SOCIAL SECURITY ACT
Public Law 74–271, as amended
49 Stat. 620, as amended
SOCIAL SECURITY ACT
271
119–37
Statute Compilation
United States House of Representatives
Office of the Legislative Counsel
text/xml
EN
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Social Security Act-ENTIRE (Current through P.L. 119–37, Enacted November 12, 2025)
Social Security Act
Department of Veterans Affairs Expiring Authorities Act of 2013
State, Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act
Emergency Unemployment Insurance Stabilization and Access Act of 2020
CARES Act
Medicare Access and CHIP Reauthorization Act of 2015
Families First Coronavirus Response Act
American Rescue Plan Act of 2021
88888888
74
1935-08-14
SOCIAL SECURITY ACT
[P.L. 74–271, approved August 14, 1935, 49 Stat. 620.]
[As Amended Through P.L. 119–37, Enacted November 12, 2025]
[Currency: This publication is a compilation of the text of Public Law 74–271. It was last amended by the public law listed in the As Amended Through note above and below at the bottom of each page of the pdf version and reflects current law through the date of the enactment of the public law listed at https://www.govinfo.gov/app/collection/comps/]
[Note: While this publication does not represent an official version of any Federal statute, substantial efforts have been made to ensure the accuracy of its contents. The official version of Federal law is found in the United States Statutes at Large and in the United States Code. The legal effect to be given to the Statutes at Large and the United States Code is established by statute (1 U.S.C. 112, 204).]

AN ACT
To provide for the general welfare by establishing a system of Federal old-age benefits, and by enabling the several States to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemployment compensation laws; to establish a Social Security Board; to raise revenue; and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
TITLE I—

GRANTS TO STATES FOR OLD-AGE ASSISTANCE FOR THE AGED1
^1
Title I of the Social Security Act is administered by the Department of Health and Human Services (formerly the Department of Health, Education, and Welfare). The Office of Family Assistance, Social Security Administration, administers benefit payments under title I. The Administration for Public Services, Office of Human Development Services, administers social services under title I.
P.L. 92–603, repealed title I effective January 1, 1974, except with respect to Puerto Rico, Guam, and the Virgin Islands. The Commonwealth of the Northern Marianas may elect to initiate a title I social services program if it chooses; see Vol. II, P.L. 94-241, approved March 24, 1976, 90 Stat. 263, [Covenant to Establish Northern Mariana Islands].

TABLE OF CONTENTS OF TITLE2
^2
This table of contents does not appear in the law.303,
Sec. 1.
Appropriation.
Sec. 2.
State old-age plans.
Sec. 3.
Payment to States.
Sec. 4.
Operation of State plans.
[ Sec. 5. Repealed. ]
Sec. 6.
Definition.

appropriation
Sec. 1.
[42 U.S.C. 301]
For the purpose of enabling each State, as far as practicable under the conditions in such State, to furnish financial assistance to aged needy individuals, there is hereby authorized to be appropriated for each fiscal year a sum sufficient to carry out the purposes of this title. The sums made available under this section shall be used for making payments to States which have submitted, and had approved by the Secretary of Health, Education, and Welfare3 (hereinafter referred to as the “Secretary”), State plans for old-age assistance.
^3
This was deemed to refer to the Secretary of Health and Human Services under section 509(a) of the “Department of Education Organization Act” (P.L. 96–88, 93 Stat. 695), effective May 4, 1980.

state old-age plans
Sec. 2.
[42 U.S.C. 302]
(a)
A State plan for old-age assistance must—
(1)
except to the extent permitted by the Secretary with respect to services, provide that it shall be in effect in all political subdivisions of the State, and, if administered by them, be mandatory upon them;
(2)
provide for financial participation by the State;
(3)
either provide for the establishment or designation of a single State agency to administer the plan, or provide for the establishment or designation of a single State agency to supervise the administration of the plan;
(4)
provide (A) for granting an opportunity for a fair hearing before the State agency to any individual whose claim for assistance under the plan is denied or is not acted upon with reasonable promptness, and (B) that if the State plan is administered in each of the political subdivisions of the State by a local agency and such local agency provides a hearing at which evidence may be presented prior to a hearing before the State agency, such local agency may put into effect immediately upon issuance its decision upon the matter considered at such hearing;
(5)
provide (A) such methods of administration (including methods relating to the establishment and maintenance of personnel standards on a merit basis, except that the Secretary shall exercise no authority with respect to the selection, tenure of office, and compensation of any individual employed in accordance with such methods) as are found by the Secretary to be necessary for the proper and efficient operation of the plan, and (B) for the training and effective use of paid subprofessional staff, with particular emphasis on the full-time or part-time employment of recipients and other persons of low income, as community service aides, in the administration of the plan and for the use of nonpaid or partially paid volunteers in a social service volunteer program in providing services to applicants and recipients and in assisting any advisory committees established by the State agency;
(6)
provide that the State agency will make such reports, in such form and containing such information, as the Secretary may from time to time require, and comply with such provisions as the Secretary may from time to time find necessary to assure the correctness and verification of such reports;
(7)
provide safeguards which permit the use or disclosure of information concerning applicants or recipients only (A) to public officials who require such information in connection with their official duties, or (B) to other persons for purposes directly connected with the administration of the State plan;
(8)
provide that all individuals wishing to make application for assistance under the plan shall have opportunity to do so, and that such assistance shall be furnished with reasonable promptness to all eligible individuals;
(9)
provide, if the plan includes assistance for or on behalf of individuals in private or public institutions, for the establishment or designation of a State authority or authorities which shall be responsible for establishing and maintaining standards for such institutions;
(10)
if the State plan includes old-age assistance—
(A)
provide that the State agency shall, in determining need for such assistance, take into consideration any other income and resources of an individual claiming old-age assistance, as well as any expenses reasonably attributable to the earning of any such income; except that, in making such determination, (i) the State agency may disregard not more than $7.50 per month of any income and (ii) of the first $80 per month of additional income which is earned the State agency may disregard not more than the first $20 thereof plus one-half of the remainder;
(B)
include reasonable standards, consistent with the objectives of this title, for determining eligibility for and the extent of such assistance; and
(C)
provide a description of the services (if any) which the State agency makes available (using whatever internal organizational arrangement it finds appropriate for this purpose) to applicants for and recipients of such assistance to help them attain self-care, including a description of the steps taken to assure, in the provision of such services, maximum utilization of other agencies providing similar or related services; and
(11)
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 of this Act.
(b)
The Secretary shall approve any plan which fulfills the conditions specified in subsection (a), except that he shall not approve any plan which imposes, as a condition of eligibility for assistance under the plan—
(1)
an age requirement of more than sixty-five years; or
(2)
any residence requirement which (A) in the case of applicants for old-age assistance, excludes any resident of the State who has resided therein five years during the nine years immediately preceding the application for old-age assistance and has resided therein continuously for one year immediately preceding the application, and (B) in the case of applicants for medical assistance for the aged, excludes any individual who resides in the State; or
(3)
any citizenship requirement which excludes any citizen of the United States.
At the option of the State, the plan may provide that manuals and other policy issuances will be furnished to persons without charge for the reasonable cost of such materials, but such provision shall not be required by the Secretary as a condition for the approval of such plan under this title.
(c)
Nothing in this title shall be construed to permit a State to have in effect with respect to any period more than one State plan approved under this title.

payment to states
Sec. 3.
[42 U.S.C. 303]
(a)
From the sums appropriated therefor, the Secretary of the Treasury shall pay to each State which has a plan approved underthis title, for each quarter, beginning with the quarter commencing October 1, 1960—
[(1)
Stricken.]
(2)
in the case of Puerto Rico, the Virgin Islands, and Guam, an amount equal to one-half of the total of the sums expended during such quarter as old-age assistance under the State plan, not counting so much of any expenditure with respect to any month as exceeds $37.50 multiplied by the total number of recipients of old-age assistance for such month; plus
[(3)
Stricken.]
(4)
in the case of any State, an amount equal to 50 percent of the total amounts expended during such quarter as found necessary by the Secretary for the proper and efficient administration of the State plan.
(b)
The method of computing and paying such amounts shall be as follows:
(1)
The Secretary of Health, Education, and Welfare 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 aged individuals in the State, and (C) such other investigation as the Secretary may find necessary.
(2)
The Secretary of Health, Education, and Welfare shall then certify to the Secretary of the Treasury the amount so estimatedby the Secretary of Health, Education, and Welfare, (A) reduced or increased, as the case may be, by any sum by which he finds that his estimate for any prior quarter was greater or less thanthe amount which should have been paid to the State under subsection (a) for such quarter, and (B) reduced by a sum equivalent to the pro rata share to which the United States is equitably entitled, as determined by the Secretary of Health, Education, and Welfare, of the net amount recovered during any prior quarter by the State or any political subdivision thereof with respect to assistance furnished under the State plan; 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 for such prior quarter: Provided, That any part of the amount recovered from the estate of a deceased recipient which is not in excess of the amount expended by the State or any political subdivision thereof for the funeral expenses of the deceased shall not be considered as a basis for reduction under clause (B) of this paragraph.
(3)
The Secretary of the Treasury shall thereupon, through the Division of Disbursement of the Treasury Department 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, Education, and Welfare, the amount so certified.

operation of state plans
Sec. 4.
[42 U.S.C. 304]
In the case of any State plan which has been approved under this title by the Secretary of Health, Education, and Welfare, if the Secretary, after reasonable notice and opportunity for hearing to the State agency administering or supervising the administration of such plan, finds—
(1)
that the plan has been so changed as to impose any age, residence, or citizenship requirement prohibited by section 2(b), or that in the administration of the plan any such prohibited requirement is imposed, with the knowledge of such State agency, in a substantial number of cases; or
(2)
that in the administration of the plan there is a failure to comply substantially with any provision required by section 2(a) 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 his 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 he is so satisfied he 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. 5.
[Repealed.]

definition
Sec. 6.
[42 U.S.C. 306]
(a)4
For the purposes of this title, the term “old-age assistance” means money payments to, or (if provided in or after the third month before the month in which the recipient makes application for assistance) medical care in behalf of or any type of remedial care recognized under State law in behalf of, needy individuals who are 65 years of age or older, but does not include any such payments to or care in behalf of any individual who is an inmate of a public institution (except as a patient in a medical institution). Such term also includes payments which are not included within the meaning of such term under the preceding sentence, but which would be so included except that they are made on behalf of such a needy individual to another individual who (as determined in accordance with standards prescribed by the Secretary) is interested in or concerned with the welfare of such needy individual, but only with respect to a State whose State plan approved under section 2 includes provision for—
^4
As in original; “(a)” should be stricken.
(1)
determination by the State agency that such needy individual has, by reason of his physical or mental condition, such inability to manage funds that making payments to him would be contrary to his welfare and, therefore, it is necessary to provide such assistance through payments described in this sentence;
(2)
making such payments only in cases in which such payments will, under the rules otherwise applicable under the State plan for determining need and the amount of old-age assistance to be paid (and in conjunction with other income and resources), meet all the need5 of the individuals with respect to whom such payments are made;
^5
So in original. Should be “needs”.
(3)
undertaking and continuing special efforts to protect the welfare of such individual and to improve, to the extent possible, his capacity for self-care and to manage funds;
(4)
periodic review by such State agency of the determination under paragraph (1) to ascertain whether conditions justifying such determination still exist, with provision for termination of such payments if they do not and for seeking judicial appointment of a guardian or other legal representative, as described in section 1111, if and when it appears that such action will best serve the interests of such needy individual; and
(5)
opportunity for a fair hearing before the State agency on the determination referred to in paragraph (1) for any individual with respect to whom it is made.
At the option of a State (if its plan approved under this title so provides), such term (i) need not include money payments to an individual who has been absent from such State for a period in excess of 90 consecutive days (regardless of whether he has maintained his residence in such State during such period) until he has been present in such State for 30 consecutive days in the case of such an individual who has maintained his residence in such State during such period or 90 consecutive days in the case of any other such individual, and (ii) may include rent payments made directly to a public housing agency on behalf of a recipient or a group or groups of recipients of assistance under such plan.
TITLE II—

FEDERAL OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE BENEFITS

TABLE OF CONTENTS OF TITLE1
^1
This table of contents does not appear in the law.
Sec. 201.
Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund.
Sec. 202.
Old-age and survivors insurance benefit payments.
Sec. 203.
Reduction of insurance benefits.
Sec. 204.
Overpayments and underpayments.
Sec. 205.
Evidence, procedure, and certification for payment.
Sec. 206.
Representation of claimants.
Sec. 207.
Assignment.
Sec. 208.
Penalties.
Sec. 209.
Definition of wages.
Sec. 210.
Definition of employment.
Sec. 211.
Self-employment.
Sec. 212.
Crediting of self-employment income to calendar years.
Sec. 213.
Quarter and quarter of coverage.
Sec. 214.
Insured status for purposes of old-age and survivors insurance benefits.
Sec. 215.
Computation of primary insurance amount.
Sec. 216.
Other definitions.
Sec. 217.
Benefits in case of veterans.
Sec. 218.
Voluntary agreements for coverage of State and local employees.
Sec. 218A.
Voluntary agreements for coverage of Indian tribal council members.
[ Sec. 219. Repealed. ]
Sec. 220.
Disability provisions inapplicable if benefit rights impaired.
Sec. 221.
Disability determinations.
Sec. 222.
Rehabilitation services.
Sec. 223.
Disability insurance benefit payments.
Sec. 224.
Reduction of benefits based on disability.
Sec. 225.
Additional rules relating to benefits based on disability.
Sec. 226.
Entitlement to hospital insurance benefits.
Sec. 226A.
Special provisions relating to coverage under medicare program for end stage renal disease.
Sec. 227.
Transitional insured status.
Sec. 228.
Benefits at age 72 for certain uninsured individuals.
Sec. 229.
Benefits in case of members of the uniformed services.
Sec. 230.
Adjustment of the contribution and benefit base.
Sec. 231.
Benefits in case of certain individuals interned during World War II.
Sec. 232.
Processing of tax data.
Sec. 233.
International agreements.
Sec. 234.
Demonstration project authority.

federal old-age and survivors insurance trust fund and federal disability insurance trust fund
Sec. 201.
[42 U.S.C. 401]
(a)
There is hereby created on the books of the Treasury of the United States a trust fund to be known as the “Federal Old-Age and Survivors Insurance Trust Fund”. The Federal Old-Age and Survivors Insurance Trust Fund shall consist of the securities held by the Secretary of the Treasury for the Old-Age Reserve Account and the amount standing to the credit of the Old-Age Reserve Account on the books of the Treasury on January 1, 1940, which securities and amount the Secretary of the Treasury is authorized and directed to transfer to the Federal Old-Age and Survivors Insurance Trust Fund, and, in addition, such gifts and bequests as may be made as provided in subsection (i)(1), and such amounts as may be appropriated to, or deposited in, the Federal Old-Age and Survivors Insurance Trust Fund as hereinafter provided. There is hereby appropriated to the Federal Old-Age and Survivors Insurance Trust Fund for the fiscal year ending June 30, 1941, and for each fiscal year thereafter, out of any moneys in the Treasury not otherwise appropriated, amounts equivalent to 100 per centum of—
(1)
the taxes (including interest, penalties, and additions to the taxes) received under subchapter A of chapter 9 of the Internal Revenue Code of 1939<ftrf> (and covered into the Treasury) which are deposited into the Treasury by collectors of internal revenue before January 1, 1951; and
(2)
the taxes certified each month by the Commissioner of Internal Revenue as taxes received under subchapter A of chapter 9 of such Code which are deposited into the Treasury by collectors of internal revenue after December 31, 1950, and before January 1, 1953, with respect to assessments of such taxes made before January 1, 1951; and
(3)
the taxes imposed by subchapter A of chapter 9 of such Code with respect to wages (as defined in section 1426 of such Code), and by chapter 21 (other than sections 3101(b) and 3111(b)) of the Internal Revenue Code of 1954 with respect to wages (as defined in section 3121 of such Code) reported to the Commissioner of Internal Revenue pursuant to section 1420(c) of the Internal Revenue Code of 1939 after December 31, 1950, or to the Secretary of the Treasury or his delegates pursuant to subtitle F of the Internal Revenue Code of 1954 after December 31, 1954, as determined by the Secretary of the Treasury by applying the applicable rates of tax under such subchapter or chapter 21 (other than sections 3101(b) and 3111(b)) to such wages, which wages shall be certified by the Commissioner of Social Security on the basis of the records of wages established and maintained by such Commissioner in accordance with such reports, less the amounts specified in clause (1) of subsection (b) of this section; and
(4)
the taxes imposed by subchapter E of chapter 1 of the Internal Revenue Code of 1939, with respect to self-employment income (as defined in section 481 of such Code), and by chapter 2 (other than section 1401(b)) of the Internal Revenue Code of 1954 with respect to self-employment income (as defined in section 1402 of such Code) reported to the Commissioner of Internal Revenue on tax returns under such subchapter or to the Secretary of the Treasury or his delegate on tax returns under subtitle F of such Code, as determined by the Secretary of the Treasury by applying the applicable rate of tax under such subchapter or chapter (other than section 1401(b)) to such self-employment income, which self-employment income shall be certified by the Commissioner of Social Security on the basis of the records of self-employment income established and maintained by the Commissioner of Social Security in accordance with such returns, less the amounts specified in clause (2) of subsection (b) of this section.
The amounts appropriated by clauses (3) and (4) shall be transferred from time to time from the general fund in the Treasury to the Federal Old-Age and Survivors Insurance Trust Fund, and the amounts appropriated by clauses (1) and (2) of subsection (b) shall be transferred from time to time from the general fund in the Treasury to the Federal Disability Insurance Trust Fund, such amounts to be determined on the basis of estimates by the Secretary of the Treasury of the taxes, specified in clauses (3) and (4) of this subsection, paid to or deposited into the Treasury; and proper adjustments shall be made in amounts subsequently transferred to the extent prior estimates were in excess of or were less than the taxes specified in such clauses (3) and (4) of this subsection. All amounts transferred to either Trust Fund under the preceding sentence shall be invested by the Managing Trustee in the same manner and to the same extent as the other assets of such Trust Fund. Notwithstanding the preceding sentence, in any case in which the Secretary of the Treasury determines that the assets of either such Trust Fund would otherwise be inadequate to meet such Fund's obligations for any month, the Secretary of the Treasury shall transfer to such Trust Fund on the first day of such month the amount which would have been transferred to such Fund under this section as in effect on October 1, 1990; and such Trust Fund shall pay interest to the general fund on the amount so transferred on the first day of any month at a rate (calculated on a daily basis, and applied against the difference between the amount so transferred on such first day and the amount which would have been transferred to the Trust Fund up to that day under the procedures in effect on January 1, 1983) equal to the rate earned by the investments of such Fund in the same month under subsection (d).
(b)
There is hereby created on the books of the Treasury of the United States a trust fund to be known as the “Federal Disability Insurance Trust Fund”. The Federal Disability Insurance Trust Fund shall consist of such gifts and bequests as may be made as provided in subsection (i)(1), and such amounts as may be appropriated to, or deposited in, such fund as provided in this section. There is hereby appropriated to the Federal Disability Insurance Trust Fund for the fiscal year ending June 30, 1957, and for each fiscal year thereafter, out of any moneys in the Treasury not otherwise appropriated, amounts equivalent to 100 per centum of—
(1)
(A)
½ of 1 per centum of the wages (as defined in section 3121 of the Internal Revenue Code of 1954) paid after December 31, 1956, and before January 1, 1966, and reported to the Secretary of the Treasury or his delegate pursuant to subtitle F of the Internal Revenue Code of 1954, (B) 0.70 of 1 per centum of the wages (as so defined) paid after December 31, 1965, and before January 1, 1968, and so reported, (C) 0.95 of 1 per centum of the wages (as so defined) paid after December 31, 1967, and before January 1, 1970, and so reported, (D) 1.10 per centum of the wages (as so defined) paid after December 31, 1969, and before January 1, 1973, and so reported, (E) 1.1 per centum of the wages (as so defined) paid after December 31, 1972, and before January 1, 1974, and so reported, (F) 1.15 per centum of the wages (as so defined) paid after December 31, 1973, and before January 1, 1978, and so reported, (G) 1.55 per centum of the wages (as so defined) paid after December 31, 1977, and before January 1, 1979, and so reported, (H) 1.50 per centum of the wages (as so defined) paid after December 31, 1978, and before January 1, 1980, and so reported, (I) 1.12 per centum of the wages (as so defined) paid after December 31, 1979, and before January 1, 1981, and so reported, (J) 1.30 per centum of the wages (as so defined) paid after December 31, 1980, and before January 1, 1982, and so reported, (K) 1.65 per centum of the wages (as so defined) paid after December 31, 1981, and before January 1, 1983, and so reported, (L) 1.25 per centum of the wages (as so defined) paid after December 31, 1982, and before January 1, 1984, and so reported, (M) 1.00 per centum of the wages (as so defined) paid after December 31, 1983, and before January 1, 1988, and so reported, (N) 1.06 per centum of the wages (as so defined) paid after December 31, 1987, and before January 1, 1990, and so reported, (O) 1.20 per centum of the wages (as so defined) paid after December 31, 1989, and before January 1, 1994, and so reported, (P) 1.88 per centum of the wages (as so defined) paid after December 31, 1993, and before January 1, 1997, and so reported, (Q) 1.70 per centum of the wages (as so defined) paid after December 31, 1996, and before January 1, 2000, and so reported, (R) 1.80 per centum of the wages (as so defined) paid after December 31, 1999, and before January 1, 2016, and so reported, (S) 2.37 per centum of the wages (as so defined) paid after December 31, 2015, and before January 1, 2019, and so reported, and (T) 1.80 per centum of the wages (as so defined) paid after December 31, 2018, and so reported,,2 which wages shall be certified by the Commissioner of Social Security on the basis of the records of wages established and maintained by such Commissioner in accordance with such reports; and
^2
Two commas are so in law.
(2)
(A)
⅜ of 1 per centum of the amount of self-employment income (as defined in section 1402 of the Internal Revenue Code of 1954) reported to the Secretary of the Treasury or his delegate on tax returns under subtitle F of the Internal Revenue Code of 1954 for any taxable year beginning after December 31, 1956, and before January 1, 1966, (B) 0.525 of 1 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1965, and before January 1, 1968, (C) 0.7125 of 1 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1967, and before January 1, 1970, (D) 0.825 of 1 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1969, and before January 1, 1973, (E) 0.795 of 1 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1972, and before January 1, 1974, (F) 0.815 of 1 per centum of the amount of self-employment income (as so defined) as reported for any taxable year beginning after December 31, 1973, and before January 1, 1978, (G) 1.090 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1977, and before January 1, 1979, (H) 1.0400 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1978, and before January 1, 1980, (I) 0.7775 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1979, and before January 1, 1981, (J) 0.9750 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1980, and before January 1, 1982, (K) 1.2375 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1981, and before January 1, 1983, (L) 0.9375 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1982, and before January 1, 1984, (M) 1.00 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1983, and before January 1, 1988, (N) 1.06 per centum of the self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1987, and before January 1, 1990, (O) 1.20 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1989, and before January 1, 1994, (P) 1.88 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1993, and before January 1, 1997, (Q) 1.70 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1996, and before January 1, 2000, (R) 1.80 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 1999, and before January 1, 2016, (S) 2.37 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 2015, and before January 1, 2019, and (T) 1.80 per centum of the amount of self-employment income (as so defined) so reported for any taxable year beginning after December 31, 2018, which self-employment income shall be certified by the Commissioner of Social Security on the basis of the records of self-employment income established and maintained by the Commissioner of Social Security in accordance with such returns.
(c)
With respect to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund (hereinafter in this title called the “Trust Funds”) there is hereby created a body to be known as the Board of Trustees of the Trust Funds (hereinafter in this title called the “Board of Trustees”) which Board of Trustees shall be composed of the Commissioner of Social Security, the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services, all ex officio, and of two members of the public (both of whom may not be from the same political party), who shall be nominated by the President for a term of four years and subject to confirmation by the Senate. A member of the Board of Trustees serving as a member of the public and nominated and confirmed to fill a vacancy occurring during a term shall be nominated and confirmed only for the remainder of such term. An individual nominated and confirmed as a member of the public may serve in such position after the expiration of such member's term until the earlier of the time at which the member's successor takes office or the time at which a report of the Board is first issued under paragraph (2) after the expiration of the member's term. The Secretary of the Treasury shall be the Managing Trustee of the Board of Trustees (hereinafter in this title called the “Managing Trustee”). The Deputy Commissioner of Social Security shall serve as Secretary of the Board of Trustees. The Board of Trustees shall meet not less frequently than once each calendar year. It shall be the duty of the Board of Trustees to—
(1)
Hold the Trust Funds;
(2)
Report to the Congress not later than the first day of April of each year on the operation and status of the Trust Funds during the preceding fiscal year and on their expected operation and status during the next ensuing five fiscal years;
(3)
Report immediately to the Congress whenever the Board of Trustees is of the opinion that the amount of either of the Trust Funds is unduly small;
(4)
Recommend improvements in administrative procedures and policies designed to effectuate the proper coordination of the old-age and survivors insurance and Federal-State unemployment compensation program; and
(5)
Review the general policies followed in managing the Trust Funds, and recommend changes in such policies, including necessary changes in the provisions of the law which govern the way in which the Trust Funds are to be managed.
The report provided for in paragraph (2) above shall include a statement of the assets of, and the disbursements made from, the Trust Funds during the preceding fiscal year, an estimate of the expected future income to, and disbursements to be made from, the Trust Funds during each of the next ensuing five fiscal years, and a statement of the actuarial status of the Trust Funds. Such statement shall include a finding by the Board of Trustees as to whether the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, individually and collectively, are in close actuarial balance (as defined by the Board of Trustees). Such report shall include an actuarial opinion by the Chief Actuary of the Social Security Administration certifying that the techniques and methodologies used are generally accepted within the actuarial profession and that the assumptions and cost estimates used are reasonable. Such report shall also include an actuarial analysis of the benefit disbursements made from the Federal Old-Age and Survivors Insurance Trust Fund with respect to disabled beneficiaries. Such report shall be printed as a House document of the session of the Congress to which the report is made. A person serving on the Board of Trustees shall not be considered to be a fiduciary and shall not be personally liable for actions taken in such capacity with respect to the Trust Funds.
(d)
It shall be the duty of the Managing Trustee to invest such portion of the Trust Funds as is not, in his judgment, required to meet current withdrawals. Such investments may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at the issue price, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under chapter 31 of title 31, United States Code, are hereby extended to authorize the issuance at par of public-debt obligations for purchase by the Trust Funds. Such obligations issued for purchase by the Trust Funds shall have maturities fixed with due regard for the needs of the Trust Funds and shall bear interest at a rate equal to the average market yield (computed by the Managing Trustee on the basis of market quotations as of the end of the calendar month next preceding the date of such issue) on all marketable interest-bearing obligations of the United States then forming a part of the public debt which are not due or callable until after the expiration of four years from the end of such calendar month; except that where such average market yield is not a multiple of one-eighth of 1 per centum, the rate of interest of such obligations shall be the multiple of one-eighth of 1 per centum nearest such market yield. Each obligation issued for purchase by the Trust Funds under this subsection shall be evidenced by a paper instrument in the form of a bond, note, or certificate of indebtedness issued by the Secretary of the Treasury setting forth the principal amount, date of maturity, and interest rate of the obligation, and stating on its face that the obligation shall be incontestable in the hands of the Trust Fund to which it is issued, that the obligation is supported by the full faith and credit of the United States, and that the United States is pledged to the payment of the obligation with respect to both principal and interest. The Managing Trustee may purchase other interest-bearing obligations of the United States or obligations guaranteed as to both principal and interest by the United States, on original issue or at the market price, only where he determines that the purchase of such other obligations is in the public interest.
(e)
Any obligations acquired by the Trust Funds (except public-debt obligations issued exclusively to the Trust Funds) may be sold by the Managing Trustee at the market price, and such public-debt obligations may be redeemed at par plus accrued interest.
(f)
The interest on, and the proceeds from the sale or redemption of, any obligations held in the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall be credited to and form a part of the Federal Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund, respectively. Payment from the general fund of the Treasury to either of the Trust Funds of any such interest or proceeds shall be in the form of paper checks drawn on such general fund to the order of such Trust Fund.
(g)
(1)
(A)
The Managing Trustee of the Trust Funds (which for purposes of this paragraph shall include also the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund established by title XVIII) is directed to pay from the Trust Funds into the Treasury—
(i)
the amounts estimated by the Managing Trustee, the Commissioner of Social Security, and the Secretary of Health and Human Services which will be expended, out of moneys appropriated from the general fund in the Treasury, during a three-month period by the Department of Health and Human Services for the administration of title XVIII of this Act, and by the Department of the Treasury for the administration of titles II and XVIII of this Act and chapters 2 and 21 of the Internal Revenue Code of 1986, less
(ii)
the amounts estimated (pursuant to the applicable method prescribed under paragraph (4) of this subsection) by the Commissioner of Social Security which will be expended, out of moneys made available for expenditures from the Trust Funds, during such three-month period to cover the cost of carrying out the functions of the Social Security Administration, specified in section 232, which relate to the administration of provisions of the Internal Revenue Code of 1986 other than those referred to in clause (i) and the functions of the Social Security Administration in connection with the withholding of taxes from benefits, as described in section 207(c), pursuant to requests by persons entitled to such benefits or such persons' representative payee.
Such payments shall be carried into the Treasury as the net amount of repayments due the general fund account for reimbursement of expenses incurred in connection with the administration of titles II and XVIII of this Act and chapters 2 and 21 of the Internal Revenue Code of 1986. A final accounting of such payments for any fiscal year shall be made at the earliest practicable date after the close thereof. There are hereby authorized to be made available for expenditure, out of any or all of the Trust Funds, such amounts as the Congress may deem appropriate to pay the costs of the part of the administration of this title, title VIII, title XVI, and title XVIII for which the Commissioner of Social Security is responsible, the costs of title XVIII for which the Secretary of Health and Human Services is responsible, and the costs of carrying out the functions of the Social Security Administration, specified in section 232, which relate to the administration of provisions of the Internal Revenue Code of 1986 other than those referred to in clause (i) of the first sentence of this subparagraph and the functions of the Social Security Administration in connection with the withholding of taxes from benefits, as described in section 207(c), pursuant to requests by persons entitled to such benefits or such persons' representative payee3. Of the amounts authorized to be made available out of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund under the preceding sentence, there are hereby authorized to be made available from either or both of such Trust Funds for continuing disability reviews—
^3
Section 4005(b)(2) of Public Law 105–277 inserted “and the functions of the Social Security Administration in connection with the withholding of taxes from benefits, as described in section 207(c), pursuant to requests by persons entitled to such benefits or such persons' representative payee”, applicable to benefits paid on or after December 1, 1998. Executed as if such Public Law added this material at the end of this sentence rather than at the end of paragraph (1)(A).
(i)
for fiscal year 1996, $260,000,000;
(ii)
for fiscal year 1997, $360,000,000;
(iii)
for fiscal year 1998, $570,000,000;
(iv)
for fiscal year 1999, $720,000,000;
(v)
for fiscal year 2000, $720,000,000;
(vi)
for fiscal year 2001, $720,000,000; and
(viii)4
for fiscal year 2002, $720,000,000.
^4
So in original. Probably should be “(vii)”.
For purposes of this subparagraph, the term “continuing disability review” means a review conducted pursuant to section 221(i) and a review or disability eligibility redetermination conducted to determine the continuing disability and eligibility of a recipient of benefits under the supplemental security income program under title XVI, including any review or redetermination conducted pursuant to section 207 or 208 of the Social Security Independence and Program Improvements Act of 1994 (Public Law 103–296).
(B)
After the close of each fiscal year—
(i)
the Commissioner of Social Security shall determine—
(I)
the portion of the costs, incurred during such fiscal year, of administration of this title, title VIII, title XVI, and title XVIII for which the Commissioner is responsible and of carrying out the functions of the Social Security Administration, specified in section 232, which relate to the administration of provisions of the Internal Revenue Code of 1986 (other than those referred to in clause (i) of the first sentence of subparagraph (A)) and the functions of the Social Security Administration in connection with the withholding of taxes from benefits, as described in section 207(c), pursuant to requests by persons entitled to such benefits or such persons' representative payee, which should have been borne by the general fund of the Treasury,
(II)
the portion of such costs which should have been borne by the Federal Old-Age and Survivors Insurance Trust Fund,
(III)
the portion of such costs which should have been borne by the Federal Disability Insurance Trust Fund,
(IV)
the portion of such costs which should have been borne by the Federal Hospital Insurance Trust Fund, and
(V)
the portion of such costs which should have been borne by the Federal Supplementary Medical Insurance Trust Fund (and, of such portion, the portion of such costs which should have been borne by the Medicare Prescription Drug Account in such Trust Fund), and
(ii)
the Secretary of Health and Human Services shall determine—
(I)
the portion of the costs, incurred during such fiscal year, of the administration of title XVIII for which the Secretary is responsible, which should have been borne by the general fund of the Treasury,
(II)
the portion of such costs which should have been borne by the Federal Hospital Insurance Trust Fund, and
(III)
the portion of such costs which should have been borne by the Federal Supplementary Medical Insurance Trust Fund (and, of such portion, the portion of such costs which should have been borne by the Medicare Prescription Drug Account in such Trust Fund).
(C)
After the determinations under subparagraph (B) have been made for any fiscal year, the Commissioner of Social Security and the Secretary shall each certify to the Managing Trustee the amounts, if any, which should be transferred from one to any of the other such Trust Funds and the amounts, if any, which should be transferred between the Trust Funds (or one of the Trust Funds) and the general fund of the Treasury, in order to ensure that each of the Trust Funds and the general fund of the Treasury have borne their proper share of the costs, incurred during such fiscal year, for—
(i)
the parts of the administration of this title, title VIII, title XVI, and title XVIII for which the Commissioner of Social Security is responsible,
(ii)
the parts of the administration of title XVIII for which the Secretary is responsible, and
(iii)
carrying out the functions of the Social Security Administration, specified in section 232, which relate to the administration of provisions of the Internal Revenue Code of 1986 (other than those referred to in clause (i) of the first sentence of subparagraph (A)) and the functions of the Social Security Administration in connection with the withholding of taxes from benefits, as described in section 207(c), pursuant to requests by persons entitled to such benefits or such persons' representative payee.
The Managing Trustee shall transfer any such amounts in accordance with any certification so made.
(D)
The determinations required under subclauses (IV) and (V) of subparagraph (B)(i) shall be made in accordance with the cost allocation methodology in existence on the date of the enactment of the Social Security Independence and Program Improvements Act of 1994, until such time as the methodology for making the determinations required under such subclauses is revised by agreement of the Commissioner and the Secretary, except that the determination of the amounts to be borne by the general fund of the Treasury with respect to expenditures incurred in carrying out the functions of the Social Security Administration specified in section 232 and the functions of the Social Security Administration in connection with the withholding of taxes from benefits as described in section 207(c) shall be made pursuant to the applicable method prescribed under paragraph (4).
(2)
The Managing Trustee is directed to pay from time to time from the Trust Funds into the Treasury the amount estimated by him as taxes imposed under section 3101(a) of the Internal Revenue Code of 1986 which are subject to refund under section 6413(c) of such Code with respect to wages (as defined in section 3121 of such Code). Such taxes shall be determined on the basis of the records of wages maintained by the Commissioner of Social Security in accordance with the wages reported to the Secretary of the Treasury or his delegate pursuant to subtitle F of such Code, and the Commissioner of Social Security shall furnish the Managing Trustee such information as may be required by the Trustee for such purpose. The payments by the Managing Trustee shall be covered into the Treasury as repayments to the account for refunding internal revenue collections. Payments pursuant to the first sentence of this paragraph shall be made from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund in the ratio in which amounts were appropriated to such Trust Funds under clause (3) of subsection (a) of this section and clause (1) of subsection (b) of this section.
(3)
Repayments made under paragraph (1) or (2) shall not be available for expenditures but shall be carried to the surplus fund of the Treasury. If it subsequently appears that the estimates under either such paragraph in any particular period were too high or too low, appropriate adjustments shall be made by the Managing Trustee in future payments.
(4)
The Commissioner of Social Security shall utilize the method prescribed pursuant to this paragraph, as in effect immediately before the date of the enactment of the Social Security Independence and Program Improvements Act of 1994, for determining the costs which should be borne by the general fund of the Treasury of carrying out the functions of the Commissioner, specified in section 232, which relate to the administration of provisions of the Internal Revenue Code of 1986 (other than those referred to in clause (i) of the first sentence of paragraph (1)(A)). The Board of Trustees of such Trust Funds shall prescribe the method of determining the costs which should be borne by the general fund in the Treasury of carrying out the functions of the Social Security Administration in connection with the withholding of taxes from benefits, as described in section 207(c), pursuant to requests by persons entitled to such benefits or such persons' representative payee. If at any time or times thereafter the Boards of Trustees of such Trust Funds consider such action advisable, they may modify the method of determining such costs.
(h)
Benefit payments required to be made under section 223, and benefit payments required to be made under subsection (b), (c), or (d) of section 202 to individuals entitled to benefits on the basis of the wages and self-employment income of an individual entitled to disability insurance benefits, shall be made only from the Federal Disability Insurance Trust Fund. All other benefit payments required to be made under this title (other than section 226) shall be made only from the Federal Old-Age and Survivors Insurance Trust Fund.
(i)
(1)
The Managing Trustee may accept on behalf of the United States money gifts and bequests made unconditionally to the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, the Federal Hospital Insurance Trust Fund, or the Federal Supplementary Medical Insurance Trust Fund (and for the Medicare Prescription Drug Account and the Transitional Assistance Account in such Trust Fund) or to the Social Security Administration, the Department of Health and Human Services, or any part or officer thereof, for the benefit of any of such Funds or any activity financed through such Funds.
(2)
Any such gift accepted pursuant to the authority granted in paragraph (1) of this subsection shall be deposited in—
(A)
the specific trust fund designated by the donor or
(B)
if the donor has not so designated, the Federal Old-Age and Survivors Insurance Trust Fund.
(j)
There are authorized to be made available for expenditure, out of the Federal Old-Age and Survivors Insurance Trust Fund, or the Federal Disability Insurance Trust Fund (as determined appropriate by the Commissioner of Social Security), such amounts as are required to pay travel expenses, either on an actual cost or commuted basis, to individuals for travel incident to medical examinations requested by the Commissioner of Social Security in connection with disability determinations under this title, and to parties, their representatives, and all reasonably necessary witnesses for travel within the United States (as defined in section 210(i)) to attend reconsideration interviews and proceedings before administrative law judges with respect to any determination under this title. The amount available under the preceding sentence for payment for air travel by any person shall not exceed the coach fare for air travel between the points involved unless the use of first-class accommodations is required (as determined under regulations of the Commissioner of Social Security) because of such person's health condition or the unavailability of alternative accommodations; and the amount available for payment for other travel by any person shall not exceed the cost of travel (between the points involved) by the most economical and expeditious means of transportation appropriate to such person's health condition, as specified in such regulations. The amount available for payment under this subsection for travel by a representative to attend an administrative proceeding before an administrative law judge or other adjudicator shall not exceed the maximum amount allowable under this subsection for such travel originating within the geographic area of the office having jurisdiction over such proceeding.
(k)
Expenditures made for experiments and demonstration projects under section 234 shall be made from the Federal Disability Insurance Trust Fund and the Federal Old-Age and Survivors Insurance Trust Fund, as determined appropriate by the Commissioner of Social Security.
(l)
(1)
If at any time prior to January 1988 the Managing Trustee determines that borrowing authorized under this subsection is appropriate in order to best meet the need for financing the benefit payments from the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund, the Managing Trustee may borrow such amounts as he determines to be appropriate from the other such Trust Fund, or, subject to paragraph (5), from the Federal Hospital Insurance Trust Fund established under section 1817, for transfer to and deposit in the Trust Fund whose need for financing is involved.
(2)
In any case where a loan has been made to a Trust Fund under paragraph (1), there shall be transferred on the last day of each month after such loan is made, from the borrowing Trust Fund to the lending Trust Fund, the total interest accrued to such day with respect to the unrepaid balance of such loan at a rate equal to the rate which the lending Trust Fund would earn on the amount involved if the loan were an investment under subsection (d) (even if such an investment would earn interest at a rate different than the rate earned by investments redeemed by the lending fund in order to make the loan).
(3)
(A)
If in any month after a loan has been made to a Trust Fund under paragraph (1), the Managing Trustee determines that the assets of such Trust Fund are sufficient to permit repayment of all or part of any loans made to such Fund under paragraph (1), he shall make such repayments as he determines to be appropriate.
(B)
(i)
If on the last day of any year after a loan has been made under paragraph (1) by the Federal Hospital Insurance Trust Fund to the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund, the Managing Trustee determines that the OASDI trust fund ratio exceeds 15 percent, he shall transfer from the borrowing Trust Fund to the Federal Hospital Insurance Trust Fund an amount that—
(I)
together with any amounts transferred from another borrowing Trust Fund under this paragraph for such year, will reduce the OASDI trust fund ratio to 15 percent; and
(II)
does not exceed the outstanding balance of such loan.
(ii)
Amounts required to be transferred under clause (i) shall be transferred on the last day of the first month of the year succeeding the year in which the determination described in clause (i) is made.
(iii)
For purposes of this subparagraph, the term “OASDI trust fund ratio” means, with respect to any calendar year, the ratio of—
(I)
the combined balance in the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, as of the last day of such calendar year, to
(II)
the amount estimated by the Commissioner of Social Security to be the total amount to be paid from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund during the calendar year following such calendar year for all purposes authorized by section 201 (other than payments of interest on, and repayments of, loans from the Federal Hospital Insurance Trust Fund under paragraph (1), but excluding any transfer payments between such trust funds and reducing the amount of any transfer to the Railroad Retirement Account by the amount of any transfers into either such trust fund from that Account).
(C)
(i)
The full amount of all loans made under paragraph (1) (whether made before or after January 1, 1983) shall be repaid at the earliest feasible date and in any event no later than December 31, 1989.
(ii)
For the period after December 31, 1987, and before January 1, 1990, the Managing Trustee shall transfer each month to the Federal Hospital Insurance Trust Fund from any Trust Fund with any amount outstanding on a loan made from the Federal Hospital Insurance Trust Fund under paragraph (1) an amount not less than an amount equal to (I) the amount owed to the Federal Hospital Insurance Trust Fund by such Trust Fund at the beginning of such month (plus the interest accrued on the outstanding balance of such loan during such month), divided by (II) the number of months elapsing after the preceding month and before January 1990. The Managing Trustee may, during this period, transfer larger amounts than prescribed by the preceding sentence.
(4)
The Board of Trustees shall make a timely report to the Congress of any amounts transferred (including interest payments) under this subsection.
(5)
(A)
No amounts may be borrowed from the Federal Hospital Insurance Trust Fund under paragraph (1) during any month if the Hospital Insurance Trust Fund ratio for such month is less than 10 percent.
(B)
For purposes of this paragraph, the term “Hospital Insurance Trust Fund ratio” means, with respect to any month, the ratio of—
(i)
the balance in the Federal Hospital Insurance Trust Fund, reduced by the outstanding amount of any loan (including interest thereon) theretofore made to such Trust Fund under this subsection, as of the last day of the second month preceding such month, to
(ii)
the amount obtained by multiplying by twelve the total amount which (as estimated by the Secretary) will be paid from the Federal Hospital Insurance Trust Fund during the month for which such ratio is to be determined (other than payments of interest on, or repayments of loans from another Trust Fund under this subsection), and reducing the amount of any transfers to the Railroad Retirement Account by the amount of any transfer into the Hospital Insurance Trust Fund from that Account.
(m)
(1)
The Secretary of the Treasury shall implement procedures to permit the identification of each check issued for benefits under this title that has not been presented for payment by the close of the sixth month following the month of its issuance.
(2)
The Secretary of the Treasury shall, on a monthly basis, credit each of the Trust Funds for the amount of all benefit checks (including interest thereon) drawn on such Trust Fund more than 6 months previously but not presented for payment and not previously credited to such Trust Fund, to the extent provided in advance in appropriation Acts.
(3)
If a benefit check is presented for payment to the Treasury and the amount thereof has been previously credited pursuant to paragraph (2) to one of the Trust Funds, the Secretary of the Treasury shall nevertheless pay such check, if otherwise proper, recharge such Trust Fund, and notify the Commissioner of Social Security. <p>
(4)
A benefit check bearing a current date may be issued to an individual who did not negotiate the original benefit check and who surrenders such check for cancellation if the Secretary of the Treasury determines it is necessary to effect proper payment of benefits.
(n)
Not later than July 1, 2004, the Secretary of the Treasury shall transfer, from amounts in the general fund of the Treasury that are not otherwise appropriated—
(1)
$624,971,854 to the Federal Old-Age and Survivors Insurance Trust Fund;
(2)
$105,379,671 to the Federal Disability Insurance Trust Fund; and
(3)
$173,306,134 to the Federal Hospital Insurance Trust Fund.
Amounts transferred in accordance with this subsection shall be in satisfaction of certain outstanding obligations for deemed wage credits for 2000 and 2001.

age and survivors insurance benefit payments
Sec. 202.
[42 U.S.C. 402]
(a)

Old-Age Insurance Benefits
Every individual who—
(1)
is a fully insured individual (as defined in section 214(a)),
(2)
has attained age 62, and
(3)
has filed application for old-age insurance benefits or was entitled to disability insurance benefits for the month preceding the month in which he attained retirement age (as defined in section 216(l)),
shall be entitled to an old-age insurance benefit for each month, beginning with—
(A)
in the case of an individual who has attained retirement age (as defined in section 216(l)), the first month in which such individual meets the criteria specified in paragraphs (1), (2), and (3), or
(B)
in the case of an individual who has attained age 62, but has not attained retirement age (as defined in section 216(l)), the first month throughout which such individual meets the criteria specified in paragraphs (1) and (2) (if in that month he meets the criterion specified in paragraph (3)),
and ending with the month preceding the month in which he dies. Except as provided in subsection (q) and subsection (w), such individual's old-age insurance benefit for any month shall be equal to his primary insurance amount (as defined in section 215(a)) for such month.
(b)

Wife's Insurance Benefits
(1)
The wife (as defined in section 216(b)) and every divorced wife (as defined in section 216(d)) of an individual entitled to old-age or disability insurance benefits, if such wife or such divorced wife—
(A)
has filed application for wife's insurance benefits,
(B)
(i)
has attained age 62, or
(ii)
in the case of a wife, has in her care (individually or jointly with such individual) at the time of filing such application a child entitled to a child’s insurance benefit on the basis of the wages and self-employment income of such individual,
(C)
in the case of a divorced wife, is not married, and
(D)
is not entitled to old age or disability insurance benefits, or is entitled to old-age or disability insurance benefits based on a primary insurance amount which is less than one-half of the primary insurance amount of such individual,
shall (subject to subsection (s)) be entitled to a wife's insurance benefit for each month, beginning with—
(i)
in the case of a wife or divorced wife (as so defined) of an individual entitled to old-age benefits, if such wife or divorced wife has attained retirement age (as defined in section 216(l)), the first month in which she meets the criteria specified in subparagraphs (A), (B), (C), and (D), or
(ii)
in the case of a wife or divorced wife (as so defined) of—
(I)
an individual entitled to old-age insurance benefits, if such wife or divorced wife has not attained retirement age (as defined in section 216(l)), or
(II)
an individual entitled to disability insurance benefits,
the first month throughout which she is such a wife or divorced wife and meets the criteria specified in subparagraphs (B), (C), and (D) (if in such month she meets the criterion specified in subparagraph (A)),
whichever is earlier, and ending with the month preceding the month in which any of the following occurs—
(E)
she dies,
(F)
such individual dies,
(G)
in the case of a wife, they are divorced and either (i) she has not attained age 62, or (ii) she has attained age 62 but has not been married to such individual for a period of 10 years immediately before the date the divorce became effective,
(H)
in the case of a divorced wife, she marries a person other than such individual,
(I)
in the case of a wife who has not attained age 62, no child of such individual is entitled to a child's insurance benefit,
(J)
she becomes entitled to an old-age or disability insurance benefit based on a primary insurance amount which is equal to or exceeds one-half of the primary insurance amount of such individual, or
(K)
such individual is not entitled to disability insurance benefits and is not entitled to old-age insurance benefits.
(2)
Except as provided in subsection (q), such wife's insurance benefit for each month shall be equal to one-half of the primary insurance amount of her husband (or, in the case of a divorced wife, her former husband) for such month.
(3)
In the case of any divorced wife who marries—
(A)
an individual entitled to benefits under subsection (c), (f), (g), or (h) of this section, or
(B)
an individual who has attained the age of 18 and is entitled to benefits under subsection (d),
such divorced wife's entitlement to benefits under this subsection shall, notwithstanding the provisions of paragraph (1) (but subject to subsection (s)), not be terminated by reason of such marriage.
(4)
(A)
Notwithstanding the preceding provisions of this subsection, except as provided in subparagraph (B), the divorced wife of an individual who is not entitled to old-age or disability insurance benefits, but who has attained age 62 and is a fully insured individual (as defined in section 214), if such divorced wife—
(i)
meets the requirements of subparagraphs (A) through (D) of paragraph (1), and
(ii)
has been divorced from such insured individual for not less than 2 years,
shall be entitled to a wife's insurance benefit under this subsection for each month, in such amount, and beginning and ending with such months, as determined (under regulations of the Commissioner of Social Security) in the manner otherwise provided for wife's insurance benefits under this subsection, as if such insured individual had become entitled to old-age insurance benefits on the date on which the divorced wife first meets the criteria for entitlement set forth in clauses (i) and (ii).
(B)
A wife's insurance benefit provided under this paragraph which has not otherwise terminated in accordance with subparagraph (E), (F), (H), or (J) of paragraph (1) shall terminate with the month preceding the first month in which the insured individual is no longer a fully insured individual.
(c)

Husband's Insurance Benefits
(1)
The husband (as defined in section 216(f)) and every divorced husband (as defined in section 216(d)) of an individual entitled to old-age or disability insurance benefits, if such husband or such divorced husband—
(A)
has filed application for husband's insurance benefits,
(B)
(i)
has attained age 62, or
(ii)
in the case of a husband, has in his care (individually or jointly with such individual) at the time of filing such application a child entitled to a child’s insurance benefit on the basis of the wages and self-employment income of such individual,
(C)
in the case of a divorced husband, is not married, and
(D)
is not entitled to old-age or disability insurance benefits, or is entitled to old-age or disability insurance benefits based on a primary insurance amount which is less than one-half of the primary insurance amount of such individual,
shall (subject to subsection (s)) be entitled to a husband's insurance benefit for each month, beginning with—
(i)
in the case of a husband or divorced husband (as so defined) of an individual who is entitled to an old-age insurance benefit, if such husband or divorced husband has attained retirement age (as defined in section 216(l)), the first month in which he meets the criteria specified in subparagraphs (A), (B), (C), and (D), or
(ii)
in the case of a husband or divorced husband (as so defined) of—
(I)
an individual entitled to old-age insurance benefits, if such husband or divorced husband has not attained retirement age (as defined in section 216(l)), or
(II)
an individual entitled to disability insurance benefits,
the first month throughout which he is such a husband or divorced husband and meets the criteria specified in subparagraphs (B), (C), and (D) (if in such month he meets the criterion specified in subparagraph (A)),
whichever is earlier, and ending with the month preceding the month in which any of the following occurs:
(E)
he dies,
(F)
such individual dies,
(G)
in the case of a husband, they are divorced and either (i) he has not attained age 62, or (ii) he has attained age 62 but has not been married to such individual for a period of 10 years immediately before the divorce became effective,
(H)
in the case of a divorced husband, he marries a person other than such individual,
(I)
in the case of a husband who has not attained age 62, no child of such individual is entitled to a child's insurance benefit,
(J)
he becomes entitled to an old-age or disability insurance benefit based on a primary insurance amount which is equal to or exceeds one-half of the primary insurance amount of such individual, or
(K)
such individual is not entitled to disability insurance benefits and is not entitled to old-age insurance benefits.
(2)
Except as provided in subsection (q), such husband's insurance benefit for each month shall be equal to one-half of the primary insurance amount of his wife (or, in the case of a divorced husband, his former wife) for such month.
(3)
In the case of any divorced husband who marries—
(A)
an individual entitled to benefits under subsection (b), (e), (g), or (h) of this section, or
(B)
an individual who has attained the age of 18 and is entitled to benefits under subsection (d), by reason of paragraph (1)(B)(ii) thereof,
such divorced husband's entitlement to benefits under this subsection, notwithstanding the provisions of paragraph (1) (but subject to subsection (s)), shall not be terminated by reason of such marriage.
(4)
(A)
Notwithstanding the preceding provisions of this subsection, except as provided in subparagraph (B), the divorced husband of an individual who is not entitled to old-age or disability insurance benefits, but who has attained age 62 and is a fully insured individual (as defined in section 214), if such divorced husband—
(i)
meets the requirements of subparagraphs (A) through (D) of paragraph (1), and
(ii)
has been divorced from such insured individual for not less than 2 years,
shall be entitled to a husband's insurance benefit under this subsection for each month, in such amount, and beginning and ending with such months, as determined (under regulations of the Commissioner of Social Security) in the manner otherwise provided for husband's insurance benefits under this subsection, as if such insured individual had become entitled to old-age insurance benefits on the date on which the divorced husband first meets the criteria for entitlement set forth in clauses (i) and (ii).
(B)
A husband's insurance benefit provided under this paragraph which has not otherwise terminated in accordance with subparagraph (E), (F), (H), or (J) of paragraph (1) shall terminate with the month preceding the first month in which the insured individual is no longer a fully insured individual.
(d)

Child's Insurance Benefits
(1)
Every child (as defined in section 216(e)) of an individual entitled to old-age or disability insurance benefits, or of an individual who dies a fully or currently insured individual, if such child—
(A)
has filed application for child's insurance benefits,
(B)
at the time such application was filed was unmarried and (i) either had not attained the age of 18 or was a full-time elementary or secondary school student and had not attained the age of 19, or (ii) is under a disability (as defined in section 223(d)) which began before he attained the age of 22, and
(C)
was dependent upon such individual—
(i)
if such individual is living, at the time such application was filed,
(ii)
if such individual has died, at the time of such death, or
(iii)
if such individual had a period of disability which continued until he became entitled to old-age or disability insurance benefits, or (if he has died) until the month of his death, at the beginning of such period of disability or at the time he became entitled to such benefits,
shall be entitled to a child's insurance benefit for each month, beginning with—
(i)
in the case of a child (as so defined) of such an individual who has died, the first month in which such child meets the criteria specified in subparagraphs (A), (B), and (C), or
(ii)
in the case of a child (as so defined) of an individual entitled to an old-age insurance benefit or to a disability insurance benefit, the first month throughout which such child is a child (as so defined) and meets the criteria specified in subparagraphs (B) and (C) (if in such month he meets the criterion specified in subparagraph (A)),
whichever is earlier, and ending with the month preceding whichever of the following first occurs—
(D)
the month in which such child dies, or marries,
(E)
the month in which such child attains the age of 18, but only if he (i) is not under a disability (as so defined) at the time he attains such age, and (ii) is not a full-time elementary or secondary school student during any part of such month,
(F)
if such child was not under a disability (as so defined) at the time he attained the age of 18, the earlier of—
(i)
the first month during no part of which he is a full-time elementary or secondary school student, or
(ii)
the month in which he attains the age of 19,
but only if he was not under a disability (as so defined) in such earlier month;
(G)
if such child was under a disability (as so defined) at the time he attained the age of 18 or if he was not under a disability (as so defined) at such time but was under a disability (as so defined) at or prior to the time he attained (or would attain) the age of 22—
(i)
the termination month, subject to section 223(e) (and for purposes of this subparagraph, the termination month for any individual shall be the third month following the month in which his disability ceases; except that, in the case of an individual who has a period of trial work which ends as determined by application of section 222(c)(4)(A), the termination month shall be the earlier of (I) the third month following the earliest month after the end of such period of trial work with respect to which such individual is determined to no longer be suffering from a disabling physical or mental impairment, or (II) the third month following the earliest month in which such individual engages or is determined able to engage in substantial gainful activity, but in no event earlier than the first month occurring after the 36 months following such period of trial work in which he engages or is determined able to engage in substantial gainful activity),
or (if later) the earlier of—
(ii)
the first month during no part of which he is a full-time elementary or secondary school student, or
(iii)
the month in which he attains the age of 19,
but only if he was not under a disability (as so defined) in such earlier month; or
(H)
if the benefits under this subsection are based on the wages and self employment income of a stepparent who is subsequently divorced from such child's natural parent, the month after the month in which such divorce becomes final.
Entitlement of any child to benefits under this subsection on the basis of the wages and self-employment income of an individual entitled to disability insurance benefits shall also end with the month before the first month for which such individual is not entitled to such benefits unless such individual is, for such later month, entitled to old-age insurance benefits or unless he dies in such month. No payment under this paragraph may be made to a child who would not meet the definition of disability in section 223(d) except for paragraph (1)(B) thereof for any month in which he engages in substantial gainful activity.
(2)
Such child's insurance benefit for each month shall, if the individual on the basis of whose wages and self-employment income the child is entitled to such benefit has not died prior to the end of such month, be equal to one-half of the primary insurance amount of such individual for such month. Such child's insurance benefit for each month shall, if such individual has died in or prior to such month, be equal to three-fourths of the primary insurance amount of such individual.
(3)
A child shall be deemed dependent upon his father or adopting father or his mother or adopting mother at the time specified in paragraph (1)(C) unless, at such time, such individual was not living with or contributing to the support of such child and—
(A)
such child is neither the legitimate nor adopted child of such individual, or
(B)
such child has been adopted by some other individual.
For purposes of this paragraph, a child deemed to be a child of a fully or currently insured individual pursuant to section 216(h)(2)(B) or section 216(h)(3) shall be deemed to be the legitimate child of such individual.
(4)
A child shall be deemed dependent upon his stepfather or stepmother at the time specified in paragraph (1)(C) if, at such time, the child was receiving at least one-half of his support from such stepfather or stepmother.
(5)
In the case of a child who has attained the age of eighteen and who marries—
(A)
an individual entitled to benefits under subsection (a), (b), (c), (e), (f), (g), or (h) of this section or under section 223(a), or
(B)
another individual who has attained the age of eighteen and is entitled to benefits under this subsection,
such child's entitlement to benefits under this subsection shall, notwithstanding the provisions of paragraph (1) but subject to subsection (s), not be terminated by reason of such marriage.
(6)
A child whose entitlement to child's insurance benefits on the basis of the wages and self-employment income of an insured individual terminated with the month preceding the month in which such child attained the age of 18, or with a subsequent month, may again become entitled to such benefits (provided no event specified in paragraph (1)(D) has occurred) beginning with the first month thereafter in which he—
(A)
(i)
is a full-time elementary or secondary school student and has not attained the age of 19, or (ii) is under a disability (as defined in section 223(d)) and has not attained the age of 22, or
(B)
is under a disability (as so defined) which began (i) before the close of the 84th month following the month in which his most recent entitlement to child's insurance benefits terminated because he ceased to be under such disability, or (ii) after the close of the 84th month following the month in which his most recent entitlement to child's insurance benefits terminated because he ceased to be under such disability due to performance of substantial gainful activity,
but only if he has filed application for such reentitlement. Such reentitlement shall end with the month preceding whichever of the following first occurs:
(C)
the first month in which an event specified in paragraph (1)(D) occurs;
(D)
the earlier of (i) the first month during no part of which he is a full-time elementary or secondary school student or (ii) the month in which he attains the age of 19, but only if he is not under a disability (as so defined) in such earlier month; or
(E)
if he was under a disability (as so defined), the termination month (as defined in paragraph (1)(G)(i)), subject to section 223(e), or (if later) the earlier of—
(i)
the first month during no part of which he is a full-time elementary or secondary school student, or
(ii)
the month in which he attains the age of 19.
(7)
For the purposes of this subsection—
(A)
A “full-time elementary or secondary school student” is an individual who is in full-time attendance as a student at an elementary or secondary school, as determined by the Commissioner of Social Security (in accordance with regulations prescribed by the Commissioner) in the light of the standards and practices of the schools involved, except that no individual shall be considered a “full-time elementary or secondary school student” if he is paid by his employer while attending an elementary or secondary school at the request, or pursuant to a requirement, of his employer. An individual shall not be considered a “full-time elementary or secondary school student” for the purpose of this section while that individual is confined in a jail, prison, or other penal institution or correctional facility, pursuant to his conviction of an offense (committed after the effective date of this sentence) which constituted a felony under applicable law. An individual who is determined to be a full-time elementary or secondary school student shall be deemed to be such a student throughout the month with respect to which such determination is made.
(B)
Except to the extent provided in such regulations, an individual shall be deemed to be a full-time elementary or secondary school student during any period of nonattendance at an elementary or secondary school at which he has been in full-time attendance if (i) such period is 4 calendar months or less, and (ii) he shows to the satisfaction of the Commissioner of Social Security that he intends to continue to be in full-time attendance at an elementary or secondary school immediately following such period. An individual who does not meet the requirement of clause (ii) with respect to such period of nonattendance shall be deemed to have met such requirement (as of the beginning of such period) if he is in full-time attendance at an elementary or secondary school immediately following such period.
(C)
(i)
An “elementary or secondary school” is a school which provides elementary or secondary education, respectively, as determined under the law of the State or other jurisdiction in which it is located.
(ii)
For the purpose of determining whether a child is a “full-time elementary or secondary school student” or “intends to continue to be in full-time attendance at an elementary or secondary school”, within the meaning of this subsection, there shall be disregarded any education provided, or to be provided, beyond grade 12.
(D)
A child who attains age 19 at a time when he is a full-time elementary or secondary school student (as defined in subparagraph (A) of this paragraph and without application of subparagraph (B) of such paragraph) but has not (at such time) completed the requirements for, or received, a diploma or equivalent certificate from a secondary school (as defined in subparagraph (C)(i)) shall be deemed (for purposes of determining whether his entitlement to benefits under this subsection has terminated under paragraph (1)(F) and for purposes of determining his initial entitlement to such benefits under clause (i) of paragraph (1)(B)) not to have attained such age until the first day of the first month following the end of the quarter or semester in which he is enrolled at such time (or, if the elementary or secondary school (as defined in this paragraph) in which he is enrolled is not operated on a quarter or semester system, until the first day of the first month following the completion of the course in which he is so enrolled or until the first day of the third month beginning after such time, whichever first occurs).
(8)
In the case of—
(A)
an individual entitled to old-age insurance benefits (other than an individual referred to in subparagraph (B)), or
(B)
an individual entitled to disability insurance benefits, or an individual entitled to old-age insurance benefits who was entitled to disability insurance benefits for the month preceding the first month for which he was entitled to old-age insurance benefits,
a child of such individual adopted after such individual became entitled to such old-age or disability insurance benefits shall be deemed not to meet the requirements of clause (i) or (iii) of paragraph (1)(C) unless such child—
(C)
is the natural child or stepchild of such individual (including such a child who was legally adopted by such individual), or
(D)
(i)
was legally adopted by such individual in an adoption decreed by a court of competent jurisdiction within the United States, and
(ii)
in the case of a child who attained the age of 18 prior to the commencement of proceedings for adoption, the child was living with or receiving at least one-half of the child's support from such individual for the year immediately preceding the month in which the adoption is decreed.
(9)
(A)
A child who is a child of an individual under clause (3) of the first sentence of section 216(e) and is not a child of such individual under clause (1) or (2) of such first sentence shall be deemed not to be dependent on such individual at the time specified in subparagraph (1)(C) of this subsection unless (i) such child was living with such individual in the United States and receiving at least one-half of his support from such individual (I) for the year immediately before the month in which such individual became entitled to old-age insurance benefits or disability insurance benefits or died, or (II) if such individual had a period of disability which continued until he had become entitled to old-age insurance benefits, or disability insurance benefits, or died, for the year immediately before the month in which such period of disability began, and (ii) the period during which such child was living with such individual began before the child attained age 18.
(B)
In the case of a child who was born in the one-year period during which such child must have been living with and receiving at least one-half of his support from such individual, such child shall be deemed to meet such requirements for such period if, as of the close of such period, such child has lived with such individual in the United States and received at least one-half of his support from such individual for substantially all of the period which begins on the date of such child's birth.
(10)
For purposes of paragraph (1)(H)—
(A)
each stepparent shall notify the Commissioner of Social Security of any divorce upon such divorce becoming final; and
(B)
the Commissioner shall annually notify any stepparent of the rule for termination described in paragraph (1)(H) and of the requirement described in subparagraph (A).
(e)

Widow's Insurance Benefits
(1)
The widow (as defined in section 216(c)) and every surviving divorced wife (as defined in section 216(d)) of an individual who died a fully insured individual, if such widow or such surviving divorced wife—
(A)
is not married,
(B)
(i)
has attained age 60, or (ii) has attained age 50 but has not attained age 60 and is under a disability (as defined in section 223(d)) which began before the end of the period specified in paragraph (4),
(C)
(i)
has filed application for widow's insurance benefits,
(ii)
was entitled to wife's insurance benefits, on the basis of the wages and self-employment income of such individual, for the month preceding the month in which such individual died, and—
(I)
has attained retirement age (as defined in section 216(l)),
(II)
is not entitled to benefits under subsection (a) or section 223, or
(III)
has in effect a certificate (described in paragraph (8)) filed by her with the Commissioner of Social Security, in accordance with regulations prescribed by the Commissioner of Social Security, in which she elects to receive widow's insurance benefits (subject to reduction as provided in subsection (q)), or
(iii)
was entitled, on the basis of such wages and self-employment income, to mother's insurance benefits for the month preceding the month in which she attained retirement age (as defined in section 216(l)), and
(D)
is not entitled to old-age insurance benefits or is entitled to old-age insurance benefits each of which is less than the primary insurance amount (as determined after application of subparagraphs (B) and (C) of paragraph (2)) of such deceased individual,
shall be entitled to a widow's insurance benefit for each month, beginning with—
(E)
if she satisfies subparagraph (B) by reason of clause (i) thereof, the first month in which she becomes so entitled to such insurance benefits, or
(F)
if she satisfies subparagraph (B) by reason of clause (ii) thereof—
(i)
the first month after her waiting period (as defined in paragraph (5)) in which she becomes so entitled to such insurance benefits, or
(ii)
the first month during all of which she is under a disability and in which she becomes so entitled to such insurance benefits, but only if she was previously entitled to insurance benefits under this subsection on the basis of being under a disability and such first month occurs (I) in the period specified in paragraph (4) and (II) after the month in which a previous entitlement to such benefits on such basis terminated,
and ending with the month preceding the first month in which any of the following occurs: she remarries, dies, becomes entitled to an old-age insurance benefit equal to or exceeding the primary insurance amount (as determined after application of subparagraphs (B) and (C) of paragraph (2)) of such deceased individual, or, if she became entitled to such benefits before she attained age 60, subject to section 223(e), the termination month (unless she attains retirement age (as defined in section 216(l)) on or before the last day of such termination month). For purposes of the preceding sentence, the termination month for any individual shall be the third month following the month in which her disability ceases; except that, in the case of an individual who has a period of trial work which ends as determined by application of section 222(c)(4)(A), the termination month shall be the earlier of (I) the third month following the earliest month after the end of such period of trial work with respect to which such individual is determined to no longer be suffering from a disabling physical or mental impairment, or (II) the third month following the earliest month in which such individual engages or is determined able to engage in substantial gainful activity, but in no event earlier than the first month occurring after the 36 months following such period of trial work in which she engages or is determined able to engage in substantial gainful activity.
(2)
(A)
Except as provided in subsection (q) and subparagraph (D) of this paragraph, such widow's insurance benefit for each month shall be equal to the primary insurance amount (as determined for purposes of this subsection after application of subparagraphs (B) and (C)) of such deceased individual.
(B)
(i)
For purposes of this subsection, in any case in which such deceased individual dies before attaining age 62 and section 215(a)(1) (as in effect after December 1978) is applicable in determining such individual's primary insurance amount—
(I)
such primary insurance amount shall be determined under the formula set forth in section 215(a)(1)(B)(i) and (ii) which is applicable to individuals who initially become eligible for old-age insurance benefits in the second year after the year specified in clause (ii),
(II)
the year specified in clause (ii) shall be substituted for the second calendar year specified in section 215(b)(3)(A)(ii)(I), and
(III)
such primary insurance amount shall be increased under section 215(i) as if it were the primary insurance amount referred to in section 215(i)(2)(A)(ii)(II), except that it shall be increased only for years beginning after the first year after the year specified in clause (ii).
(ii)
The year specified in this clause is the earlier of—
(I)
the year in which the deceased individual attained age 60, or would have attained age 60 had he lived to that age, or
(II)
the second year preceding the year in which the widow or surviving divorced wife first meets the requirements of paragraph (1)(B) or the second year preceding the year in which the deceased individual died, whichever is later.
(iii)
This subparagraph shall apply with respect to any benefit under this subsection only to the extent its application does not result in a primary insurance amount for purposes of this subsection which is less than the primary insurance amount otherwise determined for such deceased individual under section 215.
(C)
If such deceased individual was (or upon application would have been) entitled to an old-age insurance benefit which was increased (or subject to being increased) on account of delayed retirement under the provisions of subsection (w), then, for purposes of this subsection, such individual's primary insurance amount, if less than the old-age insurance benefit (increased, where applicable, under paragraph (5) or (6) of section 215(f) and under section 215(i) as if such individual were still alive in the case of an individual who has died) which he was receiving (or would upon application have received) for the month prior to the month in which he died, shall be deemed to be equal to such old-age insurance benefit, and (notwithstanding the provisions of paragraph (3) of such subsection (w)) the number of increment months shall include any month in the months of the calendar year in which he died, prior to the month in which he died, which satisfy the conditions in paragraph (2) of such subsection (w).
(D)
If the deceased individual (on the basis of whose wages and self-employment income a widow or surviving divorced wife is entitled to widow's insurance benefits under this subsection) was, at any time, entitled to an old-age insurance benefit which was reduced by reason of the application of subsection (q), the widow's insurance benefit of such widow or surviving divorced wife for any month shall, if the amount of the widow's insurance benefit of such widow or surviving divorced wife (as determined under subparagraph (A) and after application of subsection (q)) is greater than—
(i)
the amount of the old-age insurance benefit to which such deceased individual would have been entitled (after application of subsection (q)) for such month if such individual were still living and paragraph (5) or (6) of section 215(f) were applied, where applicable, and
(ii)
82 ½ percent of the primary insurance amount (as determined without regard to subparagraph (C)) of such deceased individual,
be reduced to the amount referred to in clause (i), or (if greater) the amount referred to in clause (ii).
(3)
For purposes of paragraph (1), if—
(A)
a widow or surviving divorced wife marries after attaining age 60 (or after attaining age 50 if she was entitled before such marriage occurred to benefits based on disability under this subsection), or
(B)
a disabled widow or disabled surviving divorced wife described in paragraph (1)(B)(ii) marries after attaining age 50,
such marriage shall be deemed not to have occurred.
(4)
The period referred to in paragraph (1)(B)(ii), in the case of any widow or surviving divorced wife, is the period beginning with whichever of the following is the latest:
(A)
the month in which occurred the death of the fully insured individual referred to in paragraph (1) on whose wages and self-employment income her benefits are or would be based, or
(B)
the last month for which she was entitled to mother's insurance benefits on the basis of the wages and self-employment income of such individual, or
(C)
the month in which a previous entitlement to widow's insurance benefits on the basis of such wages and self-employment income terminated because her disability had ceased,
and ending with the month before the month in which she attains age 60, or, if earlier, with the close of the eighty-fourth month following the month with which such period began.
(5)
(A)
The waiting period referred to in paragraph (1)(F), in the case of any widow or surviving divorced wife, is the earliest period of five consecutive calendar months—
(i)
throughout which she has been under a disability, and
(ii)
which begins not earlier than with whichever of the following is the later: (I) the first day of the seventeenth month before the month in which her application is filed, or (II) the first day of the fifth month before the month in which the period specified in paragraph (4) begins.
(B)
For purposes of paragraph (1)(F)(i), each month in the period commencing with the first month for which such widow or surviving divorced wife is first eligible for supplemental security income benefits under title XVI, or State supplementary payments of the type referred to in section 1616(a) (or payments of the type described in section 212(a) of Public Law 93 66) which are paid by the Commissioner of Social Security under an agreement referred to in section 1616(a) (or in section 212(b) of Public Law 93 66), shall be included as one of the months of such waiting period for which the requirements of subparagraph (A) have been met.
(6)
In the case of an individual entitled to monthly insurance benefits payable under this section for any month prior to January 1973 whose benefits were not redetermined under section 102(g) of the Social Security Amendments of 1972, such benefits shall not be redetermined pursuant to such section, but shall be increased pursuant to any general benefit increase (as defined in section 215(i)(3)) or any increase in benefits made under or pursuant to section 215(i), including for this purpose the increase provided effective for March 1974, as though such redetermination had been made.
(7)
Any certificate filed pursuant to paragraph (1)(C)(ii)(III) shall be effective for purposes of this subsection—
(A)
for the month in which it is filed and for any month thereafter, and
(B)
for months, in the period designated by the individual filing such certificate, of one or more consecutive months (not exceeding 12) immediately preceding the month in which such certificate is filed;
except that such certificate shall not be effective for any month before the month in which she attains age 62.
(8)
An individual shall be deemed to be under a disability for purposes of paragraph (1)(B)(ii) if such individual is eligible for supplemental security income benefits under title XVI, or State supplementary payments of the type referred to in section 1616(a) (or payments of the type described in section 212(a) of Public Law 93–66) which are paid by the Commissioner of Social Security under an agreement referred to in section 1616(a) (or in section 212(b) of Public Law 93–66), for the month for which all requirements of paragraph (1) for entitlement to benefits under this subsection (other than being under a disability) are met.
(f)

Widower's Insurance Benefits
(1)
The widower (as defined in section 216(g)) and every surviving divorced husband (as defined in section 216(d)) of an individual who died a fully insured individual, if such widower or such surviving divorced husband—
(A)
is not married,
(B)
(i)
has attained age 60, or (ii) has attained age 50 but has not attained age 60 and is under a disability (as defined in section 223(d)) which began before the end of the period specified in paragraph (4),
(C)
(i)
has filed application for widower's insurance benefits,
(ii)
was entitled to husband's insurance benefits, on the basis of the wages and self-employment income of such individual, for the month preceding the month in which such individual died, and—
(I)
has attained retirement age (as defined in section 216(l)),
(II)
is not entitled to benefits under subsection (a) or section 223, or
(III)
has in effect a certificate (described in paragraph (8)) filed by him with the Commissioner of Social Security, in accordance with regulations prescribed by the Commissioner of Social Security, in which he elects to receive widower's insurance benefits (subject to reduction as provided in subsection (q)), or
(iii)
was entitled, on the basis of such wages and self-employment income, to father's insurance benefits for the month preceding the month in which he attained retirement age (as defined in section 216(l)), and
(D)
is not entitled to old-age insurance benefits, or is entitled to old-age insurance benefits each of which is less than the primary insurance amount (as determined after application of subparagraphs (B) and (C) of paragraph (3)) of such deceased individual,
shall be entitled to a widower's insurance benefit for each month, beginning with—
(E)
if he satisfies subparagraph (B) by reason of clause (i) thereof, the first month in which he becomes so entitled to such insurance benefits, or
(F)
if he satisfies subparagraph (B) by reason of clause (ii) thereof—
(i)
the first month after his waiting period (as defined in paragraph (5)) in which he becomes so entitled to such insurance benefits, or
(ii)
the first month during all of which he is under a disability and in which he becomes so entitled to such insurance benefits, but only if he was previously entitled to insurance benefits under this subsection on the basis of being under a disability and such first month occurs (I) in the period specified in paragraph (4) and (II) after the month in which a previous entitlement to such benefits on such basis terminated,
and ending with the month preceding the first month in which any of the following occurs: he remarries, dies, or becomes entitled to an old-age insurance benefit equal to or exceeding the primary insurance amount (as determined after application of subparagraphs (B) and (C) of paragraph (3)) of such deceased individual, or, if he became entitled to such benefits before he attained age 60, subject to section 223(e), the termination month (unless he attains retirement age (as defined in section 216(l)) on or before the last day of such termination month). For purposes of the preceding sentence, the termination month for any individual shall be the third month following the month in which his disability ceases; except that, in the case of an individual who has a period of trial work which ends as determined by application of section 222(c)(4)(A), the termination month shall be the earlier of (I) the third month following the earliest month after the end of such period of trial work with respect to which such individual is determined to no longer be suffering from a disabling physical or mental impairment, or (II) the third month following the earliest month in which such individual engages or is determined able to engage in substantial gainful activity, but in no event earlier than the first month occurring after the 36 months following such period of trial work in which he engages or is determined able to engage in substantial gainful activity.
(2)
(A)
Except as provided in subsection (q),1 and subparagraph (D) of this paragraph, such widower's insurance benefit for each month shall be equal to the primary insurance amount (as determined for purposes of this subsection after application of subparagraphs (B) and (C)) of such deceased individual.
^1
The comma in paragraph (2)(A) probably should not appear. See the amendment made by section 2(b)(4) of Public Law 118–273.
(B)
(i)
For purposes of this subsection, in any case in which such deceased individual dies before attaining age 62 and section 215(a)(1) (as in effect after December 1978) is applicable in determining such individual's primary insurance amount—
(I)
such primary insurance amount shall be determined under the formula set forth in section 215(a)(1)(B)(i) and (ii) which is applicable to individuals who initially become eligible for old-age insurance benefits in the second year after the year specified in clause (ii),
(II)
the year specified in clause (ii) shall be substituted for the second calendar year specified in section 215(b)(3)(A)(ii)(I), and
(III)
such primary insurance amount shall be increased under section 215(i) as if it were the primary insurance amount referred to in section 215(i)(2)(A)(ii)(II), except that it shall be increased only for years beginning after the first year after the year specified in clause (ii).
(ii)
The year specified in this clause is the earlier of—
(I)
the year in which the deceased individual attained age 60, or would have attained age 60 had she lived to that age, or
(II)
the second year preceding the year in which the widower or surviving divorced husband first meets the requirements of paragraph (1)(B) or the second year preceding the year in which the deceased individual died, whichever is later.
(iii)
This subparagraph shall apply with respect to any benefit under this subsection only to the extent its application does not result in a primary insurance amount for purposes of this subsection which is less than the primary insurance amount otherwise determined for such deceased individual under section 215.
(C)
If such deceased individual was (or upon application would have been) entitled to an old-age insurance benefit which was increased (or subject to being increased) on account of delayed retirement under the provisions of subsection (w), then, for purposes of this subsection, such individual's primary insurance amount, if less than the old-age insurance benefit (increased, where applicable, under paragraph (5) or (6) of section 215(f) and under section 215(i) as if such individual were still alive in the case of an individual who has died) which she was receiving (or would upon application have received) for the month prior to the month in which she died, shall be deemed to be equal to such old-age insurance benefit, and (notwithstanding the provisions of paragraph (3) of such subsection (w)) the number of increment months shall include any month in the months of the calendar year in which she died, prior to the month in which she died, which satisfy the conditions in paragraph (2) of such subsection (w).
(D)
If the deceased individual (on the basis of whose wages and self-employment income a widower or surviving divorced husband is entitled to widower's insurance benefits under this subsection) was, at any time, entitled to an old-age insurance benefit which was reduced by reason of the application of subsection (q), the widower's insurance benefit of such widower or surviving divorced husband for any month shall, if the amount of the widower's insurance benefit of such widower or surviving divorced husband (as determined under subparagraph (A) and after application of subsection (q)) is greater than—
(i)
the amount of the old-age insurance benefit to which such deceased individual would have been entitled (after application of subsection (q)) for such month if such individual were still living and paragraph (5) or (6) of section 215(f) were applied, where applicable, and
(ii)
82½ percent of the primary insurance amount (as determined without regard to subparagraph (C)) of such deceased individual;
be reduced to the amount referred to in clause (i), or (if greater) the amount referred to in clause (ii).
(3)
For purposes of paragraph (1), if—
(A)
a widower or surviving divorced husband marries after attaining age 60 (or after attaining age 50 if he was entitled before such marriage occurred to benefits based on disability under this subsection), or
(B)
a disabled widower or surviving divorced husband described in paragraph (1)(B)(ii) marries after attaining age 50,
such marriage shall be deemed not to have occurred.
(4)
The period referred to in paragraph (1)(B)(ii), in the case of any widower or surviving divorced husband, is the period beginning with whichever of the following is the latest:
(A)
the month in which occurred the death of the fully insured individual referred to in paragraph (1) on whose wages and self-employment income his benefits are or would be based,
(B)
the last month for which he was entitled to father's insurance benefits on the basis of the wages and self-employment income of such individual, or
(C)
the month in which a previous entitlement to widower's insurance benefits on the basis of such wages and self-employment income terminated because his disability had ceased,
and ending with the month before the month in which he attains age 60, or, if earlier, with the close of the eighty-fourth month following the month with which such period began.
(5)
(A)
The waiting period referred to in paragraph (1)(F), in the case of any widower or surviving divorced husband, is the earliest period of five consecutive calendar months—
(i)
throughout which he has been under a disability, and
(ii)
which begins not earlier than with whichever of the following is the later: (I) the first day of the seventeenth month before the month in which his application is filed, or (II) the first day of the fifth month before the month in which the period specified in paragraph (4) begins.
(B)
For purposes of paragraph (1)(F)(i), each month in the period commencing with the first month for which such widower or surviving divorced husband is first eligible for supplemental security income benefits under title XVI, or State supplementary payments of the type referred to in section 1616(a) (or payments of the type described in section 212(a) of Public Law 93–66) which are paid by the Commissioner of Social Security under an agreement referred to in section 1616(a) (or in section 212(b) of Public Law 93–66), shall be included as one of the months of such waiting period for which the requirements of subparagraph (A) have been met.
(6)
In the case of an individual entitled to monthly insurance benefits payable under this section for any month prior to January 1973 whose benefits were not redetermined under section 102(g) of the Social Security Amendments of 1972, such benefits shall not be redetermined pursuant to such section, but shall be increased pursuant to any general benefit increase (as defined in section 215(i)(3)) or any increase in benefits made under or pursuant to section 215(i), including for this purpose the increase provided effective for March 1974, as though such redetermination had been made.
(7)
Any certificate filed pursuant to paragraph (1)(C)(ii)(III) shall be effective for purposes of this subsection—
(A)
for the month in which it is filed and for any month thereafter, and
(B)
for months, in the period designated by the individual filing such certificate, of one or more consecutive months (not exceeding 12) immediately preceding the month in which such certificate is filed;
except that such certificate shall not be effective for any month before the month in which he attains age 62.
(8)
An individual shall be deemed to be under a disability for purposes of paragraph (1)(B)(ii) if such individual is eligible for supplemental security income benefits under title XVI, or State supplementary payments of the type referred to in section 1616(a) (or payments of the type described in section 212(a) of Public Law 93–66) which are paid by the Commissioner of Social Security under an agreement referred to in such section 1616(a) (or in section 212(b) of Public Law 93–66), for the month for which all requirements of paragraph (1) for entitlement to benefits under this subsection (other than being under a disability) are met.
(g)

Mother's and Father's Insurance Benefits
(1)
The surviving spouse and every surviving divorced parent (as defined in section 216(d)) of an individual who died a fully or currently insured individual, if such surviving spouse or surviving divorced parent—
(A)
is not married,
(B)
is not entitled to a surviving spouse's insurance benefit,
(C)
is not entitled to old-age insurance benefits, or is entitled to old-age insurance benefits each of which is less than three-fourths of the primary insurance amount of such individual,
(D)
has filed application for mother's or father's insurance benefits, or was entitled to a spouse's insurance benefit on the basis of the wages and self-employment income of such individual for the month preceding the month in which such individual died,
(E)
at the time of filing such application has in his or her care a child of such individual entitled to a child's insurance benefit, and
(F)
in the case of a surviving divorced parent—
(i)
the child referred to in subparagraph (E) is his or her son, daughter, or legally adopted child, and
(ii)
the benefits referred to in such subparagraph are payable on the basis of such individual's wages and self-employment income,
shall (subject to subsection (s)) be entitled to a mother's or father's insurance benefit for each month, beginning with the first month in which he or she becomes so entitled to such insurance benefits and ending with the month preceding the first month in which any of the following occurs: no child of such deceased individual is entitled to a child's insurance benefit, such surviving spouse or surviving divorced parent becomes entitled to an old-age insurance benefit equal to or exceeding three-fourths of the primary insurance amount of such deceased individual, he or she becomes entitled to a surviving spouse's insurance benefit, he or she remarries, or he or she dies. Entitlement to such benefits shall also end, in the case of a surviving divorced parent, with the month immediately preceding the first month in which no son, daughter, or legally adopted child of such surviving divorced parent is entitled to a child's insurance benefit on the basis of the wages and self-employment income of such deceased individual.
(2)
Such mother's or father's insurance benefit for each month shall be equal to three-fourths of the primary insurance amount of such deceased individual.
(3)
In the case of a surviving spouse or surviving divorced parent who marries—
(A)
an individual entitled to benefits under this subsection or subsection (a), (b), (c), (e), (f), or (h), or under section 223(a), or
(B)
an individual who has attained the age of eighteen and is entitled to benefits under subsection (d),
the entitlement of such surviving spouse or surviving divorced parent to benefits under this subsection shall, notwithstanding the provisions of paragraph (1) but subject to subsection (s), not be terminated by reason of such marriage.
(h)

Parent's Insurance Benefits
(1)
Every parent (as defined in this subsection) of an individual who died a fully insured individual, if such parent—
(A)
has attained age 62,
(B)
(i)
was receiving at least one-half of his support from such individual at the time of such individual's death or, if such individual had a period of disability which did not end prior to the month in which he died, at the time such period began or at the time of such death, and (ii) filed proof of such support within two years after the date of such death, or, if such individual had such a period of disability, within two years after the month in which such individual filed application with respect to such period of disability or two years after the date of such death, as the case may be,
(C)
has not married since such individual's death,
(D)
is not entitled to old-age insurance benefits, or is entitled to old-age insurance benefits each of which is less than 82½ percent of the primary insurance amount of such deceased individual if the amount of the parent's insurance benefit for such month is determinable under paragraph (2)(A) (or 75 percent of such primary insurance amount in any other case), and
(E)
has filed application for parent's insurance benefits,
shall be entitled to a parent's insurance benefit for each month beginning with the first month after August 1950 in which such parent becomes so entitled to such parent's insurance benefits and ending with the month preceding the first month in which any of the following occurs: such parent dies, marries, or becomes entitled to an old-age insurance benefit equal to or exceeding 82½ percent of the primary insurance amount of such deceased individual if the amount of the parent's insurance benefit for such month is determinable under paragraph (2)(A) (or 75 percent of such primary insurance amount in any other case).
(2)
(A)
Except as provided in subparagraphs (B) and (C), such parent's insurance benefit for each month shall be equal to 82½ percent of the primary insurance amount of such deceased individual.
(B)
For any month for which more than one parent is entitled to parent's insurance benefits on the basis of such deceased individual's wages and self-employment income, such benefit for each such parent for such month shall (except as provided in subparagraph (C)) be equal to 75 percent of the primary insurance amount of such deceased individual.
(C)
In any case in which—
(i)
any parent is entitled to a parent's insurance benefit for a month on the basis of a deceased individual's wages and self-employment income, and
(ii)
another parent of such deceased individual is entitled to a parent's insurance benefit for such month on the basis of such wages and self-employment income, and on the basis of an application filed after such month and after the month in which the application for the parent's benefits referred to in clause (i) was filed,
the amount of the parent's insurance benefit of the parent referred to in clause (i) for the month referred to in such clause shall be determined under subparagraph (A) instead of subparagraph (B) and the amount of the parent's insurance benefit of a parent referred to in clause (ii) for such month shall be equal to 150 percent of the primary insurance amount of the deceased individual minus the amount (before the application of section 203(a)) of the benefit for such month of the parent referred to in clause (i).
(3)
As used in this subsection, the term “parent” means the mother or father of an individual, a stepparent of an individual by a marriage contracted before such individual attained the age of sixteen, or an adopting parent by whom an individual was adopted before he attained the age of sixteen.
(4)
In the case of a parent who marries—
(A)
an individual entitled to benefits under this subsection or subsection (b), (c), (e), (f), or (g), or
(B)
an individual who has attained the age of eighteen and is entitled to benefits under subsection (d),
such parent's entitlement to benefits under this subsection shall, notwithstanding the provisions of paragraph (1) but subject to subsection (s), not be terminated by reason of such marriage.
(i)

Lump-Sum Death Payments
Upon the death, after August 1950, of an individual who died a fully or currently insured individual, an amount equal to three times such individual's primary insurance amount (as determined without regard to the amendments made by section 2201 of the Omnibus Budget Reconciliation Act of 1981, relating to the repeal of the minimum benefit provisions), or an amount equal to $255, whichever is the smaller, shall be paid in a lump sum to the person, if any, determined by the Commissioner of Social Security to be the widow or widower of the deceased and to have been living in the same household with the deceased at the time of death. If there is no such person, or if such person dies before receiving payment, then such amount shall be paid—
(1)
to a widow (as defined in section 216(c)) or widower (as defined in section 216(g)) who is entitled (or would have been so entitled had a timely application been filed), on the basis of the wages and self-employment income of such insured individual, to benefits under subsection (e), (f), or (g) of this section for the month in which occurred such individual's death; or
(2)
if no person qualifies for payment under paragraph (1), or if such person dies before receiving payment, in equal shares to each person who is entitled (or would have been so entitled had a timely application been filed), on the basis of the wages and self-employment income of such insured individual, to benefits under subsection (d) of this section for the month in which occurred such individual's death.
No payment shall be made to any person under this subsection unless application therefor shall have been filed, by or on behalf of such person (whether or not legally competent), prior to the expiration of two years after the date of death of such insured individual, or unless such person was entitled to wife's or husband's insurance benefits, on the basis of the wages and self-employment income of such insured individual, for the month preceding the month in which such individual died. In the case of any individual who died outside the forty-eight States and the District of Columbia after December 1953 and before January 1, 1957, whose death occurred while he was in the active military or naval service of the United States, and who is returned to any of such States, the District of Columbia, Alaska, Hawaii, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, or American Samoa for interment or reinterment, the provisions of the preceding sentence shall not prevent payment to any person under the second sentence of this subsection if application for a lump-sum death payment with respect to such deceased individual is filed by or on behalf of such person (whether or not legally competent) prior to the expiration of two years after the date of such interment or reinterment. In the case of any individual who died outside the fifty States and the District of Columbia after December 1956 while he was performing service, as a member of a uniformed service, to which the provisions of section 210(l)(1) are applicable, and who is returned to any State, or to any Territory or possession of the United States, for interment or reinterment, the provisions of the third sentence of this subsection shall not prevent payment to any person under the second sentence of this subsection if application for a lump-sum death payment with respect to such deceased individual is filed by or on behalf of such person (whether or not legally competent) prior to the expiration of two years after the date of such interment or reinterment.
(j)

Application for Monthly Insurance Benefits
(1)
Subject to the limitations contained in paragraph (4), an individual who would have been entitled to a benefit under subsection (a), (b), (c), (d), (e), (f), (g), or (h) for any month after August 1950 had he filed application therefor prior to the end of such month shall be entitled to such benefit for such month if he files application therefor prior to—
(A)
the end of the twelfth month immediately succeeding such month in any case where the individual (i) is filing application for a benefit under subsection (e) or (f), and satisfies paragraph (1)(B) of such subsection by reason of clause (ii) thereof, or (ii) is filing application for a benefit under subsection (b), (c), or (d) on the basis of the wages and self-employment income of a person entitled to disability insurance benefits, or
(B)
the end of the sixth month immediately succeeding such month in any case where subparagraph (A) does not apply.
Any benefit under this title for a month prior to the month in which application is filed shall be reduced, to any extent that may be necessary, so that it will not render erroneous any benefit which, before the filing of such application, the Commissioner of Social Security has certified for payment for such prior month.
(2)
An application for any monthly benefits under this section filed before the first month in which the applicant satisfies the requirements for such benefits shall be deemed a valid application (and shall be deemed to have been filed in such first month) only if the applicant satisfies the requirements for such benefits before the Commissioner of Social Security makes a final decision on the application and no request under section 205(b) for notice and opportunity for a hearing thereon is made or, if such a request is made, before a decision based upon the evidence adduced at the hearing is made (regardless of whether such decision becomes the final decision of the Commissioner of Social Security).
(3)
Notwithstanding the provisions of paragraph (1), an individual may, at his option, waive entitlement to any benefit referred to in paragraph (1) for any one or more consecutive months (beginning with the earliest month for which such individual would otherwise be entitled to such benefit) which occur before the month in which such individual files application for such benefit; and, in such case, such individual shall not be considered as entitled to such benefits for any such month or months before such individual filed such application. An individual shall be deemed to have waived such entitlement for any such month for which such benefit would, under the second sentence of paragraph (1), be reduced to zero.
(4)
(A)
Except as provided in subparagraph (B), no individual shall be entitled to a monthly benefit under subsection (a), (b), (c), (e), or (f) for any month prior to the month in which he or she files an application for benefits under that subsection if the amount of the monthly benefit to which such individual would otherwise be entitled for any such month would be subject to reduction pursuant to subsection (q).
(B)
(i)
If the individual applying for retroactive benefits is a widow, surviving divorced wife, or widower and is under a disability (as defined in section 223(d)), and such individual would, except for subparagraph (A), be entitled to retroactive benefits as a disabled widow or widower or disabled surviving divorced wife for any month before attaining the age of 60, then subparagraph (A) shall not apply with respect to such month or any subsequent month.
(ii)
Subparagraph (A) does not apply to a benefit under subsection (e) or (f) for the month immediately preceding the month of application, if the insured individual died in that preceding month.
(iii)
As used in this subparagraph, the term “retroactive benefits” means benefits to which an individual becomes entitled for a month prior to the month in which application for such benefits is filed.
(5)
In any case in which it is determined to the satisfaction of the Commissioner of Social Security that an individual failed as of any date to apply for monthly insurance benefits under this title by reason of misinformation provided to such individual by any officer or employee of the Social Security Administration relating to such individual's eligibility for benefits under this title, such individual shall be deemed to have applied for such benefits on the later of—
(A)
the date on which such misinformation was provided to such individual, or
(B)
the date on which such individual met all requirements for entitlement to such benefits (other than application therefor).
(k)

Simultaneous Entitlement to Benefits
(1)
A child, entitled to child's insurance benefits on the basis of the wages and self-employment income of an insured individual, who would be entitled, on filing application, to child's insurance benefits on the basis of the wages and self-employment income of some other insured individual, shall be deemed entitled, subject to the provisions of paragraph (2) hereof, to child's insurance benefits on the basis of the wages and self-employment income of such other individual if an application for child's insurance benefits on the basis of the wages and self-employment income of such other individual has been filed by any other child who would, on filing application, be entitled to child's insurance benefits on the basis of the wages and self-employment income of both such insured individuals.
(2)
(A)
Any child who under the preceding provisions of this section is entitled for any month to child's insurance benefits on the wages and self-employment income of more than one insured individual shall, notwithstanding such provisions, be entitled to only one of such child's insurance benefits for such month. Such child's insurance benefits for such month shall be the benefit based on the wages and self-employment income of the insured individual who has the greatest primary insurance amount, except that such child's insurance benefits for such month shall be the largest benefit to which such child could be entitled under subsection (d) (without the application of section 203(a)) or subsection (m) if entitlement to such benefit would not, with respect to any person, result in a benefit lower (after the application of section 203(a)) than the benefit which would be applicable if such child were entitled on the wages and self-employment income of the individual with the greatest primary insurance amount. Where more than one child is entitled to child's insurance benefits pursuant to the preceding provisions of this paragraph, each such child who is entitled on the wages and self-employment income of the same insured individuals shall be entitled on the wages and self-employment income of the same such insured individual.
(B)
Any individual (other than an individual to whom subsection (e)(3) or (f)(3) applies) who, under the preceding provisions of this section and under the provisions of section 223, is entitled for any month to more than one monthly insurance benefit (other than an old-age or disability insurance benefit) under this title shall be entitled to only one such monthly benefit for such month, such benefit to be the largest of the monthly benefits to which he (but for this subparagraph (B)) would otherwise be entitled for such month. Any individual who is entitled for any month to more than one widow's or widower's insurance benefit to which subsection (e)(3) or (f)(3) applies shall be entitled to only one such benefit for such month, such benefit to be the largest of such benefits.
(3)
(A)
If an individual is entitled to an old-age or disability insurance benefit for any month and to any other monthly insurance benefit for such month, such other insurance benefit for such month, after any reduction under subsection (q), subsection (e)(2) or (f)(2), and any reduction under section 203(a), shall be reduced, but not below zero, by an amount equal to such old-age or disability insurance benefit (after reduction under such subsection (q)).
(B)
If an individual is entitled for any month to a widow's or widower's insurance benefit to which subsection (e)(3) or (f)(3) applies and to any other monthly insurance benefit under section 202 (other than an old-age insurance benefit), such other insurance benefit for such month, after any reduction under subparagraph (A), any reduction under subsection (q), and any reduction under section 203(a), shall be reduced, but not below zero, by an amount equal to such widow's or widower's insurance benefit after any reduction or reductions under such subparagraph (A) and such section 203(a).
(4)
Any individual who, under this section and section 223, is entitled for any month to both an old-age insurance benefit and a disability insurance benefit under this title shall be entitled to only the larger of such benefits for such month, except that, if such individual so elects, he shall instead be entitled to only the smaller of such benefits for such month.
(l)

Entitlement to Survivor Benefits Under Railroad Retirement Act
If any person would be entitled, upon filing application therefor to an annuity under section 2 of the Railroad Retirement Act of 1974, or to a lump sum payment under section 6(b) of such Act, with respect to the death of an employee (as defined in such Act) no lump sum death payment, and no monthly benefit for the month in which such employee died or for any month thereafter, shall be paid under this section to any person on the basis of the wages and self employment income of such employee.
[(m)
Repealed.]
(n)

Termination of Benefits Upon Removal of Primary Beneficiary
(1)
If any individual is (after the date of enactment of this subsection) removed under section 237(a) of the Immigration and Nationality Act (other than under paragraph (1)(C) of such section) or under section 212(a)(6)(A) of such Act, then, notwithstanding any other provisions of this title—
(A)
no monthly benefit under this section or section 223 shall be paid to such individual, on the basis of his wages and self employment income, for any month occurring (i) after the month in which the Commissioner of Social Security is notified by the Attorney General or the Secretary of Homeland Security that such individual has been so removed, and (ii) before the month in which such individual is thereafter lawfully admitted to the United States for permanent residence,
(B)
if no benefit could be paid to such individual (or if no benefit could be paid to him if he were alive) for any month by reason of subparagraph (A), no monthly benefit under this section shall be paid, on the basis of his wages and self employment income, for such month to any other person who is not a citizen of the United States and is outside the United States for any part of such month, and
(C)
no lump sum death payment shall be made on the basis of such individual's wages and self employment income if he dies (i) in or after the month in which such notice is received, and (ii) before the month in which he is thereafter lawfully admitted to the United States for permanent residence.
Section 203(b), (c), and (d) of this Act shall not apply with respect to any such individual for any month for which no monthly benefit may be paid to him by reason of this paragraph.
(2)5
(A)
In the case of the removal of any individual under any of the paragraphs of section 237(a) of the Immigration and Nationality Act (other than under paragraph (1)(C) of such section) or under section 212(a)(6)(A) of such Act, the revocation and setting aside of citizenship of any individual under section 340 of the Immigration and Nationality Act in any case in which the revocation and setting aside is based on conduct described in section 212(a)(3)(E)(i) of such Act (relating to participation in Nazi persecution), or the renunciation of nationality by any individual under section 349(a)(5) of such Act pursuant to a settlement agreement with the Attorney General where the individual has admitted to conduct described in section 212(a)(3)(E)(i) of the Immigration and Nationality Act (relating to participation in Nazi persecution) occurring after the date of the enactment of the No Social Security for Nazis Act, the Attorney General or the Secretary of Homeland Security shall notify the Commissioner of Social Security of such removal, revocation and setting aside, or renunciation of nationality not later than 7 days after such removal, revocation and setting aside, or renunciation of nationality (or, in the case of any such removal, revocation and setting aside, of renunciation of nationality that has occurred prior to the date of the enactment of the No Social Security for Nazis Act, not later than 7 days after such date of enactment).
(B)
(i)
Not later than 30 days after the enactment of the No Social Security for Nazis Act, the Attorney General shall certify to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate that the Commissioner of Social Security has been notified of each removal, revocation and setting aside, or renunciation of nationality described in subparagraph (A).
(ii)
Not later than 30 days after each notification with respect to an individual under subparagraph (A), the Commissioner of Social Security shall certify to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate that such individual’s benefits were terminated under this subsection.
^5
Margin for paragraph (2) of subsection (n) does not conform with existing margins for subsection (n).
(3)
For purposes of paragraphs (1) and (2) of this subsection—
(A)
an individual against whom a final order of removal has been issued under section 237(a)(4)(D) of the Immigration and Nationality Act on grounds of participation in Nazi persecution shall be considered to have been removed under such section as of the date on which such order became final;
(B)
an individual with respect to whom an order admitting the individual to citizenship has been revoked and set aside under section 340 of the Immigration and Nationality Act in any case in which the revocation and setting aside is based on conduct described in section 212(a)(3)(E)(i) of such Act (relating to participation in Nazi persecution), concealment of a material fact about such conduct, or willful misrepresentation about such conduct shall be considered to have been removed as described in paragraph (1) as of the date of such revocation and setting aside; and
(C)
an individual who pursuant to a settlement agreement with the Attorney General has admitted to conduct described in section 212(a)(3)(E)(i) of the Immigration and Nationality Act (relating to participation in Nazi persecution) and who pursuant to such settlement agreement has lost status as a national of the United States by a renunciation under section 349(a)(5) of the Immigration and Nationality Act shall be considered to have been removed as described in paragraph (1) as of the date of such renunciation.
(4)
In the case of any individual described in paragraph (3) whose monthly benefits are terminated under paragraph (1)—
(A)
no benefits otherwise available under section 202 based on the wages and self-employment income of any other individual shall be paid to such individual for any month after such termination; and
(B)
no supplemental security income benefits under title XVI shall be paid to such individual for any such month, including supplementary payments pursuant to an agreement for Federal administration under section 1616(a) and payments pursuant to an agreement entered into under section 212(b) of Public Law 93–666
^6
Section 3(b) of Public Law 113-270 added a new paragraph (4) to subsection (n) and the lack of a period at the end is so in law.
(o)

Application for Benefits by Survivors of Members and Former Members of the Uniformed Services
In the case of any individual who would be entitled to benefits under subsection (d), (e), (g), or (h) upon filing proper application therefor, the filing with the Administrator of Veterans' Affairs by or on behalf of such individual of an application for such benefits, on the form described in section 3005 of title 38, United States Code, shall satisfy the requirement of such subsection (d), (e), (g), or (h) that an application for such benefits be filed.
(p)

Extension of Period for Filing Proof of Support and Applications for Lump-Sum Death Payment
In any case in which there is a failure—
(1)
to file proof of support under subparagraph (B) of subsection (h)(1), or under clause (B) of subsection (f)(1) of this section as in effect prior to the Social Security Act Amendments of 1950, within the period prescribed by such subparagraph or clause, or
(2)
to file, in the case of a death after 1946, application for a lump-sum death payment under subsection (i), or under subsection (g) of this section as in effect prior to the Social Security Act Amendments of 1950, within the period prescribed by such subsection,
any such proof or application, as the case may be, which is filed after the expiration of such period shall be deemed to have been filed within such period if it is shown to the satisfaction of the Commissioner of Social Security that there was good cause for failure to file such proof or application within such period. The determination of what constitutes good cause for purposes of this subsection shall be made in accordance with regulations of the Commissioner of Social Security.
(q)

Reduction of Benefit Amounts for Certain Beneficiaries
(1)
Subject to paragraph (9), if the first month for which an individual is entitled to an old-age, wife's, husband's, widow's, or widower's insurance benefit is a month before the month in which such individual attains retirement age, the amount of such benefit for such month and for any subsequent month shall, subject to the succeeding paragraphs of this subsection, be reduced by—
(A)
5⁄9 of 1 percent of such amount if such benefit is an old-age insurance benefit, 25⁄36 of 1 percent of such amount if such benefit is a wife's or husband's insurance benefit, or 19⁄40 of 1 percent of such amount if such benefit is a widow's or widower's insurance benefit, multiplied by
(B)
(i)
the number of months in the reduction period for such benefit (determined under paragraph (6)), if such benefit is for a month before the month in which such individual attains retirement age, or
(ii)
if less, the number of such months in the adjusted reduction period for such benefit (determined under paragraph (7)), if such benefit is (I) for the month in which such individual attains age 62, or (II) for the month in which such individual attains retirement age.
(2)
If an individual is entitled to a disability insurance benefit for a month after a month for which such individual was entitled to an old-age insurance benefit, such disability insurance benefit for each month shall be reduced by the amount such old-age insurance benefit would be reduced under paragraphs (1) and (4) for such month had such individual attained retirement age (as defined in section 216(l)) in the first month for which he most recently became entitled to a disability insurance benefit.
(3)
(A)
If the first month for which an individual both is entitled to a wife's, husband's, widow's, or widower's insurance benefit and has attained age 62 (in the case of a wife's or husband's insurance benefit) or age 50 (in the case of a widow's or widower's insurance benefit) is a month for which such individual is also entitled to—
(i)
an old-age insurance benefit (to which such individual was first entitled for a month before he attains retirement age (as defined in section 216(l))), or
(ii)
a disability insurance benefit,
then in lieu of any reduction under paragraph (1) (but subject to the succeeding paragraphs of this subsection) such wife's, husband's, widow's, or widower's insurance benefit for each month shall be reduced as provided in subparagraph (B), (C), or (D).
(B)
For any month for which such individual is entitled to an old-age insurance benefit and is not entitled to a disability insurance benefit, such individual's wife's or husband's insurance benefit shall be reduced by the sum of—
(i)
the amount by which such old-age insurance benefit is reduced under paragraph (1) for such month, and
(ii)
the amount by which such wife's or husband's insurance benefit would be reduced under paragraph (1) for such month if it were equal to the excess of such wife's or husband's insurance benefit (before reduction under this subsection) over such old-age insurance benefit (before reduction under this subsection).
(C)
For any month for which such individual is entitled to a disability insurance benefit, such individual's wife's, husband's, widow's, or widower's insurance benefit shall be reduced by the sum of—
(i)
the amount by which such disability insurance benefit is reduced under paragraph (2) for such month (if such paragraph applied to such benefit), and
(ii)
the amount by which such wife's, husband's, widow's, or widower's insurance benefit would be reduced under paragraph (1) for such month if it were equal to the excess of such wife's, husband's, widow's, or widower's insurance benefit (before reduction under this subsection) over such disability insurance benefit (before reduction under this subsection).
(D)
For any month for which such individual is entitled neither to an old-age insurance benefit nor to a disability insurance benefit, such individual's wife's, husband's, widow's, or widower's insurance benefit shall be reduced by the amount by which it would be reduced under paragraph (1).
(E)
Notwithstanding subparagraph (A) of this paragraph, if the first month for which an individual is entitled to a widow's or widower's insurance benefit is a month for which such individual is also entitled to an old-age insurance benefit to which such individual was first entitled for that month or for a month before she or he became entitled to a widow's or widower's benefit, the reduction in such widow's or widower's insurance benefit shall be determined under paragraph (1).
(4)
If—
(A)
an individual is or was entitled to a benefit subject to reduction under paragraph (1) or (3) of this subsection, and
(B)
such benefit is increased by reason of an increase in the primary insurance amount of the individual on whose wages and self-employment income such benefit is based,
then the amount of the reduction of such benefit (after the application of any adjustment under paragraph (7)) for each month beginning with the month of such increase in the primary insurance amount shall be computed under paragraph (1) or (3), whichever applies, as though the increased primary insurance amount had been in effect for and after the month for which the individual first became entitled to such monthly benefit reduced under such paragraph (1) or (3).
(5)
(A)
No wife's or husband's insurance benefit shall be reduced under this subsection—
(i)
for any month before the first month for which there is in effect a certificate filed by him or her with the Commissioner of Social Security, in accordance with regulations prescribed by the Commissioner of Social Security, in which he or she elects to receive wife's or husband's insurance benefits reduced as provided in this subsection, or
(ii)
for any month in which he or she has in his or her care (individually or jointly with the person on whose wages and self-employment income the wife's or husband's insurance benefit is based) a child of such person entitled to child's insurance benefits.
(B)
Any certificate described in subparagraph (A)(i) shall be effective for purposes of this subsection (and for purposes of preventing deductions under section 203(c)(2))—
(i)
for the month in which it is filed and for any month thereafter, and
(ii)
for months, in the period designated by the individual filing such certificate, of one or more consecutive months (not exceeding 12) immediately preceding the month in which such certificate is filed;
except that such certificate shall not be effective for any month before the month in which he or she attains age 62, nor shall it be effective for any month to which subparagraph (A)(ii) applies.
(C)
If an individual does not have in his or her care a child described in subparagraph (A)(ii) in the first month for which he or she is entitled to a wife's or husband's insurance benefit, and if such first month is a month before the month in which he or she attains retirement age (as defined in section 216(l)), he or she shall be deemed to have filed in such first month the certificate described in subparagraph (A)(i).
(D)
No widow's or widower's insurance benefit for a month in which he or she has in his or her care a child of his or her deceased spouse (or deceased former spouse) entitled to child's insurance benefits shall be reduced under this subsection below the amount to which he or she would have been entitled had he or she been entitled for such month to mother's or father's insurance benefits on the basis of his or her deceased spouse's (or deceased former spouse's) wages and self-employment income.
(6)
For purposes of this subsection, the “reduction period” for an individual's old-age, wife's, husband's, widow's, or widower's insurance benefit is the period—
(A)
beginning—
(i)
in the case of an old-age insurance benefit, with the first day of the first month for which such individual is entitled to such benefit,
(ii)
in the case of a wife's or husband's insurance benefit, with the first day of the first month for which a certificate described in paragraph (5)(A)(i) is effective, or
(iii)
in the case of a widow's or widower's insurance benefit, with the first day of the first month for which such individual is entitled to such benefit or the first day of the month in which such individual attains age 60, whichever is the later, and
(B)
ending with the last day of the month before the month in which such individual attains retirement age.
(7)
For purposes of this subsection, the “adjusted reduction period” for an individual's old-age, wife's, husband's, widow's, or widower's insurance benefit is the reduction period prescribed in paragraph (6) for such benefit, excluding—
(A)
any month in which such benefit was subject to deductions under section 203(b), 203(c)(1), 203(d)(1), or 222(b),
(B)
in the case of wife's or husband's insurance benefits, any month in which such individual had in his or her care (individually or jointly with the person on whose wages and self-employment income such benefit is based) a child of such person entitled to child's insurance benefits,
(C)
in the case of wife's or husband's insurance benefits, any month for which such individual was not entitled to such benefits because of the occurrence of an event that terminated her or his entitlement to such benefits,
(D)
in the case of widow's or widower's insurance benefits, any month in which the reduction in the amount of such benefit was determined under paragraph (5)(D),
(E)
in the case of widow's or widower's insurance benefits, any month before the month in which she or he attained age 62, and also for any later month before the month in which she or he attained retirement age, for which she or he was not entitled to such benefit because of the occurrence of an event that terminated her or his entitlement to such benefits, and
(F)
in the case of old-age insurance benefits, any month for which such individual was entitled to a disability insurance benefit.
(8)
This subsection shall be applied after reduction under section 203(a) and before application of section 215(g). If the amount of any reduction computed under paragraph (1), (2), or (3) is not a multiple of $0.10, it shall be increased to the next higher multiple of $0.10.
(9)
The amount of the reduction for early retirement specified in paragraph (1)—
(A)
for old-age insurance benefits, wife's insurance benefits, and husband's insurance benefits, shall be the amount specified in such paragraph for the first 36 months of the reduction period (as defined in paragraph (6)) or adjusted reduction period (as defined in paragraph (7)), and five-twelfths of 1 percent for any additional months included in such periods; and
(B)
for widow's insurance benefits and widower's insurance benefits, shall be periodically revised by the Commissioner of Social Security such that—
(i)
the amount of the reduction at early retirement age as defined in section 216(l) shall be 28.5 percent of the full benefit; and
(ii)
the amount of the reduction for each month in the reduction period (specified in paragraph (6)) or the adjusted reduction period (specified in paragraph (7)) shall be established by linear interpolation between 28.5 percent at the month of attainment of early retirement age and 0 percent at the month of attainment of retirement age.
(10)
For purposes of applying paragraph (4), with respect to monthly benefits payable for any month after December 1977 to an individual who was entitled to a monthly benefit as reduced under paragraph (1) or (3) prior to January 1978, the amount of reduction in such benefit for the first month for which such benefit is increased by reason of an increase in the primary insurance amount of the individual on whose wages and self-employment income such benefit is based and for all subsequent months (and similarly for all subsequent increases) shall be increased by a percentage equal to the percentage increase in such primary insurance amount (such increase being made in accordance with the provisions of paragraph (8)). In the case of an individual whose reduced benefit under this section is increased as a result of the use of an adjusted reduction period (in accordance with paragraphs (1) and (3) of this subsection), then for the first month for which such increase is effective, and for all subsequent months, the amount of such reduction (after the application of the previous sentence, if applicable) shall be determined—
(A)
in the case of old-age, wife's, and husband's insurance benefits, by multiplying such amount by the ratio of (i) the number of months in the adjusted reduction period to (ii) the number of months in the reduction period,
(B)
in the case of widow's and widower's insurance benefits for the month in which such individual attains age 62, by multiplying such amount by the ratio of (i) the number of months in the reduction period beginning with age 62 multiplied by 19⁄40 of 1 percent, plus the number of months in the adjusted reduction period prior to age 62 multiplied by 19⁄40 of 1 percent to (ii) the number of months in the reduction period multiplied by 19⁄40 of 1 percent, and
(C)
in the case of widow's and widower's insurance benefits for the month in which such individual attains retirement age (as defined in section 216(l)), by multiplying such amount by the ratio of (i) the number of months in the adjusted reduction period multiplied by 19⁄40 of 1 percent to (ii) the number of months in the reduction period beginning with age 62 multiplied by 19⁄40 of 1 percent, plus the number of months in the adjusted reduction period prior to age 62 multiplied by 19⁄40 of 1 percent,
such determination being made in accordance with the provisions of paragraph (8).
(11)
When an individual is entitled to more than one monthly benefit under this title and one or more of such benefits are reduced under this subsection, paragraph (10) shall apply separately to each such benefit reduced under this subsection before the application of subsection (k) (pertaining to the method by which monthly benefits are offset when an individual is entitled to more than one kind of benefit) and the application of this paragraph shall operate in conjunction with paragraph (3).
(r)

Presumed Filing of Application by Individuals Eligible for Old-Age Insurance Benefits and for Wife's or Husband's Insurance Benefits
(1)7
If an individual is eligible for a wife’s or husband’s insurance benefit (except in the case of eligibility pursuant to clause (ii) of subsection (b)(1)(B) or subsection (c)(1)(B), as appropriate), in any month for which the individual is entitled to an old-age insurance benefit, such individual shall be deemed to have filed an application for wife’s or husband’s insurance benefits for such month.
^7
Margins of paragraph (1) and (2) (as added by section 831(a)(1) of Public Law 114–74) are so in law.
(2)7
If an individual is eligible (but for section 202(k)(4)) for an old-age insurance benefit in any month for which the individual is entitled to a wife’s or husband’s insurance benefit (except in the case of entitlement pursuant to clause (ii) of subsection (b)(1)(B) or subsection (c)(1)(B), as appropriate), such individual shall be deemed to have filed an application for old-age insurance benefits—
(A)
for such month, or
(B)
if such individual is also entitled to a disability insurance benefit for such month, in the first subsequent month for which such individual is not entitled to a disability insurance benefit.
(3)
For purposes of this subsection, an individual shall be deemed eligible for a benefit for a month if, upon filing application therefor in such month, he would be entitled to such benefit for such month.
(s)

Child Over Specified Age to be Disregarded for Certain Benefit Purposes Unless Disabled
(1)
For the purposes of subsections (b)(1), (c)(1), (g)(1), (q)(5), and (q)(7) of this section and paragraphs (2), (3), and (4) of section 203(c), a child who is entitled to child's insurance benefits under subsection (d) for any month, and who has attained the age of 16 but is not in such month under a disability (as defined in section 223(d)), shall be deemed not entitled to such benefits for such month, unless he was under such a disability in the third month before such month.
(2)
So much of subsections (b)(3), (c)(4), (d)(5), (g)(3), and (h)(4) of this section as precedes the semicolon, shall not apply in the case of any child unless such child, at the time of the marriage referred to therein, was under a disability (as defined in section 223(d)) or had been under such a disability in the third month before the month in which such marriage occurred.
(3)
The last sentence of subsection (c) of section 203, subsection (f)(1)(C) of section 203, and subsections (b)(3)(B), (c)(6)(B), (f)(3)(B), and (g)(6)(B) of section 216 shall not apply in the case of any child with respect to any month referred to therein unless in such month or the third month prior thereto such child was under a disability (as defined in section 223(d)).
(t)

Suspension of Benefits of Aliens Who Are Outside the United States; Residency Requirements for Dependents and Survivors
(1)
Notwithstanding any other provision of this title, no monthly benefits shall be paid under this section or under section 223 to any individual who is not a citizen or national of the United States for any month which is—
(A)
after the sixth consecutive calendar month during all of which the Commissioner of Social Security finds, on the basis of information furnished to the Commissioner by the Attorney General or information which otherwise comes to the Commissioner's attention, that such individual is outside the United States, and
(B)
prior to the first month thereafter for all of which such individual has been in the United States.
For purposes of the preceding sentence, after an individual has been outside the United States for any period of thirty consecutive days he shall be treated as remaining outside the United States until he has been in the United States for a period of thirty consecutive days.
(2)
Subject to paragraph (11), paragraph (1) shall not apply to any individual who is a citizen of a foreign country which the Commissioner of Social Security finds has in effect a social insurance or pension system which is of general application in such country and under which—
(A)
periodic benefits, or the actuarial equivalent thereof, are paid on account of old age, retirement, or death, and
(B)
individuals who are citizens of the United States but not citizens of such foreign country and who qualify for such benefits are permitted to receive such benefits or the actuarial equivalent thereof while outside such foreign country without regard to the duration of the absence.
(3)
Paragraph (1) shall not apply in any case where its application would be contrary to any treaty obligation of the United States in effect on the date of the enactment of this subsection.
(4)
Subject to paragraph (11), paragraph (1) shall not apply to any benefit for any month if—
(A)
not less than forty of the quarters elapsing before such month are quarters of coverage for the individual on whose wages; and self-employment income such benefit is based, or
(B)
the individual on whose wages and self-employment income such benefit is based has, before such month, resided in the United States for a period or periods aggregating ten years or more, or
(C)
the individual entitled to such benefit is outside the United States while in the active military or naval service of the United States, or
(D)
the individual on whose wages and self-employment income such benefit is based died, before such month, either (i) while on active duty or inactive duty training (as those terms are defined in section 210(l)(2) and (3)) as a member of a uniformed service (as defined in section 210(m)), or (ii) as the result of a disease or injury which the Secretary of Veterans Affairs determines was incurred or aggravated in line of duty while on active duty (as defined in section 210(l)(2)), or an injury which he determines was incurred or aggravated in line of duty while on inactive duty training (as defined in section 210(l)(3)), as a member of a uniformed service (as defined in section 210(m)), if the Secretary of Veterans Affairs determines that such individual was discharged or released from the period of such active duty or inactive duty training under conditions other than dishonorable, and if the Secretary of Veterans Affairs certifies to the Commissioner of Social Security his determinations with respect to such individual under this clause, or
(E)
the individual on whose employment such benefit is based had been in service covered by the Railroad Retirement Act of 1937 or 1974 which was treated as employment covered by this Act pursuant to the provisions of section 5(k)(1) of the Railroad Retirement Act of 1937 or section 18(2) of the Railroad Retirement Act of 1974;
except that subparagraphs (A) and (B) of this paragraph shall not apply in the case of any individual who is a citizen of a foreign country that has in effect a social insurance or pension system which is of general application in such country and which satisfies subparagraph (A) but not subparagraph (B) of paragraph (2), or who is a citizen of a foreign country that has no social insurance or pension system of general application if at any time within five years prior to the month in which the Social Security Amendments of 1967 are enacted (or the first month thereafter for which his benefits are subject to suspension under paragraph (1)) payments to individuals residing in such country were withheld by the Treasury Department under the first section of the Act of October 9, 1940 (31 U.S.C. 123).
(5)
No person who is, or upon application would be, entitled to a monthly benefit under this section for December 1956 shall be deprived, by reason of paragraph (1), of such benefit or any other benefit based on the wages and self-employment income of the individual on whose wages and self-employment income such monthly benefit for December 1956 is based.
(6)
If an individual is outside the United States when he dies and no benefit may, by reason of paragraph (1) or (10), be paid to him for the month preceding the month in which he dies, no lump-sum death payment may be made on the basis of such individual's wages and self-employment income.
(7)
Subsections (b), (c), and (d) of section 203 shall not apply with respect to any individual for any month for which no monthly benefit may be paid to him by reason of paragraph (1) of this subsection.
(8)
The Attorney General shall certify to the Commissioner of Social Security such information regarding aliens who depart from the United States to any foreign country (other than a foreign country which is territorially contiguous to the continental United States) as may be necessary to enable the Commissioner of Social Security to carry out the purposes of this subsection and shall otherwise aid, assist, and cooperate with the Commissioner of Social Security in obtaining such other information as may be necessary to enable the Commissioner of Social Security to carry out the purposes of this subsection.
(9)
No payments shall be made under part A of title XVIII with respect to items or services furnished to an individual in any month for which the prohibition in paragraph (1) against payment of benefits to him is applicable (or would be if he were entitled to any such benefits).
(10)
Notwithstanding any other provision of this title, no monthly benefits shall be paid under this section or under section 223, for any month beginning after June 30, 1968, to an individual who is not a citizen or national of the United States and who resides during such month in a foreign country if payments for such month to individuals residing in such country are withheld by the Treasury Department under the first section of the Act of October 9, 1940 (31 U.S.C. 123).
(11)
(A)
Paragraph (2) and subparagraphs (A), (B), (C), and (E) of paragraph (4) shall apply with respect to an individual's monthly benefits under subsection (b), (c), (d), (e), (f), (g), or (h) only if such individual meets the residency requirements of this paragraph with respect to those benefits.
(B)
An individual entitled to benefits under subsection (b), (c), (e), (f), or (g) meets the residency requirements of this paragraph with respect to those benefits only if such individual has resided in the United States, and while so residing bore a spousal relationship to the person on whose wages and self-employment income such entitlement is based, for a total period of not less than 5 years. For purposes of this subparagraph, a period of time for which an individual bears a spousal relationship to another person consists of a period throughout which the individual has been, with respect to such other person, a wife, a husband, a widow, a widower, a divorced wife, a divorced husband, a surviving divorced wife, a surviving divorced husband, a surviving divorced mother, a surviving divorced father, or (as applicable in the course of such period) any two or more of the foregoing.
(C)
An individual entitled to benefits under subsection (d) meets the residency requirements of this paragraph with respect to those benefits only if—
(i)
(I)
such individual has resided in the United States (as the child of the person on whose wages and self-employment income such entitlement is based) for a total period of not less than 5 years, or
(II)
the person on whose wages and self-employment income such entitlement is based, and the individual's other parent (within the meaning of subsection (h)(3)), if any, have each resided in the United States for a total period of not less than 5 years (or died while residing in the United States), and
(ii)
in the case of an individual entitled to such benefits as an adopted child, such individual was adopted within the United States by the person on whose wages and self-employment income such entitlement is based, and has lived in the United States with such person and received at least one-half of his or her support from such person for a period (beginning before such individual attained age 18) consisting of—
(I)
the year immediately before the month in which such person became eligible for old-age insurance benefits or disability insurance benefits or died, whichever occurred first, or
(II)
if such person had a period of disability which continued until he or she became entitled to old-age insurance benefits or disability insurance benefits or died, the year immediately before the month in which such period of disability began.
(D)
An individual entitled to benefits under subsection (h) meets the residency requirements of this paragraph with respect to those benefits only if such individual has resided in the United States, and while so residing was a parent (within the meaning of subsection (h)(3)) of the person on whose wages and self-employment income such entitlement is based, for a total period of not less than 5 years.
(E)
This paragraph shall not apply with respect to any individual who is a citizen or resident of a foreign country with which the United States has an agreement in force concluded pursuant to section 233, except to the extent provided by such agreement.
(u)

Conviction of Subversive Activities, Etc.
(1)
If any individual is convicted of any offense (committed after the date of the enactment of this subsection) under—
(A)
chapter 37 (relating to espionage and censorship), chapter 105 (relating to sabotage), or chapter 115 (relating to treason, sedition, and subversive activities) of title 18 of the United States Code, or
(B)
section 4 of the Internal Security Act of 1950, as amended,
then the court may, in addition to all other penalties provided by law, impose a penalty that in determining whether any monthly insurance benefit under this section or section 223 is payable to such individual for the month in which he is convicted or for any month thereafter, in determining the amount of any such benefit payable to such individual for any such month, and in determining whether such individual is entitled to insurance benefits under part A of title XVIII for any such month, there shall not be taken into account—
(C)
any wages paid to such individual or to any other individual in the calendar year in which such conviction occurs or in any prior calendar year, and
(D)
any net earnings from self-employment derived by such individual or by any other individual during a taxable year in which such conviction occurs or during any prior taxable year.
(2)
As soon as practicable after an additional penalty has, pursuant to paragraph (1), been imposed with respect to any individual, the Attorney General shall notify the Commissioner of Social Security of such imposition.
(3)
If any individual with respect to whom an additional penalty has been imposed pursuant to paragraph (1) is granted a pardon of the offense by the President of the United States, such additional penalty shall not apply for any month beginning after the date on which such pardon is granted.
(v)

Waiver of Benefits
(1)
Notwithstanding any other provisions of this title, and subject to paragraph (3), in the case of any individual who files a waiver pursuant to section 1402(g) of the Internal Revenue Code of 1986 and is granted a tax exemption thereunder, no benefits or other payments shall be payable under this title to him, no payments shall be made on his behalf under part A of title XVIII, and no benefits or other payments under this title shall be payable on the basis of his wages and self-employment income to any other person, after the filing of such waiver.
(2)
Notwithstanding any other provision of this title, and subject to paragraph (3), in the case of any individual who files a waiver pursuant to section 3127 of the Internal Revenue Code of 1986 and is granted a tax exemption thereunder, no benefits or other payments shall be payable under this title to him, no payments shall be made on his behalf under part A of title XVIII, and no benefits or other payments under this title shall be payable on the basis of his wages and self-employment income to any other person, after the filing of such waiver.
(3)
If, after an exemption referred to in paragraph (1) or (2) is granted to an individual, such exemption ceases to be effective, the waiver referred to in such paragraph shall cease to be applicable in the case of benefits and other payments under this title and part A of title XVIII to the extent based on—
(A)
his wages for and after the calendar year following the calendar year in which occurs the failure to meet the requirements of section 1402(g) or 3127 of the Internal Revenue Code of 1986 on which the cessation of such exemption is based, and
(B)
his self-employment income for and after the taxable year in which occurs such failure.
(w)

Increase in Old-Age Insurance Benefit Amounts on Account of Delayed Retirement
(1)
The amount of an old-age insurance benefit (other than a benefit based on a primary insurance amount determined under section 215(a)(3) as in effect in December 1978 or section 215(a)(1)(C)(i) as in effect thereafter) which is payable without regard to this subsection to an individual shall be increased by—
(A)
the applicable percentage (as determined under paragraph (6)) of such amount, multiplied by
(B)
the number (if any) of the increment months for such individual.
(2)
For purposes of this subsection, the number of increment months for any individual shall be a number equal to the total number of the months—
(A)
which have elapsed after the month before the month in which such individual attained retirement age (as defined in section 216(l)) or (if later) December 1970 and prior to the month in which such individual attained age 70, and
(B)
with respect to which—
(i)
such individual was a fully insured individual (as defined in section 214(a)),
(ii)
such individual either was not entitled to an old-age insurance benefit or, if so entitled, did not receive benefits pursuant to a request under section 202(z) by such individual that benefits not be paid, and
(iii)
such individual was not subject to a penalty imposed under section 1129A.
(3)
For purposes of applying the provisions of paragraph (1), a determination shall be made under paragraph (2) for each year, beginning with 1972, of the total number of an individual's increment months through the year for which the determination is made and the total so determined shall be applicable to such individual's old-age insurance benefits beginning with benefits for January of the year following the year for which such determination is made; except that the total number applicable in the case of an individual who attains age 70 after 1972 shall be determined through the month before the month in which he attains such age and shall be applicable to his old-age insurance benefit beginning with the month in which he attains such age.
(4)
This subsection shall be applied after reduction under section 203(a).
(5)
If an individual's primary insurance amount is determined under paragraph (3) of section 215(a) as in effect in December 1978, or section 215(a)(1)(C)(i) as in effect thereafter, and, as a result of this subsection, he would be entitled to a higher old-age insurance benefit if his primary insurance amount were determined under section 215(a) (whether before, in, or after December 1978) without regard to such paragraph, such individual's old-age insurance benefit based upon his primary insurance amount determined under such paragraph shall be increased by an amount equal to the difference between such benefit and the benefit to which he would be entitled if his primary insurance amount were determined under such section without regard to such paragraph.
(6)
For purposes of paragraph (1)(A), the “applicable percentage” is—
(A)
1⁄12 of 1 percent in the case of an individual who first becomes eligible for an old-age insurance benefit in any calendar year before 1979;
(B)
¼ of 1 percent in the case of an individual who first becomes eligible for an old-age insurance benefit in any calendar year after 1978 and before 1987;
(C)
in the case of an individual who first becomes eligible for an old-age insurance benefit in a calendar year after 1986 and before 2005, a percentage equal to the applicable percentage in effect under this paragraph for persons who first became eligible for an old-age insurance benefit in the preceding calendar year (as increased pursuant to this subparagraph), plus 1⁄24 of 1 percent if the calendar year in which that particular individual first becomes eligible for such benefit is not evenly divisible by 2; and
(D)
⅔ of 1 percent in the case of an individual who first becomes eligible for an old-age insurance benefit in a calendar year after 2004.
(x)

Limitation on Payments to Prisoners, Certain Other Inmates of Publicly Funded Institutions, Fugitives, Probationers, and Parolees
(1)
(A)
Notwithstanding any other provision of this title, no monthly benefits shall be paid under this section or under section 223 to any individual for any month ending with or during or beginning with or during a period of more than 30 days throughout all of which such individual—
(i)
is confined in a jail, prison, or other penal institution or correctional facility pursuant to his conviction of a criminal offense,
(ii)
is confined by court order in an institution at public expense in connection with—
(I)
a verdict or finding that the individual is guilty but insane, with respect to a criminal offense,
(II)
a verdict or finding that the individual is not guilty of such an offense by reason of insanity,
(III)
a finding that such individual is incompetent to stand trial under an allegation of such an offense, or
(IV)
a similar verdict or finding with respect to such an offense based on similar factors (such as a mental disease, a mental defect, or mental incompetence),
(iii)
immediately upon completion of confinement as described in clause (i) pursuant to conviction of a criminal offense an element of which is sexual activity, is confined by court order in an institution at public expense pursuant to a finding that the individual is a sexually dangerous person or a sexual predator or a similar finding,
(iv)
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, in jurisdictions that do not define crimes as felonies, is punishable by death or imprisonment for a term exceeding 1 year regardless of the actual sentence imposed, or
(v)
is violating a condition of probation or parole imposed under Federal or State law.
(B)
(i)
For purposes of clause (i) of subparagraph (A), an individual shall not be considered confined in an institution comprising a jail, prison, or other penal institution or correctional facility during any month throughout which such individual is residing outside such institution at no expense (other than the cost of monitoring) to such institution or the penal system or to any agency to which the penal system has tranferred jurisdiction over the individual.
(ii)
For purposes of clauses (ii) and (iii) of subparagraph (A), an individual confined in an institution as described in such clause (ii) shall be treated as remaining so confined until—
(I)
he or she is released from the care and supervision of such institution, and
(II)
such institution ceases to meet the individual's basic living needs.
(iii)
Notwithstanding subparagraph (A), the Commissioner shall, for good cause shown, pay the individual benefits that have been withheld or would otherwise be withheld pursuant to clause (iv) or (v) of subparagraph (A) if the Commissioner determines that—
(I)
a court of competent jurisdiction has found the individual not guilty of the criminal offense, dismissed the charges relating to the criminal offense, vacated the warrant for arrest of the individual for the criminal offense, or issued any similar exonerating order (or taken similar exonerating action), or
(II)
the individual was erroneously implicated in connection with the criminal offense by reason of identity fraud.
(iv)
Notwithstanding subparagraph (A), the Commissioner may, for good cause shown based on mitigating circumstances, pay the individual benefits that have been withheld or would otherwise be withheld pursuant to clause (iv) or (v) of subparagraph (A) if the Commissioner determines that—
(I)
the offense described in clause (iv) or underlying the imposition of the probation or parole described in clause (v) was nonviolent and not drug-related, and
(II)
in the case of an individual from whom benefits have been withheld or otherwise would be withheld pursuant to subparagraph (A)(v), the action that resulted in the violation of a condition of probation or parole was nonviolent and not drug-related.
(2)
Benefits which would be payable to any individual (other than a confined individual to whom benefits are not payable by reason of paragraph (1)) under this title on the basis of the wages and self-employment income of such a confined individual but for the provisions of paragraph (1), shall be payable as though such confined individual were receiving such benefits under this section or section 223.
(3)
(A)
Notwithstanding the provisions of section 552a of title 5, United States Code, or any other provision of Federal or State law, any agency of the United States Government or of any State (or political subdivision thereof) shall make available to the Commissioner of Social Security, upon written request, the name and social security account number of any individual who is confined as described in paragraph (1) if the confinement is under the jurisdiction of such agency and the Commissioner of Social Security requires such information to carry out the provisions of this section.
(B)
(i)
The Commissioner shall enter into an agreement under this subparagraph with any interested State or local institution comprising a jail, prison, penal institution, or correctional facility, or comprising any other institution a purpose of which is to confine individuals as described in paragraph (1)(A)(ii). Under such agreement—
(I)
the institution shall provide to the Commissioner, on a monthly basis and in a manner specified by the Commissioner, the first, middle, and last names, Social Security account numbers or taxpayer identification numbers, prison assigned inmate numbers, last known addresses,8 dates of birth, confinement commencement dates, dates of release or anticipated dates of release, dates of work release, and, to the extent available to the institution, such other identifying information concerning the individuals confined in the institution as the Commissioner may require for the purpose of carrying out paragraph (1) and clause (iv) of this subparagraph and other provisions of this title; and
^8
Section 204(a)(1)(B) of division A of Public Law 113–67 amends subclause (I) by striking the comma after “[s]ocial [s]ecurity account numbers” and inserting the phrase “or taxpayer identification numbers, prison assigned inmate numbers, last known addresses,”. The amendment was executed by striking the comma after “Social Security account numbers” to reflect the probable intent of Congress.
(II)
the Commissioner shall pay to the institution, with respect to information described in subclause (I) concerning each individual who is confined therein as described in paragraph (1)(A), who receives a benefit under this title for the month preceding the first month of such confinement, and whose benefit under this title is determined by the Commissioner to be not payable by reason of confinement based on the information provided by the institution, $400 (subject to reduction under clause (ii)) if the institution furnishes the information to the Commissioner within 30 days after the date such individual's confinement in such institution begins, or $200 (subject to reduction under clause (ii)) if the institution furnishes the information after 30 days after such date but within 90 days after such date.
(ii)
The dollar amounts specified in clause (i)(II) shall be reduced by 50 percent if the Commissioner is also required to make a payment to the institution with respect to the same individual under an agreement entered into under section 1611(e)(1)(I).
(iii)
There are authorized to be transferred from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, as appropriate, such sums as may be necessary to enable the Commissioner to make payments to institutions required by clause (i)(II).
(iv)
The Commissioner shall maintain, and shall provide on a reimbursable basis, information obtained pursuant to agreements entered into under this paragraph to any agency administering a Federal or federally-assisted cash, food, or medical assistance program for eligibility and other administrative purposes under such program, for statistical and research activities conducted by Federal and State agencies, and to the Secretary of the Treasury for the purposes of tax administration, debt collection, and identifying, preventing, and recovering improper payments under federally funded programs.
(v)
(I)
The Commissioner may disclose information received pursuant to this paragraph to any officer, employee, agent, or contractor of the Department of the Treasury whose official duties require such information to assist in the identification, prevention, and recovery of improper payments or in the collection of delinquent debts owed to the United States, including payments certified by the head of an executive, judicial, or legislative paying agency, and payments made to individuals whose eligibility, or continuing eligibility, to participate in a Federal program (including those administered by a State or political subdivision thereof) is being reviewed.
(II)
Notwithstanding the provisions of section 552a of title 5, United States Code, or any other provision of Federal or State law, the Secretary of the Treasury may compare information disclosed under subclause (I) with any other personally identifiable information derived from a Federal system of records or similar records maintained by a Federal contractor, a Federal grantee, or an entity administering a Federal program or activity, and may redisclose such comparison of information to any paying or administering agency and to the head of the Federal Bureau of Prisons and the head of any State agency charged with the administration of prisons with respect to inmates whom the Secretary of the Treasury has determined may have been issued, or facilitated in the issuance of, an improper payment.
(III)
The comparison of information disclosed under subclause (I) shall not be considered a matching program for purposes of section 552a of title 5, United States Code.
(C)
Notwithstanding the provisions of section 552a of title 5, United States Code, or any other provision of Federal or State law (other than section 6103 of the Internal Revenue Code of 1986 and section 1106(c) of this Act), the Commissioner shall furnish any Federal, State, or local law enforcement officer, upon the written request of the officer, with the current address, Social Security number, and photograph (if applicable) of any beneficiary under this title, if the officer furnishes the Commissioner with the name of the beneficiary, and other identifying information as reasonably required by the Commissioner to establish the unique identity of the beneficiary, and notifies the Commissioner that—
(i)
the beneficiary is described in clause (iv) or (v) of paragraph (1)(A); and
(ii)
the location or apprehension of the beneficiary is within the officer's official duties.
(y)
Notwithstanding any other provision of law, no monthly benefit under this title shall be payable to any alien in the United States for any month during which such alien is not lawfully present in the United States as determined by the Attorney General.
(z)

Voluntary Suspension.—
(1)
(A)
Except as otherwise provided in this subsection, any individual who has attained retirement age (as defined in section 216(l)) and is entitled to old-age insurance benefits may request that payment of such benefits be suspended—
(i)9
beginning with the month following the month in which such request is received by the Commissioner, and
^9
Margins of clauses (i) and (ii) of subsecton (z)(1)(A) are so in law.
(ii)9
ending with the earlier of the month following the month in which a request by the individual for a resumption of such benefits is so received or the month following the month in which the individual attains the age of 70.
(2)
An individual may not suspend such benefits under this subsection, and any suspension of such benefits under this subsection shall end, effective with respect to any month in which the individual becomes subject to—
(A)
mandatory suspension of such benefits under section 202(x);
(B)
termination of such benefits under section 202(n);
(C)
a penalty under section 1129A imposing nonpayment of such benefits; or
(D)
any other withholding, in whole or in part, of such benefits under any other provision of law that authorizes recovery of a debt by withholding such benefits.
(3)
In the case of an individual who requests that such benefits be suspended under this subsection, for any month during the period in which the suspension is in effect—
(A)
no retroactive benefits (as defined in subsection (j)(4)(B)(iii)) shall be payable to such individual;
(B)
no monthly benefit shall be payable to any other individual on the basis of such individual’s wages and self-employment income; and
(C)
no monthly benefit shall be payable to such individual on the basis of another individual’s wages and self-employment income.

reduction of insurance benefits
Sec. 203.
[42 U.S.C. 403]
(a)

Maximum Benefits
(1)
In the case of an individual whose primary insurance amount has been computed or recomputed under section 215(a)(1) or (4), or section 215(d), as in effect after December 1978, the total monthly benefits to which beneficiaries may be entitled under section 202 or 223 for a month on the basis of the wages and self employment income of such individual shall, except as provided by paragraphs (3) and (6) (but prior to any increases resulting from the application of paragraph (2)(A)(ii)(III) of section 215(i)), be reduced as necessary so as not to exceed—
(A)
150 percent of such individual's primary insurance amount to the extent that it does not exceed the amount established with respect to this subparagraph by paragraph (2),
(B)
272 percent of such individual's primary insurance amount to the extent that it exceeds the amount established with respect to subparagraph (A) but does not exceed the amount established with respect to this subparagraph by paragraph (2),
(C)
134 percent of such individual's primary insurance amount to the extent that it exceeds the amount established with respect to subparagraph (B) but does not exceed the amount established with respect to this subparagraph by paragraph (2), and
(D)
175 percent of such individual's primary insurance amount to the extent that it exceeds the amount established with respect to subparagraph (C).
Any such amount that is not a multiple of $0.10 shall be decreased to the next lower multiple of $0.10.
(2)
(A)
For individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming so eligible for such benefits), in the calendar year 1979, the amounts established with respect to subparagraphs (A), (B), and (C) of paragraph (1) shall be $230, $332, and $433, respectively.
(B)
For individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming so eligible for such benefits), in any calendar year after 1979, each of the amounts so established shall equal the product of the corresponding amount established for the calendar year 1979 by subparagraph (A) of this paragraph and the quotient obtained under subparagraph (B)(ii) of section 215(a)(1), with such product being rounded in the manner prescribed by section 215(a)(1)(B)(iii).
(C)
In each calendar year after 1978 the Commissioner of Social Security shall publish in the Federal Register, on or before November 1, the formula which (except as provided in section 215(i)(2)(D)) is to be applicable under this paragraph to individuals who become eligible for old-age or disability insurance benefits, or who die (before becoming eligible for such benefits), in the following calendar year.
(D)
A year shall not be counted as the year of an individual's death or eligibility for purposes of this paragraph or paragraph (8) in any case where such individual was entitled to a disability insurance benefit for any of the 12 months immediately preceding the month of such death or eligibility (but there shall be counted instead the year of the individual's eligibility for the disability insurance benefits to which he was entitled during such 12 months).
(3)
(A)
When an individual who is entitled to benefits on the basis of the wages and self-employment income of any insured individual and to whom this subsection applies would (but for the provisions of section 202(k)(2)(A)) be entitled to child's insurance benefits for a month on the basis of the wages and self-employment income of one or more other insured individuals, the total monthly benefits to which all beneficiaries are entitled on the basis of such wages and self-employment income shall not be reduced under this subsection to less than the smaller of—
(i)
the sum of the maximum amounts of benefits payable on the basis of the wages and self-employment income of all such insured individuals, or
(ii)
an amount (I) initially equal to the product of 1.75 and the primary insurance amount that would be computed under section 215(a)(1), for January of the year determined for purposes of this clause under the following two sentences, with respect to average indexed monthly earnings equal to one-twelfth of the contribution and benefit base determined for that year under section 230, and (II) thereafter increased in accordance with the provisions of section 215(i)(2)(A)(ii).
The year established for purposes of clause (ii) shall be 1983 or, if it occurs later with respect to any individual, the year in which occurred the month that the application of the reduction provisions contained in this subparagraph began with respect to benefits payable on the basis of the wages and self-employment income of the insured individual. If for any month subsequent to the first month for which clause (ii) applies (with respect to benefits payable on the basis of the wages and self-employment income of the insured individual) the reduction under this subparagraph ceases to apply, then the year determined under the preceding sentence shall be redetermined (for purposes of any subsequent application of this subparagraph with respect to benefits payable on the basis of such wages and self-employment income) as though this subparagraph had not been previously applicable.
(B)
When two or more persons were entitled (without the application of section 202(j)(1) and section 223(b)) to monthly benefits under section 202 or 223 for January 1971 or any prior month on the basis of the wages and self-employment income of such insured individual and the provisions of this subsection as in effect for any such month were applicable in determining the benefit amount of any persons on the basis of such wages and self-employment income, the total of benefits for any month after January 1971 shall not be reduced to less than the largest of—
(i)
the amount determined under this subsection without regard to this subparagraph,
(ii)
the largest amount which has been determined for any month under this subsection for persons entitled to monthly benefits on the basis of such insured individual's wages and self-employment income, or
(iii)
if any persons are entitled to benefits on the basis of such wages and self-employment income for the month before the effective month (after September 1972) of a general benefit increase under this title (as defined in section 215(i)(3)) or a benefit increase under the provisions of section 215(i), an amount equal to the sum of amounts derived by multiplying the benefit amount determined under this title (excluding any part thereof determined under section 202(w)) for the month before such effective month (including this subsection, but without the application of section 222(b), section 202(q), and subsections (b), (c), and (d) of this section), for each such person for such month, by a percentage equal to the percentage of the increase provided under such benefit increase (with any such increased amount which is not a multiple of $0.10 being rounded to the next lower multiple of $0.10);
but in any such case (I) subparagraph (A) of this paragraph shall not be applied to such total of benefits after the application of clause (ii) or (iii), and (II) if section 202(k)(2)(A) was applicable in the case of any such benefits for a month, and ceases to apply for a month after such month, the provisions of clause (ii) or (iii) shall be applied, for and after the month in which section 202(k)(2)(A) ceases to apply, as though subparagraph (A) of this paragraph had not been applicable to such total of benefits for the last month for which clause (ii) or (iii) was applicable.
(C)
When any of such individuals is entitled to monthly benefits as a divorced spouse under section 202(b) or (c) or as a surviving divorced spouse under section 202(e) or (f) for any month, the benefit to which he or she is entitled on the basis of the wages and self-employment income of such insured individual for such month shall be determined without regard to this subsection, and the benefits of all other individuals who are entitled for such month to monthly benefits under section 202 on the wages and self-employment income of such insured individual shall be determined as if no such divorced spouse or surviving divorced spouse were entitled to benefits for such month.
(D)
In any case in which—
(i)
two or more individuals are entitled to monthly benefits for the same month as a spouse under subsection (b) or (c) of section 202, or as a surviving spouse under subsection (e), (f), or (g) of section 202,
(ii)
at least one of such individuals is entitled by reason of subparagraph (A)(ii) or (B) of section 216(h)(1), and
(iii)
such entitlements are based on the wages and self-employment income of the same insured individual,
the benefit of the entitled individual whose entitlement is based on a valid marriage (as determined without regard to subparagraphs (A)(ii) and (B) of section 216(h)(1)) to such insured individual shall, for such month and all months thereafter, be determined without regard to this subsection, and the benefits of all other individuals who are entitled, for such month or any month thereafter, to monthly benefits under section 202 based on the wages and self-employment income of such insured individual shall be determined as if such entitled individual were not entitled to benefits for such month.
(4)
In any case in which benefits are reduced pursuant to the provisions of this subsection, the reduction shall be made after any deductions under this section and after any deductions under section 222(b). Notwithstanding the preceding sentence, any reduction under this subsection in the case of an individual who is entitled to a benefit under subsection (b), (c), (d), (e), (f), (g), or (h) of section 202 for any month on the basis of the same wages and self-employment income as another person—
(A)
who also is entitled to a benefit under subsection (b), (c), (d), (e), (f), (g), or (h) of section 202 for such month,
(B)
who does not live in the same household as such individual, and
(C)
whose benefit for such month is suspended (in whole or in part) pursuant to subsection (h)(3) of this section,
shall be made before the suspension under subsection (h)(3). Whenever a reduction is made under this subsection in the total of monthly benefits to which individuals are entitled for any month on the basis of the wages and self-employment income of an insured individual, each such benefit other than the old-age or disability insurance benefit shall be proportionately decreased.
(5)
Notwithstanding any other provision of law, when—
(A)
two or more persons are entitled to monthly benefits for a particular month on the basis of the wages and self-employment income of an insured individual and (for such particular month) the provisions of this subsection are applicable to such monthly benefits, and
(B)
such individual's primary insurance amount is increased for the following month under any provision of this title,
then the total of monthly benefits for all persons on the basis of such wages and self-employment income for such particular month, as determined under the provisions of this subsection, shall for purposes of determining the total monthly benefits for all persons on the basis of such wages and self-employment income for months subsequent to such particular month be considered to have been increased by the smallest amount that would have been required in order to assure that the total of monthly benefits payable on the basis of such wages and self-employment income for any such subsequent month will not be less (after the application of the other provisions of this subsection and section 202(q)) than the total of monthly benefits (after the application of the other provisions of this subsection and section 202(q)) payable on the basis of such wages and self-employment income for such particular month.
(6)
Notwithstanding any of the preceding provisions of this subsection other than paragraphs (3)(A), (3)(C), (3)(D), (4), and (5) (but subject to section 215(i)(2)(A)(ii)), the total monthly benefits to which beneficiaries may be entitled under sections 202 and 223 for any month on the basis of the wages and self-employment income of an individual entitled to disability insurance benefits shall be reduced (before the application of section 224) to the smaller of—
(A)
85 percent of such individual's average indexed monthly earnings (or 100 percent of his primary insurance amount, if larger), or
(B)
150 percent of such individual's primary insurance amount.
(7)
In the case of any individual who is entitled for any month to benefits based upon the primary insurance amounts of two or more insured individuals, one or more of which primary insurance amounts were determined under section 215(a) or 215(d) as in effect (without regard to the table contained therein) prior to January 1979 and one or more of which primary insurance amounts were determined under section 215(a)(1) or (4), or section 215(d), as in effect after December 1978, the total benefits payable to that individual and all other individuals entitled to benefits for that month based upon those primary insurance amounts shall be reduced to an amount equal to the amount determined in accordance with the provisions of paragraph (3)(A)(ii) of this subsection, except that for this purpose the references to subparagraph (A) in the last two sentences of paragraph (3)(A) shall be deemed to be references to paragraph (7).
(8)
Subject to paragraph (7) and except as otherwise provided in paragraph (10)(C), this subsection as in effect in December 1978 shall remain in effect with respect to a primary insurance amount computed under section 215(a) or (d), as in effect (without regard to the table contained therein) in December 1978 and as amended by section 5117 of the Omnibus Budget Reconciliation Act of 1990, except that a primary insurance amount so computed with respect to an individual who first becomes eligible for an old-age or disability insurance benefit, or dies (before becoming eligible for such a benefit), after December 1978, shall instead be governed by this section as in effect after December 1978. For purposes of the preceding sentence, the phrase “rounded to the next higher multiple of $0.10”, as it appeared in subsection (a)(2)(C) of this section as in effect in December 1978, shall be deemed to read “rounded to the next lower multiple of $0.10”.
(9)
When—
(A)
one or more persons were entitled (without the application of section 202(j)(1)) to monthly benefits under section 202 for May 1978 on the basis of the wages and self-employment income of an individual,
(B)
the benefit of at least one such person for June 1978 is increased by reason of the amendments made by section 204 of the Social Security Amendments of 1977; and
(C)
the total amount of benefits to which all such persons are entitled under such section 202 are reduced under the provisions of this subsection (or would be so reduced except for the first sentence of section 203(a)(4)),
then the amount of the benefit to which each such person is entitled for months after May 1978 shall be increased (after such reductions are made under this subsection) to the amount such benefits would have been if the benefit of the person or persons referred to in subparagraph (B) had not been so increased.
(10)
(A)
Subject to subparagraphs (B) and (C)—
(i)
the total monthly benefits to which beneficiaries may be entitled under sections 202 and 223 for a month on the basis of the wages and self-employment income of an individual whose primary insurance amount is computed under section 215(a)(2)(B)(i) shall equal the total monthly benefits which were authorized by this section with respect to such individual's primary insurance amount for the last month of his prior entitlement to disability insurance benefits, increased for this purpose by the general benefit increases and other increases under section 215(i) that would have applied to such total monthly benefits had the individual remained entitled to disability insurance benefits until the month in which he became entitled to old-age insurance benefits or reentitled to disability insurance benefits or died, and
(ii)
the total monthly benefits to which beneficiaries may be entitled under sections 202 and 223 for a month on the basis of the wages and self-employment income of an individual whose primary insurance amount is computed under section 215(a)(2)(C) shall equal the total monthly benefits which were authorized by this section with respect to such individual's primary insurance amount for the last month of his prior entitlement to disability insurance benefits.
(B)
In any case in which—
(i)
the total monthly benefits with respect to such individual's primary insurance amount for the last month of his prior entitlement to disability insurance benefits was computed under paragraph (6), and
(ii)
the individual's primary insurance amount is computed under subparagraph (B)(i) or (C) of section 215(a)(2) by reason of the individual's entitlement to old-age insurance benefits or death,
the total monthly benefits shall equal the total monthly benefits that would have been authorized with respect to the primary insurance amount for the last month of his prior entitlement to disability insurance benefits if such total monthly benefits had been computed without regard to paragraph (6).
(C)
This paragraph shall apply before the application of paragraph (3)(A), and before the application of section 203(a)(1) of this Act as in effect in December 1978.
(b)

Deductions on Account of Work
(1)
Deductions, in such amounts and at such time or times as the Commissioner of Social Security shall determine, shall be made from any payment or payments under this title to which an individual is entitled, and from any payment or payments to which any other persons are entitled on the basis of such individual's wages and self-employment income, until the total of such deductions equals—
(A)
such individual's benefit or benefits under section 202 for any month, and
(B)
if such individual was entitled to old-age insurance benefits under section 202(a) for such month, the benefit or benefits of all other persons for such month under section 202 based on such individual's wages and self-employment income,
if for such month he is charged with excess earnings, under the provisions of subsection (f) of this section, equal to the total of benefits referred to in clauses (A) and (B). If the excess earnings so charged are less than such total of benefits, such deductions with respect to such month shall be equal only to the amount of such excess earnings. If a child who has attained the age of 18 and is entitled to child's insurance benefits, or a person who is entitled to mother's or father's insurance benefits, is married to an individual entitled to old-age insurance benefits under section 202(a), such child or such person, as the case may be, shall, for the purposes of this subsection and subsection (f), be deemed to be entitled to such benefits on the basis of the wages and self-employment income of such individual entitled to old-age insurance benefits. If a deduction has already been made under this subsection with respect to a person's benefit or benefits under section 202 for a month, he shall be deemed entitled to payments under such section for such month for purposes of further deductions under this subsection, and for purposes of charging of each person's excess earnings under subsection (f), only to the extent of the total of his benefits remaining after such earlier deductions have been made. For purposes of this subsection and subsection (f)—
(i)
an individual shall be deemed to be entitled to payments under section 202 equal to the amount of the benefit or benefits to which he is entitled under such section after the application of subsection (a) of this section, but without the application of the first sentence of paragraph (4) thereof; and
(ii)
if a deduction is made with respect to an individual's benefit or benefits under section 202 because of the occurrence in any month of an event specified in subsection (c) or (d) of this section or in section 222(b), such individual shall not be considered to be entitled to any benefits under such section 202 for such month.
(2)
(A)
Except as provided in subparagraph (B), in any case in which—
(i)
any of the other persons referred to in paragraph (1)(B) is entitled to monthly benefits as a divorced spouse under section 202(b) or (c) for any month, and
(ii)
such person has been divorced for not less than 2 years,
the benefit to which he or she is entitled on the basis of the wages and self-employment income of the individual referred to in paragraph (1) for such month shall be determined without regard to deductions under this subsection as a result of excess earnings of such individual, and the benefits of all other individuals who are entitled for such month to monthly benefits under section 202 on the basis of the wages and self-employment income of such individual referred to in paragraph (1) shall be determined as if no such divorced spouse were entitled to benefits for such month.
(B)
Clause (ii) of subparagraph (A) shall not apply with respect to any divorced spouse in any case in which the individual referred to in paragraph (1) became entitled to old-age insurance benefits under section 202(a) before the date of the divorce.
(c)

Deductions on Account of Noncovered Work Outside the United States or Failure to Have Child in Care
Deductions, in such amounts and at such time or times as the Commissioner of Social Security shall determine, shall be made from any payment or payments under this title to which an individual is entitled, until the total of such deductions equals such individual's benefits or benefit under section 202 for any month—
(1)
in which such individual is under retirement age (as defined in section 216(l)) and for more than forty-five hours of which such individual engaged in noncovered remunerative activity outside the United States;
(2)
in which such individual, if a wife or husband under retirement age (as defined in section 216(l)) entitled to a wife's or husband's insurance benefit, did not have in his or her care (individually or jointly with his or her spouse) a child of such spouse entitled to a child's insurance benefit and such wife's or husband's insurance benefit for such month was not reduced under the provisions of section 202(q);
(3)
in which such individual, if a widow or widower entitled to a mother's or father's insurance benefit, did not have in his or her care a child of his or her deceased spouse entitled to a child's insurance benefit; or
(4)
in which such an individual, if a surviving divorced mother or father entitled to a mother's or father's insurance benefit, did not have in his or her care a child of his or her deceased former spouse who (A) is his or her son, daughter, or legally adopted child and (B) is entitled to a child's insurance benefit on the basis of the wages and self-employment income of such deceased former spouse.
For purposes of paragraphs (2), (3), and (4) of this subsection, a child shall not be considered to be entitled to a child's insurance benefit for any month in which paragraph (1) of section 202(s) applies or an event specified in section 222(b) occurs with respect to such child. Subject to paragraph (3) of such section 202(s), no deduction shall be made under this subsection from any child's insurance benefit for the month in which the child entitled to such benefit attained the age of eighteen or any subsequent month; nor shall any deduction be made under this subsection from any widow's or widower's insurance benefit if the widow, surviving divorced wife, widower, or surviving divorced husband involved became entitled to such benefit prior to attaining age 60.
(d)

Deductions From Dependents' Benefits on Account of Noncovered Work Outside the United States by Old-Age Insurance Beneficiary
(1)
(A)
Deductions shall be made from any wife's, husband's, or child's insurance benefit, based on the wages and self employment income of an individual entitled to old age insurance benefits, to which a wife, divorced wife, husband, divorced husband, or child is entitled, until the total of such deductions equals such wife's, husband's, or child's insurance benefit or benefits under section 202 for any month in which such individual is under retirement age (as defined in section 216(l)) and for more than forty five hours of which such individual engaged in noncovered remunerative activity outside the United States.
(B)
(i)
Except as provided in clause (ii), in any case in which—
(I)
a divorced spouse is entitled to monthly benefits under section 202(b) or (c) for any month, and
(II)
such divorced spouse has been divorced for not less than 2 years,
the benefit to which he or she is entitled for such month on the basis of the wages and self-employment income of the individual entitled to old-age insurance benefits referred to in subparagraph (A) shall be determined without regard to deductions under this paragraph as a result of excess earnings of such individual, and the benefits of all other individuals who are entitled for such month to monthly benefits under section 202 on the basis of the wages and self-employment income of such individual referred to in subparagraph (A) shall be determined as if no such divorced spouse were entitled to benefits for such month.
(ii)
Subclause (II) of clause (i) shall not apply with respect to any divorced spouse in any case in which the individual entitled to old-age insurance benefits referred to in subparagraph (A) became entitled to such benefits before the date of the divorce.
(2)
Deductions shall be made from any child's insurance benefit to which a child who has attained the age of eighteen is entitled, or from any mother's or father's insurance benefit to which a person is entitled, until the total of such deductions equals such child's insurance benefit or benefits or mother's or father's insurance benefit or benefits under section 202 for any month in which such child or person entitled to mother's or father's insurance benefits is married to an individual under retirement age (as defined in section 216(l)) who is entitled to old-age insurance benefits and for more than forty-five hours of which such individual engaged in noncovered remunerative activity outside the United States.
(e)

Occurrence of More Than One Event
If more than one of the events specified in subsections (c) and (d) and section 222(b) occurs in any one month which would occasion deductions equal to a benefit for such month, only an amount equal to such benefit shall be deducted.
(f)

Months to Which Earnings Are Charged
For purposes of subsection (b)—
(1)
The amount of an individual's excess earnings (as defined in paragraph (3)) shall be charged to months as follows: There shall be charged to the first month of such taxable year an amount of his excess earnings equal to the sum of the payments to which he and all other persons (excluding divorced spouses referred to in subsection (b)(2)) are entitled for such month under section 202 on the basis of his wages and self-employment income (or the total of his excess earnings if such excess earnings are less than such sum), and the balance, if any, of such excess earnings shall be charged to each succeeding month in such year to the extent, in the case of each such month, of the sum of the payments to which such individual and all such other persons are entitled for such month under section 202 on the basis of his wages and self-employment income, until the total of such excess has been so charged. Where an individual is entitled to benefits under section 202(a) and other persons (excluding divorced spouses referred to in subsection (b)(2)) are entitled to benefits under section 202(b), (c), or (d) on the basis of the wages and self-employment income of such individual, the excess earnings of such individual for any taxable year shall be charged in accordance with the provisions of this subsection before the excess earnings of such persons for a taxable year are charged to months in such individual's taxable year. Notwithstanding the preceding provisions of this paragraph but subject to section 202(s), no part of the excess earnings of an individual shall be charged to any month (A) for which such individual was not entitled to a benefit under this title, (B) in which such individual was at or above retirement age (as defined in section 216(l)), (C) in which such individual, if a child entitled to child's insurance benefits, has attained the age of 18, (D) for which such individual is entitled to widow's or widower's insurance benefits if such individual became so entitled prior to attaining age 60, (E) in which such individual did not engage in self-employment and did not render services for wages (determined as provided in paragraph (5) of this subsection) of more than the applicable exempt amount as determined under paragraph (8), if such month is in the taxable year in which occurs the first month after December 1977 that is both (i) a month for which the individual is entitled to benefits under subsection (a), (b), (c), (d), (e), (f), (g), or (h) of section 202 (without having been entitled for the preceding month to a benefit under any other of such subsections), and (ii) a month in which the individual did not engage in self-employment and did not render services for wages (determined as provided in paragraph (5)) of more than the applicable exempt amount as determined under paragraph (8), or (F) in which such individual did not engage in self-employment and did not render services for wages (determined as provided in paragraph (5) of this subsection) of more than the applicable exempt amount as determined under paragraph (8), in the case of an individual entitled to benefits under section 202(b) or (c) (but only by reason of having a child in his or her care within the meaning of paragraph (1)(B) of subsection (b) or (c), as may be applicable) or under section 202(d) or (g), if such month is in a year in which such entitlement ends for a reason other than the death of such individual, and such individual is not entitled to any benefits under this title for the month following the month during which such entitlement under section 202(b), (d), or (g) ended.
(2)
As used in paragraph (1), the term “first month of such taxable year” means the earliest month in such year to which the charging of excess earnings described in such paragraph is not prohibited by the application of clauses (A), (B), (C), (D), (E), and (F) thereof.
(3)
For purposes of paragraph (1) and subsection (h), an individual's excess earnings for a taxable year shall be 33⅓ percent of his earnings for such year in excess of the product of the applicable exempt amount as determined under paragraph (8) in the case of an individual who has attained (or, but for the individual's death, would have attained) retirement age (as defined in section 216(l)) before the close of such taxable year, or 50 percent of his earnings for such year in excess of such product in the case of any other individual, multiplied by the number of months in such year, except that, in determining an individual's excess earnings for the taxable year in which he attains retirement age (as defined in section 216(l)), there shall be excluded any earnings of such individual for the month in which he attains such age and any subsequent month (with any net earnings or net loss from self-employment in such year being prorated in an equitable manner under regulations of the Commissioner of Social Security). For purposes of the preceding sentence, notwithstanding section 211(e), the number of months in the taxable year in which an individual dies shall be 12. The excess earnings as derived under the first sentence of this paragraph, if not a multiple of $1, shall be reduced to the next lower multiple of $1.
(4)
For purposes of clause (E) of paragraph (1)—
(A)
An individual will be presumed, with respect to any month, to have been engaged in self-employment in such month until it is shown to the satisfaction of the Commissioner of Social Security that such individual rendered no substantial services in such month with respect to any trade or business the net income or loss of which is includible in computing (as provided in paragraph (5) of this subsection) his net earnings or net loss from self-employment for any taxable year. The Commissioner of Social Security shall by regulations prescribe the methods and criteria for determining whether or not an individual has rendered substantial services with respect to any trade or business.
(B)
An individual will be presumed, with respect to any month, to have rendered services for wages (determined as provided in paragraph (5) of this subsection) of more than the applicable exempt amount as determined under paragraph (8) until it is shown to the satisfaction of the Commissioner of Social Security that such individual did not render such services in such month for more than such amount.
(5)
(A)
An individual's earnings for a taxable year shall be (i) the sum of his wages for services rendered in such year and his net earnings from self-employment for such year, minus (ii) any net loss from self-employment for such year.
(B)
For purposes of this section—
(i)
an individual's net earnings from self-employment for any taxable year shall be determined as provided in section 211, except that paragraphs (1), (4), and (5) of section 211(c) shall not apply and the gross income shall be computed by excluding the amounts provided by subparagraph (D), and
(ii)
an individual's net loss from self-employment for any taxable year is the excess of the deductions (plus his distributive share of loss described in section 702(a)(8) of the Internal Revenue Code of 1986 taken into account under clause (i) over the gross income (plus his distributive share of income so described) taken into account under clause (i).
(C)
For purposes of this subsection, an individual's wages shall be computed without regard to the limitations as to amounts of remuneration specified in paragraphs (1), (6)(B), (6)(C), (7)(B), and (8) of section 209(a); and in making such computation services which do not constitute employment as defined in section 210, performed within the United States by the individual as an employee or performed outside the United States in the active military or naval service of the United States, shall be deemed to be employment as so defined if the remuneration for such services is not includible in computing his net earnings or net loss from self-employment. The term “wages” does not include—
(i)
the amount of any payment made to, or on behalf of, an employee or any of his dependents (including any amount paid by an employer for insurance or annuities, or into a fund, to provide for any such payment) on account of retirement, or
(ii)
any payment or series of payments by an employer to an employee or any of his dependents upon or after the termination of the employee's employment relationship because of retirement after attaining an age specified in a plan referred to in section 209(a)(11)(B) or in a pension plan of the employer.
(D)
In the case of—
(i)
an individual who has attained retirement age (as defined in section 216(l)) on or before the last day of the taxable year, and who shows to the satisfaction of the Commissioner of Social Security that he or she is receiving royalties attributable to a copyright or patent obtained before the taxable year in which he or she attained such age and that the property to which the copyright or patent relates was created by his or her own personal efforts, or
(ii)
an individual who has become entitled to insurance benefits under this title, other than benefits under section 223 or benefits payable under section 202(d) by reason of being under a disability, and who shows to the satisfaction of the Commissioner of Social Security that he or she is receiving, in a year after his or her initial year of entitlement to such benefits, any other income not attributable to services performed after the month in which he or she initially became entitled to such benefits,
there shall be excluded from gross income any such royalties or other income.
(E)
For purposes of this section, any individual's net earnings from self-employment which result from or are attributable to the performance of services by such individual as a director of a corporation during any taxable year shall be deemed to have been derived (and received) by such individual in that year, at the time the services were performed, regardless of when the income, on which the computation of such net earnings from self-employment is based, is actually paid to or received by such individual (unless such income was actually paid and received prior to that year).
(6)
For purposes of this subsection, wages (determined as provided in paragraph (5)(C)) which, according to reports received by the Commissioner of Social Security, are paid to an individual during a taxable year shall be presumed to have been paid to him for services performed in such year until it is shown to the satisfaction of the Commissioner of Social Security that they were paid for services performed in another taxable year. If such reports with respect to an individual show his wages for a calendar year, such individual's taxable year shall be presumed to be a calendar year for purposes of this subsection until it is shown to the satisfaction of the Commissioner of Social Security that his taxable year is not a calendar year.
(7)
Where an individual's excess earnings are charged to a month and the excess earnings so charged are less than the total of the payments (without regard to such charging) to which all persons (excluding divorced spouses referred to in subsection (b)(2)) are entitled under section 202 for such month on the basis of his wages and self-employment income, the difference between such total and the excess so charged to such month shall be paid (if it is otherwise payable under this title) to such individual and other persons in the proportion that the benefit to which each of them is entitled (without regard to such charging, without the application of section 202(k)(3), and prior to the application of section 203(a)) bears to the total of the benefits to which all of them are entitled.
(8)
(A)
Whenever the Commissioner of Social Security pursuant to section 215(i) increases benefits effective with the month of December following a cost-of-living computation quarter he shall also determine and publish in the Federal Register on or before November 1 of the calendar year in which such quarter occurs the new exempt amounts (separately stated for individuals described in subparagraph (D) and for other individuals) which are to be applicable (unless prevented from becoming effective by subparagraph (C)) with respect to taxable years ending in (or with the close of) the calendar year after the calendar year in which such benefit increase is effective (or, in the case of an individual who dies during the calendar year after the calendar year in which the benefit increase is effective, with respect to such individual's taxable year which ends, upon his death, during such year).
(B)
Except as otherwise provided in subparagraph (D), the exempt amount which is applicable to individuals described in such subparagraph and the exempt amount which is applicable to other individuals, for each month of a particular taxable year, shall each be whichever of the following is the larger—
(i)
the corresponding exempt amount which is in effect with respect to months in the taxable year in which the determination under subparagraph (A) is made, or
(ii)
the product of the corresponding exempt amount which is in effect with respect to months in the taxable year ending after 2001 and before 2003 (with respect to individuals described in subparagraph (D)) or the taxable year ending after 1993–and before 1995 (with respect to other individuals), and the ratio of—
(I)
the national average wage index (as defined in section 209(k)(1)) for the calendar year before the calendar year in which the determination under subparagraph (A) is made, to
(II)
the national average wage index (as so defined) for 2000 (with respect to individuals described in subparagraph (D)) or 1992 (with respect to other individuals),
with such product, if not a multiple of $10, being rounded to the next higher multiple of $10 where such product is a multiple of $5 but not of $10 and to the nearest multiple of $10 in any other case.
Whenever the Commissioner of Social Security determines that an exempt amount is to be increased in any year under this paragraph, he shall notify the House Committee on Ways and Means and the Senate Committee on Finance within 30 days after the close of the base quarter (as defined in section 215(i)(1)(A)) in such year of the estimated amount of such increase, indicating the new exempt amount, the actuarial estimates of the effect of the increase, and the actuarial assumptions and methodology used in preparing such estimates.
(C)
Notwithstanding the determination of a new exempt amount by the Commissioner of Social Security under subparagraph (A) (and notwithstanding any publication thereof under such subparagraph or any notification thereof under the last sentence of subparagraph (B)), such new exempt amount shall not take effect pursuant thereto if during the calendar year in which such determination is made a law increasing the exempt amount is enacted.
(D)
Notwithstanding any other provision of this subsection, the exempt amount which is applicable to an individual who has attained retirement age (as defined in section 216(l)) before the close of the taxable year involved shall be—
(i)
for each month of any taxable year ending after 1995 and before 1997, $1,041.66⅔,
(ii)
for each month of any taxable year ending after 1996 and before 1998, $1,125.00,
(iii)
for each month of any taxable year ending after 1997 and before 1999, $1,208.33⅓,
(iv)
for each month of any taxable year ending after 1998 and before 2000, $1,291.66⅔,
(v)
for each month of any taxable year ending after 1999 and before 2001, $1,416.66⅔,
(vi)
for each month of any taxable year ending after 2000 and before 2002, $2,083.33⅓,
(vii)
for each month of any taxable year ending after 2001 and before 2003, $2,500.00.
(E)
Notwithstanding subparagraph (D), no deductions in benefits shall be made under subsection (b) with respect to the earnings of any individual in any month beginning with the month in which the individual attains retirement age (as defined in section 216(l)).
(9)
For purposes of paragraphs (3), (5)(D)(i), (8)(D), and (8)(E), the term “retirement age (as defined in section 216(l))”, with respect to any individual entitled to monthly insurance benefits under section 202, means the retirement age (as so defined) which is applicable in the case of old-age insurance benefits, regardless of whether or not the particular benefits to which the individual is entitled (or the only such benefits) are old-age insurance benefits.
(g)

Penalty for Failure To Report Certain Events
Any individual in receipt of benefits subject to deduction under subsection (c), (or who is in receipt of such benefits on behalf of another individual), because of the occurrence of an event specified therein, who fails to report such occurrence to the Commissioner of Social Security prior to the receipt and acceptance of an insurance benefit for the second month following the month in which such event occurred, shall suffer deductions in addition to those imposed under subsection (c) as follows:
(1)
if such failure is the first one with respect to which an additional deduction is imposed by this subsection, such additional deduction shall be equal to his benefit or benefits for the first month of the period for which there is a failure to report even though such failure is with respect to more than one month;
(2)
if such failure is the second one with respect to which an additional deduction is imposed by this subsection, such additional deduction shall be equal to two times his benefit or benefits for the first month of the period for which there is a failure to report even though such failure is with respect to more than two months; and
(3)
if such failure is the third or a subsequent one for which an additional deduction is imposed under this subsection, such additional deduction shall be equal to three times his benefit or benefits for the first month of the period for which there is a failure to report even though the failure to report is with respect to more than three months;
except that the number of additional deductions required by this subsection shall not exceed the number of months in the period for which there is a failure to report. As used in this subsection, the term “period for which there is a failure to report” with respect to any individual means the period for which such individual received and accepted insurance benefits under section 202 without making a timely report and for which deductions are required under subsection (c).
(h)

Report of Earnings to Commissioner of Social Security
(1)
(A)
If an individual is entitled to any monthly insurance benefit under section 202 during any taxable year in which he has earnings or wages, as computed pursuant to paragraph (5) of subsection (f), in excess of the product of the applicable exempt amount as determined under subsection (f)(8) times the number of months in such year, such individual (or the individual who is in receipt of such benefit on his behalf) shall make a report to the Commissioner of Social Security of his earnings (or wages) for such taxable year. Such report shall be made on or before the fifteenth day of the fourth month following the close of such year, and shall contain such information and be made in such manner as the Commissioner of Social Security may by regulations prescribe. Such report need not be made for any taxable year—
(i)
beginning with or after the month in which such individual attained retirement age (as defined in section 216(l)), or
(ii)
if benefit payments for all months (in such taxable year) in which such individual is under retirement age (as defined in section 216(l)) have been suspended under the provisions of the first sentence of paragraph (3) of this subsection, unless—
(I)
such individual is entitled to benefits under subsection (b), (c), (d), (e), (f), (g), or (h) of section 202,
(II)
such benefits are reduced under subsection (a) of this section for any month in such taxable year, and
(III)
in any such month there is another person who also is entitled to benefits under subsection (b), (c), (d), (e), (f), (g), or (h) of section 202 on the basis of the same wages and self-employment income and who does not live in the same household as such individual.
The Commissioner of Social Security may grant a reasonable extension of time for making the report of earnings required in this paragraph if the Commissioner finds that there is valid reason for a delay, but in no case may the period be extended more than four months.
(B)
If the benefit payments of an individual have been suspended for all months in any taxable year under the provisions of the first sentence of paragraph (3) of this subsection, no benefit payment shall be made to such individual for any such month in such taxable year after the expiration of the period of three years, three months, and fifteen days following the close of such taxable year unless within such period the individual, or some other person entitled to benefits under this title on the basis of the same wages and self-employment income, files with the Commissioner of Social Security information showing that a benefit for such month is payable to such individual.
(2)
If an individual fails to make a report required under paragraph (1), within the time prescribed by or in accordance with such paragraph, for any taxable year and any deduction is imposed under subsection (b) by reason of his earnings for such year, he shall suffer additional deductions as follows:
(A)
if such failure is the first one with respect to which an additional deduction is imposed under this paragraph, such additional deduction shall be equal to his benefit or benefits for the last month of such year for which he was entitled to a benefit under section 202, except that if the deduction imposed under subsection (b) by reason of his earnings for such year is less than the amount of his benefit (or benefits) for the last month of such year for which he was entitled to a benefit under section 202, the additional deduction shall be equal to the amount of the deduction imposed under subsection (b) but not less than $10;
(B)
if such failure is the second one for which an additional deduction is imposed under this paragraph, such additional deduction shall be equal to two times his benefit or benefits for the last month of such year for which he was entitled to a benefit under section 202;
(C)
if such failure is the third or a subsequent one for which an additional deduction is imposed under this paragraph, such additional deduction shall be equal to three times his benefit or benefits for the last month of such year for which he was entitled to a benefit under section 202;
except that the number of the additional deductions required by this paragraph with respect to a failure to report earnings for a taxable year shall not exceed the number of months in such year for which such individual received and accepted insurance benefits under section 202 and for which deductions are imposed under subsection (b) by reason of his earnings. In determining whether a failure to report earnings is the first or a subsequent failure for any individual, all taxable years ending prior to the imposition of the first additional deduction under this paragraph, other than the latest one of such years, shall be disregarded.
(3)
If the Commissioner of Social Security determines, on the basis of information obtained by or submitted to him, that it may reasonably be expected that an individual entitled to benefits under section 202 for any taxable year will suffer deductions imposed under subsection (b) by reason of his earnings for such year, the Commissioner of Social Security may, before the close of such taxable year, suspend the total or less than the total payment for each month in such year (or for only such months as the Commissioner of Social Security may specify) of the benefits payable on the basis of such individual's wages and self-employment income; and such suspension shall remain in effect with respect to the benefits for any month until the Commissioner of Social Security has determined whether or not any deduction is imposed for such month under subsection (b). The Commissioner of Social Security is authorized, before the close of the taxable year of an individual entitled to benefits during such year, to request of such individual that he make, at such time or times as the Commissioner of Social Security may specify, a declaration of his estimated earnings for the taxable year and that he furnish to the Commissioner of Social Security such other information with respect to such earnings as the Commissioner of Social Security may specify. A failure by such individual to comply with any such request shall in itself constitute justification for a determination under this paragraph that it may reasonably be expected that the individual will suffer deductions imposed under subsection (b) by reason of his earnings for such year. If, after the close of a taxable year of an individual entitled to benefits under section 202 for such year, the Commissioner of Social Security requests such individual to furnish a report of his earnings (as computed pursuant to paragraph (5) of subsection (f)) for such taxable year or any other information with respect to such earnings which the Commissioner of Social Security may specify, and the individual fails to comply with such request, such failure shall in itself constitute justification for a determination that such individual's benefits are subject to deductions under subsection (b) for each month in such taxable year (or only for such months thereof as the Commissioner of Social Security may specify) by reason of his earnings for such year.
(4)
The Commissioner of Social Security shall develop and implement procedures in accordance with this subsection to avoid paying more than the correct amount of benefits to any individual under this title as a result of such individual's failure to file a correct report or estimate of earnings or wages. Such procedures may include identifying categories of individuals who are likely to be paid more than the correct amount of benefits and requesting that they estimate their earnings or wages more frequently than other persons subject to deductions under this section on account of earnings or wages.
[(i)
Repealed.]
(j)

Attainment of retirement age 10
For the purposes of this section, an individual shall be considered as having attained retirement age (as defined in section 216(l)) during the entire month in which he attains such age.
^{10}
So in law. This amendment was carried out as to the probable intent of the Congress. See Public Law 106–182 (114 Stat. 198).
(k)

Noncovered Remunerative Activity Outside the United States
An individual shall be considered to be engaged in noncovered remunerative activity outside the United States if he performs services outside the United States as an employee and such services do not constitute employment as defined in section 210 and are not performed in the active military or naval service of the United States, or if he carries on a trade or business outside the United States (other than the performance of service as an employee) the net income or loss of which (1) is not includible in computing his net earnings from self-employment for a taxable year and (2) would not be excluded from net earnings from self-employment, if carried on in the United States, by any of the numbered paragraphs of section 211(a). When used in the preceding sentence with respect to a trade or business (other than the performance of service as an employee), the term “United States” does not include the Commonwealth of Puerto Rico, the Virgin Islands, Guam, or American Samoa in the case of an alien who is not a resident of the United States (including the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa); and the term “trade or business” shall have the same meaning as when used in section 162 of the Internal Revenue Code of 1986.
(l)

Good Cause for Failure To Make Reports Required
The failure of an individual to make any report required by subsection (g) or (h)(1)(A) within the time prescribed therein shall not be regarded as such a failure if it is shown to the satisfaction of the Commissioner of Social Security that he had good cause for failing to make such report within such time. The determination of what constitutes good cause for purposes of this subsection shall be made in accordance with regulations of the Commissioner of Social Security, except that in making any such determination, the Commissioner of Social Security shall specifically take into account any physical, mental, educational, or linguistic limitation such individual may have (including any lack of facility with the English language).

overpayments and underpayments
Sec. 204.
[42 U.S.C. 404]
(a)
(1)
Whenever the Commissioner of Social Security finds that more or less than the correct amount of payment has been made to any person under this title, proper adjustment or recovery shall be made, under regulations prescribed by the Commissioner of Social Security, as follows:
(A)
With respect to payment to a person of more than the correct amount, the Commissioner of Social Security shall decrease any payment under this title to which such overpaid person is entitled, or shall require such overpaid person or his estate to refund the amount in excess of the correct amount, or shall decrease any payment under this title payable to his estate or to any other person on the basis of the wages and self-employment income which were the basis of the payments to such overpaid person, or shall obtain recovery by means of reduction in tax refunds based on notice to the Secretary of the Treasury as permitted under section 3720A of title 31, United States Code, or shall apply any combination of the foregoing. A payment made under this title on the basis of an erroneous report of death by the Department of Defense of an individual in the line of duty while he is a member of the uniformed services (as defined in section 210(m)) on active duty (as defined in section 210(l)) shall not be considered an incorrect payment for any month prior to the month such Department notifies the Commissioner of Social Security that such individual is alive.
(B)
(i)
Subject to clause (ii), with respect to payment to a person of less than the correct amount, the Commissioner of Social Security shall make payment of the balance of the amount due such underpaid person, or, if such person dies before payments are completed or before negotiating one or more checks representing correct payments, disposition of the amount due shall be made in accordance with subsection (d).
(ii)
No payment shall be made under this subparagraph to any person during any period for which monthly insurance benefits of such person—
(I)
are subject to nonpayment by reason of section 202(x)(1), or
(II)
in the case of a person whose monthly insurance benefits have terminated for a reason other than death, would be subject to nonpayment by reason of section 202(x)(1) but for the termination of such benefits,
until section 202(x)(1) no longer applies, or would no longer apply in the case of benefits that have terminated.
(iii)
Nothing in clause (ii) shall be construed to limit the Commissioner's authority to withhold amounts, make adjustments, or recover amounts due under this title, title VIII or title XVI that would be deducted from a payment that would otherwise be payable to such person but for such clause.
(2)
Notwithstanding any other provision of this section, when any payment of more than the correct amount is made to or on behalf of an individual who has died, and such payment—
(A)
is made by direct deposit to a financial institution;
(B)
is credited by the financial institution to a joint account of the deceased individual and another person; and
(C)
such other person was entitled to a monthly benefit on the basis of the same wages and self-employment income as the deceased individual for the month preceding the month in which the deceased individual died,
the amount of such payment in excess of the correct amount shall be treated as a payment of more than the correct amount to such other person. If any payment of more than the correct amount is made to a representative payee on behalf of an individual after the individual's death, the representative payee shall be liable for the repayment of the overpayment, and the Commissioner of Social Security shall establish an overpayment control record under the social security account number of the representative payee.11
^{11}
Section 201(a) of the Foster Care Independence Act of 1999 (P.L. 106–169) added this sentence to the end of paragraph (2).
Subsection (c) of such section provides as follows:
(c) Effective Date.—The amendments made by this section shall apply to overpayments made 12 months or more after the date of the enactment of this Act.
(3)
(A)
When any payment of more than the correct amount is made on behalf of an individual who is a represented minor beneficiary for a month in which such individual is in foster care under the responsibility of a State and the State is the representative payee of such individual, the State shall be liable for the repayment of the overpayment, and there shall be no adjustment of payments to, or recovery by the United States from, such individual.
(B)
For purposes of this paragraph, the term “represented minor beneficiary” has the meaning given such term in subsection (j)(11)(B)(iii).
(b)
(1)
In any case in which more than the correct amount of payment has been made, there shall be no adjustment of payments to, or recovery by the United States from, any person who is without fault if such adjustment or recovery would defeat the purpose of this title or would be against equity and good conscience.
(2)
In making for purposes of this subsection any determination of whether any individual is without fault, the Commissioner of Social Security shall specifically take into account any physical, mental, educational, or linguistic limitation such individual may have (including any lack of facility with the English language).
(3)
(A)
In making for purposes of this subsection any determination of whether such adjustment or recovery would defeat the purpose of this title, the Commissioner of Social Security shall require an individual to provide authorization for the Commissioner to obtain (subject to the cost reimbursement requirements of section 1115(a) of the Right to Financial Privacy Act) from any financial institution (within the meaning of section 1101(1) of such Act) any financial record (within the meaning of section 1101(2) of such Act) held by the institution with respect to such individual whenever the Commissioner determines the record is needed in connection with a determination with respect to such adjustment or recovery.
(B)
Notwithstanding section 1104(a)(1) of the Right to Financial Privacy Act, an authorization provided by an individual pursuant this paragraph shall remain effective until the earlier of—
(i)
the rendering of a final decision on whether adjustment or recovery would defeat the purpose of this title; or
(ii)
the express revocation by the individual of the authorization, in a written notification to the Commissioner.
(C)
(i)
An authorization obtained by the Commissioner of Social Security pursuant this paragraph shall be considered to meet the requirements of the Right to Financial Privacy Act for purposes of section 1103(a) of such Act, and need not be furnished to the financial institution, notwithstanding section 1104(a) of such Act.
(ii)
The certification requirements of section 1103(b) of the Right to Financial Privacy Act shall not apply to requests by the Commissioner of Social Security pursuant to an authorization provided under this paragraph.
(iii)
A request by the Commissioner pursuant to an authorization provided under this paragraph is deemed to meet the requirements of section 1104(a)(3) of the Right to Financial Privacy Act and the flush language of section 1102 of such Act.
(D)
The Commissioner shall inform any person who provides authorization pursuant to this paragraph of the duration and scope of the authorization.
(E)
If an individual refuses to provide, or revokes, any authorization for the Commissioner of Social Security to obtain from any financial institution any financial record, the Commissioner may, on that basis, determine that adjustment or recovery would not defeat the purpose of this title.
(c)
No certifying or disbursing officer shall be held liable for any amount certified or paid by him to any person where the adjustment or recovery of such amount is waived under subsection (b), or where adjustment under subsection (a) is not completed prior to the death of all persons against whose benefits deductions are authorized.
(d)
If an individual dies before any payment due him under this title is completed, payment of the amount due (including the amount of any unnegotiated checks) shall be made—
(1)
to the person, if any, who is determined by the Commissioner of Social Security to be the surviving spouse of the deceased individual and who either (i) was living in the same household with the deceased at the time of his death or (ii) was, for the month in which the deceased individual died, entitled to a monthly benefit on the basis of the same wages and self-employment income as was the deceased individual;
(2)
if there is no person who meets the requirements of paragraph (1), or if the person who meets such requirements dies before the payment due him under this title is completed, to the child or children, if any, of the deceased individual who were, for the month in which the deceased individual died, entitled to monthly benefits on the basis of the same wages and self-employment income as was the deceased individual (and, in case there is more than one such child, in equal parts to each such child);
(3)
if there is no person who meets the requirements of paragraph (1) or (2), or if each person who meets such requirements dies before the payment due him under this title is completed, to the parent or parents, if any, of the deceased individual who were, for the month in which the deceased individual died, entitled to monthly benefits on the basis of the same wages and self-employment income as was the deceased individual (and, in case there is more than one such parent, in equal parts to each such parent);
(4)
if there is no person who meets the requirements of paragraph (1), (2), or (3), or if each person who meets such requirements dies before the payment due him under this title is completed, to the person, if any, determined by the Commissioner of Social Security to be the surviving spouse of the deceased individual;
(5)
if there is no person who meets the requirements of paragraph (1), (2), (3), or (4), or if each person who meets such requirements dies before the payment due him under this title is completed, to the person or persons, if any, determined by the Commissioner of Social Security to be the child or children of the deceased individual (and, in case there is more than one such child, in equal parts to each such child);
(6)
if there is no person who meets the requirements of paragraph (1), (2), (3), (4), or (5), or if each person who meets such requirements dies before the payment due him under this title is completed, to the parent or parents, if any, of the deceased individual (and, in case there is more than one such parent, in equal parts to each such parent); or
(7)
if there is no person who meets the requirements of paragraph (1), (2), (3), (4), (5), or (6), or if each person who meets such requirements dies before the payment due him under this title is completed, to the legal representative of the estate of the deceased individual, if any.
(e)
For payments which are adjusted by reason of payment of benefits under the supplemental security income program established by title XVI, see section 1127.
(f)
(1)
With respect to any deliquent 12 amount, the Commissioner of Social Security may use the collection practices described in sections 3711(f), 3716, 3717, and 3718 of title 31, United States Code, and in section 5514 of title 5, United States Code, all as in effect immediately after the enactment of the Debt Collection Improvement Act of 1996.
^{12}
As in original.
(2)
For purposes of paragraph (1), the term “delinquent amount” means an amount—
(A)
in excess of the correct amount of payment under this title;
(B)
paid to a person after such person has attained 18 years of age; and
(C)
determined by the Commissioner of Social Security, under regulations, to be otherwise unrecoverable under this section after such person ceases to be a beneficiary under this title.
(g)
For provisions relating to the cross-program recovery of overpayments made under programs administered by the Commissioner of Social Security, see section 1147.

evidence, procedure, and certification for payment
Sec. 205.
[42 U.S.C. 405]
(a)
The Commissioner of Social Security shall have full power and authority to make rules and regulations and to establish procedures, not inconsistent with the provisions of this title, which are necessary or appropriate to carry out such provisions, and shall adopt reasonable and proper rules and regulations to regulate and provide for the nature and extent of the proofs and evidence and the method of taking and furnishing the same in order to establish the right to benefits hereunder.
(b)
(1)
The Commissioner of Social Security is directed to make findings of fact, and decisions as to the rights of any individual applying for a payment under this title. Any such decision by the Commissioner of Social Security which involves a determination of disability and which is in whole or in part unfavorable to such individual shall contain a statement of the case, in understandable language, setting forth a discussion of the evidence, and stating the Commissioner's determination and the reason or reasons upon which it is based. Upon request by any such individual or upon request by a wife, divorced wife, widow, surviving divorced wife, surviving divorced mother, surviving divorced father, husband, divorced husband, widower, surviving divorced husband, child, or parent who makes a showing in writing that his or her rights may be prejudiced by any decision the Commissioner of Social Security has rendered, the Commissioner shall give such applicant and such other individual reasonable notice and opportunity for a hearing with respect to such decision, and, if a hearing is held, shall, on the basis of evidence adduced at the hearing, affirm, modify, or reverse the Commissioner's findings of fact and such decision. Any such request with respect to such a decision must be filed within sixty days after notice of such decision is received by the individual making such request. The Commissioner of Social Security is further authorized, on the Commissioner's own motion, to hold such hearings and to conduct such investigations and other proceedings as the Commissioner may deem necessary or proper for the administration of this title. In the course of any hearing, investigation, or other proceeding, the Commissioner may administer oaths and affirmations, examine witnesses, and receive evidence. Evidence may be received at any hearing before the Commissioner of Social Security even though inadmissible under rules of evidence applicable to court procedure.
(2)
In any case where—
(A)
an individual is a recipient of disability insurance benefits, or of child's, widow's, or widower's insurance benefits based on disability,
(B)
the physical or mental impairment on the basis of which such benefits are payable is found to have ceased, not to have existed, or to no longer be disabling, and
(C)
as a consequence of the finding described in subparagraph (B), such individual is determined by the Commissioner of Social Security not to be entitled to such benefits,
any reconsideration of the finding described in subparagraph (B), in connection with a reconsideration by the Commissioner of Social Security (before any hearing under paragraph (1) on the issue of such entitlement) of the Commissioner's determination described in subparagraph (C), shall be made only after opportunity for an evidentiary hearing, with regard to the finding described in subparagraph (B), which is reasonably accessible to such individual. Any reconsideration of a finding described in subparagraph (B) may be made either by the State agency or the Commissioner of Social Security where the finding was originally made by the State agency, and shall be made by the Commissioner of Social Security where the finding was originally made by the Commissioner of Social Security. In the case of a reconsideration by a State agency of a finding described in subparagraph (B) which was originally made by such State agency, the evidentiary hearing shall be held by an adjudicatory unit of the State agency other than the unit that made the finding described in subparagraph (B). In the case of a reconsideration by the Commissioner of Social Security of a finding described in subparagraph (B) which was originally made by the Commissioner of Social Security, the evidentiary hearing shall be held by a person other than the person or persons who made the finding described in subparagraph (B).
(3)
(A)
A failure to timely request review of an initial adverse determination with respect to an application for any benefit under this title or an adverse determination on reconsideration of such an initial determination shall not serve as a basis for denial of a subsequent application for any benefit under this title if the applicant demonstrates that the applicant, or any other individual referred to in paragraph (1), failed to so request such a review acting in good faith reliance upon incorrect, incomplete, or misleading information, relating to the consequences of reapplying for benefits in lieu of seeking review of an adverse determination, provided by any officer or employee of the Social Security Administration or any State agency acting under section 221.
(B)
In any notice of an adverse determination with respect to which a review may be requested under paragraph (1), the Commissioner of Social Security shall describe in clear and specific language the effect on possible entitlement to benefits under this title of choosing to reapply in lieu of requesting review of the determination.
(c)
(1)
For the purposes of this subsection—
(A)
The term “year” means a calendar year when used with respect to wages and a taxable year when used with respect to self-employment income.
(B)
The term “time limitation” means a period of three years, three months, and fifteen days.
(C)
The term “survivor” means an individual's spouse, surviving divorced wife, surviving divorced husband, surviving divorced mother, surviving divorced father, child, or parent, who survives such individual.
(D)
The term “period” when used with respect to self-employment income means a taxable year and when used with respect to wages means—
(i)
a quarter if wages were reported or should have been reported on a quarterly basis on tax returns filed with the Secretary of the Treasury or his delegate under section 6011 of the Internal Revenue Code of 1986 or regulations thereunder (or on reports filed by a State under section 218(e) (as in effect prior to December 31, 1986) or regulations thereunder),
(ii)
a year if wages were reported or should have been reported on a yearly basis on such tax returns or reports, or
(iii)
the half year beginning January 1 or July 1 in the case of wages which were reported or should have been reported for calendar year 1937.
(2)
(A)
On the basis of information obtained by or submitted to the Commissioner of Social Security, and after such verification thereof as the Commissioner deems necessary, the Commissioner of Social Security shall establish and maintain records of the amounts of wages paid to, and the amounts of self-employment income derived by, each individual and of the periods in which such wages were paid and such income was derived and, upon request, shall inform any individual or his survivor, or the legal representative of such individual or his estate, of the amounts of wages and self-employment income of such individual and the periods during which such wages were paid and such income was derived, as shown by such records at the time of such request.
(B)
(i)
In carrying out the Commissioner's duties under subparagraph (A) and subparagraph (F), the Commissioner of Social Security shall take affirmative measures to assure that social security account numbers will, to the maximum extent practicable, be assigned to all members of appropriate groups or categories of individuals by assigning such numbers (or ascertaining that such numbers have already been assigned):
(I)
to aliens at the time of their lawful admission to the United States either for permanent residence or under other authority of law permitting them to engage in employment in the United States and to other aliens at such time as their status is so changed as to make it lawful for them to engage in such employment;
(II)
to any individual who is an applicant for or recipient of benefits under any program financed in whole or in part from Federal funds including any child on whose behalf such benefits are claimed by another person; and
(III)
to any other individual when it appears that he could have been but was not assigned an account number under the provisions of subclauses (I) or (II) but only after such investigation as is necessary to establish to the satisfaction of the Commissioner of Social Security, the identity of such individual, the fact that an account number has not already been assigned to such individual, and the fact that such individual is a citizen or a noncitizen who is not, because of his alien status, prohibited from engaging in employment;
and, in carrying out such duties, the Commissioner of Social Security is authorized to take affirmative measures to assure the issuance of social security numbers:
(IV)
to or on behalf of children who are below school age at the request of their parents or guardians; and
(V)
to children of school age at the time of their first enrollment in school.
(ii)
The Commissioner of Social Security shall require of applicants for social security account numbers such evidence as may be necessary to establish the age, citizenship, or alien status, and true identity of such applicants, and to determine which (if any) social security account number has previously been assigned to such individual. With respect to an application for a social security account number for an individual who has not attained the age of 18 before such application, such evidence shall include the information described in subparagraph (C)(ii).
(iii)
In carrying out the requirements of this subparagraph, the Commissioner of Social Security shall enter into such agreements as may be necessary with the Attorney General and other officials and with State and local welfare agencies and school authorities (including nonpublic school authorities).
(C)
(i)
It is the policy of the United States that any State (or political subdivision thereof) may, in the administration of any tax, general public assistance, driver's license, or motor vehicle registration law within its jurisdiction, utilize the social security account numbers issued by the Commissioner of Social Security for the purpose of establishing the identification of individuals affected by such law, and may require any individual who is or appears to be so affected to furnish to such State (or political subdivision thereof) or any agency thereof having administrative responsibility for the law involved, the social security account number (or numbers, if he has more than one such number) issued to him by the Commissioner of Social Security.
(ii)
In the administration of any law involving the issuance of a birth certificate, each State shall require each parent to furnish to such State (or political subdivision thereof) or any agency thereof having administrative responsibility for the law involved, the social security account number (or numbers, if the parent has more than one such number) issued to the parent unless the State (in accordance with regulations prescribed by the Commissioner of Social Security) finds good cause for not requiring the furnishing of such number. The State shall make numbers furnished under this subclause available to the Commissioner of Social Security and the agency administering the State's plan under part D of title IV in accordance with Federal or State law and regulation. Such numbers shall not be recorded on the birth certificate. A State shall not use any social security account number, obtained with respect to the issuance by the State of a birth certificate, for any purpose other than for the enforcement of child support orders in effect in the State, unless section 7(a) of the Privacy Act of 1974 does not prohibit the State from requiring the disclosure of such number, by reason of the State having adopted, before January 1, 1975, a statute or regulation requiring such disclosure.
(iii)
(I)
In the administration of section 9 of the Food and Nutrition Act of 2008 (7 U.S.C. 2018) involving the determination of the qualifications of applicants under such Act, the Secretary of Agriculture may require each applicant retail store or wholesale food concern to furnish to the Secretary of Agriculture the social security account number of each individual who is an officer of the store or concern and, in the case of a privately owned applicant, furnish the social security account numbers of the owners of such applicant. No officer or employee of the Department of Agriculture shall have access to any such number for any purpose other than the establishment and maintenance of a list of the names and social security account numbers of such individuals for use in determining those applicants who have been previously sanctioned or convicted under section 12 or 15 of such Act (7 U.S.C. 2021 or 2024).
(II)
The Secretary of Agriculture may share any information contained in any list referred to in subclause (I) with any other agency or instrumentality of the United States which otherwise has access to social security account numbers in accordance with this subsection or other applicable Federal law, except that the Secretary of Agriculture may share such information only to the extent that such Secretary determines such sharing would assist in verifying and matching such information against information maintained by such other agency or instrumentality. Any such information shared pursuant to this subclause may be used by such other agency or instrumentality only for the purpose of effective administration and enforcement of the Food and Nutrition Act of 2008 or for the purpose of investigation of violations of other Federal laws or enforcement of such laws.
(III)
The Secretary of Agriculture, and the head of any other agency or instrumentality referred to in this subclause, shall restrict, to the satisfaction of the Commissioner of Social Security, access to social security account numbers obtained pursuant to this clause only to officers and employees of the United States whose duties or responsibilities require access for the purposes described in subclause (II).
(IV)
The Secretary of Agriculture, and the head of any agency or instrumentality with which information is shared pursuant to clause (II), shall provide such other safeguards as the Commissioner of Social Security determines to be necessary or appropriate to protect the confidentiality of the social security account numbers.
(iv)
In the administration of section 506 of the Federal Crop Insurance Act, the Federal Crop Insurance Corporation may require each policyholder and each reinsured company to furnish to the insurer or to the Corporation the social security account number of such policyholder, subject to the requirements of this clause. No officer or employee of the Federal Crop Insurance Corporation shall have access to any such number for any purpose other than the establishment of a system of records necessary for the effective administration of such Act. The Manager of the Corporation may require each policyholder to provide to the Manager, at such times and in such manner as prescribed by the Manager, the social security account number of each individual that holds or acquires a substantial beneficial interest in the policyholder. For purposes of this clause, the term “substantial beneficial interest” means not less than 5 percent of all beneficial interest in the policyholder. The Secretary of Agriculture shall restrict, to the satisfaction of the Commissioner of Social Security, access to social security account numbers obtained pursuant to this clause only to officers and employees of the United States or authorized persons whose duties or responsibilities require access for the administration of the Federal Crop Insurance Act. The Secretary of Agriculture shall provide such other safeguards as the Commissioner of Social Security determines to be necessary or appropriate to protect the confidentiality of such social security account numbers. For purposes of this clause the term “authorized person” means an officer or employee of an insurer whom the Manager of the Corporation designates by rule, subject to appropriate safeguards including a prohibition against the release of such social security account number (other than to the Corporation) by such person.
(v)
If and to the extent that any provision of Federal law heretofore enacted is inconsistent with the policy set forth in clause (i), such provision shall, on and after the date of the enactment of this subparagraph, be null, void, and of no effect. If and to the extent that any such provision is inconsistent with the requirement set forth in clause (ii), such provision shall, on and after the date of the enactment of such subclause, be null, void, and of no effect.
(vi)
(I)
For purposes of clause (i) of this subparagraph, an agency of a State (or political subdivision thereof) charged with the administration of any general public assistance, driver's license, or motor vehicle registration law which did not use the social security account number for identification under a law or regulation adopted before January 1, 1975, may require an individual to disclose his or her social security number to such agency solely for the purpose of administering the laws referred to in clause (i) above and for the purpose of responding to requests for information from an agency administering a program funded under part A of title IV or an agency operating pursuant to the provisions of part D of such title.
(II)
Any State or political subdivision thereof (and any person acting as an agent of such an agency or instrumentality), in the administration of any driver's license or motor vehicle registration law within its jurisdiction, may not display a social security account number issued by the Commissioner of Social Security (or any derivative of such number) on any driver's license, motor vehicle registration, or personal identification card (as defined in section 7212(a)(2) of the 9/11 Commission Implementation Act of 2004), or include, on any such license, registration, or personal identification card, a magnetic strip, bar code, or other means of communication which conveys such number (or derivative thereof).
(vii)
For purposes of this subparagraph, the term “State” includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Commonwealth of the Northern Marianas, and the Trust Territory of the Pacific Islands.
(viii)
(I)
Social security account numbers and related records that are obtained or maintained by authorized persons pursuant to any provision of law enacted on or after October 1, 1990, shall be confidential, and no authorized person shall disclose any such social security account number or related record.
(II)
Paragraphs (1), (2), and (3) of section 7213(a) of the Internal Revenue Code of 1986 shall apply with respect to the unauthorized willful disclosure to any person of social security account numbers and related records obtained or maintained by an authorized person pursuant to a provision of law enacted on or after October 1, 1990, in the same manner and to the same extent as such paragraphs apply with respect to unauthorized disclosures of return and return information described in such paragraphs. Paragraph (4) of section 7213(a) of such Code shall apply with respect to the willful offer of any item of material value in exchange for any such social security account number or related record in the same manner and to the same extent as such paragraph applies with respect to offers (in exchange for any return or return information) described in such paragraph.
(III)
For purposes of this clause, the term “authorized person” means an officer or employee of the United States, an officer or employee of any State, political subdivision of a State, or agency of a State or political subdivision of a State, and any other person (or officer or employee thereof), who has or had access to social security account numbers or related records pursuant to any provision of law enacted on or after October 1, 1990. For purposes of this subclause, the term “officer or employee” includes a former officer or employee.
(IV)
For purposes of this clause, the term “related record” means any record, list, or compilation that indicates, directly or indirectly, the identity of any individual with respect to whom a social security account number or a request for a social security account number is maintained pursuant to this clause.
(ix)
In the administration of the provisions of chapter 81 of title 5, United States Code, and the Longshore and Harbor Workers' Compensation Act (33 U.S.C. 901 et seq.), the Secretary of Labor may require by regulation that any person filing a notice of injury or a claim for benefits under such provisions provide as part of such notice or claim such person's social security account number, subject to the requirements of this clause. No officer or employee of the Department of Labor shall have access to any such number for any purpose other than the establishment of a system of records necessary for the effective administration of such provisions. The Secretary of Labor shall restrict, to the satisfaction of the Commissioner of Social Security, access to social security account numbers obtained pursuant to this clause to officers and employees of the United States whose duties or responsibilities require access for the administration or enforcement of such provisions. The Secretary of Labor shall provide such other safeguards as the Commissioner of Social Security determines to be necessary or appropriate to protect the confidentiality of the social security account numbers.
(x)
The Secretary of Health and Human Services, and the Exchanges established under section 1311 of the Patient Protection and Affordable Care Act, are authorized to collect and use the names and social security account numbers of individuals as required to administer the provisions of, and the amendments made by, the such Act.
(xi)13
No Federal, State, or local agency may display the Social Security account number of any individual, or any derivative of such number, on any check issued for any payment by the Federal, State, or local agency.
^{13}
The second clause designated as clause (x) was added by section 2(a)(1) of Public Law 111–318 and subsequently redesignated as clause (xi) by section 501(a)(2) of Public Law 114–10. Paragraph (2) of section 2(a) of Public Law 111–318 provides as follows:
(2) Effective date.—The amendment made by this subsection shall apply with respect to checks issued after the date that is 3 years after the date of enactment of this Act .
(xii)14
No Federal, State, or local agency may employ, or enter into a contract for the use or employment of, prisoners in any capacity that would allow such prisoners access to the Social Security account numbers of other individuals. For purposes of this clause, the term “prisoner” means an individual confined in a jail, prison, or other penal institution or correctional facility pursuant to such individual's conviction of a criminal offense.
^{14}
The clause (xi) was added by section 2(b)(1) of Public Law 111–318 and subsequently redesignated as clause (xi) by section 501(a)(2) of Public Law 114–10. Paragraph (2) of such section provides as follows:
(2) Effective date.—The amendment made by this subsection shall apply with respect to employment of prisoners, or entry into contract with prisoners, after the date that is 1 year after the date of enactment of this Act.
(xiii)
The Secretary of Health and Human Services, in consultation with the Commissioner of Social Security, shall establish cost-effective procedures to ensure that a Social Security account number (or derivative thereof) is not displayed, coded, or embedded on the Medicare card issued to an individual who is entitled to benefits under part A of title XVIII or enrolled under part B of title XVIII and that any other identifier displayed on such card is not identifiable as a Social Security account number (or derivative thereof).
(D)
(i)
It is the policy of the United States that—
(I)
any State (or any political subdivision of a State) and any authorized blood donation facility may utilize the social security account numbers issued by the Commissioner of Social Security for the purpose of identifying blood donors, and
(II)
any State (or political subdivision of a State) may require any individual who donates blood within such State (or political subdivision) to furnish to such State (or political subdivision), to any agency thereof having related administrative responsibility, or to any authorized blood donation facility the social security account number (or numbers, if the donor has more than one such number) issued to the donor by the Commissioner of Social Security.
(ii)
If and to the extent that any provision of Federal law enacted before the date of the enactment of this subparagraph is inconsistent with the policy set forth in clause (i), such provision shall, on and after such date, be null, void, and of no effect.
(iii)
For purposes of this subparagraph—
(I)
the term “authorized blood donation facility” means an entity described in section 1141(h)(1)(B), and
(II)
the term “State” includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Commonwealth of the Northern Marianas, and the Trust Territory of the Pacific Islands.
(E)
(i)
It is the policy of the United States that—
(I)
any State (or any political subdivision of a State) may utilize the social security account numbers issued by the Commissioner of Social Security for the additional purposes described in clause (ii) if such numbers have been collected and are otherwise utilized by such State (or political subdivision) in accordance with applicable law, and
(II)
any district court of the United States may use, for such additional purposes, any such social security account numbers which have been so collected and are so utilized by any State.
(ii)
The additional purposes described in this clause are the following:
(I)
Identifying duplicate names of individuals on master lists used for jury selection purposes.
(II)
Identifying on such master lists those individuals who are ineligible to serve on a jury by reason of their conviction of a felony.
(iii)
To the extent that any provision of Federal law enacted before the date of the enactment of this subparagraph is inconsistent with the policy set forth in clause (i), such provision shall, on and after that date, be null, void, and of no effect.
(iv)
For purposes of this subparagraph, the term “State” has the meaning such term has in subparagraph (D).
(F)
The Commissioner of Social Security shall require, as a condition for receipt of benefits under this title, that an individual furnish satisfactory proof of a social security account number assigned to such individual by the Commissioner of Social Security or, in the case of an individual to whom no such number has been assigned, that such individual make proper application for assignment of such a number.
(G)
The Commissioner of Social Security shall issue a social security card to each individual at the time of the issuance of a social security account number to such individual. The social security card shall be made of banknote paper, and (to the maximum extent practicable) shall be a card which cannot be counterfeited.
(H)
The Commissioner of Social Security shall share with the Secretary of the Treasury the information obtained by the Commissioner pursuant to the second sentence of subparagraph (B)(ii) and to subparagraph (C)(ii) for the purpose of administering those sections of the Internal Revenue Code of 1986 which grant tax benefits based on support or residence of children.
(3)
The Commissioner's record shall be evidence for the purpose of proceedings before the Commissioner of Social Security or any court of the amounts of wages paid to, and self-employment income derived by, an individual and of the periods in which such wages were paid and such income was derived. The absence of an entry in such records as to wages alleged to have been paid to, or as to self-employment income alleged to have been derived by, an individual in any period shall be evidence that no such alleged wages were paid to, or that no such alleged income was derived by, such individual during such period.
(4)
Prior to the expiration of the time limitation following any year the Commissioner of Social Security may, if it is brought to the Commissioner's attention that any entry of wages or self-employment income in the Commissioner's records for such year is erroneous or that any item of wages or self-employment income for such year has been omitted from such records, correct such entry or include such omitted item in his records, as the case may be. After the expiration of the time limitation following any year—
(A)
the Commissioner's records (with changes, if any, made pursuant to paragraph (5)) of the amounts of wages paid to, and self-employment income derived by, an individual during any period in such year shall be conclusive for the purposes of this title;
(B)
the absence of an entry in the Commissioner's records as to the wages alleged to have been paid by an employer to an individual during any period in such year shall be presumptive evidence for the purposes of this title that no such alleged wages were paid to such individual in such period; and
(C)
the absence of an entry in the Commissioner's records as to the self-employment income alleged to have been derived by an individual in such year shall be conclusive for the purposes of this title that no such alleged self-employment income was derived by such individual in such year unless it is shown that he filed a tax return of his self-employment income for such year before the expiration of the time limitation following such year, in which case the Commissioner of Social Security shall include in the Commissioner's records the self-employment income of such individual for such year.
(5)
After the expiration of the time limitation following any year in which wages were paid or alleged to have been paid to, or self-employment income was derived or alleged to have been derived by, an individual, the Commissioner of Social Security may change or delete any entry with respect to wages or self-employment income in the Commissioner's records of such year for such individual or include in the Commissioner's records of such year for such individual any omitted item of wages or self-employment income but only—
(A)
if an application for monthly benefits or for a lump-sum death payment was filed within the time limitation following such year; except that no such change, deletion, or inclusion may be made pursuant to this subparagraph after a final decision upon the application for monthly benefits or lump-sum death payment;
(B)
if within the time limitation following such year an individual or his survivor makes a request for a change or deletion, or for an inclusion of an omitted item, and alleges in writing that the Commissioner's records of the wages paid to, or the self-employment income derived by, such individual in such year are in one or more respects erroneous; except that no such change, deletion, or inclusion may be made pursuant to this subparagraph after a final decision upon such request. Written notice of the Commissioner's decision on any such request shall be given to the individual who made the request;
(C)
to correct errors apparent on the face of such records;
(D)
to transfer items to records of the Railroad Retirement Board if such items were credited under this title when they should have been credited under the Railroad Retirement Act of 1937 or 1974, or to enter items transferred by the Railroad Retirement Board which have been credited under the Railroad Retirement Act of 1937 or 1974 when they should have been credited under this title;
(E)
to delete or reduce the amount of any entry which is erroneous as a result of fraud;
(F)
to conform the Commissioner's records to—
(i)
tax returns or portions thereof (including information returns and other written statements) filed with the Commissioner of Internal Revenue under title VIII of the Social Security Act, under subchapter E of chapter 1 or subchapter A of chapter 9 of the Internal Revenue Code of 1939, under chapter 2 or 21 of the Internal Revenue Code of 1954 or the Internal Revenue Code of 1986, or under regulations made under authority of such title, subchapter, or chapter;
(ii)
wage reports filed by a State pursuant to an agreement under section 218 or regulations of the Commissioner of Social Security thereunder; or
(iii)
assessments of amounts due under an agreement pursuant to section 218 (as in effect prior to December 31, 1986), if such assessments are made within the period specified in subsection (q) of such section (as so in effect), or allowances of credits or refunds of overpayments by a State under an agreement pursuant to such section;
except that no amount of self-employment income of an individual for any taxable year (if such return or statement was filed after the expiration of the time limitation following the taxable year) shall be included in the Commissioner's records pursuant to this subparagraph;
(G)
to correct errors made in the allocation, to individuals or periods, of wages or self-employment income entered in the records of the Commissioner of Social Security;
(H)
to include wages paid during any period in such year to an individual by an employer;
(I)
to enter items which constitute remuneration for employment under subsection (o), such entries to be in accordance with certified reports of records made by the Railroad Retirement Board pursuant to section 5(k)(3) of the Railroad Retirement Act of 1937 or section 7(b)(7) of the Railroad Retirement Act of 1974; or
(J)
to include self-employment income for any taxable year, up to, but not in excess of, the amount of wages deleted by the Commissioner of Social Security as payments erroneously included in such records as wages paid to such individual, if such income (or net earnings from self-employment), not already included in such records as self-employment income, is included in a return or statement (referred to in subparagraph (F)) filed before the expiration of the time limitation following the taxable year in which such deletion of wages is made.
(6)
Written notice of any deletion or reduction under paragraph (4) or (5) shall be given to the individual whose record is involved or to his survivor, except that (A) in the case of a deletion or reduction with respect to any entry of wages such notice shall be given to such individual only if he has previously been notified by the Commissioner of Social Security of the amount of his wages for the period involved, and (B) such notice shall be given to such survivor only if he or the individual whose record is involved has previously been notified by the Commissioner of Social Security of the amount of such individual's wages and self-employment income for the period involved.
(7)
Upon request in writing (within such period, after any change or refusal of a request for a change of the Commissioner's records pursuant to this subsection, as the Commissioner of Social Security may prescribe), opportunity for hearing with respect to such change or refusal shall be afforded to any individual or his survivor. If a hearing is held pursuant to this paragraph the Commissioner of Social Security shall make findings of fact and a decision based upon the evidence adduced at such hearing and shall include any omitted items, or change or delete any entry, in the Commissioner's records as may be required by such findings and decision.
(8)
A translation into English by a third party of a statement made in a foreign language by an applicant for or beneficiary of monthly insurance benefits under this title shall not be regarded as reliable for any purpose under this title unless the third party, under penalty or perjury—
(A)
certifies that the translation is accurate; and
(B)
discloses the nature and scope of the relationship between the third party and the applicant or recipient, as the case may be.
(9)
Decisions of the Commissioner of Social Security under this subsection shall be reviewable by commencing a civil action in the United States district court as provided in subsection (g).
(d)
For the purpose of any hearing, investigation, or other proceeding authorized or directed under this title, or relative to any other matter within the Commissioner's jurisdiction hereunder, the Commissioner of Social Security shall have power to issue subpenas requiring the attendance and testimony of witnesses and the production of any evidence that relates to any matter under investigation or in question before the Commissioner of Social Security. Such attendance of witnesses and production of evidence at the designated place of such hearing, investigation, or other proceeding may be required from any place in the United States or in any Territory or possession thereof. Subpenas of the Commissioner of Social Security shall be served by anyone authorized by the Commissioner (1) by delivering a copy thereof to the individual named therein, or (2) by registered mail or by certified mail addressed to such individual at his last dwelling place or principal place of business. A verified return by the individual so serving the subpena setting forth the manner of service, or, in the case of service by registered mail or by certified mail, the return post-office receipt therefor signed by the individual so served, shall be proof of service. Witnesses so subpenaed shall be paid the same fees and mileage as are paid witnesses in the district courts of the United States.
(e)
In case of contumacy by, or refusal to obey a subpena duly served upon, any person, any district court of the United States for the judicial district in which said person charged with contumacy or refusal to obey is found or resides or transacts business, upon application by the Commissioner of Social Security, shall have jurisdiction to issue an order requiring such person to appear and give testimony, or to appear and produce evidence, or both; any failure to obey such order of the court may be punished by said court as contempt thereof.
[(f)
Repealed.]
(g)
Any individual, after any final decision of the Commissioner of Social Security made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Commissioner of Social Security may allow. Such action shall be brought in the district court of the United States for the judicial district in which the plaintiff resides, or has his principal place of business, or, if he does not reside or have his principal place of business within any such judicial district, in the United States District Court for the District of Columbia. As part of the Commissioner's answer the Commissioner of Social Security shall file a certified copy of the transcript of the record including the evidence upon which the findings and decision complained of are based. The court shall have power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Commissioner of Social Security, with or without remanding the cause for a rehearing. The findings of the Commissioner of Social Security as to any fact, if supported by substantial evidence, shall be conclusive, and where a claim has been denied by the Commissioner of Social Security or a decision is rendered under subsection (b) hereof which is adverse to an individual who was a party to the hearing before the Commissioner of Social Security, because of failure of the claimant or such individual to submit proof in conformity with any regulation prescribed under subsection (a) hereof, the court shall review only the question of conformity with such regulations and the validity of such regulations. The court may, on motion of the Commissioner of Social Security made for good cause shown before the Commissioner files the Commissioner's answer, remand the case to the Commissioner of Social Security for further action by the Commissioner of Social Security, and it may at any time order additional evidence to be taken before the Commissioner of Social Security, but only upon a showing that there is new evidence which is material and that there is good cause for the failure to incorporate such evidence into the record in a prior proceeding; and the Commissioner of Social Security shall, after the case is remanded, and after hearing such additional evidence if so ordered, modify or affirm the Commissioner's findings of fact or the Commissioner's decision, or both, and shall file with the court any such additional and modified findings of fact and decision, and, in any case in which the Commissioner has not made a decision fully favorable to the individual, a transcript of the additional record and testimony upon which the Commissioner's action in modifying or affirming was based. Such additional or modified findings of fact and decision shall be reviewable only to the extent provided for review of the original findings of fact and decision. The judgment of the court shall be final except that it shall be subject to review in the same manner as a judgment in other civil actions. Any action instituted in accordance with this subsection shall survive notwithstanding any change in the person occupying the office of Commissioner of Social Security or any vacancy in such office.
(h)
The findings and decision of the Commissioner of Social Security after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the Commissioner of Social Security shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the Commissioner of Social Security or any officer or employee thereof shall be brought under section 1331 or 1346 of title 28, United States Code, to recover on any claim arising under this title.
(i)
Upon final decision of the Commissioner of Social Security, or upon final judgment of any court of competent jurisdiction, that any person is entitled to any payment or payments under this title, the Commissioner of Social Security shall certify to the Managing Trustee the name and address of the person so entitled to receive such payment or payments, the amount of such payment or payments, and the time at which such payment or payments should be made, and the Managing Trustee, through the Fiscal Service of the Department of the Treasury, and prior to any action thereon by the General Accounting Office, shall make payment in accordance with the certification of the Commissioner of Social Security (except that in the case of (A) an individual who will have completed ten years of service (or five or more years of service, all of which accrues after December 31, 1995) creditable under the Railroad Retirement Act of 1937 or the Railroad Retirement Act of 1974, (B) the wife or husband or divorced wife or divorced husband of such an individual, (C) any survivor of such an individual if such survivor is entitled, or could upon application become entitled, to an annuity under section 2 of the Railroad Retirement Act of 1974, and (D) any other person entitled to benefits under section 202 of this Act on the basis of the wages and self-employment income of such an individual (except a survivor of such an individual where such individual did not have a current connection with the railroad industry, as defined in the Railroad Retirement Act of 1974, at the time of his death), such certification shall be made to the Railroad Retirement Board which shall provide for such payment or payments to such person on behalf of the Managing Trustee in accordance with the provisions of the Railroad Retirement Act of 1974): Provided, That where a review of the Commissioner's decision is or may be sought under subsection (g) the Commissioner of Social Security may withhold certification of payment pending such review. The Managing Trustee shall not be held personally liable for any payment or payments made in accordance with a certification by the Commissioner of Social Security.
(j)

Representative Payees
(1)
(A)
If the Commissioner of Social Security determines that the interest of any individual under this title would be served thereby, certification of payment of such individual's benefit under this title may be made, regardless of the legal competency or incompetency of the individual, either for direct payment to the individual, or for his or her use and benefit, to another individual, or an organization, with respect to whom the requirements of paragraph (2) have been met (hereinafter in this subsection referred to as the individual's “representative payee”). If the Commissioner of Social Security or a court of competent jurisdiction determines that a representative payee has misused any individual's benefit paid to such representative payee pursuant to this subsection or section 807 or 1631(a)(2), the Commissioner of Social Security shall promptly revoke certification for payment of benefits to such representative payee pursuant to this subsection and certify payment to an alternative representative payee or, if the interest of the individual under this title would be served thereby, to the individual.
(B)
In the case of an individual entitled to benefits based on disability, the payment of such benefits shall be made to a representative payee if the Commissioner of Social Security determines that such payment would serve the interest of the individual because the individual also has an alcoholism or drug addiction condition (as determined by the Commissioner) and the individual is incapable of managing such benefits.
(C)
(i)
An individual who is entitled to or is an applicant for a benefit under this title, title VIII, or title XVI, who has attained 18 years of age or is an emancipated minor, may, at any time, designate one or more other individuals to serve as a representative payee for such individual in the event that the Commissioner of Social Security determines under subparagraph (A) that the interest of such individual would be served by certification for payment of such benefits to which the individual is entitled to a representative payee. If the Commissioner of Social Security makes such a determination with respect to such individual at any time after such designation has been made, the Commissioner shall—
(I)
certify payment of such benefits to the designated individual, subject to the requirements of paragraph (2); or
(II)
if the Commissioner determines that certification for payment of such benefits to the designated individual would not satisfy the requirements of paragraph (2), that the designated individual is unwilling or unable to serve as representative payee, or that other good cause exists, certify payment of such benefits to another individual or organization, in accordance with paragraph (1).
(ii)
An organization may not be designated to serve as a representative payee under this subparagraph.
(2)
(A)
Any certification made under paragraph (1) for payment of benefits to an individual's representative payee shall be made on the basis of—
(i)
an investigation by the Commissioner of Social Security of the person to serve as representative payee, which shall be conducted in advance of such certification and shall, to the extent practicable, include a face-to-face interview with such person, and
(ii)
adequate evidence that such certification is in the interest of such individual (as determined by the Commissioner of Social Security in regulations).
(B)
(i)
As part of the investigation referred to in subparagraph (A)(i), the Commissioner of Social Security shall—
(I)
require the person being investigated to submit documented proof of the identity of such person, unless information establishing such identity has been submitted with an application for benefits under this title, title VIII, or title XVI,
(II)
verify such person's social security account number (or employer identification number),
(III)
determine whether such person has been convicted of a violation of section 208, 811, or 1632,
(IV)
obtain information concerning whether such person has been convicted of any other offense under Federal or State law which resulted in imprisonment for more than 1 year,
(V)
obtain information concerning whether such person is a person described in section 202(x)(1)(A)(iv),
(VI)
determine whether certification of payment of benefits to such person has been revoked pursuant to this subsection, the designation of such person as a representative payee has been revoked pursuant to section 807(a), or payment of benefits to such person has been terminated pursuant to section 1631(a)(2)(A)(iii) by reason of misuse of funds paid as benefits under this title, title VIII, or title XVI, and
(VII)
determine whether such person has been convicted (and not subsequently exonerated), under Federal or State law, of a felony provided under clause (iv), or of an attempt or a conspiracy to commit such a felony.
(ii)
The Commissioner of Social Security shall establish and maintain a centralized file, which shall be updated periodically and which shall be in a form which renders it readily retrievable by each servicing office of the Social Security Administration. Such file shall consist of—
(I)
a list of the names and social security account numbers (or employer identification numbers) of all persons with respect to whom certification of payment of benefits has been revoked on or after January 1, 1991, pursuant to this subsection, whose designation as a representative payee has been revoked pursuant to section 807(a), or with respect to whom payment of benefits has been terminated on or after such date pursuant to section 1631(a)(2)(A)(iii), by reason of misuse of funds paid as benefits under this title, title VIII, or title XVI, and
(II)
a list of the names and social security account numbers (or employer identification numbers) of all persons who have been convicted of a violation of section 208, 811, or 1632.
(iii)
Notwithstanding the provisions of section 552a of title 5, United States Code, or any other provision of Federal or State law (other than section 6103 of the Internal Revenue Code of 1986 and section 1106(c) of this Act), the Commissioner shall furnish any Federal, State, or local law enforcement officer, upon the written request of the officer, with the current address, social security account number, and photograph (if applicable) of any person investigated under this paragraph, if the officer furnishes the Commissioner with the name of such person and such other identifying information as may reasonably be required by the Commissioner to establish the unique identity of such person, and notifies the Commissioner that—
(I)
such person is described in section 202(x)(1)(A)(iv),
(II)
such person has information that is necessary for the officer to conduct the officer's official duties, and
(III)
the location or apprehension of such person is within the officer's official duties.
(iv)
The felony crimes provided under this clause, whether an offense under State or Federal law, are the following:
(I)
Human trafficking, including as prohibited under sections 1590 and 1591 of title 18, United States Code.
(II)
False imprisonment, including as prohibited under section 1201 of title 18, United States Code.
(III)
Kidnapping, including as prohibited under section 1201 of title 18, United States Code.
(IV)
Rape and sexual assault, including as prohibited under sections 2241, 2242, 2243, and 2244 of title 18, United States Code.
(V)
First-degree homicide, including as prohibited under section 1111 of title 18, United States Code.
(VI)
Robbery, including as prohibited under section 2111 of title 18, United States Code.
(VII)
Fraud to obtain access to government assistance, including as prohibited under sections 287, 1001, and 1343 of title 18, United States Code.
(VIII)
Fraud by scheme, including as prohibited under section 1343 of title 18, United States Code.
(IX)
Theft of government funds or property, including as prohibited under section 641 of title 18, United States Code.
(X)
Abuse or neglect, including as prohibited under sections 111, 113, 114, 115, 116, or 117 of title 18, United States Code.
(XI)
Forgery, including as prohibited under section 642 and chapter 25 (except section 512) of title 18, United States Code.
(XII)
Identity theft or identity fraud, including as prohibited under sections 1028 and 1028A of title 18, United States Code.
The Commissioner of Social Security may promulgate regulations to provide for additional felony crimes under this clause.
(v)
(I)
For the purpose of carrying out the activities required under subparagraph (B)(i) as part of the investigation under subparagraph (A)(i), the Commissioner may conduct a background check of any individual seeking to serve as a representative payee under this subsection and may disqualify from service as a representative payee any such individual who fails to grant permission for the Commissioner to conduct such a background check.
(II)
The Commissioner may revoke certification of payment of benefits under this subsection to any individual serving as a representative payee on or after January 1, 2019 who fails to grant permission for the Commissioner to conduct such a background check.
(C)
(i)
Benefits of an individual may not be certified for payment to any other person pursuant to this subsection if—
(I)
such person has previously been convicted as described in subparagraph (B)(i)(III),
(II)
except as provided in clause (ii), certification of payment of benefits to such person under this subsection has previously been revoked as described in subparagraph (B)(i)(VI)15 the designation of such person as a representative payee has been revoked pursuant to section 807(a), or payment of benefits to such person pursuant to section 1631(a)(2)(A)(ii) has previously been terminated as described in section 1631(a)(2)(B)(ii)(VI),
^{15}
So in original. A comma is missing.
(III)
except as provided in clause (iii), such person is a creditor of such individual who provides such individual with goods or services for consideration,
(IV)
such person has previously been convicted as described in subparagraph (B)(i)(IV), unless the Commissioner determines that such certification would be appropriate notwithstanding such conviction,
(V)
such person is a person described in section 202(x)(1)(A)(iv),
(VI)
except as provided in clause (vi), such person has previously been convicted (and not subsequently exonerated) as described in subparagraph (B)(i)(VII), or
(VII)
such person’s benefits under this title, title VIII, or title XVI are certified for payment to a representative payee during the period for which the individual’s benefits would be certified for payment to another person.
(ii)
The Commissioner of Social Security shall prescribe regulations under which the Commissioner of Social Security may grant exemptions to any person from the provisions of clause (i)(II) on a case-by-case basis if such exemption is in the best interest of the individual whose benefits would be paid to such person pursuant to this subsection.
(iii)
Clause (i)(III) shall not apply with respect to any person who is a creditor referred to therein if such creditor is—
(I)
a relative of such individual if such relative resides in the same household as such individual,
(II)
a legal guardian or legal representative of such individual,
(III)
a facility that is licensed or certified as a care facility under the law of a State or a political subdivision of a State,
(IV)
a person who is an administrator, owner, or employee of a facility referred to in subclause (III) if such individual resides in such facility, and the certification of payment to such facility or such person is made only after good faith efforts have been made by the local servicing office of the Social Security Administration to locate an alternative representative payee to whom such certification of payment would serve the best interests of such individual, or
(V)
an individual who is determined by the Commissioner of Social Security, on the basis of written findings and under procedures which the Commissioner of Social Security shall prescribe by regulation, to be acceptable to serve as a representative payee.
(iv)
The procedures referred to in clause (iii)(V) shall require the individual who will serve as representative payee to establish, to the satisfaction of the Commissioner of Social Security, that—
(I)
such individual poses no risk to the beneficiary,
(II)
the financial relationship of such individual to the beneficiary poses no substantial conflict of interest, and
(III)
no other more suitable representative payee can be found.
(v)
In the case of an individual described in paragraph (1)(B), when selecting such individual's representative payee, preference shall be given to—
(I)
certified community-based nonprofit social service agencies (as defined in paragraph (10)),
(II)
a Federal, State, or local government agency whose mission is to carry out income maintenance, social service, or health care-related activities,
(III)
a State or local government agency with fiduciary responsibilities, or
(IV)
a designee of an agency (other than of a Federal agency) referred to in the preceding subclauses of this clause, if the Commissioner of Social Security deems it appropriate,
unless the Commissioner of Social Security determines that selection of a family member would be appropriate.
(vi)
(I)
With respect to any person described in subclause (II)—
- (aa)
subparagraph (B)(i)(VII) shall not apply; and
- (bb)
the Commissioner may grant an exemption from the provisions of clause (i)(VI) if the Commissioner determines that such exemption is in the best interest of the individual entitled to benefits.
(II)
A person is described in this subclause if the person—
- (aa)
is the custodial parent of a minor child for whom the person applies to serve;
- (bb)
is the custodial spouse of the beneficiary for whom the person applies to serve;
- (cc)
is the custodial parent of a beneficiary who is under a disability (as defined in section 223(d)) which began before the beneficiary attained the age of 22, for whom the person applies to serve;
- (dd)
is the custodial court appointed guardian of the beneficiary for whom the person applies to serve;
- (ee)
is the custodial grandparent of a minor grandchild for whom the person applies to serve;
- (ff)
is the parent who was previously representative payee for his or her minor child who has since turned 18 and continues to be eligible for such benefit; or
- (gg)
received a presidential or gubernatorial pardon for the relevant conviction.
(D)
(i)
Subject to clause (ii), if the Commissioner of Social Security makes a determination described in the first sentence of paragraph (1) with respect to any individual's benefit and determines that direct payment of the benefit to the individual would cause substantial harm to the individual, the Commissioner of Social Security may defer (in the case of initial entitlement) or suspend (in the case of existing entitlement) direct payment of such benefit to the individual, until such time as the selection of a representative payee is made pursuant to this subsection.
(ii)
(I)
Except as provided in subclause (II), any deferral or suspension of direct payment of a benefit pursuant to clause (i) shall be for a period of not more than 1 month.
(II)
Subclause (I) shall not apply in any case in which the individual is, as of the date of the Commissioner's determination, legally incompetent, under the age of 15 years, or described in paragraph (1)(B).
(iii)
Payment pursuant to this subsection of any benefits which are deferred or suspended pending the selection of a representative payee shall be made to the individual or the representative payee as a single sum or over such period of time as the Commissioner of Social Security determines is in the best interest of the individual entitled to such benefits.
(E)
(i)
Any individual who is dissatisfied with a determination by the Commissioner of Social Security to certify payment of such individual's benefit to a representative payee under paragraph (1) or with the designation of a particular person to serve as representative payee shall be entitled to a hearing by the Commissioner of Social Security to the same extent as is provided in subsection (b), and to judicial review of the Commissioner's final decision as is provided in subsection (g).
(ii)
In advance of the certification of payment of an individual's benefit to a representative payee under paragraph (1), the Commissioner of Social Security shall provide written notice of the Commissioner's initial determination to certify such payment. Such notice shall be provided to such individual, except that, if such individual—
(I)
is under the age of 15,
(II)
is an unemancipated minor under the age of 18, or
(III)
is legally incompetent,
then such notice shall be provided solely to the legal guardian or legal representative of such individual.
(iii)
Any notice described in clause (ii) shall be clearly written in language that is easily understandable to the reader, shall identify the person to be designated as such individual's representative payee, and shall explain to the reader the right under clause (i) of such individual or of such individual's legal guardian or legal representative—
(I)
to appeal a determination that a representative payee is necessary for such individual,
(II)
to appeal the designation of a particular person to serve as the representative payee of such individual, and
(III)
to review the evidence upon which such designation is based and submit additional evidence.
(3)
(A)
In any case where payment under this title is made to a person other than the individual entitled to such payment, the Commissioner of Social Security shall establish a system of accountability monitoring whereby such person shall report not less often than annually with respect to the use of such payments. The Commissioner of Social Security shall establish and implement statistically valid procedures for reviewing such reports in order to identify instances in which such persons are not properly using such payments.
(B)
Subparagraph (A) shall not apply in any case where the other person to whom such payment is made is a State institution. In such cases, the Commissioner of Social Security shall establish a system of accountability monitoring for institutions in each State.
(C)
Subparagraph (A) shall not apply in any case where the individual entitled to such payment is a resident of a Federal institution and the other person to whom such payment is made is the institution.
(D)16
(i)
Subparagraph (A) shall not apply in any case where the other person to whom such payment is made is—
(I)
a parent, or other individual who is a legal guardian of, a minor child entitled to such payment who primarily resides in the same household;
(II)
a parent of an individual entitled to such payment who is under a disability (as defined in section 223(d)) who primarily resides in the same household; or
(III)
the spouse of the individual entitled to such payment.
(ii)
The Commissioner of Social Security shall establish and implement procedures as necessary for the Commissioner to determine the eligibility of such parties for the exemption provided in clause (i). The Commissioner shall prescribe such regulations as may be necessary to determine eligibility for such exemption.
^{16}
Margin for subparagraph (D) is so in law.
(E)
Notwithstanding subparagraphs (A), (B), (C), and (D), the Commissioner of Social Security may require a report at any time from any person receiving payments on behalf of another, if the Commissioner of Social Security has reason to believe that the person receiving such payments is misusing such payments.
(F)
In any case in which the person described in subparagraph (A) or (E) receiving payments on behalf of another fails to submit a report required by the Commissioner of Social Security under subparagraph (A) or (E), the Commissioner may, after furnishing notice to such person and the individual entitled to such payment, require that such person appear in person at a field office of the Social Security Administration serving the area in which the individual resides in order to receive such payments.
(G)
The Commissioner of Social Security shall maintain a centralized file, which shall be updated periodically and which shall be in a form which will be readily retrievable by each servicing office of the Social Security Administration, of—
(i)
the address and the social security account number (or employer identification number) of each representative payee who is receiving benefit payments pursuant to this subsection, section 807, or section 1631(a)(2), and
(ii)
the address and social security account number of each individual for whom each representative payee is reported to be providing services as representative payee pursuant to this subsection, section 807, or section 1631(a)(2).
(H)
Each servicing office of the Administration shall maintain a list, which shall be updated periodically, of public agencies and certified community-based nonprofit social service agencies (as defined in paragraph (10)) which are qualified to serve as representative payees pursuant to this subsection or section 807 or 1631(a)(2) and which are located in the area served by such servicing office.
(4)
(A)
(i)
Except as provided in the next sentence, a qualified organization may collect from an individual a monthly fee for expenses (including overhead) incurred by such organization in providing services performed as such individual's representative payee pursuant to this subsection if such fee does not exceed the lesser of—
(I)
10 percent of the monthly benefit involved, or
(II)
$25.00 per month ($50.00 per month in any case in which the individual is described in paragraph(1)(B)).
A qualified organization may not collect a fee from an individual for any month with respect to which the Commissioner of Social Security or a court of competent jurisdiction has determined that the organization misused all or part of the individual's benefit, and any amount so collected by the qualified organization for such month shall be treated as a misused part of the individual's benefit for purposes of paragraphs (5) and (6). The Commissioner shall adjust annually (after 1995) each dollar amount set forth in subclause (II) under procedures providing for adjustments in the same manner and to the same extent as adjustments are provided for under the procedures used to adjust benefit amounts under section 215(i)(2)(A), except that any amount so adjusted that is not a multiple of $1.00 shall be rounded to the nearest multiple of $1.00.
(ii)
In the case of an individual who is no longer currently entitled to monthly insurance benefits under this title but to whom all past-due benefits have not been paid, for purposes of clause (i), any amount of such past-due benefits payable in any month shall be treated as a monthly benefit referred to in clause (i)(I).
Any agreement providing for a fee in excess of the amount permitted under this subparagraph shall be void and shall be treated as misuse by such organization of such individual's benefits.
(B)
For purposes of this paragraph, the term “qualified organization” means any State or local government agency whose mission is to carry out income maintenance, social service, or health care-related activities, any State or local government agency with fiduciary responsibilities, or any certified community-based nonprofit social service agency (as defined in paragraph (10)), if such agency, in accordance with any applicable regulations of the Commissioner of Social Security—
(i)
regularly provides services as the representative payee, pursuant to this subsection or section 807 or 1631(a)(2), concurrently to 5 or more individuals,
(ii)
demonstrates to the satisfaction of the Commissioner of Social Security that such agency is not otherwise a creditor of any such individual.
The Commissioner of Social Security shall prescribe regulations under which the Commissioner of Social Security may grant an exception from clause (ii) for any individual on a case-by-case basis if such exception is in the best interests of such individual.
(C)
Any qualified organization which knowingly charges or collects, directly or indirectly, any fee in excess of the maximum fee prescribed under subparagraph (A) or makes any agreement, directly or indirectly, to charge or collect any fee in excess of such maximum fee, shall be fined in accordance with title 18, United States Code, or imprisoned not more than 6 months, or both.
(5)
In cases where the negligent failure of the Commissioner of Social Security to investigate or monitor a representative payee results in misuse of benefits by the representative payee, the Commissioner of Social Security shall certify for payment to the beneficiary or the beneficiary's alternative representative payee an amount equal to such misused benefits. In any case in which a representative payee that—
(A)
is not an individual (regardless of whether it is a “qualified organization” within the meaning of paragraph (4)(B)); or
(B)
is an individual who, for any month during a period when misuse occurs, serves 15 or more individuals who are beneficiaries under this title, title VIII, title XVI, or any combination of such titles;
misuses all or part of an individual's benefit paid to such representative payee, the Commissioner of Social Security shall certify for payment to the beneficiary or the beneficiary's alternative representative payee an amount equal to the amount of such benefit so misused. The provisions of this paragraph are subject to the limitations of paragraph (7)(B). The Commissioner of Social Security shall make a good faith effort to obtain restitution from the terminated representative payee.
(6)
In addition to such other reviews of representative payees as the Commissioner of Social Security may otherwise conduct, the Commissioner shall provide for the periodic onsite review of any person or agency located in the United States that receives the benefits payable under this title (alone or in combination with benefits payable under title VIII or title XVI) to another individual pursuant to the appointment of such person or agency as a representative payee under this subsection, section 807, or section 1631(a)(2) in any case in which—
(i)17
the representative payee is a person who serves in that capacity with respect to 15 or more such individuals;
^{17}
Clauses (i) through (iv) are so in law and probably should be designated as subparagraphs. Also, subparagraph (C) is the only subparagraph in paragraph (6). See amendments made by sections 101(a) and (b) and 105(a)(1) of P.L. 115-165.
(ii)
the representative payee is a certified community-based nonprofit social service agency (as defined in paragraph (10) of this subsection or section 1631(a)(2)(I));
(iii)
the representative payee is an agency (other than an agency described in clause (ii)) that serves in that capacity with respect to 50 or more such individuals; or
(iv)
the representative payee collects a fee for its services.
The Commissioner shall also conduct periodic onsite reviews of individual and organizational payees, including payees who are related to the beneficiary and primarily reside in the same household, selected on the basis of risk-factors for potential misuse or unsuitability associated with such payees or beneficiaries.
(C)17
(i)
The Commissioner of Social Security shall make annual grants directly to the protection and advocacy system serving each of the States and the American Indian consortium for the purpose of conducting reviews of representative payees in accordance with this subparagraph. The total amount used by the Commissioner for such grants each year—
(I)
shall be an amount sufficient, as determined by the Commissioner in consultation with each of the protection and advocacy systems, to carry out all of the activities described in clause (ii); and
(II)
shall not be less than $25,000,000.
(ii)
A protection and advocacy system awarded a grant under this subparagraph shall use the grant funds to—
(I)
conduct all periodic onsite reviews pursuant to this paragraph and such other reviews of representative payees as the Commissioner may request, including reviews conducted in response to allegations or concerns about the performance or suitability of the payee;
(II)
conduct additional reviews that the protection and advocacy system has reason to believe are warranted;
(III)
develop corrective action plans to assist representative payees in conforming to requirements specified by the Commissioner;
(IV)
submit a report to the Commissioner on each completed review containing such information as the Commissioner shall require; and
(V)
conduct an initial onsite assessment of any organization that begins collecting a fee for its services as a representative payee to ensure that such organization is established as such a representative payee in accordance with requirements specified by the Commissioner.
A protection and advocacy system may refer beneficiaries to other programs or services as the protection and advocacy system considers appropriate.
(iii)
To be eligible to receive grants under this section, a protection and advocacy system shall submit an initial application to the Commissioner at such time, in such form and manner, and accompanied by such information and assurances as the Commissioner may require.
(iv)
(I)
Subject to subclause (II), the Commissioner shall ensure that any funds used for grants under clause (i) shall be allocated to the protection and advocacy systems serving each of the States and the American Indian consortium in a manner such that the amount provided to each protection and advocacy system bears the same ratio to the total of such funds as the number of represented beneficiaries in the State or American Indian consortium in which such protection and advocacy system is located bears to the total number of represented beneficiaries.
(II)
The amount of an annual grant to a protection and advocacy system under clause (i) shall—
- (aa)
in the case of a protection and advocacy system serving American Samoa, Guam, the United States Virgin Islands, or the Commonwealth of the Northern Mariana Islands, or the American Indian consortium, not be less than $30,000; and
- (bb)
in the case of a protection and advocacy system serving any other State, not be less than $60,000.
(III)
Funds provided to a protection and advocacy system through a grant under clause (i) for a 1-year period shall remain available through the end of the following 1-year period.
(IV)
For purposes of this clause, the term “represented beneficiary” means an individual—
- (aa)
who is entitled to benefits under this title, title VIII, or title XVI; and
- (bb)
whose benefits have been certified for payment to a representative payee.
(v)
(I)
The Commissioner shall make annual grants, in an amount equal to 4 percent of the total amount of grants awarded each year under clause (i), to an eligible national association for the provision of training and technical assistance, administrative support, and data collection services to protection and advocacy systems in connection with grants awarded under clause (i).
(II)
In this clause, the term “eligible national association” means a national disability association with extensive knowledge and demonstrated experience in providing training, technical assistance, and administrative oversight to protection and advocacy systems that monitor representative payees.
(vi)
In conducting reviews under this section, a protection and advocacy system shall have the same authorities, including access to records, facilities, and persons, as such system would have for purposes of providing services under subtitle C of title I of the Developmental Disabilities Assistance and Bill of Rights Act of 2000 (42 U.S.C. 15041 et seq.).
(vii)
Whenever benefit amounts under this title are increased by any percentage effective with any month after November 2018 as a result of a determination made under section 215(i), each of the dollar amounts specified in clauses (i)(II) and (iv)(II) shall be increased by the same percentage.
(viii)
No additional funds are authorized to be appropriated to carry out the requirements of this subparagraph. Such requirements shall be carried out using amounts otherwise authorized.
(ix)
In this subparagraph:
(I)
The term “American Indian consortium” means a consortium established under subtitle C of title I of the Developmental Disabilities Assistance and Bill of Rights Act of 2000 (42 U.S.C. 15041 et seq.).
(II)
The term “protection and advocacy system” means a protection and advocacy system established under subtitle C of title I of the Developmental Disabilities Assistance and Bill of Rights Act of 2000 (42 U.S.C. 15041 et seq.).
(III)
The term “State” means the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.
(7)
(A)
If the Commissioner of Social Security or a court of competent jurisdiction determines that a representative payee that is not a Federal, State, or local government agency has misused all or part of an individual's benefit that was paid to such representative payee under this subsection, the representative payee shall be liable for the amount misused, and such amount (to the extent not repaid by the representative payee) shall be treated as an overpayment of benefits under this title to the representative payee for all purposes of this Act and related laws pertaining to the recovery of such overpayments. Subject to subparagraph (B), upon recovering all or any part of such amount, the Commissioner shall certify an amount equal to the recovered amount for payment to such individual or such individual's alternative representative payee.
(B)
The total of the amount certified for payment to such individual or such individual's alternative representative payee under subparagraph (A) and the amount certified for payment under paragraph (5) may not exceed the total benefit amount misused by the representative payee with respect to such individual.
(8)
For purposes of this subsection, the term “benefit based on disability” of an individual means a disability insurance benefit of such individual under section 223 or a child's, widow's, or widower's insurance benefit of such individual under section 202 based on such individual's disability.
(9)
For purposes of this subsection, misuse of benefits by a representative payee occurs in any case in which the representative payee receives payment under this title for the use and benefit of another person and converts such payment, or any part thereof, to a use other than for the use and benefit of such other person. The Commissioner of Social Security may prescribe by regulation the meaning of the term “use and benefit” for purposes of this paragraph.
(10)
For purposes of this subsection, the term “certified community-based nonprofit social service agency” means a community-based nonprofit social service agency which is in compliance with requirements, under regulations which shall be prescribed by the Commissioner, for annual certification to the Commissioner that it is bonded in accordance with requirements specified by the Commissioner and that it is licensed in each State in which it serves as a representative payee (if licensing is available in the State) in accordance with requirements specified by the Commissioner. Any such annual certification shall include a copy of any independent audit on the agency which may have been performed since the previous certification.
(11)
(A)
The Commissioner of Social Security shall—
(i)
enter into agreements with each State with a plan approved under part E of title IV for the purpose of sharing and matching data, on an automated monthly basis, in the system of records of the Social Security Administration with each Statewide and Tribal Automated Child Welfare Information System to identify represented minor beneficiaries who are in foster care under the responsibility of the State for such month; and
(ii)
in any case in which a represented minor beneficiary has entered or exited foster care or changed foster care placement in such month, redetermine the appropriate representative payee for such individual.
(B)
For purposes of this paragraph—
(i)
the term “State” has the meaning given such term for purposes of part E of title IV;
(ii)
the term “Statewide and Tribal Automated Child Welfare Information System” means a statewide mechanized data collection and information retrieval system described in section 474(a)(3)(C); and
(iii)
the term “represented minor beneficiary”, with respect to an individual for a month, means a child (as defined for purposes of section 475(8)) entitled to benefits under this title for such month whose benefits are certified for payment to a representative payee.
(12)
(A)
Not later than January 31 of each fiscal year, the Commissioner shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the total number of individuals entitled to benefits under titles II, VIII, and XVI, respectively, (and the number of individuals concurrently entitled to benefits under more than one such title) who have a representative payee, the total number of such representative payees, and the results of all reviews of representative payees conducted during the previous fiscal year in connection with benefits under this title, title VIII, or title XVI. Such report shall summarize problems identified in such reviews and corrective actions taken or planned to be taken to correct such problems, and shall include—
(i)
the number of such reviews;
(ii)
the results of such reviews;
(iii)
the number of cases in which the representative payee was changed and why;
(iv)
the number of reviews conducted in response to allegations or concerns about the performance or suitability of the payee;
(v)
the number of cases discovered in which there was a misuse of funds, and the total dollar amount of benefits determined by the Commissioner during such fiscal year to have been misused by a representative payee (regardless of the fiscal year in which such misuse occurred);
(vi)
the number of cases discovered in which such misuse of funds resulted from the negligent failure of the Commissioner to investigate or monitor a representative payee;
(vii)
the final disposition of such cases of misuse of funds, including—
(I)
any criminal, civil, and administrative penalties imposed;
(II)
the total dollar amount of misused benefits repaid to beneficiaries and alternative representative payees under each of—
- (aa)
paragraph (5) (on the basis of a negligent failure of the Commissioner described in such paragraph);
- (bb)
paragraph (5) (on any other basis); and
- (cc)
paragraph (7);
(III)
the total dollar amount of misused benefits recovered under each of—
- (aa)
paragraph (5); and
- (bb)
paragraph (7);
(viii)
any updates to prior year reports necessary to reflect subsequent recoveries and repayments pertaining to misuse determinations made in prior years; and
(ix)
such other information as the Commissioner deems appropriate.
(B)
Each report required under this paragraph for a fiscal year shall include the information described in clauses (i) through (ix) of subparagraph (A) with respect to—
(i)
all representative payees reviewed during such fiscal year;
(ii)
all such representative payees that are organizations, separated by whether such organization collects a fee for its services as a representative payee;
(iii)
all such representative payees that are individuals serving 15 or more individuals; and
(iv)
all such representative payees that are individuals serving less than 15 individuals, separated by whether such representative payee is a family member.
(k)
Any payment made after December 31, 1939, under conditions set forth in subsection (j), any payment made before January 1, 1940, to, or on behalf of, a legally incompetent individual, and any payment made after December 31, 1939, to a legally incompetent individual without knowledge by the Commissioner of Social Security of incompetency prior to certification of payment, if otherwise valid under this title, shall be a complete settlement and satisfaction of any claim, right, or interest in and to such payment.
(l)
The Commissioner of Social Security is authorized to delegate to any member, officer, or employee of the Social Security Administration designated by him any of the powers conferred upon him by this section, and is authorized to be represented by his own attorneys in any court in any case or proceeding arising under the provisions of subsection (e).
[(m)
Repealed.]
(n)
The Commissioner of Social Security may, in the Commissioner's discretion, certify to the Managing Trustee any two or more individuals of the same family for joint payment of the total benefits payable to such individuals for any month, and if one of such individuals dies before a check representing such joint payment is negotiated, payment of the amount of such unnegotiated check to the surviving individual or individuals may be authorized in accordance with regulations of the Secretary of the Treasury; except that appropriate adjustment or recovery shall be made under section 204(a) with respect to so much of the amount of such check as exceeds the amount to which such surviving individual or individuals are entitled under this title for
(o)

Crediting of Compensation Under the Railroad Retirement Act
If there is no person who would be entitled, upon application therefor, to an annuity under section 2 of the Railroad Retirement Act of 1974, or to a lump sum payment under section 6(b) of such Act, with respect to the death of an employee (as defined in such Act), then, notwithstanding section 210(a)(9) of this Act, compensation (as defined in such Railroad Retirement Act, but excluding compensation attributable as having been paid during any month on account of military service creditable under section 3(i) of such Act if wages are deemed to have been paid to such employee during such month under subsection (a) or (e) of section 217 of this Act) of such employee shall constitute remuneration for employment for purposes of determining (A) entitlement to and the amount of any lump sum death payment under this title on the basis of such employee's wages and self employment income and (B) entitlement to and the amount of any monthly benefit under this title, for the month in which such employee died or for any month thereafter, on the basis of such wages and self employment income. For such purposes, compensation (as so defined) paid in a calendar year before 1978 shall, in the absence of evidence to the contrary, be presumed to have been paid in equal proportions with respect to all months in the year in which the employee rendered services for such compensation.
(p)

Special Rules in Case of Federal Service
(1)
With respect to service included as employment under section 210 which is performed in the employ of the United States or in the employ of any instrumentality which is wholly owned by the United States, including service, performed as a member of a uniformed service, to which the provisions of subsection (l)(1) of such section are applicable, and including service, performed as a volunteer or volunteer leader within the meaning of the Peace Corps Act, to which the provisions of section 210(o) are applicable, the Commissioner of Social Security shall not make determinations as to the amounts of remuneration for such service, or the periods in which or for which such remuneration was paid, but shall accept the determinations with respect thereto of the head of the appropriate Federal agency or instrumentality, and of such agents as such head may designate, as evidenced by returns filed in accordance with the provisions of section 3122 of the Internal Revenue Code of 1954<FTRF> and certifications made pursuant to this subsection. Such determinations shall be final and conclusive. Nothing in this paragraph shall be construed to affect the Commissioner's authority to determine under sections 209 and 210 whether any such service constitutes employment, the periods of such employment, and whether remuneration paid for any such service constitutes wages.
(2)
The head of any such agency or instrumentality is authorized and directed, upon written request of the Commissioner of Social Security, to make certification to the Commissioner with respect to any matter determinable for the Commissioner of Social Security by such head or his agents under this subsection, which the Commissioner of Social Security finds necessary in administering this title.
(3)
The provisions of paragraphs (1) and (2) shall be applicable in the case of service performed by a civilian employee, not compensated from funds appropriated by the Congress, in the Army and Air Force Exchange Service, Army and Air Force Motion Picture Service, Navy Exchanges, Marine Corps Exchanges, or other activities, conducted by an instrumentality of the United States subject to the jurisdiction of the Secretary of Defense, at installations of the Department of Defense for the comfort, pleasure, contentment, and mental and physical improvement of personnel of such Department; and for purposes of paragraphs (1) and (2) the Secretary of Defense shall be deemed to be the head of such instrumentality. The provisions of paragraphs (1) and (2) shall be applicable also in the case of service performed by a civilian employee, not compensated from funds appropriated by the Congress, in the Coast Guard Exchanges or other activities, conducted by an instrumentality of the United States subject to the jurisdiction of the Secretary of Homeland Security, at installations of the Coast Guard for the comfort, pleasure, contentment, and mental and physical improvement of personnel of the Coast Guard; and for purposes of paragraphs (1) and (2) the Secretary of Homeland Security shall be deemed to be the head of such instrumentality.
(q)

Expedited Benefit Payments
(1)
The Commissioner of Social Security shall establish and put into effect procedures under which expedited payment of monthly insurance benefits under this title will, subject to paragraph (4) of this subsection, be made as set forth in paragraphs (2) and (3) of this subsection.
(2)
In any case in which—
(A)
an individual makes an allegation that a monthly benefit under this title was due him in a particular month but was not paid to him, and
(B)
such individual submits a written request for the payment of such benefit—
(i)
in the case of an individual who received a regular monthly benefit in the month preceding the month with respect to which such allegation is made, not less than 30 days after the 15th day of the month with respect to which such allegation is made (and in the event that such request is submitted prior to the expiration of such 30-day period, it shall be deemed to have been submitted upon the expiration of such period), and
(ii)
in any other case, not less than 90 days after the later of (I) the date on which such benefit is alleged to have been due, or (II) the date on which such individual furnished the last information requested by the Commissioner of Social Security (and such written request will be deemed to be filed on the day on which it was filed, or the ninetieth day after the first day on which the Commissioner of Social Security has evidence that such allegation is true, whichever is later),
the Commissioner of Social Security shall, if he finds that benefits are due, certify such benefits for payment, and payment shall be made within 15 days immediately following the date on which the written request is deemed to have been filed.
(3)
In any case in which the Commissioner of Social Security determines that there is evidence, although additional evidence might be required for a final decision, that an allegation described in paragraph (2)(A) is true, he may make a preliminary certification of such benefit for payment even though the 30-day or 90-day periods described in paragraph (2)(B)(i) and (B)(ii) have not elapsed.
(4)
Any payment made pursuant to a certification under paragraph (3) of this subsection shall not be considered an incorrect payment for purposes of determining the liability of the certifying or disbursing officer.
(5)
For purposes of this subsection, benefits payable under section 228 shall be treated as monthly insurance benefits payable under this title. However, this subsection shall not apply with respect to any benefit for which a check has been negotiated, or with respect to any benefit alleged to be due under either section 223, or section 202 to a wife, husband, or child of an individual entitled to or applying for benefits under section 223, or to a child who has attained age 18 and is under a disability, or to a widow or widower on the basis of being under a disability.
(r)

Use of Death Certificates to Correct Program Information
(1)
The Commissioner of Social Security shall undertake to establish a program under which—
(A)
States (or political subdivisions thereof) voluntarily contract with the Commissioner of Social Security to furnish the Commissioner of Social Security periodically with information (in a form established by the Commissioner of Social Security in consultation with the States) concerning individuals with respect to whom death certificates (or equivalent documents maintained by the States or subdivisions) have been officially filed with them; and
(B)
there will be (i) a comparison of such information on such individuals with information on such individuals in the records being used in the administration of this Act, (ii) validation of the results of such comparisons, and (iii) corrections in such records to accurately reflect the status of such individuals.
(2)
(A)
Each State (or political subdivision thereof) which furnishes the Commissioner of Social Security with information on records of deaths in the State or subdivision under this subsection shall be paid by the Commissioner of Social Security for the following:
(i)18
A fee, to be established pursuant to subparagraph (B), for the use of such information by—
(I)
the Commissioner; and
(II)
any other agency that receives such information from the Commissioner and is subject to the requirements of subparagraph (3)(A).
^{18}
Margins for clauses (i) and (ii) and subparagraphs (B) and (C) are so in law.
(ii)18
The full documented cost to the State of transmitting such information to the Commissioner, including the costs of maintaining, enhancing, and operating any electronic system used solely for transmitting such information to the Commissioner.
(B)18
The fee for the use of such information shall be established by the Commissioner of Social Security in consultations with the States, and shall include—
(i)
a share of the costs to the State associated with collecting and maintaining such information; ensuring the completeness, timeliness, and accuracy of such information; and maintaining, enhancing, and operating the electronic systems that allow for the transmission of such information; and
(ii)
a fee for the right to use such information.
(C)18
The Commissioner of Social Security shall not use amounts provided for a fiscal year in an appropriation Act under the heading “Limitation on Administrative Expenses” for the Social Security Administration for the amounts under paragraph (3)(A), except as the Commissioner determines is necessary on a temporary basis and subject to reimbursement under such paragraph.
(3)
In the case of individuals with respect to whom federally funded benefits are provided by (or through) a Federal or State agency other than under this Act, the Commissioner of Social Security shall to the extent feasible provide such information through a cooperative arrangement with such agency, for ensuring proper payment of those benefits with respect to such individuals if—
(A)
under such arrangement the agency provides reimbursement to the Commissioner of Social Security for—
(i)19
the agency's proportional share (as determined by the Commissioner in consultation with the head of the agency) of—
(I)
the payments to States required under paragraph (2)(A);
(II)
the costs to the Commissioner of developing the contracts described in paragraph (1); and
(III)
the costs to the Commissioner of carrying out the study required under section 802 of division FF of the Consolidated Appropriations Act, 2021; and
^{19}
Margins for clauses (i) and (ii) are so in law. See amendment made by section 801(a)(2) of division FF of Public Law 116-260.
(ii)19
the full documented cost to the Commissioner of developing such arrangement and transmitting such information to the agency; and
(B)
such arrangement does not conflict with the duties of the Commissioner of Social Security under paragraph (1).
(4)
The Commissioner of Social Security may enter into similar agreements with States to provide information for their use in programs wholly funded by the States if the requirements of subparagraphs (A) and (B) of paragraph (3) are met.
(5)
The Commissioner of Social Security may use or provide for the use of all information regarding deceased individuals furnished to or maintained by the Commissioner under this subsection, subject to such safeguards as the Commissioner of Social Security determines are necessary or appropriate to protect the information from unauthorized use or disclosure, for statistical and research activities conducted by a Federal or State agency, provided that the requirements of subparagraphs (A) and (B) of paragraph (3) are met.
(6)
Information furnished to the Commissioner of Social Security under this subsection may not be used for any purpose other than the purpose described in this subsection and is exempt from disclosure under section 552 of title 5, United States Code, and from the requirements of section 552a of such title.
(7)20
In the event an individual is incorrectly identified as deceased in the records furnished by a State to the Commissioner of Social Security under this subsection and the individual provides the Commissioner with the necessary documentation to correct such identification, the Commissioner may—
(A)
notify the State of the error in the records so furnished; and
(B)
inform the individual of the source of the incorrect death data.
^{20}
Margin of paragraph (7) is so in law.
(8)
The Commissioner of Social Security shall include information on the status of the program established under this section and impediments to the effective implementation of the program in the 1984 report required under section 704 of this Act.
(9)
(A)
The Commissioner of Social Security shall, upon the request of the official responsible for a State driver's license agency pursuant to the Help America Vote Act of 2002—
(i)
enter into an agreement with such official for the purpose of verifying applicable information, so long as the requirements of subparagraphs (A) and (B) of paragraph (3) are met; and
(ii)
include in such agreement safeguards to assure the maintenance of the confidentiality of any applicable information disclosed and procedures to permit such agency to use the applicable information for the purpose of maintaining its records.
(B)
Information provided pursuant to an agreement under this paragraph shall be provided at such time, in such place, and in such manner as the Commissioner determines appropriate.
(C)
The Commissioner shall develop methods to verify the accuracy of information provided by the agency with respect to applications for voter registration, for whom the last 4 digits of a social security number are provided instead of a driver's license number.
(D)
For purposes of this paragraph—
(i)
the term “applicable information” means information regarding whether—
(I)
the name (including the first name and any family forename or surname), the date of birth (including the month, day, and year), and social security number of an individual provided to the Commissioner match the information contained in the Commissioner's records, and
(II)
such individual is shown on the records of the Commissioner as being deceased; and
(ii)
the term “State driver's license agency” means the State agency which issues driver's licenses to individuals within the State and maintains records relating to such licensure.
(E)
Nothing in this paragraph may be construed to require the provision of applicable information with regard to a request for a record of an individual if the Commissioner determines there are exceptional circumstances warranting an exception (such as safety of the individual or interference with an investigation).
(F)
Applicable information provided by the Commissioner pursuant to an agreement under this paragraph or by an individual to any agency that has entered into an agreement under this paragraph shall be considered as strictly confidential and shall be used only for the purposes described in this paragraph and for carrying out an agreement under this paragraph. Any officer or employee or former officer or employee of a State, or any officer or employee or former officer or employee of a contractor of a State who, without the written authority of the Commissioner, publishes or communicates any applicable information in such individual's possession by reason of such employment or position as such an officer, shall be guilty of a felony and upon conviction thereof shall be fined or imprisoned, or both, as described in section 208.
(10)
(A)
The Commissioner of Social Security shall, upon the request of the Secretary or the Inspector General of the Department of Health and Human Services—
(i)
enter into an agreement with the Secretary or such Inspector General for the purpose of matching data in the system of records of the Social Security Administration and the system of records of the Department of Health and Human Services, provided that the requirements of subparagraphs (A) and (B) of paragraph (3) are met with respect to such agreement; and
(ii)
include in such agreement safeguards to assure the maintenance of the confidentiality of any information disclosed.
(B)
For purposes of this paragraph, the term “system of records” has the meaning given such term in section 552a(a)(5) of title 5, United States Code.
(11)21
During the 3-year period that begins on the effective date of this paragraph, the Commissioner of Social Security shall, to the extent feasible, provide information furnished to the Commissioner under paragraph (1) to the agency operating the Do Not Pay working system described in section 3354(c) of title 31, United States Code, to prevent improper payments to deceased individuals through a cooperative arrangement with such agency, provided that the requirements of subparagraphs (A) and (B) of paragraph (3) are met with respect to such arrangement with such agency.
^{21}
Section 801(a)(7) of division FF of Public Law 116–260 provides for an amendment to add a new paragraph (11) to subsection (r). Subsection (b)(2) of such section 801 provides: “[t]he amendment made by paragraph (7) of subsection (a) shall take effect on the date that is 3 years after the date of enactment of this Act” [effective date is December 27, 2023]. Also, the margin is so in law.
(s)

Notice Requirements
The Commissioner of Social Security shall take such actions as are necessary to ensure that any notice to one or more individuals issued pursuant to this title by the Commissioner of Social Security or by a State agency—
(1)
is written in simple and clear language, and
(2)
includes the address and telephone number of the local office of the Social Security Administration which serves the recipient.
In the case of any such notice which is not generated by a local servicing office, the requirements of paragraph (2) shall be treated as satisfied if such notice includes the address of the local office of the Social Security Administration which services the recipient of the notice and a telephone number through which such office can be reached.
(t)

Same-Day Personal Interviews at Field Offices In Cases Where Time Is of The Essence
In any case in which an individual visits a field office of the Social Security Administration and represents during the visit to an officer or employee of the Social Security Administration in the office that the individual's visit is occasioned by—
(1)
the receipt of a notice from the Social Security Administration indicating a time limit for response by the individual, or
(2)
the theft, loss, or nonreceipt of a benefit payment under this title,
the Commissioner of Social Security shall ensure that the individual is granted a face-to-face interview at the office with an officer or employee of the Social Security Administration before the close of business on the day of the visit.
(u)
(1)
(A)
The Commissioner of Social Security shall immediately redetermine the entitlement of individuals to monthly insurance benefits under this title if there is reason to believe that fraud or similar fault was involved in the application of the individual for such benefits, unless a United States attorney, or equivalent State prosecutor, with jurisdiction over potential or actual related criminal cases, certifies, in writing, that there is a substantial risk that such action by the Commissioner of Social Security with regard to beneficiaries in a particular investigation would jeopardize the criminal prosecution of a person involved in a suspected fraud.
(B)
When redetermining the entitlement, or making an initial determination of entitlement, of an individual under this title, the Commissioner of Social Security shall disregard any evidence if there is reason to believe that fraud or similar fault was involved in the providing of such evidence.
(2)
For purposes of paragraph (1), similar fault is involved with respect to a determination if—
(A)
an incorrect or incomplete statement that is material to the determination is knowingly made; or
(B)
information that is material to the determination is knowingly concealed.
(3)
If, after redetermining pursuant to this subsection the entitlement of an individual to monthly insurance benefits, the Commissioner of Social Security determines that there is insufficient evidence to support such entitlement, the Commissioner of Social Security may terminate such entitlement and may treat benefits paid on the basis of such insufficient evidence as overpayments.

representation of claimants
Sec. 206.
[42 U.S.C. 406]
(a)
(1)
The Commissioner of Social Security may prescribe rules and regulations governing the recognition of agents or other persons, other than attorneys as hereinafter provided, representing claimants before the Commissioner of Social Security, and may require of such agents or other persons, before being recognized as representatives of claimants that they shall show that they are of good character and in good repute, possessed of the necessary qualifications to enable them to render such claimants valuable service, and otherwise competent to advise and assist such claimants in the presentation of their cases. An attorney in good standing who is admitted to practice before the highest court of the State, Territory, District, or insular possession of his residence or before the Supreme Court of the United States or the inferior Federal courts, shall be entitled to represent claimants before the Commissioner of Social Security. Notwithstanding the preceding sentences, the Commissioner, after due notice and opportunity for hearing, (A) may refuse to recognize as a representative, and may disqualify a representative already recognized, any attorney who has been disbarred or suspended from any court or bar to which he or she was previously admitted to practice or who has been disqualified from participating in or appearing before any Federal program or agency, and (B) may refuse to recognize, and may disqualify, as a non-attorney representative any attorney who has been disbarred or suspended from any court or bar to which he or she was previously admitted to practice. A representative who has been disqualified or suspended pursuant to this section from appearing before the Social Security Administration as a result of collecting or receiving a fee in excess of the amount authorized shall be barred from appearing before the Social Security Administration as a representative until full restitution is made to the claimant and, thereafter, may be considered for reinstatement only under such rules as the Commissioner may prescribe. The Commissioner of Social Security may, after due notice and opportunity for hearing, suspend or prohibit from further practice before the Commissioner any such person, agent, or attorney who refuses to comply with the Commissioner's rules and regulations or who violates any provision of this section for which a penalty is prescribed. The Commissioner of Social Security may, by rule and regulation, prescribe the maximum fees which may be charged for services performed in connection with any claim before the Commissioner of Social Security under this title, and any agreement in violation of such rules and regulations shall be void. Except as provided in paragraph (2)(A), whenever the Commissioner of Social Security, in any claim before the Commissioner for benefits under this title, makes a determination favorable to the claimant, the Commissioner shall, if the claimant was represented by an attorney in connection with such claim, fix (in accordance with the regulations prescribed pursuant to the preceding sentence) a reasonable fee to compensate such attorney for the services performed by him in connection with such claim.
(2)
(A)
In the case of a claim of entitlement to past-due benefits under this title, if—
(i)
an agreement between the claimant and another person regarding any fee to be recovered by such person to compensate such person for services with respect to the claim is presented in writing to the Commissioner of Social Security prior to the time of the Commissioner's determination regarding the claim,
(ii)
the fee specified in the agreement does not exceed the lesser of—
(I)
25 percent of the total amount of such past-due benefits (as determined before any applicable reduction under section 1127(a)), or
(II)
$4,000, and
(iii)
the determination is favorable to the claimant,
then the Commissioner of Social Security shall approve that agreement at the time of the favorable determination, and (subject to paragraph (3)) the fee specified in the agreement shall be the maximum fee. The Commissioner of Social Security may from time to time increase the dollar amount under clause (ii)(II) to the extent that the rate of increase in such amount, as determined over the period since January 1, 1991, does not at any time exceed the rate of increase in primary insurance amounts under section 215(i) since such date. The Commissioner of Social Security shall publish any such increased amount in the Federal Register.
(B)
For purposes of this subsection, the term “past-due benefits” excludes any benefits with respect to which payment has been continued pursuant to subsection (g) or (h) of section 223.
(C)
In any case involving—
(i)
an agreement described in subparagraph (A) with any person relating to both a claim of entitlement to past-due benefits under this title and a claim of entitlement to past-due benefits under title XVI, and
(ii)
a favorable determination made by the Commissioner of Social Security with respect to both such claims, <fp>the Commissioner of Social Security may approve such agreement only if the total fee or fees specified in such agreement does not exceed, in the aggregate, the dollar amount in effect under subparagraph (A)(ii)(II).
(D)
In the case of a claim with respect to which the Commissioner of Social Security has approved an agreement pursuant to subparagraph (A), the Commissioner of Social Security shall provide the claimant and the person representing the claimant a written notice of—
(i)
the dollar amount of the past-due benefits (as determined before any applicable reduction under section 1127(a)) and the dollar amount of the past-due benefits payable to the claimant,
(ii)
the dollar amount of the maximum fee which may be charged or recovered as determined under this paragraph, and
(iii)
a description of the procedures for review under paragraph (3).
(3)
(A)
The Commissioner of Social Security shall provide by regulation for review of the amount which would otherwise be the maximum fee as determined under paragraph (2) if, within 15 days after receipt of the notice provided pursuant to paragraph (2)(D)—
(i)
the claimant, or the administrative law judge or other adjudicator who made the favorable determination, submits a written request to the Commissioner of Social Security to reduce the maximum fee, or
(ii)
the person representing the claimant submits a written request to the Commissioner of Social Security to increase the maximum fee.
(Any such review shall be conducted after providing the claimant, the person representing the claimant, and the adjudicator with reasonable notice of such request and an opportunity to submit written information in favor of or in opposition to such request. The adjudicator may request the Commissioner of Social Security to reduce the maximum fee only on the basis of evidence of the failure of the person representing the claimant to represent adequately the claimant's interest or on the basis of evidence that the fee is clearly excessive for services rendered.
(B)
(i)
In the case of a request for review under subparagraph (A) by the claimant or by the person representing the claimant, such review shall be conducted by the administrative law judge who made the favorable determination or, if the Commissioner of Social Security determines that such administrative law judge is unavailable or if the determination was not made by an administrative law judge, such review shall be conducted by another person designated by the Commissioner of Social Security for such purpose.
(ii)
In the case of a request by the adjudicator for review under subparagraph (A), the review shall be conducted by the Commissioner of Social Security or by an administrative law judge or other person (other than such adjudicator) who is designated by the Commissioner of Social Security.
(C)
Upon completion of the review, the administrative law judge or other person conducting the review shall affirm or modify the amount which would otherwise be the maximum fee. Any such amount so affirmed or modified shall be considered the amount of the maximum fee which may be recovered under paragraph (2). The decision of the administrative law judge or other person conducting the review shall not be subject to further review.
(4)
Subject to subsection (d), if the claimant is determined to be entitled to past-due benefits under this title and the person representing the claimant is an attorney, the Commissioner of Social Security shall, notwithstanding section 205(i), certify for payment out of such past-due benefits (as determined before any applicable reduction under section 1127(a)) to such attorney an amount equal to so much of the maximum fee as does not exceed 25 percent of such past-due benefits (as determined before any applicable reduction under section 1127(a)).
(5)
Any person who shall, with intent to defraud, in any manner willfully and knowingly deceive, mislead, or threaten any claimant or prospective claimant or beneficiary under this title by word, circular, letter or advertisement, or who shall knowingly charge or collect directly or indirectly any fee in excess of the maximum fee, or make any agreement directly or indirectly to charge or collect any fee in excess of the maximum fee, prescribed by the Commissioner of Social Security shall be deemed guilty of a misdemeanor and, upon conviction thereof, shall for each offense be punished by a fine not exceeding $500 or by imprisonment not exceeding one year, or both. The Commissioner of Social Security shall maintain in the electronic information retrieval system used by the Social Security Administration a current record, with respect to any claimant before the Commissioner of Social Security, of the identity of any person representing such claimant in accordance with this subsection.
(b)
(1)
(A)
Whenever a court renders a judgment favorable to a claimant under this title who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment, and the Commissioner of Social Security may, notwithstanding the provisions of section 205(i), but subject to subsection (d) of this section, certify the amount of such fee for payment to such attorney out of, and not in addition to, the amount of such past-due benefits. In case of any such judgment, no other fee may be payable or certified for payment for such representation except as provided in this paragraph.
(B)
For purposes of this paragraph—
(i)
the term “past-due benefits” excludes any benefits with respect to which payment has been continued pursuant to subsection (g) or (h) of section 223, and
(ii)
amounts of past-due benefits shall be determined before any applicable reduction under section 1127(a).
(2)
Any attorney who charges, demands, receives, or collects for services rendered in connection with proceedings before a court to which paragraph (1) is applicable any amount in excess of that allowed by the court thereunder shall be guilty of a misdemeanor and upon conviction thereof shall be subject to a fine of not more than $500, or imprisonment for not more than one year, or both.
(c)
The Commissioner of Social Security shall notify each claimant in writing, together with the notice to such claimant of an adverse determination, of the options for obtaining attorneys to represent individuals in presenting their cases before the Commissioner of Social Security. Such notification shall also advise the claimant of the availability to qualifying claimants of legal services organizations which provide legal services free of charge.
(d)

Assessment on Attorneys.—
(1)

In general.—
Whenever a fee for services is required to be certified for payment to an attorney from a claimant's past-due benefits pursuant to subsection (a)(4) or (b)(1), the Commissioner shall impose on the attorney an assessment calculated in accordance with paragraph (2).
(2)

Amount.—
(A)
The amount of an assessment under paragraph (1) shall be equal to the product obtained by multiplying the amount of the representative's fee that would be required to be so certified by subsection (a)(4) or (b)(1) before the application of this subsection, by the percentage specified in subparagraph (B), except that the maximum amount of the assessment may not exceed the greater of $75 or the adjusted amount as provided pursuant to the following two sentences. In the case of any calendar year beginning after the amendments made by section 301 of the Social Security Protection Act of 2003 take effect, the dollar amount specified in the preceding sentence (including a previously adjusted amount) shall be adjusted annually under the procedures used to adjust benefit amounts under section 215(i)(2)(A)(ii), except such adjustment shall be based on the higher of $75 or the previously adjusted amount that would have been in effect for December of the preceding year, but for the rounding of such amount pursuant to the following sentence. Any amount so adjusted that is not a multiple of $1 shall be rounded to the next lowest multiple of $1, but in no case less than $75.
(B)
The percentage specified in this subparagraph is—
(i)
for calendar years before 2001, 6.3 percent, and
(ii)
for calendar years after 2000, such percentage rate as the Commissioner determines is necessary in order to achieve full recovery of the costs of determining and certifying fees to attorneys from the past-due benefits of claimants, but not in excess of 6.3 percent.
(3)

Collection.—
The Commissioner may collect the assessment imposed on an attorney under paragraph (1) by offset from the amount of the fee otherwise required by subsection (a)(4) or (b)(1) to be certified for payment to the attorney from a claimant's past-due benefits.
(4)

Prohibition on claimant reimbursement.—
An attorney subject to an assessment under paragraph (1) may not, directly or indirectly, request or otherwise obtain reimbursement for such assessment from the claimant whose claim gave rise to the assessment.
(5)

Disposition of assessments.—
Assessments on attorneys collected under this subsection shall be credited to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, as appropriate.
(6)

Authorization of appropriations.—
The assessments authorized under this section shall be collected and available for obligation only to the extent and in the amount provided in advance in appropriations Acts. Amounts so appropriated are authorized to remain available until expended, for administrative expenses in carrying out this title and related laws.
(e)
(1)
The Commissioner shall provide for the extension of the fee withholding procedures and assessment procedures that apply under the preceding provisions of this section to agents and other persons, other than attorneys, who represent claimants under this title before the Commissioner.
(2)
Fee-withholding procedures may be extended under paragraph (1) to any nonattorney representative only if such representative meets at least the following prerequisites:
(A)
The representative has been awarded a bachelor's degree from an accredited institution of higher education, or has been determined by the Commissioner to have equivalent qualifications derived from training and work experience.
(B)
The representative has passed an examination, written and administered by the Commissioner, which tests knowledge of the relevant provisions of this Act and the most recent developments in agency and court decisions affecting this title and title XVI.
(C)
The representative has secured professional liability insurance, or equivalent insurance, which the Commissioner has determined to be adequate to protect claimants in the event of malpractice by the representative.
(D)
The representative has undergone a criminal background check to ensure the representative's fitness to practice before the Commissioner.
(E)
The representative demonstrates ongoing completion of qualified courses of continuing education, including education regarding ethics and professional conduct, which are designed to enhance professional knowledge in matters related to entitlement to, or eligibility for, benefits based on disability under this title and title XVI. Such continuing education, and the instructors providing such education, shall meet such standards as the Commissioner may prescribe.
(3)
(A)
The Commissioner may assess representatives reasonable fees to cover the cost to the Social Security Administration of administering the prerequisites described in paragraph (2).
(B)
Fees collected under subparagraph (A) shall be credited to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, or deposited as miscellaneous receipts in the general fund of the Treasury, based on such allocations as the Commissioner determines appropriate.
(C)
The fees authorized under this paragraph shall be collected and available for obligation only to the extent and in the amount provided in advance in appropriations Acts. Amounts so appropriated are authorized to remain available until expended for administering the prerequisites described in paragraph (2).

assignment
Sec. 207.
[42 U.S.C. 407]
(a)
The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.
(b)
No other provision of law, enacted before, on, or after the date of the enactment of this section, may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.
(c)
Nothing in this section shall be construed to prohibit withholding taxes from any benefit under this title, if such withholding is done pursuant to a request made in accordance with section 3402(p)(1) of the Internal Revenue Code of 1986 by the person entitled to such benefit or such person's representative payee.

penalties
Sec. 208.
[42 U.S.C. 408]
(a)
Whoever—
(1)
for the purpose of causing an increase in any payment authorized to be made under this title, or for the purpose of causing any payment to be made where no payment is authorized under this title, shall make or cause to be made any false statement or representation (including any false statement or representation in connection with any matter arising under subchapter E of chapter 1, or subchapter A or E of chapter 9 of the Internal Revenue Code of 1939, or chapter 2 or 21 or subtitle F of the Internal Revenue Code of 1954) as to—
(A)
whether wages were paid or received for employment (as said terms are defined in this title and the Internal Revenue Code), or the amount of wages or the period during which paid or the person to whom paid; or
(B)
whether net earnings from self-employment (as such term is defined in this title and in the Internal Revenue Code) were derived, or as to the amount of such net earnings or the period during which or the person by whom derived; or
(C)
whether a person entitled to benefits under this title had earnings in or for a particular period (as determined under section 203(f) of this title for purposes of deductions from benefits), or as to the amount thereof; or
(2)
makes or causes to be made any false statement or representation of a material fact in any application for any payment or for a disability determination under this title; or
(3)
at any time makes or causes to be made any false statement or representation of a material fact for use in determining rights to payment under this title; or
(4)
having knowledge of the occurrence of any event affecting (1) his initial or continued right to any payment under this title, or (2) the initial or continued right to any payment of any other individual in whose behalf he has applied for or is receiving such payment, conceals or fails to disclose such event with an intent fraudulently to secure payment either in a greater amount than is due or when no payment is authorized; or
(5)
having made application to receive payment under this title for the use and benefit of another and having received such a payment, knowingly and willfully converts such a payment, or any part thereof, to a use other than for the use and benefit of such other person; or
(6)
willfully, knowingly, and with intent to deceive the Commissioner of Social Security as to his true identity (or the true identity of any other person) furnishes or causes to be furnished false information to the Commissioner of Social Security with respect to any information required by the Commissioner of Social Security in connection with the establishment and maintenance of the records provided for in section 205(c)(2); or
(7)
for the purpose of causing an increase in any payment authorized under this title (or any other program financed in whole or in part from Federal funds), or for the purpose of causing a payment under this title (or any such other program) to be made when no payment is authorized thereunder, or for the purpose of obtaining (for himself or any other person) any payment or any other benefit to which he (or such other person) is not entitled, or for the purpose of obtaining anything of value from any person, or for any other purpose—
(A)
willfully, knowingly, and with intent to deceive, uses a social security account number, assigned by the Commissioner of Social Security (in the exercise of the Commissioner's authority under section 205(c)(2) to establish and maintain records) on the basis of false information furnished to the Commissioner of Social Security by him or by any other person; or
(B)
with intent to deceive, falsely represents a number to be the social security account number assigned by the Commissioner of Social Security to him or to another person, when in fact such number is not the social security account number assigned by the Commissioner of Social Security to him or to such other person; or
(C)
knowingly alters a social security card issued by the Commissioner of Social Security, buys or sells a card that is, or purports to be, a card so issued, counterfeits a social security card, or possesses a social security card or counterfeit social security card with intent to sell or alter it;
(8)
discloses, uses, or compels the disclosure of the social security number of any person in violation of the laws of the United States; or
(9)
conspires to commit any offense described in any of paragraphs (1) through (4),
shall be guilty of a felony and upon conviction thereof shall be fined under title 18, United States Code, or imprisoned for not more than five years, or both, except that in the case of a person who receives a fee or other income for services performed in connection with any determination with respect to benefits under this title (including a claimant representative, translator, or current or former employee of the Social Security Administration), or who is a physician or other health care provider who submits, or causes the submission of, medical or other evidence in connection with any such determination, such person shall be guilty of a felony and upon conviction thereof shall be fined under title 18, United States Code, or imprisoned for not more than ten years, or both.
(b)
(1)
Any Federal court, when sentencing a defendant convicted of an offense under subsection (a), may order, in addition to or in lieu of any other penalty authorized by law, that the defendant make restitution to the victims of such offense specified in paragraph (4).
(2)
Sections 3612, 3663, and 3664 of title 18, United States Code, shall apply with respect to the issuance and enforcement of orders of restitution to victims of such offense under this subsection.
(3)
If the court does not order restitution, or orders only partial restitution, under this subsection, the court shall state on the record the reasons therefor.
(4)
For purposes of paragraphs (1) and (2), the victims of an offense under subsection (a) are the following:
(A)
Any individual who suffers a financial loss as a result of the defendant's violation of subsection (a).
(B)
The Commissioner of Social Security, to the extent that the defendant's violation of subsection (a) results in—
(i)
the Commissioner of Social Security making a benefit payment that should not have been made; or
(ii)
an individual suffering a financial loss due to the defendant's violation of subsection (a) in his or her capacity as the individual's representative payee appointed pursuant to section 205(j).
(5)
(A)
Except as provided in subparagraph (B), funds paid to the Commissioner of Social Security as restitution pursuant to a court order shall be deposited in the Federal Old-Age and Survivors Insurance Trust Fund, or the Federal Disability Insurance Trust Fund, as appropriate.
(B)
In the case of funds paid to the Commissioner of Social Security pursuant to paragraph (4)(B)(ii), the Commissioner of Social Security shall certify for payment to the individual described in such paragraph an amount equal to the lesser of the amount of the funds so paid or the individual's outstanding financial loss, except that such amount may be reduced by the amount of any overpayments of benefits owed under this title, title VIII, or title XVI by the individual.
(c)
Any person or other entity who is convicted of a violation of any of the provisions of this section, if such violation is committed by such person or entity in his role as, or in applying to become, a certified payee under section 205(j) on behalf of another individual (other than such person's spouse), upon his second or any subsequent such conviction shall, in lieu of the penalty set forth in the preceding provisions of this section, be guilty of a felony and shall be fined under title 18, United States Code, or imprisoned for not more than five years, or both.
(d)
Any individual or entity convicted of a felony under this section or under section 1632(b) may not be certified as a payee under section 205(j). For the purpose of subsection (a)(7), the terms “social security number” and “social security account number” mean such numbers as are assigned by the Commissioner of Social Security under section 205(c)(2) whether or not, in actual use, such numbers are called social security numbers.
(e)
(1)
Except as provided in paragraph (2), an alien—
(A)
whose status is adjusted to that of lawful temporary resident under section 210 or 245A of the Immigration and Nationality Act or under section 902 of the Foreign Relations Authorization Act, Fiscal Years 1988 and 1989,
(B)
whose status is adjusted to that of permanent resident—
(i)
under section 202 of the Immigration Reform and Control Act of 1986, or
(ii)
pursuant to section 249 of the Immigration and Nationality Act, or
(C)
who is granted special immigrant status under section 101(a)(27)(I) of the Immigration and Nationality Act,
shall not be subject to prosecution for any alleged conduct described in paragraph (6) or (7) of subsection (a) if such conduct is alleged to have occurred prior to 60 days after the date of the enactment of the Omnibus Budget Reconciliation Act of 1990.
(2)
Paragraph (1) shall not apply with respect to conduct (described in subsection (a)(7)(C)) consisting of—
(A)
selling a card that is, or purports to be, a social security card issued by the Commissioner of Social Security,
(B)
possessing a social security card with intent to sell it, or
(C)
counterfeiting a social security card with intent to sell it.
(3)
Paragraph (1) shall not apply with respect to any criminal conduct involving both the conduct described in subsection (a)(7) to which paragraph (1) applies and any other criminal conduct if such other conduct would be criminal conduct if the conduct described in subsection (a)(7) were not committed.

definition of wages
Sec. 209.
[42 U.S.C. 409]
(a)
For the purposes of this title, the term “wages” means remuneration paid prior to 1951 which was wages for the purposes of this title under the law applicable to the payment of such remuneration, and remuneration paid after 1950 for employment, including the cash value of all remuneration (including benefits) paid in any medium other than cash; except that, in the case of remuneration paid after 1950, such term shall not include—
(1)
(A)
That part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to $3,600 with respect to employment has been paid to an individual during any calendar year prior to 1955, is paid to such individual during such calendar year;
(B)
That part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to $4,200 with respect to employment has been paid to an individual during any calendar year after 1954 and prior to 1959, is paid to such individual during such calendar year;
(C)
That part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to $4,800 with respect to employment has been paid to an individual during any calendar year after 1958 and prior to 1966, is paid to such individual during such calendar year;
(D)
That part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to $6,600 with respect to employment has been paid to an individual during any calendar year after 1965 and prior to 1968, is paid to such individual during such calendar year;
(E)
That part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to $7,800 with respect to employment has been paid to an individual during any calendar year after 1967 and prior to 1972, is paid to such individual during such calendar year;
(F)
That part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to $9,000 with respect to employment has been paid to an individual during any calendar year after 1971 and prior to 1973, is paid to such individual during any such calendar year;
(G)
That part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to $10,800 with respect to employment has been paid to an individual during any calendar year after 1972 and prior to 1974, is paid to such individual during such calendar year;
(H)
That part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to $13,200 with respect to employment has been paid to an individual during any calendar year after 1973 and prior to 1975, is paid to such individual during such calendar year;
(I)
That part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to the contribution and benefit base (determined under section 230) with respect to employment has been paid to an individual during any calendar year after 1974 with respect to which such contribution and benefit base is effective, is paid to such individual during such calendar year;
(2)
The amount of any payment (including any amount paid by an employer for insurance or annuities, or into a fund, to provide for any such payment) made to, or on behalf of, an employee or any of his dependents under a plan or system established by an employer which makes provision for his employees generally (or for his employees generally and their dependents) or for a class or classes of his employees (or for a class or classes of his employees and their dependents), on account of (A) sickness or accident disability (but, in the case of payments made to an employee or any of his dependents, this clause shall exclude from the term “wages” only payments which are received under a workmen's compensation law), or (B) medical or hospitalization expenses in connection with sickness or accident disability, or (C) death, except that this subsection does not apply to a payment for group-term life insurance to the extent that such payment is includible in the gross income of the employee under the Internal Revenue Code of 1986;
(3)
Any payment on account of sickness or accident disability, or medical or hospitalization expenses in connection with sickness or accident disability, made by an employer to, or on behalf of, an employee after the expiration of six calendar months following the last calendar month in which the employee worked for such employer;
(4)
Any payment made to, or on behalf of, an employee or his beneficiary (A) from or to a trust exempt from tax under section 165(a) of the Internal Revenue Code of 1939 at the time of such payment or, in the case of a payment after 1954, under secssactions 401 and 501(a) of the Internal Revenue Code of 1954 or the Internal Revenue Code of 1986, unless such payment is made to an employee of the trust as remuneration for services rendered as such employee and not as a beneficiary of the trust, or (B) under or to an annuity plan which, at the time of such payment, meets the requirements of section 165(a)(3), (4), (5), and (6) of the Internal Revenue Code of 1939 or, in the case of a payment after 1954 and prior to 1963, the requirements of section 401(a)(3), (4), (5), and (6) of the Internal Revenue Code of 1954, or (C) under or to an annuity plan which, at the time of any such payment after 1962, is a plan described in section 403(a) of the Internal Revenue Code of 1986, or (D) under or to a bond purchase plan which, at the time of any such payment after 1962, is a qualified bond purchase plan described in section 405(a) of the Internal Revenue Code of 1954 (as in effect before the enactment of the Tax Reform Act of 1984), or (E) under or to an annuity contract described in section 403(b) of the Internal Revenue Code of 1986, other than a payment for the purchase of such contract which is made by reason of a salary reduction agreement (whether evidenced by a written instrument or otherwise), or (F) under or to an exempt governmental deferred compensation plan (as defined in section 3121(v)(3) of such Code), or (G) to supplement pension benefits under a plan or trust described in any of the foregoing provisions of this subsection to take into account some portion or all of the increase in the cost of living (as determined by the Secretary of Labor) since retirement but only if such supplemental payments are under a plan which is treated as a welfare plan under section 3(2)(B)(ii) of the Employee Retirement Income Security Act of 1974, or (H) under a simplified employee pension (as defined in section 408(k)(1) of such Code), other than any contributions described in section 408(k)(6) of such Code, (I) under a cafeteria plan (within the meaning of section 125 of the Internal Revenue Code of 1986) if such payment would not be treated as wages without regard to such plan and it is reasonable to believe that (if section 125 applied for purposes of this section) section 125 would not treat any wages as constructively received; or (J) under an arrangement to which section 408(p) of such Code applies, other than any elective contributions under paragraph (2)(A)(i) thereof; or (K) under a plan described in section 457(e)(11)(A)(ii) of the Internal Revenue Code of 1986 and maintained by an eligible employer (as defined in section 457(e)(1) of such Code);
(5)
The payment by an employer (without deduction from the remuneration of the employee)—
(A)
of the tax imposed upon an employee under section 3101 of the Internal Revenue Code of 1986, or
(B)
of any payment required from an employee under a State unemployment compensation law,
with respect to remuneration paid to an employee for domestic service in a private home of the employer or for agricultural labor;
(6)
(A)
Remuneration paid in any medium other than cash to an employee for service not in the course of the employer's trade or business or for domestic service in a private home of the employer;
(B)
Cash remuneration paid by an employer in any calendar year to an employee for domestic service in a private home of the employer (including domestic service on a farm operated for profit), if the cash remuneration paid in such year by the employer to the employee for such service is less than the applicable dollar threshold (as defined in section 3121(x) of the Internal Revenue Code of 1986) for such year;
(C)
Cash remuneration paid by an employer in any calendar year to an employee for service not in the course of the employer's trade or business, if the cash remuneration paid in such year by the employer to the employee for such service is less than $100. As used in this paragraph, the term “service not in the course of the employer's trade or business” does not include domestic service in a private home of the employer and does not include service described in section 210(f)(5);
(7)
(A)
Remuneration paid in any medium other than cash for agricultural labor;
(B)
Cash remuneration paid by an employer in any calendar year to an employee for agricultural labor unless—
(i)
the cash remuneration paid in such year by the employer to the employee for such labor is $150 or more, or
(ii)
the employer's expenditures for agricultural labor in such year equal or exceed $2,500,
except that clause (ii) shall not apply in determining whether remuneration paid to an employee constitutes “wages” under this section if such employee (I) is employed as a hand harvest laborer and is paid on a piece rate basis in an operation which has been, and is customarily and generally recognized as having been, paid on a piece rate basis in the region of employment, (II) commutes daily from his permanent residence to the farm on which he is so employed, and (III) has been employed in agriculture less than 13 weeks during the preceding calendar year;
(8)
Remuneration paid by an employer in any year to an employee for service described in section 210(j)(3)(C) (relating to home workers), if the cash remuneration paid in such year by the employer to the employee for such service is less than $100;
(9)
Remuneration paid to or on behalf of an employee if (and to the extent that) at the time of the payment of such remuneration it is reasonable to believe that a corresponding deduction is allowable under section 217 of the Internal Revenue Code of 1986 (determined without regard to section 274(n) of such Code);
(10)
(A)
Tips paid in any medium other than cash;
(B)
Cash tips received by an employee in any calendar month in the course of his employment by an employer unless the amount of such cash tips is $20 or more;
(11)
Any payment or series of payments by an employer to an employee or any of his dependents which is paid—
(A)
upon or after the termination of an employee's employment relationship because of (A) death, or (B) retirement for disability, and
(B)
under a plan established by the employer which makes provision for his employees generally or a class or classes of his employees (or for such employees or class or classes of employees and their dependents),
other than any such payment or series of payments which would have been paid if the employee's employment relationship had not been so terminated;
(12)
Any payment made by an employer to a survivor or the estate of a former employee after the calendar year in which such employee died;
(13)
Any payment made by an employer to an employee, if at the time such payment is made such employee is entitled to disability insurance benefits under section 223(a) and such entitlement commenced prior to the calendar year in which such payment is made, and if such employee did not perform any services for such employer during the period for which such payment is made;
(14)
Remuneration paid by an organization exempt from income tax under section 501 of the Internal Revenue Code of 1986 in any calendar year to an employee for service rendered in the employ of such organization, if the remuneration paid in such year by the organization to the employee for such service is less than $100;
(15)
Any payment made, or benefit furnished, to or for the benefit of an employee if at the time of such payment or such furnishing it is reasonable to believe that the employee will be able to exclude such payment or benefit from income under section 127 or 129 of the Internal Revenue Code of 1986;
(16)
The value of any meals or lodging furnished by or on behalf of the employer if at the time of such furnishing it is reasonable to believe that the employee will be able to exclude such items from income under section 119 of the Internal Revenue Code of 1986;
(17)
Any benefit provided to or on behalf of an employee if at the time such benefit is provided it is reasonable to believe that the employee will be able to exclude such benefit from income under section 74(c), 108(f)(4), 117, or 132 of the Internal Revenue Code of 1986;
(18)
Remuneration consisting of income excluded from taxation under section 7873 of the Internal Revenue Code of 1986 (relating to income derived by Indians from exercise of fishing rights);
(19)
Remuneration on account of—
(A)
a transfer of a share of stock to any individual pursuant to an exercise of an incentive stock option (as defined in section 422(b) of the Internal Revenue Code of 1986) or under an employee stock purchase plan (as defined in section 423(b) of such Code), or
(B)
any disposition by the individual of such stock; or
(20)
Any benefit or payment which is excludable from the gross income of the employee under section 139B(b) of the Internal Revenue Code of 1986).
(b)
Nothing in the regulations prescribed for purposes of chapter 24 of the Internal Revenue Code of 1986 (relating to income tax withholding) which provides an exclusion from “wages” as used in such chapter shall be construed to require a similar exclusion from “wages” in the regulations prescribed for purposes of this title.
(c)
For purposes of this title, in the case of domestic service described in subsection (a)(6)(B), any payment of cash remuneration for such service which is more or less than a whole-dollar amount shall, under such conditions and to such extent as may be prescribed by regulations made under this title, be computed to the nearest dollar. For the purpose of the computation to the nearest dollar, the payment of a fractional part of a dollar shall be disregarded unless it amounts to one-half dollar or more, in which case it shall be increased to $1. The amount of any payment of cash remuneration so computed to the nearest dollar shall, in lieu of the amount actually paid, be deemed to constitute the amount of cash remuneration for purposes of subsection (a)(6)(B).
(d)
For purposes of this title, in the case of an individual performing service, as a member of a uniformed service, to which the provisions of section 210(l)(1) are applicable, the term “wages” shall, subject to the provisions of subsection (a)(1) of this section, include as such individual's remuneration for such service only (1) his basic pay as described in chapter 3 and section 1009 of title 37, United States Code, in the case of an individual performing service to which subparagraph (A) of such section 210(l)(1) applies, or (2) his compensation for such service as determined under section 206(a) of title 37, United States Code, in the case of an individual performing service to which subparagraph (B) of such section 210(l)(1) applies.
(e)
For purposes of this title, in the case of an individual performing service, as a volunteer or volunteer leader within the meaning of the Peace Corps Act, to which the provisions of section 210(o) are applicable, (1) the term “wages” shall, subject to the provisions of subsection (a) of this section, include as such individual's remuneration for such service only amounts certified as payable pursuant to section 5(c) or 6(1) of the Peace Corps Act, and (2) any such amount shall be deemed to have been paid to such individual at the time the service, with respect to which it is paid, is performed.
(f)
For purposes of this title, tips received by an employee in the course of his employment shall be considered remuneration for employment. Such remuneration shall be deemed to be paid at the time a written statement including such tips is furnished to the employer pursuant to section 6053(a) of the Internal Revenue Code of 1986 or (if no statement including such tips is so furnished) at the time received.
(g)
For purposes of this title, in any case where an individual is a member of a religious order (as defined in section 3121(r)(2) of the Internal Revenue Code of 1986) performing service in the exercise of duties required by such order, and an election of coverage under section 3121(r) of such Code is in effect with respect to such order or with respect to the autonomous subdivision thereof to which such member belongs, the term “wages” shall, subject to the provisions of subsection (a) of this section, include as such individual's remuneration for such service the fair market value of any board, lodging, clothing, and other perquisites furnished to such member by such order or subdivision thereof or by any other person or organization pursuant to an agreement with such order or subdivision, except that the amount included as such individual's remuneration under this paragraph shall not be less than $100 a month.
(h)
For purposes of this title, in the case of an individual performing service under the provisions of section 294 of title 28, United States Code (relating to assignment of retired justices and judges to active duty), the term “wages” shall not include any payment under section 371(b) of such title 28 which is received during the period of such service.
(i)
Nothing in any of the foregoing provisions of this section (other than subsection (a)) shall exclude from the term “wages”—
(1)
Any employer contribution under a qualified cash or deferred arrangement (as defined in section 401(k) of the Internal Revenue Code of 1954) to the extent not included in gross income by reason of section 402(a)(8) of such Code, or
(2)
Any amount which is treated as an employer contribution under section 414(h)(2) of such Code where the pickup referred to in such section is pursuant to a salary reduction agreement (whether evidenced by a written instrument or otherwise).
(j)
Any amount deferred under a nonqualified deferred compensation plan (within the meaning of section 3121(v)(2)(C) of the Internal Revenue Code of 1986) shall be taken into account for purposes of this title as of the later of when the services are performed, or when there is no substantial risk of forfeiture of the rights to such amount. Any amount taken into account as wages by reason of the preceding sentence (and the income attributable thereto) shall not thereafter be treated as wages for purposes of this title.
(k)
(1)
For purposes of sections 203(f)(8)(B)(ii), 213(d)(2)(B), 215(a)(1)(B)(ii), 215(a)(1)(C)(ii), 215(a)(1)(D), 215(b)(3)(A)(ii), 215(i)(1)(E), 215(i)(2)(C)(ii), 224(f)(2)(B), and 230(b)(2) as in effect immediately prior to the enactment of the Social Security Amendments of 1977), the term “national average wage index” for any particular calendar year means, subject to regulations of the Commissioner of Social Security under paragraph (2), the average of the total wages for such particular calendar year.
(2)
The Commissioner of Social Security shall prescribe regulations under which the national average wage index for any calendar year shall be computed—
(A)
on the basis of amounts reported to the Secretary of the Treasury or his delegate for such year,
(B)
by disregarding the limitation on wages specified in subsection (a)(1),
(C)
with respect to calendar years after 1990, by incorporating deferred compensation amounts and factoring in for such years the rate of change from year to year in such amounts, in a manner consistent with the requirements of section 10208 of the Omnibus Budget Reconciliation Act of 1989, and
(D)
with respect to calendar years before 1978, in a manner consistent with the manner in which the average of the total wages for each such calendar years was determined as provided by applicable law as in effect for such years.
(3)
For purposes of this subsection, the term “deferred compensation amount” means—
(A)
any amount excluded from gross income under chapter 1 of the Internal Revenue Code of 1986 by reason of section 402(a)(8), 402(h)(1)(B), or 457(a) of such Code or by reason of a salary reduction agreement under section 403(b) of such Code,
(B)
any amount with respect to which a deduction is allowable under chapter 1 of such Code by reason of a contribution to a plan described in section 501(c)(18) of such Code, and
(C)
to the extent provided in regulations of the Commissioner of Social Security, deferred compensation provided under any arrangement, agreement, or plan referred to in subsection (i) or (j).

definition of employment
Sec. 210.
[42 U.S.C. 410]
For the purposes of this title—
(a)22

Employment
The term “employment” means any service performed after 1936 and prior to 1951 which was employment for the purposes of this title under the law applicable to the period in which such service was performed, and any service, of whatever nature, performed after 1950 (A) by an employee for the person employing him, irrespective of the citizenship or residence of either, (i) within the United States, or (ii) on or in connection with an American vessel or American aircraft under a contract of service which is entered into within the United States or during the performance of which and while the employee is employed on the vessel or aircraft it touches at a port in the United States, if the employee is employed on and in connection with such vessel or aircraft when outside the United States, or (B) outside the United States by a citizen or resident of the United States as an employee (i) of an American employer (as defined in subsection (e) of this section), or (ii) of a foreign affiliate (as defined in section 3121(l)(6) of the Internal Revenue Code of 1986 of an American employer during any period for which there is in effect an agreement, entered into pursuant to section 3121(l) of such Code, with respect to such affiliate, or (C) if it is service, regardless of where or by whom performed, which is designated as employment or recognized as equivalent to employment under an agreement entered into under section 233; except that, in the case of service performed after 1950, such term shall not include—
^{22}
So in original. The section designator and enumerator “Sec. 1147.” are missing.
(1)
Service performed by foreign agricultural workers lawfully admitted to the United States from the Bahamas, Jamaica, and the other British West Indies, or from any other foreign country or possession thereof, on a temporary basis to perform agricultural labor;
(2)
Domestic service performed in a local college club, or local chapter of a college fraternity or sorority, by a student who is enrolled and is regularly attending classes at a school, college, or university;
(3)
(A)
Service performed by a child under the age of 18 in the employ of his father or mother;
(B)
Service not in the course of the employer's trade or business, or domestic service in a private home of the employer, performed by an individual under the age of 21 in the employ of his father or mother, or performed by an individual in the employ of his spouse or son or daughter; except that the provisions of this subparagraph shall not be applicable to such domestic service performed by an individual in the employ of his son or daughter if—
(i)
the employer is a surviving spouse or a divorced individual and has not remarried, or has a spouse living in the home who has a mental or physical condition which results in such spouse's being incapable of caring for a son, daughter, stepson, or stepdaughter (referred to in clause (ii)) for at least 4 continuous weeks in the calendar quarter in which the service is rendered, and
(ii)
a son, daughter, stepson, or stepdaughter of such employer is living in the home, and
(iii)
the son, daughter, stepson, or stepdaughter (referred to in clause (ii)) has not attained age 18 or has a mental or physical condition which requires the personal care and supervision of an adult for at least 4 continuous weeks in the calendar quarter in which the service is rendered;
(4)
Service performed by an individual on or in connection with a vessel not an American vessel, or on or in connection with an aircraft not an American aircraft, if (A) the individual is employed on and in connection with such vessel or aircraft when outside the United States and (B)(i) such individual is not a citizen of the United States or (ii) the employer is not an American employer;
(5)
Service performed in the employ of the United States or any instrumentality of the United States, if such service—
(A)
would be excluded from the term “employment” for purposes of this title if the provisions of paragraphs (5) and (6) of this subsection as in effect in January 1983 had remained in effect, and
(B)
is performed by an individual who—
(i)
has been continuously performing service described in subparagraph (A) since December 31, 1983, and for purposes of this clause—
(I)
if an individual performing service described in subparagraph (A) returns to the performance of such service after being separated therefrom for a period of less than 366 consecutive days, regardless of whether the period began before, on, or after December 31, 1983, then such service shall be considered continuous,
(II)
if an individual performing service described in subparagraph (A) returns to the performance of such service after being detailed or transferred to an international organization as described under section 3343 of subchapter III of chapter 33 of title 5, United States Code, or under section 3581 of chapter 35 of such title, then the service performed for that organization shall be considered service described in subparagraph (A),
(III)
if an individual performing service described in subparagraph (A) is reemployed or reinstated after being separated from such service for the purpose of accepting employment with the American Institute of Taiwan as provided under section 3310 of chapter 48 of title 22, United States Code, then the service performed for that Institute shall be considered service described in subparagraph (A),
(IV)
if an individual performing service described in subparagraph (A) returns to the performance of such service after performing service as a member of a uniformed service (including, for purposes of this clause, service in the National Guard and temporary service in the Coast Guard Reserve) and after exercising restoration or reemployment rights as provided under chapter 43 of title 38, United States Code, then the service so performed as a member of a uniformed service shall be considered service described in subparagraph (A), and
(V)
if an individual performing service described in subparagraph (A) returns to the performance of such service after employment (by a tribal organization) to which section 104(e)(2) of the Indian Self-Determination Act applies, then the service performed for that tribal organization shall be considered service described in subparagraph (A); or
(ii)
is receiving an annuity from the Civil Service Retirement and Disability Fund, or benefits (for service as an employee) under another retirement system established by a law of the United States for employees of the Federal Government (other than for members of the uniformed services);
except that this paragraph shall not apply with respect to any such service performed on or after any date on which such individual performs—
(C)
service performed as the President or Vice President of the United States,
(D)
service performed—
(i)
in a position placed in the Executive Schedule under sections 5312 through 5317 of title 5, United States Code,
(ii)
as a noncareer appointee in the Senior Executive Service or a noncareer member of the Senior Foreign Service, or
(iii)
in a position to which the individual is appointed by the President (or his designee) or the Vice President under section 105(a)(1), 106(a)(1), or 107(a)(1) or (b)(1) of title 3, United States Code, if the maximum rate of basic pay for such position is at or above the rate for level V of the Executive Schedule,
(E)
service performed as the Chief Justice of the United States, an Associate Justice of the Supreme Court, a judge of a United States court of appeals, a judge of a United States district court (including the district court of a territory), a judge of the United States Claims Court, a judge of the United States Court of International Trade, a judge or special trial judge of the United States Tax Court, a United States magistrate, or a referee in bankruptcy or United States bankruptcy judge,
(F)
service performed as a Member, Delegate, or Resident Commissioner of or to the Congress,
(G)
any other service in the legislative branch of the Federal Government if such service—
(i)
is performed by an individual who was not subject to subchapter III of chapter 83 of title 5, United States Code, or to another retirement system established by a law of the United States for employees of the Federal Government (other than for members of the uniformed services), on December 31, 1983, or
(ii)
is performed by an individual who has, at any time after December 31, 1983, received a lump-sum payment under section 8342(a) of title 5, United States Code, or under the corresponding provision of the law establishing the other retirement system described in clause (i), or
(iii)
is performed by an individual after such individual has otherwise ceased to be subject to subchapter III of chapter 83 of title 5, United States Code (without having an application pending for coverage under such subchapter), while performing service in the legislative branch (determined without regard to the provisions of subparagraph (B) relating to continuity of employment), for any period of time after December 31, 1983,
and for purposes of this subparagraph (G) an individual is subject to such subchapter III or to any such other retirement system at any time only if (a) such individual's pay is subject to deductions, contributions, or similar payments (concurrent with the service being performed at that time) under section 8334(a) of such title 5 or the corresponding provision of the law establishing such other system, or (in a case to which section 8332(k)(1) of such title applies) such individual is making payments of amounts equivalent to such deductions, contributions, or similar payments while on leave without pay, or (b) such individual is receiving an annuity from the Civil Service Retirement and Disability Fund, or is receiving benefits (for service as an employee) under another retirement system established by a law of the United States for employees of the Federal Government (other than for members of the uniformed services), or
(H)
service performed by an individual—
(i)
on or after the effective date of an election by such individual, under section 301 of the Federal Employees' Retirement System Act of 1986, section 307 of the Central Intelligence Agency Retirement Act (50 U.S.C. 2157), or the Federal Employees' Retirement System Open Enrollment Act of 1997 to become subject to the Federal Employees' Retirement System provided in chapter 84 of title 5, United States Code, or
(ii)
on or after the effective date of an election by such individual, under regulations issued under section 860 of the Foreign Service Act of 1980, to become subject to the Foreign Service Pension System provided in subchapter II of chapter 8 of title I of such Act;
(6)
Service performed in the employ of the United States or any instrumentality of the United States if such service is performed—
(A)
in a penal institution of the United States by an inmate thereof;
(B)
by any individual as an employee included under section 5351(2) of title 5, United States Code (relating to certain interns, student nurses, and other student employees of hospitals of the Federal Government), other than as a medical or dental intern or a medical or dental resident in training; or
(C)
by any individual as an employee serving on a temporary basis in case of fire, storm, earthquake, flood, or other similar emergency;
(7)
Service performed in the employ of a State, or any political subdivision thereof, or any instrumentality of any one or more of the foregoing which is wholly owned thereby, except that this paragraph shall not apply in the case of—
(A)
service included under an agreement under section 218,
(B)
service which, under subsection (k), constitutes covered transportation service,
(C)
service in the employ of the Government of Guam or the Government of American Samoa or any political subdivision thereof, or of any instrumentality of any one or more of the foregoing which is wholly owned thereby, performed by an officer or employee thereof (including a member of the legislature of any such Government or political subdivision), and, for purposes of this title—
(i)
any person whose service as such an officer or employee is not covered by a retirement system established by a law of the United States shall not, with respect to such service, be regarded as an officer or employee of the United States or any agency or instrumentality thereof, and
(ii)
the remuneration for service described in clause (i) (including fees paid to a public official) shall be deemed to have been paid by the Government of Guam or the Government of American Samoa or by a political subdivision thereof or an instrumentality of any one or more of the foregoing which is wholly owned thereby, whichever is appropriate,
(D)
service performed in the employ of the District of Columbia or any instrumentality which is wholly owned thereby, if such service is not covered by a retirement system established by a law of the United States (other than the Federal Employees Retirement System provided in chapter 84 of title 5, United States Code); except that the provisions of this subparagraph shall not be applicable to service performed—
(i)
in a hospital or penal institution by a patient or inmate thereof;
(ii)
by any individual as an employee included under section 5351(2) of title 5, United States Code (relating to certain interns, student nurses, and other student employees of hospitals of the District of Columbia Government), other than as a medical or dental intern or as a medical or dental resident in training;
(iii)
by any individual as an employee serving on a temporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency; or
(iv)
by a member of a board, committee, or council of the District of Columbia, paid on a per diem, meeting, or other fee basis,
(E)
service performed in the employ of the Government of Guam (or any instrumentality which is wholly owned by such Government) by an employee properly classified as a temporary or intermittent employee, if such service is not covered by a retirement system established by a law of Guam; except that (i) the provisions of this subparagraph shall not be applicable to services performed by an elected official or a member of the legislature or in a hospital or penal institution by a patient or inmate thereof, and (ii) for purposes of this subparagraph, clauses (i) and (ii) of subparagraph (C) shall apply, or
(F)
service in the employ of a State (other than the District of Columbia, Guam, or American Samoa), of any political subdivision thereof, or of any instrumentality of any one or more of the foregoing which is wholly owned thereby, by an individual who is not a member of a retirement system of such State, political subdivision, or instrumentality, except that the provisions of this subparagraph shall not be applicable to service performed—
(i)
by an individual who is employed to relieve such individual from unemployment;
(ii)
in a hospital, home, or other institution by a patient or inmate thereof;
(iii)
by any individual as an employee serving on a temporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency;
(iv)
by an election official or election worker if the remuneration paid in a calendar year for such service is less than $1,000 with respect to service performed during any calendar year commencing on or after January 1, 1995, ending on or before December 31, 1999, and the adjusted amount determined under section 218(c)(8)(B) for any calendar year commencing on or after January 1, 2000, with respect to service performed during such calendar year; or
(v)
by an employee in a position compensated solely on a fee basis which is treated pursuant to section 211(c)(2)(E) as a trade or business for purposes of inclusion of such fees in net earnings from self employment;
for purposes of this subparagraph, except as provided in regulations prescribed by the Secretary of the Treasury, the term “retirement system” has the meaning given such term by section 218(b)(4).
(8)
(A)
Service performed by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order, except that this subparagraph shall not apply to service performed by a member of such an order in the exercise of such duties, if an election of coverage under section 3121(r) of the Internal Revenue Code of 1986 is in effect with respect to such order, or with respect to the autonomous subdivision thereof to which such member belongs;
(B)
Service performed in the employ of a church or qualified church-controlled organization if such church or organization has in effect an election under section 3121(w) of the Internal Revenue Code of 1986, other than service in an unrelated trade or business (within the meaning of section 513(a) of such Code);
(9)
Service performed by an individual as an employee or employee representative as defined in section 3231 of the Internal Revenue Code of 1986;
(10)
Service performed in the employ of—
(A)
a school, college, or university, or
(B)
an organization described in section 509(a)(3) of the Internal Revenue Code of 1986 if the organization is organized, and at all times thereafter is operated, exclusively for the benefit of, to perform the functions of, or to carry out the purposes of a school, college, or university and is operated, supervised, or controlled by or in connection with such school, college, or university, unless it is a school, college, or university of a State or a political subdivision thereof and the services in its employ performed by a student referred to in section 218(c)(5) are covered under the agreement between the Commissioner of Social Security and such State entered into pursuant to section 218;
if such service is performed by a student who is enrolled and regularly attending classes at such school, college, or university;
(11)
Service performed in the employ of a foreign government (including service as a consular or other officer or employee or a nondiplomatic representative);
(12)
Service performed in the employ of an instrumentality wholly owned by a foreign government—
(A)
If the service is of a character similar to that performed in foreign countries by employees of the United States Government or of an instrumentality thereof; and
(B)
If the Secretary of State shall certify to the Secretary of the Treasury that the foreign government, with respect to whose instrumentality and employees thereof exemption is claimed, grants an equivalent exemption with respect to similar service performed in the foreign country by employees of the United States Government and of instrumentalities thereof;
(13)
Service performed as a student nurse in the employ of a hospital or a nurses' training school by an individual who is enrolled and is regularly attending classes in a nurses' training school chartered or approved pursuant to State law;
(14)
(A)
Service performed by an individual under the age of eighteen in the delivery or distribution of newspapers or shopping news, not including delivery or distribution to any point for subsequent delivery or distribution;
(B)
Service performed by an individual in, and at the time of, the sale of newspapers or magazines to ultimate consumers, under an arrangement under which the newspapers or magazines are to be sold by him at a fixed price, his compensation being based on the retention of the excess of such price over the amount at which the newspapers or magazines are charged to him, whether or not he is guaranteed a minimum amount of compensation for such service, or is entitled to be credited with the unsold newspapers or magazines turned back;
(15)
Service performed in the employ of an international organization entitled to enjoy privileges, exemptions, and immunities as an international organization under the International Organizations Immunities Act (59 Stat. 669), except service which constitutes “employment” under subsection (r);
(16)
Service performed by an individual under an arrangement with the owner or tenant of land pursuant to which—
(A)
such individual undertakes to produce agricultural or horticultural commodities (including livestock, bees, poultry, and fur-bearing animals and wildlife) on such land,
(B)
the agricultural or horticultural commodities produced by such individual, or the proceeds therefrom, are to be divided between such individual and such owner or tenant, and
(C)
the amount of such individual's share depends on the amount of the agricultural or horticultural commodities produced;
[Paragraph (17) repealed by section 221(a)(99)(C)(ii) of division A of Public Law 113–295,]
(18)
Service performed in Guam by a resident of the Republic of the Philippines while in Guam on a temporary basis as a nonimmigrant alien admitted to Guam pursuant to section 101(a)(15)(H)(ii) of the Immigration and Nationality Act 23 (8 U.S.C. 1101(a)(15)(H)(ii));
^{23}
See Vol. II, P.L. 82 414.
(19)
Service which is performed by a nonresident alien individual for the period he is temporarily present in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act, as amended, and which is performed to carry out the purpose specified in subparagraph (F), (J), (M), or (Q) as the case may be;
(20)
Service (other than service described in paragraph (3)(A)) performed by an individual on a boat engaged in catching fish or other forms of aquatic animal life under an arrangement with the owner or operator of such boat pursuant to which—
(A)
such individual does not receive any additional compensation other than as provided in subparagraph (B) and other than case remuneration—
(i)
which does not exceed $100 per trip;
(ii)
which is contingent on a minimum catch; and
(iii)
which is paid solely for additional duties (such as mate, engineer, or cook) for which additional cash remuneration is traditional in the industry,
(B)
such individual receives a share of the boat's (or the boats' in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life or a share of the proceeds from the sale of such catch, and
(C)
the amount of such individual's share depends on the amount of the boat's (or boats' in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life,
but only if the operating crew of such boat (or each boat from which the individual receives a share in the case of a fishing operation involving more than one boat) is normally made up of fewer than 10 individuals;
(21)
Domestic service in a private home of the employer which—
(A)
is performed in any year by an individual under the age of 18 during any portion of such year; and
(B)
is not the principal occupation of such employee.
For purposes of paragraph (20), the operating crew of a boat shall be treated as normally made up of fewer than 10 individuals if the average size of the operating crew on trips made during the preceding 4 calendar quarters consisted of fewer than 10 individuals; or
(22)
Service performed by members of Indian tribal councils as tribal council members in the employ of an Indian tribal government, except that this paragraph shall not apply in the case of service included under an agreement under section 218A.
(b)

Included and Excluded Service
If the services performed during one-half or more of any pay period by an employee for the person employing him constitute employment, all the services of such employee for such period shall be deemed to be employment; but if the services performed during more than one-half of any such pay period by an employee for the person employing him do not constitute employment, then none of the services of such employee for such period shall be deemed to be employment. As used in this subsection, the term “pay period” means a period (of not more than thirty-one consecutive days) for which a payment of remuneration is ordinarily made to the employee by the person employing him. This subsection shall not be applicable with respect to services performed in a pay period by an employee for the person employing him, where any of such service is excepted by paragraph (9) of subsection (a).
(c)

American Vessel
The term “American vessel” means any vessel documented or numbered under the laws of the United States; and includes any vessel which is neither documented or numbered under the laws of the United States nor documented under the laws of any foreign country, if its crew is employed solely by one or more citizens or residents of the United States or corporations organized under the laws of the United States or of any State.
(d)

American Aircraft
The term “American aircraft” means an aircraft registered under the laws of the United States.
(e)

American Employer
(1)
The term “American employer” means an employer which is (A) the United States or any instrumentality thereof, (B) a State or any political subdivision thereof, or any instrumentality of any one or more of the foregoing, (C) an individual who is a resident of the United States, (D) a partnership, if two-thirds or more of the partners are residents of the United States, (E) a trust, if all of the trustees are residents of the United States, or (F) a corporation organized under the laws of the United States or of any State.
(2)
(A)
If any employee of a foreign person is performing services in connection with a contract between the United States Government (or any instrumentality thereof) and any member of any domestically controlled group of entities which includes such foreign person, such foreign person shall be treated as an American employer with respect to such services performed by such employee.
(B)
For purposes of this paragraph—
(i)
The term “domestically controlled group of entities” means a controlled group of entities the common parent of which is a domestic corporation.
(ii)
The term “controlled group of entities” means a controlled group of corporations as defined in section 1563(a)(1) of the Internal Revenue Code of 1986, except that—
(I)
“more than 50 percent” shall be substituted for “at least 80 percent” each place it appears therein, and
(II)
the determination shall be made without regard to subsections (a)(4) and (b)(2) of section 1563 of such Code.
A partnership or any other entity (other than a corporation) shall be treated as a member of a controlled group of entities if such entity is controlled (within the meaning of section 954(d)(3) of such Code) by members of such group (including any entity treated as a member of such group by reason of this sentence).
(C)
Subparagraph (A) shall not apply to any services to which paragraph (1) of section 3121(z) of the Internal Revenue Code of 1986 does not apply by reason of paragraph (4) of such section.
(f)

Agricultural Labor
The term “agricultural labor” includes all service performed—
(1)
On a farm, in the employ of any person, in connection with cultivating the soil, or in connection with raising or harvesting any agricultural or horticultural commodity, including the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and fur-bearing animals and wildlife.
(2)
In the employ of the owner or tenant or other operator of a farm, in connection with the operation, management, conservation, improvement, or maintenance of such farm and its tools and equipment, or in salvaging timber or clearing land of brush and other debris left by a hurricane, if the major part of such service is performed on a farm.
(3)
In connection with the production or harvesting of any commodity defined as an agricultural commodity in section 15(g) of the Agricultural Marketing Act, as amended, or in connection with the ginning of cotton, or in connection with the operation or maintenance of ditches, canals, reservoirs, or waterways, not owned or operated for profit, used exclusively for supplying and storing water for farming purposes.
(4)
(A)
In the employ of the operator of a farm in handling, planting, drying, packing, packaging, processing, freezing, grading, storing, or delivering to storage or to market or to a carrier for transportation to market, in its unmanufactured state, any agricultural or horticultural commodity; but only if such operator produced more than one-half of the commodity with respect to which such service is performed.
(B)
In the employ of a group of operators of farms (other than a cooperative organization) in the performance of service described in subparagraph (A), but only if such operators produced all of the commodity with respect to which such service is performed. For the purposes of this subparagraph, any unincorporated group of operators shall be deemed a cooperative organization if the number of operators comprising such group is more than twenty at any time during the calendar year in which such service is performed.
(5)
On a farm operated for profit if such service is not in the course of the employer's trade or business.
The provisions of subparagraphs (A) and (B) of paragraph (4) shall not be deemed to be applicable with respect to service performed in connection with commercial canning or commercial freezing or in connection with any agricultural or horticultural commodity after its delivery to a terminal market for distribution for consumption.
(g)

Farm
The term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards.
(h)

State
The term “State” includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.
(i)

United States
The term “United States” when used in a geographical sense means the States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.
(j)

Employee
The term “employee” means—
(1)
any officer of a corporation; or
(2)
any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee; or
(3)
any individual (other than an individual who is an employee under paragraph (1) or (2) of this subsection) who performs services for remuneration for any person—
(A)
as an agent-driver or commission-driver engaged in distributing meat products, vegetable products, fruit products, bakery products, beverages (other than milk), or laundry or dry-cleaning services, for his principal;
(B)
as a full-time life insurance salesman;
(C)
as a home worker performing work, according to specifications furnished by the person for whom the services are performed, on materials or goods furnished by such person which are required to be returned to such person or a person designated by him; or
(D)
as a traveling or city salesman, other than as an agent-driver or commission-driver, engaged upon a full-time basis in the solicitation on behalf of, and the transmission to, his principal (except for side-line sales activities on behalf of some other person) of orders from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments for merchandise for resale or supplies for use in their business operations;
if the contract of service contemplates that substantially all of such services are to be performed personally by such individual; except that an individual shall not be included in the term “employee” under the provisions of this paragraph if such individual has a substantial investment in facilities used in connection with the performance of such services (other than in facilities for transportation), or if the services are in the nature of a single transaction not part of a continuing relationship with the person for whom the services are performed.
(k)

Covered Transportation Service
(1)
Except as provided in paragraph (2), all service performed in the employ of a State or political subdivision in connection with its operation of a public transportation system shall constitute covered transportation service if any part of the transportation system was acquired from private ownership after 1936 and prior to 1951.
(2)
Service performed in the employ of a State or political subdivision in connection with the operation of its public transportation system shall not constitute covered transportation service if—
(A)
any part of the transportation system was acquired from private ownership after 1936 and prior to 1951, and substantially all service in connection with the operation of the transportation system is, on December 31, 1950, covered under a general retirement system providing benefits which, by reason of a provision of the State constitution dealing specifically with retirement systems of the State or political subdivisions thereof, cannot be diminished or impaired; or
(B)
no part of the transportation system operated by the State or political subdivision on December 31, 1950, was acquired from private ownership after 1936 and prior to 1951;
except that if such State or political subdivision makes an acquisition after 1950 from private ownership of any part of its transportation system, then, in the case of any employee who—
(C)
became an employee of such State or political subdivision in connection with and at the time of its acquisition after 1950 of such part, and
(D)
prior to such acquisition rendered service in employment in connection with the operation of such part of the transportation system acquired by the State or political subdivision,
the service of such employee in connection with the operation of the transportation system shall constitute covered transportation service, commencing with the first day of the third calendar quarter following the calendar quarter in which the acquisition of such part took place, unless on such first day such service of such employee is covered by a general retirement system which does not, with respect to such employee, contain special provisions applicable only to employees described in subparagraph (C).
(3)
All service performed in the employ of a State or political subdivision thereof in connection with its operation of a public transportation system shall constitute covered transportation service if the transportation system was not operated by the State or political subdivision prior to 1951 and, at the time of its first acquisition (after 1950) from private ownership of any part of its transportation system, the State or political subdivision did not have a general retirement system covering substantially all service performed in connection with the operation of the transportation system.
(4)
For the purposes of this subsection—
(A)
The term “general retirement system” means any pension, annuity, retirement, or similar fund or system established by a State or by a political subdivision thereof for employees of the State, political subdivision, or both; but such term shall not include such a fund or system which covers only service performed in positions connected with the operation of its public transportation system.
(B)
A transportation system or a part thereof shall be considered to have been acquired by a State or political subdivision from private ownership if prior to the acquisition service performed by employees in connection with the operation of the system or part thereof acquired constituted employment under this title, and some of such employees became employees of the State or political subdivision in connection with and at the time of such acquisition.
(C)
The term “political subdivision” includes an instrumentality of (i) a State, (ii) one or more political subdivisions of a State, or (iii) a State and one or more of its political subdivisions.
(l)

Service in the Uniformed Services
(1)
Except as provided in paragraph (4), the term “employment” shall, notwithstanding the provisions of subsection (a) of this section, include—
(A)
service performed after December 1956 by an individual as a member of a uniformed service on active duty, but such term shall not include any such service which is performed while on leave without pay, and
(B)
service performed after December 1987 by an individual as a member of a uniformed service on inactive duty training.
(2)
The term “active duty” means “active duty” as described in paragraph (21) of section 101 of title 38, United States Code, except that it shall also include “active duty for training” as described in paragraph (22) of such section.
(3)
The term “inactive duty training” means “inactive duty training” as described in paragraph (23) of such section 101.
(4)
(A)
Paragraph (1) of this subsection shall not apply in the case of any service, performed by an individual as a member of a uniformed service, which is creditable under section 3(i) of the Railroad Retirement Act of 1974. The Railroad Retirement Board shall notify the Commissioner of Social Security, with respect to all such service which is so creditable.
(B)
In any case where benefits under this title are already payable on the basis of such individual's wages and self-employment income at the time such notification (with respect to such individual) is received by the Commissioner of Social Security, the Commissioner of Social Security shall certify no further benefits for payment under this title on the basis of such individual's wages and self-employment income, or shall recompute the amount of any further benefits payable on the basis of such wages and self-employment income, as may be required as a consequence of subparagraph (A) of this paragraph. No payment of a benefit to any person on the basis of such individual's wages and self-employment income, certified by the Commissioner of Social Security prior to the end of the month in which the Commissioner receives such notification from the Railroad Retirement Board, shall be deemed by reason of this subparagraph to have been an erroneous payment or a payment to which such person was not entitled. The Commissioner of Social Security shall, as soon as possible after the receipt of such notification from the Railroad Retirement Board, advise such Board whether or not any such benefit will be reduced or terminated by reason of subparagraph (A), and if any such benefit will be so reduced or terminated, specify the first month with respect to which such reduction or termination will be effective.
(m)

Member of a Uniformed Service
The term “member of a uniformed service” means any person appointed, enlisted, or inducted in a component of the Army, Navy, Air Force, Marine Corps, or Coast Guard (including a reserve component as defined in section 101(27) of title 38, United States Code), or in one of those services without specification of component, or as a commissioned officer of the Coast and Geodetic Survey, the National Oceanic and Atmospheric Administration Corps, or the Regular or Reserve Corps of the Public Health Service, and any person serving in the Army or Air Force under call or conscription. The term includes—
(1)
a retired member of any of those services;
(2)
a member of the Fleet Reserve or Fleet Marine Corps Reserve;
(3)
a cadet at the United States Military Academy, a midshipman at the United States Naval Academy, and a cadet at the United States Coast Guard Academy or United States Air Force Academy;
(4)
a member of the Reserve Officers' Training Corps, the Naval Reserve Officers' Training Corps, or the Air Force Reserve Officers' Training Corps, when ordered to annual training duty for fourteen days or more, and while performing authorized travel to and from that duty; and
(5)
any person while en route to or from, or at, a place for final acceptance or for entry upon active duty in the military, naval, or air service—
(A)
who has been provisionally accepted for such duty; or
(B)
who, under the Military Selective Service Act, has been selected for active military, naval, or air service;
and has been ordered or directed to proceed to such place.
The term does not include a temporary member of the Coast Guard Reserve.
(n)

Crew Leader
The term “crew leader” means an individual who furnishes individuals to perform agricultural labor for another person, if such individual pays (either on his own behalf or on behalf of such person) the individuals so furnished by him for the agricultural labor performed by them and if such individual has not entered into a written agreement with such person whereby such individual has been designated as an employee of such person; and such individuals furnished by the crew leader to perform agricultural labor for another person shall be deemed to be the employees of such crew leader. A crew leader shall, with respect to services performed in furnishing individuals to perform agricultural labor for another person and service performed as a member of the crew, be deemed not to be an employee of such other person.
(o)

Peace Corps Volunteer Service
The term “employment” shall, notwithstanding the provisions of subsection (a), include service performed by an individual as a volunteer or volunteer leader within the meaning of the Peace Corps Act.
(p)

Medicare Qualified Government Employment
(1)
For purposes of sections 226 and 226A, the term “medicare qualified government employment” means any service which would constitute “employment” as defined in subsection (a) of this section but for the application of the provisions of—
(A)
subsection (a)(5), or
(B)
subsection (a)(7), except as provided in paragraphs (2) and (3).
(2)
Service shall not be treated as employment by reason of paragraph (1)(B) if the service is performed—
(A)
by an individual who is employed by a State or political subdivision thereof to relieve him from unemployment,
(B)
in a hospital, home, or other institution by a patient or inmate thereof as an employee of a State or political subdivision thereof or of the District of Columbia,
(C)
by an individual, as an employee of a State or political subdivision thereof or of the District of Columbia, serving on a temporary basis in case of fire, storm, snow, earthquake, flood or other similar emergency,
(D)
by any individual as an employee included under section 5351(2) of title 5, United States Code (relating to certain interns, student nurses, and other student employees of hospitals of the District of Columbia Government), other than as a medical or dental intern or a medical or dental resident in training, or
(E)
by an election official or election worker if the remuneration paid in a calendar year for such service is less than $1,000 with respect to service performed during any calendar year commencing on or after January 1, 1995, ending on or before December 31, 1999, and the adjusted amount determined under section 218(c)(8)(B) for any calendar year commencing on or after January 1, 2000, with respect to service performed during such calendar year.
As used in this paragraph, the terms “State” and “political subdivision” have the meanings given those terms in section 218(b).
(3)
Service performed for an employer shall not be treated as employment by reason of paragraph (1)(B) if—
(A)
such service would be excluded from the term “employment” for purposes of this section if paragraph (1)(B) did not apply;
(B)
such service is performed by an individual—
(i)
who was performing substantial and regular service for remuneration for that employer before April 1, 1986,
(ii)
who is a bona fide employee of that employer on March 31, 1986, and
(iii)
whose employment relationship with that employer was not entered into for purposes of meeting the requirements of this subparagraph; and
(C)
the employment relationship with that employer has not been terminated after March 31, 1986.
(4)
For purposes of paragraph (3), under regulations (consistent with regulations established under section 3121(u)(2)(D) of the Internal Revenue Code of 1954)—
(A)
all agencies and instrumentalities of a State (as defined in section 218(b)) or of the District of Columbia shall be treated as a single employer, and
(B)
all agencies and instrumentalities of a political subdivision of a State (as so defined) shall be treated as a single employer and shall not be treated as described in subparagraph (A).
(q)

Treatment of Real Estate Agents and Direct Sellers
Notwithstanding any other provision of this title, the rules of section 3508 of the Internal Revenue Code of 1986 shall apply for purposes of this title.
(r)

Service in the Employ of International Organizations by Certain Transferred Federal Employees
(1)
For purposes of this title, service performed in the employ of an international organization by an individual pursuant to a transfer of such individual to such international organization pursuant to section 3582 of title 5, United States Code, shall constitute “employment” if—
(A)
immediately before such transfer, such individual performed service with a Federal agency which constituted “employment” as defined in subsection (a), and
(B)
such individual would be entitled, upon separation from such international organization and proper application, to reemployment with such Federal agency under such section 3582.
(2)
For purposes of this subsection:
(A)
The term “Federal agency” means an agency, as defined in section 3581(1) of title 5, United States Code.
(B)
The term “international organization” has the meaning provided such term by section 3581(3) of title 5, United States Code.

self-employment
Sec. 211.
[42 U.S.C. 411]
For the purposes of this title—
(a)

Net Earnings From Self-Employment
The term “net earnings from self-employment” means the gross income, as computed under subtitle A of the Internal Revenue Code of 1986, derived by an individual from any trade or business carried on by such individual, less the deductions allowed under such subtitle which are attributable to such trade or business, plus his distributive share (whether or not distributed) of the ordinary net income or loss, as computed under section 702(a)(8) of such Code, from any trade or business carried on by a partnership of which he is a member; except that in computing such gross income and deductions and such distributive share of partnership ordinary net income or loss—
(1)
There shall be excluded rentals from real estate and from personal property leased with the real estate (including such rentals paid in crop shares, and including payments under section 1233(2) of the Food Security Act of 1985 (16 U.S.C. 3833(2)) to individuals receiving benefits under section 202 or 223), together with the deductions attributable thereto, unless such rentals are received in the course of a trade or business as a real estate dealer; except that the preceding provisions of this paragraph shall not apply to any income derived by the owner or tenant of land if (A) such income is derived under an arrangement, between the owner or tenant and another individual, which provides that such other individual shall produce agricultural or horticultural commodities (including livestock, bees, poultry, and fur-bearing animals and wildlife) on such land, and that there shall be material participation by the owner or tenant (as determined without regard to any activities of an agent of such owner or tenant) in the production or the management of the production of such agricultural or horticultural commodities, and (B) there is material participation by the owner or tenant (as determined without regard to any activities of an agent of such owner or tenant) with respect to any such agricultural or horticultural commodity;
(2)
There shall be excluded dividends on any share of stock, and interest on any bond, debenture, note, or certificate, or other evidence of indebtedness, issued with interest coupons or in registered form by any corporation (including one issued by a government or political subdivision thereof), unless such dividends and interest are received in the course of a trade or business as a dealer in stocks or securities;
(3)
There shall be excluded any gain or loss (A) which is considered under subtitle A of the Internal Revenue Code of 1986 as gain or loss from the sale or exchange of a capital asset, (B) from the cutting of timber, or the disposal of timber, coal, or iron ore, if section 631 of the Internal Revenue Code of 1954 applies to such gain or loss, or (C) from the sale, exchange, involuntary conversion, or other disposition of property if such property is neither (i) stock in trade or other property of a kind which would properly be includible in inventory if on hand at the close of the taxable year, nor (ii) property held primarily for sale to customers in the ordinary course of the trade or business;
(4)
The deduction for net operating losses provided in section 172 of the Internal Revenue Code of 1986 shall not be allowed;
(5)
(A)
If any of the income derived from a trade or business (other than a trade or business carried on by a partnership) is community income under community property laws applicable to such income, the gross income and deductions attributable to such trade or business shall be treated as the gross income and deductions of the spouse carrying on such trade or business or, if such trade or business is jointly operated, treated as the gross income and deductions of each spouse on the basis of their respective distributive share of the gross income and deductions;
(B)
If any portion of a partner's distributive share of the ordinary net income or loss from a trade or business carried on by a partnership is community income or loss under the community property laws applicable to such share, all of such distributive share shall be included in computing the net earnings from self-employment of such partner, and no part of such share shall be taken into account in computing the net earnings from self-employment of the spouse of such partner;
(6)
A resident of the Commonwealth of Puerto Rico shall compute his net earnings from self-employment in the same manner as a citizen of the United States but without regard to the provisions of section 933 of the Internal Revenue Code of 1986;
(7)
An individual who is a duly ordained, commissioned, or licensed minister of a church or a member of a religious order shall compute his net earnings from self-employment derived from the performance of service described in subsection (c)(4) without regard to section 107 (relating to rental value of parsonages), section 119 (relating to meals and lodging furnished for the convenience of the employer), and section 911 (relating to earned income from sources without the United States) of the Internal Revenue Code of 1986, but shall not include in any such net earnings from self-employment the rental value of any parsonage or any parsonage allowance (whether or not excluded under section 107 of the Internal Revenue Code of 1986) provided after the individual retires, or any other retirement benefit received by such individual from a church plan (as defined in section 414(e) of such Code) after the individual retires;
(8)
The exclusion from gross income provided by section 931 of the Internal Revenue Code of 1986 shall not apply;
(9)
There shall be excluded amounts received by a partner pursuant to a written plan of the partnership, which meets such requirements as are prescribed by the Secretary of the Treasury or his delegate, and which provides for payments on account of retirement, on a periodic basis, to partners generally or to a class or classes of partners, such payments to continue at least until such partner's death, if—
(A)
such partner rendered no services with respect to any trade or business carried on by such partnership (or its successors) during the taxable year of such partnership (or its successors), ending within or with his taxable year, in which such amounts were received, and
(B)
no obligation exists (as of the close of the partnership's taxable year referred to in subparagraph (A)) from the other partners to such partner except with respect to retirement payments under such plan, and
(C)
such partner's share, if any, of the capital of the partnership has been paid to him in full before the close of the partnership's taxable year referred to in subparagraph (A);
(10)
The exclusion from gross income provided by section 911(a)(1) of the Internal Revenue Code of 1954 shall not apply;
(11)
In lieu of the deduction provided by section 164(f) of the Internal Revenue Code of 1986 (relating to deduction for one-half of self-employment taxes), there shall be allowed a deduction equal to the product of—
(A)
the taxpayer's net earnings from self-employment for the taxable year (determined without regard to this paragraph), and
(B)
one-half of the sum of the rates imposed by subsections (a) and (b) of section 1401 of such Code for such year;
(12)
There shall be excluded the distributive share of any item of income or loss of a limited partner, as such, other than guaranteed payments described in section 707(c) of the Internal Revenue Code of 1986 to that partner for services actually rendered to or on behalf of the partnership to the extent that those payments are established to be in the nature of remuneration for those services;
(13)
In the case of church employee income, the special rules of subsection (i)(1) shall apply;
(14)
There shall be excluded income excluded from taxation under section 7873 of the Internal Revenue Code of 1986 (relating to income derived by Indians from exercise of fishing rights);
(15)
The deduction under section 162(l) (relating to health insurance costs of self-employed individuals) shall not be allowed; and
(16)
Notwithstanding the preceding provisions of this subsection, each spouse's share of income or loss from a qualified joint venture shall be taken into account as provided in section 761(f) of the Internal Revenue Code of 1986 in determining net earnings from self-employment of such spouse.
If the taxable year of a partner is different from that of the partnership, the distributive share which he is required to include in computing his net earnings from self-employment shall be based upon the ordinary net income or loss of the partnership for any taxable year of the partnership (even though beginning prior to 1951) ending within or with his taxable year. In the case of any trade or business which is carried on by an individual or by a partnership and in which, if such trade or business were carried on exclusively by employees, the major portion of the services would constitute agricultural labor as defined in section 210(f)—
(i)
in the case of an individual, if the gross income derived by him from such trade or business is not more than the upper limit, the net earnings from self-employment derived by him from such trade or business may, at his option, be deemed to be 66⅔ percent of such gross income; or
(ii)
in the case of an individual, if the gross income derived by him from such trade or business is more than the upper limit and the net earnings from self-employment derived by him from such trade or business (computed under this subsection without regard to this sentence) are less than the lower limit, the net earnings from self-employment derived by him from such trade or business may, at his option, be deemed to be the lower limit; and
(iii)
in the case of a member of a partnership, if his distributive share of the gross income of the partnership derived from such trade or business (after such gross income has been reduced by the sum of all payments to which section 707(c) of the Internal Revenue Code of 1986 applies) is not more than the upper limit, his distributive share of income described in section 702(a)(8) of such Code derived from such trade or business may, at his option, be deemed to be an amount equal to 66⅔ percent of his distributive share of such gross income (after such gross income has been so reduced); or
(iv)
in the case of a member of a partnership, if his distributive share of the gross income of the partnership derived from such trade or business (after such gross income has been reduced by the sum of all payments to which section 707(c) of the Internal Revenue Code of 1986 applies) is more than the upper limit and his distributive share (whether or not distributed) of income described in section 702(a)(8) of such Code derived from such trade or business (computed under this subsection without regard to this sentence) is less than the lower limit, his distributive share of income described in such section 702(a)(8) derived from such trade or business may, at his option, be deemed to be the lower limit.
For purposes of the preceding sentence, gross income means—
(v)
in the case of any such trade or business in which the income is computed under a cash receipts and disbursements method, the gross receipts from such trade or business reduced by the cost or other basis of property which was purchased and sold in carrying on such trade or business, adjusted (after such reduction) in accordance with the provisions of paragraphs (1) through (6) and paragraph (8) of this subsection; and
(vi)
in the case of any such trade or business in which the income is computed under an accrual method, the gross income from such trade or business, adjusted in accordance with the provisions of paragraphs (1) through (6) and paragraph (8) of this subsection;
and, for purposes of such sentence, if an individual (including a member of a partnership) derives gross income from more than one such trade or business, such gross income (including his distributive share of the gross income of any partnership derived from any such trade or business) shall be deemed to have been derived from one trade or business.
The preceding sentence and clauses (i) through (iv) of the second preceding sentence shall also apply in the case of any trade or business (other than a trade or business specified in such second preceding sentence) which is carried on by an individual who is self-employed on a regular basis as defined in subsection (g), or by a partnership of which an individual is a member on a regular basis as defined in subsection (g), but only if such individual's net earnings from self-employment in the taxable year as determined without regard to this sentence are less than the lower limit and less than 66⅔ percent of the sum (in such taxable year) of such individual's gross income derived from all trades or businesses carried on by him and his distributive share of the income or loss from all trades or businesses carried on by all the partnerships of which he is a member; except that this sentence shall not apply to more than 5 taxable years in the case of any individual, and in no case in which an individual elects to determine the amount of his net earnings from self-employment for a taxable year under the provisions of the two preceding sentences with respect to a trade or business to which the second preceding sentence applies and with respect to a trade or business to which this sentence applies shall such net earnings for such year exceed the lower limit.
(b)

Self-Employment Income
The term “self-employment income” means the net earnings from self-employment derived by an individual (other than a nonresident alien individual, except as provided by an agreement under section 233) during any taxable year beginning after 1950; except that such term shall not include—
(1)
That part of the net earnings from self-employment which is in excess of—
(A)
For any taxable year ending prior to 1955, (i) $3,600, minus (ii) the amount of the wages paid to such individual during the taxable year; and
(B)
For any taxable year ending after 1954 and prior to 1959, (i) $4,200, minus (ii) the amount of the wages paid to such individual during the taxable year; and
(C)
For any taxable year ending after 1958 and prior to 1966, (i) $4,800, minus (ii) the amount of the wages paid to such individual during the taxable year; and
(D)
For any taxable year ending after 1965 and prior to 1968, (i) $6,600, minus (ii) the amount of the wages paid to such individual during the taxable year; and
(E)
For any taxable year ending after 1967 and beginning prior to 1972, (i) $7,800, minus (ii) the amount of the wages paid to such individual during the taxable year; and
(F)
For any taxable year beginning after 1971 and prior to 1973, (i) $9,000, minus (ii) the amount of the wages paid to such individual during the taxable year; and
(G)
For any taxable year beginning after 1972 and prior to 1974, (i) $10,800, minus (ii) the amount of the wages paid to such individual during the taxable year; and
(H)
For any taxable year beginning after 1973 and prior to 1975, (i) $13,200, minus (ii) the amount of the wages paid to such individual during the taxable year; and
(I)
For any taxable year beginning in any calendar year after 1974, (i) an amount equal to the contribution and benefit base (as determined under section 230) which is effective for such calendar year, minus (ii) the amount of the wages paid to such individual during such taxable year; or
(2)
The net earnings from self-employment, if such net earnings for the taxable year are less than $400.
An individual who is not a citizen of the United States but who is a resident of the Commonwealth of Puerto Rico, the Virgin Islands, Guam, or American Samoa shall not, for the purposes of this subsection, be considered to be a nonresident alien individual. In the case of church employee income, the special rules of subsection (i)(2) shall apply for purposes of paragraph (2).
(c)

Trade or Business
The term “trade or business”, when used with reference to self-employment income or net earnings from self-employment, shall have the same meaning as when used in section 162 of the Internal Revenue Code of 1986, except that such term shall not include—
(1)
The performance of the functions of a public office, other than the functions of a public office of a State or a political subdivision thereof with respect to fees received in any period in which the functions are performed in a position compensated solely on a fee basis and in which such functions are not covered under an agreement entered into by such State and the Commissioner of Social Security pursuant to section 218;
(2)
The performance of service by an individual as an employee, other than—
(A)
service described in section 210(a)(14)(B) performed by an individual who has attained the age of eighteen,
(B)
service described in section 210(a)(16),
(C)
service described in section 210(a)(11), (12), or (15) performed in the United States by a citizen of the United States, except service which constitutes “employment ” under section 210(r),
(D)
service described in paragraph (4) of this subsection,
(E)
service performed by an individual as an employee of a State or a political subdivision thereof in a position compensated solely on a fee basis with respect to fees received in any period in which such service is not covered under an agreement entered into by such State and the Commissioner of Social Security pursuant to section 218,
(F)
service described in section 210(a)(20), and
(G)
service described in section 210(a)(8)(B);
(3)
The performance of service by an individual as an employee or employee representative as defined in section 3231 of the Internal Revenue Code of 1986;
(4)
The performance of service by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order;
(5)
The performance of service by an individual in the exercise of his profession as a Christian Science practitioner; or
(6)
The performance of service by an individual during the period for which an exemption under section 1402(g) of the Internal Revenue Code of 1986 is effective with respect to him.
The provisions of paragraph (4) or (5) shall not apply to service (other than service performed by a member of a religious order who has taken a vow of poverty as a member of such order) performed by an individual unless an exemption under section 1402(e) of the Internal Revenue Code of 1986 is effective with respect to him.
(d)

Partnership and Partner
The term “partnership” and the term “partner” shall have the same meaning as when used in subchapter K of chapter 1 of the Internal Revenue Code of 1986.
(e)

Taxable Year
The term “taxable year” shall have the same meaning as when used in subtitle A of the Internal Revenue Code of 1986; and the taxable year of any individual shall be a calendar year unless he has a different taxable year for the purposes of subtitle A of such Code, in which case his taxable year for the purposes of this title shall be the same as his taxable year under such subtitle A.
(f)

Partner's Taxable Year Ending as Result of Death
In computing a partner's net earnings from self-employment for his taxable year which ends as a result of his death (but only if such taxable year ends within, and not with, the taxable year of the partnership), there shall be included so much of the deceased partner's distributive share of the partnership's ordinary income or loss for the partnership taxable year as is not attributable to an interest in the partnership during any period beginning on or after the first day of the first calendar month following the month in which such partner died. For purposes of this subsection—
(1)
in determining the portion of the distributive share which is attributable to any period specified in the preceding sentence, the ordinary income or loss of the partnership shall be treated as having been realized or sustained ratably over the partnership taxable year; and
(2)
the term “deceased partner's distributive share ” includes the share of his estate or of any other person succeeding, by reason of his death, to rights with respect to his partnership interest.
(g)

Regular Basis
An individual shall be deemed to be self-employed on a regular basis in a taxable year, or to be a member of a partnership on a regular basis in such year, if he had net earnings from self-employment, as defined in the first sentence of subsection (a), of not less than $400 in at least two of the three consecutive taxable years immediately preceding such taxable year from trades or businesses carried on by such individual or such partnership.
(h)
(1)
In determining the net earnings from self-employment of any options dealer or commodities dealer—
(A)
notwithstanding subsection (a)(3)(A), there shall not be excluded any gain or loss (in the normal course of the taxpayer's activity of dealing in or trading section 1256 contracts) from section 1256 contracts or property related to such contracts, and
(B)
the deduction provided by section 1202 of the Internal Revenue Code of 1986 shall not apply.
(2)
For purposes of this subsection—
(A)
The term “options dealer” has the meaning given such term by section 1256(g)(8) of such Code.
(B)
The term “commodities dealer” means a person who is actively engaged in trading section 1256 contracts and is registered with a domestic board of trade which is designated as a contract market by the Commodities Futures Trading Commission.
(C)
The term “section 1256 contracts” has the meaning given to such term by section 1256(b) of such Code.
(i)
(1)
In applying subsection (a)—
(A)
church employee income shall not be reduced by any deduction;
(B)
church employee income and deductions attributable to such income shall not be taken into account in determining the amount of other net earnings from self-employment.
(2)
(A)
Subsection (b)(2) shall be applied separately—
(i)
to church employee income, and
(ii)
to other net earnings from self-employment.
(B)
In applying subsection (b)(2) to church employee income, “$100” shall be substituted for “$400”.
(3)
Paragraph (1) shall not apply to any amount allowable as a deduction under subsection (a)(11), and paragraph (1) shall be applied before determining the amount so allowable.
(4)
For purposes of this section, the term “church employee income” means gross income for services which are described in section 210(a)(8)(B) (and are not described in section 210(a)(8)(A)).
(j)

Codification of Treatment of Certain Termination Payments Received by Former Insurance Salesmen
Nothing in subsection (a) shall be construed as including in the net earnings from self-employment of an individual any amount received during the taxable year from an insurance company on account of services performed by such individual as an insurance salesman for such company if—
(1)
such amount is received after termination of such individual's agreement to perform such services for such company,
(2)
such individual performs no services for such company after such termination and before the close of such taxable year,
(3)
such individual enters into a covenant not to compete against such company which applies to at least the 1-year period beginning on the date of such termination, and
(4)
the amount of such payment—
(A)
depends primarily on policies sold by or credited to the account of such individual during the last year of such agreement or the extent to which such policies remain in force for some period after such termination, or both, and
(B)
does not depend to any extent on length of service or overall earnings from services performed for such company (without regard to whether eligibility for payment depends on length of service).
(k)

Upper and Lower Limits.—
For purposes of subsection (a)—
(1)
The lower limit for any taxable year is the sum of the amounts required under section 213(d) for a quarter of coverage in effect with respect to each calendar quarter ending with or within such taxable year.
(2)
The upper limit for any taxable year is the amount equal to 150 percent of the lower limit for such taxable year.

crediting of self employment income to calendar years
Sec. 212.
[42 U.S.C. 412]
(a)
For the purposes of determining average monthly wage and quarters of coverage the amount of self employment income derived during any taxable year which begins before 1978 shall—
(1)
in the case of a taxable year which is a calendar year, be credited equally to each quarter of such calendar year; and
(2)
in the case of any other taxable year, be credited equally to the calendar quarter in which such taxable year ends and to each of the next three or fewer preceding quarters any part of which is in such taxable year.
(b)
Except as provided in subsection (c), for the purposes of determining average indexed monthly earnings, average monthly wage, and quarters of coverage the amount of self-employment income derived during any taxable year which begins after 1977 shall—
(1)
in the case of a taxable year which is a calendar year or which begins with or during a calendar year and ends with or during such year, be credited to such calendar year; and
(2)
in the case of any other taxable year, be allocated proportionately to the two calendar years, portions of which are included within such taxable year, on the basis of the number of months in each such calendar year which are included completely within the taxable year.
For purposes of clause (2), the calendar month in which a taxable year ends shall be treated as included completely within that taxable year.
(c)
For the purpose of determining average indexed monthly earnings, average monthly wage, and quarters of coverage in the case of any individual who elects the option described in clause (ii) or (iv) in the matter following section 211(a)(16) for any taxable year that does not begin with or during a particular calendar year and end with or during such year, the self-employment income of such individual deemed to be derived during such taxable year shall be allocated to the two calendar years, portions of which are included within such taxable year, in the same proportion to the total of such deemed self-employment income as the sum of the amounts applicable under section 213(d) for the calendar quarters ending with or within each such calendar year bears to the lower limit for such taxable year specified in section 211(k)(1).

quarter and quarter of coverage
Sec. 213.
[42 U.S.C. 413]
(a)

Definitions
For the purposes of this title—
(1)
The term “quarter”, and the term “calendar quarter”, mean a period of three calendar months ending on March 31, June 30, September 30, or December 31.
(2)
(A)
The term “quarter of coverage” means—
(i)
for calendar years before 1978, and subject to the provisions of subparagraph (B), a quarter in which an individual has been paid $50 or more in wages (except wages for agricultural labor paid after 1954) or for which he has been credited (as determined under section 212) with $100 or more of self-employment income; and
(ii)
for calendar years after 1977, and subject to the provisions of subparagraph (B), each portion of the total of the wages paid and the self-employment income credited (pursuant to section 212) to an individual in a calendar year which equals the amount required for a quarter of coverage in that calendar year (as determined under subsection (d)), with such quarter of coverage being assigned to a specific calendar quarter in such calendar year only if necessary in the case of any individual who has attained age 62 or died or is under a disability and the requirements for insured status in subsection (a) or (b) of section 214, the requirements for entitlement to a computation or recomputation of his primary insurance amount, or the requirements of paragraph (3) of section 216(i) would not otherwise be met.
(B)
Notwithstanding the provisions of subparagraph (A)—
(i)
no quarter after the quarter in which an individual dies shall be a quarter of coverage, and no quarter any part of which is included in a period of disability (other than the initial quarter and the last quarter of such period) shall be a quarter of coverage;
(ii)
if the wages paid to an individual in any calendar year equal $3,000 in the case of a calendar year before 1951, or $3,600 in the case of a calendar year after 1950 and before 1955, or $4,200 in the case of a calendar year after 1954 and before 1959, or $4,800 in the case of a calendar year after 1958 and before 1966, or $6,600 in the case of a calendar year after 1965 and before 1968, or $7,800 in the case of a calendar year after 1967 and before 1972, or $9,000 in the case of the calendar year 1972, or $10,800 in the case of the calendar year 1973, or $13,200 in the case of the calendar year 1974, or an amount equal to the contribution and benefit base (as determined under section 230) in the case of any calendar year after 1974 and before 1978 with respect to which such contribution and benefit base is effective, each quarter of such year shall (subject to clauses (i) and (v)) be a quarter of coverage;
(iii)
if an individual has self-employment income for a taxable year, and if the sum of such income and the wages paid to him during such year equals $3,600 in the case of a taxable year beginning after 1950 and ending before 1955, or $4,200 in the case of a taxable year ending after 1954 and before 1959, or $4,800 in the case of a taxable year ending after 1958 and before 1966, or $6,600 in the case of a taxable year ending after 1965 and before 1968, or $7,800 in the case of a taxable year ending after 1967 and before 1972, or $9,000 in the case of a taxable year beginning after 1971 and before 1973, or $10,800 in the case of a taxable year beginning after 1972 and before 1974, or $13,200 in the case of a taxable year beginning after 1973 and before 1975, or an amount equal to the contribution and benefit base (as determined under section 230) which is effective for the calendar year in the case of any taxable year beginning in any calendar year after 1974 and before 1978, each quarter any part of which falls in such year shall (subject to clauses (i) and (v)) be a quarter of coverage;
(iv)
if an individual is paid wages for agricultural labor in a calendar year after 1954 and before 1978, then, subject to clauses (i) and (v), (I) the last quarter of such year which can be but is not otherwise a quarter of coverage shall be a quarter of coverage if such wages equal or exceed $100 but are less than $200; (II) the last two quarters of such year which can be but are not otherwise quarters of coverage shall be quarters of coverage if such wages equal or exceed $200 but are less than $300; (III) the last three quarters of such year which can be but are not otherwise quarters of coverage shall be quarters of coverage if such wages equal or exceed $300 but are less than $400; and (IV) each quarter of such year which is not otherwise a quarter of coverage shall be a quarter of coverage if such wages are $400 or more;
(v)
no quarter shall be counted as a quarter of coverage prior to the beginning of such quarter;
(vi)
not more than one quarter of coverage may be credited to a calendar quarter; and
(vii)
no more than four quarters of coverage may be credited to any calendar year after 1977.
If in the case of an individual who has attained age 62 or died or is under a disability and who has been paid wages for agricultural labor in a calendar year after 1954 and before 1978, the requirements for insured status in subsection (a) or (b) of section 214, the requirements for entitlement to a computation or recomputation of his primary insurance amount, or the requirements of paragraph (3) of section 216(i) are not met after assignment of quarters of coverage to quarters in such year as provided in clause (iv) of the preceding sentence, but would be met if such quarters of coverage were assigned to different quarters in such year, then such quarters of coverage shall instead be assigned, for purposes only of determining compliance with such requirements, to such different quarters. If, in the case of an individual who did not die prior to January 1, 1955, and who attained age 62 (if a woman) or age 65 (if a man) or died before July 1, 1957, the requirements for insured status in section 214(a)(3) are not met because of his having too few quarters of coverage but would be met if his quarters of coverage in the first calendar year in which he had any covered employment had been determined on the basis of the period during which wages were earned rather than on the basis of the period during which wages were paid (any such wages paid that are reallocated on an earned basis shall not be used in determining quarters of coverage for subsequent calendar years), then upon application filed by the individual or his survivors and satisfactory proof of his record of wages earned being furnished by such individual or his survivors, the quarters of coverage in such calendar year may be determined on the basis of the periods during which wages were earned.
(b)

Crediting of Wages Paid in 1937
With respect to wages paid to an individual in the six-month periods commencing either January 1, 1937, or July 1, 1937; (A) if wages of not less than $100 were paid in any such period, one-half of the total amount thereof shall be deemed to have been paid in each of the calendar quarters in such period; and (B) if wages of less than $100 were paid in any such period, the total amount thereof shall be deemed to have been paid in the latter quarter of such period, except that if in any such period, the individual attained age sixty-five, all of the wages paid in such period shall be deemed to have been paid before such age was attained.
(c)

Alternative Method for Determining Quarters of Coverage With Respect to Wages in the Period from 1937 to 1950
For purposes of sections 214(a) and 215(d), an individual shall be deemed to have one quarter of coverage for each $400 of his total wages prior to 1951 (as defined in section 215(d)(1)(C)), except where such individual is not a fully insured individual on the basis of the number of quarters of coverage so derived plus the number of quarters of coverage derived from the wages and self-employment income credited to such individual for periods after 1950.
(d)

Amount Required for a Quarter of Coverage
(1)
The amount of wages and self-employment income which an individual must have in order to be credited with a quarter of coverage in any year under subsection (a)(2)(A)(ii) shall be $250 in the calendar year 1978 and the amount determined under paragraph (2) of this subsection for years after 1978.
(2)
The Commissioner of Social Security shall, on or before November 1 of 1978 and of every year thereafter, determine and publish in the Federal Register the amount of wages and self-employment income which an individual must have in order to be credited with a quarter of coverage in the succeeding calendar year. The amount required for a quarter of coverage shall be the larger of—
(A)
the amount in effect in the calendar year in which the determination under this subsection is made, or
(B)
the product of the amount prescribed in paragraph (1) which is required for a quarter of coverage in 1978 and the ratio of the national average wage index (as defined in section 209(k)(1)) for the calendar year before the year in which the determination under this paragraph is made to the national average wage index (as so defined) for 1976,
with such product, if not a multiple of $10, being rounded to the next higher multiple of $10 where such amount is a multiple of $5 but not of $10 and to the nearest multiple of $10 in any other case.

insured status for purposes of old-age and survivors insurance benefits
Sec. 214.
[42 U.S.C. 414]
For the purposes of this title—
(a)

Fully Insured Individual
The term “fully insured individual” means any individual who had not less than—
(1)
one quarter of coverage (whenever acquired) for each calendar year elapsing after 1950 (or, if later, the year in which he attained age 21) and before the year in which he died or (if earlier) the year in which he attained age 62, except that in no case shall an individual be a fully insured individual unless he has at least 6 quarters of coverage; or
(2)
40 quarters of coverage; or
(3)
in the case of an individual who died before 1951, 6 quarters of coverage;
not counting as an elapsed year for purposes of paragraph (1) any year any part of which was included in a period of disability (as defined in section 216(i)), and who satisfies the criterion specified in subsection (c).
(b)

Currently Insured Individual
The term “currently insured individual” means any individual who had not less than six quarters of coverage during the thirteen-quarter period ending with (1) the quarter in which he died, (2) the quarter in which he became entitled to old-age insurance benefits, (3) the quarter in which he became entitled to primary insurance benefits under this title as in effect prior to the enactment of this section, or (4) in the case of any individual entitled to disability insurance benefits, the quarter in which he most recently became entitled to disability insurance benefits, not counting as part of such thirteen-quarter period any quarter any part of which was included in a period of disability unless such quarter was a quarter of coverage, and who satisfies the criterion specified in subsection (c).
(c)24
For purposes of subsections (a) and (b), the criterion specified in this subsection is that the individual, if not a United States citizen or national—
^{24}
Section 211(a) of Public Law 108–203 inserted subsection (c) at the end of “Section 214 (42 U.S.C. 414)”, without specifying the Social Security Act. This compilation reflects the presumed intent.
(1)
has been assigned a social security account number that was, at the time of assignment, or at any later time, consistent with the requirements of subclause (I) or (III) of section 205(c)(2)(B)(i); or
(2)
at the time any such quarters of coverage are earned—
(A)
is described in subparagraph (B) or (D) of section 101(a)(15) of the Immigration and Nationality Act,
(B)
is lawfully admitted temporarily to the United States for business (in the case of an individual described in such subparagraph (B)) or the performance as a crewman (in the case of an individual described in such subparagraph (D)), and
(C)
the business engaged in or service as a crewman performed is within the scope of the terms of such individual's admission to the United States.

computation of primary insurance amount
Sec. 215.
[42 U.S.C. 415]
For the purposes of this title—
(a)

Primary Insurance Amount
(1)
(A)
The primary insurance amount of an individual shall (except as otherwise provided in this section) be equal to the sum of—
(i)
90 percent of the individual's average indexed monthly earnings (determined under subsection (b)) to the extent that such earnings do not exceed the amount established for purposes of this clause by subparagraph (B),
(ii)
32 percent of the individual's average indexed monthly earnings to the extent that such earnings exceed the amount established for purposes of clause (i) but do not exceed the amount established for purposes of this clause by subparagraph (B), and
(iii)
15 percent of the individual's average indexed monthly earnings to the extent that such earnings exceed the amount established for purposes of clause (ii),
rounded, if not a multiple of $0.10, to the next lower multiple of $0.10, and thereafter increased as provided in subsection (i).
(B)
(i)
For individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming eligible for such benefits), in the calendar year 1979, the amount established for purposes of clause (i) and (ii) of subparagraph (A) shall be $180 and $1,085, respectively.
(ii)
For individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming eligible for such benefits), in any calendar year after 1979, each of the amounts so established shall equal the product of the corresponding amount established with respect to the calendar year 1979 under clause (i) of this subparagraph and the quotient obtained by dividing—
(I)
the national average wage index (as defined in section 209(k)(1)) for the second calendar year preceding the calendar year for which the determination is made, by
(II)
the national average wage index (as so defined) for 1977.
(iii)
Each amount established under clause (ii) for any calendar year shall be rounded to the nearest $1, except that any amount so established which is a multiple of $0.50 but not of $1 shall be rounded to the next higher $1.
(C)
(i)
No primary insurance amount computed under subparagraph (A) may be less than an amount equal to $11.50 multiplied by the individual's years of coverage in excess of 10, or the increased amount determined for purposes of this clause under subsection (i).
(ii)
For purposes of clause (i), the term “years of coverage” with respect to any individual means the number (not exceeding 30) equal to the sum of (I) the number (not exceeding 14 and disregarding any fraction) determined by dividing (a) the total of the wages credited to such individual (including wages deemed to be paid prior to 1951 to such individual under section 217, compensation under the Railroad Retirement Act of 1937 prior to 1951 which is creditable to such individual pursuant to this title, and wages deemed to be paid prior to 1951 to such individual under section 231) for years after 1936 and before 1951 by (b) $900, plus (II) the number equal to the number of years after 1950 each of which is a computation base year (within the meaning of subsection (b)(2)(B)(ii)) and in each of which he is credited with wages (including wages deemed to be paid to such individual under section 217, compensation under the Railroad Retirement Act of 1937 or 1974<FTRF> which is creditable to such individual pursuant to this title, and wages deemed to be paid to such individual under section 229) and self-employment income of not less than 25 percent (in the case of a year after 1950 and before 1978) of the maximum amount which (pursuant to subsection (e)) may be counted for such year, or 25 percent (in the case of a year after 1977 and before 1991) or 15 percent (in the case of a year after 1990) of the maximum amount which (pursuant to subsection (e)) could be counted for such year if section 230 as in effect immediately prior to the enactment of the Social Security Amendments of 1977 had remained in effect without change (except that, for purposes of subsection (b)(2)(A) of such section 230 as so in effect, the reference therein to the average of the wages of all employees as reported to the Secretary of the Treasury for any calendar year shall be deemed a reference to the national average wage index (within the meaning of section 209(k)(1)) for such calendar year).
(D)
In each calendar year the Commissioner of Social Security shall publish in the Federal Register, on or before November 1, the formula for computing benefits under this paragraph and for adjusting wages and self-employment income under subsection (b)(3) in the case of an individual who becomes eligible for an old-age insurance benefit, or (if earlier) becomes eligible for a disability insurance benefit or dies, in the following year, and the national average wage index (as defined in section 209(k)(1)) on which that formula is based.
(2)
(A)
A year shall not be counted as the year of an individual's death or eligibility for purposes of this subsection or subsection (i) in any case where such individual was entitled to a disability insurance benefit for any of the 12 months immediately preceding the month of such death or eligibility (but there shall be counted instead the year of the individual's eligibility for the disability insurance benefit or benefits to which he was entitled during such 12 months).
(B)
In the case of an individual who was entitled to a disability insurance benefit for any of the 12 months before the month in which he became entitled to an old-age insurance benefit, became reentitled to a disability insurance benefit, or died, the primary insurance amount for determining any benefit attributable to that entitlement, reentitlement, or death is the greater of—
(i)
the primary insurance amount upon which such disability insurance benefit was based, increased by the amount of each general benefit increase (as defined in subsection (i)(3)), and each increase provided under subsection (i)(2), that would have applied to such primary insurance amount had the individual remained entitled to such disability insurance benefit until the month in which he became so entitled or reentitled or died, or
(ii)
the amount computed under paragraph (1)(C).
(C)
In the case of an individual who was entitled to a disability insurance benefit for any month, and with respect to whom a primary insurance amount is required to be computed at any time after the close of the period of the individual's disability (whether because of such individual's subsequent entitlement to old-age insurance benefits or to a disability insurance benefit based upon a subsequent period of disability, or because of such individual's death), the primary insurance amount so computed may in no case be less than the primary insurance amount with respect to which such former disability insurance benefit was most recently determined.
(3)
(A)
Paragraph (1) applies only to an individual who was not eligible for an old-age insurance benefit prior to January 1979 and who in that or any succeeding month—
(i)
becomes eligible for such a benefit,
(ii)
becomes eligible for a disability insurance benefit, or
(iii)
dies, and (except for subparagraph (C)(i) thereof) it applies to every such individual except to the extent otherwise provided by paragraph (4).
(B)
For purposes of this title, an individual is deemed to be eligible—
(i)
for old-age insurance benefits, for months beginning with the month in which he attains age 62, or
(ii)
for disability insurance benefits, for months beginning with the month in which his period of disability began as provided under section 216(i)(2)(C),
except as provided in paragraph (2)(A) in cases where fewer than 12 months have elapsed since the termination of a prior period of disability.
(4)
Paragraph (1) (except for subparagraph (C)(i) thereof) does not apply to the computation or recomputation of a primary insurance amount for—
(A)
an individual who was eligible for a disability insurance benefit for a month prior to January 1979 unless, prior to the month in which occurs the event described in clause (i), (ii), or (iii) of paragraph (3)(A), there occurs a period of at least 12 consecutive months for which he was not entitled to a disability insurance benefit, or
(B)
an individual who had wages or self-employment income credited for one or more years prior to 1979, and who was not eligible for an old-age or disability insurance benefit, and did not die, prior to January 1979, if in the year for which the computation or recomputation would be made the individual's primary insurance amount would be greater if computed or recomputed—
(i)
under section 215(a) as in effect in December 1978, for purposes of old-age insurance benefits in the case of an individual who becomes eligible for such benefits prior to 1984, or
(ii)
as provided by section 215(d), in the case of an individual to whom such section applies.
In determining whether an individual's primary insurance amount would be greater if computed or recomputed as provided in subparagraph (B), (I) the table of benefits in effect in December 1978, as modified by paragraph (6), shall be applied without regard to any increases in that table which may become effective (in accordance with subsection (i)(4)) for years after 1978 (subject to clause (iii) of subsection (i)(2)(A)) and (II) such individual's average monthly wage shall be computed as provided by subsection (b)(4).
(5)
(A)
Subject to subparagraphs (B), (C), (D) and (E), for purposes of computing the primary insurance amount (after December 1978) of an individual to whom paragraph (1) does not apply (other than an individual described in paragraph (4)(B)), this section as in effect in December 1978 shall remain in effect, except that, effective for January 1979, the dollar amount specified in paragraph (3) of subsection (a) shall be increased to $11.50.
(B)
(i)
Subject to clauses (ii), (iii), and (iv), and notwithstanding any other provision of law, the primary insurance amount of any individual described in subparagraph (C) shall be, in lieu of the primary insurance amount as computed pursuant to any of the provisions referred to in subparagraph (D), the primary insurance amount computed under subsection (a) of section 215 as in effect in December 1978, without regard to subsections (b)(4) and (c) of such section as so in effect.
(ii)
The computation of a primary insurance amount under this subparagraph shall be subject to section 104(j)(2) of the Social Security Amendments of 1972 (relating to the number of elapsed years under section 215(b)).
(iii)
In computing a primary insurance amount under this subparagraph, the dollar amount specified in paragraph (3) of section 215(a) (as in effect in December 1978) shall be increased to $11.50.
(iv)
In the case of an individual to whom section 215(d) applies, the primary insurance amount of such individual shall be the greater of—
(I)
the primary insurance amount computed under the preceding clauses of this subparagraph, or
(II)
the primary insurance amount computed under section 215(d).
(C)
An individual is described in this subparagraph if—
(i)
paragraph (1) does not apply to such individual by reason of such individual's eligibility for an old-age or disability insurance benefit, or the individual's death, prior to 1979, and
(ii)
such individual's primary insurance amount computed under this section as in effect immediately before the date of the enactment of the Omnibus Budget Reconciliation Act of 1990 would have been computed under the provisions described in subparagraph (D).
(D)
The provisions described in this subparagraph are—
(i)
the provisions of this subsection as in effect prior to the enactment of the Social Security Amendments of 1965, if such provisions would preclude the use of wages prior to 1951 in the computation of the primary insurance amount,
(ii)
the provisions of section 209 as in effect prior to the enactment of the Social Security Act Amendments of 1950, and
(iii)
the provisions of section 215(d) as in effect prior to the enactment of the Social Security Amendments of 1977.
(E)
For purposes of this paragraph, the table for determining primary insurance amounts and maximum family benefits contained in this section in December 1978 shall be revised as provided by subsection (i) for each year after 1978.
(6)
(A)
In applying the table of benefits in effect in December 1978 under this section for purposes of the last sentence of paragraph (4), such table, revised as provided by subsection (i), as applicable, shall be extended for average monthly wages of less than $76.00 and primary insurance benefits (as determined under subsection (d)) of less than $16.20.
(B)
The Commissioner of Social Security shall determine and promulgate in regulations the methodology for extending the table under subparagraph (A).
(b)

Average Indexed Monthly Earnings; Average Monthly Wage
(1)
An individual's average indexed monthly earnings shall be equal to the quotient obtained by dividing—
(A)
the total (after adjustment under paragraph (3)) of his wages paid in and self-employment income credited to his benefit computation years (determined under paragraph (2)), by
(B)
the number of months in those years.
(2)
(A)
The number of an individual's benefit computation years equals the number of elapsed years reduced—
(i)
in the case of an individual who is entitled to old-age insurance benefits (except as provided in the second sentence of this subparagraph), or who has died, by 5 years, and
(ii)
in the case of an individual who is entitled to disability insurance benefits, by the number of years equal to one-fifth of such individual's elapsed years (disregarding any resulting fractional part of a year), but not by more than 5 years.
Clause (ii), once applicable with respect to any individual, shall continue to apply for purposes of determining such individual's primary insurance amount for purposes of any subsequent eligibility for disability or old-age insurance benefits unless prior to the month in which such eligibility begins there occurs a period of at least 12 consecutive months for which he was not entitled to a disability or an old-age insurance benefit. If an individual described in clause (ii) is living with a child (of such individual or his or her spouse) under the age of 3 in any calendar year which is included in such individual's computation base years, but which is not disregarded pursuant to clause (ii) or to subparagraph (B) (in determining such individual's benefit computation years) by reason of the reduction in the number of such individual's elapsed years under clause (ii), the number by which such elapsed years are reduced under this subparagraph pursuant to clause (ii) shall be increased by one (up to a combined total not exceeding 3) for each such calendar year; except that (I) no calendar year shall be disregarded by reason of this sentence (in determining such individual's benefit computation years) unless the individual was living with such child substantially throughout the period in which the child was alive and under the age of 3 in such year and the individual had no earnings as described in section 203(f)(5) in such year, (II) the particular calendar years to be disregarded under this sentence (in determining such benefit computation years) shall be those years (not otherwise disregarded under clause (ii)) which, before the application of section 215(f), meet the conditions of subclause (I), and (III) this sentence shall apply only to the extent that its application would not result in a lower primary insurance amount. The number of an individual's benefit computation years as determined under this subparagraph shall in no case be less than 2.
(B)
For purposes of this subsection with respect to any individual—
(i)
the term “benefit computation years” means those computation base years, equal in number to the number determined under subparagraph (A), for which the total of such individual's wages and self-employment income, after adjustment under paragraph (3), is the largest;
(ii)
the term “computation base years” means the calendar years after 1950 and before—
(I)
in the case of an individual entitled to old-age insurance benefits, the year in which occurred (whether by reason of section 202(j)(1) or otherwise) the first month of that entitlement; or
(II)
in the case of an individual who has died (without having become entitled to old-age insurance benefits), the year succeeding the year of his death;
except that such term excludes any calendar year entirely included in a period of disability; and
(iii)
the term “number of elapsed years” means (except as otherwise provided by section 104(j)(2) of the Social Security Amendments of 1972) the number of calendar years after 1950 (or, if later, the year in which the individual attained age 21) and before the year in which the individual died, or, if it occurred earlier (but after 1960), the year in which he attained age 62; except that such term excludes any calendar year any part of which is included in a period of disability.
(3)
(A)
Except as provided by subparagraph (B), the wages paid in and self-employment income credited to each of an individual's computation base years for purposes of the selection therefrom of benefit computation years under paragraph (2) shall be deemed to be equal to the product of—
(i)
the wages and self-employment income paid in or credited to such year (as determined without regard to this subparagraph), and
(ii)
the quotient obtained by dividing—
(I)
the national average wage index (as defined in section 209(k)(1)) for the second calendar year preceding the earliest of the year of the individual's death, eligibility for an old-age insurance benefit, or eligibility for a disability insurance benefit (except that the year in which the individual dies, or becomes eligible, shall not be considered as such year if the individual was entitled to disability insurance benefits for any month in the 12-month period immediately preceding such death or eligibility, but there shall be counted instead the year of the individual's eligibility for the disability insurance benefit to which he was entitled in such 12-month period), by
(II)
the national average wage index (as so defined) for the computation base year for which the determination is made.
(B)
Wages paid in or self-employment income credited to an individual's computation base year which—
(i)
occurs after the second calendar year specified in subparagraph (A)(ii)(I), or
(ii)
is a year treated under subsection (f)(2)(C) as though it were the last year of the period specified in paragraph (2)(B)(ii),
shall be available for use in determining an individual's benefit computation years, but without applying subparagraph (A) of this paragraph.
(4)
For purposes of determining the average monthly wage of an individual whose primary insurance amount is computed (after 1978) under section 215(a) or 215(d) as in effect (except with respect to the table contained therein) in December 1978, by reason of subsection (a)(4)(B), this subsection as in effect in December 1978 shall remain in effect, except that paragraph (2)(C) (as then in effect) shall be deemed to provide that “computation base years” include only calendar years in the period after 1950 (or 1936, if applicable) and prior to the year in which occurred the first month for which the individual was eligible (as defined in subsection (a)(3)(B) as in effect in January 1979) for an old-age or disability insurance benefit, or, if earlier, the year in which he died. Any calendar year all of which is included in a period of disability shall not be included as a computation base year for such purposes.
(c)

Application of Prior Provisions in Certain Cases
Subject to the amendments made by section 5117 of the Omnibus Budget Reconciliation Act of 1990, this subsection as in effect in December 1978 shall remain in effect with respect to an individual to whom subsection (a)(1) does not apply by reason of the individual's eligibility for an old-age or disability insurance benefit, or the individual's death, prior to 1979.
(d)

Primary Insurance Benefit Under 1939 Act
(1)
For purposes of column I of the table appearing in subsection (a), as that subsection was in effect in December 1977, an individual's primary insurance benefit shall be computed as follows:
(A)
The individual's average monthly wage shall be determined as provided in subsection (b), as in effect in December 1977 (but without regard to paragraph (4) thereof and subject to section 104(j)(2) of the Social Security Amendments of 1972), except that for purposes of paragraphs (2)(C) and (3) of that subsection (as so in effect) 1936 shall be used instead of 1950.
(B)
For purposes of subparagraphs (B) and (C) of subsection (b)(2) (as so in effect)—
(i)
the total wages prior to 1951 (as defined in subparagraph (C) of this paragraph) of an individual—
(I)
shall, in the case of an individual who attained age 21 prior to 1950, be divided by the number of years (hereinafter in this subparagraph referred to as the “divisor”) elapsing after the year in which the individual attained age 20, or 1936 if later, and prior to the earlier of the year of death or 1951, except that such divisor shall not include any calendar year entirely included in a period of disability, and in no case shall the divisor be less than one, and
(II)
shall, in the case of an individual who died before 1950 and before attaining age 21, be divided by the number of years (hereinafer in this subparagraph referred to as the “divisor”) elapsing after the second year prior to the year of death, or 1936 if later, and prior to the year of death, and in no case shall the divisor be less than one; and
(ii)
the total wages prior to 1951 (as defined in subparagraph (C) of this paragraph) of an individual who either attained age 21 after 1949 or died after 1949 before attaining age 21, shall be divided by the number of years (hereinafter in this subparagraph referred to as the “divisor”) elapsing after 1949 and prior to 1951.
The quotient so obtained shall be deemed to be the individual's wages credited to each of the years which were used in computing the amount of the divisor, except that—
(iii)
if the quotient exceeds $3,000, only $3,000 shall be deemed to be the individual's wages for each of the years which were used in computing the amount of the divisor, and the remainder of the individual's total wages prior to 1951 (I) if less than $3,000, shall be deemed credited to the computation base year (as defined in subsection (b)(2) as in effect in December 1977) immediately preceding the earliest year used in computing the amount of the divisor, of (II) if $3,000 or more, shall be deemed credited, in $3,000 increments, to the computation base year (as so defined) immediately preceding the earliest year used in computing the amount of the divisor and to each of the computation base years (as so defined) consecutively preceding that year, with any remainder less than $3,000 being credited to the computation base year (as so defined) immediately preceding the earliest year to which a full $3,000 increment was credited; and
(iv)
no more than $42,000 may be taken into account, for purposes of this subparagraph, as total wages after 1936 and prior to 1951.
(C)
For the purposes of subparagraph (B), “total wages prior to 1951” with respect to an individual means the sum of (i) remuneration credited to such individual prior to 1951 on the records of the Commissioner of Social Security, (ii) wages deemed paid prior to 1951 to such individual under section 217, (iii) compensation under the Railroad Retirement Act of 1937 prior to 1951 creditable to him pursuant to this title, and (iv) wages deemed paid prior to 1951 to such individual under section 231.
(D)
The individual's primary insurance benefit shall be 40 percent of the first $50 of his average monthly wage as computed under this subsection, plus 10 percent of the next $200 of his average monthly wage, increased by 1 percent for each increment year. The number of increment years is the number, not more than 14 nor less than 4, that is equal to the individual's total wages prior to 1951 divided by $1,650 (disregarding any fraction).
(2)
The provisions of this subsection shall be applicable only in the case of an individual—
(A)
with respect to whom at least one of the quarters elapsing prior to 1951 is a quarter of coverage;
(B)
who attained age 22 after 1950 and with respect to whom less than six of the quarters elapsing after 1950 are quarters of coverage, or who attained such age before 1951; and
(C)
(i)
who becomes entitled to benefits under section 202(a) or 223 or who dies, or
(ii)
whose primary insurance amount is required to be recomputed under paragraph (2), (6), or (7) of subsection (f) or under section 231.
(e)

Certain Wages and Self-Employment Income Not To Be Counted
For the purposes of subsections (b) and (d)—
(1)
in computing an individual's average indexed monthly earnings or, in the case of an individual whose primary insurance amount is computed under section 215(a) as in effect prior to January 1979, average monthly wage, there shall not be counted the excess over $3,600 in the case of any calendar year after 1950 and before 1955, the excess over $4,200 in the case of any calendar year after 1954 and before 1959, the excess over $4,800 in the case of any calendar year after 1958 and before 1966, the excess over $6,600 in the case of any calendar year after 1965 and before 1968, the excess over $7,800 in the case of any calendar year after 1967 and before 1972, the excess over $9,000 in the case of any calendar year after 1971 and before 1973, the excess over $10,800 in the case of any calendar year after 1972 and before 1974, the excess over $13,200 in the case of any calendar year after 1973 and before 1975, and the excess over an amount equal to the contribution and benefit base (as determined under section 230) in the case of any calendar year after 1974 with respect to which such contribution and benefit base is effective, (before the application, in the case of average indexed monthly earnings, of subsection (b)(3)(A)) of (A) the wages paid to him in such year, plus (B) the self-employment income credited to such year (as determined under section 212); and
(2)
if an individual's average indexed monthly earnings or, in the case of an individual whose primary insurance amount is computed under section 215(a) as in effect prior to January 1979, average monthly wage, computed under subsection (b) or for the purposes of subsection (d) is not a multiple of $1, it shall be reduced to the next lower multiple of $1.
(f)

Recomputation of Benefits
(1)
After an individual's primary insurance amount has been determined under this section, there shall be no recomputation of such individual's primary insurance amount except as provided in this subsection or, in the case of a World War II veteran who died prior to July 27, 1954, as provided in section 217(b).
(2)
(A)
If an individual has wages or self-employment income for a year after 1978 for any part of which he is entitled to old-age or disability insurance benefits, the Commissioner of Social Security shall, at such time or times and within such period as the Commissioner may by regulation prescribe, recompute the individual's primary insurance amount for that year.
(B)
For the purpose of applying subparagraph (A) of subsection (a)(1) to the average indexed monthly earnings of an individual to whom that subsection applies and who receives a recomputation under this paragraph, there shall be used, in lieu of the amounts established by subsection (a)(1)(B) for purposes of clauses (i) and (ii) of subsection (a)(1)(A), the amounts so established that were (or, in the case of an individual described in subsection (a)(4)(B), would have been) used in the computation of such individual's primary insurance amount prior to the application of this subsection.
(C)
A recomputation of any individual's primary insurance amount under this paragraph shall be made as provided in subsection (a)(1) as though the year with respect to which it is made is the last year of the period specified in subsection (b)(2)(B)(ii); and subsection (b)(3)(A) shall apply with respect to any such recomputation as it applied in the computation of such individual's primary insurance amount prior to the application of this subsection.
(D)
A recomputation under this paragraph with respect to any year shall be effective—
(i)
in the case of an individual who did not die in that year, for monthly benefits beginning with benefits for January of the following year; or
(ii)
in the case of an individual who died in that year, for monthly benefits beginning with benefits for the month in which he died.
[(3)
Repealed.]
(4)
A recomputation shall be effective under this subsection only if it increases the primary insurance amount by at least $1.
(5)
In the case of a man who became entitled to old-age insurance benefits and died before the month in which he attained retirement age (as defined in section 216(l)), the Commissioner of Social Security shall recompute his primary insurance amount as provided in subsection (a) as though he became entitled to old-age insurance benefits in the month in which he died; except that (i) his computation base years referred to in subsection (b)(2) shall include the year in which he died, and (ii) his elapsed years referred to in subsection (b)(3) shall not include the year in which he died or any year thereafter. Such recomputation of such primary insurance amount shall be effective for and after the month in which he died.
(6)
Upon the death after 1967 of an individual entitled to benefits under section 202(a) or section 223, if any person is entitled to monthly benefits or a lump-sum death payment, on the wages and self-employment income of such individual, the Commissioner of Social Security shall recompute the decedent's primary insurance amount, but only if the decedent during his lifetime was paid compensation which was treated under section 205(o) as remuneration for employment.
(7)
This subsection as in effect in December 1978 shall continue to apply to the recomputation of a primary insurance amount computed under subsection (a) or (d) as in effect (without regard to the table in subsection (a)) in that month, and, where appropriate, under subsection (d) as in effect in December 1977, including a primary insurance amount computed under any such subsection whose operation is modified as a result of the amendments made by section 5117 of the Omnibus Budget Reconciliation Act of 1990. For purposes of recomputing a primary insurance amount determined under subsection (a) or (d) (as so in effect) in the case of an individual to whom those subsections apply by reason of subsection (a)(4)(B) as in effect after December 1978, no remuneration shall be taken into account for the year in which the individual initially became eligible for an old-age or disability insurance benefit or died, or for any year thereafter, and (effective January 1982) the recomputation shall be modified by the application of subsection (a)(6) where applicable.
(8)
The Commissioner of Social Security shall recompute the primary insurance amounts applicable to beneficiaries whose benefits are based on a primary insurance amount which was computed under subsection (a)(3) effective prior to January 1979, or would have been so computed if the dollar amount specified therein were $11.50. Such recomputation shall be effective January 1979, and shall include the effect of the increase in the dollar amount provided by subsection (a)(1)(C)(i). Such primary insurance amount shall be deemed to be provided under such section for purposes of subsection (i).
(g)

Rounding of Benefits
The amount of any monthly benefit computed under section 202 or 223 which (after any reduction under sections 203(a) and 224 and any deduction under section 203(b), and after any deduction under section 1840(a)(1)) is not a multiple of $1 shall be rounded to the next lower multiple of $1.
(h)

Service of Certain Public Health Service Officers
(1)
Notwithstanding the provisions of subchapter III of chapter 83 of title 5, United States Code, remuneration paid for service to which the provisions of section 210(l)(1) of this Act are applicable and which is performed by an individual as a commissioned officer of the Reserve Corps of the Public Health Service prior to July 1, 1960, shall not be included in computing entitlement to or the amount of any monthly benefit under this title, on the basis of his wages and self-employment income, for any month after June 1960 and prior to the first month with respect to which the Director of the Office of Personnel Management certifies to the Commissioner of Social Security that, by reason of a waiver filed as provided in paragraph (2), no further annuity will be paid to him, his wife, and his children, or, if he has died, to his widow and children, under subchapter III of chapter 83 of title 5, United States Code, on the basis of such service.
(2)
In the case of a monthly benefit for a month prior to that in which the individual, on whose wages and self-employment income such benefit is based, dies, the waiver must be filed by such individual; and such waiver shall be irrevocable and shall constitute a waiver on behalf of himself, his wife, and his children. If such individual did not file such a waiver before he died, then in the case of a benefit for the month in which he died or any month thereafter, such waiver must be filed by his widow, if any, and by or on behalf of all his children, if any; and such waivers shall be irrevocable. Such a waiver by a child shall be filed by his legal guardian or guardians, or, in the absence thereof, by the person (or persons) who has the child in his care.
(i)

Cost-of-Living Increases in Benefits
(1)
For purposes of this subsection—
(A)
the term “base quarter” means (i) the calendar quarter ending on September 30 in each year after 1982, or (ii) any other calendar quarter in which occurs the effective month of a general benefit increase under this title;
(B)
the term “cost-of-living computation quarter” means a base quarter, as defined in subparagraph (A)(i), with respect to which the applicable increase percentage is greater than zero; except that there shall be no cost-of-living computation quarter in any calendar year if in the year prior to such year a law has been enacted providing a general benefit increase under this title or if in such prior year such a general benefit increase becomes effective;
(C)
the term “applicable increase percentage” means—
(i)
with respect to a base quarter or cost-of-living computation quarter in any calendar year before 1984, or in any calendar year after 1983 and before 1989 for which the OASDI fund ratio is 15.0 percent or more, or in any calendar year after 1988 for which the OASDI fund ratio is 20.0 percent or more, the CPI increase percentage; and
(ii)
with respect to a base quarter or cost-of-living computation quarter in any calendar year after 1983 and before 1989 for which the OASDI fund ratio is less than 15.0 percent, or in any calendar year after 1988 for which the OASDI fund ratio is less than 20.0 percent, the CPI increase percentage or the wage increase percentage, whichever (with respect to that quarter) is the lower;
(D)
the term “CPI increase percentage”, with respect to a base quarter or cost-of-living computation quarter in any calendar year, means the percentage (rounded to the nearest one-tenth of 1 percent) by which the Consumer Price Index for that quarter (as prepared by the Department of Labor) exceeds such index for the most recent prior calendar quarter which was a base quarter under subparagraph (A)(ii) or, if later, the most recent cost-of-living computation quarter under subparagraph (B);
(E)
the term “wage increase percentage”, with respect to a base quarter or cost-of-living computation quarter in any calendar year, means the percentage (rounded to the nearest one-tenth of 1 percent) by which the national average wage index (as defined in section 209(k)(1)) for the year immediately preceding such calendar year exceeds such index for the year immediately preceding the most recent prior calendar year which included a base quarter under subparagraph (A)(ii) or, if later, which included a cost-of-living computation quarter;
(F)
the term “OASDI fund ratio”, with respect to any calendar year, means the ratio of—
(i)
the combined balance in the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund as of the beginning of such year, including the taxes transferred under section 201(a) on the first day of such year and reduced by the outstanding amount of any loan (including interest thereon) theretofore made to either such Fund from the Federal Hospital Insurance Trust Fund under section 201(l), to
(ii)
the total amount which (as estimated by the Commissioner of Social Security) will be paid from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund during such calendar year for all purposes authorized by section 201 (other than payments of interest on, or repayments of, loans from the Federal Hospital Insurance Trust Fund under section 201(l)), but excluding any transfer payments between such trust funds and reducing the amount of any transfers to the Railroad Retirement Account by the amount of any transfers into either such trust fund from that Account;
(G)
the Consumer Price Index for a base quarter, a cost-of-living computation quarter, or any other calendar quarter shall be the arithmetical mean of such index for the 3 months in such quarter.
(2)
(A)
(i)
The Commissioner of Social Security shall determine each year beginning with 1975 (subject to the limitation in paragraph (1)(B)) whether the base quarter (as defined in paragraph (1)(A)(i)) in such year is a cost-of-living computation quarter.
(ii)
If the Commissioner of Social Security determines that the base quarter in any year is a cost of living computation quarter, the Commissioner shall, effective with the month of December of that year as provided in subparagraph (B), increase—
(I)
the benefit amount to which individuals are entitled for that month under section 227 or 228,
(II)
the primary insurance amount of each other individual on which benefit entitlement is based under this title, and
(III)
the amount of total monthly benefits based on any primary insurance amount which is permitted under section 203 (and such total shall be increased, unless otherwise so increased under another provision of this title, at the same time as such primary insurance amount) or, in the case of a primary insurance amount computed under subsection (a) as in effect (without regard to the table contained therein) prior to January 1979, the amount to which the beneficiaries may be entitled under section 203 as in effect in December 1978, except as provided by section 203(a)(7) and (8) as in effect after December 1978.
The increase shall be derived by multiplying each of the amounts described in subdivisions (I), (II), and (III) (including each of those amounts as previously increased under this subparagraph) by the applicable increase percentage; and any amount so increased that is not a multiple of $0.10 shall be decreased to the next lower multiple of $0.10. Any increase under this subsection in a primary insurance amount determined under subparagraph (C)(i) of subsection (a)(1) shall be applied after the initial determination of such primary insurance amount under that subparagraph (with the amount of such increase, in the case of an individual who becomes eligible for old-age or disability insurance benefits or dies in a calendar year after 1979, being determined from the range of possible primary insurance amounts published by the Commissioner of Social Security under the last sentence of subparagraph (D)).
(iii)
In the case of an individual who becomes eligible for an old-age or disability insurance benefit, or who dies prior to becoming so eligible, in a year in which there occurs an increase provided under clause (ii), the individual's primary insurance amount (without regard to the time of entitlement to that benefit) shall be increased (unless otherwise so increased under another provision of this title and, with respect to a primary insurance amount determined under subsection (a)(1)(C)(i)(I) in the case of an individual to whom that subsection (as in effect in December 1981) applied, subject to the provisions of subsection (a)(1)(C)(i) and clauses (iv) and (v) of this subparagraph (as then in effect)) by the amount of that increase and subsequent applicable increases, but only with respect to benefits payable for months after November of that year.
(B)
The increase provided by subparagraph (A) with respect to a particular cost-of-living computation quarter shall apply in the case of monthly benefits under this title for months after November of the calendar year in which occurred such cost-of-living computation quarter, and in the case of lump-sum death payments with respect to deaths occurring after November of such calendar year.
(C)
(i)
Whenever the Commissioner of Social Security determines that a base quarter in a calendar year is also a cost-of-living computation quarter, the Commissioner shall notify the House Committee on Ways and Means and the Senate Committee on Finance of such determination within 30 days after the close of such quarter, indicating the amount of the benefit increase to be provided, the Commissioner's estimate of the extent to which the cost of such increase would be met by an increase in the contribution and benefit base under section 230 and the estimated amount of the increase in such base, the actuarial estimates of the effect of such increase, and the actuarial assumptions and methodology used in preparing such estimates.
(ii)
The Commissioner of Social Security shall determine and promulgate the OASDI fund ratio for the current calendar year on or before November 1 of the current calendar year, based upon the most recent data then available. The Commissioner of Social Security shall include a statement of the fund ratio and the national average wage index (as defined in section 209(k)(1)) and a statement of the effect such ration and the level of such index may have upon benefit increases under this subsection in any notification made under clause (i) and any determination published under subparagraph (D).
(D)
If the Commissioner of Social Security determines that a base quarter in a calendar year is also a cost-of-living computation quarter, the Commissioner shall publish in the Federal Register within 45 days after the close of such quarter a determination that a benefit increase is resultantly required and the percentage thereof. The Commissioner shall also publish in the Federal Register at that time (i) a revision of the range of the primary insurance amounts which are possible after the application of this subsection based on the dollar amount specified in subparagraph (C)(i) of subsection (a)(1) (with such revised primary insurance amounts constituting the increased amounts determined for purposes of such subparagraph (C)(i) under this subsection), or specified in subsection (a)(3) as in effect prior to 1979, and (ii) a revision of the range of maximum family benefits which correspond to such primary insurance amounts (with such maximum benefits being effective notwithstanding section 203(a) except for paragraph (3)(B) thereof (or paragraph (2) thereof as in effect prior to 1979)). Notwithstanding the preceding sentence, such revision of maximum family benefits shall be subject to paragraph (6) of section 203(a) (as added by section 101(a)(3) of the Social Security Disability Amendments of 1980.
(3)
As used in this subsection, the term “general benefit increase under this title” means an increase (other than an increase under this subsection) in all primary insurance amounts on which monthly insurance benefits under this title are based.
(4)
This subsection as in effect in December 1978, and as amended by sections 111(a)(6), 111(b)(2), and 112 of the Social Security Amendments of 1983 and by section 9001 of the Omnibus Budget Reconciliation Act of 1986, shall continue to apply to subsections (a) and (d), as then in effect and as amended by section 5117 of the Omnibus Budget Reconciliation Act of 1990, for purposes of computing the primary insurance amount of an individual to whom subsection (a), as in effect after December 1978, does not apply (including an individual to whom subsection (a) does not apply in any year by reason of paragraph (4)(B) of that subsection (but the application of this subsection in such cases shall be modified by the application of subdivision (I) in the last sentence of paragraph (4) of that subsection)), except that for this purpose, in applying paragraphs (2)(A)(ii), (2)(D)(iv), and (2)(D)(v) of this subsection as in effect in December 1978, the phrase “increased to the next higher multiple of $0.10” shall be deemed to read “decreased to the next lower multiple of $0.10”. For purposes of computing primary insurance amounts and maximum family benefits (other than primary insurance amounts and maximum family benefits for individuals to whom such paragraph (4)(B) applies), the Commissioner of Social Security shall revise the table of benefits contained in subsection (a), as in effect in December 1978, in accordance with the requirements of paragraph (2)(D) of this subsection as then in effect, except that the requirement in such paragraph (2)(D) that the Commissioner of Social Security publish such revision of the table of benefits in the Federal Register shall not apply.
(5)
(A)
If—
(i)
with respect to any calendar year the “applicable increase percentage” was determined under clause (ii) of paragraph (1)(C) rather than under clause (i) of such paragraph, and the increase becoming effective under paragraph (2) in such year was accordingly determined on the basis of the wage increase percentage rather than the CPI increase percentage (or there was no such increase becoming effective under paragraph (2) in that year because there was no wage increase percentage greater than zero), and
(ii)
for any subsequent calendar year in which an increase under paragraph (2) becomes effective the OASDI fund ratio is greater than 32.0 percent,
then each of the amounts described in subdivisions (I), (II), and (III) of paragraph (2)(A)(ii), as increased under paragraph (2) effective with the month of December in such subsequent calendar year, shall be further increased (effective with such month) by an additional percentage, which shall be determined under subparagraph (B) and shall apply as provided in subparagraph (C). Any amount so increased that is not a multiple of $0.10 shall be decreased to the next lower multiple of $0.10.
(B)
The applicable additional percentage by which the amounts described in subdivisions (I), (II), and (III) of paragraph (2)(A)(ii) are to be further increased under subparagraph (A) in the subsequent calendar year involved shall be the amount derived by—
(i)
subtracting (I) the compounded percentage benefit increases that were actually paid under paragraph (2) and this paragraph from (II) the compounded percentage benefit increases that would have been paid if all increases under paragraph (2) had been made on the basis of the CPI increase percentage,
(ii)
dividing the difference by the sum of the compounded percentage in clause (i)(I) and 100 percent, and
(iii)
multiplying such quotient by 100 so as to yield such applicable additional percentage (which shall be rounded to the nearest one-tenth of 1 percent),
with the compounded increases referred to in clause (i) being measured—
(iv)
in the case of amounts described in subdivision (I) of paragraph (2)(A)(ii), over the period beginning with the calendar year in which monthly benefits described in such subdivision were first increased on the basis of the wage increase percentage and ending with the year before such subsequent calendar year, and
(v)
in the case of amounts described in subdivisions (II) and (III) of paragraph (2)(A)(ii), over the period beginning with the calendar year in which the individual whose primary insurance amount is increased under such subdivision (II) became eligible (as defined in subsection (a)(3)(B)) for the old-age or disability insurance benefit that is being increased under this subsection, or died before becoming so eligible, and ending with the year before such subsequent calendar year;
except that if the Commissioner of Social Security determines in any case that the application (in accordance with subparagraph (C)) of the additional percentage as computed under the preceding provisions of this subparagraph would cause the OASDI fund ratio to fall below 32.0 percent in the calendar year immediately following such subsequent year, the Commissioner shall reduce such applicable additional percentage to the extent necessary to ensure that the OASDI fund ratio will remain at or above 32.0 percent through the end of such following year.
(C)
Any applicable additional percentage increase in an amount described in subdivision (I), (II), or (III) of paragraph (2)(A)(ii), made under this paragraph in any calendar year, shall thereafter be treated for all the purposes of this Act as a part of the increase made in such amount under paragraph (2) for that year.
[Note: The 1977 Social Security Amendments greatly modified the manner of computing social security benefits. In a number of cases, however, the former law continues to be applied. The basic benefit computation section as previously in effect is reprinted in this appendix.]

computation of primary insurance amount
Sec. 215.
For the purposes of this title—
(a)
The primary insurance amount of an insured individual shall be determined as follows:
(1)
Subject to the conditions specified in subsections (b), (c), and (d) of this section and except as provided in paragraphs (2) and (3) of this subsection, such primary insurance amount shall be whichever of the following amounts is the largest:
(A)
the amount in column IV of the following table (or, if larger, the amount in column IV of the latest table deemed to be such table under subsection (i)(2)(D)) on the line on which in column III of such table appears his average monthly wage (as determined under subsection (b));
(B)
the amount in column IV of such table on the line on which in column II appears his primary insurance amount (as determined under subsection (c)); or
(C)
the amount in column IV of such table on the line on which in column I appears his primary insurance benefit (as determined under subsection (d)).
(2)
In the case of an individual who was entitled to a disability insurance benefit for the month before the month in which he died, became entitled to old-age insurance benefits, or attained age 65, such primary insurance amount shall be—
(A)
the amount in column IV of such table which is equal to the primary insurance amount upon which such disability insurance benefit is based; except that if such individual was entitled to a disability insurance benefit under section 223 for the month before the effective month of a new table (whether enacted by another law or deemed to be such table under subsection (i)(2)(D)) and in the following month became entitled to an old-age insurance benefit, or he died in such following month, then his primary insurance amount for such following month shall be the amount in column IV of the new table on the line on which in column II of such table appears his primary insurance amount for the month before the effective month of the table (as determined under subsection (c)) instead of the amount in column IV equal to the primary insurance amount on which his disability insurance benefit is based. For purposes of this paragraph, the term “primary insurance amount” with respect to any individual means only a primary insurance amount determined under paragraph (1) (and such individual's benefits shall be deemed to be based upon the primary insurance amount as so determined); or
(B)
an amount equal to the primary insurance amount upon which such disability insurance benefit is based if such primary insurance amount was determined under paragraph (3).
(3)
Such primary insurance amount shall be an amount equal to $9.00 multiplied by the individual's years of coverage in excess of 10 in any case in which such amount is higher than the individual's primary insurance amount as determined under paragraph (1) or (2).
For purposes of paragraph (3), an individual's “years of coverage” is the number (not exceeding 30) equal to the sum of (i) the number (not exceeding 14 and disregarding any fraction) determined by dividing the total of the wages credited to him (including wages deemed to be paid prior to 1951 to such individual under section 217, compensation under the Railroad Retirement Act of 1937 prior to 1951 which is creditable to such individual pursuant to this title, and wages deemed to be paid prior to 1951 to such individual under section 231) for years after 1936 and before 1951 by $900, plus (ii) the number equal to the number of years after 1950 each of which is a computation base year (within the meaning of subsection (b)(2)(C)) and in each of which he is credited with wages (including wages deemed to be paid to such individual under section 217, compensation under the Railroad Retirement Act of 1937 which is creditable to such individual pursuant to this title, and wages deemed to be paid prior to 1951 to such individual under section 229) and self-employment income of not less than 25 percent of the maximum amount which, pursuant to subsection (e), may be counted for such year.
[Insert tables]
(b)

Average Monthly Wage
(1)
For the purposes of column III of the table appearing in subsection (a) of this section, an individual's “average monthly wage” shall be the quotient obtained by dividing—
(A)
the total of his wages paid in and self-employment income credited to his “benefit computation years” (determined under paragraph (2)), by
(B)
the number of months in such years.
(2)
(A)
The number of an individual's “benefit computation years” shall be equal to the number of elapsed years (determined under paragraph (3) of this subsection), reduced by five, except that the number of an individual's benefit computation years shall in no case be less than two.
(B)
An individual's “benefit computation years” shall be those computation base years, equal in number to the number determined under subparagraph (A), for which the total of his wages and self-employment income is the largest.
(C)
For purposes of subparagraph (B), “computation base years” include only calendar years in the period after 1950 and prior to the earlier of the following years—
(i)
the year in which occurred (whether by reason of section 202(j)(1) or otherwise) the first month for which the individual was entitled to old-age insurance benefits, or
(ii)
the year succeeding the year in which he died.
Any calendar year all of which is included in a period of disability shall not be included as a computation base year.
(3)
For purposes of paragraph (2), the number of an individual's elapsed years is the number of calendar years after 1950 (or, if later, the year in which he attained age 21) and before the year in which he died, or if it occurred earlier but after 1960, the year in which he attained age 62.25 For purposes of the preceding sentence, any calendar year any part of which was included in a period of disability shall not be included in such number of calendar years.
(4)
The provisions of this subsection shall be applicable only in the case of an individual—
(A)
who becomes entitled to benefits under section 202(a) or section 223 in or after the month in which a new table that appears in (or is deemed by subsection (i)(2)(D) to appear in) subsection (a) becomes effective; or
(B)
who dies in or after the month in which such table becomes effective without being entitled to benefits under section 202(a) or section 223; or
(C)
whose primary insurance amount is required to be recomputed under section (f)(2).
(5)
[Repealed.]
^{25}
P.L. 92–603, section 104(b), deleted ``before—
(A) in the case of a woman, the year in which she died or, if it occurred earlier but after 1960, the year in which she attained age 62,
(B) in the case of a man who has died, the year in which he died or, if it occurred earlier but after 1960, the year in which he attained age 65, or
(C) in the case of a man who has not died, the year occurring after 1960 in which he attained (or would attain) age 65.
For'' and inserted “before the year in which he died, or if it occurred earlier but after 1960, the year in which he attained age 62. For”.
See footnote to sec. 214(a)(1) for effective date.
(c)

Primary Insurance Amount Under Prior Provisions
(1)
For the purpose of column II of the latest table that appears in (or is deemed to appear in) subsection (a) of this section, an individual's primary insurance amount shall be computed on the basis of the law in effect prior to the month in which the latest such table became effective.
(2)
The provisions of this subsection shall be applicable only in the case of an individual who became entitled to benefits under section 202(a) or section 223, or who died, before such effective month.
(d)

Primary Insurance Benefit Under 1939 Act 26
(1)
For purposes of column I of the table appearing in subsection (a) of this section, an individual's primary insurance benefit shall be computed as follows:
^{26}
Subsection (d), as it appears here, is applicable only to individuals who become eligible for old-age or disability insurance benefits or die prior to 1978. Otherwise, the provisions of subsection (d) as it appears on pages 131–133 apply.
(A)
The individual's average monthly wage shall be determined as provided in subsection (b) (but without regard to paragraph (4) thereof) of this section, except that for purposes of paragraph (2)(C) and (3) of such subsection, 1936 shall be used instead of 1950.
(B)
For purposes of subparagraphs (B) and (C) of subsection (b)(2), an individual whose total wages prior to 1951 (as defined in subparagraph (C) of this subsection)—
(i)
do not exceed $27,000 shall be deemed to have been paid such wages in equal parts in nine calendar years after 1936 and prior to 1951;
(ii)
exceed $27,000 and are less than $42,000 shall be deemed to have been paid (I) $3,000 in each of such number of calendar years after 1936 and prior to 1951 as is equal to the integer derived by dividing such total wages by $3,000, and (II) the excess of such total wages over the product of $3,000 times such integer, in an additional calendar year in such period; or
(iii)
are at least $42,000 shall be deemed to have been paid $3,000 in each of the fourteen calendar years after 1936 and prior to 1951.
(C)
For the purposes of subparagraph (B), “total wages prior to 1951” with respect to an individual means the sum of (i) remuneration credited to such individual prior to 1951 on the records of the Secretary, (ii) wages deemed paid prior to 1951 to such individual under section 217, (iii) compensation under the Railroad Retirement Act of 1937 prior to 1951 creditable to him pursuant to this title, and (iv) wages deemed paid prior to 1951 to such individual under section 231.
(D)
The individual's primary insurance benefits shall be 45.6 per centum of the first $50 of his average monthly wage as computed under this subsection, plus 11.4 per centum of the next $200 of such average monthly wage.
(2)
The provisions of this subsection shall be applicable only in the case of an individual—
(A)
with respect to whom at least one of the quarters elapsing prior to 1951 is a quarter of coverage;
(B)
except as provided in paragraph (3), who attained age 22 after 1950 and with respect to whom less than six of the quarters elapsing after 1950 are quarters of coverage, or who attained such age before 1951; and
(C)
(i)
who becomes entitled to benefits under section 202(a) or 223 after the date of the enactment of the Social Security Amendments of 1967, or
(ii)
who dies after such date without being entitled to benefits under section 202(a) or 223, or
(iii)
whose primary insurance amount is required to be recomputed under section 215(f) (2) or (6), or section 231.
(3)
The provisions of this subsection as in effect prior to the enactment of the Social Security Amendments of 1967 shall be applicable in the case of an individual—
(A)
who attained age 21 after 1936 and prior to 1951, or
(B)
who had a period of disability which began prior to 1951, but only if the primary insurance amount resulting therefrom is higher than the primary insurance amount resulting from the application of this section (as amended by the Social Security Amendments of 1967) and section 220.
(c)

Certain Wages and Self-Employment Income Not To Be Counted
For the purposes of subsections (b) and (d)—
(1)
in computing an individual's average monthly wage there shall not be counted the excess over $3,600 in the case of any calendar year after 1950 and before 1955, the excess over $4,200 in the case of any calendar year after 1954 and before 1959, the excess over $4,800 in the case of any calendar year after 1958 and before 1966, the excess over $6,600 in the case of any calendar year after 1965 and before 1968, the excess over $7,800 in the case of any calendar year after 1967 and before 1972, the excess over $9,000 in the case of any calendar year after 1971 and before 1973, the excess over $10,800 in the case of any calendar year after 1972 and before 1974, the excess over $13,200 in the case of any calendar year after 1973 and before 1975, and the excess over an amount equal to the contribution and benefit base (as determined under section 230)27 in the case of any calendar year after 1974 with respect to which such contribution and benefit base is effective of (A) the wages paid to him in such year, plus (B) the self-employment income credited to such year (as determined under section 212); and
^{27}
See Appendix E.
(2)
if an individual's average monthly wage computed under subsection (b) or for the purposes of subsection (d) is not a multiple of $1, it shall be reduced to the next lower multiple of $1.
(f)

Recomputation of Benefits
(1)
After an individual's primary insurance amount has been determined under this section, there shall be no recomputation of such individual's primary insurance amount except as provided in this subsection or, in the case of a World War II veteran who died prior to July 27, 1954, as provided in section 217(b).
(2)
If an individual has wages or self-employment income for a year after 1965 for any part of which he is entitled to old-age insurance benefits, the Secretary shall, at such time or times and within such period as he may by regulations prescribe, recompute such individual's primary insurance amount with respect to each such year. Such recomputation shall be made as provided in subsections (a)(1) (A) and (C) and (a)(3) as though the year with respect to which such recomputation is made is the last year of the period specified in subsection (b)(2)(C). A recomputation under this paragraph with respect to any year shall be effective—
(A)
in the case of an individual who did not die in such year, for monthly benefits beginning with benefits for January of the following year; or
(B)
in the case of an individual who died in such year, for monthly benefits beginning with benefits for the month in which he died.
(3)
In the case of any individual who became entitled to old-age insurance benefits in 1952 or in a taxable year which began in 1952 (and without the application of section 202(j)(1)), or who died in 1952 or in a taxable year which began in 1952 but did not become entitled to such benefits prior to 1952, and who had self-employment income for a taxable year which ended within or with 1952 or which began in 1952, then upon application filed by such individual after the close of such taxable year and prior to January 1961 or (if he died without filing such application and such death occurred prior to January 1961) by a person entitled to monthly benefits on the basis of such individual's wages and self-employment income, the Secretary shall recompute such individual's primary insurance amount. Such recomputation shall be made in the manner provided in the preceding subsections of this section (other than subsection (b)(4)(A)) for computation of such amount, except that (A) the self-employment income closing date shall be the day following the quarter with or within which such taxable year ended, and (B) the self-employment income for any subsequent taxable year shall not be taken into account. Such recomputation shall be effective (A) in the case of an application filed by such individual, for and after the first month in which he became entitled to old-age insurance benefits, and (B) in the case of an application filed by any other person, for and after the month in which such person who filed such application for recomputation became entitled to such monthly benefits. No recomputation under this paragraph pursuant to an application filed after such individual's death shall affect the amount of the lump-sum death payment under subsection (i) of section 202, and no such recomputation shall render erroneous any such payment certified by the Secretary prior to the effective date of the recomputation.
(4)
Any recomputation under this subsection shall be effective only if such recomputation results in a higher primary insurance amount.
(5)
In the case of a man who became entitled to old-age insurance benefits and died before the month in which he attained age 65, the Secretary shall recompute his primary insurance amount as provided in subsection (a) as though he became entitled to old-age insurance benefits in the month in which he died; except that (i) his computation base years referred to in subsection (b)(2) shall include the year in which he died, and (ii) his elapsed years referred to in subsection (b)(3) shall not include the year in which he died or any year thereafter. Such recomputation of such primary insurance amount shall be effective for and after the month in which he died.
(6)
Upon the death after 1967 of an individual entitled to benefits under section 202(a) or section 223, if any person is entitled to monthly benefits or a lump-sum death payment, on the wages and self-employment income of such individual, the Secretary shall recompute the decedent's primary insurance amount, but only if the decedent during his lifetime was paid compensation which was treated under section 205(o) as remuneration for employment.
(g)

Rounding of Benefits
The amount of any primary insurance amount and the amount of any monthly benefit computed under section 202 or 223 which (after reduction under section 203(a) and deductions under section 203(b)) is not a multiple of $0.10 shall be raised to the next higher multiple of $0.10.
(h)

Remuneration of Certain Public Health Service Officers 28
(1)
Notwithstanding the provisions of subchapter III of chapter 83 of title 5, United States Code, remuneration paid for services to which the provisions of section 210(l)(1) of this Act are applicable and which is performed by an individual as a commissioned officer of the Reserve Corps of the Public Health Service prior to July 1, 1960, shall not be included in computing entitlement to or the amount of any monthly benefit under this title, on the basis of his wages and self-employment income, for any month after June 1960 and prior to the first month with respect to which the Civil Service Commission certifies to the Secretary that, by reason of a waiver filed as provided in paragraph (2), no further annuity will be paid to him, his wife, and his children, or, if he has died, to his widow and children, under subchapter III of chapter 83 of title 5, United States Code, on the basis of such service.
^{28}
Subsection title is not included in the statute.
(2)
In the case of a monthly benefit for a month prior to that in which the individual, on whose wages and self-employment income such benefit is based, dies, the waiver must be filed by such individual; and such waiver shall be irrevocable and shall constitute a waiver on behalf of himself, his wife, and his children. If such individual did not file such a waiver before he died, then in the case of a benefit for the month in which he died or any month thereafter, such waiver must be filed by his widow, if any, and by or on behalf of all his children, if any; and such waivers shall be irrevocable. Such a waiver by a child shall be filed by his legal guardian or guardians, or, in the absence thereof, by the person (or persons) who has the child in his care.
(i)

Cost-of-Living Increases in Benefits
(1)
For purposes of this subsection—
(A)
the term “base quarter” means (i) the calendar quarter ending on September 30 in each year after 1982, or (ii) any other calendar quarter in which occurs the effective month of a general benefit increase under this title;
(B)
the term “cost-of-living computation quarter” means a base quarter, as defined in subparagraph (A)(i), in which the Consumer Price Index prepared by the Department of Labor exceeds, by not less than 3 per centum, such Index in the later of (i) the last prior cost-of-living computation quarter which was established under this subparagraph, or (ii) the most recent calendar quarter in which occurred the effective month of a general benefit increase under this title; except that there shall be no cost-of-living computation quarter in any calendar year if in the year prior to such year a law has been enacted providing a general benefit increase under this title or if in such prior year such a general benefit increase becomes effective; and
(C)
the Consumer Price Index for a base quarter, a cost-of-living computation quarter, or any other calendar quarter shall be the arithmetical mean of such index for the 3 months in such quarter.
(2)
(A)
(i)
The Secretary shall determine each year beginning with 1975 (subject to the limitation in paragraph (1)(B)) whether the base quarter (as defined in paragraph (1)(A)(i)) in such year is a cost-of-living computation quarter.
(ii)
If the Secretary determines that the base quarter in any year is a cost-of-living computation quarter, he shall, effective with the month of December 29 of such year as provided in subparagraph (B), increase the benefit amount of each individual who for such month is entitled to benefits under section 227 or 228, and the primary insurance amount of each other individual under this title (but not including a primary insurance amount determined under subsection (a)(3) of this section), by an amount derived by multiplying each such amount (including each such individual's primary insurance amount or benefit amount under section 227 or 228 as previously increased under this subparagraph) by the same percentage (rounded to the nearest one-tenth of 1 percent) as the percentage by which the Consumer Price Index for such cost-of-living computation quarter exceeds such index for the most recent prior calendar quarter which was a base quarter under paragraph (1)(A)(ii) or, if later, the most recent cost-of-living computation quarter under paragraph (1)(B). Any such increased amount which is not a multiple of $0.10 shall be decreased 30 to the next lower 30 multiple of $0.10.
^{29}
§111 P.L. 98–21.
^{30}
§2206 P.L. 97–35.
(B)
The increase provided by subparagraph (A) with respect to a particular cost-of-living computation quarter shall apply in the case of monthly benefits under this title for months after November 29 of the calendar year in which occurred such cost-of-living computation quarter, and in the case of lump-sum death payments with respect to deaths occurring after November 29 of such calendar year.
(C)
(i)
Whenever the level of the Consumer Price Index as published for any month exceeds by 2.5 percent or more the level of such index for the most recent base quarter (as defined in paragraph (1)(A)(ii)) or, if later, the most recent cost-of-living computation quarter, the Secretary shall (within 5 days after such publication) report the amount of such excess to the House Committee on Ways and Means and the Senate Committee on Finance.
(ii)
Whenever the Secretary determines that a base quarter in a calendar year is also a cost-of-living computation quarter, he shall notify the House Committee on Ways and Means and the Senate Committee on Finance of such determination within 30 days after the close of such quarter, indicating the amount of the benefit increase to be provided, his estimate of the extent to which the cost of such increase would be met by an increase in the contribution and benefit base under section 230 and the estimated amount of the increase in such base, the actuarial estimates of the effect of such increase, and the actuarial assumptions and methodology used in preparing such estimates.
(D)
If the Secretary determines that a base quarter in a calendar year is also a cost-of-living computation quarter, he shall publish in the Federal Register within 45 days after the close of such quarter, a determination that a benefit increase is resultantly required and the percentage thereof. He shall also publish in the Federal Register at that time (along with the increased benefit amounts which shall be deemed to be the amounts appearing in sections 227 and 228) a revision of the table of benefits contained in subsection (a) of this section (as it may have been most recently revised by another law or pursuant to this paragraph); and such revised table shall be deemed to be the table appearing in such subsection (a). Such revision shall be determined as follows:
(i)
The headings of the table shall be the same as the headings in the table immediately prior to its revision, except that the parenthetical phrase at the beginning of column II shall reflect the year in which the primary insurance amounts set forth in column IV of the table immediately prior to its revision were effective.
(ii)
The amounts on each line of column I and column III, except as otherwise provided by clause (v) of this subparagraph, shall be the same as the amounts appearing in each such column in the table immediately prior to its revision.
(iii)
The amount on each line of column II shall be changed to the amount shown on the corresponding line of column IV of the table immediately prior to its revision.
(iv)
The amounts on each line of column IV and column V shall be increased from the amounts shown in the table immediately prior to its revision by increasing each such amount by the percentage specified in subparagraph (A)(ii) of this paragraph. The amount on each line of column V shall be increased, if necessary, so that such amount is at least equal to one and one-half times the amount shown on the corresponding line in column IV. Any such increased amount which is not a multiple of $0.10 shall be decreased 31 to the next lower 31 multiple of $0.10.
^{31}
§2206 P.L. 97–35.
(v)
If the contribution and benefit base (determined under section 230) for the calendar year in which the table of benefits is revised is lower than such base for the following calendar year, columns III, IV, and V of such table shall be extended. The amounts on each additional line of column III shall be the amounts on the preceding line increased by $5 until in the last such line of column III the second figure is equal to, or exceeds by less than $5, one-twelfth of the new contribution and benefit base for the calendar year following the calendar year in which such table of benefits is revised. The amount on each additional line of column IV shall be the amount on the preceding line increased by $1.00, until the amount on the last line of such column is equal to the last line of such column as determined under clause (iv) plus 20 percent of the excess of the second figure in the last line of column III as extended under the preceding sentence over such second figure for the calendar year in which the table of benefits is revised. The amount in each additional line of column V shall be equal to 1.75 times the amount on the same line of column IV. Any such increased amount which is not a multiple of $0.10 shall be decreased 31 to the next lower 31 multiple of $0.10.32
^{32}
Clause (v) was amended by sec. 103(d) of P.L. 95–216.
(3)
As used in this subsection, the term “general benefit increase under this title” means an increase (other than an increase under this subsection) in all primary insurance amounts on which monthly insurance benefits under this title are based.

other definitions
Sec. 216.
[42 U.S.C. 416]
For the purposes of this title—
(a)

Spouse; Surviving Spouse
(1)
The term “spouse” means a wife as defined in subsection (b) or a husband as defined in subsection (f).
(2)
The term “surviving spouse” means a widow as defined in subsection (c) or a widower as defined in subsection (g).
(b)

Wife
The term “wife” means the wife of an individual, but only if she (1) is the mother of his son or daughter, (2) was married to him for a period of not less than one year immediately preceding the day on which her application is filed, or (3) in the month prior to the month of her marriage to him (A) was entitled to, or on application therefor and attainment of age 62 in such prior month would have been entitled to, benefits under subsection (b), (e), or (h) of section 202, (B) had attained age eighteen and was entitled to, or on application therefor would have been entitled to, benefits under subsection (d) of such section (subject, however, to section 202(s)), or (C) was entitled to, or upon application therefor and attainment of the required age (if any) would have been entitled to, a widow's, child's (after attainment of age 18), or parent's insurance annuity under section 2 of the Railroad Retirement Act of 1974, as amended. For purposes of clause (2), a wife shall be deemed to have been married to an individual for a period of one year throughout the month in which occurs the first anniversary of her marriage to such individual. For purposes of subparagraph (C) of section 202(b)(1), a divorced wife shall be deemed not to be married throughout the month in which she becomes divorced.
(c)

Widow
(1)
The term “widow” (except when used in the first sentence of section 202(i)) means the surviving wife of an individual, but only if (A) she is the mother of his son or daughter, (B) she legally adopted his son or daughter while she was married to him and while such son or daughter was under the age of eighteen, (C) he legally adopted her son or daughter while she was married to him and while such son or daughter was under the age of eighteen, (D) she was married to him at the time both of them legally adopted a child under the age of eighteen, (E) except as provided in paragraph (2), she was married to him for a period of not less than nine months immediately prior to the day on which he died, or (F) in the month prior to the month of her marriage to him (i) she was entitled to, or on application therefor and attainment of age 62 in such prior month would have been entitled to, benefits under subsection (b), (e), or (h) of section 202, (ii) she had attained age eighteen and was entitled to, or on application therefor would have been entitled to, benefits under subsection (d) of such section (subject, however, to section 202(s)), or (iii) she was entitled to, or upon application therefor and attainment of the required age (if any) would have been entitled to, a widow's, child's (after attainment of age 18), or parent's insurance annuity under section 2 of the Railroad Retirement Act of 1974, as amended.
(2)
The requirements of paragraph (1)(E) in connection with the surviving wife of an individual shall be treated as satisfied if—
(A)
the individual had been married prior to the individual's marriage to the surviving wife,
(B)
the prior wife was institutionalized during the individual's marriage to the prior wife due to mental incompetence or similar incapacity,
(C)
during the period of the prior wife's institutionalization, the individual would have divorced the prior wife and married the surviving wife, but the individual did not do so because such divorce would have been unlawful, by reason of the prior wife's institutionalization, under the laws of the State in which the individual was domiciled at the time (as determined based on evidence satisfactory to the Commissioner of Social Security),
(D)
the prior wife continued to remain institutionalized up to the time of her death, and
(E)
the individual married the surviving wife within 60 days after the prior wife's death.
(d)

Divorced Spouses; Divorce
(1)
The term “divorced wife” means a woman divorced from an individual, but only if she had been married to such individual for a period of 10 years immediately before the date the divorce became effective.
(2)
The term “surviving divorced wife” means a woman divorced from an individual who has died, but only if she had been married to the individual for a period of 10 years immediately before the date the divorce became effective.
(3)
The term “surviving divorced mother” means a woman divorced from an individual who has died, but only if (A) she is the mother of his son or daughter, (B) she legally adopted his son or daughter while she was married to him and while such son or daughter was under the age of 18, (C) he legally adopted her son or daughter while she was married to (him and while such son or daughter was under the age of 18, or (D) she was married to him at the time both of them legally adopted a child under the age of 18.
(4)
The term “divorced husband” means a man divorced from an individual, but only if he had been married to such individual for a period of 10 years immediately before the date the divorce became effective.
(5)
The term “surviving divorced husband” means a man divorced from an individual who has died, but only if he had been married to the individual for a period of 10 years immediately before the divorce became effective.
(6)
The term “surviving divorced father” means a man divorced from an individual who has died, but only if (A) he is the father of her son or daughter, (B) he legally adopted her son or daughter while he was married to her and while such son or daughter was under the age of 18, (C) she legally adopted his son or daughter while he was married to her and while such son or daughter was under the age of 18, or (D) he was married to her at the time both of them legally adopted a child under the age of 18.
(7)
The term “surviving divorced parent” means a surviving divorced mother as defined in paragraph (3) of this subsection or a surviving divorced father as defined in paragraph (6).
(8)
The terms “divorce” and “divorced” refer to a divorce a vinculo matrimonii.
(e)

Child
The term “child” means (1) the child or legally adopted child of an individual, (2) a stepchild who has been such stepchild for not less than one year immediately preceding the day on which application for child's insurance benefits is filed or (if the insured individual is deceased) not less than nine months immediately preceding the day on which such individual died, and (3) a person who is the grandchild or stepgrandchild of an individual or his spouse, but only if (A) there was no natural or adoptive parent (other than such a parent who was under a disability, as defined in section 223(d)) of such person living at the time (i) such individual became entitled to old-age insurance benefits or disability insurance benefits or died, or (ii) if such individual had a period of disability which continued until such individual (became entitled to old-age insurance benefits or disability insurance benefits, or died, at the time such period of disability began, or (B) such person was legally adopted after the death of such individual by such individual's surviving spouse in an adoption that was decreed by a court of competent jurisdiction within the United States and such person's natural or adopting parent or stepparent was not living in such individual's household and making regular contributions toward such person's support at the time such individual died. For purposes of clause (1), a person shall be deemed, as of the date of death of an individual, to be the legally adopted child of such individual if such person was either living with or receiving at least one-half of his support from such individual at the time of such individual's death and was legally adopted by such individual's surviving spouse after such individual's death but only if (A) proceedings for the adoption of the child had been instituted by such individual before his death, or (B) such child was adopted by such individual's surviving spouse before the end of two years after (i) the day on which such individual died or (ii) the date of enactment of the Social Security Amendments of 1958. For purposes of clause (2), a person who is not the stepchild of an individual shall be deemed the stepchild of such individual if such individual was not the mother or adopting mother or the father or adopting father of such person and such individual and the mother or adopting mother, or the father or adopting father, as the case may be, of such person went through a marriage ceremony resulting in a purported marriage between them which, but for a legal impediment described in the last sentence of subsection (h)(1)(B), would have been a valid marriage. For purposes of clause (2), a child shall be deemed to have been the stepchild of an individual for a period of one year throughout the month in which occurs the expiration of such one year. For purposes of clause (3), a person shall be deemed to have no natural or adoptive parent living (other than a parent who was under a disability) throughout the most recent month in which a natural or adoptive parent (not under a disability) dies.
(f)

Husband
The term “husband” means the husband of an individual, but only if (1) he is the father of her son or daughter, (2) he was married to her for a period of not less than one year immediately preceding the day on which his application is filed, or (3) in the month prior to the month of his marriage to her (A) he was entitled to, or on application (therefor and attainment of age 62 in such prior month would have been entitled to, benefits under subsection (c), (f) or (h) of section 202, (B) he had attained age eighteen and was entitled to, or on application therefor would have been entitled to, benefits under subsection (d) of such section (subject, however, to section 202(s)), or (C) he was entitled to, or upon application therefor and attainment of the required age (if any) he would have been entitled to, a widower's, child's (after attainment of age 18), or parent's insurance annuity under section 2 of the Railroad Retirement Act of 1974, as amended. For purposes of clause (2), a husband shall be deemed to have been married to an individual for a period of one year throughout the month in which occurs the first anniversary of his marriage to her. For purposes of subparagraph (C) of section 202(c)(1), a divorced husband shall be deemed not to be married throughout the month which he becomes divorced.
(g)

Widower
(1)
The term “widower” (except when used in the first sentence of section 202(i)) means the surviving husband of an individual, but only if (A) he is the father of her son or daughter, (B) he legally adopted her son or daughter while he was married to her and while such son or daughter was under the age of eighteen, (C) she legally adopted his son or daughter while he was married to her and while such son or daughter was under the age of eighteen, (D) he was married to her at the time both of them legally adopted a child under the age of eighteen, (E) except as provided in paragraph (2), he was married to her for a period of not less than nine months immediately prior to the day on which she died, or (F) in the month before the month of his marriage to her (i) he was entitled to, or on application therefor and attainment of age 62 in such prior month would have been entitled to, benefits under subsection (c), (f) or (h) of section 202, (ii) he had attained age eighteen and was entitled to, or on application therefor would have been entitled to, benefits under subsection (d) of such section (subject, however, to section 202(s)), or (iii) he was entitled to, or on application therefor and attainment of the required age (if any) he would have been entitled to, a widower's, child's (after attainment of age 18), or parent's insurance annuity under section 2 of the Railroad Retirement Act of 1974, as amended.
(2)
The requirements of paragraph (1)(E) in connection with the surviving husband of an individual shall be treated as satisfied if—
(A)
the individual had been married prior to the individual's marriage to the surviving husband,
(B)
the prior husband was institutionalized during the individual's marriage to the prior husband due to mental incompetence or similar incapacity,
(C)
during the period of the prior husband's institutionalization, the individual would have divorced the prior husband and married the surviving husband, but the individual did not do so because such divorce would have been unlawful, by reason of the prior husband's institutionalization, under the laws of the State in which the individual was domiciled at the time (as determined based on evidence satisfactory to the Commissioner of Social Security),
(D)
the prior husband continued to remain institutionalized up to the time of his death, and
(E)
the individual married the surviving husband within 60 days after the prior husband's death.
(h)

Determination of Family Status
(1)
(A)
(i)
An applicant is the wife, husband, widow, or widower of a fully or currently insured individual for purposes of this title if the courts of the State in which such insured individual is domiciled at the time such applicant files an application, or, if such insured individual is dead, the courts of the State in which he was domiciled at the time of death, or, if such insured individual is or was not so domiciled in any State, the courts of the District of Columbia, would find that such applicant and such insured individual were validly married at the time such applicant files such application or, if such insured individual is dead, at the time he died.
(ii)
If such courts would not find that such applicant and such insured individual were validly married at such time, such applicant shall, nevertheless be deemed to be the wife, husband, widow, or widower, as the case may be, of such insured individual if such applicant would, under the laws applied by such courts in determining the devolution of intestate personal property, have the same status with respect to the taking of such property as a wife, husband, widow, or widower of such insured individual.
(B)
(i)
In any case where under subparagraph (A) an applicant is not (and is not deemed to be) the wife, widow, husband, or widower of a fully or currently insured individual, or where under subsection (b), (c), (d), (f), or (g) such applicant is not the wife, divorced wife, widow, surviving divorced wife, husband, divorced husband, widower, or surviving divorced husband of such individual, but it is established to the satisfaction of the Commissioner of Social Security that such applicant in good faith went through a marriage ceremony with such individual resulting in a purported marriage between them which, but for a legal impediment not known to the applicant at the time of such ceremony, would have been a valid marriage, then, for purposes of subparagraph (A) and subsections (b), (c), (d), (f), and (g), such purported marriage shall be deemed to be a valid marriage. Notwithstanding the preceding sentence, in the case of any person who would be deemed under the preceding sentence a wife, widow, husband, or widower of the insured individual, such marriage shall not be deemed to be a valid marriage unless the applicant and the insured individual were living in the same household at the time of the death of (the insured individual or (if the insured individual is living) at the time the applicant files the application. A marriage that is deemed to be a valid marriage by reason of the preceding sentence shall continue to be deemed a valid marriage if the insured individual and the person entitled to benefits as the wife or husband of the insured individual are no longer living in the same household at the time of the death of such insured individual.
(ii)
The provisions of clause (i) shall not apply if the Commissioner of Social Security determines, on the basis of information brought to the Commissioner's attention, that such applicant entered into such purported marriage with such insured individual with knowledge that it would not be a valid marriage.
(iii)
The entitlement to a monthly benefit under subsection (b) or (c) of section 202, based on the wages and self-employment income of such insured individual, of a person who would not be deemed to be a wife or husband of such insured individual but for this subparagraph, shall end with the month before the month in which such person enters into a marriage, valid without regard to this subparagraph, with a person other than such insured individual.
(iv)
For purposes of this subparagraph, a legal impediment to the validity of a purported marriage includes only an impediment (I) resulting from the lack of dissolution of a previous marriage or otherwise arising out of such previous marriage or its dissolution, or (II) resulting from a defect in the procedure followed in connection with such purported marriage.
(2)
(A)
In determining whether an applicant is the child or parent of a fully or currently insured individual for purposes of this title, the Commissioner of Social Security shall apply such law as would be applied in determining the devolution of intestate personal property by the courts of the State in which such insured individual is domiciled at the time such applicant files application, or, if such insured individual is dead, by the courts of the State in which he was domiciled at the time of his death, or, if such insured individual is or was not so domiciled in any State, by the courts of the District of Columbia. Applicants who according to such law would have the same status relative to taking intestate personal property as a child or parent shall be deemed such.
(B)
If an applicant is a son or daughter of a fully or currently insured individual but is not (and is not deemed to (be) the child of such insured individual under subparagraph (A), such applicant shall nevertheless be deemed to be the child of such insured individual if such insured individual and the mother or father, as the case may be, of such applicant went through a marriage ceremony resulting in a purported marriage between them which, but for a legal impediment described in the last sentence of paragraph (1)(B), would have been a valid marriage.
(3)
An applicant who is the son or daughter of a fully or currently insured individual, but who is not (and is not deemed to be) the child of such insured individual under paragraph (2), shall nevertheless be deemed to be the child of such insured individual if:
(A)
in the case of an insured individual entitled to old-age insurance benefits (who was not, in the month preceding such entitlement, entitled to disability insurance benefits)—
(i)
such insured individual—
(I)
has acknowledged in writing that the applicant is his or her son or daughter,
(II)
has been decreed by a court to be the mother or father of the applicant, or
(III)
has been ordered by a court to contribute to the support of the applicant because the applicant is his or her son or daughter,
and such acknowledgment, court decree, or court order was made not less than one year before such insured individual became entitled to old-age insurance benefits or attained retirement age (as defined in subsection (l)), whichever is earlier; or
(ii)
such insured individual is shown by evidence satisfactory to the Commissioner of Social Security to be the mother or father of the applicant and was living with or contributing to the support of the applicant at the time such applicant's application for benefits was filed;
(B)
in the case of an insured individual entitled to disability insurance benefits, or who was entitled to such benefits in the month preceding the first month for which he or she was entitled to old-age insurance benefits—
(i)
such insured individual—
(I)
has acknowledged in writing that the applicant is his or her son or daughter,
(II)
has been decreed by a court to be the mother or father of the applicant, or
(III)
has been ordered by a court to contribute to the support of the applicant because the applicant is his or her son or daughter,
and such acknowledgment, court decree, or court order was made before such insured individual's most recent period of disability began; or
(ii)
such insured individual is shown by evidence satisfactory to the Commissioner of Social Security to be the mother or father of the applicant and was living with or contributing to the support of that applicant at the time such applicant's application for benefits was filed;
(C)
in the case of a deceased individual—
(i)
such insured individual—
(I)
had acknowledged in writing that the applicant is his or her son or daughter,
(II)
had been decreed by a court to be the mother or father of the applicant, or
(III)
had been ordered by a court to contribute to the support of the applicant because the applicant was his or her son or daughter,
and such acknowledgment, court decree, or court order was made before the death of such insured individual, or
(ii)
such insured individual is shown by evidence satisfactory to the Commissioner of Social Security to have been the mother or father of the applicant, and such insured individual was living with or contributing to the support of the applicant at the time such insured individual died.
For purposes of subparagraphs (A)(i) and (B)(i), an acknowledgement, court decree, or court order shall be deemed to have occurred on the first day of the month in which it actually occurred.
(i)

Disability; Period of Disability
(1)
Except for purposes of sections 202(d), 202(e), 202(f), 223, and 225, the term “disability” means (A) inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or has lasted or can be expected to last for a continuous period of not less than 12 months, or (B) blindness; and the term “blindness” means central visual acuity of 20⁄200 or less in the better eye with the use of a correcting lens. An eye which is accompanied by a limitation in the fields of vision such that the widest diameter of the visual field subtends an angle no greater than 20 degrees shall be considered for purposes of this paragraph as having a central visual acuity of 20⁄200 or less. The provisions of paragraphs (2)(A),(2)(B),(3), (4), (5), and (6) of section 223(d) shall be applied for purposes of determining whether an individual is under a disability within the meaning of the first sentence of this paragraph in the same manner as they are applied for purposes of paragraph (1) of such section. Nothing in this title shall be construed as authorizing the Commissioner or any other officer or employee of the United States to interfere in any way with the practice of medicine or with relationships between practitioners of medicine and their patients, or to exercise any supervision or control over the administration or operation of any hospital.
(2)
(A)
The term “period of disability” means a continuous period (beginning and ending as hereinafter provided in this subsection) during which an individual was under a disability (as defined in paragraph (1)), but only if such period is of not less than five full calendar months' duration or such individual was entitled to benefits under section 223 for one or more months in such period.
(B)
No period of disability shall begin as to any individual unless such individual files an application for a disability determination with respect to such period; and no such period shall begin as to any individual after such individual attains retirement age (as defined in subsection (l)). In the case of a deceased individual, the requirement of an application under the preceding sentence may be satisfied by an application for a disability determination filed with respect to such individual within 3 months after the month in which he died.
(C)
A period of disability shall begin—
(i)
on the day the disability began, but only if the individual satisfies the requirements of paragraph (3) on such day; or
(ii)
if such individual does not satisfy the requirements of paragraph (3) on such day, then on the first day of the first quarter thereafter in which he satisfies such requirements.
(D)
A period of disability shall end with the close of whichever of the following months is the earlier: (i) the month preceding the month in which the individual attains retirement age (as defined in subsection (l)), or (ii) the month preceding (I) the termination month (as defined in section 223(a)(1)), or, if earlier (II) the first month for which no benefit is payable by reason of section 223(e), where no benefit is payable for any of the succeeding months during the 36 month period referred to in such section. The provisions set forth in section 223(f) with respect to determinations of whether entitlement to benefits under this title or title XVIII based on the disability of any individual is terminated (on the basis of a finding that the physical or mental impairment on the basis of which such benefits are provided has ceased, does not exist, or is not disabling) shall apply in the same manner and to the same extent with respect to determinations of whether a period of disability has ended (on the basis of a finding that the physical or mental impairment on the basis of which the finding of disability was made has ceased, does not exist, or is not disabling).
(E)
Except as is otherwise provided in subparagraph (F), no application for a disability determination which is filed more than 12 months after the month prescribed by subparagraph (D) as the month in which the period of disability ends (determined without regard to subparagraph (B) and this subparagraph) shall be accepted as an application for purposes of this paragraph.
(F)
An application for a disability determination which is filed more than 12 months after the month prescribed by subparagraph (D) as the month in which the period of disability ends (determined without regard to subparagraphs (B) and (E)) shall be accepted as an application for purposes of this paragraph if—
(i)
in the case of an application filed by or on behalf of an individual with respect to a disability which ends after the month in which the Social Security Amendments of 1967 is enacted, such application is filed not more than 36 months after the month in which such disability ended, such individual is alive at the time the application is filed, and the Commissioner of Social Security finds in accordance with regulations prescribed by the Commissioner that the failure of such individual to file an application for a disability determination within the time specified in subparagraph (E) was attributable to a physical or mental condition of such individual which rendered him incapable of executing such an application, and
(ii)
in the case of an application filed by or on behalf of an individual with respect to a period of disability which ends in or before the month in which the Social Security Amendments of 1967 is enacted—
(I)
such application is filed not more than 12 months after the month in which the Social Security Amendments of 1967 is enacted,
(II)
a previous application for a disability determination has been filed by or on behalf of such individual (1) in or before the month in which the Social Security Amendments of 1967 is enacted, and (2) not more than 36 months after the month in which his disability ended, and
(III)
the Commissioner of Social Security finds in accordance with regulations prescribed by the Commissioner, that the failure of such individual to file an application within the then specified time period was attributable to a physical or mental condition of such individual which rendered him incapable of executing such an application.
In making a determination under this subsection, with respect to the disability or period of disability of any individual whose application for a determination thereof is accepted solely by reason of the provisions of this subparagraph (F), the provisions of this subsection (other than the provisions of this subparagraph) shall be applied as such provisions are in effect at the time such determination is made.
(G)
An application for a disability determination filed before the first day on which the applicant satisfies the requirements for a period of disability under this subsection shall be deemed a valid application (and shall be deemed to have been filed on such first day) only if the applicant satisfies the requirements for a period of disability before the Commissioner of Social Security makes a final decision on the application and no request under section 205(b) for notice and opportunity ( for a hearing thereon is made or, if such a request is made, before a decision based upon the evidence adduced at the hearing is made (regardless of whether such decision becomes the final decision of the Commissioner of Social Security).
(3)
The requirements referred to in clauses (i) and (ii) of paragraph (2)(C) are satisfied by an individual with respect to any quarter only if—
(A)
he would have been a fully insured individual (as defined in section 214) had he attained age 62 and filed application for benefits under section 202(a) on the first day of such quarter; and
(B)
(i)
he had not less than 20 quarters of coverage during the 40-quarter period which ends with such quarter, or
(ii)
if such quarter ends before he attains (or would attain) age 31, not less than one-half (and not less than 6) of the quarters during the period ending with such quarter and beginning after he attained the age of 21 were quarters of coverage, or (if the number of quarters in such period is less than 12) not less than 6 of the quarters in the 12-quarter period ending with such quarter were quarters of coverage, or
(iii)
in the case of an individual (not otherwise insured under clause (i)) who, by reason of clause (ii), had a prior period of disability that began during a period before the quarter in which he or she attained age 31, not less than one-half of the quarters beginning after such individual attained age 21 and ending with such quarter are quarters of coverage, or (if the number of quarters in such period is less than 12) not less than 6 of the quarters in the 12-quarter period ending with such quarter are quarters of coverage;
except that the provisions of subparagraph (B) of this paragraph shall not apply in the case of an individual who is blind (within the meaning of “blindness” as defined in paragraph (1)). For purposes of subparagraph (B) of this paragraph, when the number of quarters in any period is an odd number, such number shall be reduced by one, and a quarter shall not be counted as part of any period if any part of such quarter was included in a prior period of disability unless such quarter was a quarter of coverage.
(j)

Periods of Limitation Ending on Nonwork Days
Where this title, any provision of another law of the United (States (other than the Internal Revenue Code of 1986) relating to or changing the effect of this title, or any regulation issued by the Commissioner of Social Security pursuant thereto provides for a period within which an act is required to be done which affects eligibility for or the amount of any benefit or payment under this title or is necessary to establish or protect any rights under this title, and such period ends on a Saturday, Sunday, or legal holiday, or on any other day all or part of which is declared to be a nonwork day for Federal employees by statute or Executive order, then such act shall be considered as done within such period if it is done on the first day thereafter which is not a Saturday, Sunday, or legal holiday or any other day all or part of which is declared to be a nonwork day for Federal employees by statute or Executive order. For purposes of this subsection, the day on which a period ends shall include the day on which an extension of such period, as authorized by law or by the Commissioner of Social Security pursuant to law, ends. The provisions of this subsection shall not extend the period during which benefits under this title may (pursuant to section 202(j)(1) or 223(b)) be paid for months prior to the day application for such benefits is filed, or during which an application for benefits under this title may (pursuant to section 202(j)(2) or 223(b)) be accepted as such.
(k)

Waiver of Nine-Month Requirement for Widow, Stepchild, or Widower in Case of Accidental Death or in Case of Serviceman Dying in Line of Duty, or in Case of Remarriage to the Same Individual
The requirement in clause (E) of subsection (c)(1) or clause (E) of subsection (g)(1) that the surviving spouse of an individual have been married to such individual for a period of not less than nine months immediately prior to the day on which such individual died in order to qualify as such individual's widow or widower, and the requirement in subsection (e) that the stepchild of a deceased individual have been such stepchild for not less than nine months immediately preceding the day on which such individual died in order to qualify as such individual's child, shall be deemed to be satisfied, where such individual dies within the applicable nine-month period, if—
(1)
his death—
(A)
is accidental, or
(B)
occurs in line of duty while he is a member of a uniformed (service serving on active duty (as defined in section 210(l)(2)),
unless the Commissioner of Social Security determines that at the time of the marriage involved the individual could not have reasonably been expected to live for nine months, or
(2)
(A)
the widow or widower of such individual had been previously married to such individual and subsequently divorced and such requirement would have been satisfied at the time of such divorce if such previous marriage had been terminated by the death of such individual at such time instead of by divorce;or
(B)
the stepchild of such individual had been the stepchild of such individual during a previous marriage of such stepchild's parent to such individual which ended in divorce and such requirement would have been satisfied at the time of such divorce if such previous marriage had been terminated by the death of such individual at such time instead of by divorce;
except that paragraph (2) of this subsection shall not apply if the Commissioner of Social Security determines that at the time of the marriage involved the individual could not have reasonably been expected to live for nine months. For purposes of paragraph (1)(A) of this subsection, the death of an individual is accidental if he receives bodily injuries solely through violent, external, and accidental means and, as a direct result of the bodily injuries and independently of all other causes, loses his life not later than three months after the day on which he receives such bodily injuries.
(l)

Retirement Age
(1)
The term “retirement age” means—
(A)
with respect to an individual who attains early retirement age (as defined in paragraph (2)) before January 1, 2000, 65 years of age;
(B)
with respect to an individual who attains early retirement age after December 31, 1999, and before January 1, 2005, 65 years of age plus the number of months in the age increase factor (as determined under paragraph (3)) for the calendar year in which such individual attains early retirement age;
(C)
with respect to an individual who attains early retirement age after December 31, 2004, and before January 1, 2017, 66 (years of age;
(D)
with respect to an individual who attains early retirement age after December 31, 2016, and before January 1, 2022, 66 years of age plus the number of months in the age increase factor (as determined under paragraph (3)) for the calendar year in which such individual attains early retirement age; and
(E)
with respect to an individual who attains early retirement age after December 31, 2021, 67 years of age.
(2)
The term “early retirement age” means age 62 in the case of an old-age, wife's, or husband's insurance benefit, and age 60 in the case of a widow's or widower's insurance benefit.
(3)
The age increase factor for any individual who attains early retirement age in a calendar year within the period to which subparagraph (B) or (D) of paragraph (1) applies shall be determined as follows:
(A)
With respect to an individual who attains early retirement age in the 5-year period consisting of the calendar years 2000 through 2004, the age increase factor shall be equal to two-twelfths of the number of months in the period beginning with January 2000 and ending with December of the year in which the individual attains early retirement age.
(B)
With respect to an individual who attains early retirement age in the 5-year period consisting of the calendar years 2017 through 2021, the age increase factor shall be equal to two-twelfths of the number of months in the period beginning with January 2017 and ending with December of the year in which the individual attains early retirement age.

benefits in case of veterans
Sec. 217.
[42 U.S.C. 417]
(a)
(1)
For purposes of determining entitlement to and the amount of any monthly benefit for any month after August 1950, or entitlement to and the amount of any lump-sum death payment in case of a death after such month, payable under this title on the basis of the wages and self-employment income of any World War II veteran, and for purposes of section 216(i)(3), such veteran shall be deemed to have been paid wages (in addition to the wages, if any, actually paid to him) of $160 in each month during any part of which he served in the active military or naval service of the United States during World War II. This subsection shall not be applicable in the case of any monthly benefit or lump-sum death payment if—
(A)
a larger such benefit or payment, as the case may be, would be payable without its application; or
(B)
a benefit (other than a benefit payable in a lump sum unless it is a commutation of, or a substitute for, periodic payments) which is based, in whole or in part, upon the active military or naval service of such veteran during World War II is determined by any agency or wholly owned instrumentality of the United States (other than the Department of Veterans Affairs) to be payable by it under any other law of the United States or under a system established by such agency or instrumentality.
The provisions of clause (B) shall not apply in the case of any monthly benefit or lump-sum death payment under this title if its application would reduce by $0.50 or less the primary insurance amount (as computed under section 215 prior to any recomputation thereof pursuant to subsection (f) of such section) of the individual on whose wages and self-employment income such benefit or payment is based. The provisions of clause (B) shall also not apply for purposes of section 216(i)(3).
(2)
Upon application for benefits or a lump-sum death payment on the basis of the wages and self-employment income of any World War II veteran, the Commissioner of Social Security shall make a decision without regard to clause (B) of paragraph (1) of this subsection unless the Commissioner has been notified by some other agency or instrumentality of the United States that, on the basis of the military or naval service of such veteran during World War II, a benefit described in clause (B) of paragraph (1) has been determined by such agency or instrumentality to be payable by it. If the Commissioner has not been so notified, the Commissioner of Social Security shall then ascertain whether some other agency or wholly owned instrumentality of the United States has decided that a benefit described in clause (B) of paragraph (1) is payable by it. If any such agency or instrumentality has decided, or thereafter decides, that such a benefit is payable by it, it shall so notify the Commissioner of Social Security, and the Commissioner of Social Security shall certify no further benefits for payment or shall recompute the amount of any further benefits payable, as may be required by paragraph (1) of this subsection.
(3)
Any agency or wholly owned instrumentality of the United States which is authorized by any law of the United States to pay benefits, or has a system of benefits which are based, in whole or in part, on military or naval service during World War II shall, at the request of the Commissioner of Social Security, certify to the Commissioner, with respect to any veteran, such information as the Commissioner of Social Security deems necessary to carry out the Commissioner's functions under paragraph (2) of this subsection.
(b)
(1)
Subject to paragraph (3), any World War II veteran who died during the period of three years immediately following his separation from the active military or naval service of the United States shall be deemed to have died a fully insured individual whose primary insurance amount is the amount determined under section 215(c) as in effect in December 1978. Notwithstanding section 215(d) as in effect in December 1978, the primary insurance benefit (for purposes of section 215(c) as in effect in December 1978) of such veteran shall be determined as provided in this title as in effect prior to the enactment of this section, except that the 1 per centum addition provided for in section 209(a)(4)(B) of this Act as in effect prior to the enactment of this section shall be applicable only with respect to calendar years prior to 1951. This subsection shall not be applicable in the case of any monthly benefit or lump-sum death payment if—
(A)
a larger such benefit or payment, as the case may be, would be payable without its application;
(B)
any pension or compensation is determined by the Secretary of Veterans Affairs to be payable by him on the basis of the death of such veteran;
(C)
the death of the veteran occurred while he was in the active military or naval service of the United States; or
(D)
such veteran has been discharged or released from the active military or naval service of the United States subsequent to July 26, 1951.
(2)
Upon an application for benefits or a lump-sum death payment on the basis of the wages and self-employment income of any World War II veteran, the Commissioner of Social Security shall make a decision without regard to paragraph (1)(B) of this subsection unless the Commissioner has been notified by the Secretary of Veterans Affairs that pension or compensation is determined to be payable by that Commissioner of Social Security by reason of the death of such veteran. The Commissioner of Social Security shall thereupon report such decision to the Secretary of Veterans Affairs. If the Secretary of Veterans Affairs in any such case has made an adjudication or thereafter makes an adjudication that any pension or compensation is payable under any law administered by it, the Secretary of Veterans Affairs shall notify the Commissioner of Social Security, and the Commissioner of Social Security shall certify no further benefits for payment, or shall recompute the amount of any further benefits payable, as may be required by paragraph (1) of this subsection. Any payments theretofore certified by the Commissioner of Social Security on the basis of paragraph (1) of this subsection to any individual, not exceeding the amount of any accrued pension or compensation payable to him by the Secretary of Veterans Affairs, shall (notwithstanding the provisions of section 3101 of title 38, United States Code) be deemed to have been paid to him by that Secretary on account of such accrued pension or compensation. No such payment certified by the Commissioner of Social Security, and no payment certified by the Commissioner for any month prior to the first month for which any pension or compensation is paid by the Secretary of Veterans Affairs shall be deemed by reason of this subsection to have been an erroneous payment.
(3)
(A)
The preceding provisions of this subsection shall apply for purposes of determining the entitlement to benefits under section 202, based on the primary insurance amount of the deceased World War II veteran, of any surviving individual only if such surviving individual makes application for such benefits before the end of the 18-month period after the month in which the Omnibus Budget Reconciliation Act of 1990 was enacted.
(B)
Subparagraph (A) shall not apply if any person is entitled to benefits under section 202 based on the primary insurance amount of such veteran for the month preceding the month in which such application is made.
(c)
In the case of any World War II veteran to whom subsection (a) is applicable, proof of support required under section 202(h) may be filed by a parent at any time prior to July 1951 or prior to the expiration of two years after the date of the death of such veteran, whichever is the later.
(d)
For the purposes of this section—
(1)
The term “World War II” means the period beginning with September 16, 1940, and ending at the close of July 24, 1947.
(2)
The term “World War II veteran” means any individual who served in the active military or naval service of the United States at any time during World War II and who, if discharged or released therefrom, was so discharged or released under conditions other than dishonorable after active service of ninety days or more or by reason of a disability or injury incurred or aggravated in service in line of duty; but such term shall not include any individual who died while in the active military or naval service of the United States if his death was inflicted (other than by an enemy of the United States) as lawful punishment for a military or naval offense.
(e)
(1)
For purposes of determining entitlement to and the amount of any monthly benefit or lump-sum death payment payable under this title on the basis of wages and self-employment income of any veteran (as defined in paragraph (4)), and for purposes of section 216(i)(3), such veteran shall be deemed to have been paid wages (in addition to the wages, if any, actually paid to him) of $160 in each month during any part of which he served in the active military or naval service of the United States on or after July 25, 1947, and prior to January 1, 1957. This subsection shall not be applicable in the case of any monthly benefit or lump-sum death payment if—
(A)
a larger such benefit or payment, as the case may be, would be payable without its application; or
(B)
a benefit (other than a benefit payable in a lump sum unless it is a commutation of, or a substitute for, periodic payments) which is based, in whole or in part, upon the active military or naval service of such veteran on or after July 25, 1947, and prior to January 1, 1957, is determined by any agency or wholly owned instrumentality of the United States (other than the Department of Veterans Affairs) to be payable by it under any other law of the United States or under a system established by such agency or instrumentality.
The provisions of clause (B) shall not apply in the case of any monthly benefit or lump-sum death payment under this title if its application would reduce by $0.50 or less the primary insurance amount (as computed under section 215 prior to any recomputation thereof pursuant to subsection (f) of such section) of the individual on whose wages and self-employment income such benefit or payment is based. The provisions of clause (B) shall also not apply for purposes of section 216(i)(3). In the case of monthly benefits under this title for months after December 1956 (and any lump-sum death payment under this title with respect to a death occurring after December 1956) based on the wages and self-employment income of a veteran who performed service (as a member of a uniformed service) to which the provisions of section 210(l)(1) are applicable, wages which would, but for the provisions of clause (B), be deemed under this subsection to have been paid to such veteran with respect to his active military or naval service performed after December 1950 shall be deemed to have been paid to him with respect to such service notwithstanding the provisions of such clause, but only if the benefits referred to in such clause which are based (in whole or in part) on such service are payable solely by the Army, Navy, Air Force, Marine Corps, Coast Guard, Coast and Geodetic Survey, National Oceanic and Atmospheric Administration Corps, or Public Health Service.
(2)
Upon application for benefits or a lump-sum death payment on the basis of the wages and self-employment income of any veteran, the Commissioner of Social Security shall make a decision without regard to clause (B) of paragraph (1) of this subsection unless the Commissioner has been notified by some other agency or instrumentality of the United States that, on the basis of the military or naval service of such veteran on or after July 25, 1947, and prior to January 1, 1957, a benefit described in clause (B) of paragraph (1) has been determined by such agency or instrumentality to be payable by it. If the Commissioner has not been so notified, the Commissioner of Social Security shall then ascertain whether some other agency or wholly owned instrumentality of the United States has decided that a benefit described in clause (B) of paragraph (1) is payable by it. If any such agency or instrumentality has decided, or thereafter decides, that such a benefit is payable by it, it shall so notify the Commissioner of Social Security, and the Commissioner of Social Security shall certify no further benefits for payment or shall recompute the amount of any further benefits payable, as may be required by paragraph (1) of this subsection.
(3)
Any agency or wholly owned instrumentality of the United States which is authorized by any law of the United States to pay benefits, or has a system of benefits which are based, in whole or in part, on military or naval service on or after July 25, 1947, and prior to January 1, 1957, shall, at the request of the Commissioner of Social Security, certify to the Commissioner, with respect to any veteran, such information as the Commissioner of Social Security deems necessary to carry out the Commissioner's functions under paragraph (2) of this subsection.
(4)
For the purposes of this subsection, the term “veteran” means any individual who served in the active military or naval service of the United States at any time on or after July 25, 1947, and prior to January 1, 1957, and who, if discharged or released therefrom, was so discharged or released under conditions other than dishonorable after active service of ninety days or more or by reason of a disability or injury incurred or aggravated in service in line of duty; but such term shall not include any individual who died while in the active military or naval service of the United States if his death was inflicted (other than by an enemy of the United States) as lawful punishment for a military or naval offense.
(f)
(1)
In any case where a World War II veteran (as defined in subsection (d)(2)) or a veteran (as defined in subsection (e)(4)) has died or shall hereafter die, and his or her surviving spouse or child is entitled under subchapter III of chapter 83 of title 5, United States Code, to an annuity in the computation of which his or her active military or naval service was included, clause (B) of subsection (a)(1) or clause (B) of subsection (e)(1) shall not operate (solely by reason of such annuity) to make such subsection inapplicable in the case of any monthly benefit under section 202 which is based on his or her wages and self-employment income; except that no such surviving spouse or child shall be entitled under section 202 to any monthly benefit in the computation of which such service is included by reason of this subsection (A) unless such surviving spouse or child after December 1956 waives his or her right to receive such annuity, or (B) for any month prior to the first month with respect to which the Director of the Office of Personnel Management certifies to the Commissioner of Social Security that (by reason of such waiver) no further annuity will be paid to such surviving spouse or child under such subchapter III on the basis of such veteran's military or civilian service. Any such waiver shall be irrevocable.
(2)
Whenever a surviving spouse waives his or her right to receive such annuity such waiver shall constitute a waiver on his or her own behalf; a waiver by a legal guardian or guardians, or, in the absence of a legal guardian, the person (or persons) who has the child in his or her care, of the child's right to receive such annuity shall constitute a waiver on behalf of such child. Such a waiver with respect to an annuity based on a veteran's service shall be valid only if the surviving spouse and all children, or, if there is no surviving spouse, all the children, waive their rights to receive annuities under subchapter III of chapter 83 of title 5, United States Code, based on such veteran's military or civilian service.
(g)

Appropriation to Trust Funds
(1)
Within thirty days after the date of the enactment of the Social Security Amendments of 1983, the Commissioner of Social Security shall determine the amount equal to the excess of—
(A)
the actuarial present value as of such date of enactment of the past and future benefit payments from the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, and the Federal Hospital Insurance Trust Fund under this title and title XVIII, together with associated administrative costs, resulting from the operation of this section (other than this subsection) and section 210 of this Act as in effect before the enactment of the Social Security Amendments of 1950, over
(B)
any amounts previously transferred from the general fund of the Treasury to such Trust Funds pursuant to the provisions of this subsection as in effect immediately before the date of the enactment of the Social Security Amendments of 1983.
Such actuarial present value shall be based on the relevant actuarial assumptions set forth in the report of the Board of Trustees of each such Trust Fund for 1983 under sections 201(c) and 1817(b). Within thirty days after the date of the enactment of the Social Security Amendments of 1983, the Secretary of the Treasury shall transfer the amount determined under this paragraph with respect to each such Trust Fund to such Trust Fund from amounts in the general fund of the Treasury not otherwise appropriated.
(2)
The Commissioner of Social Security shall revise the amount determined under paragraph (1) with respect to each such Trust Fund in 1985 and each fifth year thereafter through 2010, as determined appropriate by the Commissioner of Social Security from data which becomes available to the Commissioner after the date of the determination under paragraph (1) on the basis of the amount of benefits and administrative expenses actually paid from such Trust Fund under this title or title XVIII and the relevant actuarial assumptions set forth in the report of the Board of Trustees of such Trust Fund for such year under section 201(c) or 1817(b). The Secretary of Health and Human Services shall revise the amount determined under paragraph (1) with respect to the Federal Hospital Insurance Trust Fund under title XVIII in 2015 and each fifth year thereafter through such date, and using such data, as the Secretary determines appropriate on the basis of the amount of benefits and administrative expenses actually paid from such Trust Fund under title XVIII and the relevant actuarial assumptions set forth in the report of the Board of Trustees of such Trust Fund for such year under section 1817(b). Within 30 days after any such revision, the Secretary of the Treasury, to the extent provided in advance in appropriation Acts, shall transfer to such Trust Fund, from amounts in the general fund of the Treasury not otherwise appropriated, or from such Trust Fund to the general fund of the Treasury, such amounts as the Secretary of the Treasury determines necessary to take into account such revision.
(h)
(1)
For the purposes of this section, any individual who the Commissioner of Social Security finds—
(A)
served during World War II (as defined in subsection (d)(1)) in the active military or naval service of a country which was on September 16, 1940, at war with a country with which the United States was at war during World War II;
(B)
entered into such active service on or before December 8, 1941;
(C)
was a citizen of the United States throughout such period of service or lost his United States citizenship solely because of his entrance into such service;
(D)
had resided in the United States for a period or periods aggregating four years during the five-year period ending on the day of, and was domiciled in the United States on the day of, such entrance into such active service; and
(E)
(i)
was discharged or released from such service under conditions other than dishonorable after active service of ninety days or more or by reason of a disability or injury incurred or aggravated in service in line of duty, or
(ii)
died while in such service,
shall be considered a World War II veteran (as defined in subsection (d)(2)) and such service shall be considered to have been performed in the active military or naval service of the United States.
(2)
In the case of any individual to whom paragraph (1) applies, proof of support required under section 202(f) or (h) may be filed at any time prior to the expiration of two years after the date of such individual's death or the date of the enactment of this subsection, whichever is the later.

voluntary agreements for coverage of state and local employees
Sec. 218.
[42 U.S.C. 418]
(a)

Purpose of Agreement
(1)
The Commissioner of Social Security shall, at the request of any State, enter into an agreement with such State for the purpose of extending the insurance system established by this title to services performed by individuals as employees of such State or any political subdivision thereof. Each such agreement shall contain such provisions, not inconsistent with the provisions of this section, as the State may request.
(2)
Notwithstanding section 210(a), for the purposes of this title the term “employment” includes any service included under an agreement entered into under this section.
(b)

Definitions
For the purposes of this section—
(1)
The term “State” does not include the District of Columbia, Guam, or American Samoa.
(2)
The term “political subdivision” includes an instrumentality of (A) a State, (B) one or more political subdivisions of a State, or (C) a State and one or more of its political subdivisions.
(3)
The term “employee” includes an officer of a State or political subdivision.
(4)
The term “retirement system” means a pension, annuity, retirement, or similar fund or system established by a State or by a political subdivision thereof.
(5)
The term “coverage group” means (A) employees of the State other than those engaged in performing service in connection with a proprietary function; (B) employees of a political subdivision of a State other than those engaged in performing service in connection with a proprietary function; (C) employees of a State engaged in performing service in connection with a single proprietary function; or (D) employees of a political subdivision of a State engaged in performing service in connection with a single proprietary function. If under the preceding sentence an employee would be included in more than one coverage group by reason of the fact that he performs service in connection with two or more proprietary functions or in connection with both a proprietary function and a nonproprietary function, he shall be included in only one such coverage group. The determination of the coverage group in which such employee shall be included shall be made in such manner as may be specified in the agreement. Persons employed under section 709 of title 32, United States Code, who elected under section 6 of the National Guard Technicians Act of 1968 to remain covered by an employee retirement system of, or plan sponsored by, a State or the Commonwealth of Puerto Rico, shall, for the purposes of this Act, be employees of the State or the Commonwealth of Puerto Rico and (notwithstanding the preceding provisions of this paragraph), shall be deemed to be a separate coverage group. For purposes of this section, individuals employed pursuant to an agreement, entered into pursuant to section 205 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1624) or section 14 of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499n), between a State and the United States Department of Agriculture to perform services as inspectors of agricultural products may be deemed, at the option of the State, to be employees of the State and (notwithstanding the preceding provisions of this paragraph) shall be deemed to be a separate coverage group.
(c)

Services Covered
(1)
An agreement under this section shall be applicable to any one or more coverage groups designated by the State.
(2)
In the case of each coverage group to which the agreement applies, the agreement must include all services (other than services excluded by or pursuant to subsection (d) or paragraph (3), (5), or (6) of this subsection) performed by individuals as members of such group.
(3)
Such agreement shall, if the State requests it, exclude (in the case of any coverage group) any one or more of the following:
(A)
All services in any class or classes of (i) elective positions, (ii) part-time positions, or (iii) positions the compensation for which is on a fee basis;
(B)
All services performed by individuals as members of a coverage group in positions covered by a retirement system on the date such agreement is made applicable to such coverage group, but only in the case of individuals who, on such date (or, if later, the date on which they first occupy such positions), are not eligible to become members of such system and whose services in such positions have not already been included under such agreement pursuant to subsection (d)(3).
(4)
The Commissioner of Social Security shall, at the request of any State, modify the agreement with such State so as to (A) include any coverage group to which the agreement did not previously apply, or (B) include, in the case of any coverage group to which the agreement applies, services previously excluded from the agreement; but the agreement as so modified may not be inconsistent with the provisions of this section applicable in the case of an original agreement with a State. A modification of an agreement pursuant to clause (B) of the preceding sentence may apply to individuals to whom paragraph (3)(B) is applicable (whether or not the previous exclusion of the service of such individuals was pursuant to such paragraph), but only if such individuals are, on the effective date specified in such modification, ineligible to be members of any retirement system or if the modification with respect to such individuals is pursuant to subsection (d)(3).
(5)
Such agreement shall, if the State requests it, exclude (in the case of any coverage group) any agricultural labor, or service performed by a student, designated by the State. This paragraph shall apply only with respect to service which is excluded from employment by any provision of section 210(a) other than paragraph (7) of such section and service the remuneration for which is excluded from wages by subparagraph (B) of section 209(a)(7).
(6)
Such agreement shall exclude—
(A)
service performed by an individual who is employed to relieve him from unemployment,
(B)
service performed in a hospital, home, or other institution by a patient or inmate thereof,
(C)
covered transportation service (as determined under section 210(k)),
(D)
service (other than agricultural labor or service performed by a student) which is excluded from employment by any provision of section 210(a) other than paragraph (7) of such section,
(E)
service performed by an individual as an employee serving on a temporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency, and
(F)
service described in section 210(a)(7)(F) which is included as “employment” under section 210(a).
(7)
No agreement may be made applicable (either in the original agreement or by any modification thereof) to service performed by any individual to whom paragraph (3)(B) is applicable unless such agreement provides (in the case of each coverage group involved) either that the service of any individual to whom such paragraph is applicable and who is a member of such coverage group shall continue to be covered by such agreement in case he thereafter becomes eligible to be a member of a retirement system, or that such service shall cease to be so covered when he becomes eligible to be a member of such a system (but only if the agreement is not already applicable to such system pursuant to subsection (d)(3)), whichever may be desired by the State.
(8)
(A)
Notwithstanding any other provision of this section, the agreement with any State entered into under this section may at the option of the State be modified at any time to exclude service performed by election officials or election workers if the remuneration paid in a calendar year for such service is less than $1,000 with respect to service performed during any calendar year commencing on or after January 1, 1995, ending on or before December 31, 1999, and the adjusted amount determined under subparagraph (B) for any calendar year commencing on or after January 1, 2000, with respect to service performed during such calendar year. Any modification of an agreement pursuant to this paragraph shall be effective with respect to services performed in and after the calendar year in which the modification is mailed or delivered by other means to the Commissioner of Social Security.
(B)
For each year after 1999, the Commissioner of Social Security shall adjust the amount referred to in subparagraph (A) at the same time and in the same manner as is provided under section 215(a)(1)(B)(ii) with respect to the amounts referred to in section 215(a)(1)(B)(i), except that—
(i)
for purposes of this subparagraph, 1997 shall be substituted for the calendar year referred to in section 215(a)(1)(B)(ii)(II), and
(ii)
such amount as so adjusted, if not a multiple of $100, shall be rounded to the next higher multiple of $100 where such amount is a multiple of $50 and to the nearest multiple of $100 in any other case.
The Commissioner of Social Security shall determine and publish in the Federal Register each adjusted amount determined under this subparagraph not later than November 1 preceding the year for which the adjustment is made.
(d)

Positions Covered By Retirement Systems
(1)
No agreement with any State may be made applicable (either in the original agreement or by any modification thereof) to any service performed by employees as members of any coverage group in positions covered by a retirement system either (A) on the date such agreement is made applicable to such coverage group, or (B) on the date of enactment of the succeeding paragraph of this subsection (except in the case of positions which are, by reason of action by such State or political subdivision thereof, as may be appropriate, taken prior to the date of enactment of such succeeding paragraph, no longer covered by a retirement system on the date referred to in clause (A), and except in the case of positions excluded by paragraph (5)(A)). The preceding sentence shall not be applicable to any service performed by an employee as a member of any coverage group in a position (other than a position excluded by paragraph (5)(A)) covered by a retirement system on the date an agreement is made applicable to such coverage group if, on such date (or, if later, the date on which such individual first occupies such position), such individual is ineligible to be a member of such system.
(2)
It is hereby declared to be the policy of the Congress in enacting the succeeding paragraphs of this subsection that the protection afforded employees in positions covered by a retirement system on the date an agreement under this section is made applicable to service performed in such positions, or receiving periodic benefits under such retirement system at such time, will not be impaired as a result of making the agreement so applicable or as a result of legislative enactment in anticipation thereof.
(3)
Notwithstanding paragraph (1), an agreement with a State may be made applicable (either in the original agreement or by any modification thereof) to service performed by employees in positions covered by a retirement system (including positions specified in paragraph (4) but not including positions excluded by or pursuant to paragraph (5)), if the governor of the State, or an official of the State designated by him for the purpose, certifies to the Commissioner of Social Security that the following conditions have been met:
(A)
A referendum by secret written ballot was held on the question of whether service in positions covered by such retirement system should be excluded from or included under an agreement under this section;
(B)
An opportunity to vote in such referendum was given (and was limited) to eligible employees;
(C)
Not less than ninety days' notice of such referendum was given to all such employees;
(D)
Such referendum was conducted under the supervision of the governor or an agency or individual designated by him; and
(E)
A majority of the eligible employees voted in favor of including service in such positions under an agreement under this section.
An employee shall be deemed an “eligible employee” for purposes of any referendum with respect to any retirement system if, at the time such referendum was held, he was in a position covered by such retirement system and was a member of such system, and if he was in such a position at the time notice of such referendum was given as required by clause (C) of the preceding sentence; except that he shall not be deemed an “eligible employee” if, at the time the referendum was held, he was in a position to which the State agreement already applied, or if he was in a position excluded by or pursuant to paragraph (5). No referendum with respect to a retirement system shall be valid for purposes of this paragraph unless held within the two-year period which ends on the date of execution of the agreement or modification which extends the insurance system established by this title to such retirement system, nor shall any referendum with respect to a retirement system be valid for purposes of this paragraph if held less than one year after the last previous referendum held with respect to such retirement system.
(4)
For the purposes of subsection (c) of this section, the following employees shall be deemed to be a separate coverage group—
(A)
all employees in positions which were covered by the same retirement system on the date the agreement was made applicable to such system (other than employees to whose services the agreement already applied on such date);
(B)
all employees in positions which became covered by such system at any time after such date; and
(C)
all employees in positions which were covered by such system at any time before such date and to whose services the insurance system established by this title has not been extended before such date because the positions were covered by such retirement system (including employees to whose services the agreement was not applicable on such date because such services were excluded pursuant to subsection (c)(3)(B)).
(5)
(A)
Nothing in paragraph (3) of this subsection shall authorize the extension of the insurance system established by this title to service in any policeman's or fireman's position.
(B)
At the request of the State, any class or classes of positions covered by a retirement system which may be excluded from the agreement pursuant to paragraph (3) or (5) of subsection (c), and to which the agreement does not already apply, may be excluded from the agreement at the time it is made applicable to such retirement system; except that, notwithstanding the provisions of paragraph (3)(B) of such subsection, such exclusion may not include any services to which such paragraph (3)(B) is applicable. In the case of any such exclusion, each such class so excluded shall, for purposes of this subsection, constitute a separate retirement system in case of any modification of the agreement thereafter agreed to.
(6)
(A)
If a retirement system covers positions of employees of the State and positions of employees of one or more political subdivisions of the State, or covers positions of employees of two or more political subdivisions of the State, then, for purposes of the preceding paragraphs of this subsection, there shall, if the State so desires, be deemed to be a separate retirement system with respect to any one or more of the political subdivisions concerned and, where the retirement system covers positions of employees of the State, a separate retirement system with respect to the State or with respect to the State and any one or more of the political subdivisions concerned. Where a retirement system covering positions of employees of a State and positions of employees of one or more political subdivisions of the State, or covering positions of employees of two or more political subdivisions of the State, is not divided into separate retirement systems pursuant to the preceding sentence or pursuant to subparagraph (C), then the State may, for purposes of subsection (e) only, deem the system to be a separate retirement system with respect to any one or more of the political subdivisions concerned and, where the retirement system covers positions of employees of the State, a separate retirement system with respect to the State or with respect to the State and any one or more of the political subdivisions concerned.
(B)
If a retirement system covers positions of employees of one or more institutions of higher learning, then, for purposes of such preceding paragraphs there shall, if the State so desires, be deemed to be a separate retirement system for the employees of each such institution of higher learning. For the purposes of this subparagraph, the term “institutions of higher learning” includes junior colleges and teachers colleges. If a retirement system covers positions of employees of a hospital which is an integral part of a political subdivision, then, for purposes of the preceding paragraphs there shall, if the State so desires, be deemed to be a separate retirement system for the employees of such hospital.
(C)
For the purposes of this subsection, any retirement system established by the State of Alaska, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Louisiana, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Dakota, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Washington, Wisconsin, or Hawaii, or any political subdivision of any such State, which, on, before, or after the date of enactment of this subparagraph, is divided into two divisions or parts, one of which is composed of positions of members of such system who desire coverage under an agreement under this section and the other of which is composed of positions of members of such system who do not desire such coverage, shall, if the State so desires and if it is provided that there shall be included in such division or part composed of members desiring such coverage the positions of individuals who become members of such system after such coverage is extended, be deemed to be a separate retirement system with respect to each such division or part. If, in the case of a separate retirement system which is deemed to exist by reason of subparagraph (A) and which has been divided into two divisions or parts pursuant to the first sentence of this subparagraph, individuals become members of such system by reason of action taken by a political subdivision after coverage under an agreement under this section has been extended to the division or part thereof composed of positions of individuals who desire such coverage, the positions of such individuals who become members of such retirement system by reason of the action so taken shall be included in the division or part of such system composed of positions of members who do not desire such coverage if (i) such individuals, on the day before becoming such members, were in the division or part of another separate retirement system (deemed to exist by reason of subparagraph (A)) composed of positions of members of such system who do not desire coverage under an agreement under this section, and (ii) all of the positions in the separate retirement system of which such individuals so become members and all of the positions in the separate retirement system referred to in clause (i) would have been covered by a single retirement system if the State had not taken action to provide for separate retirement systems under this paragraph.
(D)
(i)
The position of any individual which is covered by any retirement system to which subparagraph (C) is applicable shall, if such individual is ineligible to become a member of such system on August 1, 1956, or, if later, the day he first occupies such position, be deemed to be covered by the separate retirement system consisting of the positions of members of the division or part who do not desire coverage under the insurance system established under this title.
(ii)
Notwithstanding clause (i), the State may, pursuant to subsection (c)(4)(B) and subject to the conditions of continuation or termination of coverage provided for in subsection (c)(7), modify its agreement under this section to include services performed by all individuals described in clause (i) other than those individuals to whose services the agreement already applies. Such individuals shall be deemed (on and after the effective date of the modification) to be in positions covered by the separate retirement system consisting of the positions of members of the division or part who desire coverage under the insurance system established under this title.
(E)
An individual who is in a position covered by a retirement system to which subparagraph (C) is applicable and who is not a member of such system but is eligible to become a member thereof shall, for purposes of this subsection (other than paragraph (8)), be regarded as a member of such system; except that, in the case of any retirement system a division or part of which is covered under the agreement (either in the original agreement or by a modification thereof), which coverage is agreed to prior to 1960, the preceding provisions of this subparagraph shall apply only if the State so requests and any such individual referred to in such preceding provisions shall, if the State so requests, be treated, after division of the retirement system pursuant to such subparagraph (C), the same as individuals in positions referred to in subparagraph (F).
(F)
In the case of any retirement system divided pursuant to subparagraph (C), the position of any member of the division or part composed of positions of members who do not desire coverage may be transferred to the separate retirement system composed of positions of members who desire such coverage if it is so provided in a modification of such agreement which is mailed, or delivered by other means, to the Commissioner of Social Security prior to 1970 or, if later, the expiration of two years after the date on which such agreement, or the modification thereof making the agreement applicable to such separate retirement system, as the case may be, is agreed to, but only if, prior to such modification or such later modification, as the case may be, the individual occupying such position files with the State a written request for such transfer. Notwithstanding subsection (e)(1), any such modification or later modification, providing for the transfer of additional positions within a retirement system previously divided pursuant to subparagraph (C) to the separate retirement system composed of positions of members who desire coverage, shall be effective with respect to services performed after the same effective date as that which was specified in the case of such previous division.
(G)
For the purposes of this subsection, in the case of any retirement system of the State of Florida, Georgia, Minnesota, North Dakota, Pennsylvania, Washington, or Hawaii which covers positions of employees of such State who are compensated in whole or in part from grants made to such State under title III, there shall be deemed to be, if such State so desires, a separate retirement system with respect to any of the following:
(i)
the positions of such employees;
(ii)
the positions of all employees of such State covered by such retirement system who are employed in the department of such State in which the employees referred to in clause (i) are employed; or
(iii)
employees of such State covered by such retirement system who are employed in such department of such State in positions other than those referred to in clause (i).
(7)
The certification by the governor (or an official of the State designated by him for the purpose) required under paragraph (3) shall be deemed to have been made, in the case of a division or part (created under subparagraph (C) of paragraph (6) or the corresponding provision of prior law) consisting of the positions of members of a retirement system who desire coverage under the agreement under this section, if the governor (or the official so designated) certifies to the Commissioner of Social Security that—
(A)
an opportunity to vote by written ballot on the question of whether they wish to be covered under an agreement under this section was given to all individuals who were members of such system at the time the vote was held;
(B)
not less than ninety days' notice of such vote was given to all individuals who were members of such system on the date the notice was issued;
(C)
the vote was conducted under the supervision of the governor or an agency or individual designated by him; and
(D)
such system was divided into two parts or divisions in accordance with the provisions of subparagraphs (C) and (D) of paragraph (6) or the corresponding provision of prior law.
For purposes of this paragraph, an individual in a position to which the State agreement already applied or in a position excluded by or pursuant to paragraph (5) shall not be considered a member of the retirement system.
(8)
(A)
Notwithstanding paragraph (1), if under the provisions of this subsection an agreement is, after December 31, 1958, made applicable to service performed in positions covered by a retirement system, service performed by an individual in a position covered by such a system may not be excluded from the agreement because such position is also covered under another retirement system.
(B)
Subparagraph (A) shall not apply to service performed by an individual in a position covered under a retirement system if such individual, on the day the agreement is made applicable to service performed in positions covered by such retirement system, is not a member of such system and is a member of another system.
(C)
If an agreement is made applicable, prior to 1959, to service in positions covered by any retirement system, the preceding provisions of this paragraph shall be applicable in the case of such system if the agreement is modified to so provide.
(D)
Except in the case of State agreements modified as provided in subsection (l) and agreements with interstate instrumentalities, nothing in this paragraph shall authorize the application of an agreement to service in any policeman's or fireman's position.
(e)

Effective Date of Agreement
(1)
Any agreement or modification of an agreement under this section shall be effective with respect to services performed after an effective date specified in such agreement or modification; except that such date may not be earlier than the last day of the sixth calendar year preceding the year in which such agreement or modification, as the case may be, is mailed or delivered by other means to the Commissioner of Social Security.
(2)
In the case of service performed by members of any coverage group—
(A)
to which an agreement under this section is made applicable, and
(B)
with respect to which the agreement, or modification thereof making the agreement so applicable, specifies an effective date earlier than the date of execution of such agreement and such modification, respectively,
the agreement shall, if so requested by the State, be applicable to such services (to the extent the agreement was not already applicable) performed before such date of execution and after such effective date by any individual as a member of such coverage group if he is such a member on a date, specified by the State, which is earlier than such date of execution, except that in no case may the date so specified be earlier than the date such agreement or such modification, as the case may be, is mailed, or delivered by other means, to the Commissioner of Social Security.
(3)
Notwithstanding the provisions of paragraph (2) of this subsection, in the case of services performed by individuals as members of any coverage group to which an agreement under this section is made applicable, and with respect to which there were timely paid in good faith to the Secretary of the Treasury amounts equivalent to the sum of the taxes which would have been imposed by sections 3101 and 3111 of the Internal Revenue Code of 1986 had such services constituted employment for purposes of chapter 21 of such Code at the time they were performed, and with respect to which refunds were not obtained, such individuals may, if so requested by the State, be deemed to be members of such coverage group on the date designated pursuant to paragraph (2).
(f)

Duration of Agreement
No agreement under this section may be terminated, either in its entirety or with respect to any coverage group, on or after the date of the enactment of the Social Security Amendments of 1983.
(g)

Instrumentalities of Two or More States
(1)
The Commissioner of Social Security may, at the request of any instrumentality of two or more States, enter into an agreement with such instrumentality for the purpose of extending the insurance system established by this title to services performed by individuals as employees of such instrumentality. Such agreement, to the extent practicable, shall be governed by the provisions of this section applicable in the case of an agreement with a State.
(2)
In the case of any instrumentality of two or more States, if—
(A)
employees of such instrumentality are in positions covered by a retirement system of such instrumentality or of any of such States or any of the political subdivisions thereof, and
(B)
such retirement system is (on, before, or after the date of enactment of this paragraph) divided into two divisions or parts, one of which is composed of positions of members of such system who are employees of such instrumentality and who desire coverage under an agreement under this section and the other of which is composed of positions of members of such system who are employees of such instrumentality and who do not desire such coverage, and
(C)
it is provided that there shall be included in such division or part composed of the positions of members desiring such coverage the positions of employees of such instrumentality who become members of such system after such coverage is extended,
then such retirement system shall, if such instrumentality so desires, be deemed to be a separate retirement system with respect to each such division or part. An individual who is in a position covered by a retirement system divided pursuant to the preceding sentence and who is not a member of such system but is eligible to become a member thereof shall, for purposes of this subsection, be regarded as a member of such system. Coverage under the agreement of any such individual shall be provided under the same conditions, to the extent practicable, as are applicable in the case of the States to which the provisions of subsection (d)(6)(C) apply. The position of any employee of any such instrumentality which is covered by any retirement system to which the first sentence of this paragraph is applicable shall, if such individual is ineligible to become a member of such system on the date of enactment of this paragraph or, if later, the day he first occupies such position, be deemed to be covered by the separate retirement system consisting of the positions of members of the division or part who do not desire coverage under the insurance system established under this title. Services in positions covered by a separate retirement system created pursuant to this subsection (and consisting of the positions of members who desire coverage under an agreement under this section) shall be covered under such agreement on compliance, to the extent practicable, with the same conditions as are applicable to coverage under an agreement under this section of services in positions covered by a separate retirement system created pursuant to subparagraph (C) of subsection (d)(6) or the corresponding provision of prior law (and consisting of the positions of members who desire coverage under such agreement).
(3)
Any agreement with any instrumentality of two or more States entered into pursuant to this Act may, notwithstanding the provisions of subsection (d)(5)(A) and the references thereto in subsections (d)(1) and (d)(3), apply to service performed by employees of such instrumentality in any policeman's or fireman's position covered by a retirement system, but only upon compliance, to the extent practicable, with the requirements of subsection (d)(3). For the purpose of the preceding sentence, a retirement system which covers positions of policemen or firemen or both, and other positions shall, if the instrumentality concerned so desires, be deemed to be a separate retirement system with respect to the positions of such policemen or firemen, or both, as the case may be.
(h)

Delegation of Functions
The Commissioner of Social Security is authorized, pursuant to agreement with the head of any Federal agency, to delegate any of the Commissioner's functions under this section to any officer or employee of such agency and otherwise to utilize the services and facilities of such agency in carrying out such functions, and payment therefor shall be in advance or by way of reimbursement, as may be provided in such agreement.
(i)

Wisconsin Retirement Fund
(1)
Notwithstanding paragraph (1) of subsection (d), the agreement with the State of Wisconsin may, subject to the provisions of this subsection, be modified so as to apply to service performed by employees in positions covered by the Wisconsin retirement fund or any successor system.
(2)
All employees in positions covered by the Wisconsin retirement fund at any time on or after January 1, 1951, shall, for the purposes of subsection (c) only, be deemed to be a separate coverage group; except that there shall be excluded from such separate coverage group all employees in positions to which the agreement applies without regard to this subsection.
(3)
The modification pursuant to this subsection shall exclude (in the case of employees in the coverage group established by paragraph (2) of this subsection) service performed by any individual during any period before he is included under the Wisconsin retirement fund.
(4)
The modification pursuant to this subsection shall, if the State of Wisconsin requests it, exclude (in the case of employees in the coverage group established by paragraph (2) of this subsection) all service performed in policemen's positions, all service performed in firemen's positions, or both.
(j)

Certain Positions No Longer Covered By Retirement Systems
Notwithstanding subsection (d), an agreement with any State entered into under this section prior to the date of the enactment of this subsection may, prior to January 1, 1958, be modified pursuant to subsection (c)(4) so as to apply to services performed by employees, as members of any coverage group to which such agreement already applies (and to which such agreement applied on such date of enactment), in positions (1) to which such agreement does not already apply, (2) which were covered by a retirement system on the date such agreement was made applicable to such coverage group, and (3) which, by reason of action by such State or political subdivision thereof, as may be appropriate, taken prior to the date of the enactment of this subsection, are no longer covered by a retirement system on the date such agreement is made applicable to such services.
(k)

Certain Employees of the State of Utah
Notwithstanding the provisions of subsection (d), the agreement with the State of Utah entered into pursuant to this section may be modified pursuant to subsection (c)(4) so as to apply to services performed for any of the following, the employees performing services for each of which shall constitute a separate coverage group: Weber Junior College, Carbon Junior College, Dixie Junior College, Central Utah Vocational School, Salt Lake Area Vocational School, Center for the Adult Blind, Union High School (Roosevelt, Utah), Utah High School Activities Association, State Industrial School, State Training School, State Board of Education, and Utah School Employees Retirement Board. Any modification agreed to prior to January 1, 1955, may be made effective with respect to services performed by employees as members of any of such coverage groups after an effective date specified therein, except that in no case may any such date be earlier than December 31, 1950. Coverage provided for in this subsection shall not be affected by a subsequent change in the name of a group.
(l)

Policemen and Firemen in Certain States
Any agreement with a State entered into pursuant to this section may, notwithstanding the provisions of subsection (d)(5)(A) and the references thereto in subsections (d)(1) and (d)(3), be modified pursuant to subsection (c)(4) to apply to service performed by employees of such State or any political subdivision thereof in any policeman's or fireman's position covered by a retirement system in effect on or after the date of the enactment of this subsection, but only upon compliance with the requirements of subsection (d)(3). For the purposes of the preceding sentence, a retirement system which covers positions of policemen or firemen, or both, and other positions shall, if the State concerned so desires, be deemed to be a separate retirement system with respect to the positions of such policemen or firemen, or both, as the case may be.
(m)

Positions Compensated Solely on a Fee Basis
(1)
Notwithstanding any other provision in this section, an agreement entered into under this section may be made applicable to service performed after 1967 in any class or classes of positions compensated solely on a fee basis to which such agreement did not apply prior to 1968 only if the State specifically requests that its agreement be made applicable to such service in such class or classes of positions.
(2)
Notwithstanding any other provision in this section, an agreement entered into under this section may be modified, at the option of the State, at any time after 1967, so as to exclude services performed in any class or classes of positions compensation for which is solely on a fee basis.
(3)
Any modification made under this subsection shall be effective with respect to services performed after the last day of the calendar year in which the modification is mailed or delivered by other means to the Commissioner of Social Security.
(4)
If any class or classes of positions have been excluded from coverage under the State agreement by a modification agreed to under this subsection, the Commissioner of Social Security and the State may not thereafter modify such agreement so as to again make the agreement applicable with respect to such class or classes of positions.
(n)
(1)
The Commissioner of Social Security shall, at the request of any State, enter into or modify an agreement with such State under this section for the purpose of extending the provisions of title XVIII, and sections 226 and 226A, to services performed by employees of such State or any political subdivision thereof who are described in paragraph (2).
(2)
This subsection shall apply only with respect to employees—
(A)
whose services are not treated as employment as that term applies under section 210(p) by reason of paragraph (3) of such section; and
(B)
who are not otherwise covered under the State's agreement under this section.
(3)
For purposes of sections 226 and 226A of this Act, services covered under an agreement pursuant to this subsection shall be treated as “medicare qualified government employment”.
(4)
Except as otherwise provided in this subsection, the provisions of this section shall apply with respect to services covered under the agreement pursuant to this subsection.

voluntary agreements for coverage of indian tribal council members
Sec. 218A.
[42 U.S.C. 418a]
(a)

Purpose of Agreement
(1)
The Commissioner of Social Security shall, at the request of any Indian tribe, enter into an agreement with such Indian tribe for the purpose of extending the insurance system established by this title to services performed by individuals as members of such Indian tribe's tribal council. Any agreement with an Indian tribe under this section applies to all members of the tribal council, and shall include all services performed by individuals in their capacity as council members.
(2)
Notwithstanding section 210(a), for the purposes of this title, the term “employment” includes any service included under an agreement entered into under this section.
(b)

Definitions
For the purposes of this section:
(1)
The term “member” means, with respect to a tribal council, an individual appointed or elected to serve as a member or the head of the tribal council.
(2)
The term “tribal council” means the appointed or elected governing body of a federally recognized Indian tribe.
(c)

Effective Date of Agreement
(1)
Any agreement under this section shall be effective with respect to services performed after an effective date specified in such agreement, provided that such date may not be earlier than the first day of the next calendar month after the month in which the agreement is executed by both parties.
(2)
At the request of the Indian tribe at the time of the agreement, such agreement may apply with respect to services performed before such effective date for which there were timely paid in good faith (and not subsequently refunded) to the Secretary of the Treasury amounts equivalent to the sum of the taxes which would have been imposed by sections 3101 and 3111 of the Internal Revenue Code of 1986 had such services constituted employment for purposes of chapter 21 of such Code. No agreement under this section may require payment to be made after the effective date specified in such agreement of any taxes with respect to services performed before such effective date.
(d)

Duration of Agreement
No agreement under this section may be terminated on or after the effective date of the agreement.
Sec. 219.
Repealed.

disability provisions inapplicable if benefit rights impaired
Sec. 220.
[42 U.S.C. 420]
None of the provisions of this title relating to periods of disability shall apply in any case in which their application would result in the denial of monthly benefits or a lump-sum death payment which would otherwise be payable under this title; nor shall they apply in the case of any monthly benefit or lump-sum death payment under this title if such benefit or payment would be greater without their application.

disability determinations
Sec. 221.
[42 U.S.C. 421]
(a)
(1)
In the case of any individual, the determination of whether or not he is under a disability (as defined in section 216(i) or 223(d)) and of the day such disability began, and the determination of the day on which such disability ceases, shall be made by a State agency, notwithstanding any other provision of law, in any State that notifies the Commissioner of Social Security in writing that it wishes to make such disability determinations commencing with such month as the Commissioner of Social Security and the State agree upon, but only if (A) the Commissioner of Social Security has not found, under subsection (b)(1), that the State agency has substantially failed to make disability determinations in accordance with the applicable provisions of this section or rules issued thereunder, and (B) the State has not notified the Commissioner of Social Security, under subsection (b)(2), that it does not wish to make such determinations. If the Commissioner of Social Security once makes the finding described in clause (A) of the preceding sentence, or the State gives the notice referred to in clause (B) of such sentence, the Commissioner of Social Security may thereafter determine whether (and, if so, beginning with which month and under what conditions) the State may again make disability determinations under this paragraph.
(2)
The disability determinations described in paragraph (1) made by a State agency shall be made in accordance with the pertinent provisions of this title and the standards and criteria contained in regulations or other written guidelines of the Commissioner of Social Security pertaining to matters such as disability determinations, the class or classes of individuals with respect to which a State may make disability determinations (if it does not wish to do so with respect to all individuals in the State), and the conditions under which it may choose not to make all such determinations. In addition, the Commissioner of Social Security shall promulgate regulations specifying, in such detail as the Commissioner deems appropriate, performance standards and administrative requirements and procedures to be followed in performing the disability determination function in order to assure effective and uniform administration of the disability insurance program throughout the United States. The regulations may, for example, specify matters such as—
(A)
the administrative structure and the relationship between various units of the State agency responsible for disability determinations,
(B)
the physical location of and relationship among agency staff units, and other individuals or organizations performing tasks for the State agency, and standards for the availability to applicants and beneficiaries of facilities for making disability determinations,
(C)
State agency performance criteria, including the rate of accuracy of decisions, the time periods within which determinations must be made, the procedures for and the scope of review by the Commissioner of Social Security, and, as the Commissioner finds appropriate, by the State, of its performance in individual cases and in classes of cases, and rules governing access of appropriate Federal officials to State offices and to State records relating to its administration of the disability determination function,
(D)
fiscal control procedures that the State agency may be required to adopt, and
(E)
the submission of reports and other data, in such form and at such time as the Commissioner of Social Security may require, concerning the State agency's activities relating to the disability determination.
Nothing in this section shall be construed to authorize the Commissioner of Social Security to take any action except pursuant to law or to regulations promulgated pursuant to law.
(b)
(1)
If the Commissioner of Social Security finds, after notice and opportunity for a hearing, that a State agency is substantially failing to make disability determinations in a manner consistent with the Commissioner's regulations and other written guidelines, the Commissioner of Social Security shall, not earlier than 180 days following the Commissioner's finding, and after the Commissioner has complied with the requirements of paragraph (3), make the disability determinations referred to in subsection (a)(1).
(2)
If a State, having notified the Commissioner of Social Security of its intent to make disability determinations under subsection (a)(1), no longer wishes to make such determinations, it shall notify the Commissioner of Social Security in writing of that fact, and, if an agency of the State is making disability determinations at the time such notice is given, it shall continue to do so for not less than 180 days, or (if later) until the Commissioner of Social Security has complied with the requirements of paragraph (3). Thereafter, the Commissioner of Social Security shall make the disability determinations referred to in subsection (a)(1).
(3)
(A)
The Commissioner of Social Security shall develop and initiate all appropriate procedures to implement a plan with respect to any partial or complete assumption by the Commissioner of Social Security of the disability determination function from a State agency, as provided in this section, under which employees of the affected State agency who are capable of performing duties in the disability determination process for the Commissioner of Social Security shall, notwithstanding any other provision of law, have a preference over any other individual in filling an appropriate employment position with the Commissioner of Social Security (subject to any system established by the Commissioner of Social Security for determining hiring priority among such employees of the State agency) unless any such employee is the administrator, the deputy administrator, or assistant administrator (or his equivalent) of the State agency, in which case the Commissioner of Social Security may accord such priority to such employee.
(B)
The Commissioner of Social Security shall not make such assumption of the disability determination function until such time as the Secretary of Labor determines that, with respect to employees of such State agency who will be displaced from their employment on account of such assumption by the Commissioner of Social Security and who will not be hired by the Commissioner of Social Security to perform duties in the disability determination process, the State has made fair and equitable arrangements to protect the interests of employees so displaced. Such protective arrangements shall include only those provisions which are provided under all applicable Federal, State and local statutes including, but not limited to, (i) the preservation of rights, privileges, and benefits (including continuation of pension rights and benefits) under existing collective-bargaining agreements; (ii) the continuation of collective-bargaining rights; (iii) the assignment of affected employees to other jobs or to retraining programs; (iv) the protection of individual employees against a worsening of their positions with respect to their employment; (v) the protection of health benefits and other fringe benefits; and (vi) the provision of severance pay, as may be necessary.
(c)
(1)
The Commissioner of Social Security may on the Commissioner's own motion or as required under paragraphs (2) and (3) review a determination, made by a State agency under this section, that an individual is or is not under a disability (as defined in section 216(i) or 223(d)) and, as a result of such review, may modify such agency's determination and determine that such individual either is or is not under a disability (as so defined) or that such individual's disability began on a day earlier or later than that determined by such agency, or that such disability ceased on a day earlier or later than that determined by such agency. A review by the Commissioner of Social Security on the Commissioner's own motion of a State agency determination under this paragraph may be made before or after any action is taken to implement such determination.
(2)
The Commissioner of Social Security (in accordance with paragraph (3)) shall review determinations, made by State agencies pursuant to this section, that individuals are under disabilities (as defined in section 216(i) or 223(d)). Any review by the Commissioner of Social Security of a State agency determination under this paragraph shall be made before any action is taken to implement such determination.
(3)
(A)
In carrying out the provisions of paragraph (2) with respect to the review of determinations made by State agencies pursuant to this section that individuals are under disabilities (as defined in section 216(i) or 223(d)), the Commissioner of Social Security shall review—
(i)
at least 50 percent of all such determinations made by State agencies on applications for benefits under this title, and
(ii)
other determinations made by State agencies pursuant to this section to the extent necessary to assure a high level of accuracy in such other determinations.
(B)
In conducting reviews pursuant to subparagraph (A), the Commissioner of Social Security shall, to the extent feasible, select for review those determinations which the Commissioner of Social Security identifies as being the most likely to be incorrect.
(C)
Not later than April 1, 1992, and annually thereafter, the Commissioner of Social Security shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a written report setting forth the number of reviews conducted under subparagraph (A)(ii) during the preceding fiscal year and the findings of the Commissioner of Social Security based on such reviews of the accuracy of the determinations made by State agencies pursuant to this section.
(d)
Any individual dissatisfied with any determination under subsection (a), (b), (c), or (g) shall be entitled to a hearing thereon by the Commissioner of Social Security to the same extent as is provided in section 205(b) with respect to decisions of the Commissioner of Social Security, and to judicial review of the Commissioner's final decision after such hearing as is provided in section 205(g).
(e)
Each State which is making disability determinations under subsection (a)(1) shall be entitled to receive from the Trust Funds, in advance or by way of reimbursement, as determined by the Commissioner of Social Security, the cost to the State of making disability determinations under subsection (a)(1). The Commissioner of Social Security shall from time to time certify such amount as is necessary for this purpose to the Managing Trustee, reduced or increased, as the case may be, by any sum (for which adjustment hereunder has not previously been made) by which the amount certified for any prior period was greater or less than the amount which should have been paid to the State under this subsection for such period; and the Managing Trustee, prior to audit or settlement by the General Accounting Office, shall make payment from the Trust Funds at the time or times fixed by the Commissioner of Social Security, in accordance with such certification. Appropriate adjustments between the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund with respect to the payments made under this subsection shall be made in accordance with paragraph (1) of subsection (g) of section 201 (but taking into account any refunds under subsection (f) of this section) to insure that the Federal Disability Insurance Trust Fund is charged with all expenses incurred which are attributable to the administration of section 223 and the Federal Old-Age and Survivors Insurance Trust Fund is charged with all other expenses.
(f)
All money paid to a State under this section shall be used solely for the purposes for which it is paid; and any money so paid which is not used for such purposes shall be returned to the Treasury of the United States for deposit in the Trust Funds.
(g)
In the case of individuals in a State which does not undertake to perform disability determinations under subsection (a)(1), or which has been found by the Commissioner of Social Security to have substantially failed to make disability determinations in a manner consistent with the Commissioner's regulations and guidelines, in the case of individuals outside the United States, and in the case of any class or classes of individuals for whom no State undertakes to make disability determinations, the determinations referred to in subsection (a) shall be made by the Commissioner of Social Security in accordance with regulations prescribed by the Commissioner.
(h)
An initial determination under subsection (a), (c), (g), or (i) shall not be made until the Commissioner of Social Security has made every reasonable effort to ensure—
(1)
in any case where there is evidence which indicates the existence of a mental impairment, that a qualified psychiatrist or psychologist has completed the medical portion of the case review and any applicable residual functional capacity assessment; and
(2)
in any case where there is evidence which indicates the existence of a physical impairment, that a qualified physician has completed the medical portion of the case review and any applicable residual functional capacity assessment.
(i)
(1)
In any case where an individual is or has been determined to be under a disability, the case shall be reviewed by the applicable State agency or the Commissioner of Social Security (as may be appropriate), for purposes of continuing eligibility, at least once every 3 years, subject to paragraph (2); except that where a finding has been made that such disability is permanent, such reviews shall be made at such times as the Commissioner of Social Security determines to be appropriate. Reviews of cases under the preceding sentence shall be in addition to, and shall not be considered as a substitute for, any other reviews which are required or provided for under or in the administration of this title.
(2)
The requirement of paragraph (1) that cases be reviewed at least every 3 years shall not apply to the extent that the Commissioner of Social Security determines, on a State-by-State basis, that such requirement should be waived to insure that only the appropriate number of such cases are reviewed. The Commissioner of Social Security shall determine the appropriate number of cases to be reviewed in each State after consultation with the State agency performing such reviews, based upon the backlog of pending reviews, the projected number of new applications for disability insurance benefits, and the current and projected staffing levels of the State agency, but the Commissioner of Social Security shall provide for a waiver of such requirement only in the case of a State which makes a good faith effort to meet proper staffing requirements for the State agency and to process case reviews in a timely fashion. The Commissioner of Social Security shall report annually to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives with respect to the determinations made by the Commissioner of Social Security under the preceding sentence.
(3)
The Commissioner of Social Security shall report annually to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives with respect to the number of reviews of continuing disability carried out under paragraph (1), the number of such reviews which result in an initial termination of benefits, the number of requests for reconsideration of such initial termination or for a hearing with respect to such termination under subsection (d), or both, and the number of such initial terminations which are overturned as the result of a reconsideration or hearing.
(4)
In any case in which the Commissioner of Social Security initiates a review under this subsection of the case of an individual who has been determined to be under a disability, the Commissioner of Social Security shall notify such individual of the nature of the review to be carried out, the possibility that such review could result in the termination of benefits, and the right of the individual to provide medical evidence with respect to such review.
(5)
For suspension of reviews under this subsection in the case of an individual using a ticket to work and self-sufficiency, see section 1148(i).
(j)
The Commissioner of Social Security shall prescribe regulations which set forth, in detail—
(1)
the standards to be utilized by State disability determination services and Federal personnel in determining when a consultative examination should be obtained in connection with disability determinations;
(2)
standards for the type of referral to be made; and
(3)
procedures by which the Commissioner of Social Security will monitor both the referral processes used and the product of professionals to whom cases are referred.
Nothing in this subsection shall be construed to preclude the issuance, in accordance with section 553(b)(A) of title 5, United States Code, of interpretive rules, general statements of policy, and rules of agency organization relating to consultative examinations if such rules and statements are consistent with such regulations.
(k)
(1)
The Commissioner of Social Security shall establish by regulation uniform standards which shall be applied at all levels of determination, review, and adjudication in determining whether individuals are under disabilities as defined in section 216(i) or 223(d).
(2)
Regulations promulgated under paragraph (1) shall be subject to the rulemaking procedures established under section 553 of title 5, United States Code.
(l)
(1)
In any case where an individual who is applying for or receiving benefits under this title on the basis of disability by reason of blindness is entitled to receive notice from the Commissioner of Social Security of any decision or determination made or other action taken or proposed to be taken with respect to his or her rights under this title, such individual shall at his or her election be entitled either (A) to receive a supplementary notice of such decision, determination, or action, by telephone, within 5 working days after the initial notice is mailed, (B) to receive the initial notice in the form of a certified letter, or (C) to receive notification by some alternative procedure established by the Commissioner of Social Security and agreed to by the individual.
(2)
The election under paragraph (1) may be made at any time, but an opportunity to make such an election shall in any event be given, to every individual who is an applicant for benefits under this title on the basis of disability by reason of blindness, at the time of his or her application. Such an election, once made by an individual, shall apply with respect to all notices of decisions, determinations, and actions which such individual may thereafter be entitled to receive under this title until such time as it is revoked or changed.
(m)
(1)
In any case where an individual entitled to disability insurance benefits under section 223 or to monthly insurance benefits under section 202 based on such individual's disability (as defined in section 223(d)) has received such benefits for at least 24 months—
(A)
no continuing disability review conducted by the Commissioner may be scheduled for the individual solely as a result of the individual's work activity;
(B)
no work activity engaged in by the individual may be used as evidence that the individual is no longer disabled; and
(C)
no cessation of work activity by the individual may give rise to a presumption that the individual is unable to engage in work.
(2)
An individual to which paragraph (1) applies shall continue to be subject to—
(A)
continuing disability reviews on a regularly scheduled basis that is not triggered by work; and
(B)
termination of benefits under this title in the event that the individual has earnings that exceed the level of earnings established by the Commissioner to represent substantial gainful activity.

rehabilitation services
Sec. 222.
[42 U.S.C. 422]
[Subsections (a) and (b) are repealed.]
(c)

Period of Trial Work
(1)
The term “period of trial work”, with respect to an individual entitled to benefits under section 223, 202(d), 202(e), or 202(f), means a period of months beginning and ending as provided in paragraphs (3) and (4).
(2)
For purposes of sections 216(i) and 223, any services rendered by an individual during a period of trial work shall be deemed not to have been rendered by such individual in determining whether his disability has ceased in a month during such period. For purposes of this subsection the term “services” means activity (whether legal or illegal) which is performed for remuneration or gain or is determined by the Commissioner of Social Security to be of a type normally performed for remuneration or gain.
(3)
A period of trial work for any individual shall begin with the month in which he becomes entitled to disability insurance benefits, or, in the case of an individual entitled to benefits under section 202(d) who has attained the age of eighteen, with the month in which he becomes entitled to such benefits or the month in which he attains the age of eighteen, whichever is later, or, in the case of an individual entitled to widow's or widower's insurance benefits under section 202(e) or (f) who became entitled to such benefits prior to attaining age 60, with the month in which such individual becomes so entitled. Notwithstanding the preceding sentence, no period of trial work may begin for any individual prior to the beginning of the month following the month in which this paragraph is enacted; and no such period may begin for an individual in a period of disability of such individual in which he had a previous period of trial work.
(4)
A period of trial work for any individual shall end with the close of whichever of the following months is the earlier:
(A)
the ninth month, in any period of 60 consecutive months, in which the individual renders services (whether or not such nine months are consecutive); or
(B)
the month in which his disability (as defined in section 223(d)) ceases (as determined after application of paragraph (2) of this subsection).
(5)
Upon conviction by a Federal court, or the imposition of a civil monetary penalty under section 1129, that an individual has fraudulently concealed work activity during a period of trial work from the Commissioner of Social Security by—
(A)
providing false information to the Commissioner of Social Security as to whether the individual had earnings in or for a particular period, or as to the amount thereof;
(B)
receiving disability insurance benefits under this title while engaging in work activity under another identity, including under another social security account number or a number purporting to be a social security account number; or
(C)
taking other actions to conceal work activity with an intent fraudulently to secure payment in a greater amount than is due or when no payment is authorized,
no benefit shall be payable to such individual under this title with respect to a period of disability for any month before such conviction during which the individual rendered services during the period of trial work with respect to which the fraudulently concealed work activity occurred, and amounts otherwise due under this title as restitution, penalties, assessments, fines, or other repayments shall in all cases be in addition to any amounts for which such individual is liable as overpayments by reason of such concealment.
(d)

Costs of Rehabilitation Services From Trust Funds
(1)
For purposes of making vocational rehabilitation services more readily available to disabled individuals who are—
(A)
entitled to disability insurance benefits under section 223,
(B)
entitled to child's insurance benefits under section 202(d) after having attained age 18 (and are under a disability),
(C)
entitled to widow's insurance benefits under section 202(e) prior to attaining age 60, or
(D)
entitled to widower's insurance benefits under section 202(f) prior to attaining age 60,
to the end that savings will accrue to the Trust Funds as a result of rehabilitating such individuals, there are authorized to be transferred from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund each fiscal year such sums as may be necessary to enable the Commissioner of Social Security to reimburse the State for the reasonable and necessary costs of vocational rehabilitation services furnished such individuals (including services during their waiting periods), under a State plan for vocational rehabilitation services approved under title I of the Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.), (i) in cases where the furnishing of such services results in the performance by such individuals of substantial gainful activity for a continuous period of nine months, (ii) in cases where such individuals receive benefits as a result of section 225(b) (except that no reimbursement under this paragraph shall be made for services furnished to any individual receiving such benefits for any period after the close of such individual's ninth consecutive month of substantial gainful activity or the close of the month in which his or her entitlement to such benefits ceases, whichever first occurs), and (iii) in cases where such individuals, without good cause, refuse to continue to accept vocational rehabilitation services or fail to cooperate in such a manner as to preclude their successful rehabilitation. The determination that the vocational rehabilitation services contributed to the successful return of an individual to substantial gainful activity, the determination that an individual, without good cause, refused to continue to accept vocational rehabilitation services or failed to cooperate in such a manner as to preclude successful rehabilitation, and the determination of the amount of costs to be reimbursed under this subsection shall be made by the Commissioner of Social Security in accordance with criteria formulated by the Commissioner.
(2)
In the case of any State which is unwilling to participate or does not have a plan which meets the requirements of paragraph (1), the Commissioner of Social Security may provide such services in such State by agreement or contract with other public or private agencies, organizations, institutions, or individuals. The provision of such services shall be subject to the same conditions as otherwise apply under paragraph (1).
(3)
Payments under this subsection shall be made in advance or by way of reimbursement, with necessary adjustments for overpayments and underpayments.
(4)
Money paid from the Trust Funds under this subsection for the reimbursement of the costs of providing services to individuals who are entitled to benefits under section 223 (including services during their waiting periods), or who are entitled to benefits under section 202(d) on the basis of the wages and self-employment income of such individuals, shall be charged to the Federal Disability Insurance Trust Fund, and all other money paid from the Trust Funds under this subsection shall be charged to the Federal Old-Age and Survivors Insurance Trust Fund. The Commissioner of Social Security shall determine according to such methods and procedures as the Commissioner may deem appropriate—
(A)
the total amount to be reimbursed for the cost of services under this subsection, and
(B)
subject to the provisions of the preceding sentence, the amount which should be charged to each of the Trust Funds.
(5)
For purposes of this subsection the term “vocational rehabilitation services” shall have the meaning assigned to it in title I of the Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.), except that such services may be limited in type, scope, or amount in accordance with regulations of the Commissioner of Social Security designed to achieve the purpose of this subsection.
(e)

Treatment Referrals for Individuals With An Alcoholism or Drug Addiction Condition
In the case of any individual whose benefits under this title are paid to a representative payee pursuant to section 205(j)(1)(B), the Commissioner of Social Security shall refer such individual to the appropriate State agency administering the State plan for substance abuse treatment services approved under subpart II of part B of title XIX of the Public Health Service Act (42 U.S.C. 300x 21 et seq.).

DISABILITY INSURANCE BENEFIT PAYMENTS
Sec. 223.
[42 U.S.C. 423]
(a)

Disability Insurance Benefits
(1)
Every individual who—
(A)
is insured for disability insurance benefits (as determined under subsection (c)(1)),
(B)
has not attained retirement age (as defined in section 216(l)),
(C)
if not a United States citizen or national—
(i)
has been assigned a social security account number that was, at the time of assignment, or at any later time, consistent with the requirements of subclause (I) or (III) of section 205(c)(2)(B)(i); or
(ii)
at the time any quarters of coverage are earned—
(I)
is described in subparagraph (B) or (D) of section 101(a)(15) of the Immigration and Nationality Act,
(II)
is lawfully admitted temporarily to the United States for business (in the case of an individual described in such subparagraph (B)) or the performance as a crewman (in the case of an individual described in such subparagraph (D)), and
(III)
the business engaged in or service as a crewman performed is within the scope of the terms of such individual's admission to the United States.
(D)
has filed application for disability insurance benefits, and
(E)
is under a disability (as defined in subsection (d))
shall be entitled to a disability insurance benefit (i) for each month beginning with the first month after his waiting period (as defined in subsection (c)(2)) in which he becomes so entitled to such insurance benefits, (ii) in the case of an individual who has been medically determined to have amyotrophic lateral sclerosis, for each month beginning with the first month during all of which the individual is under a disability and in which the individual becomes entitled to such insurance benefits, or (iii) for each month beginning with the first month during all of which he is under a disability and in which he becomes so entitled to such insurance benefits, but only if he was entitled to disability insurance benefits which terminated, or had a period of disability (as defined in section 216(i)) which ceased, within the 60-month period preceding the first month in which he is under such disability, and ending with the month preceding whichever of the following months is the earliest: the month in which he dies, the month in which he attains retirement age (as defined in section 216(l)), or, subject to subsection (e), the termination month. For purposes of the preceding sentence, the termination month for any individual shall be the third month following the month in which his disability ceases; except that, in the case of an individual who has a period of trial work which ends as determined by application of section 222(c)(4)(A), the termination month shall be the earlier of (I) the third month following the earliest month after the end of such period of trial work with respect to which such individual is determined to no longer be suffering from a disabling physical or mental impairment, or (II) the third month following the earliest month in which such individual engages or is determined able to engage in substantial gainful activity, but in no event earlier than the first month occurring after the 36 months following such period of trial work in which he engages or is determined able to engage in substantial gainful activity. No payment under this paragraph may be made to an individual who would not meet the definition of disability in subsection (d) except for paragraph (1)(B) thereof for any month in which he engages in substantial gainful activity, and no payment may be made for such month under subsection (b), (c), or (d) of section 202 to any person on the basis of the wages and self-employment income of such individual. In the case of a deceased individual, the requirement of subparagraph (C) may be satisfied by an application for benefits filed with respect to such individual within 3 months after the month in which he died.
(2)
Except as provided in section 202(q) and section 215(b)(2)(A)(ii), such individual's disability insurance benefit for any month shall be equal to his primary insurance amount for such month determined under section 215 as though he had attained age 62 in—
(A)
the first month of his waiting period, or
(B)
in any case in which clause (ii) of paragraph (1) of this subsection is applicable, the first month for which he becomes entitled to such disability insurance benefits,
and as though he had become entitled to old-age insurance benefits in the month in which the application for disability insurance benefits was filed and he was entitled to an old-age insurance benefit for each month for which (pursuant to subsection (b)) he was entitled to a disability insurance benefit. For the purposes of the preceding sentence, in the case of an individual who attained age 62 in or before the first month referred to in subparagraph (A) or (B) of such sentence, as the case may be, the elapsed years referred to in section 215(b)(3) shall not include the year in which he attained age 62, or any year thereafter.
(b)

Filing of Application
An application for disability insurance benefits filed before the first month in which the applicant satisfies the requirements for such benefits (as prescribed in subsection (a)(1)) shall be deemed a valid application (and shall be deemed to have been filed in such first month) only if the applicant satisfies the requirements for such benefits before the Commissioner of Social Security makes a final decision on the application and no request under section 205(b) for notice and opportunity for a hearing thereon is made, or if such a request is made, before a decision based upon the evidence adduced at the hearing is made (regardless of whether such decision becomes the final decision of the Commissioner of Social Security). An individual who would have been entitled to a disability insurance benefit for any month had he filed application therefor before the end of such month shall be entitled to such benefit for such month if such application is filed before the end of the 12th month immediately succeeding such month.
(c)

Definitions of Insured Status and Waiting Period
For purposes of this section—
(1)
An individual shall be insured for disability insurance benefits in any month if—
(A)
he would have been a fully insured individual (as defined in section 214) had he attained age 62 and filed application for benefits under section 202(a) on the first day of such month, and
(B)
(i)
he had not less than 20 quarters of coverage during the 40-quarter period which ends with the quarter in which such month occurred, or
(ii)
if such month ends before the quarter in which he attains (or would attain) age 31, not less than one-half (and not less than 6) of the quarters during the period ending with the quarter in which such month occurred and beginning after he attained the age of 21 were quarters of coverage, or (if the number of quarters in such period is less than 12) not less than 6 of the quarters in the 12-quarter period ending with such quarter were quarters of coverage, or
(iii)
in the case of an individual (not otherwise insured under clause (i)) who, by reason of section 216(i)(3)(B)(ii), had a prior period of disability that began during a period before the quarter in which he or she attained age 31, not less than one-half of the quarters beginning after such individual attained age 21 and ending with the quarter in which such month occurs are quarters of coverage, or (if the number of quarters in such period is less than 12) not less than 6 of the quarters in the 12-quarter period ending with such quarter are quarters of coverage;
except that the provisions of subparagraph (B) of this paragraph shall not apply in the case of an individual who is blind (within the meaning of “blindness” as defined in section 216(i)(1)). For purposes of subparagraph (B) of this paragraph, when the number of quarters in any period is an odd number, such number shall be reduced by one, and a quarter shall not be counted as part of any period if any part of such quarter was included in a period of disability unless such quarter was a quarter of coverage.
(2)
The term “waiting period” means, in the case of any application for disability insurance benefits, the earliest period of five consecutive calendar months—
(A)
throughout which the individual with respect to whom such application is filed has been under a disability, and
(B)
(i)
which begins not earlier than with the first day of the seventeenth month before the month in which such application is filed if such individual is insured for disability insurance benefits in such seventeenth month, or (ii) if he is not so insured in such month, which begins not earlier than with the first day of the first month after such seventeenth month in which he is so insured.
Notwithstanding the preceding provisions of this paragraph, no waiting period may begin for any individual before January 1, 1957.
(d)

Definition of Disability
(1)
The term “disability” means—
(A)
inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment 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; or
(B)
in the case of an individual who has attained the age of 55 and is blind (within the meaning of “blindness” as defined in section 216(i)(1)), inability by reason of such blindness to engage in substantial gainful activity requiring skills or abilities comparable to those of any gainful activity in which he has previously engaged with some regularity and over a substantial period of time.
(2)
For purposes of paragraph (1)(A)—
(A)
An individual shall be determined to be under a disability only if his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy, regardless of whether such work exists in the immediate area in which he lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for work. For purposes of the preceding sentence (with respect to any individual), “work which exists in the national economy” means work which exists in significant numbers either in the region where such individual lives or in several regions of the country.
(B)
In determining whether an individual's physical or mental impairment or impairments are of a sufficient medical severity that such impairment or impairments could be the basis of eligibility under this section, the Commissioner of Social Security shall consider the combined effect of all of the individual's impairments without regard to whether any such impairment, if considered separately, would be of such severity. If the Commissioner of Social Security does find a medically severe combination of impairments, the combined impact of the impairments shall be considered throughout the disability determination process.
(C)
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.
(3)
For purposes of this subsection, a “physical or mental impairment” is an impairment that results from anatomical, physiological, or psychological abnormalities which are demonstrable by medically acceptable clinical and laboratory diagnostic techniques.
(4)
(A)
The Commissioner of Social Security shall by regulations prescribe the criteria for determining when services performed or earnings derived from services demonstrate an individual's ability to engage in substantial gainful activity. No individual who is blind shall be regarded as having demonstrated an ability to engage in substantial gainful activity on the basis of earnings that do not exceed an amount equal to the exempt amount which would be applicable under section 203(f)(8), to individuals described in subparagraph (D) thereof, if section 102 of the Senior Citizens' Right to Work Act of 1996 had not been enacted. Notwithstanding the provisions of paragraph (2), an individual whose services or earnings meet such criteria shall, except for purposes of section 222(c), be found not to be disabled. In determining whether an individual is able to engage in substantial gainful activity by reason of his earnings, where his disability is sufficiently severe to result in a functional limitation requiring assistance in order for him to work, there shall be excluded from such earnings an amount equal to the cost (to such individual) of any attendant care services, medical devices, equipment, prostheses, and similar items and services (not including routine drugs or routine medical services unless such drugs or services are necessary for the control of the disabling condition) which are necessary (as determined by the Commissioner of Social Security in regulations) for that purpose, whether or not such assistance is also needed to enable him to carry out his normal daily functions; except that the amount to be excluded shall be subject to such reasonable limits as the Commissioner of Social Security may prescribe.
(B)
In determining under subparagraph (A) when services performed or earnings derived from services demonstrate an individual's ability to engage in substantial gainful activity, the Commissioner of Social Security shall apply the criteria described in subparagraph (A) with respect to services performed by any individual without regard to the legality of such services.
(C)
(i)
Subject to clause (ii), in determining when earnings derived from services demonstrate an individual’s ability to engage in substantial gainful activity, such earnings shall be presumed to have been earned—
(I)
in making a determination of initial entitlement on the basis of disability, in the month in which the services were performed from which such earnings were derived; and
(II)
in any other case, in the month in which such earnings were paid.
(ii)
A presumption made under clause (i) shall not apply to a determination described in such clause if—
(I)
the Commissioner can reasonably establish, based on evidence readily available at the time of such determination, that the earnings were earned in a different month than when paid; or
(II)
in any case in which there is a determination that no benefit is payable due to earnings, after the individual is notified of the presumption made and provided with an opportunity to submit additional information along with an explanation of what additional information is needed, the individual shows to the satisfaction of the Commissioner that such earnings were earned in another month.
(5)
(A)
An individual shall not be considered to be under a disability unless he furnishes such medical and other evidence of the existence thereof as the Commissioner of Social Security may require. An individual's statement as to pain or other symptoms shall not alone be conclusive evidence of disability as defined in this section; there must be medical signs and findings, established by medically acceptable clinical or laboratory diagnostic techniques, which show the existence of a medical impairment that results from anatomical, physiological, or psychological abnormalities which could reasonably be expected to produce the pain or other symptoms alleged and which, when considered with all evidence required to be furnished under this paragraph (including statements of the individual or his physician as to the intensity and persistence of such pain or other symptoms which may reasonably be accepted as consistent with the medical signs and findings), would lead to a conclusion that the individual is under a disability. Objective medical evidence of pain or other symptoms established by medically acceptable clinical or laboratory techniques (for example, deteriorating nerve or muscle tissue) must be considered in reaching a conclusion as to whether the individual is under a disability. Any non-Federal hospital, clinic, laboratory, or other provider of medical services, or physician not in the employ of the Federal Government, which supplies medical evidence required and requested by the Commissioner of Social Security under this paragraph shall be entitled to payment from the Commissioner of Social Security for the reasonable cost of providing such evidence.
(B)
In making any determination with respect to whether an individual is under a disability or continues to be under a disability, the Commissioner of Social Security shall consider all evidence available in such individual's case record, and shall develop a complete medical history of at least the preceding twelve months for any case in which a determination is made that the individual is not under a disability. In making any determination the Commissioner of Social Security shall make every reasonable effort to obtain from the individual's treating physician (or other treating health care provider) all medical evidence, including diagnostic tests, necessary in order to properly make such determination, prior to evaluating medical evidence obtained from any other source on a consultative basis.
(C)33
(i)
In making any determination with respect to whether an individual is under a disability or continues to be under a disability, the Commissioner of Social Security may not consider (except for good cause as determined by the Commissioner) any evidence furnished by—
(I)
any individual or entity who has been convicted of a felony under section 208 or under section 1632;
(II)
any individual or entity who has been excluded from participation in any Federal health care program under section 1128; or
(III)
any person with respect to whom a civil money penalty or assessment has been imposed under section 1129 for the submission of false evidence.
(ii)
To the extent and at such times as is necessary for the effective implementation of clause (i) of this subparagraph—
(I)
the Inspector General of the Social Security Administration shall transmit to the Commissioner information relating to persons described in subclause (I) or (III) of clause (i);
(II)
the Secretary of Health and Human Services shall transmit to the Commissioner information relating to persons described in subclause (II) of clause (i); and
^{33}
Margin of subparagraph (C) is so in law.
(6)
(A)
Notwithstanding any other provision of this title, any physical or mental impairment which arises in connection with the commission by an individual (after the date of the enactment of this paragraph) of an offense which constitutes a felony under applicable law and for which such individual is subsequently convicted, or which is aggravated in connection with such an offense (but only to the extent so aggravated), shall not be considered in determining whether an individual is under a disability.
(B)
Notwithstanding any other provision of this title, any physical or mental impairment which arises in connection with an individual's confinement in a jail, prison, or other penal institution or correctional facility pursuant to such individual's conviction of an offense (committed after the date of the enactment of this paragraph) constituting a felony under applicable law, or which is aggravated in connection with such a confinement (but only to the extent so aggravated), shall not be considered in determining whether such individual is under a disability for purposes of benefits payable for any month during which such individual is so confined.
(e)
(1)
No benefit shall be payable under subsection (d)(1)(B)(ii), (d)(6)(A)(ii), (d)(6)(B), (e)(1)(B)(ii), or (f)(1)(B)(ii) of section 202 or under subsection (a)(1) of this section to an individual for any month, after the third month, in which he engages in substantial gainful activity during the 36-month period following the end of his trial work period determined by application of section 222(c)(4)(A).
(2)
No benefit shall be payable under section 202 on the basis of the wages and self-employment income of an individual entitled to a benefit under subsection (a)(1) of this section for any month for which the benefit of such individual under subsection (a)(1) is not payable under paragraph (1).
(f)

Standard of Review for Termination of Disability Benefits
A recipient of benefits under this title or title XVIII based on the disability of any individual may be determined not to be entitled to such benefits on the basis of a finding that the physical or mental impairment on the basis of which such benefits are provided has ceased, does not exist, or is not disabling only if such finding is supported by—
(1)
substantial evidence which demonstrates that—
(A)
there has been any medical improvement in the individual's impairment or combination of impairments (other than medical improvement which is not related to the individual's ability to work), and
(B)
the individual is now able to engage in substantial gainful activity; or
(2)
substantial evidence which—
(A)
consists of new medical evidence and a new assessment of the individual's residual functional capacity, and demonstrates that—
(i)
although the individual has not improved medically, he or she is nonetheless a beneficiary of advances in medical or vocational therapy or technology (related to the individual's ability to work), and
(ii)
the individual is now able to engage in substantial gainful activity, or
(B)
demonstrates that—
(i)
although the individual has not improved medically, he or she has undergone vocational therapy (related to the individual's ability to work), and
(ii)
the individual is now able to engage in substantial gainful activity; or
(3)
substantial evidence which demonstrates that, as determined on the basis of new or improved diagnostic techniques or evaluations, the individual's impairment or combination of impairments is not as disabling as it was considered to be at the time of the most recent prior decision that he or she was under a disability or continued to be under a disability, and that therefore the individual is able to engage in substantial gainful activity; or
(4)
substantial evidence (which may be evidence on the record at the time any prior determination of the entitlement to benefits based on disability was made, or newly obtained evidence which relates to that determination) which demonstrates that a prior determination was in error.
Nothing in this subsection shall be construed to require a determination that a recipient of benefits under this title or title XVIII based on an individual's disability is entitled to such benefits if the prior determination was fraudulently obtained or if the individual is engaged in substantial gainful activity, cannot be located, or fails, without good cause, to cooperate in a review of the entitlement to such benefits or to follow prescribed treatment which would be expected to restore his or her ability to engage in substantial gainful activity. In making for purposes of the preceding sentence any determination relating to fraudulent behavior by any individual or failure by any individual without good cause to cooperate or to take any required action, the Commissioner of Social Security shall specifically take into account any physical, mental, educational, or linguistic limitation such individual may have (including any lack of facility with the English language). Any determination under this section shall be made on the basis of all the evidence available in the individual's case file, including new evidence concerning the individual's prior or current condition which is presented by the individual or secured by the Commissioner of Social Security. Any determination made under this section shall be made on the basis of the weight of the evidence and on a neutral basis with regard to the individual's condition, without any initial inference as to the presence or absence of disability being drawn from the fact that the individual has previously been determined to be disabled. For purposes of this subsection, a benefit under this title is based on an individual's disability if it is a disability insurance benefit, a child's, widow's, or widower's insurance benefit based on disability, or a mother's or father's insurance benefit based on the disability of the mother's or father's child who has attained age 16.
(g)

Continued Payment of Disability Benefits During Appeal
(1)
In any case where—
(A)
an individual is a recipient of disability insurance benefits, or of child's, widow's, or widower's insurance benefits based on disability,
(B)
the physical or mental impairment on the basis of which such benefits are payable is found to have ceased, not to have existed, or to no longer be disabling, and as a consequence such individual is determined not to be entitled to such benefits, and
(C)
a timely request for a hearing under section 221(d), or for an administrative review prior to such hearing, is pending with respect to the determination that he is not so entitled,
such individual may elect (in such manner and form and within such time as the Commissioner of Social Security shall by regulations prescribe) to have the payment of such benefits, the payment of any other benefits under this title based on such individual's wages and self-employment income, the payment of mother's or father's insurance benefits to such individual's mother or father based on the disability of such individual as a child who has attained age 16, and the payment of benefits under title XVIII based on such individual's disability, continued for an additional period beginning with the first month beginning after the date of the enactment of this subsection for which (under such determination) such benefits are no longer otherwise payable, and ending with the earlier of (i) the month preceding the month in which a decision is made after such a hearing, or (ii) the month preceding the month in which no such request for a hearing or an administrative review is pending.
(2)
(A)
If an individual elects to have the payment of his benefits continued for an additional period under paragraph (1), and the final decision of the Commissioner of Social Security affirms the determination that he is not entitled to such benefits, any benefits paid under this title pursuant to such election (for months in such additional period) shall be considered overpayments for all purposes of this title, except as otherwise provided in subparagraph (B).
(B)
If the Commissioner of Social Security determines that the individual's appeal of his termination of benefits was made in good faith, all of the benefits paid pursuant to such individual's election under paragraph (1) shall be subject to waiver consideration under the provisions of section 204. In making for purposes of this subparagraph any determination of whether any individual's appeal is made in good faith, the Commissioner of Social Security shall specifically take into account any physical, mental, educational, or linguistic limitation such individual may have (including any lack of facility with the English language).
(h)

Interim Benefits in Cases of Delayed Final Decisions
(1)
In any case in which an administrative law judge has determined after a hearing as provided under section 205(b) that an individual is entitled to disability insurance benefits or child's, widow's, or widower's insurance benefits based on disability and the Commissioner of Social Security has not issued the Commissioner's final decision in such case within 110 days after the date of the administrative law judge's determination, such benefits shall be currently paid for the months during the period beginning with the month preceding the month in which such 110 day period expires and ending with the month preceding the month in which such final decision is issued.
(2)
For purposes of paragraph (1), in determining whether the 110-day period referred to in paragraph (1) has elapsed, any period of time for which the action or inaction of such individual or such individual's representative without good cause results in the delay in the issuance of the Commissioner's final decision shall not be taken into account to the extent that such period of time exceeds 20 calendar days.
(3)
Any benefits currently paid under this title pursuant to this subsection (for the months described in paragraph (1)) shall not be considered overpayments for any purpose of this title (unless payment of such benefits was fraudulently obtained), and such benefits shall not be treated as past-due benefits for purposes of section 206(b)(1).
(i)

Reinstatement of Entitlement
(1)
(A)
Entitlement to benefits described in subparagraph (B)(i)(I) shall be reinstated in any case where the Commissioner determines that an individual described in subparagraph (B) has filed a request for reinstatement meeting the requirements of paragraph (2)(A) during the period prescribed in subparagraph (C). Reinstatement of such entitlement shall be in accordance with the terms of this subsection.
(B)
An individual is described in this subparagraph if—
(i)
prior to the month in which the individual files a request for reinstatement—
(I)
the individual was entitled to benefits under this section or section 202 on the basis of disability pursuant to an application filed therefor; and
(II)
such entitlement terminated due to the performance of substantial gainful activity;
(ii)
the individual is under a disability and the physical or mental impairment that is the basis for the finding of disability is the same as (or related to) the physical or mental impairment that was the basis for the finding of disability that gave rise to the entitlement described in clause (i); and
(iii)
the individual's disability renders the individual unable to perform substantial gainful activity.
(C)
(i)
Except as provided in clause (ii), the period prescribed in this subparagraph with respect to an individual is 60 consecutive months beginning with the month following the most recent month for which the individual was entitled to a benefit described in subparagraph (B)(i)(I) prior to the entitlement termination described in subparagraph (B)(i)(II).
(ii)
In the case of an individual who fails to file a reinstatement request within the period prescribed in clause (i), the Commissioner may extend the period if the Commissioner determines that the individual had good cause for the failure to so file.
(2)
(A)
(i)
A request for reinstatement shall be filed in such form, and containing such information, as the Commissioner may prescribe.
(ii)
A request for reinstatement shall include express declarations by the individual that the individual meets the requirements specified in clauses (ii) and (iii) of paragraph (1)(B).
(B)
A request for reinstatement filed in accordance with subparagraph (A) may constitute an application for benefits in the case of any individual who the Commissioner determines is not entitled to reinstated benefits under this subsection.
(3)
In determining whether an individual meets the requirements of paragraph (1)(B)(ii), the provisions of subsection (f) shall apply.
(4)
(A)
(i)
Subject to clause (ii), entitlement to benefits reinstated under this subsection shall commence with the benefit payable for the month in which a request for reinstatement is filed.
(ii)
An individual whose entitlement to a benefit for any month would have been reinstated under this subsection had the individual filed a request for reinstatement before the end of such month shall be entitled to such benefit for such month if such request for reinstatement is filed before the end of the twelfth month immediately succeeding such month.
(B)
(i)
Subject to clauses (ii) and (iii), the amount of the benefit payable for any month pursuant to the reinstatement of entitlement under this subsection shall be determined in accordance with the provisions of this title.
(ii)
For purposes of computing the primary insurance amount of an individual whose entitlement to benefits under this section is reinstated under this subsection, the date of onset of the individual's disability shall be the date of onset used in determining the individual's most recent period of disability arising in connection with such benefits payable on the basis of an application.
(iii)
Benefits under this section or section 202 payable for any month pursuant to a request for reinstatement filed in accordance with paragraph (2) shall be reduced by the amount of any provisional benefit paid to such individual for such month under paragraph (7).
(C)
No benefit shall be payable pursuant to an entitlement reinstated under this subsection to an individual for any month in which the individual engages in substantial gainful activity.
(D)
The entitlement of any individual that is reinstated under this subsection shall end with the benefits payable for the month preceding whichever of the following months is the earliest:
(i)
The month in which the individual dies.
(ii)
The month in which the individual attains retirement age.
(iii)
The third month following the month in which the individual's disability ceases.
(5)
Whenever an individual's entitlement to benefits under this section is reinstated under this subsection, entitlement to benefits payable on the basis of such individual's wages and self-employment income may be reinstated with respect to any person previously entitled to such benefits on the basis of an application if the Commissioner determines that such person satisfies all the requirements for entitlement to such benefits except requirements related to the filing of an application. The provisions of paragraph (4) shall apply to the reinstated entitlement of any such person to the same extent that they apply to the reinstated entitlement of such individual.
(6)
An individual to whom benefits are payable under this section or section 202 pursuant to a reinstatement of entitlement under this subsection for 24 months (whether or not consecutive) shall, with respect to benefits so payable after such twenty-fourth month, be deemed for purposes of paragraph (1)(B)(i)(I) and the determination, if appropriate, of the termination month in accordance with subsection (a)(1) of this section, or subsection (d)(1), (e)(1), or (f)(1) of section 202, to be entitled to such benefits on the basis of an application filed therefor.
(7)
(A)
An individual described in paragraph (1)(B) who files a request for reinstatement in accordance with the provisions of paragraph (2)(A) shall be entitled to provisional benefits payable in accordance with this paragraph, unless the Commissioner determines that the individual does not meet the requirements of paragraph (1)(B)(i) or that the individual's declaration under paragraph (2)(A)(ii) is false. Any such determination by the Commissioner shall be final and not subject to review under subsection (b) or (g) of section 205.
(B)
The amount of a provisional benefit for a month shall equal the amount of the last monthly benefit payable to the individual under this title on the basis of an application increased by an amount equal to the amount, if any, by which such last monthly benefit would have been increased as a result of the operation of section 215(i).
(C)
(i)
Provisional benefits shall begin with the month in which a request for reinstatement is filed in accordance with paragraph (2)(A).
(ii)
Provisional benefits shall end with the earliest of—
(I)
the month in which the Commissioner makes a determination regarding the individual's entitlement to reinstated benefits;
(II)
the fifth month following the month described in clause (i);
(III)
the month in which the individual performs substantial gainful activity; or
(IV)
the month in which the Commissioner determines that the individual does not meet the requirements of paragraph (1)(B)(i) or that the individual's declaration made in accordance with paragraph (2)(A)(ii) is false.
(D)
In any case in which the Commissioner determines that an individual is not entitled to reinstated benefits, any provisional benefits paid to the individual under this paragraph shall not be subject to recovery as an overpayment unless the Commissioner determines that the individual knew or should have known that the individual did not meet the requirements of paragraph (1)(B).
(j)

Limitation on Payments to Prisoners
For provisions relating to limitation on payments to prisoners, see section 202(x).

reduction of benefits based on disability
Sec. 224.
[42 U.S.C. 424a]
(a)
If for any month prior to the month in which an individual attains retirement age (as defined in section 216(l)(1))34—
^{34}
Section 201(a) of division B of Public Law 113–295 strikes “the age of 65” and inserts “retirement age (as defined in section 216(l)(1))”. Subsection (b) of such Public Law states that amendment “shall apply with respect to any individual who attains 65 years of age on or after the date that is 12 months after the date of the enactment of this Act”.
(1)
such individual is entitled to benefits under section 223, and
(2)
such individual is entitled for such month to—
(A)
periodic benefits on account of his or her total or partial disability (whether or not permanent) under a workmen's compensation law or plan of the United States or a State, or
(B)
periodic benefits on account of his or her total or partial disability (whether or not permanent) under any other law or plan of the United States, a State, a political subdivision (as that term is used in section 218(b)(2)), or an instrumentality of two or more States (as that term is used in section 218(g)), other than (i) benefits payable under title 38, United States Code, (ii) benefits payable under a program of assistance which is based on need, (iii) benefits based on service all or substantially all of which was included under an agreement entered into by a State and the Commissioner of Social Security under section 218, and (iv) benefits under a law or plan of the United States based on service all or substantially all of which is employment as defined in section 210,
the total of his benefits under section 223 for such month and of any benefits under section 202 for such month based on his wages and self-employment income shall be reduced (but not below zero) by the amount by which the sum of—
(3)
such total of benefits under sections 223 and 202 for such month, and
(4)
such periodic benefits payable (and actually paid) for such month to such individual under such laws or plans,
exceeds the higher of—
(5)
80 per centum of his “average current earnings”, or
(6)
the total of such individual's disability insurance benefits under section 223 for such month and of any monthly insurance benefits under section 202 for such month based on his wages and self-employment income, prior to reduction under this section.
In no case shall the reduction in the total of such benefits under sections 223 and 202 for a month (in a continuous period of months) reduce such total below the sum of—
(7)
the total of the benefits under sections 223 and 202, after reduction under this section, with respect to all persons entitled to benefits on the basis of such individual's wages and self-employment income for such month which were determined for such individual and such persons for the first month for which reduction under this section was made (or which would have been so determined if all of them had been so entitled in such first month), and
(8)
any increase in such benefits with respect to such individual and such persons, before reduction under this section, which is made effective for months after the first month for which reduction under this section is made.
For purposes of clause (5), an individual's average current earnings means the largest of (A) the average monthly wage (determined under section 215(b) as in effect prior to January 1979) used for purposes of computing his benefits under section 223, (B) one-sixtieth of the total of his wages and self-employment income (computed without regard to the limitations specified in sections 209(a)(1) and 211(b)(1)) for the five consecutive calendar years after 1950 for which such wages and self-employment income were highest, or (C) one-twelfth of the total of his wages and self-employment income (computed without regard to the limitations specified in sections 209(a)(1) and 211(b)(1)) for the calendar year in which he had the highest such wages and income during the period consisting of the calendar year in which he became disabled (as defined in section 223(d)) and the five years preceding that year.
(b)
If any periodic benefit for a total or partial disability under a law or plan described in subsection (a)(2) is payable on other than a monthly basis (excluding a benefit payable as a lump sum except to the extent that it is a commutation of, or a substitute for, periodic payments), the reduction under this section shall be made at such time or times and in such amounts as the Commissioner of Social Security finds will approximate as nearly as practicable the reduction prescribed by subsection (a).
(c)
Reduction of benefits under this section shall be made after any reduction under subsection (a) of section 203, but before deductions under such section and under section 222(b).
(d)
The reduction of benefits required by this section shall not be made if the law or plan described in subsection (a)(2) under which a periodic benefit is payable provides for the reduction thereof when anyone is entitled to benefits under this title on the basis of the wages and self-employment income of an individual entitled to benefits under section 223, and such law or plan so provided on February 18, 1981.
(e)
If it appears to the Commissioner of Social Security that an individual may be eligible for periodic benefits under a law or plan which would give rise to reduction under this section, he may require, as a condition of certification for payment of any benefits under section 223 to any individual for any month and of any benefits under section 202 for such month based on such individual's wages and self-employment income, that such individual certify (i) whether he has filed or intends to file any claim for such periodic benefits, and (ii) if he has so filed, whether there has been a decision on such claim. The Commissioner of Social Security may, in the absence of evidence to the contrary, rely upon such a certification by such individual that he has not filed and does not intend to file such a claim, or that he has so filed and no final decision thereon has been made, in certifying benefits for payment pursuant to section 205(i).
(f)
(1)
In the second calendar year after the year in which reduction under this section in the total of an individual's benefits under section 223 and any benefits under section 202 based on his wages and self-employment income was first required (in a continuous period of months), and in each third year thereafter, the Commissioner of Social Security shall redetermine the amount of such benefits which are still subject to reduction under this section; but such redetermination shall not result in any decrease in the total amount of benefits payable under this title on the basis of such individual's wages and self-employment income. Such redetermined benefit shall be determined as of, and shall become effective with, the January following the year in which such redetermination was made.
(2)
In making the redetermination required by paragraph (1), the individual's average current earnings (as defined in subsection (a)) shall be deemed to be the product of—
(A)
his average current earnings as initially determined under subsection (a); and
(B)
the ratio of (i) the national average wage index (as defined in section 209(k)(1)) for the calendar year before the year in which such redetermination is made to (ii) the national average wage index (as so defined) for the calendar year before the year in which the reduction was first computed (but not counting any reduction made in benefits for a previous period of disability).
Any amount determined under this paragraph which is not a multiple of $1 shall be reduced to the next lower multiple of $1.
(g)
Whenever a reduction in the total of benefits for any month based on an individual's wages and self-employment income is made under this section, each benefit, except the disability insurance benefit, shall first be proportionately decreased, and any excess of such reduction over the sum of all such benefits other than the disability insurance benefits shall then be applied to such disability insurance benefit.
(h)
(1)
Notwithstanding any other provision of law, the head of any Federal agency shall provide such information within its possession as the Commissioner of Social Security may require for purposes of making a timely determination of the amount of the reduction, if any, required by this section in benefits payable under this title, or verifying other information necessary in carrying out the provisions of this section.
(2)
The Commissioner of Social Security is authorized to enter into agreements with States, political subdivisions, and other organizations that administer a law or plan subject to the provisions of this section, in order to obtain such information as he may require to carry out the provisions of this section.

ADDITIONAL RULES RELATING TO BENEFITS BASED ON DISABILITY
Sec. 225.
[42 U.S.C. 425]
(a)

Suspension of Benefits
If the Commissioner of Social Security, on the basis of information obtained by or submitted to him, believes that an individual entitled to benefits under section 223, or that a child who has attained the age of eighteen and is entitled to benefits under section 202(d), or that a widow or surviving divorced wife who has not attained age 60 and is entitled to benefits under section 202(e), or that a widower or surviving divorced husband who has not attained age 60 and is entitled to benefits under section 202(f), may have ceased to be under a disability, the Commissioner of Social Security may suspend the payment of benefits under such section 202(d), 202(e), 202(f), or 223 until it is determined (as provided in section 221) whether or not such individual's disability has ceased or until the Commissioner of Social Security believes that such disability has not ceased. In the case of any individual whose disability is subject to determination under an agreement with a State under section 221(b), the Commissioner of Social Security shall promptly notify the appropriate State of his action under this subsection and shall request a prompt determination of whether such individual's disability has ceased. For purposes of this subsection, the term “disability” has the meaning assigned to such term in section 223(d). Whenever the benefits of an individual entitled to a disability insurance benefit are suspended for any month, the benefits of any individual entitled thereto under subsection (b), (c), or (d) of section 202, on the basis of the wages and self-employment income of such individual, shall be suspended for such month. The first sentence of this subsection shall not apply to any child entitled to benefits under section 202(d), if he has attained the age of 18 but has not attained the age of 22, for any month during which he is a full-time student (as defined and determined under section 202(d)).
(b)

Continued Payments During Rehabilitation Program
Notwithstanding any other provision of this title, payment to an individual of benefits based on disability (as described in the first sentence of subsection (a)) shall not be terminated or suspended because the physical or mental impairment, on which the individual's entitlement to such benefits is based, has or may have ceased, if—
(1)
such individual is participating in a program consisting of the Ticket to Work and Self-Sufficiency Program under section 1148 or another program of vocational rehabilitation services, employment services, or other support services approved by the Commissioner of Social Security, and
(2)
the Commissioner of Social Security determines that the completion of such program, or its continuation for a specified period of time, will increase the likelihood that such individual may (following his participation in such program) be permanently removed from the disability benefit rolls.
(c)

Access to Information Held by Payroll Data Providers.-
(1)
The Commissioner of Social Security may require each individual who applies for or is entitled to monthly insurance benefits under subsections (d)(1)(B)(ii), (d)(6)(A)(ii), (d)(6)(B), (e)(1)(B)(ii), and (f)(1)(B)(ii) of section 202 and subsection (a)(1) of section 223 to provide authorization by the individual for the Commissioner to obtain from any payroll data provider (as defined in section 1184(c)(1)) any record held by the payroll data provider with respect to the individual whenever the Commissioner determines the record is needed in connection with a determination of initial or ongoing entitlement to such benefits.
(2)
An authorization provided by an individual under this subsection shall remain effective until the earliest of—
(A)
the rendering of a final adverse decision on the individual’s application or entitlement to benefits under this title;
(B)
the termination of the individual’s entitlement to benefits under this title; or
(C)
the express revocation by the individual of the authorization, in a written notification to the Commissioner.
(3)
The Commissioner of Social Security is not required to furnish any authorization obtained pursuant to this subsection to the payroll data provider.
(4)
The Commissioner shall inform any person who provides authorization pursuant to this clause of the duration and scope of the authorization.
(5)
If an individual who applies for or is entitled to benefits under this title refuses to provide, or revokes, any authorization under this subsection, subsection (d) shall not apply to such individual beginning with the first day of the first month in which he or she refuses or revokes such authorization.
(d)
An individual who has authorized the Commissioner of Social Security to obtain records from a payroll data provider under subsection (c) shall not be subject to a penalty under section 1129A for any omission or error with respect to such individual’s wages as reported by the payroll data provider.

entitlement to hospital insurance benefits
Sec. 226.
[42 U.S.C. 426]
(a)
Every individual who—
(1)
has attained age 65, and
(2)
(A)
is entitled to monthly insurance benefits under section 202, would be entitled to those benefits except that he has not filed an application therefor (or application has not been made for a benefit the entitlement to which for any individual is a condition of entitlement therefor), or would be entitled to such benefits but for the failure of another individual, who meets all the criteria of entitlement to monthly insurance benefits, to meet such criteria throughout a month, and, in conformity with regulations of the Secretary, files an application for hospital insurance benefits under part A of title XVIII,
(B)
is a qualified railroad retirement beneficiary, or
(C)
(i)
would meet the requirements of subparagraph (A) upon filing application for the monthly insurance benefits involved if medicare qualified government employment (as defined in section 210(p)) were treated as employment (as defined in section 210(a)) for purposes of this title, and (ii) files an application, in conformity with regulations of the Secretary, for hospital insurance benefits under part A of title XVIII,
shall be entitled to hospital insurance benefits under part A of title XVIII for each month for which he meets the condition specified in paragraph (2), beginning with the first month after June 1966 for which he meets the conditions specified in paragraphs (1) and (2).
(b)
Every individual who—
(1)
has not attained age 65, and
(2)
(A)
is entitled to, and has for 24 calendar months been entitled to, (i) disability insurance benefits under section 223 or (ii) child's insurance benefits under section 202(d) by reason of a disability (as defined in section 223(d)) or (iii) widow's insurance benefits under section 202(e) or widower's insurance benefits under section 202(f) by reason of a disability (as defined in section 223(d)), or
(B)
is, and has been for not less than 24 months, a disabled qualified railroad retirement beneficiary, within the meaning of section 7(d) of the Railroad Retirement Act of 1974, or
(C)
(i)
has filed an application, in conformity with regulations of the Secretary, for hospital insurance benefits under part A of title XVIII pursuant to this subparagraph, and
(ii)
would meet the requirements of subparagraph (A) (as determined under the disability criteria, including reviews, applied under this title), including the requirement that he has been entitled to the specified benefits for 24 months, if—
(I)
medicare qualified government employment (as defined in section 210(p)) were treated as employment (as defined in section 210(a)) for purposes of this title, and
(II)
the filing of the application under clause (i) of this subparagraph were deemed to be the filing of an application for the disability-related benefits referred to in clause (i), (ii), or (iii) of subparagraph (A),
shall be entitled to hospital insurance benefits under part A of title XVIII for each month beginning with the later of (I) July 1973 or (II) the twenty-fifth month of his entitlement or status as a qualified railroad retirement beneficiary described in paragraph (2), and ending (subject to the last sentence of this subsection) with the month following the month in which notice of termination of such entitlement to benefits or status as a qualified railroad retirement beneficiary described in paragraph (2) is mailed to him, or if earlier, with the month before the month in which he attains age 65. In applying the previous sentence in the case of an individual described in paragraph (2)(C), the “twenty-fifth month of his entitlement” refers to the first month after the twenty-fourth month of entitlement to specified benefits referred to in paragraph (2)(C) and “notice of termination of such entitlement” refers to a notice that the individual would no longer be determined to be entitled to such specified benefits under the conditions described in that paragraph. For purposes of this subsection, an individual who has had a period of trial work which ended as provided in section 222(c)(4)(A), and whose entitlement to benefits or status as a qualified railroad retirement beneficiary as described in paragraph (2) has subsequently terminated, shall be deemed to be entitled to such benefits or to occupy such status (notwithstanding the termination of such entitlement or status) for the period of consecutive months throughout all of which the physical or mental impairment, on which such entitlement or status was based, continues, and throughout all of which such individual would have been entitled to monthly insurance benefits under title II or as a qualified railroad retirement beneficiary had such individual been unable to engage in substantial gainful activity, but not in excess of 78 such months. In determining when an individual's entitlement or status terminates for purposes of the preceding sentence, the term “36 months” in the second sentence of section 223(a)(1), in section 202(d)(1)(G)(i), in the last sentence of section 202(e)(1), and in the last sentence of section 202(f)(1) shall be applied as though it read “15 months”.
(c)
For purposes of subsection (a)—
(1)
entitlement of an individual to hospital insurance benefits for a month shall consist of entitlement to have payment made under, and subject to the limitations in, part A of title XVIII on his behalf for inpatient hospital services, post-hospital extended care services, and home health services (as such terms are defined in part C of title XVIII) furnished him in the United States (or outside the United States in the case of inpatient hospital services furnished under the conditions described in section 1814(f)) during such month; except that (A) no such payment may be made for post-hospital extended care services furnished before January 1967, and (B) no such payment may be made for post-hospital extended care services unless the discharge from the hospital required to qualify such services for payment under part A of title XVIII occurred (i) after June 30, 1966, or on or after the first day of the month in which he attains age 65, whichever is later, or (ii) if he was entitled to hospital insurance benefits pursuant to subsection (b), at a time when he was so entitled; and
(2)
an individual shall be deemed entitled to monthly insurance benefits under section 202 or section 223, or to be a qualified railroad retirement beneficiary, for the month in which he died if he would have been entitled to such benefits, or would have been a qualified railroad retirement beneficiary, for such month had he died in the next month.
(d)
For purposes of this section, the term “qualified railroad retirement beneficiary” means an individual whose name has been certified to the Secretary by the Railroad Retirement Board under section 7(d) of the Railroad Retirement Act of 1974. An individual shall cease to be a qualified railroad retirement beneficiary at the close of the month preceding the month which is certified by the Railroad Retirement Board as the month in which he ceased to meet the requirements of section 7(d) of the Railroad Retirement Act of 1974.
(e)
(1)
(A)
For purposes of determining entitlement to hospital insurance benefits under subsection (b) in the case of widows and widowers described in paragraph (2)(A)(iii) thereof—
(i)
the term “age 60” in sections 202(e)(1)(B)(ii), 202(e)(4), 202(f)(1)(B)(ii), and 202(f)(4) shall be deemed to read “age 65”; and
(ii)
the phrase “before she attained age 60” in the matter following subparagraph (F) of section 202(e)(1) and the phrase “before he attained age 60” in the matter following subparagraph (F) of section 202(f)(1) shall each be deemed to read “based on a disability”.
(B)
For purposes of subsection (b)(2)(A)(iii), each month in the period commencing with the first month for which an individual is first eligible for supplemental security income benefits under title XVI, or State supplementary payments of the type referred to in section 1616(a) of this Act (or payments of the type described in section 212(a) of Public Law 93–66) which are paid by the Secretary under an agreement referred to in section 1616(a) (or in section 212(b) of Public Law 93–66), shall be included as one of the 24 months for which such individual must have been entitled to widow's or widower's insurance benefits on the basis of disability in order to become entitled to hospital insurance benefits on that basis.
(2)
For purposes of determining entitlement to hospital insurance benefits under subsection (b) in the case of an individual under age 65 who is entitled to benefits under section 202, and who was entitled to widow's insurance benefits or widower's insurance benefits based on disability for the month before the first month in which such individual was so entitled to old-age insurance benefits (but ceased to be entitled to such widow's or widower's insurance benefits upon becoming entitled to such old-age insurance benefits), such individual shall be deemed to have continued to be entitled to such widow's insurance benefits or widower's insurance benefits for and after such first month.
(3)
For purposes of determining entitlement to hospital insurance benefits under subsection (b), any disabled widow aged 50 or older who is entitled to mother's insurance benefits (and who would have been entitled to widow's insurance benefits by reason of disability if she had filed for such widow's benefits), and any disabled widower aged 50 or older who is entitled to father's insurance benefits (and who would have been entitled to widower's insurance benefits by reason of disability if he had filed for such widower's benefits), shall, upon application for such hospital insurance benefits be deemed to have filed for such widow's or widower's insurance benefits.
(4)
For purposes of determining entitlement to hospital insurance benefits under subsection (b) in the case of an individual described in clause (iii) of subsection (b)(2)(A), the entitlement of such individual to widow's or widower's insurance benefits under section 202(e) or (f) by reason of a disability shall be deemed to be the entitlement to such benefits that would result if such entitlement were determined without regard to the provisions of section 202(j)(4).
(f)
For purposes of subsection (b) (and for purposes of section 1837(g)(1) of this Act and section 7(d)(2)(ii) of the Railroad Retirement Act of 1974), the 24 months for which an individual has to have been entitled to specified monthly benefits on the basis of disability in order to become entitled to hospital insurance benefits on such basis effective with any particular month (or to be deemed to have enrolled in the supplementary medical insurance program, on the basis of such entitlement, by reason of section 1837(f)), where such individual had been entitled to specified monthly benefits of the same type during a previous period which terminated—
(1)
more than 60 months before the month in which his current disability began in any case where such monthly benefits were of the type specified in clause (A)(i) or (B) of subsection (b)(2), or
(2)
more than 84 months before the month in which his current disability began in any case where such monthly benefits were of the type specified in clause (A)(ii) or (A)(iii) of such subsection,
shall not include any month which occurred during such previous period, unless the physical or mental impairment which is the basis for disability is the same as (or directly related to) the physical or mental impairment which served as the basis for disability in such previous period.
(g)
The Secretary and Director of the Office of Personnel Management shall jointly prescribe and carry out procedures designed to assure that all individuals who perform medicare qualified government employment by virtue of service described in section 210(a)(5) are fully informed with respect to (1) their eligibility or potential eligibility for hospital insurance benefits (based on such employment) under part A of title XVIII, (2) the requirements for and conditions of such eligibility, and (3) the necessity of timely application as a condition of entitlement under subsection (b)(2)(C), giving particular attention to individuals who apply for an annuity under chapter 83 of title 5, United States Code, or under another similar Federal retirement program, and whose eligibility for such an annuity is or would be based on a disability.
(h)
For purposes of applying this section in the case of an individual medically determined to have amyotrophic lateral sclerosis (ALS), the following special rules apply:
(1)
Subsection (b) shall be applied as if there were no requirement for any entitlement to benefits, or status, for a period longer than 1 month.
(2)
The entitlement under such subsection shall begin with the first month (rather than twenty-fifth month) of entitlement or status.
(3)
Subsection (f) shall not be applied.
(i)
For entitlement to hospital insurance benefits in the case of certain uninsured individuals, see section 103 of the Social Security Amendments of 1965.

special provisions relating to coverage under medicare program for end stage renal disease
Sec. 226A.
[42 U.S.C. 426–1]
(a)
Notwithstanding any provision to the contrary in section 226 or title XVIII, every individual who—
(1)
(A)
is fully or currently insured (as such terms are defined in section 214), or would be fully or currently insured if (i) his service as an employee (as defined in the Railroad Retirement Act of 1974) after December 31, 1936, were included within the meaning of the term “employment” for purposes of this title, and (ii) his medicare qualified government employment (as defined in section 210(p)) were included within the meaning of the term “employment” for purposes of this title;
(B)
(i)
is entitled to monthly insurance benefits under this title, (ii) is entitled to an annuity under the Railroad Retirement Act of 1974, or (iii) would be entitled to a monthly insurance benefit under this title if medicare qualified government employment (as defined in section 210(p)) were included within the meaning of the term “employment” for purposes of this title; or
(C)
is the spouse or dependent child (as defined in regulations) of an individual described in subparagraph (A) or (B);
(2)
is medically determined to have end stage renal disease; and
(3)
has filed an application for benefits under this section;
shall, in accordance with the succeeding provisions of this section, be entitled to benefits under part A and eligible to enroll under part B of title XVIII, subject to the deductible, premium, and coinsurance provisions of that title.
(b)
Subject to subsection (c), entitlement of an individual to benefits under part A and eligibility to enroll under part B of title XVIII by reasons of this section on the basis of end stage renal disease—
(1)
shall begin with—
(A)
the third month after the month in which a regular course of renal dialysis is initiated, or
(B)
the month in which such individual receives a kidney transplant, or (if earlier) the first month in which such individual is admitted as an inpatient to an institution which is a hospital meeting the requirements of section 1861(e) (and such additional requirements as the Secretary may prescribe under section 1881(b) for such institutions) in preparation for or anticipation of kidney transplantation, but only if such transplantation occurs in that month or in either of the next two months,
whichever first occurs (but no earlier than one year preceding the month of the filing of an application for benefits under this section); and
(2)
shall end, in the case of an individual who receives a kidney transplant (except for eligibility for enrollment under part B solely for purposes of coverage of immunosuppressive drugs described in section 1861(s)(2)(J)), with the thirty-sixth month after the month in which such individual receives such transplant or, in the case of an individual who has not received a kidney transplant and no longer requires a regular course of dialysis, with the twelfth month after the month in which such course of dialysis is terminated.
(c)
Notwithstanding the provisions of subsection (b)—
(1)
in the case of any individual who participates in a self-care dialysis training program prior to the third month after the month in which such individual initiates a regular course of renal dialysis in a renal dialysis facility or provider of services meeting the requirements of section 1881(b), entitlement to benefits under part A and eligibility to enroll under part B of title XVIII shall begin with the month in which such regular course of renal dialysis is initiated;
(2)
in any case in which a kidney transplant fails (whether during or after the thirty-six-month period specified in subsection (b)(2)) and as a result the individual who received such transplant initiates or resumes a regular course of renal dialysis, entitlement to benefits under part A and eligibility to enroll under part B of title XVIII shall begin with the month in which such course is initiated or resumed; and
(3)
in any case in which a regular course of renal dialysis is resumed subsequent to the termination of an earlier course, entitlement to benefits under part A and eligibility to enroll under part B of title XVIII shall begin with the month in which such regular course of renal dialysis is resumed.

transitional insured status
Sec. 227.
[42 U.S.C. 427]
(a)
In the case of any individual who attains the age of 72 before 1969 but who does not meet the requirements of section 214(a), the 6 quarters of coverage referred to in paragraph (1) of section 214(a) shall, instead, be 3 quarters of coverage for purposes of determining entitlement of such individual to benefits under section 202(a), and of the spouse to benefits under section 202(b) or section 202(c), but, in the case of such spouse, only if he or she attains the age of 72 before 1969 and only with respect to spouse's insurance benefits under section 202(b) or section 202(c) for and after the month in which he or she attains such age. For each month before the month in which any such individual meets the requirements of section 214(a), the amount of the old-age insurance benefit shall, notwithstanding the provisions of section 202(a), be the larger of $64.40 or the amount most recently established in lieu thereof under section 215(i) and the amount of the spouse's insurance benefit of the spouse shall, notwithstanding the provisions of section 202(b) or section 202(c), be the larger of $32.20 or the amount most recently established in lieu thereof under section 215(i).
(b)
In the case of any individual who has died, who does not meet the requirements of section 214(a), and whose surviving spouse attains age 72 before 1969, the 6 quarters of coverage referred to in paragraph (3) of section 214(a) and in paragraph (1) thereof shall, for purposes of determining the entitlement to surviving spouse's insurance benefits under section 202(e) or section 202(f), instead be—
(1)
3 quarters of coverage if such surviving spouse attains the age of 72 in or before 1966,
(2)
4 quarters of coverage if such surviving spouse attains the age of 72 in 1967, or
(3)
5 quarters of coverage if such surviving spouse attains the age of 72 in 1968.
The amount of the surviving spouse's insurance benefit for each month shall, notwithstanding the provisions of section 202(e) or section 202(f) (and section 202(m)), be the larger of $64.40 or the amount most recently established in lieu thereof under section 215(i).
(c)
In the case of any individual who becomes, or upon filing application therefor would become, entitled to benefits under section 202(a) by reason of the application of subsection (a) of this section, who dies, and whose surviving spouse attains the age of 72 before 1969, such deceased individual shall be deemed to meet the requirements of subsection (b) of this section for purposes of determining entitlement of such surviving spouse to surviving spouse's insurance benefits under section 202(e) or section 202(f).

benefits at age 72 for certain uninsured individuals
Sec. 228.
[42 U.S.C. 428]
(a)

Eligibility
Every individual who—
(1)
has attained the age of 72,
(2)
(A)
attained such age before 1968, or (B) (i) attained such age after 1967 and before 1972, and (ii) has not less than 3 quarters of coverage, whenever acquired, for each calendar year elapsing after 1966 and before the year in which he or she attained such age,
(3)
is a resident of the United States (as defined in subsection (e)), and is (A) a citizen of the United States or (B) an alien lawfully admitted for permanent residence who has resided in the United States (as defined in section 210(i)) continuously during the 5 years immediately preceding the month in which he or she files application under this section, and
(4)
has filed application for benefits under this section,
shall (subject to the limitations in this section) be entitled to a benefit under this section for each month beginning with the first month after September 1966 in which he or she becomes so entitled to such benefits and ending with the month preceding the month in which he or she dies. No application under this section which is filed by an individual more than 3 months before the first month in which he or she meets the requirements of paragraphs (1), (2), and (3) shall be accepted as an application for purposes of this section.
(b)

Benefit Amount
The benefit amount to which an individual is entitled under this section for any month shall be the larger of $64.40 or the amount most recently established in lieu thereof under section 215(i).
(c)

Reduction for Governmental Pension System Benefits
(1)
The benefit amount of any individual under this section for any month shall be reduced (but not below zero) by the amount of any periodic benefit under a governmental pension system for which he or she is eligible for such month.
(2)
In the case of a husband and wife only one of whom is entitled to benefits under this section for any month, the benefit amount, after any reduction under paragraph (1), shall be further reduced (but not below zero) by the excess (if any) of (A) the total amount of any periodic benefits under governmental pension systems for which the spouse who is not entitled to benefits under this section is eligible for such month, over (B) the benefit amount as determined without regard to this subsection.
(3)
In the case of a husband or wife both of whom are entitled to benefits under this section for any month, the benefit amount of each spouse, after any reduction under paragraph (1), shall be further reduced (but not below zero) by the excess (if any) of (A) the total amount of any periodic benefits under governmental pension systems for which the other spouse is eligible for such month, over (B) the benefit amount of such other spouse as determined without regard to this subsection.
(4)
For purposes of this subsection, in determining whether an individual is eligible for periodic benefits under a governmental pension system—
(A)
such individual shall be deemed to have filed application for such benefits,
(B)
to the extent that entitlement depends on an application by such individual's spouse, such spouse shall be deemed to have filed application, and
(C)
to the extent that entitlement depends on such individual or his or her spouse having retired, such individual and his or her spouse shall be deemed to have retired before the month for which the determination of eligibility is being made.
(5)
For purposes of this subsection, if any periodic benefit is payable on any basis other than a calendar month, the Commissioner of Social Security shall allocate the amount of such benefit to the appropriate calendar months.
(6)
If, under the foregoing provisions of this section, the amount payable for any month would be less than $1, such amount shall be reduced to zero. In the case of a husband and wife both of whom are entitled to benefits under this section for the month, the preceding sentence shall be applied with respect to the aggregate amount so payable for such month.
(7)
If any benefit amount computed under the foregoing provisions of this section is not a multiple of $0.10, it shall be raised to the next higher multiple of $0.10.
(8)
Under regulations prescribed by the Commissioner of Social Security, benefit payments under this section to an individual (or aggregate benefit payments under this section in the case of a husband and wife) of less than $5 may be accumulated until they equal or exceed $5.
(d)

Suspension for Months in Which Cash Payments Are Made Under Public Assistance
The benefit to which any individual is entitled under this section for any month shall not be paid for such month if—
(1)
such individual receives aid or assistance in the form of money payments in such month under a State plan approved under title I, X, XIV, or XVI, or under a State program funded under part A of title IV, or
(2)
such individual's husband or wife receives such aid or assistance in such month, and under the State plan the needs of such individual were taken into account in determining eligibility for (or amount of) such aid or assistance,
unless the State agency administering or supervising the administration of such plan notifies the Commissioner of Social Security, at such time and in such manner as may be prescribed in accordance with regulations of the Commissioner of Social Security, that such payments to such individual (or such individual's husband or wife) under such plan are being terminated with the payment or payments made in such month and such individual is not an individual with respect to whom supplemental security income benefits are payable pursuant to title XVI or section 211 of Public Law 93–66 for the following month, nor shall such benefit be paid for such month if such individual is an individual with respect to whom supplemental security income benefits are payable pursuant to title XVI or section 211 of Public Law 93–66 for such month, unless the Commissioner of Social Security determines that such benefits are not payable with respect to such individual for the month following such month.
(e)

Suspension Where Individual Is Residing Outside the United States
The benefit to which any individual is entitled under this section for any month shall not be paid if, during such month, such individual is not a resident of the United States. For purposes of this subsection, the term “United States” means the 50 States and the District of Columbia.
(f)

Treatment as Monthly Insurance Benefits
For purposes of subsections (t) and (u) of section 202, and of section 1840, a monthly benefit under this section shall be treated as a monthly insurance benefit payable under section 202.
(g)

Annual Reimbursement of Federal Old-Age and Survivors Insurance Trust Fund
There are authorized to be appropriated to the Federal Old-Age and Survivors Insurance Trust Fund for the fiscal year ending June 30, 1969, and for each fiscal year thereafter, such sums as the Commissioner of Social Security deems necessary on account of—
(1)
payments made under this section during the second preceding fiscal year and all fiscal years prior thereto to individuals who, as of the beginning of the calendar year in which falls the month for which payment was made, had less than 3 quarters of coverage,
(2)
the additional administrative expenses resulting from the payments described in paragraph (1), and
(3)
any loss in interest to such Trust Fund resulting from such payments and expenses,
in order to place such Trust Fund in the same position at the end of such fiscal year as it would have been in if such payments had not been made.
(h)

Definitions
For purposes of this section—
(1)
The term “quarter of coverage” includes a quarter of coverage as defined in section 5(l) of the Railroad Retirement Act of 1937.
(2)
The term “governmental pension system” means theinsurance system established by this title or any other system or fund established by the United States, a State, any politicalsubdivision of a State, or any wholly owned instrumentality of any one or more of the foregoing which provides for payment of (A) pensions, (B) retirement or retired pay, or (C) annuities orsimilar amounts payable on account of personal services performed by any individual (not including any payment under anyworkmen's compensation law or any payment by the Secretary of Veterans Affairs as compensation for service-connected disability or death).
(3)
The term “periodic benefit” includes a benefit payable in a lump sum if it is a commutation of, or a substitutefor, periodic payments.
(4)
The determination of whether an individual is a husband or wife for any month shall be made under subsection (h) of section216 without regard to subsections (b) and (f) of section 216.

benefits in case of members of the uniformed services
Sec. 229.
[42 U.S.C. 429]
For purposes of determining entitlement to and the amount of any monthly benefit for any month after December 1972, or entitlement to and the amount of any lump-sum death payment in case of a death after such month, payable under this title on the basis of the wages and self-employment income of any individual, and for purposes of section 216(i)(3), such individual, if he was paid wages for service as a member of a uniformed service (as defined in section 210(m)) which was included in the term “employment” as defined in section 210(a) as a result of the provisions of section 210(l)(1)(A), shall be deemed to have been paid—
(1)
in each calendar quarter occurring after 1956 and before 1978 in which he was paid such wages, additional wages of $300, and
(2)
in each calendar year occurring after 1977 and before 2002 in which he was paid such wages, additional wages of $100 for each $300 of such wages, up to a maximum of $1,200 of additional wages for any calendar year.

adjustment of the contribution and benefit base
Sec. 230.
[42 U.S.C. 430]
(a)
Whenever the Commissioner of Social Security pursuant to section 215(i) increases benefits effective with the December following a cost-of-living computation quarter, the Commissioner shall also determine and publish in the Federal Register on or before November 1 of the calendar year in which such quarter occurs the contribution and benefit base determined under subsection (b) or (c) which shall be effective with respect to remuneration paid after the calendar year in which such quarter occurs and taxable years beginning after such year.
(b)
The amount of such contribution and benefit base shall (subject to subsection (c)) be the amount of the contribution and benefit base in effect in the year in which the determination is made or, if larger, the product of—
(1)
$60,600, and
(2)
the ratio of (A) the national average wage index (as defined in section 209(k)(1)) for the calendar year before the calendar year in which the determination under subsection (a) is made to (B) the national average wage index (as so defined) for 1992,
with such product, if not a multiple of $300, being rounded to the next higher multiple of $300 where such product is a multiple of $150 but not of $300 and to the nearest multiple of $300 in any other case.
(c)
For purposes of this section, and for purposes of determining wages and self-employment income under sections 209, 211, 213, and 215 of this Act and sections 1402, 3121, 3122, 3125, 6413, and 6654 of the Internal Revenue Code of 1986, (1) the “contribution and benefit base” with respect to remuneration paid in (and taxable years beginning in) any calendar year after 1973 and prior to the calendar year with the June of which the first increase in benefits pursuant to section 215(i) of this Act becomes effective shall be $13,200 or (if applicable) such other amount as may be specified in a law enacted subsequent to the law which added this section, and (2) the “contribution and benefit base” with respect to remuneration paid (and taxable years beginning)—
(A)
in 1978 shall be $17,700,
(B)
in 1979 shall be $22,900,
(C)
in 1980 shall be $25,900, and
(D)
in 1981 shall be $29,700.
For purposes of determining under subsection (b) the “contribution and benefit base” with respect to remuneration paid (and taxable years beginning) in 1982 and subsequent years, the dollar amounts specified in clause (2) of the preceding sentence shall be considered to have resulted from the application of such subsection (b) and to be the amount determined (with respect to the years involved) under that subsection.
(d)
Notwithstanding any other provision of law, the contribution and benefit base determined under this section for any calendar year after 1976 for purposes of section 4022(b)(3)(B) of Public Law 93–406, with respect to any plan, shall be the contribution and benefit base that would have been determined for such year if this section as in effect immediately prior to the enactment of the Social Security Amendments of 1977 had remained in effect without change (except that, for purposes of subsection (b) of such section 230 as so in effect, the reference to the contribution and benefit base in paragraph (1) of such subsection (b) shall be deemed a reference to an amount equal to $45,000, each reference in paragraph (2) of such subsection (b) to the average of the wages of all employees as reported to the Secretary of Treasury shall be deemed a reference to the national average wage index (as defined in section 209(k)(1)), the reference to a preceding calendar year in paragraph (2)(A) of such subsection (b) shall be deemed a reference to the calendar year before the calendar year in which the determination under subsection (a) of such section 230 is made, and the reference to a calendar year in paragraph (2)(B) of such subsection (b) shall be deemed a reference to 1992).

benefits in case of certain individuals interned during world war ii
Sec. 231.
[42 U.S.C. 431]
(a)
For the purposes of this section the term “internee” means an individual who was interned during any period of time from December 7, 1941, through December 31, 1946, at a place within the United States operated by the Government of the United States for the internment of United States citizens of Japanese ancestry.
(b)
(1)
For purposes of determining entitlement to and the amount of any monthly benefit for any month after December 1972, or entitlement to and the amount of any lump-sum death payment in the case of a death after such month, payable under this title on the basis of the wages and self-employment income of any individual, and for purposes of section 216(i)(3), such individual shall be deemed to have been paid during any period after he attained age 18 and for which he was an internee, wages (in addition to any wages actually paid to him) at a weekly rate of basic pay during such period as follows—
(A)
in the case such individual was not employed prior to the beginning of such period, 40 multiplied by the minimum hourly rate or rates in effect at any such time under section 206(a)(1) of title 29, United States Code, for each full week during such period; and
(B)
in the case such individual who was employed prior to the beginning of such period, 40 multiplied by the greater of (i) the highest hourly rate received during any such employment, or (ii) the minimum hourly rate or rates in effect at any such time under section 206(a)(1) of title 29, United States Code, for each full week during such period.
(2)
This subsection shall not be applicable in the case of any monthly benefit or lump-sum death payment if—
(A)
a larger such benefit or payment, as the case may be, would be payable without its application; or
(B)
a benefit (other than a benefit payable in a lump-sum unless it is a commutation of, or a substitute for, periodic payments) which is based, in whole or in part, upon internment during any period from December 7, 1941, through December 31, 1946, at a place within the United States operated by the Government of the United States for the internment of United States citizens of Japanese ancestry, is determined by any agency or wholly owned instrumentality of the United States to be payable by it under any other law of the United States or under a system established by such agency or instrumentality.
The provisions of clause (B) shall not apply in the case of any monthly benefit or lump-sum death payment under this title if its application would reduce by $0.50 or less the primary insurance amount (as computed under section 215 prior to any recomputation thereof pursuant to subsection (f) of such section) of the individual on whose wages and self-employment income such benefit or payment is based. The provisions of clause (B) shall also not apply for purposes of section 216(i)(3).
(3)
Upon application for benefits, a recalculation of benefits (by reason of this section), or a lump-sum death payment on the basis of the wages and self-employment income of any individual who was an internee, the Commissioner of Social Security shall accept the certification of the Secretary of Defense or his designee concerning any period of time for which an internee is to receive credit under paragraph (1) and shall make a decision without regard to clause (B) of paragraph (2) of this subsection unless the Commissioner has been notified by some other agency or instrumentality of the United States that, on the basis of the period for which such individual was an internee, a benefit described in clause (B) of paragraph (2) has been determined by such agency or instrumentality to be payable by it. If the Commissioner of Social Security has not been so notified, the Commissioner shall then ascertain whether some other agency or wholly owned instrumentality of the United States has decided that a benefit described in clause (B) of paragraph (2) is payable by it. If any such agency or instrumentality has decided, or thereafter decides, that such a benefit is payable by it, it shall so notify the Commissioner of Social Security, and the Commissioner of Social Security shall certify no further benefits for payment or shall recompute the amount of any further benefits payable, as may be required by this section.
(4)
Any agency or wholly owned instrumentality of the United States which is authorized by any law of the United States to pay benefits, or has a system of benefits which are based, in whole or in part, on any period for which any individual was an internee shall, at the request of the Commissioner of Social Security, certify to the Commissioner, with respect to any individual who was an internee, such information as the Commissioner of Social Security deems necessary to carry out the Commissioner's functions under paragraph (3) of this subsection.
(c)
There are authorized to be appropriated to the Trust Funds and the Federal Hospital Insurance Trust Fund for the fiscal year ending June 30, 1978, such sums as the Commissioner of Social Security and the Secretary jointly determine would place the Trust Funds and the Federal Hospital Insurance Trust Fund in the position in which they would have been if the preceding provisions of this section had not been enacted.

processing of tax data
Sec. 232.
[42 U.S.C. 432]
The Secretary of the Treasury shall make available information returns filed pursuant to part III of subchapter A of chapter 61 of subtitle F of the Internal Revenue Code of 1954, to the Commissioner of Social Security for the purposes of this title and title XI. The Commissioner of Social Security and the Secretary of the Treasury are authorized to enter into an agreement for the processing by the Commissioner of Social Security of information contained in returns filed pursuant to part III of subchapter A of chapter 61 of subtitle F of the Internal Revenue Code of 1986. Notwithstanding the provisions of section 6103(a) of the Internal Revenue Code of 1986, the Secretary of the Treasury shall make available to the Commissioner of Social Security such documents as may be agreed upon as being necessary for purposes of such processing. For purposes of carrying out the return processing program described in the preceding sentence, the Commissioner of Social Security shall request, not less than annually, such information described in section 7529(b)(2) of the Internal Revenue Code of 1986 as may be necessary to ensure the accuracy of the records maintained by the Commissioner of Social Security related to the amounts of wages paid to, and the amounts of self-employment income derived by, individuals. The Commissioner of Social Security shall process any withholding tax statements or other documents made available to the Commissioner by the Secretary of the Treasury pursuant to this section. Any agreement made pursuant to this section shall remain in full force and effect until modified or otherwise changed by mutual agreement of the Commissioner of Social Security and the Secretary of the Treasury.

international agreements
Sec. 233.
[42 U.S.C. 433]
(a)

Purpose of Agreement
The President is authorized (subject to the succeeding provisions of this section) to enter into agreements establishing totalization arrangements between the social security system established by this title and the social security system of any foreign country, for the purposes of establishing entitlement to and the amount of old-age, survivors, disability, or derivative benefits based on a combination of an individual's periods of coverage under the social security system established by this title and the social security system of such foreign country.
(b)

Definitions
For the purposes of this section—
(1)
the term “social security system” means, with respect to a foreign country, a social insurance or pension system which is of general application in the country and under which periodic benefits, or the actuarial equivalent thereof, are paid on account of old age, death, or disability; and
(2)
the term “period of coverage” means a period of payment of contributions or a period of earnings based on wages for employment or on self-employment income, or any similar period recognized as equivalent thereto under this title or under the social security system of a country which is a party to an agreement entered into under this section.
(c)

Crediting Periods of Coverage; Conditions of Payment of Benefits
(1)
Any agreement establishing a totalization arrangement pursuant to this section shall provide—
(A)
that in the case of an individual who has at least 6 quarters of coverage as defined in section 213 of this Act and periods of coverage under the social security system of a foreign country which is a party to such agreement, periods of coverage of such individual under such social security system of such foreign country may be combined with periods of coverage under this title and otherwise considered for the purposes of establishing entitlement to and the amount of old-age, survivors, and disability insurance benefits under this title;
(B)
(i)
that employment or self-employment, or any service which is recognized as equivalent to employment or self-employment under this title or the social security system of a foreign country which is a party to such agreement, shall, on or after the effective date of such agreement, result in a period of coverage under the system established under this title or under the system established under the laws of such foreign country, but not under both, and (ii) the methods and conditions for determining under which system employment, self-employment, or other service shall result in a period of coverage; and
(C)
that where an individual's periods of coverage are combined, the benefit amount payable under this title shall be based on the proportion of such individual's periods of coverage which was completed under this title.
(2)
Any such agreement may provide that an individual who is entitled to cash benefits under this title shall, notwithstanding the provisions of section 202(t), receive such benefits while he resides in a foreign country which is a party to such agreement.
(3)
Section 226 shall not apply in the case of any individual to whom it would not be applicable but for this section or any agreement or regulation under this section.
(4)
Any such agreement may contain other provisions which are not inconsistent with the other provisions of this title and which the President deems appropriate to carry out the purposes of this section.
(d)

Regulations
The Commissioner of Social Security shall make rules and regulations and establish procedures which are reasonable and necessary to implement and administer any agreement which has been entered into in accordance with this section.
(e)

Reports to Congress; Effective Date of Agreements
(1)
Any agreement to establish a totalization arrangement entered into pursuant to this section shall be transmitted by the President to the Congress together with a report on the estimated number of individuals who will be affected by the agreement and the effect of the agreement on the estimated income and expenditures of the programs established by this Act.
(2)
Such an agreement shall become effective on any date, provided in the agreement, which occurs after the expiration of the period (following the date on which the agreement is transmitted in accordance with paragraph (1)) during which at least one House of the Congress has been in session on each of 60 days; except that such agreement shall not become effective if, during such period, either House of the Congress adopts a resolution of disapproval of the agreement.

DEMONSTRATION PROJECT AUTHORITY
Sec. 234.
(a)

Authority.—
(1)

In general.—
The Commissioner of Social Security (in this section referred to as the “Commissioner”) shall develop and carry out experiments and demonstration projects designed to promote attachment to the labor force and to determine the relative advantages and disadvantages of—
(A)
various alternative methods of treating the work activity of individuals entitled to disability insurance benefits under section 223 or to monthly insurance benefits under section 202 based on such individual's disability (as defined in section 223(d)), including such methods as a reduction in benefits based on earnings, designed to encourage the return to work of such individuals;
(B)
altering other limitations and conditions applicable to such individuals (including lengthening the trial work period (as defined in section 222(c)), altering the 24-month waiting period for hospital insurance benefits under section 226, altering the manner in which the program under this title is administered, earlier referral of such individuals for rehabilitation, and greater use of employers and others to develop, perform, and otherwise stimulate new forms of rehabilitation); and
(C)
implementing sliding scale benefit offsets using variations in—
(i)
the amount of the offset as a proportion of earned income;
(ii)
the duration of the offset period; and
(iii)
the method of determining the amount of income earned by such individuals,
to the end that savings will accrue to the Trust Funds, or to otherwise promote the objectives or facilitate the administration of this title.
(2)

Authority for expansion of scope.—
The Commissioner may expand the scope of any such experiment or demonstration project to include any group of applicants for benefits under the program established under this title with impairments that reasonably may be presumed to be disabling for purposes of such demonstration project, and may limit any such demonstration project to any such group of applicants, subject to the terms of such demonstration project which shall define the extent of any such presumption.
(b)

Requirements.—
The experiments and demonstration projects developed under subsection (a) shall be of sufficient scope and shall be carried out on a wide enough scale to permit a thorough evaluation of the alternative methods under consideration while giving assurance that the results derived from the experiments and projects will obtain generally in the operation of the disability insurance program under this title without committing such program to the adoption of any particular system either locally or nationally.
(c)

Authority To Waive Compliance With Benefits Requirements.—
In the case of any experiment or demonstration project initiated under subsection (a) on or before December 30, 2021, the Commissioner may waive compliance with the benefit requirements of this title and the requirements of section 1148 as they relate to the program established under this title, and the Secretary may (upon the request of the Commissioner) waive compliance with the benefits requirements of title XVIII, insofar as is necessary for a thorough evaluation of the alternative methods under consideration. No such experiment or project shall be actually placed in operation unless at least 90 days prior thereto a written report, prepared for purposes of notification and information only and containing a full and complete description thereof, including the objectives of the experiment or demonstration project, the expected annual and total costs, and the dates on which the experiment or demonstration project is expected to start and finish, has been transmitted by the Commissioner to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate. Periodic reports on the progress of such experiments and demonstration projects shall be submitted by the Commissioner to such committees. When appropriate, such reports shall include detailed recommendations for changes in administration or law, or both, to carry out the objectives stated in subsection (a).
(d)

Reports.—
(1)

Interim reports.—
On or before September 30 of each year, the Commissioner shall submit to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate an annual interim report on the progress of the experiments and demonstration projects carried out under this subsection together with any related data and materials that the Commissioner may consider appropriate.
(2)

Termination and final report.—
The authority to initiate projects under the preceding provisions of this section shall terminate on December 31, 2021, and the authority to carry out such projects shall terminate on December 31, 2022. Not later than 90 days after the termination of any experiment or demonstration project carried out under this section, the Commissioner shall submit to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate a final report with respect to that experiment or demonstration project.
(e)

Additional Requirements.—
In developing and carrying out any experiment or demonstration project under this section, the Commissioner may not require any individual to participate in such experiment or demonstration project and shall ensure—
(1)
that the voluntary participation of individuals in such experiment or demonstration project is obtained through informed written consent which satisfies the requirements for informed consent established by the Commissioner for use in such experiment or demonstration project in which human subjects are at risk;
(2)
that any individual’s voluntary agreement to participate in any such experiment or demonstration project may be revoked by such individual at any time; and
(3)
that such experiment or demonstration project is expected to yield statistically significant results.
(f)

Promoting Opportunity Demonstration Project.—
(1)

In general.—
The Commissioner shall carry out a demonstration project under this subsection as described in paragraph (2) during a 5-year period beginning not later than January 1, 2017.
(2)

Benefit offset.—
Under the demonstration project described in this paragraph, with respect to any individual participating in the project who is otherwise entitled to a benefit under section 223(a)(1) for a month—
(A)
any such benefit otherwise payable to the individual for such month (other than a benefit payable for any month prior to the 1st month beginning after the date on which the individual’s entitlement to such benefit is determined) shall be reduced by $1 for each $2 by which the individual’s earnings derived from services paid during such month exceeds an amount equal to the individual’s impairment-related work expenses for such month (as determined under paragraph (3)), except that such benefit may not be reduced below $0;
(B)
no benefit shall be payable under section 202 on the basis of the wages and self-employment income of the individual for any month for which the benefit of such individual under section 223(a)(1) is reduced to $0 pursuant to subparagraph (A);
(C)
entitlement to any benefit described in subparagraph (A) or (B) shall not terminate due to earnings derived from services except following the first month for which such benefit has been reduced to $0 pursuant to subparagraph (A) (and the trial work period (as defined in section 222(c)) and extended period of eligibility shall not apply to any such individual for any such month); and
(D)
in any case in which such an individual is entitled to hospital insurance benefits under part A of title XVIII by reason of section 226(b) and such individual’s entitlement to a benefit described in subparagraph (A) or (B) or status as a qualified railroad retirement beneficiary is terminated pursuant to subparagraph (C), such individual shall be deemed to be entitled to such benefits or to occupy such status (notwithstanding the termination of such entitlement or status) for the period of consecutive months throughout all of which the physical or mental impairment, on which such entitlement or status was based, continues, and throughout all of which such individual would have been entitled to monthly insurance benefits under title II or as a qualified railroad retirement beneficiary had such termination of entitlement or status not occurred, but not in excess of 93 such months.
(3)

Impairment-related work expenses.—
(A)

In general.—
For purposes of paragraph (2)(A) and except as provided in subparagraph (C), the amount of an individual’s impairment-related work expenses for a month is deemed to be the minimum threshold amount.
(B)

Minimum threshold amount.—
In this paragraph, the term “minimum threshold amount” means an amount, to be determined by the Commissioner, which shall not exceed the amount sufficient to demonstrate that an individual has rendered services in a month, as determined by the Commissioner under section 222(c)(4)(A). The Commissioner may test multiple minimum threshold amounts.
(C)

Exception for itemized impairment-related work expenses.—
(i)

In general.—
Notwithstanding subparagraph (A), in any case in which the amount of such an individual’s itemized impairment-related work expenses (as defined in clause (ii)) for a month is greater than the minimum threshold amount, the amount of the individual’s impairment-related work expenses for the month shall be equal to the amount of the individual’s itemized impairment-related work expenses (as so defined) for the month.
(ii)

Definition.—
In this subparagraph, the term “itemized impairment-related work expenses” means the amount excluded under section 223(d)(4)(A) from an individual’s earnings for a month in determining whether an individual is able to engage in substantial gainful activity by reason of such earnings in such month, except that such amount does not include the cost to the individual of any item or service for which the individual does not provide to the Commissioner a satisfactory itemized accounting.
(D)

Limitation.—
Notwithstanding the other provisions of this paragraph, for purposes of paragraph (2)(A), the amount of an individual’s impairment-related work expenses for a month shall not exceed the amount of earnings derived from services, prescribed by the Commissioner under regulations issued pursuant to section 223(d)(4)(A), sufficient to demonstrate an individual’s ability to engage in substantial gainful activity.
TITLE III—

GRANTS TO STATES FOR UNEMPLOYMENT COMPENSATION ADMINISTRATION1
^1
The President's Reorganization Plan No. 2 of 1949, §1 (14 FR 5225, 63 Stat. 1065), transferred the Bureau of Employment Security, including the United States Employment Service, from the Federal Security Agency to the Department of Labor, effective August 20, 1949.
Title III of the Social Security Act is administered by the Department of Labor.

TABLE OF CONTENTS OF TITLE2
^2
This table of contents does not appear in the law.
Sec. 301.
Appropriations.
Sec. 302.
Payments to States.
Sec. 303.
Provisions of State laws.
Sec. 304.
Judicial review.
Sec. 305.
Demonstration projects.
Sec. 306.
Grants to states for reemployment services and eligibility assessments.

appropriations
Sec. 301.
[42 U.S.C. 501]
The amounts made available pursuant to section 901(c)(1)(A) for the purpose of assisting the States in the administration of their unemployment compensation laws shall be used as hereinafter provided.

payments to states
Sec. 302.
[42 U.S.C. 502]
(a)
The Secretary of Labor shall from time to time certify to the Secretary of the Treasury for payment to each State which has an unemployment compensation law approved by the Secretary of Labor under the Federal Unemployment Tax Act, such amounts as the Secretary of Labor determines to be necessary for the proper and efficient administration of such law during the fiscal year for which such payment is to be made, including 100 percent of so much of the reasonable expenditures of the State as are attributable to the costs of the implementation and operation of the immigration status verification system described in section 1137(d). The Secretary of Labor's determination shall be based on (1) the population of the State; (2) an estimate of the number of persons covered by the State law and of the cost of proper and efficient administration of such law; and (3) such other factors as the Secretary of Labor finds relevant. The Secretary of Labor shall not certify for payment under this section in any fiscal year a total amount in excess of the amount appropriated therefor for such fiscal year.
(b)
Out of the sums appropriated therefor, the Secretary of the Treasury shall, upon receiving a certification under subsection (a), pay, through the Fiscal Service of the Department of the Treasury and prior to audit or settlement by the General Accounting Office, to the State agency charged with the administration of such law the amount so certified.
(c)
No portion of the cost of mailing a statement under 6050B(b) of the Internal Revenue Code of 1986 (relating to unemployment compensation) shall be treated as not being a cost for the proper and efficient administration of the State unemployment compensation law by reason of including with such statement information about the earned income credit provided by section 32 of the Internal Revenue Code of 1986. The preceding sentence shall not apply if the inclusion of such information increases the postage required to mail such statement.

provisions of state laws
Sec. 303.
[42 U.S.C. 503]
(a)
The Secretary of Labor shall make no certification for payment to any State unless he finds that the law of such State, approved by the Secretary of Labor under the Federal Unemployment Tax Act, includes provision for—
(1)
Such methods of administration (including after January 1, 1940, methods relating to the establishment and maintenance of personnel standards on a merit basis, except that the Secretary of Labor shall exercise no authority with respect to the selection, tenure of office, and compensation of any individual employed in accordance with such methods) as are found by the Secretary of Labor to be reasonably calculated to insure full payment of unemployment compensation when due; and
(2)
Payment of unemployment compensation solely through public employment offices or such other agencies as the Secretary of Labor may approve; and
(3)
Opportunity for a fair hearing, before an impartial tribunal, for all individuals whose claims for unemployment compensation are denied; and
(4)
The payment of all money received in the unemployment fund of such State (except for refunds of sums erroneously paid into such fund and except for refunds paid in accordance with the provisions of 3305(b) of the Federal Unemployment Tax Act), immediately upon such receipt, to the Secretary of the Treasury to the credit of the unemployment trust fund3 established by section 904; and
^3
As in original. Probably should be “Unemployment Trust Fund”.
(5)
Expenditure of all money withdrawn from an unemployment fund of such State, in the payment of unemployment compensation, exclusive of expenses of administration, and for refunds of sums erroneously paid into such fund and refunds paid in accordance with the provisions of 3305(b) of the Federal Unemployment Tax Act: Provided, That an amount equal to the amount of employee payments in to the unemployment fund of a State may be used in the payment of cash benefits to individuals with respect to their disability, exclusive of expenses of administration: Provided further, That the amounts specified by section 903(c)(2) or 903(d)(4) may, subject to the conditions prescribed in such section, be used for expenses incurred by the State for administration of its unemployment compensation law and public employment offices: Provided further, That nothing in this paragraph shall be construed to prohibit deducting an amount from unemployment compensation otherwise payable to an individual and using the amount so deducted to pay for health insurance, or the withholding of Federal, State, or local individual income tax, if the individual elected to have such deduction made and such deduction was made under a program approved by the Secretary of Labor: Provided further, That amounts may be deducted from unemployment benefits and used to repay overpayments as provided in subsection (g): Provided further, That amounts may be withdrawn for the payment of short-time compensation under a short-time compensation program (as defined in section 3306(v) of the Internal Revenue Code of 1986): Provided further, That amounts may be withdrawn for the payment of allowances under a self-employment assistance program (as defined in section 3306(t) of the Internal Revenue Code of 1986); and
(6)
The making of such reports, in such form and containing such information, as the Secretary of Labor may from time to time require, and compliance with such provisions as the Secretary of Labor may from time to time find necessary to assure the correctness and verification of such reports; and
(7)
Making available upon request to any agency of the United States charged with the administration of public works or assistance through public employment, the name, address, ordinary occupation and employment status of each recipient of unemployment compensation, and a statement of such recipient's rights to further compensation under such law; and
(8)
Effective July 1, 1941, the expenditure of all moneys received pursuant to section 302 of this title solely for the purposes and in the amounts found necessary by the Secretary of Labor for the proper and efficient administration of such State law; and
(9)
Effective July 1, 1941, the replacement, within a reasonable time, of any moneys received pursuant to section 302 of this title, which, because of any action or contingency, have been lost or have been expended for purposes other than, or in amounts in excess of, those found necessary by the Secretary of Labor for the proper administration of such State law; and
(10)
A requirement that, as a condition of eligibility for regular compensation for any week, any claimant who has been referred to reemployment services pursuant to the profiling system under subsection (j)(1)(B) participate in such services or in similar services unless the State agency charged with the administration of the State law determines—
(A)
such claimant has completed such services; or
(B)
there is justifiable cause for such claimant's failure to participate in such services; and
(11)
(A)4
At the time the State agency determines an erroneous payment from its unemployment fund was made to an individual due to fraud committed by such individual, the assessment of a penalty on the individual in an amount of not less than 15 percent of the amount of the erroneous payment; and
^4
Section 251(a) of Public Law 112–40 added paragraph (11) to section 303(a) (and mad a conforming change to paragraph (10)). Subsection (c) of section 251 of such Public Law provides:
(c) Effective Date.—
(1) In general.—Except as provided in paragraph (2), the amendments made by this section shall apply to erroneous payments established after the end of the 2-year period beginning on the date of the enactment of this Act [October 21, 2013].
(2) Authority.—A State may amend its State law to apply such amendments to erroneous payments established prior to the end of the period described in paragraph (1).
(B)
The immediate deposit of all assessments paid pursuant to subparagraph (A) into the unemployment fund of the State.
(12)
A requirement that, as a condition of eligibility for regular compensation for any week, a claimant must be able to work, available to work, and actively seeking work.
(b)
Whenever the Secretary of Labor, after reasonable notice and opportunity for hearing to the State agency charged with the administration of the State law, finds that in the administration of the law there is—
(1)
a denial, in a substantial number of cases, of unemployment compensation to individuals entitled thereto under such law; or
(2)
a failure to comply substantially with any provision specified in subsection (a);
the Secretary of Labor shall notify such State agency that further payments will not be made to the State until the Secretary of Labor is satisfied that there is no longer any such denial or failure to comply. Until he is so satisfied he shall make no further certification to the Secretary of the Treasury with respect to such State: Provided, That there shall be no finding under clause (1) until the question of entitlement shall have been decided by the highest judicial authority given jurisdiction under such State law: Provided further, That any costs may be paid with respect to any claimant by a State and included as costs of administration of its law.
(c)
The Secretary of Labor shall make no certification for payment to any State if he finds, after reasonable notice and opportunity for hearing to the State agency charged with the administration of the State law—
(1)
that such State does not make its records available to the Railroad Retirement Board, and furnish to the Railroad Retirement Board at the expense of the Railroad Retirement Board such copies thereof as the Railroad Retirement Board deems necessary for its purposes;
(2)
that such State is failing to afford reasonable cooperation with every agency of the United States charged with the administration of any unemployment insurance law; or
(3)
that any interest required to be paid on advances under title XII of this Act has not been paid by the date on which such interest is required to be paid or has been paid directly or indirectly (by an equivalent reduction in State unemployment taxes or otherwise) by such State from amounts in such State's unemployment fund, until such interest is properly paid.
(d)
(1)
The State agency charged with the administration of the State law—
(A)
shall disclose, upon request and on a reimbursable basis, to officers and employees of the Department of Agriculture and to officers or employees of any State supplemental nutrition assistance program benefits agency any of the following information contained in the records of such State agency—
(i)
wage information,
(ii)
whether an individual is receiving, has received, or has made application for, unemployment compensation, and the amount of any such compensation being received (or to be received) by such individual,
(iii)
the current (or most recent) home address of such individual, and
(iv)
whether an individual has refused an offer of employment and, if so, a description of the employment so offered and the terms, conditions, and rate of pay therefor, and
(B)
shall establish such safeguards as are necessary (as determined by the Secretary of Labor in regulations) to insure that information disclosed under subparagraph (A) is used only for purposes of determining an individual's eligibility for benefits, or the amount of benefits, under the supplemental nutrition assistance program established under the Food and Nutrition Act of 2008.
(2)
(A)
For purposes of this paragraph, the term “unemployment compensation” means any unemployment compensation payable under the State law (including amounts payable pursuant to an agreement under a Federal unemployment compensation law).
(B)
The State agency charged with the administration of the State law—
(i)
may require each new applicant for unemployment compensation to disclose whether the applicant owes an uncollected overissuance (as defined in section 13(c)(1) of the Food and Nutrition Act of 2008) of supplemental nutrition assistance program benefits coupons,
(ii)
may notify the State supplemental nutrition assistance program benefits agency to which the uncollected overissuance is owed that the applicant has been determined to be eligible for unemployment compensation if the applicant discloses under clause (i) that the applicant owes an uncollected overissuance and the applicant is determined to be so eligible,
(iii)
may deduct and withhold from any unemployment compensation otherwise payable to an individual—
(I)
the amount specified by the individual to the State agency to be deducted and withheld under this clause,
(II)
the amount (if any) determined pursuant to an agreement submitted to the State supplemental nutrition assistance program benefits agency under section 13(c)(3)(A) of the Food and Nutrition Act of 2008, or
(III)
any amount otherwise required to be deducted and withheld from the unemployment compensation pursuant to section 13(c)(3)(B) of such Act, and
(iv)
shall pay any amount deducted and withheld under clause (iii) to the appropriate State supplemental nutrition assistance program benefits agency.
(C)
Any amount deducted and withheld under subparagraph (B)(iii) shall for all purposes be treated as if it were paid to the individual as unemployment compensation and paid by the individual to the State supplemental nutrition assistance program benefits agency to which the uncollected overissuance is owed as repayment of the individual's uncollected overissuance.
(D)
A State supplemental nutrition assistance program benefits agency to which an uncollected overissuance is owed shall reimburse the State agency charged with the administration of the State unemployment compensation law for the administrative costs incurred by the State agency under this paragraph that are attributable to repayment of uncollected overissuance to the State supplemental nutrition assistance program benefits agency to which the uncollected overissuance is owed.
(3)
Whenever the Secretary of Labor, after reasonable notice and opportunity for hearing to the State agency charged with the administration of the State law, finds that there is a failure to comply substantially with the requirements of paragraph (1), the Secretary of Labor shall notify such State agency that further payments will not be made to the State until he is satisfied that there is no longer any such failure. Until the Secretary of Labor is so satisfied, he shall make no further certification to the Secretary of the Treasury with respect to such State.
(4)
For purposes of this subsection, the term “State supplemental nutrition assistance program benefits agency” means any agency described in section 3(t)(1) of the Food and Nutrition Act of 2008 which administers the supplemental nutrition assistance program established under such Act.
(e)
(1)
The State agency charged with the administration of the State law—
(A)
shall disclose, upon request and on a reimbursable basis, directly to officers or employees of any State or local child support enforcement agency any wage information contained in the records of such State agency, and
(B)
shall establish such safeguards as are necessary (as determined by the Secretary of Labor in regulations) to insure that information disclosed under subparagraph (A) is used only for purposes of establishing and collecting child support obligations from, and locating, individuals owing such obligations.
For purposes of this subsection, the term “child support obligations” only includes obligations which are being enforced pursuant to a plan described in section 454 of this Act which has been approved by the Secretary of Health and Human Services under part D of title IV of this Act.
(2)
(A)
The State agency charged with the administration of the State law—
(i)
shall require each new applicant for unemployment compensation to disclose whether or not such applicant owes child support obligations (as defined in the last sentence of paragraph (1)),
(ii)
shall notify the State or local child support enforcement agency enforcing such obligations, if any applicant discloses under clause (i) that he owes child support obligations and he is determined to be eligible for unemployment compensation, that such applicant has been so determined to be eligible,
(iii)
shall deduct and withhold from any unemployment compensation otherwise payable to an individual—
(I)
the amount specified by the individual to the State agency to be deducted and withheld under this clause,
(II)
the amount (if any) determined pursuant to an agreement submitted to the State agency under section 454(19)(B)(i) of this Act, or
(III)
any amount otherwise required to be so deducted and withheld from such unemployment compensation through legal process (as defined in section 462(e)), and
(iv)
shall pay any amount deducted and withheld under clause (iii) to the appropriate State or local child support enforcement agency.
Any amount deducted and withheld under clause (iii) shall for all purposes be treated as if it were paid to the individual as unemployment compensation and paid by such individual to the State or local child support enforcement agency in satisfaction of his child support obligations.
(B)
For purposes of this paragraph, the term “unemployment compensation” means any compensation payable under the State law (including amounts payable pursuant to agreements under any Federal unemployment compensation law).
(C)
Each State or local child support enforcement agency shall reimburse the State agency charged with the administration of the State unemployment compensation law for the administrative costs incurred by such State agency under this paragraph which are attributable to child support obligations being enforced by the State or local child support enforcement agency.
(3)
Whenever the Secretary of Labor, after reasonable notice and opportunity for hearing to the State agency charged with the administration of the State law, finds that there is a failure to comply substantially with the requirements of paragraph (1) or (2), the Secretary of Labor shall notify such State agency that further payments will not be made to the State until he is satisfied that there is no longer any such failure. Until the Secretary of Labor is so satisfied, he shall make no further certification to the Secretary of the Treasury with respect to such State.
(4)
For purposes of this subsection, the term “State or local child support enforcement agency” means any agency of a State or political subdivision thereof operating pursuant to a plan described in the last sentence of paragraph (1).
(5)
A State or local child support enforcement agency may disclose to any agent of the agency that is under contract with the agency to carry out the purposes described in paragraph (1)(B) wage information that is disclosed to an officer or employee of the agency under paragraph (1)(A). Any agent of a State or local child support agency that receives wage information under this paragraph shall comply with the safeguards established pursuant to paragraph (1)(B)
(f)
The State agency charged with the administration of the State law shall provide that information shall be requested and exchanged for purposes of income and eligibility verification in accordance with a State system which meets the requirements of section 1137 of this Act.
(g)
(1)
A State shall deduct from unemployment benefits otherwise payable to an individual an amount equal to any overpayment made to such individual under an unemployment benefit program of the United States or of any other State, and not previously recovered. The amount so deducted shall be paid to the jurisdiction under whose program such overpayment was made. Any such deduction shall be made only in accordance with the same procedures relating to notice and opportunity for a hearing as apply to the recovery of overpayments of regular unemployment compensation paid by such State.
(2)
Any State may enter into an agreement with the Secretary of Labor under which—
(A)
the State agrees to recover from unemployment benefits otherwise payable to an individual by such State any overpayments made under an unemployment benefit program of the United States to such individual and not previously recovered, in accordance with paragraph (1), and to pay such amounts recovered to the United States for credit to the appropriate account, and
(B)
the United States agrees to allow the State to recover from unemployment benefits otherwise payable to an individual under an unemployment benefit program of the United States any overpayments made by such State to such individual under a State unemployment benefit program and not previously recovered, in accordance with the same procedures as apply under paragraph (1).
(3)
For purposes of this subsection, “unemployment benefits” means unemployment compensation, trade adjustment allowances, Federal additional compensation, and other unemployment assistance.
(h)
(1)
The State agency charged with the administration of the State law shall, on a reimbursable basis—
(A)
disclose quarterly, to the Secretary of Health and Human Services, wage and claim information, as required pursuant to section 453(i)(1), contained in the records of such agency;
(B)
ensure that information provided pursuant to subparagraph (A) meets such standards relating to correctness and verification as the Secretary of Health and Human Services, with the concurrence of the Secretary of Labor, may find necessary; and
(C)
establish such safeguards as the Secretary of Labor determines are necessary to insure that information disclosed under subparagraph (A) is used only for purposes of subsections (i)(1), (i)(3), and (j) of section 453.
(2)
Whenever the Secretary of Labor, after reasonable notice and opportunity for hearing to the State agency charged with the administration of the State law, finds that there is a failure to comply substantially with the requirements of paragraph (1), the Secretary of Labor shall notify such State agency that further payments will not be made to the State until the Secretary of Labor is satisfied that there is no longer any such failure. Until the Secretary of Labor is so satisfied, such Secretary shall make no future certification to the Secretary of the Treasury with respect to the State.
(3)
For purposes of this subsection—
(A)
the term “wage information” means information regarding wages paid to an individual, the social security account number of such individual, and the name, address, State, and the Federal employer identification number of the employer paying such wages to such individual; and
(B)
the term “claim information” means information regarding whether an individual is receiving, has received, or has made application for, unemployment compensation, the amount of any such compensation being received (or to be received by such individual), and the individual's current (or most recent) home address.
(i)
(1)
The State agency charged with the administration of the State law—
(A)
shall disclose, upon request and on a reimbursable basis, only to officers and employees of the Department of Housing and Urban Development and to representatives of a public housing agency, any of the following information contained in the records of such State agency with respect to individuals applying for or participating in any housing assistance program administered by the Department who have signed an appropriate consent form approved by the Secretary of Housing and Urban Development—
(i)
wage information, and
(ii)
whether an individual is receiving, has received, or has made application for, unemployment compensation, and the amount of any such compensation being received (or to be received) by such individual, and
(B)
shall establish such safeguards as are necessary (as determined by the Secretary of Labor in regulations) to ensure that information disclosed under subparagraph (A) is used only for purposes of determining an individual's eligibility for benefits, or the amount of benefits, under a housing assistance program of the Department of Housing and Urban Development.
(2)
The Secretary of Labor shall prescribe regulations governing how often and in what form information may be disclosed under paragraph (1)(A).
(3)
Whenever the Secretary of Labor, after reasonable notice and opportunity for hearing to the State agency charged with the administration of the State law, finds that there is a failure to comply substantially with the requirements of paragraph (1), the Secretary of Labor shall notify such State agency that further payments will not be made to the State until he or she is satisfied that there is no longer any such failure. Until the Secretary of Labor is so satisfied, he or she shall make no future certification to the Secretary of the Treasury with respect to such State.
(4)
For purposes of this subsection, the term “public housing agency” means any agency described in section 3(b)(6) of the United States Housing Act of 1937.
(5)
[Repealed by section 542(a)(1) of P.L. 105–65 (111 Stat. 1412).]
(j)
(1)
The State agency charged with the administration of the State law shall establish and utilize a system of profiling all new claimants for regular compensation that—
(A)
identifies which claimants will be likely to exhaust regular compensation and will need job search assistance services to make a successful transition to new employment;
(B)
refers claimants identified pursuant to subparagraph (A) to reemployment services, such as job search assistance services, available under any State or Federal law;
(C)
collects follow-up information relating to the services received by such claimants and the employment outcomes for such claimants subsequent to receiving such services and utilizes such information in making identifications pursuant to subparagraph (A); and
(D)
meets such other requirements as the Secretary of Labor determines are appropriate.
(2)
Whenever the Secretary of Labor, after reasonable notice and opportunity for hearing to the State agency charged with the administration of the State law, finds that there is a failure to comply substantially with the requirements of paragraph (1), the Secretary of Labor shall notify such State agency that further payments will not be made to the State until he is satisified that there is no longer any such failure. Until the Secretary of Labor is so satisfied, he shall make no further certification to the Secretary of the Treasury with respect to such State.
(k)
(1)
For purposes of subsection (a), the unemployment compensation law of a State must provide—
(A)
that if an employer transfers its business to another employer, and both employers are (at the time of transfer) under substantially common ownership, management, or control, then the unemployment experience attributable to the transferred business shall also be transferred to (and combined with the unemployment experience attributable to) the employer to whom such business is so transferred,
(B)
that unemployment experience shall not, by virtue of the transfer of a business, be transferred to the person acquiring such business if—
(i)
such person is not otherwise an employer at the time of such acquisition, and
(ii)
the State agency finds that such person acquired the business solely or primarily for the purpose of obtaining a lower rate of contributions,
(C)
that unemployment experience shall (or shall not) be transferred in accordance with such regulations as the Secretary of Labor may prescribe to ensure that higher rates of contributions are not avoided through the transfer or acquisition of a business,
(D)
that meaningful civil and criminal penalties are imposed with respect to—
(i)
persons that knowingly violate or attempt to violate those provisions of the State law which implement subparagraph (A) or (B) or regulations under subparagraph (C), and
(ii)
persons that knowingly advise another person to violate those provisions of the State law which implement subparagraph (A) or (B) or regulations under subparagraph (C), and
(E)
for the establishment of procedures to identify the transfer or acquisition of a business for purposes of this subsection.
(2)
For purposes of this subsection—
(A)
the term “unemployment experience”, with respect to any person, refers to such person's experience with respect to unemployment or other factors bearing a direct relation to such person's unemployment risk;
(B)
the term “employer” means an employer as defined under the State law;
(C)
the term “business” means a trade or business (or a part thereof);
(D)
the term “contributions” has the meaning given such term by section 3306(g) of the Internal Revenue Code of 1986;
(E)
the term “knowingly” means having actual knowledge of or acting with deliberate ignorance of or reckless disregard for the prohibition involved; and
(F)
the term “person” has the meaning given such term by section 7701(a)(1) of the Internal Revenue Code of 1986.
(l)
(1)
Nothing in this Act or any other provision of Federal law shall be considered to prevent a State from enacting legislation to provide for—
(A)
testing an applicant for unemployment compensation for the unlawful use of controlled substances as a condition for receiving such compensation, if such applicant—
(i)
was terminated from employment with the applicant's most recent employer (as defined under the State law) because of the unlawful use of controlled substances; or
(ii)
is an individual for whom suitable work (as defined under the State law) is only available in an occupation that regularly conducts drug testing (as determined under regulations issued by the Secretary of Labor); or
(B)
denying such compensation to such applicant on the basis of the result of the testing conducted by the State under legislation described in subparagraph (A).
(2)
For purposes of this subsection—
(A)
the term “unemployment compensation” has the meaning given such term in subsection (d)(2)(A); and
(B)
the term “controlled substance” has the meaning given such term in section 102 of the Controlled Substances Act (21 U.S.C. 802).
(m)
In the case of a covered unemployment compensation debt (as defined under section 6402(f)(4) of the Internal Revenue Code of 1986) that remains uncollected as of the date that is 1 year after the debt was finally determined to be due and collected, the State to which such debt is owed shall take action to recover such debt under section 6402(f) of the Internal Revenue Code of 1986.

judicial review
Sec. 304.
[42 U.S.C. 504]
(a)
Whenever the Secretary of Labor—
(1)
finds that a State law does not include any provision specified in section 303(a), or
(2)
makes a finding with respect to a State under subsection (b), (c), (d), (e), (h), (i), or (j) of section 303,
such State may, within 60 days after the Governor of the State has been notified of such action, file with the United States court of appeals for the circuit in which such State is located or with the United States Court of Appeals for the District of Columbia, a petition for review of such action. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Secretary of Labor. The Secretary of Labor thereupon shall file in the court the record of the proceedings on which he based his action as provided in section 2112 of title 28, United States Code.
(b)
The findings of fact by the Secretary of Labor, if supported by substantial evidence, shall be conclusive; but the court, for good cause shown, may remand the case to the Secretary of Labor to take further evidence and the Secretary of Labor may thereupon make new or modified findings of fact and may modify his previous action, and shall certify to the court the record of the further proceedings. Such new or modified findings of fact shall likewise be conclusive if supported by substantial evidence.
(c)
The court shall have jurisdiction to affirm the action of the Secretary of Labor or to set it aside, in whole or in part. The judgment of the court shall be subject to review by the Supreme Court of the United States upon certiorari or certification as provided in section 1254 of title 28 of the United States Code.
(d)
(1)
The Secretary of Labor shall not withhold any certification for payment to any State under section 302 until the expiration of 60 days after the Governor of the State has been notified of the action referred to in paragraph (1) or (2) of subsection (a) or until the State has filed a petition for review of such action, whichever is earlier.
(2)
The commencement of judicial proceedings under this section shall stay the Secretary's action for a period of 30 days, and the court may thereafter grant interim relief if warranted, including a further stay of the Secretary's action and including such other relief as may be necessary to preserve status or rights.

DEMONSTRATION PROJECTS
Sec. 305.
[42 U.S.C. 505]
(a)
The Secretary of Labor may enter into agreements, with up to 10 States that submit an application described in subsection (b), for the purpose of allowing such States to conduct demonstration projects to test and evaluate measures designed—
(1)
to expedite the reemployment of individuals who have established a benefit year and are otherwise eligible to claim unemployment compensation under the State law of such State; or
(2)
to improve the effectiveness of a State in carrying out its State law with respect to reemployment.
(b)
The Governor of any State desiring to conduct a demonstration project under this section shall submit an application to the Secretary of Labor. Any such application shall include—
(1)
a general description of the proposed demonstration project, including the authority (under the laws of the State) for the measures to be tested, as well as the period of time during which such demonstration project would be conducted;
(2)
if a waiver under subsection (c) is requested, a statement describing the specific aspects of the project to which the waiver would apply and the reasons why such waiver is needed;
(3)
a description of the goals and the expected programmatic outcomes of the demonstration project, including how the project would contribute to the objective described in subsection (a)(1), subsection (a)(2), or both;
(4)
assurances (accompanied by supporting analysis) that the demonstration project would operate for a period of at least 1 calendar year and not result in any increased net costs to the State's account in the Unemployment Trust Fund;
(5)
a description of the manner in which the State—
(A)
will conduct an impact evaluation, using a methodology appropriate to determine the effects of the demonstration project, including on individual skill levels, earnings, and employment retention; and
(B)
will determine the extent to which the goals and outcomes described in paragraph (3) were achieved;
(6)
assurances that the State will provide any reports relating to the demonstration project, after its approval, as the Secretary of Labor may require; and
(7)
assurances that employment meets the State's suitable work requirement and the requirements of section 3304(a)(5) of the Internal Revenue Code of 1986.
(c)
The Secretary of Labor may waive any of the requirements of section 3304(a)(4) of the Internal Revenue Code of 1986 or of paragraph (1) or (5) of section 303(a), to the extent and for the period the Secretary of Labor considers necessary to enable the State to carry out a demonstration project under this section.
(d)
A demonstration project under this section—
(1)
may be commenced any time after the date of enactment of this section;
(2)
may not be approved for a period of time greater than 3 years; and
(3)
must be completed by not later than December 31, 2015.
(e)
Activities that may be pursued under a demonstration project under this section are limited to—
(1)
subsidies for employer-provided training, such as wage subsidies; and
(2)
direct disbursements to employers who hire individuals receiving unemployment compensation, not to exceed the weekly benefit amount for each such individual, to pay part of the cost of wages that exceed the unemployed individual's prior benefit level.
(f)
The Secretary of Labor shall, in the case of any State for which an application is submitted under subsection (b)—
(1)
notify the State as to whether such application has been approved or denied within 30 days after receipt of a complete application; and
(2)
provide public notice of the decision within 10 days after providing notification to the State in accordance with paragraph (1).
Public notice under paragraph (2) may be provided through the Internet or other appropriate means. Any application under this section that has not been denied within the 30-day period described in paragraph (1) shall be deemed approved, and public notice of any approval under this sentence shall be provided within 10 days thereafter.
(g)
The Secretary of Labor may terminate a demonstration project under this section if the Secretary determines that the State has violated the substantive terms or conditions of the project.
(h)
Funding certified under section 302(a) may be used for an approved demonstration project.
SEC. 306.
[42 U.S.C. 506]

GRANTS TO STATES FOR REEMPLOYMENT SERVICES AND ELIGIBILITY ASSESSMENTS.
(a)

In General.—
The Secretary of Labor (in this section referred to as the “Secretary”) shall award grants under this section for a fiscal year to eligible States to conduct a program of reemployment services and eligibility assessments for claimants for regular compensation, including claimants referred to reemployment services as described in section 303(j), for weeks in such fiscal year for which such claimants receive unemployment compensation.
(b)

Purposes.—
The purposes of this section are to accomplish the following goals:
(1)
To improve employment outcomes of individuals that receive unemployment compensation and to reduce the average duration of receipt of such compensation through employment.
(2)
To strengthen program integrity and reduce improper payments of unemployment compensation by States through the detection and prevention of such payments to individuals who are not eligible for such compensation.
(3)
To promote alignment with the broader vision of the Workforce Innovation and Opportunity Act (29 U.S.C. 3101 et seq.) of increased program integration and service delivery for job seekers, including claimants for unemployment compensation.
(4)
To establish reemployment services and eligibility assessments as an entry point for individuals receiving unemployment compensation into other workforce system partner programs.
(c)

Evidence-based Standards.—
(1)

In general.—
In carrying out a State program of reemployment services and eligibility assessments using grant funds awarded to the State under this section, a State shall use such funds only for interventions demonstrated to reduce the number of weeks for which program participants receive unemployment compensation by improving employment outcomes for program participants.
(2)

Expanding evidence-based interventions.—
In addition to the requirement imposed by paragraph (1), a State shall—
(A)
for fiscal years 2023 and 2024, use no less than 25 percent of the grant funds awarded to the State under this section for interventions with a high or moderate causal evidence rating that show a demonstrated capacity to improve employment and earnings outcomes for program participants;
(B)
for fiscal years 2025 and 2026, use no less than 40 percent of such grant funds for interventions described in subparagraph (A); and
(C)
for fiscal years beginning after fiscal year 2026, use no less than 50 percent of such grant funds for interventions described in subparagraph (A).
(d)

Evaluations.—
(1)

Required evaluations.—
Any intervention without a high or moderate causal evidence rating used by a State in carrying out a State program of reemployment services and eligibility assessments under this section shall be under evaluation at the time of use.
(2)

Funding limitation.—
A State shall use not more than 10 percent of grant funds awarded to the State under this section to conduct or cause to be conducted evaluations of interventions used in carrying out a program under this section (including evaluations conducted pursuant to paragraph (1)).
(e)

State Plan.—
(1)

In general.—
As a condition of eligibility to receive a grant under this section for a fiscal year, a State shall submit to the Secretary, at such time and in such manner as the Secretary may require, a State plan that outlines how the State intends to conduct a program of reemployment services and eligibility assessments under this section, including—
(A)
assurances that, and a description of how, the program will provide—
(i)
proper notification to participating individuals of the program’s eligibility conditions, requirements, and benefits, including the issuance of warnings and simple, clear notifications to ensure that participating individuals are fully aware of the consequences of failing to adhere to such requirements, including policies related to non-attendance or non-fulfillment of work search requirements; and
(ii)
reasonable scheduling accommodations to maximize participation for eligible individuals;
(B)
assurances that, and a description of how, the program will conform with the purposes outlined in subsection (b) and satisfy the requirement to use evidence-based standards under subsection (c), including—
(i)
a description of the evidence-based interventions the State plans to use to speed reemployment;
(ii)
an explanation of how such interventions are appropriate to the population served; and
(iii)
if applicable, a description of the evaluation structure the State plans to use for interventions without at least a moderate or high causal evidence rating, which may include national evaluations conducted by the Department of Labor or by other entities; and
(C)
a description of any reemployment activities and evaluations conducted in the prior fiscal year, and any data collected on—
(i)
characteristics of program participants;
(ii)
the number of weeks for which program participants receive unemployment compensation; and
(iii)
employment and other outcomes for program participants consistent with State performance accountability measures provided by the State unemployment compensation program and in section 116(b) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3141(b)).
(2)

Approval.—
The Secretary shall approve any State plan, that is timely submitted to the Secretary, in such manner as the Secretary may require, that satisfies the conditions described in paragraph (1).
(3)

Disapproval and revision.—
If the Secretary determines that a State plan submitted pursuant to this subsection fails to satisfy the conditions described in paragraph (1), the Secretary shall—
(A)
disapprove such plan;
(B)
provide to the State, not later than 30 days after the date of receipt of the State plan, a written notice of such disapproval that includes a description of any portion of the plan that was not approved and the reason for the disapproval of each such portion; and
(C)
provide the State with an opportunity to correct any such failure and submit a revised State plan.
(f)

Allocation of Funds.—
(1)

Base funding.—
(A)

In general.—
For each fiscal year after fiscal year 2020, the Secretary shall allocate a percentage equal to the base funding percentage for such fiscal year of the funds made available for grants under this section among the States awarded such a grant for such fiscal year using a formula prescribed by the Secretary based on the rate of insured unemployment (as defined in section 203(e)(1) of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note)) in the State for a period to be determined by the Secretary. In developing such formula with respect to a State, the Secretary shall consider the importance of avoiding sharp reductions in grant funding to a State over time.
(B)

Base funding percentage.—
For purposes of subparagraph (A), the term “base funding percentage” means—
(i)
for fiscal years 2021 through 2026, 89 percent; and
(ii)
for fiscal years after 2026, 84 percent.
(2)

Reservation for outcome payments.—
(A)

In general.—
Of the amounts made available for grants under this section for each fiscal year after 2020, the Secretary shall reserve a percentage equal to the outcome reservation percentage for such fiscal year for outcome payments to increase the amount otherwise awarded to a State under paragraph (1). Such outcome payments shall be paid to States conducting reemployment services and eligibility assessments under this section that, during the previous fiscal year, met or exceeded the outcome goals provided in subsection (b)(1) related to reducing the average duration of receipt of unemployment compensation by improving employment outcomes.
(B)

Outcome reservation percentage.—
For purposes of subparagraph (A), the term “outcome reservation percentage” means—
(i)
for fiscal years 2021 through 2026, 10 percent; and
(ii)
for fiscal years after 2026, 15 percent.
(3)

Reservation for research and technical assistance.—
Of the amounts made available for grants under this section for each fiscal year after 2020, the Secretary may reserve not more than 1 percent to conduct research and provide technical assistance to States.
(4)

Consultation and public comment.—
Not later than September 30, 2019, the Secretary shall—
(A)
consult with the States and seek public comment in developing the allocation formula under paragraph (1) and the criteria for carrying out the reservations under paragraph (2); and
(B)
make publicly available the allocation formula and criteria developed pursuant to subclause (A).
(g)

Notification to Congress.—
Not later than 90 days prior to making any changes to the allocation formula or the criteria developed pursuant to subsection (f)(5)(A), the Secretary shall submit to Congress, including to the Committee on Ways and Means and the Committee on Appropriations of the House of Representatives and the Committee on Finance and the Committee on Appropriations of the Senate, a notification of any such change.
(h)

Supplement Not Supplant.—
Funds made available to carry out this section shall be used to supplement the level of Federal, State, and local public funds that, in the absence of such availability, would be expended to provide reemployment services and eligibility assessments to individuals receiving unemployment compensation, and in no case to supplant such Federal, State, or local public funds.
(i)

Definitions.—
In this section:
(1)

Causal evidence rating.—
The terms “high causal evidence rating” and “moderate causal evidence rating” shall have the meaning given such terms by the Secretary of Labor.
(2)

Eligible state.—
The term “eligible State” means a State that has in effect a State plan approved by the Secretary in accordance with subsection (e).
(3)

Intervention.—
The term “intervention” means a service delivery strategy for the provision of State reemployment services and eligibility assessment activities under this section.
(4)

State.—
The term “State” has the meaning given the term in section 205 of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note).
(5)

Unemployment compensation.—
The term unemployment compensation means “regular compensation”, “extended compensation”, and “additional compensation” (as such terms are defined by section 205 of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note)).
TITLE IV—

GRANTS TO STATES FOR AID AND SERVICES TO NEEDY FAMILIES WITH CHILDREN AND FOR CHILD-WELFARE SERVICES

TABLE OF CONTENTS OF TITLE1
^1
This table of contents does not appear in the law.
Part A—
Aid to Families With Dependent Children
Part A—
Block Grants to States for Temporary Assistance for Needy Families
Sec. 401.
Purpose.
Sec. 402.
Eligible States; State plan.
Sec. 403.
Grants to States.
Sec. 404.
Use of grants.
Sec. 405.
Administrative provisions.
Sec. 406.
Federal loans for State welfare programs.
Sec. 407.
Mandatory work requirements.
Sec. 408.
Prohibitions; requirements.
Sec. 409.
Penalties.
Sec. 410.
Appeal of adverse decision.
Sec. 411.
Data collection and reporting.
Sec. 412.
Direct funding and administration by Indian tribes.
Sec. 413.
Research, evaluations, and national studies.
Sec. 415.
Waivers.
Sec. 416.
Administration.
Sec. 417.
Limitation on Federal authority.
Sec. 418.
Funding for child care.
Sec. 419.
Definitions.
Part B—
Child and Family Services
Subpart 1—
Stephanie Tubbs Jones Child Welfare Services Program
Sec. 421.
Purpose.
Sec. 422.
State plans for child welfare services.
Sec. 423.
Allotments to States.
Sec. 424.
Payment to States.
Sec. 425.
Limitations on authorizations of appropriations.
Sec. 426.
Research, training, or demonstration projects.
Sec. 427.
Family connection grants.
Sec. 428.
Payments to Indian tribal organizations.
Sec. 429.
National random sample study of child welfare.
Sec. 429A.
Grants to States to enhance collaboration between State child welfare and juvenile justice system.
Sec. 429B.
Effective implementation of the Indian Child Welfare Act of 1978.
Subpart 2—
Promoting Safe and Stable Families
Sec. 430.
Purpose.
Sec. 431.
Definitions.
Sec. 432.
State plans.
Sec. 433.
Allotments to States.
Sec. 434.
Payments to States.
Sec. 435.
Evaluations; research; technical assistance.
Sec. 436.
Authorization of appropriations; reservation of certain amounts.
Sec. 437.
Discretionary grants.
Sec. 438.
Entitlement funding for State courts to assess and improve handling of proceedings relating to foster care and adoption.
Sec. 439.
Grants for programs for mentoring children of prisoners.
Subpart 3—
Common Provisions
Sec. 441.
Reduction of administrative burden.
Sec. 442.
Public access to State plans.
Sec. 443.
Data exchange standards for improved interoperability.
[Part C—Repealed]
Part D—
Child Support and Establishment of Paternity
Sec. 451.
Appropriation.
Sec. 452.
Duties of the Secretary.
Sec. 453.
Federal Parent Locator Service.
Sec. 453A.
State directory of new hires.
Sec. 454.
State plan for child and spousal support.
Sec. 454A.
Automated data processing.
Sec. 454B.
Collection and disbursement of support payments.
Sec. 455.
Payments to States.
Sec. 456.
Support obligations.
Sec. 457.
Distribution of proceeds.
Sec. 458.
Incentive payments to States.
Sec. 459.
Consent by the United States to garnishment and similar proceedings for enforcement of child support and alimony obligations.
Sec. 459A.
International support enforcement.
Sec. 460.
Civil actions to enforce support obligations.
[Sec. 461. Repealed.]
[Sec. 462. Repealed.]
Sec. 463.
Use of Federal Parent Locator Service in connection with the enforcement or determination of child custody and in cases of parental kidnaping of a child.
Sec. 464.
Collection of past-due support from Federal tax refunds.
Sec. 465.
Allotments from pay for child and spousal support owed by members of the uniformed services on active duty.
Sec. 466.
Requirement of statutorily prescribed procedures to improve effectiveness of child support enforcement.
Sec. 467.
State guidelines for child support awards.
Sec. 468.
Encouragement of States to adopt simple civil process for voluntarily acknowledging paternity and a civil procedure for establishing paternity in contested cases.
Sec. 469.
Collection and reporting of child support enforcement data.
Part E—
Federal Payments for Foster Care, Prevention, and Permanency
Sec. 470.
Purpose: appropriation.
Sec. 471.
State plan for foster care and adoption assistance.
Sec. 472.
Foster care maintenance payments program.
Sec. 473.
Adoption assistance program.
Sec. 474.
Payments to States; allotments to States.
Sec. 475.
Definitions.
Sec. 476.
Technical assistance; data collection and evaluation.
Sec. 477.
John H. Chafee foster care program for successful transition to adulthood.
Sec. 478.
Rule of construction.
Sec. 479.
Collection of data relating to adoption and foster care.
Sec. 479A.
Annual report.
Sec. 479B.
Programs operated by Indian tribal organizations.
[Part F—Repealed]
PART A—

BLOCK GRANTS TO STATES FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES
SEC. 401.
[42 U.S.C. 601]

PURPOSE.
(a)

In General.—
The purpose of this part is to increase the flexibility of States in operating a program designed to—
(1)
provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives;
(2)
end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage;
(3)
prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and
(4)
encourage the formation and maintenance of two-parent families.
(b)

No Individual Entitlement.—
This part shall not be interpreted to entitle any individual or family to assistance under any State program funded under this part.
SEC. 402.
[42 U.S.C. 602]

ELIGIBLE STATES; STATE PLAN.
(a)

In General.—
As used in this part, the term “eligible State” means, with respect to a fiscal year, a State that, during the 27-month period ending with the close of the 1st quarter of the fiscal year, has submitted to the Secretary a plan that the Secretary has found includes the following:
(1)

Outline of family assistance program.—
(A)

General provisions.—
A written document that outlines how the State intends to do the following:
(i)
Conduct a program, designed to serve all political subdivisions in the State (not necessarily in a uniform manner), that provides assistance to needy families with (or expecting) children and provides parents with job preparation, work, and support services to enable them to leave the program and become self-sufficient.
(ii)
Require a parent or caretaker receiving assistance under the program to engage in work (as defined by the State) once the State determines the parent or caretaker is ready to engage in work, or once the parent or caretaker has received assistance under the program for 24 months (whether or not consecutive), whichever is earlier, consistent with section 407(e)(2).
(iii)
Ensure that parents and caretakers receiving assistance under the program engage in work activities in accordance with section 407.
(iv)
Take such reasonable steps as the State deems necessary to restrict the use and disclosure of information about individuals and families receiving assistance under the program attributable to funds provided by the Federal Government.
(v)
Establish goals and take action to prevent and reduce the incidence of out-of-wedlock pregnancies, with special emphasis on teenage pregnancies, and establish numerical goals for reducing the illegitimacy ratio of the State (as defined in section 403(a)(2)(C)(iii)2) for calendar years 1996 through 2005.
^2
Section 403(a)(2) of this Act, referred to in subsection (a)(1)(A)(v), was amended generally by section 7103(a) of Public Law 109–171, and, as so amended, no longer defines `illegitimacy ratio''.
(vi)
Conduct a program, designed to reach State and local law enforcement officials, the education system, and relevant counseling services, that provides education and training on the problem of statutory rape so that teenage pregnancy prevention programs may be expanded in scope to include men.
(vii)
Implement policies and procedures as necessary to prevent access to assistance provided under the State program funded under this part through any electronic fund transaction in an automated teller machine or point-of-sale device located in a place described in section 408(a)(12), including a plan to ensure that recipients of the assistance have adequate access to their cash assistance.
(viii)
Ensure that recipients of assistance provided under the State program funded under this part have access to using or withdrawing assistance with minimal fees or charges, including an opportunity to access assistance with no fee or charges, and are provided information on applicable fees and surcharges that apply to electronic fund transactions involving the assistance, and that such information is made publicly available.
(B)

Special provisions.—
(i)
The document shall indicate whether the State intends to treat families moving into the State from another State differently than other families under the program, and if so, how the State intends to treat such families under the program.
(ii)
The document shall indicate whether the State intends to provide assistance under the program to individuals who are not citizens of the United States, and if so, shall include an overview of such assistance.
(iii)
The document shall set forth objective criteria for the delivery of benefits and the determination of eligibility and for fair and equitable treatment, including an explanation of how the State will provide opportunities for recipients who have been adversely affected to be heard in a State administrative or appeal process.
(iv)
Not later than 1 year after the date of enactment of this section, unless the chief executive officer of the State opts out of this provision by notifying the Secretary, a State shall, consistent with the exception provided in section 407(e)(2), require a parent or caretaker receiving assistance under the program who, after receiving such assistance for 2 months is not exempt from work requirements and is not engaged in work, as determined under section 407(c), to participate in community service employment, with minimum hours per week and tasks to be determined by the State.
(v)
The document shall indicate whether the State intends to assist individuals to train for, seek, and maintain employment—
(I)
providing direct care in a long-term care facility (as such terms are defined under section 2011); or
(II)
in other occupations related to elder care determined appropriate by the State for which the State identifies an unmet need for service personnel,
and, if so, shall include an overview of such assistance.
(2)

Certification that the state will operate a child support enforcement program.—
A certification by the chief executive officer of the State that, during the fiscal year, the State will operate a child support enforcement program under the State plan approved under part D.
(3)

Certification that the state will operate a foster care and adoption assistance program.—
A certification by the chief executive officer of the State that, during the fiscal year, the State will operate a foster care and adoption assistance program under the State plan approved under part E, and that the State will take such actions as are necessary to ensure that children receiving assistance under such part are eligible for medical assistance under the State plan under title XIX.
(4)

Certification of the administration of the program.—
A certification by the chief executive officer of the State specifying which State agency or agencies will administer and supervise the program referred to in paragraph (1) for the fiscal year, which shall include assurances that local governments and private sector organizations—
(A)
have been consulted regarding the plan and design of welfare services in the State so that services are provided in a manner appropriate to local populations; and
(B)
have had at least 45 days to submit comments on the plan and the design of such services.
(5)

Certification that the state will provide indians with equitable access to assistance.—
A certification by the chief executive officer of the State that, during the fiscal year, the State will provide each member of an Indian tribe, who is domiciled in the State and is not eligible for assistance under a tribal family assistance plan approved under section 412, with equitable access to assistance under the State program funded under this part attributable to funds provided by the Federal Government.
(6)

Certification of standards and procedures to ensure against program fraud and abuse.—
A certification by the chief executive officer of the State that the State has established and is enforcing standards and procedures to ensure against program fraud and abuse, including standards and procedures concerning nepotism, conflicts of interest among individuals responsible for the administration and supervision of the State program, kickbacks, and the use of political patronage.
(7)

Optional certification of standards and procedures to ensure that the state will screen for and identify domestic violence.—
(A)

In general.—
At the option of the State, a certification by the chief executive officer of the State that the State has established and is enforcing standards and procedures to—
(i)
screen and identify individuals receiving assistance under this part with a history of domestic violence while maintaining the confidentiality of such individuals;
(ii)
refer such individuals to counseling and supportive services; and
(iii)
waive, pursuant to a determination of good cause, other program requirements such as time limits (for so long as necessary) for individuals receiving assistance, residency requirements, child support cooperation requirements, and family cap provisions, in cases where compliance with such requirements would make it more difficult for individuals receiving assistance under this part to escape domestic violence or unfairly penalize such individuals who are or have been victimized by such violence, or individuals who are at risk of further domestic violence.
(B)

Domestic violence defined.—
For purposes of this paragraph, the term “domestic violence” has the same meaning as the term “battered or subjected to extreme cruelty”, as defined in section 408(a)(7)(C)(iii).
(8)

Certification that the state will provide information to victims of sexual harassment or survivors of domestic violence, sexual assault, or stalking.—
(A)

In general.—
A certification by the chief executive officer of the State that the State has established and is enforcing standards and procedures to—
(i)
ensure that applicants and potential applicants for assistance under the State program funded under this part are notified of assistance made available by the State to victims of sexual harassment and survivors of domestic violence, sexual assault, or stalking;
(ii)
ensure that case workers and other agency personnel responsible for administering the State program funded under this part are trained in—
(I)
the nature and dynamics of sexual harassment and domestic violence, sexual assault, and stalking;
(II)
State standards and procedures relating to the prevention of, and assistance for, individuals who are victims of sexual harassment or survivors of domestic violence, sexual assault, or stalking; and
(III)
methods of ascertaining and ensuring the confidentiality of personal information and documentation related to applicants for assistance and their children who have provided notice about their experiences of sexual harassment, domestic violence, sexual assault, or stalking; and
(iii)
ensure that, if a State has elected to establish and enforce standards and procedures regarding the screening for, and identification of, domestic violence, sexual assault, or stalking pursuant to paragraph (7)—
(I)
the State program funded under this part provides information about the options under this part to current and potential beneficiaries; and
(II)
case workers and other agency personnel responsible for administering the State program funded under this part are provided with training regarding State standards and procedures pursuant to paragraph (7).
(B)

Definitions.—
For purposes of this paragraph—
(i)
the term “sexual harassment” means hostile, intimidating, or oppressive behavior based on sex that creates an offensive work environment;
(ii)
the term “domestic violence” has the meaning given such term in paragraph (7); and
(iii)
the terms “sexual assault” and “stalking” have the meanings given such terms in section 40002 of the Violence Against Women Act of 1994 (34 U.S.C. 12291).
(b)

Plan Amendments.—
Within 30 days after a State amends a plan submitted pursuant to subsection (a), the State shall notify the Secretary of the amendment.
(c)

Public Availability of State Plan Summary.—
The State shall make available to the public a summary of any plan or plan amendment submitted by the State under this section.
SEC. 403.
[42 U.S.C. 603]

GRANTS TO STATES.
(a)

Grants.—
(1)

Family assistance grant.—
(A)

In general.—
Each eligible State shall be entitled to receive from the Secretary, for each of fiscal years 2017 and 2018, a grant in an amount equal to the State family assistance grant.
(B)

State family assistance grant.—
The State family assistance grant payable to a State for a fiscal year shall be the amount that bears the same ratio to the amount specified in subparagraph (C) of this paragraph (as in effect just before the enactment of the Welfare Integrity and Data Improvement Act), reduced by the percentage specified in section 413(h)(1) with respect to the fiscal year, as the amount required to be paid to the State under this paragraph (as so in effect) for fiscal year 2002 (determined without regard to any reduction pursuant to section 409 or 412(a)(1)) bears to the total amount required to be paid under this paragraph for fiscal year 2002 (as so determined).
(C)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for each of fiscal years 2017 and 2018 $16,566,542,000 for grants under this paragraph.
(2)

Healthy marriage promotion and responsible fatherhood grants.—
(A)

In general.—
(i)

Use of funds.—
Subject to subparagraphs (B), (C), and (E), the Secretary may use the funds made available under subparagraph (D) for the purpose of conducting and supporting research and demonstration projects by public or private entities, and providing technical assistance to States, Indian tribes and tribal organizations, and such other entities as the Secretary may specify that are receiving a grant under another provision of this part.
(ii)

Limitations.—
The Secretary may not award funds made available under this paragraph on a noncompetitive basis, and may not provide any such funds to an entity for the purpose of carrying out healthy marriage promotion activities or for the purpose of carrying out activities promoting responsible fatherhood unless the entity has submitted to the Secretary an application (or, in the case of an entity seeking funding to carry out healthy marriage promotion activities and activities promoting responsible fatherhood, a combined application that contains assurances that the entity will carry out such activities under separate programs and shall not combine any funds awarded to carry out either such activities) which—
(I)
describes—
- (aa)
how the programs or activities proposed in the application will address, as appropriate, issues of domestic violence; and
- (bb)
what the applicant will do, to the extent relevant, to ensure that participation in the programs or activities is voluntary, and to inform potential participants that their participation is voluntary; and
(II)
contains a commitment by the entity—
- (aa)
to not use the funds for any other purpose; and
- (bb)
to consult with experts in domestic violence or relevant community domestic violence coalitions in developing the programs and activities.
(iii)

Healthy marriage promotion activities.—
In clause (ii), the term “healthy marriage promotion activities” means the following:
(I)
Public advertising campaigns on the value of marriage and the skills needed to increase marital stability and health.
(II)
Education in high schools on the value of marriage, relationship skills, and budgeting.
(III)
Marriage education, marriage skills, and relationship skills programs, that may include parenting skills, financial management, conflict resolution, and job and career advancement.
(IV)
Pre-marital education and marriage skills training for engaged couples and for couples or individuals interested in marriage.
(V)
Marriage enhancement and marriage skills training programs for married couples.
(VI)
Divorce reduction programs that teach relationship skills.
(VII)
Marriage mentoring programs which use married couples as role models and mentors in at-risk communities.
(VIII)
Programs to reduce the disincentives to marriage in means-tested aid programs, if offered in conjunction with any activity described in this subparagraph.
(B)

Limitation on use of funds for demonstration projects for coordination of provision of child welfare and tanf services to tribal families at risk of child abuse or neglect.—
(i)

In general.—
Of the amounts made available under subparagraph (D) for a fiscal year, the Secretary may not award more than $2,000,000 on a competitive basis to fund demonstration projects designed to test the effectiveness of tribal governments or tribal consortia in coordinating the provision to tribal families at risk of child abuse or neglect of child welfare services and services under tribal programs funded under this part.
(ii)

Limitation on use of funds.—
A grant made pursuant to clause (i) to such a project shall not be used for any purpose other than—
(I)
to improve case management for families eligible for assistance from such a tribal program;
(II)
for supportive services and assistance to tribal children in out-of-home placements and the tribal families caring for such children, including families who adopt such children; and
(III)
for prevention services and assistance to tribal families at risk of child abuse and neglect.
(iii)

Reports.—
The Secretary may require a recipient of funds awarded under this subparagraph to provide the Secretary with such information as the Secretary deems relevant to enable the Secretary to facilitate and oversee the administration of any project for which funds are provided under this subparagraph.
(C)

Limitation on use of funds for activities promoting responsible fatherhood.—
(i)

In general.—
Of the amounts made available under subparagraph (D) for a fiscal year, the Secretary may not award more than $75,000,000 on a competitive basis to States, territories, Indian tribes and tribal organizations, and public and nonprofit community entities, including religious organizations, for activities promoting responsible fatherhood.
(ii)

Activities promoting responsible fatherhood.—
In this paragraph, the term “activities promoting responsible fatherhood” means the following:
(I)
Activities to promote marriage or sustain marriage through activities such as counseling, mentoring, disseminating information about the benefits of marriage and 2-parent involvement for children, enhancing relationship skills, education regarding how to control aggressive behavior, disseminating information on the causes of domestic violence and child abuse, marriage preparation programs, premarital counseling, marital inventories, skills-based marriage education, financial planning seminars, including improving a family's ability to effectively manage family business affairs by means such as education, counseling, or mentoring on matters related to family finances, including household management, budgeting, banking, and handling of financial transactions and home maintenance, and divorce education and reduction programs, including mediation and counseling.
(II)
Activities to promote responsible parenting through activities such as counseling, mentoring, and mediation, disseminating information about good parenting practices, skills-based parenting education, encouraging child support payments, and other methods.
(III)
Activities to foster economic stability by helping fathers improve their economic status by providing activities such as work first services, job search, job training, subsidized employment, job retention, job enhancement, and encouraging education, including career-advancing education, dissemination of employment materials, coordination with existing employment services such as welfare-to-work programs, referrals to local employment training initiatives, and other methods.
(IV)
Activities to promote responsible fatherhood that are conducted through a contract with a nationally recognized, nonprofit fatherhood promotion organization, such as the development, promotion, and distribution of a media campaign to encourage the appropriate involvement of parents in the life of any child and specifically the issue of responsible fatherhood, and the development of a national clearinghouse to assist States and communities in efforts to promote and support marriage and responsible fatherhood.
(D)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for each of fiscal years 2017 and 2018 for expenditure in accordance with this paragraph—
(i)
$75,000,000 for awarding funds for the purpose of carrying out healthy marriage promotion activities; and
(ii)
$75,000,000 for awarding funds for the purpose of carrying out activities promoting responsible fatherhood.
If the Secretary makes an award under subparagraph (B)(i) for fiscal year 2017 or 2018, the funds for such award shall be taken in equal portion from the amounts appropriated under clauses (i) and (ii).
(E)

Preference.—
In awarding funds under this paragraph for fiscal year 2011, the Secretary shall give preference to entities that were awarded funds under this paragraph for any prior fiscal year and that have demonstrated the ability to successfully carry out the programs funded under this paragraph.
(3)

Supplemental grant for population increases in certain states.—
(A)

In general.—
Each qualifying State shall, subject to subparagraph (F), be entitled to receive from the Secretary—
(i)
for fiscal year 1998 a grant in an amount equal to 2.5 percent of the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and
(ii)
for each of fiscal years 1999, 2000, and 2001, a grant in an amount equal to the sum of—
(I)
the amount (if any) required to be paid to the State under this paragraph for the immediately preceding fiscal year; and
(II)
2.5 percent of the sum of—
- (aa)
the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and
- (bb)
the amount (if any) required to be paid to the State under this paragraph for the fiscal year preceding the fiscal year for which the grant is to be made.
(B)

Preservation of grant without increases for states failing to remain qualifying states.—
Each State that is not a qualifying State for a fiscal year specified in subparagraph (A)(ii) but was a qualifying State for a prior fiscal year shall, subject to subparagraph (F), be entitled to receive from the Secretary for the specified fiscal year, a grant in an amount equal to the amount required to be paid to the State under this paragraph for the most recent fiscal year for which the State was a qualifying State.
(C)

Qualifying state.—
(i)

In general.—
For purposes of this paragraph, a State is a qualifying State for a fiscal year if—
(I)
the level of welfare spending per poor person by the State for the immediately preceding fiscal year is less than the national average level of State welfare spending per poor person for such preceding fiscal year; and
(II)
the population growth rate of the State (as determined by the Bureau of the Census) for the most recent fiscal year for which information is available exceeds the average population growth rate for all States (as so determined) for such most recent fiscal year.
(ii)

State must qualify in fiscal year 1998.—
Notwithstanding clause (i), a State shall not be a qualifying State for any fiscal year after 1998 by reason of clause (i) if the State is not a qualifying State for fiscal year 1998 by reason of clause (i).
(iii)

Certain states deemed qualifying states.—
For purposes of this paragraph, a State is deemed to be a qualifying State for fiscal years 1998, 1999, 2000, and 2001 if—
(I)
the level of welfare spending per poor person by the State for fiscal year 1994 is less than 35 percent of the national average level of State welfare spending per poor person for fiscal year 1994; or
(II)
the population of the State increased by more than 10 percent from April 1, 1990 to July 1, 1994, according to the population estimates in publication CB94–204 of the Bureau of the Census.
(D)

Definitions.—
As used in this paragraph:
(i)

Level of welfare spending per poor person.—
The term “level of State welfare spending per poor person” means, with respect to a State and a fiscal year—
(I)
the sum of—
- (aa)
the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and
- (bb)
the amount (if any) paid to the State under this paragraph for the immediately preceding fiscal year; divided by
(II)
the number of individuals, according to the 1990 decennial census, who were residents of the State and whose income was below the poverty line.
(ii)

National average level of state welfare spending per poor person.—
The term “national average level of State welfare spending per poor person” means, with respect to a fiscal year, an amount equal to—
(I)
the total amount required to be paid to the States under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; divided by
(II)
the number of individuals, according to the 1990 decennial census, who were residents of any State and whose income was below the poverty line.
(iii)

State.—
The term “State” means each of the 50 States of the United States and the District of Columbia.
(E)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal years 1998, 1999, 2000, and 2001 such sums as are necessary for grants under this paragraph, in a total amount not to exceed $800,000,000.
(F)

Grants reduced pro rata if insufficient appropriations.—
If the amount appropriated pursuant to this paragraph for a fiscal year (or portion of a fiscal year) is less than the total amount of payments otherwise required to be made under this paragraph for the fiscal year (or portion of the fiscal year), then the amount otherwise payable to any State for the fiscal year (or portion of the fiscal year) under this paragraph shall be reduced by a percentage equal to the amount so appropriated divided by such total amount.
(G)

Budget scoring.—
Notwithstanding section 257(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985, the baseline shall assume that no grant shall be made under this paragraph after fiscal year 2001.
(H)

Reauthorization.—
Notwithstanding any other provision of this paragraph—
(i)
any State that was a qualifying State under this paragraph for fiscal year 2001 or any prior fiscal year shall be entitled to receive from the Secretary for each of fiscal years 2002 and 2003 a grant in an amount equal to the amount required to be paid to the State under this paragraph for the most recent fiscal year in which the State was a qualifying State;
(ii)
subparagraph (G) shall be applied as if “fiscal year 2011” were substituted for “fiscal year 2001”;3
^3
There probably should be a “and” after the semicolong at the end of clause (ii) of subparagraph (H).
(iii)
out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for each of fiscal years 2002 and 2003 such sums as are necessary for grants under this subparagraph.
(4)

Bonus to reward high performance states.—
(A)

In general.—
The Secretary shall make a grant pursuant to this paragraph to each State for each bonus year for which the State is a high performing State.
(B)

Amount of grant.—
(i)

In general.—
Subject to clause (ii) of this subparagraph, the Secretary shall determine the amount of the grant payable under this paragraph to a high performing State for a bonus year, which shall be based on the score assigned to the State under subparagraph (D)(i) for the fiscal year that immediately precedes the bonus year.
(ii)

Limitation.—
The amount payable to a State under this paragraph for a bonus year shall not exceed 5 percent of the State family assistance grant.
(C)

Formula for measuring state performance.—
Not later than 1 year after the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the Secretary, in consultation with the National Governors' Association and the American Public Welfare Association, shall develop a formula for measuring State performance in operating the State program funded under this part so as to achieve the goals set forth in section 401(a).
(D)

Scoring of state performance; setting of performance thresholds.—
For each bonus year, the Secretary shall—
(i)
use the formula developed under subparagraph (C) to assign a score to each eligible State for the fiscal year that immediately precedes the bonus year; and
(ii)
prescribe a performance threshold in such a manner so as to ensure that—
(I)
the average annual total amount of grants to be made under this paragraph for each bonus year equals $200,000,000; and
(II)
the total amount of grants to be made under this paragraph for all bonus years equals $1,000,000,000.
(E)

Definitions.—
As used in this paragraph:
(i)

Bonus year.—
The term “bonus year” means fiscal years 1999, 2000, 2001, 2002, and 2003.
(ii)

High performing state.—
The term “high performing State” means, with respect to a bonus year, an eligible State whose score assigned pursuant to subparagraph (D)(i) for the fiscal year immediately preceding the bonus year equals or exceeds the performance threshold prescribed under subparagraph (D)(ii) for such preceding fiscal year.
(F)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal years 1999 through 2003 $1,000,000,000 for grants under this paragraph.
(5)

Welfare-to-work grants.—
(A)

Formula grants.—
(i)

Entitlement.—
A State shall be entitled to receive from the Secretary of Labor a grant for each fiscal year specified in subparagraph (H) of this paragraph for which the State is a welfare-to-work State, in an amount that does not exceed the lesser of—
(I)
2 times the total of the expenditures by the State (excluding qualified State expenditures (as defined in section 409(a)(7)(B)(i)) and any expenditure described in subclause (I), (II), or (IV) of section 409(a)(7)(B)(iv)) during the period permitted under subparagraph (C)(vii) of this paragraph for the expenditure of funds under the grant for activities described in subparagraph (C)(i) of this paragraph; or
(II)
the allotment of the State under clause (iii) of this subparagraph for the fiscal year.
(ii)

Welfare-to-work state.—
A State shall be considered a welfare-to-work State for a fiscal year for purposes of this paragraph if the Secretary of Labor determines that the State meets the following requirements:
(I)
The State has submitted to the Secretary of Labor and the Secretary of Health and Human Services (in the form of an addendum to the State plan submitted under section 402) a plan which—
- (aa)
describes how, consistent with this subparagraph, the State will use any funds provided under this subparagraph during the fiscal year;
- (bb)
specifies the formula to be used pursuant to clause (vi) to distribute funds in the State, and describes the process by which the formula was developed;
- (cc)
contains evidence that the plan was developed in consultation and coordination with appropriate entitites in sub-State areas;
- (dd)
contains assurances by the Governor of the State that the private industry council (and any alternate agency designated by the Governor under item (ee)) for a service delivery area in the State will coordinate the expenditure of any funds provided under this subparagraph for the benefit of the service delivery area with the expenditure of the funds provided to the State under section 403(a)(1);
- (ee)
if the Governor of the State desires to have an agency other than a private industry council administer the funds provided under this subparagraph for the benefit of 1 or more service delivery areas in the State, contains an application to the Secretary of Labor for a waiver of clause (vii)(I) with respect to the area or areas in order to permit an alternate agency designated by the Governor to so administer the funds; and
- (ff)
describes how the State will ensure that a private industry council to which information is disclosed pursuant to section 403(a)(5)(K)4 or 454A(f)(5) has procedures for safeguarding the information and for ensuring that the information is used solely for the purpose described in that section.
^4
So in law. Should be “403(a)(5)(J)”.
(II)
The State has provided to the Secretary of Labor an estimate of the amount that the State intends to expend during the period permitted under subparagraph (C)(vii) of this paragraph for the expenditure of funds under the grant (excluding expenditures described in section 409(a)(7)(B)(iv) (other than subclause (III) thereof)) pursuant to this paragraph.
(III)
The State has agreed to negotiate in good faith with the Secretary of Health and Human Services with respect to the substance and funding of any evaluation under section 413(j), and to cooperate with the conduct of any such evaluation.
(IV)
The State is an eligible State for the fiscal year.
(V)
The State certifies that qualified State expenditures (within the meaning of section 409(a)(7)) for the fiscal year will be not less than the applicable percentage of historic State expenditures (within the meaning of section 409(a)(7)) with respect to the fiscal year.
(iii)

Allotments to welfare-to-work states.—
(I)

In general.—
Subject to this clause, the allotment of a welfare-to-work State for a fiscal year shall be the available amount for the fiscal year, multiplied by the State percentage for the fiscal year.
(II)

Minimum allotment.—
The allotment of a welfare-to-work State (other than Guam, the Virgin Islands, or American Samoa) for a fiscal year shall not be less than 0.25 percent of the available amount for the fiscal year.
(III)

Pro rata reduction.—
Subject to subclause (II), the Secretary of Labor shall make pro rata reductions in the allotments to States under this clause for a fiscal year as necessary to ensure that the total of the allotments does not exceed the available amount for the fiscal year.
(iv)

Available amount.—
As used in this subparagraph, the term “available amount” means, for a fiscal year, the sum of—
(I)
75 percent of the sum of—
- (aa)
the amount specified in subparagraph (H) for the fiscal year, minus the total of the amounts reserved pursuant to subparagraphs (E), (F), and (G) for the fiscal year; and
- (bb)
any amount reserved pursuant to subparagraph (E) for the immediately preceding fiscal year that has not been obligated; and
(II)
any available amount for the immediately preceding fiscal year that has not been obligated by a State, other than funds reserved by the State for distribution under clause (vi)(III) and funds distributed pursuant to clause (vi)(I) in any State in which the service delivery area is the State.
(v)

State percentage.—
As used in clause (iii), the term “State percentage” means, with respect to a fiscal year, ½ of the sum of—
(I)
the percentage represented by the number of individuals in the State whose income is less than the poverty line divided by the number of such individuals in the United States; and
(II)
the percentage represented by the number of adults who are recipients of assistance under the State program funded under this part divided by the number of adults in the United States who are recipients of assistance under any State program funded under this part.
(vi)

Procedure for distribution of funds within states.—
(I)

Allocation formula.—
A State to which a grant is made under this subparagraph shall devise a formula for allocating not less than 85 percent of the amount of the grant among the service delivery areas in the State, which—
- (aa)
determines the amount to be allocated for the benefit of a service delivery area in proportion to the number (if any) by which the population of the area with an income that is less than the poverty line exceeds 7.5 percent of the total population of the area, relative to such number for all such areas in the State with such an excess, and accords a weight of not less than 50 percent to this factor;
- (bb)
may determine the amount to be allocated for the benefit of such an area in proportion to the number of adults residing in the area who have been recipients of assistance under the State program funded under this part (whether in effect before or after the amendments made by section 103(a) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 first applied to the State) for at least 30 months (whether or not consecutive) relative to the number of such adults residing in the State; and
- (cc)
may determine the amount to be allocated for the benefit of such an area in proportion to the number of unemployed individuals residing in the area relative to the number of such individuals residing in the State.
(II)

Distribution of funds.—
- (aa)

In general.—
If the amount allocated by the formula to a service delivery area is at least $100,000, the State shall distribute the amount to the entity administering the grant in the area.
- (bb)

Special rule.—
If the amount allocated by the formula to a service delivery area is less than $100,000, the sum shall be available for distribution in the State under subclause (III) during the fiscal year.
(III)

Projects to help long-term recipients of assistance enter unsubsidized jobs.—
The Governor of a State to which a grant is made under this subparagraph may distribute not more than 15 percent of the grant funds (plus any amount required to be distributed under this subclause by reason of subclause (II)(bb)) to projects that appear likely to help long-term recipients of assistance under the State program funded under this part (whether in effect before or after the amendments made by section 103(a) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 first applied to the State) enter unsubsidized employment.
(vii)

Administration.—
(I)

Private industry councils.—
The private industry council for a service delivery area in a State shall have sole authority, in coordination with the chief elected official (as defined in section 3 of the Workforce Innovation and Opportunity Act) of the area, to expend the amounts distributed under clause (vi)(II)(aa) for the benefit of the service delivery area, in accordance with the assurances described in clause (ii)(I)(dd) provided by the Governor of the State.
(II)

Enforcement of coordination of expenditures with other expenditures under this part.—
Notwithstanding subclause (I) of this clause, on a determination by the Governor of a State that a private industry council (or an alternate agency described in clause (ii)(I)(dd)) has used funds provided under this subparagraph in a manner inconsistent with the assurances described in clause (ii)(I)(dd)—
- (aa)
the private industry council (or such alternate agency) shall remit the funds to the Governor; and
- (bb)
the Governor shall apply to the Secretary of Labor for a waiver of subclause (I) of this clause with respect to the service delivery area or areas involved in order to permit an alternate agency designated by the Governor to administer the funds in accordance with the assurances.
(III)

Authority to permit use of alternate administering agency.—
The Secretary of Labor shall approve an application submitted under clause (ii)(I)(ee) or subclause (II)(bb) of this clause to waive subclause (I) of this clause with respect to 1 or more service delivery areas if the Secretary determines that the alternate agency designated in the application would improve the effectiveness or efficiency of the administration of amounts distributed under clause (vi)(II)(aa) for the benefit of the area or areas.
(viii)

Data to be used in determining the number of adult tanf recipients.—
For purposes of this subparagraph, the number of adult recipients of assistance under a State program funded under this part for a fiscal year shall be determined using data for the most recent 12-month period for which such data is available before the beginning of the fiscal year.
(ix)

Reversion of unallotted formula funds.—
If at the end of any fiscal year any funds available under this subparagraph have not been allotted due to a determination by the Secretary that any State has not met the requirements of clause (ii), such funds shall be transferred to the General Fund of the Treasury of the United States.
(B)

Competitive grants.—
(i)

In general.—
The Secretary of Labor shall award grants in accordance with this subparagraph, in fiscal years 1998 and 1999, for projects proposed by eligible applicants, based on the following:
(I)
The effectiveness of the proposal in—
- (aa)
expanding the base of knowledge about programs aimed at moving recipients of assistance under State programs funded under this part who are least job ready into unsubsidized employment.
- (bb)
moving recipients of assistance under State programs funded under this part who are least job ready into unsubsidized employment; and
- (cc)
moving recipients of assistance under State programs funded under this part who are least job ready into unsubsidized employment, even in labor markets that have a shortage of low-skill jobs.
(II)
At the discretion of the Secretary of Labor, any of the following:
- (aa)
The history of success of the applicant in moving individuals with multiple barriers into work.
- (bb)
Evidence of the applicant's ability to leverage private, State, and local resources.
- (cc)
Use by the applicant of State and local resources beyond those required by subparagraph (A).
- (dd)
Plans of the applicant to coordinate with other organizations at the local and State level.
- (ee)
Use by the applicant of current or former recipients of assistance under a State program funded under this part as mentors, case managers, or service providers.
(ii)

Eligible applicants.—
As used in clause (i), the term “eligible applicant” means a private industry council for a service delivery area in a State, a political subdivision of a State, or a private entity applying in conjunction with the private industry council for such a service delivery area or with such a political subdivision, that submits a proposal developed in consultation with the Governor of the State.
(iii)

Determination of grant amount.—
In determining the amount of a grant to be made under this subparagraph for a project proposed by an applicant, the Secretary of Labor shall provide the applicant with an amount sufficient to ensure that the project has a reasonable opportunity to be successful, taking into account the number of long-term recipients of assistance under a State program funded under this part, the level of unemployment, the job opportunities and job growth, the poverty rate, and such other factors as the Secretary of Labor deems appropriate, in the area to be served by the project.
(iv)

Consideration of needs of rural areas and cities with large concentrations of poverty.—
In making grants under this subparagraph, the Secretary of Labor shall consider the needs of rural areas and cities with large concentrations of residents with an income that is less than the poverty line.
(v)

Funding.—
For grants under this subparagraph for each fiscal year specified in subparagraph (H), there shall be available to the Secretary of Labor an amount equal to the sum of—
(I)
25 percent of the sum of—
- (aa)
the amount specified in subparagraph (H) for the fiscal year, minus the total of the amounts reserved pursuant to subparagraphs (E), (F), and (G) for the fiscal year; and
- (bb)
any amount reserved pursuant to subparagraph (E) for the immediately preceding fiscal year that has not been obligated; and
(II)
any amount available for grants under this subparagraph for the immediately preceding fiscal year that has not been obligated.
(C)

Limitations on use of funds.—
(i)

Allowable activities.—
An entity to which funds are provided under this paragraph shall use the funds to move individuals into and keep individuals in lasting unsubsidized employment by means of any of the following:
(I)
The conduct and administration of community service or work experience programs.
(II)
Job creation through public or private sector employment wage subsidies.
(III)
On-the-job training.
(IV)
Contracts with public or private providers of readiness, placement, and post-employment services, or if the entity is not a private industry council or workforce investment board, the direct provision of such services.
(V)
Job vouchers for placement, readiness, and postemployment services.
(VI)
Job retention or support services if such services are not otherwise available.
(VII)
Not more than 6 months of vocational educational or job training.
Contracts or vouchers for job placement services supported by such funds must require that at least ½ of the payment occur after an eligible individual placed into the workforce has been in the workforce for 6 months.
(ii)

General eligibility.—
An entity that operates a project with funds provided under this paragraph may expend funds provided to the project for the benefit of recipients of assistance under the program funded under this part of the State in which the entity is located who—
(I)
has received assistance under the State program funded under this part (whether in effect before or after the amendments made by section 103 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 first apply to the State) for at least 30 months (whether or not consecutive); or
(II)
within 12 months, will become ineligible for assistance under the State program funded under this part by reason of a durational limit on such assistance, without regard to any exemption provided pursuant to section 408(a)(7)(C) that may apply to the individual.
(iii)

Noncustodial parents.—
An entity that operates a project with funds provided under this paragraph may use the funds to provide services in a form described in clause (i) to noncustodial parents with respect to whom the requirements of the following subclauses are met:
(I)
The noncustodial parent is unemployed, underemployed, or having difficulty in paying child support obligations.
(II)
At least 1 of the following applies to a minor child of the noncustodial parent (with preference in the determination of the noncustodial parents to be provided services under this paragraph to be provided by the entity to those noncustodial parents with minor children who meet, or who have custodial parents who meet, the requirements of item (aa)):
- (aa)
The minor child or the custodial parent of the minor child meets the requirements of subclause (I) or (II) of clause (ii).
- (bb)
The minor child is eligible for, or is receiving, benefits under the program funded under this part.
- (cc)
The minor child received benefits under the program funded under this part in the 12-month period preceding the date of the determination but no longer receives such benefits.
- (dd)
The minor child is eligible for, or is receiving, assistance under the Food and Nutrition Act of 2008, benefits under the supplemental security income program under title XVI of this Act, medical assistance under title XIX of this Act, or child health assistance under title XXI of this Act.
(III)
In the case of a noncustodial parent who becomes enrolled in the project on or after the date of the enactment of this clause, the noncustodial parent is in compliance with the terms of an oral or written personal responsibility contract entered into among the noncustodial parent, the entity, and (unless the entity demonstrates to the Secretary that the entity is not capable of coordinating with such agency) the agency responsible for administering the State plan under part D, which was developed taking into account the employment and child support status of the noncustodial parent, which was entered into not later than 30 (or, at the option of the entity, not later than 90) days after the noncustodial parent was enrolled in the project, and which, at a minimum, includes the following:
- (aa)
A commitment by the noncustodial parent to cooperate, at the earliest opportunity, in the establishment of the paternity of the minor child, through voluntary acknowledgement or other procedures, and in the establishment of a child support order.
- (bb)
A commitment by the noncustodial parent to cooperate in the payment of child support for the minor child, which may include a modification of an existing support order to take into account the ability of the noncustodial parent to pay such support and the participation of such parent in the project.
- (cc)
A commitment by the noncustodial parent to participate in employment or related activities that will enable the noncustodial parent to make regular child support payments, and if the noncustodial parent has not attained 20 years of age, such related activities may include completion of high school, a general equivalency degree, or other education directly related to employment.
- (dd)
A description of the services to be provided under this paragraph, and a commitment by the noncustodial parent to participate in such services, that are designed to assist the noncustodial parent obtain and retain employment, increase earnings, and enhance the financial and emotional contributions to the well-being of the minor child.
In order to protect custodial parents and children who may be at risk of domestic violence, the preceding provisions of this subclause shall not be construed to affect any other provision of law requiring a custodial parent to cooperate in establishing the paternity of a child or establishing or enforcing a support order with respect to a child, or entitling a custodial parent to refuse, for good cause, to provide such cooperation as a condition of assistance or benefit under any program, shall not be construed to require such cooperation by the custodial parent as a condition of participation of either parent in the program authorized under this paragraph, and shall not be construed to require a custodial parent to cooperate with or participate in any activity under this clause. The entity operating a project under this clause with funds provided under this paragraph shall consult with domestic violence prevention and intervention organizations in the development of the project.
(iv)

Targeting of hard to employ individuals with characteristics associated with long-term welfare dependence.—
An entity that operates a project with funds provided under this paragraph may expend not more than 30 percent of all funds provided to the project for programs that provide assistance in a form described in clause (i)—
(I)
to recipients of assistance under the program funded under this part of the State in which the entity is located who have characteristics associated with long-term welfare dependence (such as school dropout, teen pregnancy, or poor work history), including, at the option of the State, by providing assistance in such form as a condition of receiving assistance under the State program funded under this part;
(II)
to children—
- (aa)
who have attained 18 years of age but not 25 years of age; and
- (bb)
who, before attaining 18 years of age, were recipients of foster care maintenance payments (as defined in section 475(4)) under part E or were in foster care under the responsibility of a State;
(III)
to recipients of assistance under the State program funded under this part, determined to have significant barriers to self-sufficiency, pursuant to criteria established by the local private industry council; or
(IV)
to custodial parents with incomes below 100 percent of the poverty line (as defined in section 673(2) of the Omnibus Budget Reconciliation Act of 1981, including any revision required by such section, applicable to a family of the size involved).
To the extent that the entity does not expend such funds in accordance with the preceding sentence, the entity shall expend such funds in accordance with clauses (ii) and (iii) and, as appropriate, clause (v).
(v)

Authority to provide work-related services to individuals who have reached the 5 year limit.—
An entity that operates a project with funds provided under this paragraph may use the funds to provide assistance in a form described in clause (i) of this subparagraph to, or for the benefit of, individuals who (but for section 408(a)(7)) would be eligible for assistance under the program funded under this part of the State in which the entity is located.
(vi)

Relationship to other provisions of this part.—
(I)

Rules governing use of funds.—
The rules of section 404, other than subsections (b), (f), and (h) of section 404, shall not apply to a grant made under this paragraph.
(II)

Rules governing payments to states.—
The Secretary of Labor shall carry out the functions otherwise assigned by section 405 to the Secretary of Health and Human Services with respect to the grants payable under this paragraph.
(III)

Administration.—
Section 416 shall not apply to the programs under this paragraph.
(vii)

Prohibition against use of grant funds for any other fund matching requirement.—
An entity to which funds are provided under this paragraph shall not use any part of the funds, nor any part of State expenditures made to match the funds, to fulfill any obligation of any State, political subdivision, or private industry council to contribute funds under section 403(b) or 418 or any other provision of this Act or other Federal law.
(viii)

Deadline for expenditure.—
An entity to which funds are provided under this paragraph shall remit to the Secretary of Labor any part of the funds that are not expended within 5 years after the date the funds are so provided.
(ix)

Regulations.—
Within 90 days after the date of the enactment of this paragraph, the Secretary of Labor, after consultation with the Secretary of Health and Human Services and the Secretary of Housing and Urban Development, shall prescribe such regulations as may be necessary to implement this paragraph.
(x)

Reporting requirements.—
The Secretary of Labor, in consultation with the Secretary of Health and Human Services, States, and organizations that represent State or local governments, shall establish requirements for the collection and maintenance of financial and participant information and the reporting of such information by entities carrying out activities under this paragraph.
(D)

Definitions.—
(i)

Individuals with income less than the poverty line.—
For purposes of this paragraph, the number of individuals with an income that is less than the poverty line shall be determined for a fiscal year—
(I)
based on the methodology used by the Bureau of the Census to produce and publish intercensal poverty data for States and counties (or, in the case of Puerto Rico, the Virgin Islands, Guam, and American Samoa, other poverty data selected by the Secretary of Labor); and
(II)
using data for the most recent year for which such data is available before the beginning of the fiscal year.
(ii)

Private industry council.—
As used in this paragraph, the term “private industry council” means, with respect to a service delivery area, the private industry council or local workforce development board established for the local workforce development area pursuant to title I of the Workforce Innovation and Opportunity Act, as appropriate.
(iii)

Service delivery area.—
As used in this paragraph, the term “service delivery area” shall have the meaning given such term for purposes of the Job Training Partnership Act or5.
^5
So in law. The word “or” should be stricken.
(E)

Funding for indian tribes.—
1 percent of the amount specified in subparagraph (H) for fiscal year 1998 and $15,000,000 of the amount so specified for fiscal year 1999 shall be reserved for grants to Indian tribes under section 412(a)(3).
(F)

Funding for evaluations of welfare-to-work programs.—
0.6 percent of the amount specified in subparagraph (H) for fiscal year 1998 and $9,000,000 of the amount so specified for fiscal year 1999 shall be reserved for use by the Secretary to carry out section 413(j).
(G)

Funding for evaluation of abstinence education programs.—
(i)

In general.—
0.2 percent of the amount specified in subparagraph (H) for fiscal year 1998 and $3,000,000 of the amount so specified for fiscal year 1999 shall be reserved for use by the Secretary to evaluate programs under section 510, directly or through grants, contracts, or interagency agreements.
(ii)

Authority to use funds for evaluations of welfare-to-work programs.—
Any such amount not required for such evaluations shall be available for use by the Secretary to carry out section 413(j).
(iii)

Deadline for outlays.—
Outlays from funds used pursuant to clause (i) for evaluation of programs under section 510 shall not be made after fiscal year 20056.
^6
Section 513 of the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2001 (114 Stat. 2763A–69), as enacted into law by section 1(a)(1) of Public Law 106–554, provides:
Sec. 513. (a) Section 403(a)(5)(H)(iii) of the Social Security Act (42 U.S.C. 603(a)(5)(H)(iii)) is amended by striking “2001” and inserting “2005”.
(b) Section 403(a)(5)(H) of such Act (42 U.S.C. 603(a)(5)(G)) is amended by adding at the end the following:
``(iv) Interim report.—Not later than January 1, 2002, the Secretary shall submit to the Congress an interim report on the evaluations referred to in clause (i).''.
These amendments were executed to suparagraph (G) (as redesignated by section 107(a) of Public Law 106–554 (114 Stat. 2763A–12)) to reflect the probable intent of Congress.
(iv)6

Interim report.—
Not later than January 1, 2002, the Secretary shall submit to the Congress an interim report on the evaluations referred to in clause (i).
(H)

Appropriations.—
(i)

In general.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for grants under this paragraph—
(I)
$1,500,000,000 for fiscal year 1998; and
(II)
$1,400,000,000 for fiscal year 1999.
(ii)

Availability.—
The amounts made available pursuant to clause (i) shall remain available for such period as is necessary to make the grants provided for in this paragraph.
(I)

Worker protections.—
(i)

Nondisplacement in work activities.—
(I)

General prohibition.—
Subject to this clause, an adult in a family receiving assistance attributable to funds provided under this paragraph may fill a vacant employment position in order to engage in a work activity.
(II)

Prohibition against violation of contracts.—
A work activity engaged in under a program operated with funds provided under this paragraph shall not violate an existing contract for services or a collective bargaining agreement, and such a work activity that would violate a collective bargaining agreement shall not be undertaken without the written concurrence of the labor organization and employer concerned.
(III)

Other prohibitions.—
An adult participant in a work activity engaged in under a program operated with funds provided under this paragraph shall not be employed or assigned—
- (aa)
when any other individual is on layoff from the same or any substantially equivalent job;
- (bb)
if the employer has terminated the employment of any regular employee or otherwise caused an involuntary reduction in its workforce with the intention of filling the vacancy so created with the participant; or
- (cc)
if the employer has caused an involuntary reduction to less than full time in hours of any employee in the same or a substantially equivalent job.
(ii)

Health and safety.—
Health and safety standards established under Federal and State law otherwise applicable to working conditions of employees shall be equally applicable to working conditions of other participants engaged in a work activity under a program operated with funds provided under this paragraph.
(iii)

Nondiscrimination.—
In addition to the protections provided under the provisions of law specified in section 408(c), an individual may not be discriminated against by reason of gender with respect to participation in work activities engaged in under a program operated with funds provided under this paragraph.
(iv)

Grievance procedure.—
(I)

In general.—
Each State to which a grant is made under this paragraph shall establish and maintain a procedure for grievances or complaints from employees alleging violations of clause (i) and participants in work activities alleging violations of clause (i), (ii), or (iii).
(II)

Hearing.—
The procedure shall include an opportunity for a hearing.
(III)

Remedies.—
The procedure shall include remedies for violation of clause (i), (ii), or (iii), which may continue during the pendency of the procedure, and which may include—
- (aa)
suspension or termination of payments from funds provided under this paragraph;
- (bb)
prohibition of placement of a participant with an employer that has violated clause (i), (ii), or (iii);
- (cc)
where applicable, reinstatement of an employee, payment of lost wages and benefits, and reestablishment of other relevant terms, conditions and privileges of employment; and
- (dd)
where appropriate, other equitable relief.
(IV)

Appeals.—
- (aa)

Filing.—
Not later than 30 days after a grievant or complainant receives an adverse decision under the procedure established pursuant to subclause (I), the grievant or complainant may appeal the decision to a State agency designated by the State which shall be independent of the State or local agency that is administering the programs operated with funds provided under this paragraph and the State agency administering, or supervising the administration of, the State program funded under this part.
- (bb)

Final determination.—
Not later than 120 days after the State agency designated under item (aa) receives a grievance or complaint made under the procedure established by a State pursuant to subclause (I), the State agency shall make a final determination on the appeal.
(v)

Rule of interpretation.—
This subparagraph shall not be construed to affect the authority of a State to provide or require workers' compensation.
(vi)

Nonpreemption of state law.—
The provisions of this subparagraph shall not be construed to preempt any provision of State law that affords greater protections to employees or to other participants engaged in work activities under a program funded under this part than is afforded by such provisions of this subparagraph.
(J)

Information disclosure.—
If a State to which a grant is made under section 403 establishes safeguards against the use or disclosure of information about applicants or recipients of assistance under the State program funded under this part, the safeguards shall not prevent the State agency administering the program from furnishing to a private industry council the names, addresses, telephone numbers, and identifying case number information in the State program funded under this part, of noncustodial parents residing in the service delivery area of the private industry council, for the purpose of identifying and contacting noncustodial parents regarding participation in the program under this paragraph.
(b)

Contingency Fund.—
(1)

Establishment.—
There is hereby established in the Treasury of the United States a fund which shall be known as the “Contingency Fund for State Welfare Programs” (in this section referred to as the “Fund”).
(2)

Deposits into fund.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal year 2018 such sums as are necessary for payment to the Fund in a total amount not to exceed $608,000,000.
(3)

Grants.—
(A)

Provisional payments.—
If an eligible State submits to the Secretary a request for funds under this paragraph during an eligible month, the Secretary shall, subject to this paragraph, pay to the State, from amounts appropriated pursuant to paragraph (2), an amount equal to the amount of funds so requested.
(B)

Payment priority.—
The Secretary shall make payments under subparagraph (A) in the order in which the Secretary receives requests for such payments.
(C)

Limitations.—
(i)

Monthly payment to a state.—
The total amount paid to a single State under subparagraph (A) during a month shall not exceed 1⁄12 of 20 percent of the State family assistance grant.
(ii)

Payments to all states.—
The total amount paid to all States under subparagraph (A) during fiscal year 2011 and 2012, respectively, shall not exceed the total amount appropriated pursuant to paragraph (2) for each such fiscal year.
(4)

Eligible month.—
As used in paragraph (3)(A), the term “eligible month” means, with respect to a State, a month in the 2-month period that begins with any month for which the State is a needy State.
(5)

Needy state.—
For purposes of paragraph (4), a State is a needy State for a month if—
(A)
the average rate of—
(i)
total unemployment in such State (seasonally adjusted) for the period consisting of the most recent 3 months for which data for all States are published equals or exceeds 6.5 percent; and
(ii)
total unemployment in such State (seasonally adjusted) for the 3-month period equals or exceeds 110 percent of such average rate for either (or both) of the corresponding 3-month periods ending in the 2 preceding calendar years; or
(B)
as determined by the Secretary of Agriculture (in the discretion of the Secretary of Agriculture), the monthly average number of individuals (as of the last day of each month) participating in the supplemental nutrition assistance program in the State in the then most recently concluded 3-month period for which data are available exceeds by not less than 10 percent the lesser of—
(i)
the monthly average number of individuals (as of the last day of each month) in the State that would have participated in the supplemental nutrition assistance program in the corresponding 3-month period in fiscal year 1994 if the amendments made by titles IV and VIII of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 had been in effect throughout fiscal year 1994; or
(ii)
the monthly average number of individuals (as of the last day of each month) in the State that would have participated in the supplemental nutrition assistance program in the corresponding 3-month period in fiscal year 1995 if the amendments made by titles IV and VIII of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 had been in effect throughout fiscal year 1995.
(6)

Annual reconciliation.—
(A)

In general.—
Notwithstanding paragraph (3), if the Secretary makes a payment to a State under this subsection in a fiscal year, then the State shall remit to the Secretary, within 1 year after the end of the first subsequent period of 3 consecutive months for which the State is not a needy State, an amount equal to the amount (if any) by which—
(i)
the total amount paid to the State under paragraph (3) of this subsection in the fiscal year; exceeds
(ii)
the product of—
(I)
the Federal medical assistance percentage for the State (as defined in section 1905(b), as such section was in effect on September 30, 1995);
(II)
the State's reimbursable expenditures for the fiscal year; and
(III)
1⁄12 times the number of months during the fiscal year for which the Secretary made a payment to the State under such paragraph (3).
(B)

Definitions.—
As used in subparagraph (A):
(i)

Reimbursable expenditures.—
The term “reimbursable expenditures” means, with respect to a State and a fiscal year, the amount (if any) by which—
(I)
countable State expenditures for the fiscal year; exceeds
(II)
historic State expenditures (as defined in section 409(a)(7)(B)(iii)), excluding any amount expended by the State for child care under subsection (g) or (i) of section 402 (as in effect during fiscal year 1994) for fiscal year 1994.
(ii)

Countable state expenditures.—
The term “countable expenditures” means, with respect to a State and a fiscal year—
(I)
the qualified State expenditures (as defined in section 409(a)(7)(B)(i) (other than the expenditures described in subclause (I)(bb) of such section)) under the State program funded under this part for the fiscal year; plus
(II)
any amount paid to the State under paragraph (3) during the fiscal year that is expended by the State under the State program funded under this part.
(C)

Adjustment of state remittances.—
(i)

In general.—
The amount otherwise required by subparagraph (A) to be remitted by a State for a fiscal year shall be increased by the lesser of—
(I)
the total adjustment for the fiscal year, multiplied by the adjustment percentage for the State for the fiscal year; or
(II)
the unadjusted net payment to the State for the fiscal year.
(ii)

Total adjustment.—
As used in clause (i), the term “total adjustment” means—
(I)
in the case of fiscal year 1998, $2,000,000;
(II)
in the case of fiscal year 1999, $9,000,000;
(III)
in the case of fiscal year 2000, $16,000,000; and
(IV)
in the case of fiscal year 2001, $13,000,000.
(iii)

Adjustment percentage.—
As used in clause (i), the term “adjustment percentage” means, with respect to a State and a fiscal year—
(I)
the unadjusted net payment to the State for the fiscal year; divided by
(II)
the sum of the unadjusted net payments to all States for the fiscal year.
(iv)

Unadjusted net payment.—
As used in this subparagraph, the term, “unadjusted net payment” means with respect to a State and a fiscal year—
(I)
the total amount paid to the State under paragraph (3) in the fiscal year; minus
(II)
the amount that, in the absence of this subparagraph, would be required by subparagraph (A) or by section 409(a)(10) to be remitted by the State in respect of the payment.
(7)

State defined.—
As used in this subsection, the term “State” means each of the 50 States and the District of Columbia.
(8)

Annual reports.—
The Secretary shall annually report to the Congress on the status of the Fund.
(c)

Pandemic Emergency Assistance.—
(1)

Appropriation.—
In addition to amounts otherwise available, there is appropriated for fiscal year 2021, out of any money in the Treasury of the United States not otherwise appropriated, $1,000,000,000, to remain available until expended, to carry out this subsection.
(2)

Reservation of funds for technical assistance.—
Of the amount specified in paragraph (1), the Secretary shall reserve $2,000,000 for administrative expenses and the provision of technical assistance to States and Indian tribes with respect to the use of funds provided under this subsection.
(3)

Allotments.—
(A)

50 states and the district of columbia.—
(i)

Total amount to be allotted.—
The Secretary shall allot a total of 92.5 percent of the amount specified in paragraph (1) that is not reserved under paragraph (2) among the States that are not a territory and that are operating a program funded under this part, in accordance with clause (ii) of this subparagraph.
(ii)

Allotment formula.—
The Secretary shall allot to each such State the sum of the following percentages of the total amount described in clause (i):
(I)
50 percent, multiplied by—
- (aa)
the population of children in the State, determined on the basis of the most recent population estimates as determined by the Bureau of the Census; divided by
- (bb)
the total population of children in the States that are not territories, as so determined; plus
(II)
50 percent, multiplied by—
- (aa)
the total amount expended by the State for basic assistance, non-recurrent short term benefits, and emergency assistance in fiscal year 2019, as reported by the State under section 411; divided by
- (bb)
the total amount expended by the States that are not territories for basic assistance, non-recurrent short term benefits, and emergency assistance in fiscal year 2019, as so reported by the States.
(B)

Territories and indian tribes.—
The Secretary shall allot among the territories and Indian tribes otherwise eligible for a grant under this part such portions of 7.5 percent of the amount specified in paragraph (1) that are not reserved under paragraph (2) as the Secretary deems appropriate based on the needs of the territory or Indian tribe involved.
(C)

Expenditure commitment requirement.—
To receive the full amount of funding payable under this subsection, a State or Indian tribe shall inform the Secretary as to whether it intends to use all of its allotment under this paragraph and provide that information—
(i)
in the case of a State that is not a territory, within 45 days after the date of the enactment of this subsection; or
(ii)
in the case of a territory or an Indian tribe, within 90 days after such date of enactment.
(4)

Grants.—
(A)

In general.—
The Secretary shall provide funds to each State and Indian tribe to which an amount is allotted under paragraph (3), from the amount so allotted.
(B)

Treatment of unused funds.—
(i)

Reallotment.—
The Secretary shall reallot in accordance with paragraph (3) all funds provided to any State or Indian tribe under this subsection that are unused, among the other States and Indian tribes eligible for funds under this subsection. For purposes of paragraph (3), the Secretary shall treat the funds as if included in the amount specified in paragraph (1).
(ii)

Provision.—
The Secretary shall provide funds to each such other State or Indian tribe in an amount equal to the amount so reallotted.
(5)

Recipient of funds provided for territories.—
In the case of a territory not operating a program funded under this part, the Secretary shall provide the funds required to be provided to the territory under this subsection, to the agency that administers the bulk of local human services programs in the territory.
(6)

Use of funds.—
(A)

In general.—
A State or Indian tribe to which funds are provided under this subsection may use the funds only for non-recurrent short term benefits, whether in the form of cash or in other forms.
(B)

Limitation on use for administrative expenses.—
A State to which funds are provided under this subsection shall not expend more than 15 percent of the funds for administrative purposes.
(C)

Nonsupplantation.—
Funds provided under this subsection shall be used to supplement and not supplant other Federal, State, or tribal funds for services and activities that promote the purposes of this part.
(D)

Expenditure deadline.—
(i)

In general.—
Except as provided in clause (ii), a State or Indian tribe to which funds are provided under this subsection shall expend the funds not later than the end of fiscal year 2022.
(ii)

Exception for reallotted funds.—
A State or Indian tribe to which funds are provided under paragraph (4)(B) shall expend the funds within 12 months after receipt.
(7)

Suspension of territory spending cap.—
Section 1108 shall not apply with respect to any funds provided under this subsection.
(8)

Definitions.—
In this subsection:
(A)

Applicable period.—
The term “applicable period” means the period that begins with April 1, 2021, and ends with September 30, 2022.
(B)

Non-recurrent short term benefits.—
The term “non-recurrent short term benefits” has the meaning given the term in OMB approved Form ACF–196R, published on July 31, 2014.
(C)

State.—
The term “State” means the 50 States of the United States, the District of Columbia, and the territories.
(D)

Territory.—
The term “territory” means the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.
SEC. 404.
[42 U.S.C. 604]

USE OF GRANTS.
(a)

General Rules.—
Subject to this part, a State to which a grant is made under section 403 may use the grant—
(1)
in any manner that is reasonably calculated to accomplish the purpose of this part, including to provide low income households with assistance in meeting home heating and cooling costs; or
(2)
in any manner that the State was authorized to use amounts received under part A or F, as such parts were in effect on September 30, 1995, or (at the option of the State) August 21, 1996.
(b)

Limitation on Use of Grant for Administrative Purposes.—
(1)

Limitation.—
A State to which a grant is made under section 403 shall not expend more than 15 percent of the grant for administrative purposes.
(2)

Exception.—
Paragraph (1) shall not apply to the use of a grant for information technology and computerization needed for tracking or monitoring required by or under this part.
(c)

Authority To Treat Interstate Immigrants Under Rules of Former State.—
A State operating a program funded under this part may apply to a family the rules (including benefit amounts) of the program funded under this part of another State if the family has moved to the State from the other State and has resided in the State for less than 12 months.
(d)

Authority To Use Portion of Grant for Other Purposes.—
(1)

In general.—
Subject to paragraph (2), a State may use not more than 30 percent of the amount of any grant made to the State under section 403(a) for a fiscal year to carry out a State program pursuant to any or all of the following provisions of law:
(A)
Subtitle A of title XX of this Act.
(B)
The Child Care and Development Block Grant Act of 1990.
(2)

Limitation on amount transferable to subtitle 1 of title xx programs.—
(A)

In general.—
A State may use not more than the applicable percent of the amount of any grant made to the State under section 403(a) for a fiscal year to carry out State programs pursuant to subtitle 1 of title XX7.
^7
See amendment made by Section 6703(d)(2)(A)(ii) of Public Law 111–148. The amendment was executed to reflect the probable intent of congress. Also, references to subtitle 1 probably should be to subtitle A.
(B)

Applicable percent.—
For purposes of subparagraph (A), the applicable percent is 4.258 percent in the case of fiscal year 2001 and each succeeding fiscal year.
^8
10 percent for fiscal year 2003. See Labor, HHS Appropriations, FY03 (H.J. Res. 2; page 309).
(3)

Applicable rules.—
(A)

In general.—
Except as provided in subparagraph (B) of this paragraph, any amount paid to a State under this part that is used to carry out a State program pursuant to a provision of law specified in paragraph (1) shall not be subject to the requirements of this part, but shall be subject to the requirements that apply to Federal funds provided directly under the provision of law to carry out the program, and the expenditure of any amount so used shall not be considered to be an expenditure under this part.
(B)

Exception relating to subtitle 1 of title xx programs.—
All amounts paid to a State under this part that are used to carry out State programs pursuant to subtitle 1 of title XX shall be used only for programs and services to children or their families whose income is less than 200 percent of the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to a family of the size involved.
(e)

Authority to Carry Over Certain Amounts for Benefits or Services or for Future Contingencies.—
A State or tribe may use a grant made to the State or tribe under this part for any fiscal year to provide, without fiscal year limitation, any benefit or service that may be provided under the State or tribal program funded under this part.
(f)

Authority to Operate Employment Placement Program.—
A State to which a grant is made under section 403 may use the grant to make payments (or provide job placement vouchers) to State-approved public and private job placement agencies that provide employment placement services to individuals who receive assistance under the State program funded under this part.
(g)

Implementation of Electronic Benefit Transfer System.—
A State to which a grant is made under section 403 is encouraged to implement an electronic benefit transfer system for providing assistance under the State program funded under this part, and may use the grant for such purpose.
(h)

Use of Funds for Individual Development Accounts.—
(1)

In general.—
A State to which a grant is made under section 403 may use the grant to carry out a program to fund individual development accounts (as defined in paragraph (2)) established by individuals eligible for assistance under the State program funded under this part.
(2)

Individual development accounts.—
(A)

Establishment.—
Under a State program carried out under paragraph (1), an individual development account may be established by or on behalf of an individual eligible for assistance under the State program operated under this part for the purpose of enabling the individual to accumulate funds for a qualified purpose described in subparagraph (B).
(B)

Qualified purpose.—
A qualified purpose described in this subparagraph is 1 or more of the following, as provided by the qualified entity providing assistance to the individual under this subsection:
(i)

Postsecondary educational expenses.—
Postsecondary educational expenses paid from an individual development account directly to an eligible educational institution.
(ii)

First home purchase.—
Qualified acquisition costs with respect to a qualified principal residence for a qualified first-time homebuyer, if paid from an individual development account directly to the persons to whom the amounts are due.
(iii)

Business capitalization.—
Amounts paid from an individual development account directly to a business capitalization account which is established in a federally insured financial institution and is restricted to use solely for qualified business capitalization expenses.
(C)

Contributions to be from earned income.—
An individual may only contribute to an individual development account such amounts as are derived from earned income, as defined in section 911(d)(2) of the Internal Revenue Code of 1986.
(D)

Withdrawal of funds.—
The Secretary shall establish such regulations as may be necessary to ensure that funds held in an individual development account are not withdrawn except for 1 or more of the qualified purposes described in subparagraph (B).
(3)

Requirements.—
(A)

In general.—
An individual development account established under this subsection shall be a trust created or organized in the United States and funded through periodic contributions by the establishing individual and matched by or through a qualified entity for a qualified purpose (as described in paragraph (2)(B)).
(B)

Qualified entity.—
As used in this subsection, the term “qualified entity” means—
(i)
a not-for-profit organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code; or
(ii)
a State or local government agency acting in cooperation with an organization described in clause (i).
(4)

No reduction in benefits.—
Notwithstanding any other provision of Federal law (other than the Internal Revenue Code of 1986) that requires consideration of 1 or more financial circumstances of an individual, for the purpose of determining eligibility to receive, or the amount of, any assistance or benefit authorized by such law to be provided to or for the benefit of such individual, funds (including interest accruing) in an individual development account under this subsection shall be disregarded for such purpose with respect to any period during which such individual maintains or makes contributions into such an account.
(5)

Definitions.—
As used in this subsection—
(A)

Eligible educational institution.—
The term “eligible educational institution” means the following:
(i)
An institution described in section 481(a)(1) or 1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1088(a)(1) or 1141(a)), as such sections are in effect on the date of the enactment of this subsection.
(ii)
An area vocational education school (as defined in subparagraph (C) or (D) of section 521(4) of the Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2471(4))) which is in any State (as defined in section 521(33) of such Act), as such sections are in effect on the date of the enactment of this subsection.
(B)

Post-secondary educational expenses.—
The term “post-secondary educational expenses” means—
(i)
tuition and fees required for the enrollment or attendance of a student at an eligible educational institution, and
(ii)
fees, books, supplies, and equipment required for courses of instruction at an eligible educational institution.
(C)

Qualified acquisition costs.—
The term “qualified acquisition costs” means the costs of acquiring, constructing, or reconstructing a residence. The term includes any usual or reasonable settlement, financing, or other closing costs.
(D)

Qualified business.—
The term “qualified business” means any business that does not contravene any law or public policy (as determined by the Secretary).
(E)

Qualified business capitalization expenses.—
The term “qualified business capitalization expenses” means qualified expenditures for the capitalization of a qualified business pursuant to a qualified plan.
(F)

Qualified expenditures.—
The term “qualified expenditures” means expenditures included in a qualified plan, including capital, plant, equipment, working capital, and inventory expenses.
(G)

Qualified first-time homebuyer.—
(i)

In general.—
The term “qualified first-time homebuyer” means a taxpayer (and, if married, the taxpayer's spouse) who has 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 subsection applies.
(ii)

Date of acquisition.—
The term “date of acquisition” means the date on which a binding contract to acquire, construct, or reconstruct the principal residence to which this subparagraph applies is entered into.
(H)

Qualified plan.—
The term “qualified plan” means a business plan which—
(i)
is approved by a financial institution, or by a nonprofit loan fund having demonstrated fiduciary integrity,
(ii)
includes a description of services or goods to be sold, a marketing plan, and projected financial statements, and
(iii)
may require the eligible individual to obtain the assistance of an experienced entrepreneurial advisor.
(I)

Qualified principal residence.—
The term “qualified principal residence” means a principal residence (within the meaning of section 1034 of the Internal Revenue Code of 1986), the qualified acquisition costs of which do not exceed 100 percent of the average area purchase price applicable to such residence (determined in accordance with paragraphs (2) and (3) of section 143(e) of such Code).
(i)

Sanction Welfare Recipients for Failing To Ensure That Minor Dependent Children Attend School.—
A State to which a grant is made under section 403 shall not be prohibited from sanctioning a family that includes an adult who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government or under the supplemental nutrition assistance program, as defined in section 3(l) of the Food and Nutrition Act of 2008, if such adult fails to ensure that the minor dependent children of such adult attend school as required by the law of the State in which the minor children reside.
(j)

Requirement for High School Diploma or Equivalent.—
A State to which a grant is made under section 403 shall not be prohibited from sanctioning a family that includes an adult who is older than age 20 and younger than age 51 and who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government or under the supplemental nutrition assistance program, as defined in section 3(l) of the Food and Nutrition Act of 2008, if such adult does not have, or is not working toward attaining, a secondary school diploma or its recognized equivalent unless such adult has been determined in the judgment of medical, psychiatric, or other appropriate professionals to lack the requisite capacity to complete successfully a course of study that would lead to a secondary school diploma or its recognized equivalent.
(k)

Limitations on Use of Grant for Matching Under Certain Federal Transportation Program.—
(1)

Use limitations.—
A State to which a grant is made under section 403 may not use any part of the grant to match funds made available under section 3037 of the Transportation Equity Act for the 21st Century, unless—
(A)
the grant is used for new or expanded transportation services (and not for construction) that benefit individuals described in subparagraph (C), and not to subsidize current operating costs;
(B)
the grant is used to supplement and not supplant other State expenditures on transportation;
(C)
the preponderance of the benefits derived from such use of the grant accrues to individuals who are—
(i)
recipients of assistance under the State program funded under this part;
(ii)
former recipients of such assistance;
(iii)
noncustodial parents who are described in section 403(a)(5)(C)(iii); and
(iv)
low-income individuals who are at risk of qualifying for such assistance; and
(D)
the services provided through such use of the grant promote the ability of such recipients to engage in work activities (as defined in section 407(d)).
(2)

Amount limitation.—
From a grant made to a State under section 403(a), the amount that a State uses to match funds described in paragraph (1) of this subsection shall not exceed the amount (if any) by which 30 percent of the total amount of the grant exceeds the amount (if any) of the grant that is used by the State to carry out any State program described in subsection (d)(1) of this section.
(3)

Rule of interpretation.—
The provision by a State of a transportation benefit under a program conducted under section 3037 of the Transportation Equity Act for the 21st Century, to an individual who is not otherwise a recipient of assistance under the State program funded under this part, using funds from a grant made under section 403(a) of this Act, shall not be considered to be the provision of assistance to the individual under the State program funded under this part.
SEC. 405.
[42 U.S.C. 605]

ADMINISTRATIVE PROVISIONS.
(a)

Quarterly.—
The Secretary shall pay each grant payable to a State under section 403 in quarterly installments, subject to this section.
(b)

Notification.—
Not later than 3 months before the payment of any such quarterly installment to a State, the Secretary shall notify the State of the amount of any reduction determined under section 412(a)(1)(B) with respect to the State.
(c)

Computation and Certification of Payments to States.—
(1)

Computation.—
The Secretary shall estimate the amount to be paid to each eligible State for each quarter under this part, such estimate to be based on a report filed by the State containing an estimate by the State of the total sum to be expended by the State in the quarter under the State program funded under this part and such other information as the Secretary may find necessary.
(2)

Certification.—
The Secretary of Health and Human Services shall certify to the Secretary of the Treasury the amount estimated under paragraph (1) with respect to a State, reduced or increased to the extent of any overpayment or underpayment which the Secretary of Health and Human Services determines was made under this part to the State for any prior quarter and with respect to which adjustment has not been made under this paragraph.
(d)

Payment Method.—
Upon receipt of a certification under subsection (c)(2) with respect to a State, the Secretary of the Treasury shall, through the Fiscal Service of the Department of the Treasury and before audit or settlement by the General Accounting Office9, pay to the State, at the time or times fixed by the Secretary of Health and Human Services, the amount so certified.
^9
The reference to the General Accounting Office in section 405(d) probably should be to the Government Accountability Office.
SEC. 406.
[42 U.S.C. 606]

FEDERAL LOANS FOR STATE WELFARE PROGRAMS.
(a)

Loan Authority.—
(1)

In general.—
The Secretary shall make loans to any loan-eligible State, for a period to maturity of not more than 3 years.
(2)

Loan-eligible state.—
As used in paragraph (1), the term “loan-eligible State” means a State against which a penalty has not been imposed under section 409(a)(1).
(b)

Rate of Interest.—
The Secretary shall charge and collect interest on any loan made under this section at a rate equal to the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the period to maturity of the loan.
(c)

Use of Loan.—
A State shall use a loan made to the State under this section only for any purpose for which grant amounts received by the State under section 403(a) may be used, including—
(1)
welfare anti-fraud activities; and
(2)
the provision of assistance under the State program to Indian families that have moved from the service area of an Indian tribe with a tribal family assistance plan approved under section 412.
(d)

Limitation on Total Amount of Loans to a State.—
The cumulative dollar amount of all loans made to a State under this section during fiscal years 1997 through 2003 shall not exceed 10 percent of the State family assistance grant.
(e)

Limitation on Total Amount of Outstanding Loans.—
The total dollar amount of loans outstanding under this section may not exceed $1,700,000,000.
(f)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated such sums as may be necessary for the cost of loans under this section.
SEC. 407.
[42 U.S.C. 607]

MANDATORY WORK REQUIREMENTS.
(a)

Participation Rate Requirements.—
(1)

All families.—
A State to which a grant is made under section 403 for a fiscal year shall achieve the minimum participation rate specified in the following table for the fiscal year with respect to all families receiving assistance under the State program funded under this part or any other State program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)):
| The minimum
| participation
If the fiscal year is: | rate is:
1997 | 25
1998 | 30
1999 | 35
2000 | 40
2001 | 45
2002 or thereafter | 50.
(2)

2-parent families.—
A State to which a grant is made under section 403 for a fiscal year shall achieve the minimum participation rate specified in the following table for the fiscal year with respect to 2-parent families receiving assistance under the State program funded under this part or any other State program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)):
| The minimum
| participation
If the fiscal year is: | rate is:
1997 | 75
1998 | 75
1999 or thereafter | 90.
(b)

Calculation of Participation Rates.—
(1)

All families.—
(A)

Average monthly rate.—
For purposes of subsection (a)(1), the participation rate for all families of a State for a fiscal year is the average of the participation rates for all families of the State for each month in the fiscal year.
(B)

Monthly participation rates.—
The participation rate of a State for all families of the State for a month, expressed as a percentage, is—
(i)
the number of families receiving assistance under the State program funded under this part or any other State program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)) that include an adult or a minor child head of household who is engaged in work for the month; divided by
(ii)
the amount by which—
(I)
the number of families receiving such assistance during the month that include an adult or a minor child head of household receiving such assistance; exceeds
(II)
the number of families receiving such assistance that are subject in such month to a penalty described in subsection (e)(1) but have not been subject to such penalty for more than 3 months within the preceding 12-month period (whether or not consecutive).
(2)

2-parent families.—
(A)

Average monthly rate.—
For purposes of subsection (a)(2), the participation rate for 2-parent families of a State for a fiscal year is the average of the participation rates for 2-parent families of the State for each month in the fiscal year.
(B)

Monthly participation rates.—
The participation rate of a State for 2-parent families of the State for a month shall be calculated by use of the formula set forth in paragraph (1)(B), except that in the formula the term “number of 2-parent families” shall be substituted for the term “number of families” each place such latter term appears.
(C)

Family with a disabled parent not treated as a 2-parent family.—
A family that includes a disabled parent shall not be considered a 2-parent family for purposes of subsections (a) and (b) of this section.
(3)

Pro rata reduction of participation rate due to caseload reductions not required by federal law and not resulting from changes in state eligibility criteria.—
(A)

In general.—
The Secretary shall prescribe regulations for reducing the minimum participation rate otherwise required by this section for a fiscal year by the number of percentage points equal to the number of percentage points (if any) by which—
(i)
the average monthly number of families receiving assistance during the immediately preceding fiscal year under the State program funded under this part or any other State program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)) is less than
(ii)
the average monthly number of families that received assistance under any State program referred to in clause (i) during fiscal year 200510.
^{10}
Effective October 1, 2025, section 301 of division C of Public Law 118-5 provides for amendments to subparagraphs (A)(ii) and (B) of paragraph (3) by striking “2005” and inserting “2015”.
Section 305 of such Public Law states: “The amendments made by this title shall take effect on October 1, 2024, except for sections 301 and 303 which shall take effect on October 1, 2025.”.
The minimum participation rate shall not be reduced to the extent that the Secretary determines that the reduction in the number of families receiving such assistance is required by Federal law.
(B)

Eligibility changes not counted.—
The regulations required by subparagraph (A) shall not take into account families that are diverted from a State program funded under this part as a result of differences in eligibility criteria under a State program funded under this part and the eligibility criteria in effect during fiscal year 200510. Such regulations shall place the burden on the Secretary to prove that such families were diverted as a direct result of differences in such eligibility criteria.
(4)

State option to include individuals receiving assistance under a tribal family assistance plan or tribal work program.—
For purposes of paragraphs (1)(B) and (2)(B), a State may, at its option, include families in the State that are receiving assistance under a tribal family assistance plan approved under section 412 or under a tribal work program to which funds are provided under this part.
(5)

State option for participation requirement exemptions.—
For any fiscal year, a State may, at its option, not require an individual who is a single custodial parent caring for a child who has not attained 12 months of age to engage in work, and may disregard such an individual in determining the participation rates under subsection (a) for not more than 12 months.
(6)11

Special rule regarding calculation of the minimum participation rate.—
The Secretary shall determine participation rates under this section without regard to any individual engaged in work in a family that receives no assistance under this part and less than $35 in assistance funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)).
^{11}
Paragraph (6) (as added section 303 of division C of Public Law 118-5) shall take effect on October 1, 2025. See delayed effective date in section 305 of such Public Law as it appears in a footnote to paragraph (3)(A)(ii) of this subsection.
(c)

Engaged in Work.—
(1)

General rules.—
(A)

All families.—
For purposes of subsection (b)(1)(B)(i), a recipient is engaged in work for a month in a fiscal year if the recipient is participating in work activities for at least the minimum average number of hours per week specified in the following table during the month, not fewer than 20 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of subsection (d), subject to this subsection:
| The minimum
If the month is | average number of
in fiscal year: | hours per week is:
1997 | 20
1998 | 20
1999 | 25
2000 or thereafter | 30.
(B)

2-parent families.—
For purposes of subsection (b)(2)(B), an individual is engaged in work for a month in a fiscal year if—
(i)
the individual and the other parent in the family are participating in work activities for a total of at least 35 hours per week during the month, not fewer than 30 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of subsection (d), subject to this subsection; and
(ii)
if the family of the individual receives federally-funded child care assistance and an adult in the family is not disabled or caring for a severely disabled child, the individual and the other parent in the family are participating in work activities for a total of at least 55 hours per week during the month, not fewer than 50 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of subsection (d).
(2)

Limitations and special rules.—
(A)

Number of weeks for which job search counts as work.—
(i)

Limitation.—
Notwithstanding paragraph (1) of this subsection, an individual shall not be considered to be engaged in work by virtue of participation in an activity described in subsection (d)(6) of a State program funded under this part or any other State program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)), after the individual has participated in such an activity for 6 weeks (or, if the unemployment rate of the State is at least 50 percent greater than the unemployment rate of the United States or the State is a needy State (within the meaning of section 403(b)(5)), 12 weeks), or if the participation is for a week that immediately follows 4 consecutive weeks of such participation.
(ii)

Limited authority to count less than full week of participation.—
For purposes of clause (i) of this subparagraph, on not more than 1 occasion per individual, the State shall consider participation of the individual in an activity described in subsection (d)(6) for 3 or 4 days during a week as a week of participation in the activity by the individual.
(B)

Single parent or relative with child under age 6 deemed to be meeting work participation requirements if parent or relative is engaged in work for 20 hours per week.—
For purposes of determining monthly participation rates under subsection (b)(1)(B)(i), a recipient who is the only parent or caretaker relative in the family of a child who has not attained 6 years of age is deemed to be engaged in work for a month if the recipient is engaged in work for an average of at least 20 hours per week during the month.
(C)

Single teen head of household or married teen who maintains satisfactory school attendance deemed to be meeting work participation requirements.—
For purposes of determining monthly participation rates under sub-section (b)(1)(B)(i), a recipient who is married or a head of household and has not attained 20 years of age is deemed to be engaged in work for a month in a fiscal year if the recipient—
(i)
maintains satisfactory attendance at secondary school or the equivalent during the month; or
(ii)
participates in education directly related to employment for an average of at least 20 hours per week during the month.
(D)

Limitation on number of persons who may be treated as engaged in work by reason of participation in educational activities.—
For purposes of determining monthly participation rates under paragraphs (1)(B)(i) and (2)(B) of subsection (b), not more than 30 percent of the number of individuals in all families and in 2-parent families, respectively, in a State who are treated as engaged in work for a month may consist of individuals who are determined to be engaged in work for the month by reason of participation in vocational educational training, or (if the month is in fiscal year 2000 or thereafter) deemed to be engaged in work for the month by reason of subparagraph (C) of this paragraph.
(d)

Work Activities Defined.—
As used in this section, the term “work activities” means—
(1)
unsubsidized employment;
(2)
subsidized private sector employment;
(3)
subsidized public sector employment;
(4)
work experience (including work associated with the refurbishing of publicly assisted housing) if sufficient private sector employment is not available;
(5)
on-the-job training;
(6)
job search and job readiness assistance;
(7)
community service programs;
(8)
vocational educational training (not to exceed 12 months with respect to any individual);
(9)
job skills training directly related to employment;
(10)
education directly related to employment, in the case of a recipient who has not received a high school diploma or a certificate of high school equivalency;
(11)
satisfactory attendance at secondary school or in a course of study leading to a certificate of general equivalence, in the case of a recipient who has not completed secondary school or received such a certificate; and
(12)
the provision of child care services to an individual who is participating in a community service program.
(e)

Penalties Against Individuals.—
(1)

In general.—
Except as provided in paragraph (2), if an individual in a family receiving assistance under the State program funded under this part or any other State program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)) refuses to engage in work required in accordance with this section, the State shall—
(A)
reduce the amount of assistance otherwise payable to the family pro rata (or more, at the option of the State) with respect to any period during a month in which the individual so refuses; or
(B)
terminate such assistance,
subject to such good cause and other exceptions as the State may establish.
(2)

Exception.—
Notwithstanding paragraph (1), a State may not reduce or terminate assistance under the State program funded under this part or any other State program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)) based on a refusal of an individual to engage in work required in accordance with this section if the individual is a single custodial parent caring for a child who has not attained 6 years of age, and the individual proves that the individual has a demonstrated inability (as determined by the State) to obtain needed child care, for 1 or more of the following reasons:
(A)
Unavailability of appropriate child care within a reasonable distance from the individual's home or work site.
(B)
Unavailability or unsuitability of informal child care by a relative or under other arrangements.
(C)
Unavailability of appropriate and affordable formal child care arrangements.
(f)

Nondisplacement in Work Activities.—
(1)

In general.—
Subject to paragraph (2), an adult in a family receiving assistance under a State program funded under this part attributable to funds provided by the Federal Government may fill a vacant employment position in order to engage in a work activity described in subsection (d).
(2)

No filling of certain vacancies.—
No adult in a work activity described in subsection (d) which is funded, in whole or in part, by funds provided by the Federal Government shall be employed or assigned—
(A)
when any other individual is on layoff from the same or any substantially equivalent job; or
(B)
if the employer has terminated the employment of any regular employee or otherwise caused an involuntary reduction of its workforce in order to fill the vacancy so created with an adult described in paragraph (1).
(3)

Grievance procedure.—
A State with a program funded under this part shall establish and maintain a grievance procedure for resolving complaints of alleged violations of paragraph (2).
(4)

No preemption.—
Nothing in this subsection shall preempt or supersede any provision of State or local law that provides greater protection for employees from displacement.
(g)

Sense of the Congress.—
It is the sense of the Congress that in complying with this section, each State that operates a program funded under this part is encouraged to assign the highest priority to requiring adults in 2-parent families and adults in single-parent families that include older preschool or school-age children to be engaged in work activities.
(h)

Sense of the Congress That States Should Impose Certain Requirements on Noncustodial, Nonsupporting Minor Parents.—
It is the sense of the Congress that the States should require noncustodial, nonsupporting parents who have not attained 18 years of age to fulfill community work obligations and attend appropriate parenting or money management classes after school.
(i)

Verification of Work and Work-Eligible Individuals in Order To Implement Reforms.—
(1)

Secretarial direction and oversight.—
(A)
Regulations for determining whether activities may be counted as “work activities”, how to count and verify reported hours of work, and determining who is a work-eligible individual.—
(i)

In general.—
Not later than June 30, 2006, the Secretary shall promulgate regulations to ensure consistent measurement of work participation rates under State programs funded under this part and State programs funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)), which shall include information with respect to—
(I)
determining whether an activity of a recipient of assistance may be treated as a work activity under subsection (d);
(II)
uniform methods for reporting hours of work by a recipient of assistance;
(III)
the type of documentation needed to verify reported hours of work by a recipient of assistance; and
(IV)
the circumstances under which a parent who resides with a child who is a recipient of assistance should be included in the work participation rates.
(ii)

Issuance of regulations on an interim final basis.—
The regulations referred to in clause (i) may be effective and final immediately on an interim basis as of the date of publication of the regulations. If the Secretary provides for an interim final regulation, the Secretary shall provide for a period of public comment on the regulation after the date of publication. The Secretary may change or revise the regulation after the public comment period.
(B)

Oversight of state procedures.—
The Secretary shall review the State procedures established in accordance with paragraph (2) to ensure that such procedures are consistent with the regulations promulgated under subparagraph (A) and are adequate to ensure an accurate measurement of work participation under the State programs funded under this part and any other State programs funded with qualified State expenditures (as so defined).
(2)

Requirement for states to establish and maintain work participation verification procedures.—
Not later than September 30, 2006, a State to which a grant is made under section 403 shall establish procedures for determining, with respect to recipients of assistance under the State program funded under this part or under any State programs funded with qualified State expenditures (as so defined), whether activities may be counted as work activities, how to count and verify reported hours of work, and who is a work-eligible individual, in accordance with the regulations promulgated pursuant to paragraph (1)(A)(i) and shall establish internal controls to ensure compliance with the procedures.
SEC. 408.
[42 U.S.C. 608]

PROHIBITIONS; REQUIREMENTS.
(a)

In General.—12
^{12}
See also section 115 of PRWORA, for a ban on assistance to drug felons, with opt-out.
(1)

No assistance for families without a minor child.—
A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to a family, unless the family includes a minor child who resides with the family (consistent with paragraph (10)) or a pregnant individual.
(2)

Reduction or elimination of assistance for noncooperation in establishing paternity or obtaining child support.—
If the agency responsible for administering the State plan approved under part D determines that an individual is not cooperating with the State in establishing paternity or in establishing, modifying, or enforcing a support order with respect to a child of the individual, and the individual does not qualify for any good cause or other exception established by the State pursuant to section 454(29), then the State—
(A)
shall deduct from the assistance that would otherwise be provided to the family of the individual under the State program funded under this part an amount equal to not less than 25 percent of the amount of such assistance; and
(B)
may deny the family any assistance under the State program.
(3)

No assistance for families not assigning certain support rights to the state.—
A State to which a grant is made under section 403 shall require, as a condition of paying assistance to a family under the State program funded under this part, that a member of the family assign to the State any right the family member may have (on behalf of the family member or of any other person for whom the family member has applied for or is receiving such assistance) to support from any other person, not exceeding the total amount of assistance so paid to the family, which accrues during the period that the family receives assistance under the program.
(4)

No assistance for teenage parents who do not attend high school or other equivalent training program.—
A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to an individual who has not attained 18 years of age, is not married, has a minor child at least 12 weeks of age in his or her care, and has not successfully completed a high-school education (or its equivalent), if the individual does not participate in—
(A)
educational activities directed toward the attainment of a high school diploma or its equivalent; or
(B)
an alternative educational or training program that has been approved by the State.
(5)

No assistance for teenage parents not living in adult-supervised settings.—
(A)

In general.—
(i)

Requirement.—
Except as provided in subparagraph (B), a State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to an individual described in clause (ii) of this subparagraph if the individual and the minor child referred to in clause (ii)(II) do not reside in a place of residence maintained by a parent, legal guardian, or other adult relative of the individual as such parent's, guardian's, or adult relative's own home.
(ii)

Individual described.—
For purposes of clause (i), an individual described in this clause is an individual who—
(I)
has not attained 18 years of age; and
(II)
is not married, and has a minor child in his or her care.
(B)

Exception.—
(i)

Provision of, or assistance in locating, adult-supervised living arrangement.—
In the case of an individual who is described in clause (ii), the State agency referred to in section 402(a)(4) shall provide, or assist the individual in locating, a second chance home, maternity home, or other 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 the minor child referred to in subparagraph (A)(ii)(II) reside in such living arrangement as a condition of the continued receipt of assistance under the State program funded under this part attributable to funds provided by the Federal Government (or in an alternative appropriate arrangement, should circumstances change and the current arrangement cease to be appropriate).
(ii)

Individual described.—
For purposes of clause (i), an individual is described in this clause if the individual is described in subparagraph (A)(ii), and—
(I)
the individual has no parent, legal guardian, or other appropriate adult relative described in subclause (II) of his or her own who is living or whose whereabouts are known;
(II)
no living parent, legal guardian, or other appropriate adult relative, who would otherwise meet applicable State criteria to act as the individual's legal guardian, of such individual allows the individual to live in the home of such parent, guardian, or relative;
(III)
the State agency determines that—
- (aa)
the individual or the minor child referred to in subparagraph (A)(ii)(II) is being or has been subjected to serious physical or emotional harm, sexual abuse, or exploitation in the residence of the individual's own parent or legal guardian; or
- (bb)
substantial evidence exists of an act or failure to act that presents an imminent or serious harm if the individual and the minor child lived in the same residence with the individual's own parent or legal guardian; or
(IV)
the State agency otherwise determines that it is in the best interest of the minor child to waive the requirement of subparagraph (A) with respect to the individual or the minor child.
(iii)

Second-chance home.—
For purposes of this subparagraph, the term “second-chance home” means an entity that provides individuals described in clause (ii) with a supportive and supervised living arrangement in which such individuals are required to learn parenting skills, including child development, family budgeting, health and nutrition, and other skills to promote their long-term economic independence and the well-being of their children.
(6)

No medical services.—
(A)

In general.—
A State to which a grant is made under section 403 shall not use any part of the grant to provide medical services.
(B)

Exception for prepregnancy family planning services.—
As used in subparagraph (A), the term “medical services” does not include prepregnancy family planning services.
(7)

No assistance for more than 5 years.—
(A)

In general.—
A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to a family that includes an adult who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government, for 60 months (whether or not consecutive) after the date the State program funded under this part commences, subject to this paragraph.
(B)

Minor child exception.—
In determining the number of months for which an individual who is a parent or pregnant has received assistance under the State program funded under this part, the State shall disregard any month for which such assistance was provided with respect to the individual and during which the individual was—
(i)
a minor child; and
(ii)
not the head of a household or married to the head of a household.
(C)

Hardship exception.—
(i)

In general.—
The State may exempt a family from the application of subparagraph (A) by reason of hardship or if the family includes an individual who has been battered or subjected to extreme cruelty.
(ii)

Limitation.—
The average monthly number of families with respect to which an exemption made by a State under clause (i) is in effect for a fiscal year shall not exceed 20 percent of the average monthly number of families to which assistance is provided under the State program funded under this part during the fiscal year or the immediately preceding fiscal year (but not both), as the State may elect.
(iii)

Battered or subject to extreme cruelty defined.—
For purposes of clause (i), an individual has been battered or subjected to extreme cruelty if the individual has been subjected to—
(I)
physical acts that resulted in, or threatened to result in, physical injury to the individual;
(II)
sexual abuse;
(III)
sexual activity involving a dependent child;
(IV)
being forced as the caretaker relative of a dependent child to engage in nonconsensual sexual acts or activities;
(V)
threats of, or attempts at, physical or sexual abuse;
(VI)
mental abuse; or
(VII)
neglect or deprivation of medical care.
(D)

Disregard of months of assistance received by adult while living in indian country or an alaskan native village with 50 percent unemployment.—
(i)

In general.—
In determining the number of months for which an adult has received assistance under a State or tribal program funded under this part, the State or tribe shall disregard any month during which the adult lived in Indian country or an Alaskan Native village if the most reliable data available with respect to the month (or a period including the month) indicate that at least 50 percent of the adults living in Indian country or in the village were not employed.
(ii)

Indian country defined.—
As used in clause (i), the term “Indian country” has the meaning given such term in section 1151 of title 18, United States Code.
(E)

Rule of interpretation.—
Subparagraph (A) shall not be interpreted to require any State to provide assistance to any individual for any period of time under the State program funded under this part.
(F)

Rule of interpretation.—
This part shall not be interpreted to prohibit any State from expending State funds not originating with the Federal Government on benefits for children or families that have become ineligible for assistance under the State program funded under this part by reason of subparagraph (A).
(G)

Inapplicability to welfare-to-work grants and assistance.—
For purposes of subparagraph (A) of this paragraph, a grant made under section 403(a)(5) shall not be considered a grant made under section 403, and noncash assistance from funds provided under section 403(a)(5) shall not be considered assistance.
(8)

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.—
A State to which a grant is made under section 403 shall not use any part of the grant to provide cash assistance to an individual 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 assistance simultaneously from 2 or more States under programs that are funded under this title, title XIX, or the Food and Nutrition Act of 2008, or benefits in 2 or more States under the supplemental security income program under title XVI. The preceding sentence shall not apply with respect to a conviction of an individual, for any month beginning after the President of the United States grants a pardon with respect to the conduct which was the subject of the conviction.
(9)

Denial of assistance for fugitive felons and probation and parole violators.—
(A)

In general.—
A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to any individual who 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.
The preceding sentence shall not apply with respect to conduct of an individual, for any month beginning after the President of the United States grants a pardon with respect to the conduct.
(B)

Exchange of information with law enforcement agencies.—
If a State to which a grant is made under section 403 establishes safeguards against the use or disclosure of information about applicants or recipients of assistance under the State program funded under this part, the safeguards shall not prevent the State agency administering the program from furnishing a Federal, State, or local law enforcement officer, upon the request of the officer, with the current address of any recipient if the officer furnishes the agency with the name of the recipient and notifies the agency that—
(i)
the recipient—
(I)
is described in subparagraph (A); or
(II)
has information that is necessary for the officer to conduct the official duties of the officer; and
(ii)
the location or apprehension of the recipient is within such official duties.
(10)

Denial of assistance for minor children who are absent from the home for a significant period.—
(A)

In general.—
A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance for a minor child who has been, or is expected by a parent (or other caretaker relative) of the child to be, absent from the home for a period of 45 consecutive days or, at the option of the State, such period of not less than 30 and not more than 180 consecutive days as the State may provide for in the State plan submitted pursuant to section 402.
(B)

State authority to establish good cause exceptions.—
The State may establish such good cause exceptions to subparagraph (A) as the State considers appropriate if such exceptions are provided for in the State plan submitted pursuant to section 402.
(C)

Denial of assistance for relative who fails to notify state agency of absence of child.—
A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance for an individual who is a parent (or other caretaker relative) of a minor child and who fails to notify the agency administering the State program funded under this part of the absence of the minor child from the home for the period specified in or provided for pursuant to subparagraph (A), by the end of the 5-day period that begins with the date that it becomes clear to the parent (or relative) that the minor child will be absent for such period so specified or provided for.
(11)

Medical assistance required to be provided for certain families having earnings from employment or child support.—
(A)

Earnings from employment.—
A State to which a grant is made under section 403 and which has a State plan approved under title XIX shall provide that in the case of a family that is treated (under section 1931(b)(1)(A) for purposes of title XIX) as receiving aid under a State plan approved under this part (as in effect on July 16, 1996), that would become ineligible for such aid because of hours of or income from employment of the caretaker relative (as defined under this part as in effect on such date) or because of section 402(a)(8)(B)(ii)(II) (as so in effect), and that was so treated as receiving such aid in at least 3 of the 6 months immediately preceding the month in which such ineligibility begins, the family shall remain eligible for medical assistance under the State's plan approved under title XIX for an extended period or periods as provided in section 1925 or 1902(e)(1) (as applicable), and that the family will be appropriately notified of such extension as required by section 1925(a)(2).
(B)

Child support.—
A State to which a grant is made under section 403 and which has a State plan approved under title XIX shall provide that in the case of a family that is treated (under section 1931(b)(1)(A) for purposes of title XIX) as receiving aid under a State plan approved under this part (as in effect on July 16, 1996), that would become ineligible for such aid as a result (wholly or partly) of the collection of child or spousal support under part D and that was so treated as receiving such aid in at least 3 of the 6 months immediately preceding the month in which such ineligibility begins, the family shall remain eligible for medical assistance under the State's plan approved under title XIX for an extended period or periods as provided in section 1931(c)(1).
(12)

State requirement to prevent unauthorized spending of benefits.—
(A)

In general.—
A State to which a grant is made under section 403 shall maintain policies and practices as necessary to prevent assistance provided under the State program funded under this part from being used in any electronic benefit transfer transaction in—
(i)
any liquor store;
(ii)
any casino, gambling casino, or gaming establishment; or
(iii)
any retail establishment which provides adult-oriented entertainment in which performers disrobe or perform in an unclothed state for entertainment.
(B)

Definitions.—
For purposes of subparagraph (A)—
(i)

Liquor store.—
The term “liquor store” means any retail establishment which sells exclusively or primarily intoxicating liquor. Such term does not include a grocery store which sells both intoxicating liquor and groceries including staple foods (within the meaning of section 3(r) of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(r))).
(ii)

Casino, gambling casino, or gaming establishment.—
The terms “casino”, “gambling casino”, and “gaming establishment” do not include—
(I)
a grocery store which sells groceries including such staple foods and which also offers, or is located within the same building or complex as, casino, gambling, or gaming activities; or
(II)
any other establishment that offers casino, gambling, or gaming activities incidental to the principal purpose of the business.
(iii)

Electronic benefit transfer transaction.—
The term “electronic benefit transfer transaction” means the use of a credit or debit card service, automated teller machine, point-of-sale terminal, or access to an online system for the withdrawal of funds or the processing of a payment for merchandise or a service.
(b)

Individual Responsibility Plans.—
(1)

Assessment.—
The State agency responsible for administering the State program funded under this part shall make an initial assessment of the skills, prior work experience, and employability of each recipient of assistance under the program who—
(A)
has attained 18 years of age; or
(B)
has not completed high school or obtained a certificate of high school equivalency, and is not attending secondary school.
(2)

Contents of plans.—
(A)

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, may develop an individual responsibility plan for the individual, which—
(i)
sets forth an employment goal for the individual and a plan for moving the individual immediately into private sector employment;
(ii)
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;
(iii)
to the greatest extent possible is 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;
(iv)
describes the 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
(v)
may require the individual to undergo appropriate substance abuse treatment.
(B)

Timing.—
The State agency may comply with paragraph (1) with respect to an individual—
(i)
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 aid under the State plan approved under part A (as in effect immediately before such effective date); or
(ii)
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.
(3)

Penalty for noncompliance by individual.—
In addition to any other penalties required under the State program funded under this part, the State may reduce, by such amount as the State considers appropriate, the amount of assistance otherwise payable under the State program to a family that includes an individual who fails without good cause to comply with an individual responsibility plan signed by the individual.
(4)

State discretion.—
The exercise of the authority of this subsection shall be within the sole discretion of the State.
(c)

Sanctions Against Recipients Not Considered Wage Reductions.—
A penalty imposed by a State against the family of an individual by reason of the failure of the individual to comply with a requirement under the State program funded under this part shall not be construed to be a reduction in any wage paid to the individual.
(d)

Nondiscrimination Provisions.—
The following provisions of law shall apply to any program or activity which receives funds provided under this part:
(1)
The Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.).
(2)
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794).
(3)
The Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.).
(4)
Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.).
(e)

Special Rules Relating to Treatment of Certain Aliens.—
For special rules relating to the treatment of certain aliens, see title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
(f)

Special Rules Relating to the Treatment of Non-213A Aliens.—
The following rules shall apply if a State elects to take the income or resources of any sponsor of a non-213A alien into account in determining whether the alien is eligible for assistance under the State program funded under this part, or in determining the amount or types of such assistance to be provided to the alien:
(1)

Deeming of sponsor's income and resources.—
For a period of 3 years after a non-213A alien enters the United States:
(A)

Income deeming rule.—
The income of any sponsor of the alien and of any spouse of the sponsor is deemed to be income of the alien, to the extent that the total amount of the income exceeds the sum of—
(i)
the lesser of—
(I)
20 percent of the total of any amounts received by the sponsor or any such spouse in the month as wages or salary or as net earnings from self-employment, plus the full amount of any costs incurred by the sponsor and any such spouse in producing self-employment income in such month; or
(II)
$175;
(ii)
the cash needs standard established by the State for purposes of determining eligibility for assistance under the State program funded under this part for a family of the same size and composition as the sponsor and any other individuals living in the same household as the sponsor who are claimed by the sponsor as dependents for purposes of determining the sponsor's Federal personal income tax liability but whose needs are not taken into account in determining whether the sponsor's family has met the cash needs standard;
(iii)
any amounts paid by the sponsor or any such spouse to individuals not living in the household who are claimed by the sponsor as dependents for purposes of determining the sponsor's Federal personal income tax liability; and
(iv)
any payments of alimony or child support with respect to individuals not living in the household.
(B)

Resource deeming rule.—
The resources of a sponsor of the alien and of any spouse of the sponsor are deemed to be resources of the alien to the extent that the aggregate value of the resources exceeds $1,500.
(C)

Sponsors of multiple non-213a aliens.—
If a person is a sponsor of 2 or more non-213A aliens who are living in the same home, the income and resources of the sponsor and any spouse of the sponsor that would be deemed income and resources of any such alien under subparagraph (A) shall be divided into a number of equal shares equal to the number of such aliens, and the State shall deem the income and resources of each such alien to include 1 such share.
(2)

Ineligibility of non-213a aliens sponsored by agencies; exception.—
A non-213A alien whose sponsor is or was a public or private agency shall be ineligible for assistance under a State program funded under this part, during a period of 3 years after the alien enters the United States, unless the State agency administering the program determines that the sponsor either no longer exists or has become unable to meet the alien's needs.
(3)

Information provisions.—
(A)

Duties of non-213a aliens.—
A non-213A alien, as a condition of eligibility for assistance under a State program funded under this part during the period of 3 years after the alien enters the United States, shall be required to provide to the State agency administering the program—
(i)
such information and documentation with respect to the alien's sponsor as may be necessary in order for the State agency to make any determination required under this subsection, and to obtain any cooperation from the sponsor necessary for any such determination; and
(ii)
such information and documentation as the State agency may request and which the alien or the alien's sponsor provided in support of the alien's immigration application.
(B)

Duties of federal agencies.—
The Secretary shall enter into agreements with the Secretary of State and the Attorney General under which any information available to them and required in order to make any determination under this subsection will be provided by them to the Secretary (who may, in turn, make the information available, upon request, to a concerned State agency).
(4)

Non-213a alien defined.—
An alien is a non-213A alien for purposes of this subsection if the affidavit of support or similar agreement with respect to the alien that was executed by the sponsor of the alien's entry into the United States was executed other than pursuant to section 213A of the Immigration and Nationality Act.
(5)

Inapplicability to alien minor sponsored by a parent.—
This subsection shall not apply to an alien who is a minor child if the sponsor of the alien or any spouse of the sponsor is a parent of the alien.
(6)

Inapplicability to certain categories of aliens.—
This subsection shall not apply to an alien who is—
(A)
admitted to the United States as a refugee under section 207 of the Immigration and Nationality Act;
(B)
paroled into the United States under section 212(d)(5) of such Act for a period of at least 1 year; or
(C)
granted political asylum by the Attorney General under section 208 of such Act.
(g)

State Required To Provide Certain Information.—
Each State to which a grant is made under section 403 shall, at least 4 times annually and upon request of the Immigration and Naturalization Service, furnish the Immigration and Naturalization Service with the name and address of, and other identifying information on, any individual who the State knows is not lawfully present in the United States.
SEC. 409.
[42 U.S.C. 609]

PENALTIES.
(a)

In General.—
Subject to this section:
(1)

Use of grant in violation of this part.—
(A)

General penalty.—
If an audit conducted under chapter 75 of title 31, United States Code, finds that an amount paid to a State under section 403 for a fiscal year has been used in violation of this part, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter by the amount so used.
(B)

Enhanced penalty for intentional violations.—
If the State does not prove to the satisfaction of the Secretary that the State did not intend to use the amount in violation of this part, the Secretary shall further reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter by an amount equal to 5 percent of the State family assistance grant.
(C)

Penalty for misuse of competitive welfare-to-work funds.—
If the Secretary of Labor finds that an amount paid to an entity under section 403(a)(5)(B) has been used in violation of subparagraph (B) or (C) of section 403(a)(5), the entity shall remit to the Secretary of Labor an amount equal to the amount so used.
(2)

Failure to submit required report.—
(A)

Quarterly reports.—
(i)

In general.—
If the Secretary determines that a State has not, within 45 days after the end of a fiscal quarter, submitted the report required by section 411(a) for the quarter, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to 4 percent of the State family assistance grant.
(ii)

Rescission of penalty.—
The Secretary shall rescind a penalty imposed on a State under clause (i) with respect to a report if the State submits the report before the end of the fiscal quarter that immediately succeeds the fiscal quarter for which the report was required.
(B)

Report on engagement in additional work activities and expenditures for other benefits and services.—
(i)

In general.—
If the Secretary determines that a State has not submitted the report required by section 411(c)(1)(A)(i) by May 31, 2011, or the report required by section 411(c)(1)(A)(ii) by August 31, 2011, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not more than 4 percent of the State family assistance grant.
(ii)

Rescission of penalty.—
The Secretary shall rescind a penalty imposed on a State under clause (i) with respect to a report required by section 411(c)(1)(A) if the State submits the report not later than—
(I)
in the case of the report required under section 411(c)(1)(A)(i), June 15, 2011; and
(II)
in the case of the report required under section 411(c)(1)(A)(ii), September 15, 2011.
(iii)

Penalty based on severity of failure.—
The Secretary shall impose a reduction under clause (i) with respect to a fiscal year based on the degree of noncompliance.
(3)

Failure to satisfy minimum participation rates.—
(A)

In general.—
If the Secretary determines that a State to which a grant is made under section 403 for a fiscal year has failed to comply with section 407(a) for the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to the applicable percentage of the State family assistance grant.
(B)

Applicable percentage defined.—
As used in subparagraph (A), the term “applicable percentage” means, with respect to a State—
(i)
if a penalty was not imposed on the State under subparagraph (A) for the immediately preceding fiscal year, 5 percent; or
(ii)
if a penalty was imposed on the State under subparagraph (A) for the immediately preceding fiscal year, the lesser of—
(I)
the percentage by which the grant payable to the State under section 403(a)(1) was reduced for such preceding fiscal year, increased by 2 percentage points; or
(II)
21 percent.
(C)

Penalty based on severity of failure.—
The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of noncompliance, and may reduce the penalty if the noncompliance is due to circumstances that caused the State to become a needy State (as defined in section 403(b)(5)) during the fiscal year or if the noncompliance is due to extraordinary circumstances such as a natural disaster or regional recession. The Secretary shall provide a written report to Congress to justify any waiver or penalty reduction due to such extraordinary circumstances.
(4)

Failure to participate in the income and eligibility verification system.—
If the Secretary determines that a State program funded under this part is not participating during a fiscal year in the income and eligibility verification system required by section 1137, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not more than 2 percent of the State family assistance grant.
(5)

Failure to comply with paternity establishment and child support enforcement requirements under part d.—
Notwithstanding any other provision of this Act, if the Secretary determines that the State agency that administers a program funded under this part does not enforce the penalties requested by the agency administering part D against recipients of assistance under the State program who fail to cooperate in establishing paternity or in establishing, modifying, or enforcing a child support order in accordance with such part and who do not qualify for any good cause or other exception established by the State under section 454(29), the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year (without regard to this section) by not more than 5 percent.
(6)

Failure to timely repay a federal loan fund for state welfare programs.—
If the Secretary determines that a State has failed to repay any amount borrowed from the Federal Loan Fund for State Welfare Programs established under section 406 within the period of maturity applicable to the loan, plus any interest owed on the loan, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter (without regard to this section) by the outstanding loan amount, plus the interest owed on the outstanding amount. The Secretary shall not forgive any outstanding loan amount or interest owed on the outstanding amount.
(7)

Failure of any state to maintain certain level of historic effort.—
(A)

In general.—
The Secretary shall reduce the grant payable to the State under section 403(a)(1) for a fiscal year by the amount (if any) by which qualified State expenditures for the then immediately preceding fiscal year are less than the applicable percentage of historic State expenditures with respect to such preceding fiscal year.
(B)

Definitions.—
As used in this paragraph:
(i)

Qualified state expenditures.—
(I)

In general.—
The term “qualified State expenditures” means, with respect to a State and a fiscal year, the total expenditures by the State during the fiscal year, under all State programs, for any of the following with respect to eligible families:
- (aa)
Cash assistance, including any amount collected by the State as support pursuant to a plan approved under part D, on behalf of a family receiving assistance under the State program funded under this part, that is distributed to the family under section 457(a)(1)(B) and disregarded in determining the eligibility of the family for, and the amount of, such assistance.
- (bb)
Child care assistance.
- (cc)
Educational activities designed to increase self-sufficiency, job training, and work, excluding any expenditure for public education in the State except expenditures which involve the provision of services or assistance to a member of an eligible family which is not generally available to persons who are not members of an eligible family.
- (dd)
Administrative costs in connection with the matters described in items (aa), (bb), (cc), and (ee), but only to the extent that such costs do not exceed 15 percent of the total amount of qualified State expenditures for the fiscal year.
- (ee)
Any other use of funds allowable under section 404(a)(1).
(II)

Exclusion of transfers from other state and local programs.—
Such term does not include expenditures under any State or local program during a fiscal year, except to the extent that—
- (aa)
the expenditures exceed the amount expended under the State or local program in the fiscal year most recently ending before the date of the enactment of this section; or
- (bb)
the State is entitled to a payment under former section 403 (as in effect immediately before such date of enactment) with respect to the expenditures.
(III)

Exclusion of amounts expended to replace penalty grant reductions.—
Such term does not include any amount expended in order to comply with paragraph (12).
(IV)

Eligible families.—
As used in subclause (I), the term “eligible families” means families eligible for assistance under the State program funded under this part, families that would be eligible for such assistance but for the application of section 408(a)(7) of this Act, and families of aliens lawfully present in the United States that would be eligible for such assistance but for the application of title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
(V)

Counting of spending on certain pro-family activities.—
The term “qualified State expenditures” includes the total expenditures by the State during the fiscal year under all State programs for a purpose described in paragraph (3) or (4) of section 401(a).
(ii)

Applicable percentage.—
The term “applicable percentage” means 80 percent (or, if the State meets the requirements of section 407(a), 75 percent).
(iii)

Historic state expenditures.—
The term “historic State expenditures” means, with respect to a State, the lesser of—
(I)
the expenditures by the State under parts A and F (as in effect during fiscal year 1994) for fiscal year 1994; or
(II)
the amount which bears the same ratio to the amount described in subclause (I) as—
- (aa)
the State family assistance grant, plus the total amount required to be paid to the State under former section 403 for fiscal year 1994 with respect to amounts expended by the State for child care under subsection (g) or (i) of section 402 (as in effect during fiscal year 1994); bears to
- (bb)
the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994.
Such term does not include any expenditures under the State plan approved under part A (as so in effect) on behalf of individuals covered by a tribal family assistance plan approved under section 412, as determined by the Secretary.
(iv)

Expenditures by the state.—
The term “expenditures by the State” does not include—
(I)
any expenditure from amounts made available by the Federal Government;
(II)
any State funds expended for the medicaid program under title XIX;
(III)
any State funds which are used to match Federal funds provided under section 403(a)(5); or
(IV)
any State funds which are expended as a condition of receiving Federal funds other than under this part.
Notwithstanding subclause (IV) of the preceding sentence, such term includes expenditures by a State for child care in a fiscal year to the extent that the total amount of the expenditures does not exceed the amount of State expenditures in fiscal year 1994 or 1995 (whichever is the greater) that equal the non-Federal share for the programs described in section 418(a)(1)(A).
(v)

Source of data.—
In determining expenditures by a State for fiscal years 1994 and 1995, the Secretary shall use information which was reported by the State on ACF Form 231 or (in the case of expenditures under part F) ACF Form 331, available as of the dates specified in clauses (ii) and (iii) of section 403(a)(1)(D).
(8)

Noncompliance of state child support enforcement program with requirements of part d.—
(A)

In general.—
If the Secretary finds, with respect to a State's program under part D, in a fiscal year beginning on or after October 1, 1997—
(i)
(I)
on the basis of data submitted by a State pursuant to section 454(15)(B), or on the basis of the results of a review conducted under section 452(a)(4), that the State program failed to achieve the paternity establishment percentages (as defined in section 452(g)(2)), or to meet other performance measures that may be established by the Secretary;
(II)
on the basis of the results of an audit or audits conducted under section 452(a)(4)(C)(i) that the State data submitted pursuant to section 454(15)(B) is incomplete or unreliable; or
(III)
on the basis of the results of an audit or audits conducted under section 452(a)(4)(C) that a State failed to substantially comply with 1 or more of the requirements of part D (other than paragraph (24), or subparagraph (A) or (B)(i) of paragraph (27), of section 454); and
(ii)
that, with respect to the succeeding fiscal year—
(I)
the State failed to take sufficient corrective action to achieve the appropriate performance levels or compliance as described in subparagraph (A)(i); 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 has achieved the paternity establishment percentages or other performance measures as described in subparagraph (A)(i)(I), or is in substantial compliance with 1 or more of the requirements of part D as described in subparagraph (A)(i)(III), as appropriate, shall be reduced by the percentage specified in subparagraph (B).
(B)

Amount of reductions.—
The reductions required under subparagraph (A) shall be—
(i)
not less than 1 nor more than 2 percent;
(ii)
not less than 2 nor more than 3 percent, if the finding is the 2nd consecutive finding made pursuant to subparagraph (A); or
(iii)
not less than 3 nor more than 5 percent, if the finding is the 3rd or a subsequent consecutive such finding.
(C)

Disregard of noncompliance which is of a technical nature.—
For purposes of this section and section 452(a)(4), a State determined as a result of an audit—
(i)
to have failed to have substantially complied with 1 or more of the requirements of part D shall be determined to have achieved substantial compliance only if the Secretary determines that the extent of the noncompliance is of a technical nature which does not adversely affect the performance of the State's program under part D; or
(ii)
to have submitted incomplete or unreliable data pursuant to section 454(15)(B) shall be determined to have submitted adequate data only 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 paternity establishment percentages (as defined under section 452(g)(2)) or other performance measures that may be established by the Secretary.
(9)

Failure to comply with 5-year limit on assistance.—
If the Secretary determines that a State has not complied with section 408(a)(7) during a fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to 5 percent of the State family assistance grant.
(10)

Failure of state receiving amounts from contingency fund to maintain 100 percent of historic effort.—
If, at the end of any fiscal year during which amounts from the Contingency Fund for State Welfare Programs have been paid to a State, the Secretary finds that the qualified State expenditures (as defined in paragraph (7)(B)(i) (other than the expenditures described in subclause (I)(bb) of that paragraph)) under the State program funded under this part for the fiscal year are less than 100 percent of historic State expenditures (as defined in paragraph (7)(B)(iii) of this subsection), excluding any amount expended by the State for child care under subsection (g) or (i) of section 402 (as in effect during fiscal year 1994) for fiscal year 1994, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by the total of the amounts so paid to the State that the State has not remitted under section 403(b)(6).
(11)

Failure to maintain assistance to adult single custodial parent who cannot obtain child care for child under age 6.—
(A)

In general.—
If the Secretary determines that a State to which a grant is made under section 403 for a fiscal year has violated section 407(e)(2) during the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not more than 5 percent of the State family assistance grant.
(B)

Penalty based on severity of failure.—
The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of noncompliance.
(12)

Requirement to expend additional state funds to replace grant reductions; penalty for failure to do so.—
If the grant payable to a State under section 403(a)(1) for a fiscal year is reduced by reason of this subsection, the State shall, during the immediately succeeding fiscal year, expend under the State program funded under this part an amount equal to the total amount of such reductions. If the State fails during such succeeding fiscal year to make the expenditure required by the preceding sentence from its own funds, the Secretary may reduce the grant payable to the State under section 403(a)(1) for the fiscal year that follows such succeeding fiscal year by an amount equal to the sum of—
(A)
not more than 2 percent of the State family assistance grant; and
(B)
the amount of the expenditure required by the preceding sentence.
(13)

Penalty for failure of state to maintain historic effort during year in which welfare-to-work grant is received.—
If a grant is made to a State under section 403(a)(5)(A) for a fiscal year and paragraph (7) of this subsection requires the grant payable to the State under section 403(a)(1) to be reduced for the immediately succeeding fiscal year, then the Secretary shall reduce the grant payable to the State under section 403(a)(1) for such succeeding fiscal year by the amount of the grant made to the State under section 403(a)(5)(A) for the fiscal year.
(14)

Penalty for failure to reduce assistance for recipients refusing without good cause to work.—
(A)

In general.—
If the Secretary determines that a State to which a grant is made under section 403 in a fiscal year has violated section 407(e) during the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not less than 1 percent and not more than 5 percent of the State family assistance grant.
(B)

Penalty based on severity of failure.—
The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of noncompliance.
(15)

Penalty for failure to establish or comply with work participation verification procedures.—
(A)

In general.—
If the Secretary determines that a State to which a grant is made under section 403 in a fiscal year has violated section 407(i)(2) during the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not less than 1 percent and not more than 5 percent of the State family assistance grant.
(B)

Penalty based on severity of failure.—
The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of noncompliance.
(16)

Penalty for failure to enforce spending policies.—
(A)

In general.—
If, within 2 years after the date of the enactment of this paragraph, any State has not reported to the Secretary on such State's implementation of the policies and practices required by section 408(a)(12), or the Secretary determines, based on the information provided in State reports, that any State has not implemented and maintained such policies and practices, the Secretary shall reduce, by an amount equal to 5 percent of the State family assistance grant, the grant payable to such State under section 403(a)(1) for—
(i)
the fiscal year immediately succeeding the year in which such 2-year period ends; and
(ii)
each succeeding fiscal year in which the State does not demonstrate that such State has implemented and maintained such policies and practices.
(B)

Reduction of applicable penalty.—
The Secretary may reduce the amount of the reduction required under subparagraph (A) based on the degree of noncompliance of the State.
(C)

State not responsible for individual violations.—
Fraudulent activity by any individual in an attempt to circumvent the policies and practices required by section 408(a)(12) shall not trigger a State penalty under subparagraph (A).
(b)

Reasonable Cause Exception.—
(1)

In general.—
The Secretary may not impose a penalty on a State under subsection (a) with respect to a requirement if the Secretary determines that the State has reasonable cause for failing to comply with the requirement.
(2)

Exception.—
Paragraph (1) of this subsection shall not apply to any penalty under paragraph (6), (7), (8), (10), (12), or (13) of subsection (a) and, with respect to the penalty under paragraph (2)(B) of subsection (a), shall only apply to the extent the Secretary determines that the reasonable cause for failure to comply with a requirement of that paragraph is as a result of a one-time, unexpected event, such as a widespread data system failure or a natural or man-made disaster.
(c)

Corrective Compliance Plan.—
(1)

In general.—
(A)

Notification of violation.—
Before imposing a penalty against a State under subsection (a) with respect to a violation of this part, the Secretary shall notify the State of the violation and allow the State the opportunity to enter into a corrective compliance plan in accordance with this subsection which outlines how the State will correct or discontinue, as appropriate, the violation and how the State will insure continuing compliance with this part.
(B)

60-day period to propose a corrective compliance plan.—
During the 60-day period that begins on the date the State receives a notice provided under subparagraph (A) with respect to a violation, the State may submit to the Federal Government a corrective compliance plan to correct or discontinue, as appropriate, the violation.
(C)

Consultation about modifications.—
During the 60-day period that begins with the date the Secretary receives a corrective compliance plan submitted by a State in accordance with subparagraph (B), the Secretary may consult with the State on modifications to the plan.
(D)

Acceptance of plan.—
A corrective compliance plan submitted by a State in accordance with subparagraph (B) is deemed to be accepted by the Secretary if the Secretary does not accept or reject the plan during 60-day period that begins on the date the plan is submitted.
(2)

Effect of correcting or discontinuing violation.—
The Secretary may not impose any penalty under subsection (a) with respect to any violation covered by a State corrective compliance plan accepted by the Secretary if the State corrects or discontinues, as appropriate, the violation pursuant to the plan.
(3)

Effect of failing to correct or discontinue violation.—
The Secretary shall assess some or all of a penalty imposed on a State under subsection (a) with respect to a violation if the State does not, in a timely manner, correct or discontinue, as appropriate, the violation pursuant to a State corrective compliance plan accepted by the Secretary.
(4)

Inapplicability to certain penalties.—
This subsection shall not apply to the imposition of a penalty against a State under paragraph (2)(B), (6), (7), (8), (10), (12), (13), or (16) of subsection (a).
(d)

Limitation on Amount of Penalties.—
(1)

In general.—
In imposing the penalties described in subsection (a), the Secretary shall not reduce any quarterly payment to a State by more than 25 percent.
(2)

Carryforward of unrecovered penalties.—
To the extent that paragraph (1) of this subsection prevents the Secretary from recovering during a fiscal year the full amount of penalties imposed on a State under subsection (a) of this section for a prior fiscal year, the Secretary shall apply any remaining amount of such penalties to the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year.
SEC. 410.
[42 U.S.C. 610]

APPEAL OF ADVERSE DECISION.
(a)

In General.—
Within 5 days after the date the Secretary takes any adverse action under this part with respect to a State, the Secretary shall notify the chief executive officer of the State of the adverse action, including any action with respect to the State plan submitted under section 402 or the imposition of a penalty under section 409.
(b)

Administrative Review.—
(1)

In general.—
Within 60 days after the date a State receives notice under subsection (a) of an adverse action, the State may appeal the action, in whole or in part, to the Departmental Appeals Board established in the Department of Health and Human Services (in this section referred to as the “Board”) by filing an appeal with the Board.
(2)

Procedural rules.—
The Board shall consider an appeal filed by a State under paragraph (1) on the basis of such documentation as the State may submit and as the Board may require to support the final decision of the Board. In deciding whether to uphold an adverse action or any portion of such an action, the Board shall conduct a thorough review of the issues and take into account all relevant evidence. The Board shall make a final determination with respect to an appeal filed under paragraph (1) not less than 60 days after the date the appeal is filed.
(c)

Judicial Review of Adverse Decision.—
(1)

In general.—
Within 90 days after the date of a final decision by the Board under this section with respect to an adverse action taken against a State, the State may obtain judicial review of the final decision (and the findings incorporated into the final decision) by filing an action in—
(A)
the district court of the United States for the judicial district in which the principal or headquarters office of the State agency is located; or
(B)
the United States District Court for the District of Columbia.
(2)

Procedural rules.—
The district court in which an action is filed under paragraph (1) shall review the final decision of the Board on the record established in the administrative proceeding, in accordance with the standards of review prescribed by subparagraphs (A) through (E) of section 706(2) of title 5, United States Code. The review shall be on the basis of the documents and supporting data submitted to the Board.
SEC. 411.
[42 U.S.C. 611]

DATA COLLECTION AND REPORTING.
(a)

Quarterly Reports by States.—
(1)

General reporting requirement.—
(A)

Contents of report.—
Each eligible State shall collect on a monthly basis, and report to the Secretary on a quarterly basis, the following disaggregated case record information on the families receiving assistance under the State program funded under this part (except for information relating to activities carried out under section 403(a)(5)) or any other State program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)):
(i)
The county of residence of the family.
(ii)
Whether a child receiving such assistance or an adult in the family is receiving—
(I)
Federal disability insurance benefits;
(II)
benefits based on Federal disability status;
(III)
aid under a State plan approved under title XIV (as in effect without regard to the amendment made by section 301 of the Social Security Amendments of 1972);
(IV)
aid or assistance under a State plan approved under title XVI (as in effect without regard to such amendment) by reason of being permanently and totally disabled; or
(V)
supplemental security income benefits under title XVI (as in effect pursuant to such amendment) by reason of disability.
(iii)
The ages of the members of such families.
(iv)
The number of individuals in the family, and the relation of each family member to the head of the family.
(v)
The employment status and earnings of the employed adult in the family.
(vi)
The marital status of the adults in the family, including whether such adults have never married, are widowed, or are divorced.
(vii)
The race and educational level of each adult in the family.
(viii)
The race and educational level of each child in the family.
(ix)
Whether the family received subsidized housing, medical assistance under the State plan approved under title XIX, supplemental nutrition assistance program benefits, or subsidized child care, and if the latter 2, the amount received.
(x)
The number of months that the family has received each type of assistance under the program.
(xi)
If the adults participated in, and the number of hours per week of participation in, the following activities:
(I)
Education.
(II)
Subsidized private sector employment.
(III)
Unsubsidized employment.
(IV)
Public sector employment, work experience, or community service.
(V)
Job search.
(VI)
Job skills training or on-the-job training.
(VII)
Vocational education.
(xii)
Information necessary to calculate participation rates under section 407.
(xiii)
The type and amount of assistance received under the program, including the amount of and reason for any reduction of assistance (including sanctions).
(xiv)
Any amount of unearned income received by any member of the family.
(xv)
The citizenship of the members of the family.
(xvi)
From a sample of closed cases, whether the family left the program, and if so, whether the family left due to—
(I)
employment;
(II)
marriage;
(III)
the prohibition set forth in section 408(a)(7);
(IV)
sanction; or
(V)
State policy.
(xvii)
With respect to each individual in the family who has not attained 20 years of age, whether the individual is a parent of a child in the family.
(B)

Use of samples.—
(i)

Authority.—
A State may comply with subparagraph (A) by submitting disaggregated case record information on a sample of families selected through the use of scientifically acceptable sampling methods approved by the Secretary.
(ii)

Sampling and other methods.—
The Secretary shall provide the States with such case sampling plans and data collection procedures as the Secretary deems necessary to produce statistically valid estimates of the performance of State programs funded under this part and any other State programs funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)). The Secretary may develop and implement procedures for verifying the quality of data submitted by the States.
(2)

Report on use of federal funds to cover administrative costs and overhead.—
The report required by paragraph (1) for a fiscal quarter shall include a statement of the percentage of the funds paid to the State under this part for the quarter that are used to cover administrative costs or overhead, with a separate statement of the percentage of such funds that are used to cover administrative costs or overhead incurred for programs operated with funds provided under section 403(a)(5).
(3)

Report on state expenditures on programs for needy families.—
The report required by paragraph (1) for a fiscal quarter shall include a statement of the total amount expended by the State during the quarter on programs for needy families, with a separate statement of the total amount expended by the State during the quarter on programs operated with funds provided under section 403(a)(5).
(4)

Report on noncustodial parents participating in work activities.—
The report required by paragraph (1) for a fiscal quarter shall include the number of noncustodial parents in the State who participated in work activities (as defined in section 407(d)) during the quarter, with a separate statement of the number of such parents who participated in programs operated with funds provided under section 403(a)(5).
(5)

Report on transitional services.—
The report required by paragraph (1) for a fiscal quarter shall include the total amount expended by the State during the quarter to provide transitional services to a family that has ceased to receive assistance under this part because of employment, along with a description of such services.
(6)

Report on families receiving assistance.—
The report required by paragraph (1) for a fiscal quarter shall include for each month in the quarter—
(A)
the number of families and individuals receiving assistance under the State program funded under this part (including the number of 2-parent and 1-parent families);
(B)
the total dollar value of such assistance received by all families; and
(C)
with respect to families and individuals participating in a program operated with funds provided under section 403(a)(5)—
(i)
the total number of such families and individuals; and
(ii)
the number of such families and individuals whose participation in such a program was terminated during a month.
(7)

Regulations.—
The Secretary shall prescribe such regulations as may be necessary to define the data elements with respect to which reports are required by this subsection, and shall consult with the Secretary of Labor in defining the data elements with respect to programs operated with funds provided under section 403(a)(5).
(b)

Annual Reports to the Congress by the Secretary.—
Not later than 6 months after the end of fiscal year 1997, and each fiscal year thereafter, the Secretary shall transmit to the Congress a report describing—
(1)
whether the States are meeting—
(A)
the participation rates described in section 407(a); and
(B)
the objectives of—
(i)
increasing employment and earnings of needy families, and child support collections; and
(ii)
decreasing out-of-wedlock pregnancies and child poverty;
(2)
the demographic and financial characteristics of families applying for assistance, families receiving assistance, and families that become ineligible to receive assistance;
(3)
the characteristics of each State program funded under this part; and
(4)
the trends in employment and earnings of needy families with minor children living at home.
(c)

Pre-reauthorization State-by-state Reports on Engagement in Additional Work Activities and Expenditures for Other Benefits and Services.—
(1)

State reporting requirements.—
(A)

Reporting periods and deadlines.—
Each eligible State shall submit to the Secretary the following reports:
(i)

March 2011 report.—
Not later than May 31, 2011, a report for the period that begins on March 1, 2011, and ends on March 31, 2011, that contains the information specified in subparagraphs (B) and (C).
(ii)

April-june, 2011 report.—
Not later than August 31, 2011, a report for the period that begins on April 1, 2011, and ends on June 30, 2011, that contains with respect to the 3 months that occur during that period—
(I)
the average monthly numbers for the information specified in subparagraph (B); and
(II)
the information specified in subparagraph (C).
(B)

Engagement in additional work activities.—
(i)
With respect to each work-eligible individual in a family receiving assistance during a reporting period specified in subparagraph (A), whether the individual engages in any activities directed toward attaining self-sufficiency during a month occurring in a reporting period, and if so, the specific activities—
(I)
that do not qualify as a work activity under section 407(d) but that are otherwise reasonably calculated to help the family move toward self-sufficiency; or
(II)
that are of a type that would be counted toward the State participation rates under section 407 but for the fact that—
- (aa)
the work-eligible individual did not engage in sufficient hours of the activity;
- (bb)
the work-eligible individual has reached the maximum time limit allowed for having participation in the activity counted toward the State's work participation rate; or
- (cc)
the number of work-eligible individuals engaged in such activity exceeds a limitation under such section.
(ii)
Any other information that the Secretary determines appropriate with respect to the information required under clause (i), including if the individual has no hours of participation, the principal reason or reasons for such non-participation.
(C)

Expenditures on other benefits and services.—
(i)
Detailed, disaggregated information regarding the types of, and amounts of, expenditures made by the State during a reporting period specified in subparagraph (A) using—
(I)
Federal funds provided under section 403 that are (or will be) reported by the State on Form ACF–196 (or any successor form) under the category of other expenditures or the category of benefits or services provided in accordance with the authority provided under section 404(a)(2); or
(II)
State funds expended to meet the requirements of section 409(a)(7) and reported by the State in the category of other expenditures on Form ACF–196 (or any successor form).
(ii)
Any other information that the Secretary determines appropriate with respect to the information required under clause (i).
(2)

Publication of summary and analysis of engagement in additional activities.—
Concurrent with the submission of each report required under paragraph (1)(A), an eligible State shall publish on an Internet website maintained by the State agency responsible for administering the State program funded under this part (or such State-maintained website as the Secretary may approve)—
(A)
a summary of the information submitted in the report:
(B)
an analysis statement regarding the extent to which the information changes measures of total engagement in work activities from what was (or will be) reported by the State in the quarterly report submitted under subsection (a) for the comparable period; and
(C)
a narrative describing the most common activities contained in the report that are not countable toward the State participation rates under section 407.
(3)

Application of authority to use sampling.—
Subparagraph (B) of subsection (a)(1) shall apply to the reports required under paragraph (1) of this subsection in the same manner as subparagraph (B) of subsection (a)(1) applies to reports required under subparagraph (A) of subsection (a)(1).
(4)

Secretarial reports to congress.—
(A)

March 2011 report.—
Not later than June 30, 2011, the Secretary shall submit to Congress a report on the information submitted by eligible States for the March 2011 reporting period under paragraph (1)(A)(i). The report shall include a State-by-State summary and analysis of such information, identification of any States with missing or incomplete reports, and recommendations for such administrative or legislative changes as the Secretary determines are necessary to require eligible States to report the information on a recurring basis.
(B)

April-june, 2011 report.—
Not later than September 30, 2011, the Secretary shall submit to Congress a report on the information submitted by eligible States for the April-June 2011 reporting period under paragraph (1)(A)(ii). The report shall include a State-by-State summary and analysis of such information, identification of any States with missing or incomplete reports, and recommendations for such administrative or legislative changes as the Secretary determines are necessary to require eligible States to report the information on a recurring basis
(5)

Authority for expeditious implementation.—
The requirements of chapter 5 of title 5, United States Code (commonly referred to as the “Administrative Procedure Act”) or any other law relating to rulemaking or publication in the Federal Register shall not apply to the issuance of guidance or instructions by the Secretary with respect to the implementation of this subsection to the extent the Secretary determines that compliance with any such requirement would impede the expeditious implementation of this subsection.
(d)

Data Exchange Standardization for Improved Interoperability.—
(1)

Data exchange standards.—
(A)

Designation.—
The Secretary, in consultation with an interagency work group which shall be established by the Office of Management and Budget, and considering State and tribal perspectives, shall, by rule, designate a data exchange standard for any category of information required to be reported under this part.
(B)

Data exchange standards must be nonproprietary and interoperable.—
The data exchange standard designated under subparagraph (A) shall, to the extent practicable, be nonproprietary and interoperable.
(C)

Other requirements.—
In designating data exchange standards under this section, the Secretary shall, to the extent practicable, incorporate—
(i)
interoperable standards developed and maintained by an international voluntary consensus standards body, as defined by the Office of Management and Budget, such as the International Organization for Standardization;
(ii)
interoperable standards developed and maintained by intergovernmental partnerships, such as the National Information Exchange Model; and
(iii)
interoperable standards developed and maintained by Federal entities with authority over contracting and financial assistance, such as the Federal Acquisition Regulatory Council.
(2)

Data exchange standards for reporting.—
(A)

Designation.—
The Secretary, in consultation with an interagency work group established by the Office of Management and Budget, and considering State and tribal perspectives, shall, by rule, designate data exchange standards to govern the data reporting required under this part.
(B)

Requirements.—
The data exchange standards required by subparagraph (A) shall, to the extent practicable—
(i)
incorporate a widely-accepted, nonproprietary, searchable, computer-readable format;
(ii)
be consistent with and implement applicable accounting principles; and
(iii)
be capable of being continually upgraded as necessary.
(C)

Incorporation of nonproprietary standards.—
In designating reporting standards under this paragraph, the Secretary shall, to the extent practicable, incorporate existing nonproprietary standards, such as the eXtensible Markup Language.
(e)

Pilot Projects for Promoting Accountability by Measuring Work Outcomes.—
(1)

In general.—
The Secretary shall carry out a pilot program under which the Secretary may select up to 5 States to which a grant is made under section 403(a) for a fiscal year to negotiate performance benchmarks for work and family outcomes for recipients of assistance under the State program funded under this part, and programs funded with qualified State expenditures. The Secretary shall issue guidance on how States apply for participation in the pilot. The benchmarks shall include—
(A)
the percentage of work-eligible individuals under the State program funded under this part who are in unsubsidized employment during the 2nd quarter after exiting the program;
(B)
the level of earnings of such individuals in the 2nd and 4th quarters after exit; and
(C)
other indicators of family stability and well-being as established by the Secretary.
(2)

Level of performance benchmark.—
The Secretary and a State selected under paragraph (1) shall agree to the requisite level of performance on these benchmarks after developing baseline data in the State and comparative data in other States.
(3)

Failure of state to meet benchmark.—
If a State fails to meet a measured benchmark standard agreed to under paragraph (2) for 2 successive fiscal years, the State, in order to continue in the pilot shall enter into a plan with the Secretary to achieve the required level of performance or, if mutually agreed to, adjust the benchmark based on new information about the feasibility of meeting such benchmark.
(4)

Duration.—
The pilot under this subsection shall be in effect for 6 fiscal years, with one year to establish benchmark data and negotiate targets and five years to measure performance against the targets, and shall supersede the requirements under section 407 for such fiscal years, notwithstanding any other provision of law.
(5)

Application of penalty for failure to reduce assistance for recipients refusing without good cause to work.—
For purposes of section 409(a)(14), a State operating a pilot must have a system for reducing the amount of assistance payable to a family if an individual refuses, without good cause (including for reasons described in 407(e)(2)), to engage in any such activities as the State has required of such an individual. A State without such a system shall be considered to have failed to comply with the requirements of section 407(e) for so long as the failure to comply continues.
(6)

Collection of performance data.—
Each State selected under paragraph (1), in consultation with the Secretary, shall collect and submit to the Secretary data on the performance of the State operating such a pilot program.
(7)

Reports.—
(A)

Initial report.—
Not later than 12 months after the date of the enactment of this subsection the Secretary shall submit a report to Congress on the status of the program under this section.
(B)

Final report.—
Not later than 12 months after the date on which the programs under this section have terminated, the Secretary shall submit a comprehensive report to Congress on outcomes achieved under such programs.
(f)

Reporting Performance Indicators.—
(1)

In general.—
Each State, in consultation with the Secretary, shall collect and submit to the Secretary the information necessary for each indicator described in paragraph (2), for fiscal year 2025 and each fiscal year thereafter.
(2)

Indicators of performance.—
The indicators described in this paragraph for a fiscal year are the following:
(A)
The percentage of individuals who were work-eligible individuals as of the time of exit from the program, who are in unsubsidized employment during the second quarter after the exit.
(B)
The percentage of individuals who were work-eligible individuals who were in unsubsidized employment in the second quarter after the exit, who are also in unsubsidized employment during the fourth quarter after the exit.
(C)
The median earnings of individuals who were work-eligible individuals as of the time of exit from the program, who are in unsubsidized employment during the second quarter after the exit.
(D)
The percentage of individuals who have not attained 24 years of age, are attending high school or enrolled in an equivalency program, and are work-eligible individuals or were work-eligible individuals as of the time of exit from the program, who obtain a high school degree or its recognized equivalent while receiving assistance under the State program funded under this part or within 1 year after the exit.
(3)

Definition of exit.—
In paragraph (2), the term ‘exit’ means, with respect to a State program funded under this part, ceases to receive assistance under the program funded by this part.
(4)

Regulations.—
In order to ensure nationwide comparability of data, the Secretary, after consultation with the Secretary of Labor and with States, shall issue regulations governing the reporting of performance indicators under this subsection.
SEC. 411A.
[42 U.S.C. 611a]

STATE REQUIRED TO PROVIDE CERTAIN INFORMATION.
Each State to which a grant is made under section 403 shall, at least 4 times annually and upon request of the Immigration and Naturalization Service, furnish the Immigration and Naturalization Service with the name and address of, and other identifying information on, any individual who the State knows is unlawfully in the United States.
SEC. 412.
[42 U.S.C. 612]

DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES.
(a)

Grants for Indian Tribes.—
(1)

Tribal family assistance grant.—
(A)

In general.—
For each of fiscal years 2017 and 2018, the Secretary shall pay to each Indian tribe that has an approved tribal family assistance plan a tribal family assistance grant for the fiscal year in an amount equal to the amount determined under subparagraph (B), which shall be reduced for a fiscal year, on a pro rata basis for each quarter, in the case of a tribal family assistance plan approved during a fiscal year for which the plan is to be in effect, and shall reduce the grant payable under section 403(a)(1) to any State in which lies the service area or areas of the Indian tribe by that portion of the amount so determined that is attributable to expenditures by the State.
(B)

Amount determined.—
(i)

In general.—
The amount determined under this subparagraph is an amount equal to the total amount of the Federal payments to a State or States under section 403 (as in effect during such fiscal year) for fiscal year 1994 attributable to expenditures (other than child care expenditures) by the State or States under parts A and F (as so in effect) for fiscal year 1994 for Indian families residing in the service area or areas identified by the Indian tribe pursuant to subsection (b)(1)(C) of this section.
(ii)

Use of state submitted data.—
(I)

In general.—
The Secretary shall use State submitted data to make each determination under clause (i).
(II)

Disagreement with determination.—
If an Indian tribe or tribal organization disagrees with State submitted data described under subclause (I), the Indian tribe or tribal organization may submit to the Secretary such additional information as may be relevant to making the determination under clause (i) and the Secretary may consider such information before making such determination.
(2)

Grants for indian tribes that received jobs funds.—
(A)

In general.—
For each of fiscal years 2017 and 2018, the Secretary shall pay to each eligible Indian tribe that proposes to operate a program described in subparagraph (C) a grant in an amount equal to the amount received by the Indian tribe in fiscal year 1994 under section 482(i) (as in effect during fiscal year 1994).
(B)

Eligible indian tribe.—
For purposes of subparagraph (A), the term “eligible Indian tribe” means an Indian tribe or Alaska Native organization that conducted a job opportunities and basic skills training program in fiscal year 1995 under section 482(i) (as in effect during fiscal year 1995).
(C)

Use of grant.—
Each Indian tribe to which a grant is made under this paragraph shall use the grant for the purpose of operating a program to make work activities available to such population and such service area or areas as the tribe specifies.
(D)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated $7,633,287 for each fiscal year specified in subparagraph (A) for grants under subparagraph (A).
(3)

Welfare-to-work grants.—
(A)

In general.—
The Secretary of Labor shall award a grant in accordance with this paragraph to an Indian tribe for each fiscal year specified in section 403(a)(5)(H) for which the Indian tribe is a welfare-to-work tribe, in such amount as the Secretary of Labor deems appropriate, subject to subparagraph (B) of this paragraph.
(B)

Welfare-to-work tribe.—
An Indian tribe shall be considered a welfare-to-work tribe for a fiscal year for purposes of this paragraph if the Indian tribe meets the following requirements:
(i)
The Indian tribe has submitted to the Secretary of Labor a plan which describes how, consistent with section 403(a)(5), the Indian tribe will use any funds provided under this paragraph during the fiscal year. If the Indian tribe has a tribal family assistance plan, the plan referred to in the preceding sentence shall be in the form of an addendum to the tribal family assistance plan.
(ii)
The Indian tribe is operating a program under a tribal family assistance plan approved by the Secretary of Health and Human Services, a program described in paragraph (2)(C), or an employment program funded through other sources under which substantial services are provided to recipients of assistance under a program funded under this part.
(iii)
The Indian tribe has provided the Secretary of Labor with an estimate of the amount that the Indian tribe intends to expend during the fiscal year (excluding tribal expenditures described in section 409(a)(7)(B)(iv) (other than subclause (III) thereof)) pursuant to this paragraph.
(iv)
The Indian tribe has agreed to negotiate in good faith with the Secretary of Health and Human Services with respect to the substance and funding of any evaluation under section 413(j), and to cooperate with the conduct of any such evaluation.
(C)

Limitations on use of funds.—
(i)

In general.—
Section 403(a)(5)(C) shall apply to funds provided to Indian tribes under this paragraph in the same manner in which such section applies to funds provided under section 403(a)(5).
(ii)

Waiver authority.—
The Secretary of Labor may waive or modify the application of a provision of section 403(a)(5)(C) (other than clause (viii) thereof) with respect to an Indian tribe to the extent necessary to enable the Indian tribe to operate a more efficient or effective program with the funds provided under this paragraph.
(iii)

Regulations.—
Within 90 days after the date of the enactment of this paragraph, the Secretary of Labor, after consultation with the Secretary of Health and Human Services and the Secretary of Housing and Urban Development, shall prescribe such regulations as may be necessary to implement this paragraph.
(b)

3-Year Tribal Family Assistance Plan.—
(1)

In general.—
Any Indian tribe that desires to receive a tribal family assistance grant shall submit to the Secretary a 3-year tribal family assistance plan that—
(A)
outlines the Indian tribe's approach to providing welfare-related services for the 3-year period, consistent with this section;
(B)
specifies whether the welfare-related services provided under the plan will be provided by the Indian tribe or through agreements, contracts, or compacts with intertribal consortia, States, or other entities;
(C)
identifies the population and service area or areas to be served by such plan;
(D)
provides that a family receiving assistance under the plan may not receive duplicative assistance from other State or tribal programs funded under this part;
(E)
identifies the employment opportunities in or near the service area or areas of the Indian tribe and the manner in which the Indian tribe will cooperate and participate in enhancing such opportunities for recipients of assistance under the plan consistent with any applicable State standards; and
(F)
applies the fiscal accountability provisions of section 5(f)(1) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450c(f)(1)), relating to the submission of a single-agency audit report required by chapter 75 of title 31, United States Code.
(2)

Approval.—
The Secretary shall approve each tribal family assistance plan submitted in accordance with paragraph (1).
(3)

Consortium of tribes.—
Nothing in this section shall preclude the development and submission of a single tribal family assistance plan by the participating Indian tribes of an intertribal consortium.
(c)

Minimum Work Participation Requirements and Time Limits.—
The Secretary, with the participation of Indian tribes, shall establish for each Indian tribe receiving a grant under this section minimum work participation requirements, appropriate time limits for receipt of welfare-related services under the grant, and penalties against individuals—
(1)
consistent with the purposes of this section;
(2)
consistent with the economic conditions and resources available to each tribe; and
(3)
similar to comparable provisions in section 407(e).
(d)

Emergency Assistance.—
Nothing in this section shall preclude an Indian tribe from seeking emergency assistance from any Federal loan program or emergency fund.
(e)

Accountability.—
Nothing in this section shall be construed to limit the ability of the Secretary to maintain program funding accountability consistent with—
(1)
generally accepted accounting principles; and
(2)
the requirements of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450 et seq.).
(f)

Eligibility for Federal Loans.—
Section 406 shall apply to an Indian tribe with an approved tribal assistance plan in the same manner as such section applies to a State, except that section 406(c) shall be applied by substituting “section 412(a)” for “section 403(a)”.
(g)

Penalties.—
(1)
Subsections (a)(1), (a)(6), (b), and (c) of section 409, shall apply to an Indian tribe with an approved tribal assistance plan in the same manner as such subsections apply to a State.
(2)
Section 409(a)(3) shall apply to an Indian tribe with an approved tribal assistance plan by substituting “meet minimum work participation requirements established under section 412(c)” for “comply with section 407(a)”.
(h)

Data Collection and Reporting.—
Section 411 shall apply to an Indian tribe with an approved tribal family assistance plan.
(i)

Special Rule for Indian Tribes in Alaska.—
(1)

In general.—
Notwithstanding any other provision of this section, and except as provided in paragraph (2), an Indian tribe in the State of Alaska that receives a tribal family assistance grant under this section shall use the grant to operate a program in accordance with requirements comparable to the requirements applicable to the program of the State of Alaska funded under this part. Comparability of programs shall be established on the basis of program criteria developed by the Secretary in consultation with the State of Alaska and such Indian tribes.
(2)

Waiver.—
An Indian tribe described in paragraph (1) may apply to the appropriate State authority to receive a waiver of the requirement of paragraph (1).
SEC. 413.
[42 U.S.C. 613]

EVALUATION OF TEMPORARY ASSISTANCE FOR NEEDY FAMILIES AND RELATED PROGRAMS.
(a)

Evaluation of the Impacts of TANF.—
The Secretary shall conduct research on the effect of State programs funded under this part and any other State program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)) on employment, self-sufficiency, child well-being, unmarried births, marriage, poverty, economic mobility, and other factors as determined by the Secretary.
(b)

Evaluation of Grants to Improve Child Well-being by Promoting Healthy Marriage and Responsible Fatherhood.—
The Secretary shall conduct research to determine the effects of the grants made under section 403(a)(2) on child well-being, marriage, family stability, economic mobility, poverty, and other factors as determined by the Secretary.
(c)

Dissemination of Information.—
The Secretary shall, in consultation with States receiving funds provided under this part, develop methods of disseminating information on any research, evaluation, or study conducted under this section, including facilitating the sharing of information and best practices among States and localities.
(d)

State-Initiated Evaluations.—
A State shall be eligible to receive funding to evaluate the State program funded under this part or any other State program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)) if—
(1)
the State submits to the Secretary a description of the proposed evaluation;
(2)
the Secretary determines that the design and approach of the proposed evaluation is rigorous and is likely to yield information that is credible and will be useful to other States; and
(3)
unless waived by the Secretary, the State contributes to the cost of the evaluation, from non-Federal sources, an amount equal to at least 25 percent of the cost of the proposed evaluation.
(e)

Census Bureau Research.—
(1)
The Bureau of the Census shall implement or enhance household surveys of program participation, in consultation with the Secretary and the Bureau of Labor Statistics and made available to interested parties, to allow for the assessment of the outcomes of continued welfare reform on the economic and child well-being of low-income families with children, including those who received assistance or services from a State program funded under this part or any other State program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)). The content of the surveys should include such information as may be necessary to examine the issues of unmarried childbearing, marriage, welfare dependency and compliance with work requirements, the beginning and ending of spells of assistance, work, earnings and employment stability, and the well-being of children.
(2)
To carry out the activities specified in paragraph (1), the Bureau of the Census, the Secretary, and the Bureau of Labor Statistics shall consider ways to improve the surveys and data derived from the surveys to—
(A)
address under reporting of the receipt of means-tested benefits and tax benefits for low-income individuals and families;
(B)
increase understanding of poverty spells and long-term poverty, including by facilitating the matching of information to better understand intergenerational poverty;
(C)
generate a better geographical understanding of poverty such as through State-based estimates and measures of neighborhood poverty;
(D)
increase understanding of the effects of means-tested benefits and tax benefits on the earnings and incomes of low-income families; and
(E)
improve how poverty and economic well-being are measured, including through the use of consumption measures, material deprivation measures, social exclusion measures, and economic and social mobility measures.
(f)

Research and Evaluation Conducted Under This Section.—
Research and evaluation conducted under this section designed to determine the effects of a program or policy (other than research conducted under subsection (e)) shall use experimental designs using random assignment or other reliable, evidence-based research methodologies that allow for the strongest possible causal inferences when random assignment is not feasible.
(g)

Development of What Works Clearinghouse of Proven and Promising Approaches to Move Welfare Recipients Into Work.—
(1)

In general.—
The Secretary, in consultation with the Secretary of Labor, shall develop a database (which shall be referred to as the “What Works Clearinghouse of Proven and Promising Projects to Move Welfare Recipients into Work”) of the projects that used a proven approach or a promising approach in moving welfare recipients into work, based on independent, rigorous evaluations of the projects. The database shall include a separate listing of projects that used a developmental approach in delivering services and a further separate listing of the projects with no or negative effects. The Secretary shall add to the What Works Clearinghouse of Proven and Promising Projects to Move Welfare Recipients into Work data about the projects that, based on an independent, well-conducted experimental evaluation of a program or project, using random assignment or other research methodologies that allow for the strongest possible causal inferences, have shown they are proven, promising, developmental, or ineffective approaches.
(2)

Criteria for evidence of effectiveness of approach.—
The Secretary, in consultation with the Secretary of Labor and organizations with experience in evaluating research on the effectiveness of various approaches in delivering services to move welfare recipients into work, shall—
(A)
establish criteria for evidence of effectiveness; and
(B)
ensure that the process for establishing the criteria—
(i)
is transparent;
(ii)
is consistent across agencies;
(iii)
provides opportunity for public comment; and
(iv)
takes into account efforts of Federal agencies to identify and publicize effective interventions, including efforts at the Department of Health and Human Services, the Department of Education, and the Department of Justice.
(h)

Appropriation.—
(1)

In general.—
Of the amount appropriated by section 403(a)(1) for each fiscal year, 0.33 percent shall be available for research, technical assistance, and evaluation under this section.
(2)

Allocation.—
Of the amount made available under paragraph (1) for each fiscal year, the Secretary shall make available $10,000,000 plus such additional amount as the Secretary deems necessary and appropriate, to carry out subsection (e).
(3)

Baseline.—
The baseline established pursuant to section 257 of the Balanced Budget and Deficit Control Act of 1985 (2 U.S.C. 907(b)(2)) for the Temporary Assistance for Needy Families Program shall be recorded by the Office of Management and Budget and the Congressional Budget Office at the level prior to any transfers recorded pursuant to section 413(h) of this Act.
SEC. 415.
[42 U.S.C. 615]

WAIVERS.
(a)

Continuation of Waivers.—
(1)

Waivers in effect on date of enactment of welfare reform.—
(A)

In general.—
Except as provided in subparagraph (B), if any waiver granted to a State under section 1115 of this Act or otherwise which relates to the provision of assistance under a State plan under this part (as in effect on September 30, 1996) is in effect as of the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (other than by section 103(c) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) shall not apply with respect to the State before the expiration (determined without regard to any extensions) of the waiver to the extent such amendments are inconsistent with the waiver.
(B)

Financing limitation.—
Notwithstanding any other provision of law, beginning with fiscal year 1996, a State operating under a waiver described in subparagraph (A) shall be entitled to payment under section 403 for the fiscal year, in lieu of any other payment provided for in the waiver.
(2)

Waivers granted subsequently.—
(A)

In general.—
Except as provided in subparagraph (B), if any waiver granted to a State under section 1115 of this Act or otherwise which relates to the provision of assistance under a State plan under this part (as in effect on September 30, 1996) is submitted to the Secretary before the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and approved by the Secretary on or before July 1, 1997, and the State demonstrates to the satisfaction of the Secretary that the waiver will not result in Federal expenditures under title IV of this Act (as in effect without regard to the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) that are greater than would occur in the absence of the waiver, the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (other than by section 103(c) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) shall not apply with respect to the State before the expiration (determined without regard to any extensions) of the waiver to the extent the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 are inconsistent with the waiver.
(B)

No effect on new work requirements.—
Notwithstanding subparagraph (A), a waiver granted under section 1115 or otherwise which relates to the provision of assistance under a State program funded under this part (as in effect on September 30, 1996) shall not affect the applicability of section 407 to the State.
(b)

State Option To Terminate Waiver.—
(1)

In general.—
A State may terminate a waiver described in subsection (a) before the expiration of the waiver.
(2)

Report.—
A State which terminates a waiver under paragraph (1) shall submit a report to the Secretary summarizing the waiver and any available information concerning the result or effect of the waiver.
(3)

Hold harmless provision.—
(A)

In general.—
Notwithstanding any other provision of law, a State that, not later than the date described in subparagraph (B) of this paragraph, submits a written request to terminate a waiver described in subsection (a) shall be held harmless for accrued cost neutrality liabilities incurred under the waiver.
(B)

Date described.—
The date described in this subparagraph is 90 days following the adjournment of the first regular session of the State legislature that begins after the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
(c)

Secretarial Encouragement of Current Waivers.—
The Secretary shall encourage any State operating a waiver described in subsection (a) to continue the waiver and to evaluate, using random sampling and other characteristics of accepted scientific evaluations, the result or effect of the waiver.
(d)

Continuation of Individual Waivers.—
A State may elect to continue 1 or more individual waivers described in sub-section (a).
SEC. 416.
[42 U.S.C. 616]

ADMINISTRATION.
The programs under this part and part D shall be administered by an Assistant Secretary for Family Support within the Department of Health and Human Services, who shall be appointed by the President, by and with the advice and consent of the Senate, and who shall be in addition to any other Assistant Secretary of Health and Human Services provided for by law, and the Secretary shall reduce the Federal workforce within the Department of Health and Human Services by an amount equal to the sum of 75 percent of the full-time equivalent positions at such Department that relate to any direct spending program, or any program funded through discretionary spending, that has been converted into a block grant program under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and the amendments made by such Act, and by an amount equal to 75 percent of that portion of the total full-time equivalent departmental management positions at such Department that bears the same relationship to the amount appropriated for any direct spending program, or any program funded through discretionary spending, that has been converted into a block grant program under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and the amendments made by such Act, as such amount relates to the total amount appropriated for use by such Department, and, notwithstanding any other provision of law, the Secretary shall take such actions as may be necessary, including reductions in force actions, consistent with sections 3502 and 3595 of title 5, United States Code, to reduce the full-time equivalent positions within the Department of Health and Human Services by 245 full-time equivalent positions related to the program converted into a block grant under the amendments made by section 103 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, and by 60 full-time equivalent managerial positions in the Department.
SEC. 417.
[42 U.S.C. 617]

LIMITATION ON FEDERAL AUTHORITY.
No officer or employee of the Federal Government may regulate the conduct of States under this part or enforce any provision of this part, except to the extent expressly provided in this part.
SEC. 418.
[42 U.S.C. 618]

FUNDING FOR CHILD CARE.
(a)

General Child Care Entitlement.—
(1)

General entitlement.—
Subject to the amount appropriated under paragraph (3), 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 the greater of—
(A)
the total amount required to be paid to the State under section 403 for fiscal year 1994 or 1995 (whichever is greater) with respect to expenditures for child care under subsections (g) and (i) of section 402 (as in effect before October 1, 1995); or
(B)
the average of the total amounts required to be paid to the State for fiscal years 1992 through 1994 under the subsections referred to in subparagraph (A).
(2)

Remainder.—
(A)

Grants.—
The Secretary shall use any amounts appropriated for a fiscal year under paragraph (3)(A), after grants are awarded under paragraph (1), to make grants to States under this paragraph.
(B)

Allotments to states.—
The total amount available for payments to States under this paragraph, as determined under subparagraph (A), shall be allotted among the States based on the formula used for determining the amount of Federal payments to each State under section 403(n) (as in effect before October 1, 1995).
(C)

Federal matching of state expenditures exceeding historical expenditures.—
The Secretary shall pay to each eligible State for a fiscal year an amount equal to the lesser of the State's allotment under subparagraph (B) or the Federal medical assistance percentage for the State for the fiscal year (as defined in section 1905(b), as such section was in effect on September 30, 1995) of so much of the State's expenditures for child care in that fiscal year as exceed the total amount of expenditures by the State (including expenditures from amounts made available from Federal funds) in fiscal year 1994 or 1995 (whichever is greater) for the programs described in paragraph (1)(A).
(D)

Redistribution.—
(i)

In general.—
With respect to any fiscal year, if the Secretary determines (in accordance with clause (ii)) that any amounts allotted to a State under this paragraph for such fiscal year will not be used by such State during such fiscal year for carrying out the purpose for which the such amounts are allotted, the Secretary shall make such amounts available in the subsequent fiscal year for carrying out such purpose to one or more States which apply for such funds to the extent the Secretary determines that such 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 403(n) (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”.
(ii)

Time of determination and distribution.—
The determination of the Secretary under clause (i) for a fiscal year shall be made not later than the end of the first quarter of the subsequent fiscal year. The redistribution of amounts under clause (i) shall be made as close as practicable to the date on which such determination is made. Any amount made available to a State from an appropriation for a fiscal year in accordance with this subparagraph shall, for purposes of this part, be regarded as part of such State's payment (as determined under this subsection) for the fiscal year in which the redistribution is made.
(3)

Appropriation.—
For grants under this section, there are appropriated $3,550,000,000 for each fiscal year, of which—
(A)
$3,375,000,000 shall be available for grants to States;
(B)
$100,000,000 shall be available for grants to Indian tribes and tribal organizations; and
(C)
$75,000,000 shall be available for grants to territories.
(4)

Territories.—
(A)

Grants.—
The Secretary shall use the amounts made available by paragraph (3)(C) to make grants to the territories under this paragraph.
(B)

Allotments.—
The amount described in subparagraph (A) shall be allotted among the territories in proportion to their respective needs.
(C)

Redistribution.—
The 1st sentence of clause (i) and clause (ii) of paragraph (2)(D) shall apply with respect to the amounts allotted to the territories under this paragraph, except that the 2nd sentence of paragraph (2)(D) shall not apply and the amounts allotted to the territories that are available for redistribution for a fiscal year shall be redistributed to each territory that applies for the additional amounts, to the extent that the Secretary determines that the territory will be able to use the additional amounts to provide child care assistance, in an amount that bears the same ratio to the amount so available for redistribution as the amount allotted to the territory for the fiscal year bears to the total amount allotted to all the territories receiving redistributed funds under this paragraph for the fiscal year.
(D)

Inapplicability of payment limitation.—
Section 1108(a) shall not apply with respect to any amount paid under this paragraph.
(E)

Territory.—
In this paragraph, the term “territory” means the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.
(5)

Data used to determine state and federal shares of expenditures.—
In making the determinations concerning expenditures required under paragraphs (1) and (2)(C), the Secretary shall use information that was reported by the State on ACF Form 231 and available as of the applicable dates specified in clauses (i)(I), (ii), and (iii)(III) of section 403(a)(1)(D).
(b)

Use of Funds.—
(1)

In general.—
Amounts received by a State under this section shall only be used to provide child care assistance. Amounts received by a State under a grant under subsection (a)(1) shall be available for use by the State without fiscal year limitation.
(2)

Use for certain populations.—
A State shall ensure that not less than 70 percent of the total amount of funds received by the State in a fiscal year under this section are used to provide child care assistance to families who are receiving assistance under a State program under this part, families who are attempting through work activities to transition off of such assistance program, and families who are at risk of becoming dependent on such assistance program.
(c)

Application of Child Care and Development Block Grant Act of 1990.—
Notwithstanding any other provision of law, amounts provided to a State under this section shall be transferred to the lead agency under the Child Care and Development Block Grant Act of 1990, integrated by the State into the programs established by the State under such Act, and be subject to requirements and limitations of such Act.
(d)

Definition.—
As used in this section, the term “State” means each of the 50 States and the District of Columbia.
SEC. 419.
[42 U.S.C. 619]

DEFINITIONS.
As used in this part:
(1)

Adult.—
The term “adult” means an individual who is not a minor child.
(2)

Minor child.—
The term “minor child” means an individual who—
(A)
has not attained 18 years of age; or
(B)
has not attained 19 years of age and is a full-time student in a secondary school (or in the equivalent level of vocational or technical training).
(3)

Fiscal year.—
The term “fiscal year” means any 12-month period ending on September 30 of a calendar year.
(4)

Indian, indian tribe, and tribal organization.—
(A)

In general.—
Except as provided in subparagraph (B), the terms “Indian”, “Indian tribe”, and “tribal organization” have the meaning given such terms by section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b).
(B)

Special rule for indian tribes in alaska.—
The term “Indian tribe” means, with respect to the State of Alaska, only the Metlakatla Indian Community of the Annette Islands Reserve and the following Alaska Native regional nonprofit corporations:
(i)
Arctic Slope Native Association.
(ii)
Kawerak, Inc.
(iii)
Maniilaq Association.
(iv)
Association of Village Council Presidents.
(v)
Tanana Chiefs Conference.
(vi)
Cook Inlet Tribal Council.
(vii)
Bristol Bay Native Association.
(viii)
Aleutian and Pribilof Island Association.
(ix)
Chugachmuit.
(x)
Tlingit Haida Central Council.
(xi)
Kodiak Area Native Association.
(xii)
Copper River Native Association.
(5)

State.—
Except as otherwise specifically provided, the term “State” means the 50 States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, and American Samoa.
PART B—

CHILD AND FAMILY SERVICES 13
Subpart 1—

Stephanie Tubbs Jones Child Welfare Services Program

PURPOSE
Sec. 421.
[42 U.S.C. 621]
The purpose of this subpart is to promote State flexibility in the development and expansion of a coordinated child and family services program that utilizes community-based agencies and ensures all children are raised in safe, loving families, by—
(1)
protecting and promoting the welfare of all children;
(2)
preventing the neglect, abuse, or exploitation of children;
(3)
supporting at-risk families through services which allow children, where appropriate, to remain safely with their families or return to their families in a timely manner;
(4)
promoting the safety, permanence, and well-being of children in foster care and adoptive families; and
(5)
providing training, professional development and support to ensure a well-qualified child welfare workforce.
^{13}
For a version of part B, as amended by title I of Public Law 118–258 and effective on October 1, 2025 pursuant to section 117(a) of such Public Law, see 2nd version of part B set out at the end of this one with a bracketed note.

STATE PLANS FOR CHILD WELFARE SERVICES
Sec. 422.
[42 U.S.C. 622]
(a)
In order to be eligible for payment under this subpart, a State must have a plan for child welfare services which has been developed jointly by the Secretary and the State agency designated pursuant to subsection (b)(1), and which meets the requirements of subsection (b).
(b)
Each plan for child welfare services under this subpart shall—
(1)
provide that
(A)
the individual or agency that administers or supervises the administration of the State's services program under subtitle 1 of title XX 14 will administer or supervise the administration of the plan (except as otherwise provided in section 103(d) of the Adoption Assistance and Child Welfare Act of 1980), and
(B)
to the extent that child welfare services are furnished by the staff of the State agency or local agency administering the plan, a single organizational unit in such State or local agency, as the case may be, will be responsible for furnishing such child welfare services;
^{14}
So in law. The reference to subtitle 1 in paragraphs (1) and (2) probably should be to subtitle A.
(2)
provide for coordination between the services provided for children under the plan and the services and assistance provided under subtitle 1 of title XX 14, under the State program funded under part A, under the State plan approved under subpart 2 of this part, under the State plan approved under the State plan approved under part E, and under other State programs having a relationship to the program under this subpart, with a view to provision of welfare and related services which will best promote the welfare of such children and their families;
(3)
include a description of the services and activities which the State will fund under the State program carried out pursuant to this subpart, and how the services and activities will achieve the purpose of this subpart;
(4)
contain a description of—
(A)
the steps the State will take to provide child welfare services statewide and to expand and strengthen the range of existing services and develop and implement services to improve child outcomes; and
(B)
the child welfare services staff development and training plans of the State;
(5)
provide, in the development of services for children, for utilization of the facilities and experience of voluntary agencies in accordance with State and local programs and arrangements, as authorized by the State;
(6)
provide that the agency administering or supervising the administration of the plan will furnish such reports, containing such information, and participate in such evaluations, as the Secretary may require;
(7)
provide for the diligent recruitment of potential foster and adoptive families that reflect the ethnic and racial diversity of children in the State for whom foster and adoptive homes are needed;
(8)
provide assurances that the State—
(A)
is operating, to the satisfaction of the Secretary—
(i)
a statewide information system from which can be readily determined the status, demographic characteristics, location, and goals for the placement of every child who is (or, within the immediately preceding 12 months, has been) in foster care;
(ii)
a case review system (as defined in section 475(5) and in accordance with the requirements of section 475A) for each child receiving foster care under the supervision of the State;
(iii)
a service program designed to help children—
(I)
where safe and appropriate, return to families from which they have been removed; or
(II)
be placed for adoption, with a legal guardian, or if adoption or legal guardianship is determined not to be appropriate for a child, in some other planned, permanent living arrangement, subject to the requirements of sections 475(5)(C) and 475A(a), which may include a residential educational program; and
(iv)
a preplacement preventive services program designed to help children at risk of foster care placement remain safely with their families; and
(B)
has in effect policies and administrative and judicial procedures for children abandoned at or shortly after birth (including policies and procedures providing for legal representation of the children) which enable permanent decisions to be made expeditiously with respect to the placement of the children;
(9)
contain a description, developed after consultation with tribal organizations (as defined in section 4 of the Indian Self-Determination and Education Assistance Act) in the State, of the specific measures taken by the State to comply with the Indian Child Welfare Act;
(10)
contain assurances that the State shall make effective use of cross-jurisdictional resources (including through contracts for the purchase of services), and shall eliminate legal barriers, to facilitate timely adoptive or permanent placements for waiting children;
(11)
contain a description of the activities that the State has undertaken for children adopted from other countries, including the provision of adoption and post-adoption services;
(12)
provide that the State shall collect and report information on children who are adopted from other countries and who enter into State custody as a result of the disruption of a placement for adoption or the dissolution of an adoption, including the number of children, the agencies who handled the placement or adoption, the plans for the child, and the reasons for the disruption or dissolution;
(13)
demonstrate substantial, ongoing, and meaningful collaboration with State courts in the development and implementation of the State plan under subpart 1, the State plan approved under subpart 2, and the State plan approved under part E, and in the development and implementation of any program improvement plan required under section 1123A;
(14)
not later than October 1, 2007, include assurances that not more than 10 percent of the expenditures of the State with respect to activities funded from amounts provided under this subpart will be for administrative costs;
(15)
(A)
provides 15 that the State will develop, in coordination and collaboration with the State agency referred to in paragraph (1) and the State agency responsible for administering the State plan approved under title XIX, and in consultation with pediatricians, other experts in health care, and experts in and recipients of child welfare services, a plan for the ongoing oversight and coordination of health care services for any child in a foster care placement, which shall ensure a coordinated strategy to identify and respond to the health care needs of children in foster care placements, including mental health and dental health needs, and shall include an outline of—
^{15}
So in law. The word “provides” in paragraph (15)(A) probably should read “provide”.
(i)
a schedule for initial and follow-up health screenings that meet reasonable standards of medical practice;
(ii)
how health needs identified through screenings will be monitored and treated, including emotional trauma associated with a child's maltreatment and removal from home;
(iii)
how medical information for children in care will be updated and appropriately shared, which may include the development and implementation of an electronic health record;
(iv)
steps to ensure continuity of health care services, which may include the establishment of a medical home for every child in care;
(v)
the oversight of prescription medicines, including protocols for the appropriate use and monitoring of psychotropic medications;
(vi)
how the State actively consults with and involves physicians or other appropriate medical or non-medical professionals in assessing the health and well-being of children in foster care and in determining appropriate medical treatment for the children;
(vii)
the procedures and protocols the State has established to ensure that children in foster care placements are not inappropriately diagnosed with mental illness, other emotional or behavioral disorders, medically fragile conditions, or developmental disabilities, and placed in settings that are not foster family homes as a result of the inappropriate diagnoses; and
(viii)
steps to ensure that the components of the transition plan development process required under section 475(5)(H) that relate to the health care needs of children aging out of foster care, including the requirements to include options for health insurance, information about a health care power of attorney, health care proxy, or other similar document recognized under State law, and to provide the child with the option to execute such a document, are met; and
(B)
subparagraph (A) shall not be construed to reduce or limit the responsibility of the State agency responsible for administering the State plan approved under title XIX to administer and provide care and services for children with respect to whom services are provided under the State plan developed pursuant to this subpart;
(16)
provide that, not later than 1 year after the date of the enactment of this paragraph, the State shall have in place procedures providing for how the State programs assisted under this subpart, subpart 2 of this part, or part E would respond to a disaster, in accordance with criteria established by the Secretary which should include how a State would—
(A)
identify, locate, and continue availability of services for children under State care or supervision who are displaced or adversely affected by a disaster;
(B)
respond, as appropriate, to new child welfare cases in areas adversely affected by a disaster, and provide services in those cases;
(C)
remain in communication with caseworkers and other essential child welfare personnel who are displaced because of a disaster;
(D)
preserve essential program records; and
(E)
coordinate services and share information with other States;
(17)
not later than October 1, 2007, describe the State standards for the content and frequency of caseworker visits for children who are in foster care under the responsibility of the State, which, at a minimum, ensure that the children are visited on a monthly basis and that the caseworker visits are well-planned and focused on issues pertinent to case planning and service delivery to ensure the safety, permanency, and well-being of the children;
(18)
include a description of the activities that the State has undertaken to reduce the length of time children who have not attained 5 years of age are without a permanent family, and the activities the State undertakes to address the developmental needs of all vulnerable children under 5 years of age who receive benefits or services under this part or part E; and
(19)
document steps taken to track and prevent child maltreatment deaths by including—
(A)
a description of the steps the State is taking to compile complete and accurate information on the deaths required by Federal law to be reported by the State agency referred to in paragraph (1), including gathering relevant information on the deaths from the relevant organizations in the State including entities such as State vital statistics department, child death review teams, law enforcement agencies, offices of medical examiners, or coroners; and
(B)
a description of the steps the State is taking to develop and implement a comprehensive, statewide plan to prevent the fatalities that involves and engages relevant public and private agency partners, including those in public health, law enforcement, and the courts.
(c)

Definitions.—
In this subpart:
(1)

Administrative costs.—
The term “administrative costs” means costs for the following, but only to the extent incurred in administering the State plan developed pursuant to this subpart: procurement, payroll management, personnel functions (other than the portion of the salaries of supervisors attributable to time spent directly supervising the provision of services by caseworkers), management, maintenance and operation of space and property, data processing and computer services, accounting, budgeting, auditing, and travel expenses (except those related to the provision of services by caseworkers or the oversight of programs funded under this subpart).
(2)

Other terms.—
For definitions of other terms used in this part, see section 475.

ALLOTMENTS TO STATES
Sec. 423.
[42 U.S.C. 623]
(a)

In General.—
(1)

In general.—
Subject to paragraph (2), the sum appropriated pursuant to section 425 for each fiscal year shall be allotted by the Secretary for use by cooperating State public welfare agencies which have plans developed jointly by the State agency and the Secretary as follows: The Secretary shall first allot $70,000 to each State, and shall then allot to each State an amount which bears the same ratio to the remainder of such sum as the product of (1) the population of the State under the age of twenty-one and (2) the allotment percentage of the State (as determined under this section) bears to the sum of the corresponding products of all the States.
(2)

Grants to states to enhance collaboration between state child welfare and juvenile justice systems.—
For each fiscal year beginning with fiscal year 2023 for which the amount appropriated under section 425 for the fiscal year exceeds $270,000,000—
(A)
the Secretary shall reserve from such excess amount such sums as are necessary for making grants under section 429A for such fiscal year; and
(B)
the remainder to be applied under paragraph (1) for purposes of making allotments to States for such fiscal year shall be determined after the Secretary first allots $70,000 to each State under such paragraph and reserves such sums under subparagraph (A) of this paragraph.
(b)

Determination of State Allotment Percentages.—
The “allotment percentage” for any State shall be 100 per percent less the State percentage; and the State percentage shall be the percentage which bears the same ratio to 50 per percent as the per capita income of such State bears to the per capita income of the United States; except that (1) the allotment percentage shall in no case be less than 30 per percent or more than 70 per percent, and (2) the allotment percentage shall be 70 per percent in the case of Puerto Rico, the Virgin Islands, Guam, and American Samoa.
(c)

Promulgation of State Allotment Percentages.—
The allotment percentage for each State shall be promulgated by the Secretary between October 1 and November 30 of each even-numbered year, on the basis of the average per capita income of each State and of the United States for the three most recent calendar years for which satisfactory data are available from the Department of Commerce. Such promulgation shall be conclusive for each of the two fiscal years in the period beginning October 1 next succeeding such promulgation.
(d)

United States Defined.—
For purposes of this section, the term “United States” means the 50 States and the District of Columbia.
(e)

Reallotment of Funds.—
(1)

In general.—
The amount of any allotment to a State for a fiscal year under the preceding provisions of this section which the State certifies to the Secretary will not be required for carrying out the State plan developed as provided in section 422 shall be available for reallotment from time to time, on such dates as the Secretary may fix, to other States which the Secretary determines—
(A)
need sums in excess of the amounts allotted to such other States under the preceding provisions of this section, in carrying out their State plans so developed; and
(B)
will be able to so use such excess sums during the fiscal year.
(2)

Considerations.—
The Secretary shall make the reallotments on the basis of the State plans so developed, after taking into consideration—
(A)
the population under 21 years of age;
(B)
the per capita income of each of such other States as compared with the population under 21 years of age; and
(C)
the per capita income of all such other States with respect to which such a determination by the Secretary has been made.
(3)

Amounts reallotted to a state deemed part of state allotment.—
Any amount so reallotted to a State is deemed part of the allotment of the State under this section.

PAYMENT TO STATES
Sec. 424.
[42 U.S.C. 624]
(a)
From the sums appropriated therefor and the allotment under this subpart, subject to the conditions set forth in this section, the Secretary shall from time to time pay to each State that has a plan developed in accordance with section 422 an amount equal to 75 percent of the total sum expended under the plan (including the cost of administration of the plan) in meeting the costs of State, district, county, or other local child welfare services.
(b)
The method of computing and making payments under this section shall be as follows:
(1)
The Secretary shall, prior to the beginning of each period for which a payment is to be made, estimate the amount to be paid to the State for such period under the provisions of this section.
(2)
From the allotment available therefor, the Secretary shall pay the amount so estimated, reduced or increased, as the case may be, by any sum (not previously adjusted under this section) by which he finds that his estimate of the amount to be paid the State for any prior period under this section was greater or less than the amount which should have been paid to the State for such prior period under this section.
(c)

Limitation on Use of Federal Funds for Child Care, Foster Care Maintenance Payments, or Adoption Assistance Payments.—
The total amount of Federal payments under this subpart for a fiscal year beginning after September 30, 2007, that may be used by a State for expenditures for child care, foster care maintenance payments, or adoption assistance payments shall not exceed the total amount of such payments for fiscal year 2005 that were so used by the State.
(d)

Limitation on Use by States of Non-Federal Funds for Foster Care Maintenance Payments To Match Federal Funds.—
For any fiscal year beginning after September 30, 2007, State expenditures of non-Federal funds for foster care maintenance payments shall not be considered to be expenditures under the State plan developed under this subpart for the fiscal year to the extent that the total of such expenditures for the fiscal year exceeds the total of such expenditures under the State plan developed under this subpart for fiscal year 2005.
(e)

Limitation on Reimbursement for Administrative Costs.—
A payment may not be made to a State under this section with respect to expenditures during a fiscal year for administrative costs, to the extent that the total amount of the expenditures exceeds 10 percent of the total expenditures of the State during the fiscal year for activities funded from amounts provided under this subpart.
(f)
(1)
(A)
Each State shall take such steps as are necessary to ensure that the total number of visits made by caseworkers on a monthly basis to children in foster care under the responsibility of the State during a fiscal year is not less than 90 percent (or, in the case of fiscal year 2015 or thereafter, 95 percent) of the total number of such visits that would occur during the fiscal year if each such child were so visited once every month while in such care.
(B)
If the Secretary determines that a State has failed to comply with subparagraph (A) for a fiscal year, then the percentage that would otherwise apply for purposes of subsection (a) for the fiscal year shall be reduced by—
(i)
1, if the number of full percentage points by which the State fell short of the percentage specified in subparagraph (A) is less than 10;
(ii)
3, if the number of full percentage points by which the State fell short, as described in clause (i), is not less than 10 and less than 20; or
(iii)
5, if the number of full percentage points by which the State fell short, as described in clause (i), is not less than 20.
(2)
(A)
Each State shall take such steps as are necessary to ensure that not less than 50 percent of the total number of visits made by caseworkers to children in foster care under the responsibility of the State during a fiscal year occur in the residence of the child involved.
(B)
If the Secretary determines that a State has failed to comply with subparagraph (A) for a fiscal year, then the percentage that would otherwise apply for purposes of subsection (a) for the fiscal year shall be reduced by—
(i)
1, if the number of full percentage points by which the State fell short of the percentage specified in subparagraph (A) is less than 10;
(ii)
3, if the number of full percentage points by which the State fell short, as described in clause (i), is not less than 10 and less than 20; or
(iii)
5, if the number of full percentage points by which the State fell short, as described in clause (i), is not less than 20.

LIMITATIONS ON AUTHORIZATION OF APPROPRIATIONS
Sec. 425.
[42 U.S.C. 625]
To carry out this subpart (other than sections 426, 427, and 429), there are authorized to be appropriated to the Secretary not more than $325,000,000 for each of fiscal years 2017 through 2023.

RESEARCH, TRAINING, OR DEMONSTRATION PROJECTS
Sec. 426.
[42 U.S.C. 626]
(a)
There are hereby authorized to be appropriated for each fiscal year such sums as the Congress may determine—
(1)
for grants by the Secretary—
(A)
to public or other nonprofit institutions of higher learning, and to public or other nonprofit agencies and organizations engaged in research or child-welfare activities, for special research or demonstration projects in the field of child welfare which are of regional or national significance and for special projects for the demonstration of new methods or facilities which show promise of substantial contribution to the advancement of child welfare;
(B)
to State or local public agencies responsible for administering, or supervising the administration of, the plan under this part, for projects for the demonstration of the utilization of research (including findings resulting therefrom) in the field of child welfare in order to encourage experimental and special types of welfare services; and
(C)
to public or other nonprofit institutions of higher learning for special projects for training personnel for work in the field of child welfare, including traineeships described in section 429 with such stipends and allowances as may be permitted by the Secretary; and
(2)
for contracts or jointly financed cooperative arrangements with States and public and other organizations and agencies for the conduct of research, special projects, or demonstration projects relating to such matters.
(b)
Payments of grants or under contracts or cooperative arrangements under this section may be made in advance or by way of reimbursement, and in such installments, as the Secretary may determine; and shall be made on such conditions as the Secretary finds necessary to carry out the purposes of the grants, contracts, or other arrangements.
(c)

Child Welfare Traineeships.—
The Secretary may approve an application for a grant to a public or nonprofit institution for higher learning to provide traineeships with stipends under section 426(a)(1)(C) only if the application—
(1)
provides assurances that each individual who receives a stipend with such traineeship (in this section referred to as a “recipient”) agrees—
(A)
to participate in training at a public or private nonprofit child welfare agency on a regular basis (as determined by the Secretary) for the period of the traineeship;
(B)
to be employed for a period of years equivalent to the period of the traineeship, in a public or private nonprofit child welfare agency in any State, within a period of time (determined by the Secretary in accordance with regulations) after completing the postsecondary education for which the traineeship was awarded;
(C)
to furnish to the institution and the Secretary evidence of compliance with subparagraphs (A) and (B); and
(D)
if the recipient fails to comply with subparagraph (A) or (B) and does not qualify for any exception to this subparagraph which the Secretary may prescribe in regulations, to repay to the Secretary all (or an appropriately prorated part) of the amount of the stipend, plus interest, and, if applicable, reasonable collection fees (in accordance with regulations promulgated by the Secretary);
(2)
provides assurances that the institution will—
(A)
enter into agreements with child welfare agencies for onsite training of recipients;
(B)
permit an individual who is employed in the field of child welfare services to apply for a traineeship with a stipend if the traineeship furthers the progress of the individual toward the completion of degree requirements; and
(C)
develop and implement a system that, for the 3-year period that begins on the date any recipient completes a child welfare services program of study, tracks the employment record of the recipient, for the purpose of determining the percentage of recipients who secure employment in the field of child welfare services and remain employed in the field.
SEC. 427.
[42 U.S.C. 627]

FAMILY CONNECTION GRANTS.
(a)

In General.—
The Secretary of Health and Human Services may make matching grants to State, local, or tribal child welfare agencies, private nonprofit organizations that have experience in working with foster children or children in kinship care arrangements, and institutions of higher education (as defined under section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001)), for the purpose of helping children who are in, or at risk of entering, foster care reconnect with family members through the implementation of—
(1)
a kinship navigator program to assist kinship caregivers in learning about, finding, and using programs and services to meet the needs of the children they are raising and their own needs, and to promote effective partnerships among public and private agencies to ensure kinship caregiver families are served, which program—
(A)
shall be coordinated with other State or local agencies that promote service coordination or provide information and referral services, including the entities that provide 2–1–1 or 3–1–1 information systems where available, to avoid duplication or fragmentation of services to kinship care families;
(B)
shall be planned and operated in consultation with kinship caregivers and organizations representing them, youth raised by kinship caregivers, relevant government agencies, and relevant community-based or faith-based organizations;
(C)
shall establish information and referral systems that link (via toll-free access) kinship caregivers, kinship support group facilitators, and kinship service providers to—
(i)
each other;
(ii)
eligibility and enrollment information for Federal, State, and local benefits;
(iii)
relevant training to assist kinship caregivers in caregiving and in obtaining benefits and services; and
(iv)
relevant legal assistance and help in obtaining legal services;
(D)
shall provide outreach to kinship care families, including by establishing, distributing, and updating a kinship care website, or other relevant guides or outreach materials;
(E)
shall promote partnerships between public and private agencies, including schools, community based or faith-based organizations, and relevant government agencies, to increase their knowledge of the needs of kinship care families and other individuals who are willing and able to be foster parents for children in foster care under the responsibility of the State who are themselves parents to promote better services for those families;
(F)
may establish and support a kinship care ombudsman with authority to intervene and help kinship caregivers access services; and
(G)
may support any other activities designed to assist kinship caregivers in obtaining benefits and services to improve their caregiving;
(2)
intensive family-finding efforts that utilize search technology to find biological family members for children in the child welfare system, and once identified, work to reestablish relationships and explore ways to find a permanent family placement for the children;
(3)
family group decision-making meetings for children in the child welfare system, that—
(A)
enable families to make decisions and develop plans that nurture children and protect them from abuse and neglect, and
(B)
when appropriate, shall address domestic violence issues in a safe manner and facilitate connecting children exposed to domestic violence to appropriate services, including reconnection with the abused parent when appropriate; or
(4)
residential family treatment programs that—
(A)
enable parents and their children to live in a safe environment for a period of not less than 6 months; and
(B)
provide, on-site or by referral, substance abuse treatment services, children's early intervention services, family counseling, medical, and mental health services, nursery and pre-school, and other services that are designed to provide comprehensive treatment that supports the family.
(b)

Applications.—
An entity desiring to receive a matching grant under this section shall submit to the Secretary an application, at such time, in such manner, and containing such information as the Secretary may require, including—
(1)
a description of how the grant will be used to implement 1 or more of the activities described in subsection (a);
(2)
a description of the types of children and families to be served, including how the children and families will be identified and recruited, and an initial projection of the number of children and families to be served;
(3)
if the entity is a private organization—
(A)
documentation of support from the relevant local or State child welfare agency; or
(B)
a description of how the organization plans to coordinate its services and activities with those offered by the relevant local or State child welfare agency; and
(4)
an assurance that the entity will cooperate fully with any evaluation provided for by the Secretary under this section.
(c)

Limitations.—
(1)

Grant duration.—
The Secretary may award a grant under this section for a period of not less than 1 year and not more than 3 years.
(2)

Number of new grantees per year.—
The Secretary may not award a grant under this section to more than 30 new grantees each fiscal year.
(d)

Federal Contribution.—
The amount of a grant payment to be made to a grantee under this section during each year in the grant period shall be the following percentage of the total expenditures proposed to be made by the grantee in the application approved by the Secretary under this section:
(1)
75 percent, if the payment is for the 1st or 2nd year of the grant period.
(2)
50 percent, if the payment is for the 3rd year of the grant period.
(e)

Form of Grantee Contribution.—
A grantee under this section may provide not more than 50 percent of the amount which the grantee is required to expend to carry out the activities for which a grant is awarded under this section in kind, fairly evaluated, including plant, equipment, or services.
(f)

Use of Grant.—
A grantee under this section shall use the grant in accordance with the approved application for the grant.
(g)

Reservations of Funds.—
(1)

Evaluation.—
The Secretary shall reserve 3 percent of the funds made available under subsection (h) for each fiscal year for the conduct of a rigorous evaluation of the activities funded with grants under this section.
(2)

Technical assistance.—
The Secretary may reserve 2 percent of the funds made available under subsection (h) for each fiscal year to provide technical assistance to recipients of grants under this section.
(h)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to the Secretary for purposes of making grants under this section $15,000,000 for each of fiscal years 2009 through 2014.

PAYMENTS TO INDIAN TRIBAL ORGANIZATIONS
Sec. 428.
[42 U.S.C. 628]
(a)
The Secretary may, in appropriate cases (as determined by the Secretary) make payments under this subpart directly to an Indian tribal organization within any State which has a plan for child welfare services approved under this subpart. Such payments shall be made in such manner and in such amounts as the Secretary determines to be appropriate.
(b)
Amounts paid under subsection (a) shall be deemed to be a part of the allotment (as determined under section 423) for the State in which such Indian tribal organization is located.
(c)
For purposes of this section, the terms “Indian tribe” and “tribal organization” shall have the meanings given such terms by subsections (e) and (l) of section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b), respectively.
SEC. 429.
[42 U.S.C. 628b]

NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE.
(a)

In General.—
The Secretary shall conduct (directly, or by grant, contract, or interagency agreement) a national study based on random samples of children who are at risk of child abuse or neglect, or are determined by States to have been abused or neglected.
(b)

Requirements.—
The study required by subsection (a) shall—
(1)
have a longitudinal component; and
(2)
yield data reliable at the State level for as many States as the Secretary determines is feasible.
(c)

Preferred Contents.—
In conducting the study required by subsection (a), the Secretary should—
(1)
carefully consider selecting the sample from cases of confirmed abuse or neglect; and
(2)
follow each case for several years while obtaining information on, among other things—
(A)
the type of abuse or neglect involved;
(B)
the frequency of contact with State or local agencies;
(C)
whether the child involved has been separated from the family, and, if so, under what circumstances;
(D)
the number, type, and characteristics of out-of-home placements of the child; and
(E)
the average duration of each placement.
(d)

Reports.—
(1)

In general.—
From time to time, the Secretary shall prepare reports summarizing the results of the study required by subsection (a).
(2)

Availability.—
The Secretary shall make available to the public any report prepared under paragraph (1), in writing or in the form of an electronic data tape.
(3)

Authority to charge fee.—
The Secretary may charge and collect a fee for the furnishing of reports under para-graph (2).
(e)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to the Secretary for each of fiscal years 1996 through 2002 $6,000,000 to carry out this section.
SEC. 429A.
[42 U.S.C. 628c]

GRANTS TO STATES TO ENHANCE COLLABORATION BETWEEN STATE CHILD WELFARE AND JUVENILE JUSTICE SYSTEMS.
(a)

Purpose.—
The purpose of this section is to authorize the Secretary, in collaboration with the Attorney General and the Administrator of the Office of Juvenile Justice and Delinquency Prevention of the Department of Justice—
(1)
to make grants to State child welfare and juvenile justice agencies and child- and youth-serving agencies to collaborate in the collection of data relating to dual status youth; and
(2)
to develop practices, policies, and protocols—
(A)
to confront the challenges presented and experienced by dual status youth; and
(B)
for the development of interoperable data systems.
(b)

Authority to Award Grants.—
(1)

In general.—
Subject to the availability of appropriations, from amounts reserved under section 423(a)(2) for a fiscal year, the Secretary shall award competitive grants jointly to a State child welfare agency and a State juvenile justice agency to facilitate or enhance collaboration between the child welfare and juvenile justice systems of the State in order to carry out programs to address the needs of dual status youth and their families.
(2)

Length of grants.—
(A)

In general.—
Subject to subparagraph (B), a grant shall be awarded under this section for a period of not less than 2 fiscal years and not more than 5 fiscal years.
(B)

Extension of grant.—
Upon the application of the grantee, the Secretary may extend the period for which a grant is awarded under this section for not more than 2 fiscal years.
(c)

Additional Requirements.—
(1)

Application.—
In order for a State to be eligible for a grant under this section, the State shall submit an application, subject to the approval of the Secretary, that includes—
(A)
a description of the proposed leadership collaboration group (including the membership of such group), and how such group will manage and oversee a review and analysis of current practices while working to jointly address enhanced practices to improve outcomes for dual status youth;
(B)
a description of how the State proposes—
(i)
to identify dual status youth;
(ii)
to identify individuals who are at risk of becoming dual status youth;
(iii)
to identify common characteristics shared by dual status youth in the State; and
(iv)
to determine the prevalence of dual status youth in the State;
(C)
a description of current and proposed practices and procedures that the State intends to use—
(i)
to screen and assess dual status youth for risks and treatment needs;
(ii)
to provide targeted and evidence-based services, including educational, behavioral health, and pro-social treatment interventions for dual status youth and their families; and
(iii)
to provide for a lawful process to enhance or ensure the abilities of the State and any relevant agencies to share information and data about dual status youth, while maintaining confidentiality and privacy protections under Federal and State law; and
(D)
a certification that the State has involved local governments, as appropriate, in the development, expansion, modification, operation, or improvement of proposed policy and practice reforms to address the needs of dual status youth.
(2)

No supplantation of other funds.—
Any amounts paid to a State under a grant under this section shall be used to supplement and not supplant other State expenditures on dual status youths or children involved with either the child welfare or juvenile justice systems.
(3)

Evaluation.—
Up to 10 percent of the amount made available to carry out this section for a fiscal year shall be made available to the Secretary to evaluate the effectiveness of the projects funded under this section, using a methodology that—
(A)
includes random assignment whenever feasible, or other research methods that allow for the strongest possible causal inferences when random assignment is not feasible; and
(B)
generates evidence on the impact of specific projects, or groups of projects with identical (or similar) practices and procedures.
(4)

Report.—
A State child welfare agency and a State juvenile justice agency receiving a grant under this section shall jointly submit to the Secretary, the Attorney General, and the Administrator of the Office of Juvenile Justice and Delinquency Prevention of the Department of Justice, a report on the evaluation of the activities carried out under the grant at the end of each fiscal year during the period of the grant. Such report shall include—
(A)
a description of the scope and nature of the dual status youth population in the State, including the number of dual status youth;
(B)
a description of the evidence-based practices and procedures used by the agencies to carry out the activities described in clauses (i) through (iii) of paragraph (1)(C); and
(C)
an analysis of the effects of such practices and procedures, including information regarding—
(i)
the collection of data related to individual dual status youths;
(ii)
aggregate data related to the dual status youth population, including—
(I)
characteristics of dual status youths in the State;
(II)
case processing timelines; and
(III)
information related to case management, the provision of targeted services, and placements within the foster care or juvenile justice system; and
(iii)
the extent to which such practices and procedures have contributed to—
(I)
improved educational outcomes for dual status youths;
(II)
fewer delinquency referrals for dual status youths;
(III)
shorter stays in intensive restrictive placements for dual status youths; or
(IV)
such other outcomes for dual status youths as the State child welfare agency and State juvenile justice agency may identify.
(d)

Training and Technical Assistance.—
The Secretary may support State child welfare agencies and State juvenile justice agencies by offering a program, developed in consultation with organizations and agencies with subject matter expertise, of training and technical assistance to assist such agencies in developing programs and protocols that draw on best practices for serving dual status youth in order to facilitate or enhance—
(1)
collaboration between State child welfare agencies and State juvenile justice agencies; and
(2)
the effectiveness of such agencies with respect to working with Federal agencies and child welfare and juvenile justice agencies from other States.
(e)

Report.—
Not later than 3 years after the date of enactment of this section, and every 3 years thereafter, the Secretary, the Attorney General, and the Administrator of the Office of Juvenile Justice and Delinquency Prevention of the Department of Justice shall jointly submit to the Committee on Finance and the Committee on the Judiciary of the Senate and the Committee on Ways and Means and the Committee on Education and Labor of the House of Representatives, a report on the grants provided under this section.
(f)

Definitions.—
In this section:
(1)

Dual status youth.—
The term “dual status youth” means a child who has come into contact with both the child welfare and juvenile justice systems and occupies various statuses in terms of the individual’s relationship to such systems.
(2)

Leadership collaboration group.—
The term “leadership collaboration group” means a group composed of senior officials from the State child welfare agency, the State juvenile justice agency, and other relevant youth and family-serving public agencies and private organizations, including, to the extent practicable, representatives from the State judiciary branch.
(3)

State juvenile justice agency.—
The term “State juvenile justice agency” means the agency of the State or Indian tribe responsible for administering grant funds awarded under the Juvenile Justice and Delinquency Prevention Act of 1974 (34 U.S.C. 11101 et seq.).
(4)

State child welfare agency.—
The term “State child welfare agency” means the State agency responsible for administering the program under this subpart, or, in the case of a tribal organization that is receiving payments under section 428, the tribal agency responsible for administering such program.
Subpart 2—

Marylee Allen Promoting Safe and Stable Families Program
SEC. 430.
[42 U.S.C. 629]

PURPOSE.
The purpose of this program is to enable States to develop and establish, or expand, and to operate coordinated programs of community-based family support services, family preservation services, family reunification services, and adoption promotion and support services to accomplish the following objectives:
(1)
To prevent child maltreatment among families at risk through the provision of supportive family services.
(2)
To assure children's safety within the home and preserve intact families in which children have been maltreated, when the family's problems can be addressed effectively.
(3)
To address the problems of families whose children have been placed in foster care so that reunification may occur in a safe and stable manner in accordance with the Adoption and Safe Families Act of 1997.
(4)
To support adoptive families by providing support services as necessary so that they can make a lifetime commitment to their children.
SEC. 431.
[42 U.S.C. 629a]

DEFINITIONS.
(a)

In General.—
As used in this subpart:
(1)

Family preservation services.—
The term “family preservation services” means services for children and families designed to help families (including adoptive and extended families) at risk or in crisis, including—
(A)
service programs designed to help children—
(i)
where safe and appropriate, return to families from which they have been removed; or
(ii)
be placed for adoption, with a legal guardian, or, if adoption or legal guardianship is determined not to be safe and appropriate for a child, in some other planned, permanent living arrangement;
(B)
preplacement preventive services programs, such as intensive family preservation programs, designed to help children at risk of foster care placement remain safely with their families;
(C)
service programs designed to provide followup care to families to whom a child has been returned after a foster care placement;
(D)
respite care of children to provide temporary relief for parents and other caregivers (including foster parents);
(E)
services designed to improve parenting skills (by reinforcing parents' confidence in their strengths, and helping them to identify where improvement is needed and to obtain assistance in improving those skills) with respect to matters such as child development, family budgeting, coping with stress, health, and nutrition; and
(F)
infant safe haven programs to provide a way for a parent to safely relinquish a newborn infant at a safe haven designated pursuant to a State law.
(2)

Family support services.—
(A)

In general.—
The term “family support services” means community-based services designed to carry out the purposes described in subparagraph (B).
(B)

Purposes described.—
The purposes described in this subparagraph are the following:
(i)
To promote the safety and well-being of children and families.
(ii)
To increase the strength and stability of families (including adoptive, foster, and extended families).
(iii)
To support and retain foster families so they can provide quality family-based settings for children in foster care.
(iv)
To increase parents' confidence and competence in their parenting abilities.
(v)
To afford children a safe, stable, and supportive family environment.
(vi)
To strengthen parental relationships and promote healthy marriages.
(vii)
To enhance child development, including through mentoring (as defined in section 439(b)(2)).
(3)

State agency.—
The term “State agency” means the State agency responsible for administering the program under subpart 1.
(4)

State.—
The term “State” includes an Indian tribe or tribal organization, in addition to the meaning given such term for purposes of subpart 1.
(5)

Indian tribe.—
The term “Indian tribe” has the meaning given the term in section 428(c).
(6)

Tribal organization.—
The term “tribal organization” has the meaning given the term in section 428(c).
(7)

Family reunification services.—
(A)

In general.—
The term “family reunification services” means the services and activities described in subparagraph (B) that are provided to a child that is removed from the child's home and placed in a foster family home or a child care institution or a child who has been returned home and to the parents or primary caregiver of such a child, in order to facilitate the reunification of the child safely and appropriately within a timely fashion and to ensure the strength and stability of the reunification. In the case of a child who has been returned home, the services and activities shall only be provided during the 15-month period that begins on the date that the child returns home.
(B)

Services and activities described.—
The services and activities described in this subparagraph are the following:
(i)
Individual, group, and family counseling.
(ii)
Inpatient, residential, or outpatient substance abuse treatment services.
(iii)
Mental health services.
(iv)
Assistance to address domestic violence.
(v)
Services designed to provide temporary child care and therapeutic services for families, including crisis nurseries.
(vi)
Peer-to-peer mentoring and support groups for parents and primary caregivers.
(vii)
Services and activities designed to facilitate access to and visitation of children by parents and siblings.
(viii)
Transportation to or from any of the services and activities described in this subparagraph.
(8)

Adoption promotion and support services.—
The term “adoption promotion and support services” means services and activities designed to encourage more adoptions out of the foster care system, when adoptions promote the best interests of children, including such activities as pre- and post-adoptive services and activities designed to expedite the adoption process and support adoptive families.
(9)

Non-federal funds.—
The term “non-Federal funds” means State funds, or at the option of a State, State and local funds.
(b)

Other Terms.—
For other definitions of other terms used in this subpart, see section 475.
SEC. 432.
[42 U.S.C. 629b]

STATE PLANS.
(a)

Plan Requirements.—
A State plan meets the requirements of this subsection if the plan—
(1)
provides that the State agency shall administer, or supervise the administration of, the State program under this subpart;
(2)
(A)
(i)
sets forth the goals intended to be accomplished under the plan by the end of the 5th fiscal year in which the plan is in operation in the State, and (ii) is updated periodically to set forth the goals intended to be accomplished under the plan by the end of each 5th fiscal year thereafter;
(B)
describes the methods to be used in measuring progress toward accomplishment of the goals;
(C)
contains assurances that the State—
(i)
after the end of each of the 1st 4 fiscal years covered by a set of goals, will perform an interim review of progress toward accomplishment of the goals, and on the basis of the interim review will revise the statement of goals in the plan, if necessary, to reflect changed circumstances; and
(ii)
after the end of the last fiscal year covered by a set of goals, will perform a final review of progress toward accomplishment of the goals, and on the basis of the final review (I) will prepare, transmit to the Secretary, and make available to the public a final report on progress toward accomplishment of the goals, and (II) will develop (in consultation with the entities required to be consulted pursuant to subsection (b)) and add to the plan a statement of the goals intended to be accomplished by the end of the 5th succeeding fiscal year;
(3)
provides for coordination, to the extent feasible and appropriate, of the provision of services under the plan and the provision of services or benefits under other Federal or federally assisted programs serving the same populations;
(4)
contains assurances that not more than 10 percent of expenditures under the plan for any fiscal year with respect to which the State is eligible for payment under section 434 for the fiscal year shall be for administrative costs, and that the remaining expenditures shall be for programs of family preservation services, community-based family support services, family reunification services, and adoption promotion and support services, with significant portions of such expenditures for each such program;
(5)
contains assurances that the State will—
(A)
annually prepare, furnish to the Secretary, and make available to the public a description (including separate descriptions with respect to family preservation services, community-based family support services, family reunification services, and adoption promotion and support services) of—
(i)
the service programs to be made available under the plan in the immediately succeeding fiscal year;
(ii)
the populations which the programs will serve; and
(iii)
the geographic areas in the State in which the services will be available; and
(B)
perform the activities described in subparagraph (A)—
(i)
in the case of the 1st fiscal year under the plan, at the time the State submits its initial plan; and
(ii)
in the case of each succeeding fiscal year, by the end of the 3rd quarter of the immediately preceding fiscal year;
(6)
provides for such methods of administration as the Secretary finds to be necessary for the proper and efficient operation of the plan;
(7)
(A)
contains assurances that Federal funds provided to the State under this subpart will not be used to supplant Federal or non-Federal funds for existing services and activities which promote the purposes of this subpart; and
(B)
provides that the State will furnish reports to the Secretary, at such times, in such format, and containing such information as the Secretary may require, that demonstrate the State's compliance with the prohibition contained in subparagraph (A);
(8)
(A)
provides that the State agency will furnish such reports, containing such information, and participate in such evaluations, as the Secretary may require; and
(B)
provides that, not later than June 30 of each year, the State will submit to the Secretary—
(i)
copies of form CFS–101 (including all parts and any successor forms) that report on planned child and family services expenditures by the agency for the immediately succeeding fiscal year; and
(ii)
copies of form CFS–101 (including all parts and any successor forms) that provide, with respect to the programs authorized under this subpart and subpart 1 and, at State option, other programs included on such forms, for the most recent preceding fiscal year for which reporting of actual expenditures is complete—
(I)
the numbers of families and of children served by the State agency;
(II)
the population served by the State agency;
(III)
the geographic areas served by the State agency; and
(IV)
the actual expenditures of funds provided to the State agency;
(9)
contains assurances that in administering and conducting service programs under the plan, the safety of the children to be served shall be of paramount concern; and
(10)
describes how the State identifies which populations are at the greatest risk of maltreatment and how services are targeted to the populations.
(b)

Approval of Plans.—
(1)

In general.—
The Secretary shall approve a plan that meets the requirements of subsection (a) only if the plan was developed jointly by the Secretary and the State, after consultation by the State agency with appropriate public and nonprofit private agencies and community-based organizations with experience in administering programs of services for children and families (including family preservation, family support, family reunification, and adoption promotion and support services).
(2)

Plans of indian tribes or tribal consortia.—
(A)

Exemption from inappropriate requirements.—
The Secretary may exempt a plan submitted by an Indian tribe or tribal consortium from the requirements of subsection (a)(4) of this section to the extent that the Secretary determines those requirements would be inappropriate to apply to the Indian tribe or tribal consortium, taking into account the resources, needs, and other circumstances of the Indian tribe or tribal consortium.
(B)

Special rule.—
Notwithstanding subparagraph (A) of this paragraph, the Secretary may not approve a plan of an Indian tribe or tribal consortium under this subpart to which (but for this subparagraph) an allotment of less than $10,000 would be made under section 433(a) if allotments were made under section 433(a) to all Indian tribes and tribal consortia with plans approved under this subpart with the same or larger numbers of children.
(c)

Annual Submission of State Reports to Congress.—
(1)

In general.—
The Secretary shall compile the reports required under subsection (a)(8)(B) and, not later than September 30 of each year, submit such compilation to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.
(2)

Information to be included.—
The compilation shall include the individual State reports and tables that synthesize State information into national totals for each element required to be included in the reports, including planned and actual spending by service category for the program authorized under this subpart and planned spending by service category for the program authorized under subpart 1.
(3)

Public accessibility.—
Not later than September 30 of each year, the Secretary shall publish the compilation on the website of the Department of Health and Human Services in a location easily accessible by the public.
SEC. 433.
[42 U.S.C. 629c]

ALLOTMENTS TO STATES.
(a)

Indian Tribes or Tribal Consortia.—
From the amount reserved pursuant to section 436(b)(3) for any fiscal year, the Secretary shall allot to each Indian tribe with a plan approved under this subpart an amount that bears the same ratio to such reserved amount as the number of children in the Indian tribe bears to the total number of children in all Indian tribes with State plans so approved, as determined by the Secretary on the basis of the most current and reliable information available to the Secretary. If a consortium of Indian tribes submits a plan approved under this subpart, the Secretary shall allot to the consortium an amount equal to the sum of the allotments determined for each Indian tribe that is part of the consortium.
(b)

Territories.—
From the amount described in section 436(a) for any fiscal year that remains after applying section 436(b) for the fiscal year, the Secretary shall allot to each of the jurisdictions of Puerto Rico, Guam, the Virgin Islands, the Northern Mariana Islands, and American Samoa an amount determined in the same manner as the allotment to each of such jurisdictions is determined under section 423.
(c)

Other States.—
(1)

In general.—
From the amount described in section 436(a) for any fiscal year that remains after applying section 436(b) and subsection (b) of this section for the fiscal year, the Secretary shall allot to each State (other than an Indian tribe) which is not specified in subsection (b) of this section an amount equal to such remaining amount multiplied by the supplemental nutrition assistance program benefits percentage of the State for the fiscal year.
(2)

Supplemental nutrition assistance program benefits percentage defined.—
(A)

In general.—
As used in paragraph (1) of this subsection, the term “supplemental nutrition assistance program benefits percentage” means, with respect to a State and a fiscal year, the average monthly number of children receiving supplemental nutrition assistance program benefits in the State for months in the 3 fiscal years referred to in subparagraph (B) of this paragraph, as determined from sample surveys made under section 16(c) of the Food and Nutrition Act of 2008, expressed as a percentage of the average monthly number of children receiving supplemental nutrition assistance program benefits in the States described in such paragraph (1) for months in such 3 fiscal years, as so determined.
(B)

Fiscal years used in calculation.—
For purposes of the calculation pursuant to subparagraph (A), the Secretary shall use data for the 3 most recent fiscal years, preceding the fiscal year for which the State's allotment is calculated under this subsection, for which such data are available to the Secretary.
(d)

Reallotments.—
The amount of any allotment to a State under subsection (a), (b), or (c) of this section for any fiscal year that the State certifies to the Secretary will not be required for carrying out the State plan under section 432 shall be available for reallotment using the allotment methodology specified in subsection (a), (b), or (c) of this section. Any amount so reallotted to a State is deemed part of the allotment of the State under the preceding provisions of this section.
(e)

Allotment of Funds Reserved To Support Monthly Caseworker Visits.—
(1)

Territories.—
From the amount reserved pursuant to section 436(b)(4)(A) for any fiscal year, the Secretary shall allot to each jurisdiction specified in subsection (b) of this section, that has provided to the Secretary such documentation as may be necessary to verify that the jurisdiction has complied with section 436(b)(4)(B)(ii) during the fiscal year, an amount determined in the same manner as the allotment to each of such jurisdictions is determined under section 423 (without regard to the initial allotment of $70,000 to each State).
(2)

Other states.—
From the amount reserved pursuant to section 436(b)(4)(A) for any fiscal year that remains after applying paragraph (1) of this subsection for the fiscal year, the Secretary shall allot to each State (other than an Indian tribe) not specified in subsection (b) of this section, that has provided to the Secretary such documentation as may be necessary to verify that the State has complied with section 436(b)(4)(B)(ii) during the fiscal year, an amount equal to such remaining amount multiplied by the supplemental nutrition assistance program benefits percentage of the State (as defined in subsection (c)(2) of this section) for the fiscal year, except that in applying subsection (c)(2)(A) of this section, “subsection (e)(2)” shall be substituted for “such paragraph (1)”.
SEC. 434.
[42 U.S.C. 629d]

PAYMENTS TO STATES.
(a)

Entitlement.—
Each State that has a plan approved under section 432 shall, subject to subsection (d), be entitled to payment of the sum of—
(1)
the lesser of—
(A)
75 percent of the total expenditures by the State for activities under the plan during the fiscal year or the immediately succeeding fiscal year; or
(B)
the allotment of the State under subsection (a), (b), or (c) of section 433, whichever is applicable, for the fiscal year; and
(2)
the lesser of—
(A)
75 percent of the total expenditures by the State in accordance with section 436(b)(4)(B) during the fiscal year or the immediately succeeding fiscal year; or
(B)
the allotment of the State under section 433(e) for the fiscal year.
(b)

Prohibitions.—
(1)

No use of other federal funds for state match.—
Each State receiving an amount paid under subsection (a) may not expend any Federal funds to meet the costs of services under the State plan under section 432 not covered by the amount so paid.
(2)

Availability of funds.—
A State may not expend any amount paid under subsection (a) for any fiscal year after the end of the immediately succeeding fiscal year.
(c)

Direct Payments to Tribal Organizations of Indian Tribes or Tribal Consortia.—
The Secretary shall pay any amount to which an Indian tribe or tribal consortium is entitled under this section directly to the tribal organization of the Indian tribe or in the case of a payment to a tribal consortium, such tribal organizations of, or entity established by, the Indian tribes that are part of the consortium as the consortium shall designate.
(d)16

Limitation on Reimbursement for Administrative Costs.—
The Secretary shall not make a payment to a State under this section with respect to expenditures for administrative costs during a fiscal year, to the extent that the total amount of the expenditures exceeds 10 percent of the total expenditures of the State during the fiscal year under the State plan approved under section 432.
^{16}
Subsection (d) (and the amendment to insert the reference to such subsection in subsection (a)) as added by section 3(f)(1)(B) of Public Law 109–288 applies to expenditures made on or after October 1, 2007 pursuant to paragraph (2) of section 3(f) of such Public Law.
SEC. 435.
[42 U.S.C. 629e]

EVALUATIONS; RESEARCH; TECHNICAL ASSISTANCE.
(a)

Evaluations.—
(1)

In general.—
The Secretary shall evaluate and report to the Congress biennially on the effectiveness of the programs carried out pursuant to this subpart in accomplishing the purposes of this subpart, and may evaluate any other Federal, State, or local program, regardless of whether federally assisted, that is designed to achieve the same purposes as the program under this subpart, in accordance with criteria established in accordance with paragraph (2).
(2)

Criteria to be used.—
In developing the criteria to be used in evaluations under paragraph (1), the Secretary shall consult with appropriate parties, such as—
(A)
State agencies administering programs under this part and part E;
(B)
persons administering child and family services programs (including family preservation and family support programs) for private, nonprofit organizations with an interest in child welfare; and
(C)
other persons with recognized expertise in the evaluation of child and family services programs (including family preservation and family support programs) or other related programs.
(3)

Timing of report.—
Beginning in 2003, the Secretary shall submit the biennial report required by this subsection not later than April 1 of every other year, and shall include in each such report the funding level, the status of ongoing evaluations, findings to date, and the nature of any technical assistance provided to States under subsection (d).
(b)

Coordination of Evaluations.—
The Secretary shall develop procedures to coordinate evaluations under this section, to the extent feasible, with evaluations by the States of the effectiveness of programs under this subpart.
(c)

Evaluation, Research, and Technical Assistance With Respect to Targeted Program Resources.—
Of the amount reserved under section 436(b)(1) for a fiscal year, the Secretary shall use not less than—
(1)
$1,000,000 for evaluations, research, and providing technical assistance with respect to supporting monthly caseworker visits with children who are in foster care under the responsibility of the State, in accordance with section 436(b)(4)(B)(i); and
(2)
$1,000,000 for evaluations, research, and providing technical assistance with respect to grants under section 437(f).
(d)

Technical Assistance.—
To the extent funds are available therefor, the Secretary shall provide technical assistance that helps States and Indian tribes or tribal consortia to—
(1)
develop research-based protocols for identifying families at risk of abuse and neglect of use in the field;
(2)
develop treatment models that address the needs of families at risk, particularly families with substance abuse issues;
(3)
implement programs with well-articulated theories of how the intervention will result in desired changes among families at risk;
(4)
establish mechanisms to ensure that service provision matches the treatment model; and
(5)
establish mechanisms to ensure that postadoption services meet the needs of the individual families and develop models to reduce the disruption rates of adoption.
(e)

Family Recovery and Reunification Program Replication Project.—
(1)

Purpose.—
The purpose of this subsection is to provide resources to the Secretary to support the conduct and evaluation of a family recovery and reunification program replication project (referred to in this subsection as the “project”) and to determine the extent to which such programs may be appropriate for use at different intervention points (such as when a child is at risk of entering foster care or when a child is living with a guardian while a parent is in treatment). The family recovery and reunification program conducted under the project shall use a recovery coach model that is designed to help reunify families and protect children by working with parents or guardians with a substance use disorder who have temporarily lost custody of their children.
(2)

Program components.—
The family recovery and reunification program conducted under the project shall adhere closely to the elements and protocol determined to be most effective in other recovery coaching programs that have been rigorously evaluated and shown to increase family reunification and protect children and, consistent with such elements and protocol, shall provide such items and services as—
(A)
assessments to evaluate the needs of the parent or guardian;
(B)
assistance in receiving the appropriate benefits to aid the parent or guardian in recovery;
(C)
services to assist the parent or guardian in prioritizing issues identified in assessments, establishing goals for resolving such issues that are consistent with the goals of the treatment provider, child welfare agency, courts, and other agencies involved with the parent or guardian or their children, and making a coordinated plan for achieving such goals;
(D)
home visiting services coordinated with the child welfare agency and treatment provider involved with the parent or guardian or their children;
(E)
case management services to remove barriers for the parent or guardian to participate and continue in treatment, as well as to re-engage a parent or guardian who is not participating or progressing in treatment;
(F)
access to services needed to monitor the parent’s or guardian's compliance with program requirements;
(G)
frequent reporting between the treatment provider, child welfare agency, courts, and other agencies involved with the parent or guardian or their children to ensure appropriate information on the parent’s or guardian's status is available to inform decision-making; and
(H)
assessments and recommendations provided by a recovery coach to the child welfare caseworker responsible for documenting the parent’s or guardian's progress in treatment and recovery as well as the status of other areas identified in the treatment plan for the parent or guardian, including a recommendation regarding the expected safety of the child if the child is returned to the custody of the parent or guardian that can be used by the caseworker and a court to make permanency decisions regarding the child.
(3)

Responsibilities of the secretary.—
(A)

In general.—
The Secretary shall, through a grant or contract with 1 or more entities, conduct and evaluate the family recovery and reunification program under the project.
(B)

Requirements.—
In identifying 1 or more entities to conduct the evaluation of the family recovery and reunification program, the Secretary shall—
(i)
determine that the area or areas in which the program will be conducted have sufficient substance use disorder treatment providers and other resources (other than those provided with funds made available to carry out the project) to successfully conduct the program;
(ii)
determine that the area or areas in which the program will be conducted have enough potential program participants, and will serve a sufficient number of parents or guardians and their children, so as to allow for the formation of a control group, evaluation results to be adequately powered, and preliminary results of the evaluation to be available within 4 years of the program's implementation;
(iii)
provide the entity or entities with technical assistance for the program design, including by working with 1 or more entities that are or have been involved in recovery coaching programs that have been rigorously evaluated and shown to increase family reunification and protect children so as to make sure the program conducted under the project adheres closely to the elements and protocol determined to be most effective in such other recovery coaching programs;
(iv)
assist the entity or entities in securing adequate coaching, treatment, child welfare, court, and other resources needed to successfully conduct the family recovery and reunification program under the project; and
(v)
ensure the entity or entities will be able to monitor the impacts of the program in the area or areas in which it is conducted for at least 5 years after parents or guardians and their children are randomly assigned to participate in the program or to be part of the program's control group.
(4)

Evaluation requirements.—
(A)

In general.—
The Secretary, in consultation with the entity or entities conducting the family recovery and reunification program under the project, shall conduct an evaluation to determine whether the program has been implemented effectively and resulted in improvements for children and families. The evaluation shall have 3 components: a pilot phase, an impact study, and an implementation study.
(B)

Pilot phase.—
The pilot phase component of the evaluation shall consist of the Secretary providing technical assistance to the entity or entities conducting the family recovery and reunification program under the project to ensure—
(i)
the program's implementation adheres closely to the elements and protocol determined to be most effective in other recovery coaching programs that have been rigorously evaluated and shown to increase family reunification and protect children; and
(ii)
random assignment of parents or guardians and their children to be participants in the program or to be part of the program's control group is being carried out.
(C)

Impact study.—
The impact study component of the evaluation shall determine the impacts of the family recovery and reunification program conducted under the project on the parents and guardians and their children participating in the program. The impact study component shall—
(i)
be conducted using an experimental design that uses a random assignment research methodology;
(ii)
consistent with previous studies of other recovery coaching programs that have been rigorously evaluated and shown to increase family reunification and protect children, measure outcomes for parents and guardians and their children over multiple time periods, including for a period of 5 years; and
(iii)
include measurements of family stability and parent, guardian, and child safety for program participants and the program control group that are consistent with measurements of such factors for participants and control groups from previous studies of other recovery coaching programs so as to allow results of the impact study to be compared with the results of such prior studies, including with respect to comparisons between program participants and the program control group regarding—
(I)
safe family reunification;
(II)
time to reunification;
(III)
permanency (such as through measures of reunification, adoption, or placement with guardians);
(IV)
safety (such as through measures of subsequent maltreatment);
(V)
parental or guardian treatment persistence and engagement;
(VI)
parental or guardian substance use;
(VII)
juvenile delinquency;
(VIII)
cost; and
(IX)
other measurements agreed upon by the Secretary and the entity or entities operating the family recovery and reunification program under the project.
(D)

Implementation study.—
The implementation study component of the evaluation shall be conducted concurrently with the conduct of the impact study component and shall include, in addition to such other information as the Secretary may determine, descriptions and analyses of—
(i)
the adherence of the family recovery and reunification program conducted under the project to other recovery coaching programs that have been rigorously evaluated and shown to increase family reunification and protect children; and
(ii)
the difference in services received or proposed to be received by the program participants and the program control group.
(E)

Report.—
The Secretary shall publish on an internet website maintained by the Secretary the following information:
(i)
A report on the pilot phase component of the evaluation.
(ii)
A report on the impact study component of the evaluation.
(iii)
A report on the implementation study component of the evaluation.
(iv)
A report that includes—
(I)
analyses of the extent to which the program has resulted in increased reunifications, increased permanency, case closures, net savings to the State or States involved (taking into account both costs borne by States and the Federal government), or other outcomes, or if the program did not produce such outcomes, an analysis of why the replication of the program did not yield such results;
(II)
if, based on such analyses, the Secretary determines the program should be replicated, a replication plan; and
(III)
such recommendations for legislation and administrative action as the Secretary determines appropriate.
(5)

Appropriation.—
In addition to any amounts otherwise made available to carry out this subpart, out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated $15,000,000 for fiscal year 2019 to carry out the project, which shall remain available through fiscal year 2026.
SEC. 436.
[42 U.S.C. 629f]

AUTHORIZATION OF APPROPRIATIONS; RESERVATION OF CERTAIN AMOUNTS.
(a)

Authorization.—
In addition to any amount otherwise made available to carry out this subpart, there are authorized to be appropriated to carry out this subpart $345,000,000 for each of fiscal years 2017 through 2023.
(b)

Reservation of Certain Amounts.—
From the amount specified in subsection (a) for a fiscal year, the Secretary shall reserve amounts as follows:
(1)

Evaluation, research, training, and technical assistance.—
The Secretary shall reserve $6,000,000 for expenditure by the Secretary—
(A)
for research, training, and technical assistance costs related to the program under this subpart; and
(B)
for evaluation of State programs based on the plans approved under section 432 and funded under this subpart, and any other Federal, State, or local program, regardless of whether federally assisted, that is designed to achieve the same purposes as the State programs.
(2)

State court improvements.—
The Secretary shall reserve $30,000,000 for grants under section 438.
(3)

Indian tribes or tribal consortia.—
After applying paragraphs (4) and (5) (but before applying paragraphs (1) or (2)), the Secretary shall reserve 3 percent for allotment to Indian tribes or tribal consortia in accordance with section 433(a).
(4)

Support for monthly caseworker visits.—
(A)

Reservation.—
The Secretary shall reserve for allotment in accordance with section 433(e) $20,000,000 for each of fiscal years 2017 through 2023.
(B)

Use of funds.—
(i)

In general.—
A State to which an amount is paid from amounts reserved under subparagraph (A) shall use the amount to improve the quality of monthly caseworker visits with children who are in foster care under the responsibility of the State, with an emphasis on improving caseworker decision making on the safety, permanency, and well-being of foster children and on activities designed to increase retention, recruitment, and training of caseworkers.
(ii)

Nonsupplantation.—
A State to which an amount is paid from amounts reserved pursuant to subparagraph (A) shall not use the amount to supplant any Federal funds paid to the State under part E that could be used as described in clause (i).
(5)

Regional partnership grants.—
The Secretary shall reserve for awarding grants under section 437(f) $20,000,000 for each of fiscal years 2017 through 2023.
(c)

Support for Foster Family Homes.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to the Secretary for fiscal year 2018, $8,000,000 for the Secretary to make competitive grants to States, Indian tribes, or tribal consortia to support the recruitment and retention of high-quality foster families to increase their capacity to place more children in family settings, focused on States, Indian tribes, or tribal consortia with the highest percentage of children in non-family settings. The amount appropriated under this subparagraph shall remain available through fiscal year 2022.
SEC. 437.
[42 U.S.C. 629g]

DISCRETIONARY AND TARGETED GRANTS.
(a)

Limitations on Authorization of Appropriations.—
In addition to any amount appropriated pursuant to section 436, there are authorized to be appropriated to carry out this section $200,000,000 for each of fiscal years 2017 through 2023.
(b)

Reservation of Certain Amounts.—
From the amount (if any) appropriated pursuant to subsection (a) for a fiscal year, the Secretary shall reserve amounts as follows:
(1)

Evaluation, research, training, and technical assistance.—
The Secretary shall reserve 3.3 percent for expenditure by the Secretary for the activities described in section 436(b)(1).
(2)

State court improvements.—
The Secretary shall reserve 3.3 percent for grants under section 438.
(3)

Indian tribes or tribal consortia.—
The Secretary shall reserve 3 percent for allotment to Indian tribes or tribal consortia in accordance with subsection (c)(1).
(4)

Improving the interstate placement of children.—
The Secretary shall reserve $5,000,000 of the amount made available for fiscal year 2018 for grants under subsection (g), and the amount so reserved shall remain available through fiscal year 2022.
(c)

Allotments.—
(1)

Indian tribes or tribal consortia.—
From the amount (if any) reserved pursuant to subsection (b)(3) for any fiscal year, the Secretary shall allot to each Indian tribe with a plan approved under this subpart an amount that bears the same ratio to such reserved amount as the number of children in the Indian tribe bears to the total number of children in all Indian tribes with State plans so approved, as determined by the Secretary on the basis of the most current and reliable information available to the Secretary. If a consortium of Indian tribes applies and is approved for a grant under this section, the Secretary shall allot to the consortium an amount equal to the sum of the allotments determined for each Indian tribe that is part of the consortium.
(2)

Territories.—
From the amount (if any) appropriated pursuant to subsection (a) for any fiscal year that remains after applying subection 17 (b) for the fiscal year, the Secretary shall allot to each of the jurisdictions of Puerto Rico, Guam, the Virgin Islands, the Northern Mariana Islands, and American Samoa an amount determined in the same manner as the allotment to each of such jurisdictions is determined under section 423.
^{17}
So in law. The word “subection” in subsection (c)(2) probably should read “subsection”.
(3)

Other states.—
From the amount (if any) appropriated pursuant to subsection (a) for any fiscal year that remains after applying subsection (b) and paragraph (2) of this subsection for the fiscal year, the Secretary shall allot to each State (other than an Indian tribe) which is not specified in paragraph (2) of this subsection an amount equal to such remaining amount multiplied by the supplemental nutrition assistance program benefits percentage (as defined in section 433(c)(2)) of the State for the fiscal year.
(d)

Grants.—
The Secretary may make a grant to a State which has a plan approved under this subpart in an amount equal to the lesser of—
(1)
75 percent of the total expenditures by the State for activities under the plan during the fiscal year or the immediately succeeding fiscal year; or
(2)
the allotment of the State under subsection (c) for the fiscal year.
(e)

Applicability of Certain Rules.—
The rules of subsections (b) and (c) of section 434 shall apply in like manner to the amounts made available pursuant to subsection (a).
(f)

Targeted Grants To Implement IV–E Prevention Services, and Improve the Well-Being of, and Improve Permanency Outcomes for, Children and Families Affected by Heroin, Opioids, and Other Substance Abuse.—
(1)

Purpose.—
The purpose of this subsection is to authorize the Secretary to make competitive grants to regional partnerships to provide, through interagency collaboration and integration of programs and services, services and activities that are designed to increase the well-being of, improve permanency outcomes for, and enhance the safety of children who are in an out-of-home placement or are at risk of being placed in an out-of-home placement as a result of a parent's or caretaker's substance abuse.
(2)

Regional partnership defined.—
In this subsection, the term “regional partnership” means a collaborative agreement (which may be established on an interstate, State, or intrastate basis) entered into by the following:
(A)

Mandatory partners for all partnership grants.—
(i)
The State child welfare agency that is responsible for the administration of the State plan under this part and part E.
(ii)
The State agency responsible for administering the substance abuse prevention and treatment block grant provided under subpart II of part B of title XIX of the Public Health Service Act.
(B)

Mandatory partners for partnership grants proposing to serve children in out-of-home placements.—
If the partnership proposes to serve children in out-of-home placements, the Juvenile Court or Administrative Office of the Court that is most appropriate to oversee the administration of court programs in the region to address the population of families who come to the attention of the court due to child abuse or neglect.
(C)

Optional partners.—
At the option of the partnership, any of the following:
(i)
An Indian tribe or tribal consortium.
(ii)
Nonprofit child welfare service providers.
(iii)
For-profit child welfare service providers.
(iv)
Community health service providers, including substance abuse treatment providers.
(v)
Community mental health providers.
(vi)
Local law enforcement agencies.
(vii)
School personnel.
(viii)
Tribal child welfare agencies (or a consortia of the agencies).
(ix)
Any other providers, agencies, personnel, officials, or entities that are related to the provision of child and family services under a State plan approved under this subpart.
(D)

Exception for regional partnerships where the lead applicant is an indian tribe or tribal consortia.—
If an Indian tribe or tribal consortium enters into a regional partnership for purposes of this subsection, the Indian tribe or tribal consortium—
(i)
may (but is not required to) include the State child welfare agency as a partner in the collaborative agreement;
(ii)
may not enter into a collaborative agreement only with tribal child welfare agencies (or a consortium of the agencies); and
(iii)
if the condition described in paragraph (2)(B) applies, may include tribal court organizations in lieu of other judicial partners.
(3)

Authority to award grants.—
(A)

In general.—
In addition to amounts authorized to be appropriated to carry out this section, the Secretary shall award grants under this subsection, from the amounts reserved for each of fiscal years 2017 through 2023 under section 436(b)(5), to regional partnerships that satisfy the requirements of this subsection, in amounts that are not less than $250,000 and not more than $1,000,000 per grant per fiscal year.
(B)

Required minimum period of approval; planning.—
(i)

In general.—
A grant shall be awarded under this subsection for a period of not less than 2, and not more than 5, fiscal years, subject to clauses (ii) and (iii).
(ii)

Extension of grant.—
On application of the grantee, the Secretary may extend for not more than 2 fiscal years the period for which a grant is awarded under this subsection.
(iii)

Sufficient planning.—
A grant awarded under this subsection shall be disbursed in two phases: a planning phase (not to exceed 2 years) and an implementation phase. The total disbursement to a grantee for the planning phase may not exceed $250,000, and may not exceed the total anticipated funding for the implementation phase.
(C)

Multiple grants allowed.—
This subsection shall not be interpreted to prevent a grantee from applying for, or being awarded, separate grants under this subsection.
(D)

Limitation on payment for a fiscal year.—
No payment shall be made under subparagraph (A) or (C) for a fiscal year until the Secretary determines that the eligible partnership has made sufficient progress in meeting the goals of the grant and that the members of the eligible partnership are coordinating to a reasonable degree with the other members of the eligible partnership.
(4)

Application requirements.—
To be eligible for a grant under this subsection, a regional partnership shall submit to the Secretary a written application containing the following:
(A)
Recent evidence demonstrating that substance abuse has had a substantial impact on the number of out-of-home placements for children, or the number of children who are at risk of being placed in an out-of-home placement, in the partnership region.
(B)
A description of the goals and outcomes to be achieved during the funding period for the grant that will—
(i)
enhance the well-being of children, parents, and families receiving services or taking part in activities conducted with funds provided under the grant;
(ii)
lead to safe, permanent caregiving relationships for the children;
(iii)
improve the substance abuse treatment outcomes for parents including retention in treatment and successful completion of treatment;
(iv)
facilitate the implementation, delivery, and effectiveness of prevention services and programs under section 471(e); and
(v)
decrease the number of out-of-home placements for children, increase reunification rates for children who have been placed in out-of-home care, or decrease the number of children who are at risk of being placed in an out-of-home placement, in the partnership region.
(C)
A description of the joint activities to be funded in whole or in part with the funds provided under the grant, including the sequencing of the activities proposed to be conducted under the funding period for the grant.
(D)
A description of the strategies for integrating programs and services determined to be appropriate for the child and the child's family.
(E)
A description of a plan for sustaining the services provided by or activities funded under the grant after the conclusion of the grant period, including through the use of prevention services and programs under section 471(e) and other funds provided to the State for child welfare and substance abuse prevention and treatment services.
(F)
Additional information needed by the Secretary to determine that the proposed activities and implementation will be consistent with research or evaluations showing which practices and approaches are most effective.
(5)

Use of funds.—
Funds made available under a grant made under this subsection shall only be used for services or activities that are consistent with the purpose of this subsection and may include the following:
(A)
Family-based comprehensive long-term substance use disorder treatment including medication assisted treatment and in-home substance abuse disorder treatment and recovery services.
(B)
Early intervention and preventative services.
(C)
Children and family counseling.
(D)
Mental health services.
(E)
Parenting skills training.
(F)
Replication of successful models for providing family-based comprehensive long-term substance abuse treatment services.
(6)

Matching requirement.—
(A)

Federal share.—
A grant awarded under this subsection shall be available to pay a percentage share of the costs of services provided or activities conducted under such grant, not to exceed—
(i)
85 percent for the first and second fiscal years for which the grant is awarded to a recipient;
(ii)
80 percent for the third and fourth such fiscal years;
(iii)
75 percent for the fifth such fiscal year;
(iv)
70 percent for the sixth such fiscal year; and
(v)
65 percent for the seventh such fiscal year.
(B)

Non-federal share.—
The non-Federal share of the cost of services provided or activities conducted under a grant awarded under this subsection may be in cash or in kind. In determining the amount of the non-Federal share, the Secretary may attribute fair market value to goods, services, and facilities contributed from non-Federal sources.
(7)

Considerations in awarding grants.—
In awarding grants under this subsection, the Secretary shall take into consideration the extent to which applicant regional partnerships—
(A)
demonstrate that substance abuse by parents or caretakers has had a substantial impact on the number of out-of-home placements for children, or the number of children who are at risk of being placed in an out-of-home placement, in the partnership region;
(B)
have limited resources for addressing the needs of children affected by such abuse;
(C)
have a lack of capacity for, or access to, comprehensive family treatment services;
(D)
demonstrate a track record of successful collaboration among child welfare, substance abuse disorder treatment and mental health agencies; and
(E)
demonstrate a plan for sustaining the services provided by or activities funded under the grant after the conclusion of the grant period.
(8)

Performance indicators.—
(A)

In general.—
Not later than 9 months after the date of enactment of this subsection, the Secretary shall review indicators that are used to assess periodically the performance of the grant recipients under this subsection and establish a set of core indicators related to child safety, parental recovery, parenting capacity, and family well-being. In developing the core indicators, to the extent possible, indicators shall be made consistent with the outcome measures described in section 471(e)(6).
(B)

Consultation required.—
In establishing the performance indicators required by subparagraph (A), the Secretary shall base the performance measures on lessons learned from prior rounds of regional partnership grants under this subsection, and consult with the following:
(i)
The Assistant Secretary for the Administration for Children and Families.
(ii)
The Administrator of the Substance Abuse and Mental Health Services Administration.
(iii)
Other stakeholders or constituencies as determined by the Secretary.
(9)

Reports.—
(A)

Grantee reports.—
(i)

Semiannual reports.—
Not later than September 30 of each fiscal year in which a recipient of a grant under this subsection is paid funds under the grant, and every 6 months thereafter, the grant recipient shall submit to the Secretary a report on the services provided and activities carried out during the reporting period, progress made in achieving the goals of the program, the number of children, adults, and families receiving services, and such additional information as the Secretary determines is necessary. The report due not later than September 30 of the last such fiscal year shall include, at a minimum, data on each of the performance indicators included in the evaluation of the regional partnership.
(ii)

Incorporation of information related to performance indicators.—
Each recipient of a grant under this subsection shall incorporate into the first annual report required by clause (i) that is submitted after the establishment of performance indicators under paragraph (8), information required in relation to such indicators.
(B)

Reports to congress.—
On the basis of the reports submitted under subparagraph (A), the Secretary annually shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on—
(i)
the services provided and activities conducted with funds provided under grants awarded under this subsection;
(ii)
the performance indicators established under paragraph (8); and
(iii)
the progress that has been made in addressing the needs of families with substance abuse problems who come to the attention of the child welfare system and in achieving the goals of child safety, permanence, and family stability.
(10)

Limitation on use of funds for administrative expenses of the secretary.—
Not more than 5 percent of the amounts appropriated or reserved for awarding grants under this subsection for each of fiscal years 2017 through 2023 may be used by the Secretary for salaries and Department of Health and Human Services administrative expenses in administering this subsection.
(g)

Funding for the Development of an Electronic Interstate Case-processing System to Expedite the Interstate Placement of Children in Foster Care or Guardianship, or for Adoption.—
(1)

Purpose.—
The purpose of this subsection is to facilitate the development of an electronic interstate case-processing system for the exchange of data and documents to expedite the placements of children in foster, guardianship, or adoptive homes across State lines.
(2)

Requirements.—
A State that seeks funding under this subsection shall submit to the Secretary the following:
(A)
A description of the goals and outcomes to be achieved, which goals and outcomes must result in—
(i)
reducing the time it takes for a child to be provided with a safe and appropriate permanent living arrangement across State lines;
(ii)
improving administrative processes and reducing costs in the foster care system; and
(iii)
the secure exchange of relevant case files and other necessary materials in real time, and timely communications and placement decisions regarding interstate placements of children.
(B)
A description of the activities to be funded in whole or in part with the funds, including the sequencing of the activities.
(C)
A description of the strategies for integrating programs and services for children who are placed across State lines.
(D)
Such other information as the Secretary may require.
(3)

Funding authority.—
The Secretary may provide funds to a State that complies with paragraph (2). In providing funds under this subsection, the Secretary shall prioritize States that are not yet connected with the electronic interstate case-processing system referred to in paragraph (1).
(4)

Use of funds.—
A State to which funding is provided under this subsection shall use the funding to support the State in connecting with, or enhancing or expediting services provided under, the electronic interstate case-processing system referred to in paragraph (1).
(5)

Evaluations.—
Not later than 1 year after the final year in which funds are awarded under this subsection, the Secretary shall submit to the Congress, and make available to the general public by posting on a website, a report that contains the following information:
(A)
How using the electronic interstate case-processing system developed pursuant to paragraph (4) has changed the time it takes for children to be placed across State lines.
(B)
The number of cases subject to the Interstate Compact on the Placement of Children that were processed through the electronic interstate case-processing system, and the number of interstate child placement cases that were processed outside the electronic interstate case-processing system, by each State in each year.
(C)
The progress made by States in implementing the electronic interstate case-processing system.
(D)
How using the electronic interstate case-processing system has affected various metrics related to child safety and well-being, including the time it takes for children to be placed across State lines.
(E)
How using the electronic interstate case-processing system has affected administrative costs and caseworker time spent on placing children across State lines.
(6)

Data integration.—
The Secretary, in consultation with the Secretariat for the Interstate Compact on the Placement of Children and the States, shall assess how the electronic interstate case-processing system developed pursuant to paragraph (4) could be used to better serve and protect children that come to the attention of the child welfare system, by—
(A)
connecting the system with other data systems (such as systems operated by State law enforcement and judicial agencies, systems operated by the Federal Bureau of Investigation for the purposes of the Innocence Lost National Initiative, and other systems);
(B)
simplifying and improving reporting related to paragraphs (34) and (35) of section 471(a) regarding children or youth who have been identified as being a sex trafficking victim or children missing from foster care; and
(C)
improving the ability of States to quickly comply with background check requirements of section 471(a)(20), including checks of child abuse and neglect registries as required by section 471(a)(20)(B).
SEC. 438.
[42 U.S.C. 629h]

ENTITLEMENT FUNDING FOR STATE COURTS TO ASSESS AND IMPROVE HANDLING OF PROCEEDINGS RELATING TO FOSTER CARE AND ADOPTION.
(a)

In General.—
The Secretary shall make grants, in accordance with this section, to the highest State courts in States participating in the program under part E, for the purpose of enabling such courts—
(1)
to conduct assessments, in accordance with such requirements as the Secretary shall publish, of the role, responsibilities, and effectiveness of State courts in carrying out State laws requiring proceedings (conducted by or under the supervision of the courts)—
(A)
that implement parts B and E;
(B)
that determine the advisability or appropriateness of foster care placement;
(C)
that determine whether to terminate parental rights;
(D)
that determine whether to approve the adoption or other permanent placement of a child;18
^{18}
So in law. The word “and” probably should appear at the end of subsection (a)(1)(D).
(E)
that determine the best strategy to use to expedite the interstate placement of children, including—
(i)
requiring courts in different States to cooperate in the sharing of information;
(ii)
authorizing courts to obtain information and testimony from agencies and parties in other States without requiring interstate travel by the agencies and parties; and
(iii)
permitting the participation of parents, children, other necessary parties, and attorneys in cases involving interstate placement without requiring their interstate travel; and 19
^{19}
So in law. The word “and” at the end of subsecton (a)(1)(E)(iii) probably should not appear.
(2)
to implement improvements the highest state 20 courts deem necessary as a result of the assessments, including—
^{20}
So in law. The word “state” probably should read “State”.
(A)
to provide for the safety, well-being, and permanence of children in foster care in a timely and complete manner, as set forth in the Adoption and Safe Families Act of 1997 (Public Law 105–89), including the requirements in the Act related to concurrent planning;
(B)
to implement a corrective action plan, as necessary, resulting from reviews of child and family service programs under section 1123A of this Act; and
(C)
to increase and improve engagement of the entire family in court processes relating to child welfare, family preservation, family reunification, and adoption, including by training judges, attorneys, and other legal personnel.
(b)

Applications.—
In order to be eligible to receive a grant under this section, a highest State court shall have in effect a rule requiring State courts to ensure that foster parents, pre-adoptive parents, and relative caregivers of a child in foster care under the responsibility of the State are notified of any proceeding to be held with respect to the child, shall provide for the training of judges, attorneys, and other legal personnel in child welfare cases on Federal child welfare policies and payment limitations with respect to children in foster care who are placed in settings that are not a foster family home, and shall submit to the Secretary an application at such time, in such form, and including such information and assurances as the Secretary may require, including—
(1)
a description of how courts and child welfare agencies on the local and State levels will use not less than 30 percent of grant funds to collaborate and jointly plan for the collection and sharing of all relevant data and information to demonstrate how improved case tracking and analysis of child abuse and neglect cases will produce safe and timely permanency decisions;
(2)
a demonstration that a portion of the grant will be used for cross-training initiatives that are jointly planned and executed with the State agency or any other agency under contract with the State to administer the State program under the State plan under subpart 1, the State plan approved under section 434, or the State plan approved under part E; and
(C)
in the case of a grant for any purpose described in subsection (a),21 a demonstration of meaningful and ongoing collaboration among the courts in the State, the State agency or any other agency under contract with the State who is responsible for administering the State program under part B or E, and, where applicable, Indian tribes.
^{21}
Subparagraph (C) is so in law. The amendment by clause (iv) of section 305(b)(2)(C) of division CC of Public Law 116–260 to subparagraph (C) to strike “(C) in the case of a grant for the purpose described in subsection (a),’’ and inserting ‘‘(3)” does not execute because the phrase being struck does not appear in law.
(c)

Amount of Grant.—
(1)

In general.—
From the amounts reserved under sections 436(b)(2) and 437(b)(2) for a fiscal year, each highest State court that has an application approved under this section for the fiscal year shall be entitled to payment of an amount equal to the sum of—
(A)
$255,000; and
(B)
the amount described in paragraph (2) with respect to the court and the fiscal year.
(2)

Amount described.—
The amount described in this paragraph with respect to a court and a fiscal year is the amount that bears the same ratio to the total of the amounts reserved under sections 436(b)(2) and 437(b)(2) for grants under this section for the fiscal year (after applying paragraphs (1)(A) and (3) of this subsection) as the number of individuals in the State in which the court is located who have not attained 21 years of age bears to the total number of such individuals in all States with a highest State court that has an approved application under this section for the fiscal year.
(3)

Indian tribes.—
From the amounts reserved under section 436(b)(2) for a fiscal year, the Secretary shall, before applying paragraph (1) of this subsection, allocate $1,000,000 for grants to be awarded on a competitive basis among the highest courts of Indian tribes or tribal consortia that—
(A)
are operating a program under part E, in accordance with section 479B;
(B)
are seeking to operate a program under part E and have received an implementation grant under section 476; or
(C)
have a court responsible for proceedings related to foster care or adoption.
(d)

Federal Share.—
Each highest State court which receives funds paid under this section may use such funds to pay not more than 75 percent of the cost of activities under this section in each of fiscal years 2017 through 202322.
^{22}
Section 305(b)(4) of division CC of Public Law 116–260 provides for an amendment to subsection (d) by striking “2017 through 2021” and inserting “2018 through 2022”. Subsection (c) of such section 305 provides: “The amendments made by this section shall take effect on October 1, 2021”.
Effective on such date, the amendment will not execute as a result of the amendment made by section 7(d) of division X of Public Law 116–260 which struck “2021” and inserted “2022” (effective on date of enactment). Subsequently amended by section 6103(a)(4) of division FF of Public Law 117–328 striking “2022” and inserting “2023”.
SEC. 439.
[42 U.S.C. 629i]

GRANTS FOR PROGRAMS FOR MENTORING CHILDREN OF PRISONERS.
(a)

Findings and Purposes.—
(1)

Findings.—
(A)
In the period between 1991 and 1999, the number of children with a parent incarcerated in a Federal or State correctional facility increased by more than 100 percent, from approximately 900,000 to approximately 2,000,000. In 1999, 2.1 percent of all children in the United States had a parent in Federal or State prison.
(B)
Prior to incarceration, 64 percent of female prisoners and 44 percent of male prisoners in State facilities lived with their children.
(C)
Nearly 90 percent of the children of incarcerated fathers live with their mothers, and 79 percent of the children of incarcerated mothers live with a grandparent or other relative.
(D)
Parental arrest and confinement lead to stress, trauma, stigmatization, and separation problems for children. These problems are coupled with existing problems that include poverty, violence, parental substance abuse, high-crime environments, intrafamilial abuse, child abuse and neglect, multiple care givers, and/or prior separations. As a result, these children often exhibit a broad variety of behavioral, emotional, health, and educational problems that are often compounded by the pain of separation.
(E)
Empirical research demonstrates that mentoring is a potent force for improving children's behavior across all risk behaviors affecting health. Quality, one-on-one relationships that provide young people with caring role models for future success have profound, life-changing potential. Done right, mentoring markedly advances youths' life prospects. A widely cited 1995 study by Public/Private Ventures measured the impact of one Big Brothers Big Sisters program and found significant effects in the lives of youth—cutting first-time drug use by almost half and first-time alcohol use by about a third, reducing school absenteeism by half, cutting assaultive behavior by a third, improving parental and peer relationships, giving youth greater confidence in their school work, and improving academic performance.
(2)

Purposes.—
The purposes of this section are to authorize the Secretary—
(A)
to make competitive grants to applicants in areas with substantial numbers of children of incarcerated parents, to support the establishment or expansion and operation of programs using a network of public and private community entities to provide mentoring services for children of prisoners; and
(B)
to enter into on a competitive basis a cooperative agreement to conduct a service delivery demonstration project in accordance with the requirements of subsection (g).
(b)

Definitions.—
In this section:
(1)

Children of prisoners.—
The term “children of prisoners” means children one or both of whose parents are incarcerated in a Federal, State, or local correctional facility. The term is deemed to include children who are in an ongoing mentoring relationship in a program under this section at the time of their parents' release from prison, for purposes of continued participation in the program.
(2)

Mentoring.—
The term “mentoring” means a structured, managed program in which children are appropriately matched with screened and trained adult volunteers for one-on-one relationships, involving meetings and activities on a regular basis, intended to meet, in part, the child's need for involvement with a caring and supportive adult who provides a positive role model.
(3)

Mentoring services.—
The term “mentoring services” means those services and activities that support a structured, managed program of mentoring, including the management by trained personnel of outreach to, and screening of, eligible children; outreach to, education and training of, and liaison with sponsoring local organizations; screening and training of adult volunteers; matching of children with suitable adult volunteer mentors; support and oversight of the mentoring relationship; and establishment of goals and evaluation of outcomes for mentored children.
(c)

Program Authorized.—
From the amounts appropriated under subsection (i) for a fiscal year that remain after applying subsection (i)(2), the Secretary shall make grants under this section for each of fiscal years 2007 through 2011 to State or local governments, tribal governments or tribal consortia, faith-based organizations, and community-based organizations in areas that have significant numbers of children of prisoners and that submit applications meeting the requirements of this section, in amounts that do not exceed $5,000,000 per grant.
(d)

Application Requirements.—
In order to be eligible for a grant under this section, the chief executive officer of the applicant must submit to the Secretary an application containing the following:
(1)

Program design.—
A description of the proposed program, including—
(A)
a list of local public and private organizations and entities that will participate in the mentoring network;
(B)
the name, description, and qualifications of the entity that will coordinate and oversee the activities of the mentoring network;
(C)
the number of mentor-child matches proposed to be established and maintained annually under the program;
(D)
such information as the Secretary may require concerning the methods to be used to recruit, screen support, and oversee individuals participating as mentors, (which methods shall include criminal background checks on the individuals), and to evaluate outcomes for participating children, including information necessary to demonstrate compliance with requirements established by the Secretary for the program; and
(E)
such other information as the Secretary may require.
(2)

Community consultation; coordination with other programs.—
A demonstration that, in developing and implementing the program, the applicant will, to the extent feasible and appropriate—
(A)
consult with public and private community entities, including religious organizations, and including, as appropriate, Indian tribal organizations and urban Indian organizations, and with family members of potential clients;
(B)
coordinate the programs and activities under the program with other Federal, State, and local programs serving children and youth; and
(C)
consult with appropriate Federal, State, and local corrections, workforce development, and substance abuse and mental health agencies.
(3)

Equal access for local service providers.—
An assurance that public and private entities and community organizations, including religious organizations and Indian organizations, will be eligible to participate on an equal basis.
(4)

Records, reports, and audits.—
An agreement that the applicant will maintain such records, make such reports, and cooperate with such reviews or audits as the Secretary may find necessary for purposes of oversight of project activities and expenditures.
(5)

Evaluation.—
An agreement that the applicant will cooperate fully with the Secretary's ongoing and final evaluation of the program under the plan, by means including providing the Secretary access to the program and program-related records and documents, staff, and grantees receiving funding under the plan.
(e)

Federal Share.—
(1)

In general.—
A grant for a program under this section shall be available to pay a percentage share of the costs of the program up to—
(A)
75 percent for the first and second fiscal years for which the grant is awarded; and
(B)
50 percent for the third and each succeeding such fiscal years.
(2)

Non-federal share.—
The non-Federal share of the cost of projects under this section may be in cash or in kind. In determining the amount of the non-Federal share, the Secretary may attribute fair market value to goods, services, and facilities contributed from non-Federal sources.
(f)

Considerations in Awarding Grants.—
In awarding grants under this section, the Secretary shall take into consideration—
(1)
the qualifications and capacity of applicants and networks of organizations to effectively carry out a mentoring program under this section;
(2)
the comparative severity of need for mentoring services in local areas, taking into consideration data on the numbers of children (and in particular of low-income children) with an incarcerated parents 23 (or parents) in the areas;
^{23}
So in law. The first reference to the word “parents” in subsection (f)(2) probably should be “parent”.
(3)
evidence of consultation with existing youth and family service programs, as appropriate; and
(4)
any other factors the Secretary may deem significant with respect to the need for or the potential success of carrying out a mentoring program under this section.
(g)

Service Delivery Demonstration Project.—
(1)

Purpose; authority to enter into cooperative agreement.—
The Secretary shall enter into a cooperative agreement with an eligible entity that meets the requirements of paragraph (2) for the purpose of requiring the entity to conduct a demonstration project consistent with this subsection under which the entity shall—
(A)
identify children of prisoners in need of mentoring services who have not been matched with a mentor by an applicant awarded a grant under this section, with a priority for identifying children who—
(i)
reside in an area not served by a recipient of a grant under this section;
(ii)
reside in an area that has a substantial number of children of prisoners;
(iii)
reside in a rural area; or
(iv)
are Indians;
(B)
provide the families of the children so identified with—
(i)
a voucher for mentoring services that meets the requirements of paragraph (5); and
(ii)
a list of the providers of mentoring services in the area in which the family resides that satisfy the requirements of paragraph (6); and
(C)
monitor and oversee the delivery of mentoring services by providers that accept the vouchers.
(2)

Eligible entity.—
(A)

In general.—
Subject to subparagraph (B), an eligible entity under this subsection is an organization that the Secretary determines, on a competitive basis—
(i)
has substantial experience—
(I)
in working with organizations that provide mentoring services for children of prisoners; and
(II)
in developing quality standards for the identification and assessment of mentoring programs for children of prisoners; and
(ii)
submits an application that satisfies the requirements of paragraph (3).
(B)

Limitation.—
An organization that provides mentoring services may not be an eligible entity for purposes of being awarded a cooperative agreement under this subsection.
(3)

Application requirements.—
To be eligible to be awarded a cooperative agreement under this subsection, an entity shall submit to the Secretary an application that includes the following:
(A)

Qualifications.—
Evidence that the entity—
(i)
meets the experience requirements of paragraph (2)(A)(i); and
(ii)
is able to carry out—
(I)
the purposes of this subsection identified in paragraph (1); and
(II)
the requirements of the cooperative agreement specified in paragraph (4).
(B)

Service delivery plan.—
(i)

Distribution requirements.—
Subject to clause (iii), a description of the plan of the entity to ensure the distribution of not less than—
(I)
3,000 vouchers for mentoring services in the first year in which the cooperative agreement is in effect with that entity;
(II)
8,000 vouchers for mentoring services in the second year in which the agreement is in effect with that entity; and
(III)
13,000 vouchers for mentoring services in any subsequent year in which the agreement is in effect with that entity.
(ii)

Satisfaction of priorities.—
A description of how the plan will ensure the delivery of mentoring services to children identified in accordance with the requirements of paragraph (1)(A).
(iii)

Secretarial authority to modify distribution requirement.—
The Secretary may modify the number of vouchers specified in subclauses (I) through (III) of clause (i) to take into account the availability of appropriations and the need to ensure that the vouchers distributed by the entity are for amounts that are adequate to ensure the provision of mentoring services for a 12-month period.
(C)

Collaboration and cooperation.—
A description of how the entity will ensure collaboration and cooperation with other interested parties, including courts and prisons, with respect to the delivery of mentoring services under the demonstration project.
(D)

Other.—
Any other information that the Secretary may find necessary to demonstrate the capacity of the entity to satisfy the requirements of this subsection.
(4)

Cooperative agreement requirements.—
A cooperative agreement awarded under this subsection shall require the eligible entity to do the following:
(A)

Identify quality standards for providers.—
To work with the Secretary to identify the quality standards that a provider of mentoring services must meet in order to participate in the demonstration project and which, at a minimum, shall include criminal records checks for individuals who are prospective mentors and shall prohibit approving any individual to be a mentor if the criminal records check of the individual reveals a conviction which would prevent the individual from being approved as a foster or adoptive parent under section 471(a)(20)(A).
(B)

Identify eligible providers.—
To identify and compile a list of those providers of mentoring services in any of the 50 States or the District of Columbia that meet the quality standards identified pursuant to subparagraph (A).
(C)

Identify eligible children.—
To identify children of prisoners who require mentoring services, consistent with the priorities specified in paragraph (1)(A).
(D)

Monitor and oversee delivery of mentoring services.—
To satisfy specific requirements of the Secretary for monitoring and overseeing the delivery of mentoring services under the demonstration project, which shall include a requirement to ensure that providers of mentoring services under the project report data on the children served and the types of mentoring services provided.
(E)

Records, reports, and audits.—
To maintain any records, make any reports, and cooperate with any reviews and audits that the Secretary determines are necessary to oversee the activities of the entity in carrying out the demonstration project under this subsection.
(F)

Evaluations.—
To cooperate fully with any evaluations of the demonstration project, including collecting and monitoring data and providing the Secretary or the Secretary's designee with access to records and staff related to the conduct of the project.
(G)

Limitation on administrative expenditures.—
To ensure that administrative expenditures incurred by the entity in conducting the demonstration project with respect to a fiscal year do not exceed the amount equal to 10 percent of the amount awarded to carry out the project for that year.
(5)

Voucher requirements.—
A voucher for mentoring services provided to the family of a child identified in accordance with paragraph (1)(A) shall meet the following requirements:
(A)

Total payment amount; 12-month service period.—
The voucher shall specify the total amount to be paid a provider of mentoring services for providing the child on whose behalf the voucher is issued with mentoring services for a 12-month period.
(B)

Periodic payments as services provided.—
(i)

In general.—
The voucher shall specify that it may be redeemed with the eligible entity by the provider accepting the voucher in return for agreeing to provide mentoring services for the child on whose behalf the voucher is issued.
(ii)

Demonstration of the provision of services.—
A provider that redeems a voucher issued by the eligible entity shall receive periodic payments from the eligible entity during the 12-month period that the voucher is in effect upon demonstration of the provision of significant services and activities related to the provision of mentoring services to the child on whose behalf the voucher is issued.
(6)

Provider requirements.—
In order to participate in the demonstration project, a provider of mentoring services shall—
(A)
meet the quality standards identified by the eligible entity in accordance with paragraph (1);
(B)
agree to accept a voucher meeting the requirements of paragraph (5) as payment for the provision of mentoring services to a child on whose behalf the voucher is issued;
(C)
demonstrate that the provider has the capacity, and has or will have nonfederal resources, to continue supporting the provision of mentoring services to the child on whose behalf the voucher is issued, as appropriate, after the conclusion of the 12-month period during which the voucher is in effect; and
(D)
if the provider is a recipient of a grant under this section, demonstrate that the provider has exhausted its capacity for providing mentoring services under the grant.
(7)

3-year period; option for renewal.—
(A)

In general.—
A cooperative agreement awarded under this subsection shall be effective for a 3-year period.
(B)

Renewal.—
The cooperative agreement may be renewed for an additional period, not to exceed 2 years and subject to any conditions that the Secretary may specify that are not inconsistent with the requirements of this subsection or subsection (i)(2)(B), if the Secretary determines that the entity has satisfied the requirements of the agreement and evaluations of the service delivery demonstration project demonstrate that the voucher service delivery method is effective in providing mentoring services to children of prisoners.
(8)

Independent evaluation and report.—
(A)

In general.—
The Secretary shall enter into a contract with an independent, private organization to evaluate and prepare a report on the first 2 fiscal years in which the demonstration project is conducted under this subsection.
(B)

Deadline for report.—
Not later than 90 days after the end of the second fiscal year in which the demonstration project is conducted under this subsection, the Secretary shall submit the report required under subparagraph (A) to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate. The report shall include—
(i)
the number of children as of the end of such second fiscal year who received vouchers for mentoring services; and
(ii)
any conclusions regarding the use of vouchers for the delivery of mentoring services for children of prisoners.
(9)

No effect on eligibility for other federal assistance.—
A voucher provided to a family under the demonstration project conducted under this subsection shall be disregarded for purposes of determining the eligibility for, or the amount of, any other Federal or federally-supported assistance for the family.
(h)

Independent Evaluation; Reports.—
(1)

Independent evaluation.—
The Secretary shall conduct by grant, contract, or cooperative agreement an independent evaluation of the programs authorized under this section, including the service delivery demonstration project authorized under subsection (g).
(2)

Reports.—
Not later than 12 months after the date of enactment of this subsection, the Secretary shall submit a report to the Congress that includes the following:
(A)
The characteristics of the mentoring programs funded under this section.
(B)
The plan for implementation of the service delivery demonstration project authorized under subsection (g).
(C)
A description of the outcome-based evaluation of the programs authorized under this section that the Secretary is conducting as of that date of enactment and how the evaluation has been expanded to include an evaluation of the demonstration project authorized under subsection (g).
(D)
The date on which the Secretary shall submit a final report on the evaluation to the Congress.
(i)

Authorization of Appropriations; Reservations of Certain Amounts.—
(1)

Limitations on authorization of appropriations.—
To carry out this section, there are authorized to be appropriated to the Secretary such sums as may be necessary for fiscal years 2007 through 2011.
(2)

Reservations.—
(A)

Research, technical assistance, and evaluation.—
The Secretary shall reserve 4 percent of the amount appropriated for each fiscal year under paragraph (1) for expenditure by the Secretary for research, technical assistance, and evaluation related to programs under this section.
(B)

Service delivery demonstration project.—
(i)

In general.—
Subject to clause (ii), for purposes of awarding a cooperative agreement to conduct the service delivery demonstration project authorized under subsection (g), the Secretary shall reserve not more than—
(I)
$5,000,000 of the amount appropriated under paragraph (1) for the first fiscal year in which funds are to be awarded for the agreement;
(II)
$10,000,000 of the amount appropriated under paragraph (1) for the second fiscal year in which funds are to be awarded for the agreement; and
(III)
$15,000,000 of the amount appropriated under paragraph (1) for the third fiscal year in which funds are to be awarded for the agreement.
(ii)

Assurance of funding for general program grants.—
With respect to any fiscal year, no funds may be awarded for a cooperative agreement under subsection (g), unless at least $25,000,000 of the amount appropriated under paragraph (1) for that fiscal year is used by the Secretary for making grants under this section for that fiscal year.
Subpart 3—

Common Provisions
SEC. 440.
[42 U.S.C. 629m]

DATA EXCHANGE STANDARDS FOR IMPROVED INTEROPERABILITY.
(a)

Designation.—
The Secretary shall, in consultation with an interagency work group established by the Office of Management and Budget and considering State government perspectives, by rule, designate data exchange standards to govern, under this part and part E—
(1)
necessary categories of information that State agencies operating programs under State plans approved under this part are required under applicable Federal law to electronically exchange with another State agency; and
(2)
Federal reporting and data exchange required under applicable Federal law.
(b)

Requirements.—
The data exchange standards required by paragraph (1) shall, to the extent practicable—
(1)
incorporate a widely accepted, non-proprietary, searchable, computer-readable format, such as the Extensible Markup Language;
(2)
contain interoperable standards developed and maintained by intergovernmental partnerships, such as the National Information Exchange Model;
(3)
incorporate interoperable standards developed and maintained by Federal entities with authority over contracting and financial assistance;
(4)
be consistent with and implement applicable accounting principles;
(5)
be implemented in a manner that is cost-effective and improves program efficiency and effectiveness; and
(6)
be capable of being continually upgraded as necessary.
(c)

Rule of Construction.—
Nothing in this subsection shall be construed to require a change to existing data exchange standards found to be effective and efficient.
[Effective on October 1, 2025, title I of Public Law 118–258 provides for amendments to various provisions of part B. For the effective date and applicability, see section 117(a) of such Public Law. Upon such date, part B (as so amended) will read as follows:]
PART B—

CHILD AND FAMILY SERVICES
Subpart 1—

Stephanie Tubbs Jones Child Welfare Services Program

purpose
Sec. 421.
[42 U.S.C. 621]
The purpose of this subpart is to promote State flexibility in the development and expansion of a coordinated child and family services program that utilizes community-based agencies and ensures all children are raised in safe, loving families, by—
(1)
protecting and promoting the welfare of all children;
(2)
preventing the neglect, abuse, or exploitation of children;
(3)
supporting at-risk families through services which allow children, where appropriate, to remain safely with their families or return to their families in a timely manner;
(4)
promoting the safety, permanence, and well-being of children in foster care and adoptive families; and
(5)
providing training, professional development and support to ensure a well-qualified child welfare workforce.

state plans for child welfare services
Sec. 422.
[42 U.S.C. 622]
(a)
In order to be eligible for payment under this subpart, a State must have a plan for child welfare services which has been developed jointly by the Secretary and the State agency designated pursuant to subsection (b)(1), and which meets the requirements of subsection (b).
(b)
Each plan for child welfare services under this subpart shall—
(1)
provide that a State agency will administer or supervise the administration of the plan under this subpart;
(2)
provide for coordination between the services provided for children under the plan and the services and assistance provided under subtitle 1 of title XX 24, under the State program funded under part A, under the State plan approved under subpart 2 of this part, under the State plan approved under the State plan approved under part E, and under other State programs having a relationship to the program under this subpart, with a view to provision of welfare and related services which will best promote the welfare of such children and their families;
^{24}
So in law. The reference to subtitle 1 in paragraphs (1) and (2) probably should be to subtitle A.
(3)
include a description of the services and activities which the State will fund under the State program carried out pursuant to this subpart, and how the services and activities will achieve the purpose of this subpart;
(4)
contain a description of—
(A)
the steps the State will take to provide child welfare services statewide and to expand and strengthen the range of existing services and develop and implement services to improve child outcomes;
(B)
the child welfare services staff development and training plans of the State; and
(C)
the steps that the State will take to ensure that, with respect to any judicial proceeding involving a child and in which there is an allegation of child abuse or neglect, including a proceeding on dependency, adoption, guardianship, or termination of parental rights, information about available independent legal representation is provided to—
(i)
the child, as appropriate; and
(ii)
any individual who is a parent or guardian, or has legal custody, of the child;
(5)
provide, in the development of services for children, for utilization of the facilities and experience of voluntary agencies in accordance with State and local programs and arrangements, as authorized by the State;
(6)
provide that the agency administering or supervising the administration of the plan will furnish such reports, containing such information, and participate in such evaluations, as the Secretary may require;
(7)
provide for the diligent recruitment of potential foster and adoptive families that reflect the ethnic and racial diversity of children in the State for whom foster and adoptive homes are needed;
(8)
provide assurances that the State—
(A)
is operating, to the satisfaction of the Secretary—
(i)
a statewide information system from which can be readily determined the status, demographic characteristics, location, and goals for the placement of every child who is (or, within the immediately preceding 12 months, has been) in foster care;
(ii)
a case review system (as defined in section 475(5) and in accordance with the requirements of section 475A) for each child receiving foster care under the supervision of the State;
(iii)
a service program designed to help children—
(I)
where safe and appropriate, return to families from which they have been removed; or
(II)
be placed for adoption, with a legal guardian, or if adoption or legal guardianship is determined not to be appropriate for a child, in some other planned, permanent living arrangement, subject to the requirements of sections 475(5)(C) and 475A(a), which may include a residential educational program; and
(iv)
a preplacement preventive services program designed to help children at risk of foster care placement remain safely with their families; and
(B)
has in effect policies and administrative and judicial procedures for children abandoned at or shortly after birth (including policies and procedures providing for legal representation of the children) which enable permanent decisions to be made expeditiously with respect to the placement of the children;
(9)
contain a description, developed after consultation with tribal organizations (as defined in section 4 of the Indian Self-Determination and Education Assistance Act) in the State, of the specific measures taken by the State to comply with the Indian Child Welfare Act of 1978, including how the State will ensure timely notice to Indian tribes of State custody proceedings involving Indian children, foster care or adoptive placements of Indian children, and case recordkeeping as such matters relate to transfers of jurisdiction, termination of parental rights, and active efforts;
(10)
contain assurances that the State shall make effective use of cross-jurisdictional resources (including through contracts for the purchase of services), and shall eliminate legal barriers, to facilitate timely adoptive or permanent placements for waiting children;
(11)
contain a description of the activities that the State has undertaken for children adopted from other countries, including the provision of adoption and post-adoption services;
(12)
provide that the State shall collect and report information on children who are adopted from other countries and who enter into State custody as a result of the disruption of a placement for adoption or the dissolution of an adoption, including the number of children, the agencies who handled the placement or adoption, the plans for the child, and the reasons for the disruption or dissolution;
(13)
demonstrate substantial, ongoing, and meaningful collaboration with State courts in the development and implementation of the State plan under subpart 1, the State plan approved under subpart 2, and the State plan approved under part E, and in the development and implementation of any program improvement plan required under section 1123A;
(14)
not later than October 1, 2007, include assurances that not more than 10 percent of the expenditures of the State with respect to activities funded from amounts provided under this subpart will be for administrative costs;
(15)
(A)
provides 25 that the State will develop, in coordination and collaboration with the State agency referred to in paragraph (1) and the State agency responsible for administering the State plan approved under title XIX, and, if applicable, the State agency responsible for mental health services, and in consultation with pediatricians, mental health providers, other experts in health care, and experts in and recipients of child welfare services, a plan for the ongoing oversight and coordination of health care services for any child in a foster care placement, which shall ensure a coordinated strategy to identify and respond to the health care needs of children in foster care placements, including mental health and dental health needs, and shall include an outline of—
^{25}
So in law. The word “provides” in paragraph (15)(A) probably should read “provide”.
(i)
a schedule for initial and follow-up health screenings that meet reasonable standards of medical practice;
(ii)
how health needs identified through screenings will be monitored and treated, including a list of services provided to support the physical and emotional trauma associated with a child's maltreatment and removal from home;
(iii)
how medical information for children in care will be updated and appropriately shared, which may include the development and implementation of an electronic health record;
(iv)
steps to ensure continuity of health care and mental health services, which may include the establishment of a medical home for every child in care;
(v)
the oversight of prescription medicines, including protocols for the appropriate use and monitoring of psychotropic medications, informed consent of youth, and compliance with professional practice guidelines;
(vi)
how the State actively consults with and involves physicians , licensed mental health providers, or other appropriate medical or non-medical professionals in assessing the health and well-being of children in foster care and in determining appropriate medical treatment for the children;
(vii)
the procedures and protocols the State has established to ensure that children in foster care placements are not inappropriately diagnosed with mental illness, other emotional or behavioral disorders, medically fragile conditions, or developmental disabilities, and placed in settings that are not foster family homes as a result of the inappropriate diagnoses; and
(viii)
steps to ensure that the components of the transition plan development process required under section 475(5)(H) that relate to the health care needs of children aging out of foster care, including the requirements to include options for health insurance, information about a health care power of attorney, health care proxy, or other similar document recognized under State law, and to provide the child with the option to execute such a document, are met; and
(B)
subparagraph (A) shall not be construed to reduce or limit the responsibility of the State agency responsible for administering the State plan approved under title XIX to administer and provide care and services for children with respect to whom services are provided under the State plan developed pursuant to this subpart;
(16)
provide that, not later than 1 year after the date of the enactment of this paragraph, the State shall have in place procedures providing for how the State programs assisted under this subpart, subpart 2 of this part, or part E would respond to a disaster, in accordance with criteria established by the Secretary which should include how a State would—
(A)
identify, locate, and continue availability of services for children under State care or supervision who are displaced or adversely affected by a disaster;
(B)
respond, as appropriate, to new child welfare cases in areas adversely affected by a disaster, and provide services in those cases;
(C)
remain in communication with caseworkers and other essential child welfare personnel who are displaced because of a disaster;
(D)
preserve essential program records; and
(E)
coordinate services and share information with other States;
(17)
not later than October 1, 2007, describe the State standards for the content and frequency of caseworker visits for children who are in foster care under the responsibility of the State, which, at a minimum, ensure that the children are visited on a monthly basis and that the caseworker visits are well-planned and focused on issues pertinent to case planning and service delivery to ensure the safety, permanency, and well-being of the children, and include a description of how the State may offer virtual caseworker visits to youth in care who have attained the age of 18 years and provided informed consent for virtual visits;
(18)
include a description of the activities that the State has undertaken to reduce the length of time children who have not attained 5 years of age are without a permanent family, and the activities the State undertakes to address the developmental needs of all vulnerable children under 5 years of age who receive benefits or services under this part or part E; and
(19)
document steps taken to track and prevent child maltreatment deaths by including—
(A)
a description of the steps the State is taking to compile complete and accurate information on the deaths required by Federal law to be reported by the State agency referred to in paragraph (1), including gathering relevant information on the deaths from the relevant organizations in the State including entities such as State vital statistics department, child death review teams, law enforcement agencies, offices of medical examiners, or coroners; and
(B)
a description of the steps the State is taking to develop and implement a comprehensive, statewide plan to prevent the fatalities that involves and engages relevant public and private agency partners, including those in public health, law enforcement, and the courts.
(c)

Definitions.—
In this subpart:
(1)

Administrative costs.—
The term “administrative costs” means costs for the following, but only to the extent incurred in administering the State plan developed pursuant to this subpart: procurement, payroll management, personnel functions (other than the portion of the salaries of supervisors attributable to time spent directly supervising the provision of services by caseworkers), management, maintenance and operation of space and property, data processing and computer services, accounting, budgeting, auditing, and travel expenses (except those related to the provision of services by caseworkers or the oversight of programs funded under this subpart).
(2)

Other terms.—
For definitions of other terms used in this part, see section 475.

ALLOTMENTS TO STATES
Sec. 423.
[42 U.S.C. 623]
(a)

In General.—
(1)

In general.—
Subject to paragraph (2), for each fiscal year, the sum appropriated pursuant to section 425 remaining after applying section 428(a) shall be allotted by the Secretary for use by cooperating State public welfare agencies which have plans developed jointly by the State agency and the Secretary as follows: The Secretary shall first allot $70,000 to each State, and shall then allot to each State an amount which bears the same ratio to the remainder of such sum as the product of (1) the population of the State under the age of twenty-one and (2) the allotment percentage of the State (as determined under this section) bears to the sum of the corresponding products of all the States.
(2)

Grants to states to enhance collaboration between state child welfare and juvenile justice systems.—
For each fiscal year beginning with fiscal year 2023 for which the amount appropriated under section 425 for the fiscal year exceeds $270,000,000—
(A)
the Secretary shall reserve from such excess amount such sums as are necessary for making grants under section 429A for such fiscal year, not to exceed $10,000,000; and
(B)
the remainder to be applied under paragraph (1) for purposes of making allotments to States for such fiscal year shall be determined after the Secretary first allots $70,000 to each State under such paragraph and reserves such sums under subparagraph (A) of this paragraph.
(b)

Determination of State Allotment Percentages.—
The “allotment percentage” for any State shall be 100 per percent less the State percentage; and the State percentage shall be the percentage which bears the same ratio to 50 per percent as the per capita income of such State bears to the per capita income of the United States; except that (1) the allotment percentage shall in no case be less than 30 per percent or more than 70 per percent, and (2) the allotment percentage shall be 70 per percent in the case of Puerto Rico, the Virgin Islands, Guam, and American Samoa.
(c)

Promulgation of State Allotment Percentages.—
The allotment percentage for each State shall be promulgated by the Secretary between October 1 and November 30 of each even-numbered year, on the basis of the average per capita income of each State and of the United States for the three most recent calendar years for which satisfactory data are available from the Department of Commerce. Such promulgation shall be conclusive for each of the two fiscal years in the period beginning October 1 next succeeding such promulgation.
(d)

United States Defined.—
For purposes of this section, the term “United States” means the 50 States and the District of Columbia.
(e)

Reallotment of Funds.—
(1)

In general.—
The amount of any allotment to a State for a fiscal year under the preceding provisions of this section which the State certifies to the Secretary will not be required for carrying out the State plan developed as provided in section 422 shall be available for reallotment from time to time, on such dates as the Secretary may fix, to other States which the Secretary determines—
(A)
need sums in excess of the amounts allotted to such other States under the preceding provisions of this section, in carrying out their State plans so developed; and
(B)
will be able to so use such excess sums during the fiscal year.
(2)

Considerations.—
The Secretary shall make the reallotments on the basis of the State plans so developed, after taking into consideration—
(A)
the population under 21 years of age;
(B)
the per capita income of each of such other States as compared with the population under 21 years of age; and
(C)
the per capita income of all such other States with respect to which such a determination by the Secretary has been made.
(3)

Amounts reallotted to a state deemed part of state allotment.—
Any amount so reallotted to a State is deemed part of the allotment of the State under this section.

PAYMENT TO STATES
Sec. 424.
[42 U.S.C. 624]
(a)
From the sums appropriated therefor and the allotment under this subpart, subject to the conditions set forth in this section, the Secretary shall from time to time pay to each State that has a plan developed in accordance with section 422 an amount equal to 75 percent of the total sum expended under the plan (including the cost of administration of the plan) in meeting the costs of State, district, county, or other local child welfare services.
(b)
The method of computing and making payments under this section shall be as follows:
(1)
The Secretary shall, prior to the beginning of each period for which a payment is to be made, estimate the amount to be paid to the State for such period under the provisions of this section.
(2)
From the allotment available therefor, the Secretary shall pay the amount so estimated, reduced or increased, as the case may be, by any sum (not previously adjusted under this section) by which he finds that his estimate of the amount to be paid the State for any prior period under this section was greater or less than the amount which should have been paid to the State for such prior period under this section.
(c)

Limitation on Use of Federal Funds for Child Care, Foster Care Maintenance Payments, or Adoption Assistance Payments.—
The total amount of Federal payments under this subpart for a fiscal year beginning after September 30, 2007, that may be used by a State for expenditures for child care, foster care maintenance payments, or adoption assistance payments shall not exceed the total amount of such payments for fiscal year 2005 that were so used by the State.
(d)

Limitation on Use by States of Non-Federal Funds for Foster Care Maintenance Payments To Match Federal Funds.—
For any fiscal year beginning after September 30, 2007, State expenditures of non-Federal funds for foster care maintenance payments shall not be considered to be expenditures under the State plan developed under this subpart for the fiscal year to the extent that the total of such expenditures for the fiscal year exceeds the total of such expenditures under the State plan developed under this subpart for fiscal year 2005.
(e)

Limitation on Reimbursement for Administrative Costs.—
A payment may not be made to a State under this section with respect to expenditures during a fiscal year for administrative costs, to the extent that the total amount of the expenditures exceeds 10 percent of the total expenditures of the State during the fiscal year for activities funded from amounts provided under this subpart.
(f)
Each State shall take such steps as are necessary to ensure that the total number of visits made by caseworkers on a monthly basis to children in foster care under the responsibility of the State during a fiscal year is not less than 90 percent (or, in the case of fiscal year 2015 or thereafter, 95 percent) of the total number of such visits that would occur during the fiscal year if each such child were so visited once every month while in such care.

LIMITATIONS ON AUTHORIZATION OF APPROPRIATIONS
Sec. 425.
[42 U.S.C. 625]
To carry out this subpart (other than sections 426, 427, and 429), there are authorized to be appropriated to the Secretary not more than $325,000,000 for each of fiscal years 2025 through 2029.

RESEARCH, TRAINING, OR DEMONSTRATION PROJECTS
Sec. 426.
[42 U.S.C. 626]
(a)
There are hereby authorized to be appropriated for each fiscal year such sums as the Congress may determine—
(1)
for grants by the Secretary—
(A)
to public or other nonprofit institutions of higher learning, and to public or other nonprofit agencies and organizations engaged in research or child-welfare activities, for special research or demonstration projects in the field of child welfare which are of regional or national significance and for special projects for the demonstration of new methods or facilities which show promise of substantial contribution to the advancement of child welfare;
(B)
to State or local public agencies responsible for administering, or supervising the administration of, the plan under this part, for projects for the demonstration of the utilization of research (including findings resulting therefrom) in the field of child welfare in order to encourage experimental and special types of welfare services; and
(C)
to public or other nonprofit institutions of higher learning for special projects for training personnel for work in the field of child welfare, including traineeships described in section 429 with such stipends and allowances as may be permitted by the Secretary; and
(2)
for contracts or jointly financed cooperative arrangements with States and public and other organizations and agencies for the conduct of research, special projects, or demonstration projects relating to such matters.
(b)
Payments of grants or under contracts or cooperative arrangements under this section may be made in advance or by way of reimbursement, and in such installments, as the Secretary may determine; and shall be made on such conditions as the Secretary finds necessary to carry out the purposes of the grants, contracts, or other arrangements.
(c)

Child Welfare Traineeships.—
The Secretary may approve an application for a grant to a public or nonprofit institution for higher learning to provide traineeships with stipends under section 426(a)(1)(C) only if the application—
(1)
provides assurances that each individual who receives a stipend with such traineeship (in this section referred to as a “recipient”) agrees—
(A)
to participate in training at a public or private nonprofit child welfare agency on a regular basis (as determined by the Secretary) for the period of the traineeship;
(B)
to be employed for a period of years equivalent to the period of the traineeship, in a public or private nonprofit child welfare agency in any State, within a period of time (determined by the Secretary in accordance with regulations) after completing the postsecondary education for which the traineeship was awarded;
(C)
to furnish to the institution and the Secretary evidence of compliance with subparagraphs (A) and (B); and
(D)
if the recipient fails to comply with subparagraph (A) or (B) and does not qualify for any exception to this subparagraph which the Secretary may prescribe in regulations, to repay to the Secretary all (or an appropriately prorated part) of the amount of the stipend, plus interest, and, if applicable, reasonable collection fees (in accordance with regulations promulgated by the Secretary);
(2)
provides assurances that the institution will—
(A)
enter into agreements with child welfare agencies for onsite training of recipients;
(B)
permit an individual who is employed in the field of child welfare services to apply for a traineeship with a stipend if the traineeship furthers the progress of the individual toward the completion of degree requirements; and
(C)
develop and implement a system that, for the 3-year period that begins on the date any recipient completes a child welfare services program of study, tracks the employment record of the recipient, for the purpose of determining the percentage of recipients who secure employment in the field of child welfare services and remain employed in the field.
SEC. 427.
[42 U.S.C. 627]

KINSHIP NAVIGATORS.
(a)

In General.—
The Secretary of Health and Human Services may make matching grants to State, local, or tribal child welfare agencies, private nonprofit organizations that have experience in working with foster children or children in kinship care arrangements, and institutions of higher education (as defined under section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001)), for the purpose of administering programs to help children who are in, or at risk of entering, foster care reconnect with family members through the implementation of a kinship navigator program to assist kinship caregivers in learning about, finding, and using programs and services to meet the needs of the children they are raising and their own needs, and to promote effective partnerships among public and private agencies to ensure kinship caregiver families are served, which program—
(1)
shall be coordinated with other State or local agencies that promote service coordination or provide information and referral services, including the entities that provide 2–1–1 or 3–1–1 information systems where available, to avoid duplication or fragmentation of services to kinship care families;
(2)
shall be planned and operated in consultation with kinship caregivers and organizations representing them, youth raised by kinship caregivers, relevant government agencies, and relevant community-based or faith-based organizations;
(3)
shall establish information and referral systems that link (via toll-free access) kinship caregivers, kinship support group facilitators, and kinship service providers to—
(A)
each other;
(B)
eligibility and enrollment information for Federal, State, and local benefits;
(C)
relevant training to assist kinship caregivers in caregiving and in obtaining benefits and services;
(D)
relevant legal assistance and help in obtaining legal services; and
(E)
connections to individualized assistance, as needed;
(4)
shall provide outreach to kinship care families, including by establishing, distributing, and updating a kinship care website, or other relevant guides or outreach materials;
(5)
shall promote partnerships between public and private agencies, including schools, community based or faith-based organizations, and relevant government agencies, to increase their knowledge of the needs of kinship care families and other individuals who are willing and able to be foster parents for children in foster care under the responsibility of the State who are themselves parents to promote better services for those families;
(6)
may establish and support a kinship care ombudsman with authority to intervene and help kinship caregivers access services; and
(7)
may support any other activities designed to assist kinship caregivers in obtaining benefits and services to improve their caregiving.
(b)

Applications.—
An entity desiring to receive a matching grant under this section shall submit to the Secretary an application, at such time, in such manner, and containing such information as the Secretary may require, including—
(1)
a description of how the grant will be used to implement the activities described in subsection (a);
(2)
a description of the types of children and families to be served, including how the children and families will be identified and recruited, and an initial projection of the number of children and families to be served;
(3)
a description of how the entity will directly fund, or provide data to the Secretary for, an evaluation which will publish and submit information to the clearinghouse described in section 476(d)(2) and which is designed to meet the requirements of section 471(e)(4)(C), or a description of how the funds will be used to help the State transition to a program for which the State will seek reimbursement under section 474(a)(7);
(4)
if the entity is a private organization—
(A)
documentation of support from the relevant local or State child welfare agency; or
(B)
a description of how the organization plans to coordinate its services and activities with those offered by the relevant local or State child welfare agency;
(5)
an assurance that the entity will cooperate fully with any evaluation provided for by the Secretary under this section; and
(6)
if the entity is a State, local or tribal child welfare agency—
(A)
documentation of support from a relevant community-based organization with experience serving kinship families when applicable; or
(B)
a description of how the organization plans to coordinate its services and activities with those offered by the relevant community-based organizations.
(c)

Limitations.—
(1)

Grant duration.—
The Secretary may award a grant under this section for a period of not less than 1 year and not more than 3 years.
(2)

Number of new grantees per year.—
The Secretary may not award a grant under this section to more than 30 new grantees each fiscal year.
(d)

Federal Share.—
An entity to which a grant is made under this section may use the grant to pay not more than 75 percent of the cost of the activities to be carried out by the entity pursuant to this section.
(e)

Form of Grantee Contribution.—
A grantee under this section may provide not more than 50 percent of the amount which the grantee is required to expend to carry out the activities for which a grant is awarded under this section in kind, fairly evaluated, including plant, equipment, or services.
(f)

Use of Grant.—
A grantee under this section shall use the grant in accordance with the approved application for the grant.
(g)

Reservation of Funds for Technical Assistance.—
The Secretary may reserve 2 percent of the funds made available under section 437(b)(6) for each fiscal year to provide technical assistance to recipients of grants under this section.

payments to indian tribal organizations
Sec. 428.
[42 U.S.C. 628]
(a)

Reservation of Funds; Direct Payments.—
Out of any amount appropriated pursuant to section 425 for a fiscal year, the Secretary shall reserve 3 percent for grants to Indian tribes and tribal organizations, which shall be paid directly to Indian tribes and tribal organizations with a plan approved under this subpart, in accordance with section 433(a).
(b)

Authority to Streamline Reporting Requirements.—
The Secretary shall, in consultation with the affected Indian tribes, modify any reporting requirement imposed by or under this part on an Indian tribe, tribal organization, or tribal consortium if the total of the amounts allotted to the Indian tribe, tribal organization, or tribal consortium under this part for the fiscal year is not more than $50,000, and in a manner that limits the administrative burden on any tribe to which not more than $50,000 is allotted under this subpart for the fiscal year.
(c)

Tribal Authority to Substitute the Federal Negotiated Indirect Cost Rate for Administrative Costs Cap.—
For purposes of sections 422(b)(14) and 424(e), an Indian tribal organization may elect to have the weighted average of the indirect cost rates in effect under part 220 of title 2, Code of Federal Regulations with respect to the administrative costs of the Indian tribal organization apply in lieu of the percentage specified in each such section.
(d)
For purposes of this section, the terms “Indian tribe” and “tribal organization” shall have the meanings given such terms by subsections (e) and (l) of section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304), respectively.
SEC. 429.
[42 U.S.C. 628b]

NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE.
(a)

In General.—
The Secretary shall conduct (directly, or by grant, contract, or interagency agreement) a national study based on random samples of children who are at risk of child abuse or neglect, or are determined by States to have been abused or neglected.
(b)

Requirements.—
The study required by subsection (a) shall—
(1)
have a longitudinal component; and
(2)
yield data reliable at the State level for as many States as the Secretary determines is feasible.
(c)

Preferred Contents.—
In conducting the study required by subsection (a), the Secretary should—
(1)
carefully consider selecting the sample from cases of confirmed abuse or neglect; and
(2)
follow each case for several years while obtaining information on, among other things—
(A)
the type of abuse or neglect involved;
(B)
the frequency of contact with State or local agencies;
(C)
whether the child involved has been separated from the family, and, if so, under what circumstances;
(D)
the number, type, and characteristics of out-of-home placements of the child; and
(E)
the average duration of each placement.
(d)

Reports.—
(1)

In general.—
From time to time, the Secretary shall prepare reports summarizing the results of the study required by subsection (a).
(2)

Availability.—
The Secretary shall make available to the public any report prepared under paragraph (1), in writing or in the form of an electronic data tape.
(3)

Authority to charge fee.—
The Secretary may charge and collect a fee for the furnishing of reports under para-graph (2).
(e)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to the Secretary for each of fiscal years 1996 through 2002 $6,000,000 to carry out this section.
SEC. 429A.
[42 U.S.C. 628c]

GRANTS TO STATES TO ENHANCE COLLABORATION BETWEEN STATE CHILD WELFARE AND JUVENILE JUSTICE SYSTEMS.
(a)

Purpose.—
The purpose of this section is to authorize the Secretary, in collaboration with the Attorney General and the Administrator of the Office of Juvenile Justice and Delinquency Prevention of the Department of Justice—
(1)
to make grants to State child welfare and juvenile justice agencies and child- and youth-serving agencies to collaborate in the collection of data relating to dual status youth; and
(2)
to develop practices, policies, and protocols—
(A)
to confront the challenges presented and experienced by dual status youth; and
(B)
for the development of interoperable data systems.
(b)

Authority to Award Grants.—
(1)

In general.—
Subject to the availability of appropriations, from amounts reserved under section 423(a)(2) for a fiscal year, the Secretary shall award competitive grants jointly to a State child welfare agency and a State juvenile justice agency to facilitate or enhance collaboration between the child welfare and juvenile justice systems of the State in order to carry out programs to address the needs of dual status youth and their families.
(2)

Length of grants.—
(A)

In general.—
Subject to subparagraph (B), a grant shall be awarded under this section for a period of not less than 2 fiscal years and not more than 5 fiscal years.
(B)

Extension of grant.—
Upon the application of the grantee, the Secretary may extend the period for which a grant is awarded under this section for not more than 2 fiscal years.
(c)

Additional Requirements.—
(1)

Application.—
In order for a State to be eligible for a grant under this section, the State shall submit an application, subject to the approval of the Secretary, that includes—
(A)
a description of the proposed leadership collaboration group (including the membership of such group), and how such group will manage and oversee a review and analysis of current practices while working to jointly address enhanced practices to improve outcomes for dual status youth;
(B)
a description of how the State proposes—
(i)
to identify dual status youth;
(ii)
to identify individuals who are at risk of becoming dual status youth;
(iii)
to identify common characteristics shared by dual status youth in the State; and
(iv)
to determine the prevalence of dual status youth in the State;
(C)
a description of current and proposed practices and procedures that the State intends to use—
(i)
to screen and assess dual status youth for risks and treatment needs;
(ii)
to provide targeted and evidence-based services, including educational, behavioral health, and pro-social treatment interventions for dual status youth and their families; and
(iii)
to provide for a lawful process to enhance or ensure the abilities of the State and any relevant agencies to share information and data about dual status youth, while maintaining confidentiality and privacy protections under Federal and State law; and
(D)
a certification that the State has involved local governments, as appropriate, in the development, expansion, modification, operation, or improvement of proposed policy and practice reforms to address the needs of dual status youth.
(2)

No supplantation of other funds.—
Any amounts paid to a State under a grant under this section shall be used to supplement and not supplant other State expenditures on dual status youths or children involved with either the child welfare or juvenile justice systems.
(3)

Evaluation.—
Up to 10 percent of the amount made available to carry out this section for a fiscal year shall be made available to the Secretary to evaluate the effectiveness of the projects funded under this section, using a methodology that—
(A)
includes random assignment whenever feasible, or other research methods that allow for the strongest possible causal inferences when random assignment is not feasible; and
(B)
generates evidence on the impact of specific projects, or groups of projects with identical (or similar) practices and procedures.
(4)

Report.—
A State child welfare agency and a State juvenile justice agency receiving a grant under this section shall jointly submit to the Secretary, the Attorney General, and the Administrator of the Office of Juvenile Justice and Delinquency Prevention of the Department of Justice, a report on the evaluation of the activities carried out under the grant at the end of each fiscal year during the period of the grant. Such report shall include—
(A)
a description of the scope and nature of the dual status youth population in the State, including the number of dual status youth;
(B)
a description of the evidence-based practices and procedures used by the agencies to carry out the activities described in clauses (i) through (iii) of paragraph (1)(C); and
(C)
an analysis of the effects of such practices and procedures, including information regarding—
(i)
the collection of data related to individual dual status youths;
(ii)
aggregate data related to the dual status youth population, including—
(I)
characteristics of dual status youths in the State;
(II)
case processing timelines; and
(III)
information related to case management, the provision of targeted services, and placements within the foster care or juvenile justice system; and
(iii)
the extent to which such practices and procedures have contributed to—
(I)
improved educational outcomes for dual status youths;
(II)
fewer delinquency referrals for dual status youths;
(III)
shorter stays in intensive restrictive placements for dual status youths; or
(IV)
such other outcomes for dual status youths as the State child welfare agency and State juvenile justice agency may identify.
(d)

Training and Technical Assistance.—
The Secretary may support State child welfare agencies and State juvenile justice agencies by offering a program, developed in consultation with organizations and agencies with subject matter expertise, of training and technical assistance to assist such agencies in developing programs and protocols that draw on best practices for serving dual status youth in order to facilitate or enhance—
(1)
collaboration between State child welfare agencies and State juvenile justice agencies; and
(2)
the effectiveness of such agencies with respect to working with Federal agencies and child welfare and juvenile justice agencies from other States.
(e)

Report.—
Not later than 3 years after the date of enactment of this section, and every 3 years thereafter, the Secretary, the Attorney General, and the Administrator of the Office of Juvenile Justice and Delinquency Prevention of the Department of Justice shall jointly submit to the Committee on Finance and the Committee on the Judiciary of the Senate and the Committee on Ways and Means and the Committee on Education and Labor of the House of Representatives, a report on the grants provided under this section.
(f)

Definitions.—
In this section:
(1)

Dual status youth.—
The term “dual status youth” means a child who has come into contact with both the child welfare and juvenile justice systems and occupies various statuses in terms of the individual’s relationship to such systems.
(2)

Leadership collaboration group.—
The term “leadership collaboration group” means a group composed of senior officials from the State child welfare agency, the State juvenile justice agency, and other relevant youth and family-serving public agencies and private organizations, including, to the extent practicable, representatives from the State judiciary branch.
(3)

State juvenile justice agency.—
The term “State juvenile justice agency” means the agency of the State or Indian tribe responsible for administering grant funds awarded under the Juvenile Justice and Delinquency Prevention Act of 1974 (34 U.S.C. 11101 et seq.).
(4)

State child welfare agency.—
The term “State child welfare agency” means the State agency responsible for administering the program under this subpart, or, in the case of a tribal organization that is receiving payments under section 428, the tribal agency responsible for administering such program.
SEC. 429B.
[42 U.S.C. 628d]

EFFECTIVE IMPLEMENTATION OF THE INDIAN CHILD WELFARE ACT OF 1978.
(a)

In General.—
Not later than October 1, 2025, the Secretary, in consultation with Indian tribal organizations and States, shall develop a plan and provide technical assistance supporting effective implementation of the Indian Child Welfare Act of 1978, including specific measures identified in State plans as required by section 422(b)(9) of this Act. The technical assistance plan shall be based on data sufficient to assess State strengths and areas for improvement in implementing Federal standards established under the Indian Child Welfare Act of 1978, including, at a minimum, the following:
(1)
Timely identification of Indian children and extended family members.
(2)
Timely tribal notice of State child custody proceedings involving an Indian child.
(3)
Reports of cases in which a transfer of jurisdiction (as defined under the Indian Child Welfare Act of 1978) was granted or was not granted, and reasons specified for denial in cases where transfer was denied.
(4)
In cases in which a State court orders a foster care placement of an Indian child, whether requirements for active efforts to prevent the breakup of the Indian family, testimony of a qualified expert witness, and evidentiary standards were met.
(5)
Whether an Indian child was placed in a placement that is required to be preferred under the Indian Child Welfare Act of 1978, and if not, the reasons specified.
(6)
In cases in which a State court orders the termination of parental rights to an Indian child, whether requirements for active efforts to prevent the breakup of the Indian family, testimony of a qualified expert witness, and evidentiary standards were met.
(b)

Interagency Coordination.—
On request of the Secretary, the Secretary of the Interior shall provide the Secretary with such guidance and assistance as may be necessary to facilitate informing States and public child welfare agencies on how to comply with the Indian Child Welfare Act of 1978, including specific measures identified in State plans as required by section 422(b)(9) of this Act.
(c)

Biennial Reports to Congress.—
The Secretary shall biennially submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a written report on how—
(1)
the States are complying with the Indian Child Welfare Act of 1978 and section 422(b)(9) of this Act, as informed by data collected under this section; and
(2)
the Secretary is assisting States and Indian tribes to improve implementation of Federal standards established under the Indian Child Welfare Act of 1978.
Subpart 2—

Marylee Allen Promoting Safe and Stable Families Program
SEC. 430.
[42 U.S.C. 629]

PURPOSE.
The purpose of this program is to enable States to develop and establish, or expand, and to operate coordinated programs of community-based family support services, family preservation services, family reunification services, and adoption promotion and support services to accomplish the following objectives:
(1)
To prevent child maltreatment among families at risk through the provision of supportive family services.
(2)
To assure children's safety within the home and preserve intact families in which children have been maltreated, when the family's problems can be addressed effectively.
(3)
To address the problems of families whose children have been placed in foster care so that reunification may occur in a safe and stable manner in accordance with the Adoption and Safe Families Act of 1997.
(4)
To support adoptive families by providing support services as necessary so that they can make a lifetime commitment to their children.
SEC. 431.
[42 U.S.C. 629a]

DEFINITIONS.
(a)

In General.—
As used in this subpart:
(1)

Family preservation services.—
The term “family preservation services” means services for children, youth, and families designed to help families (including kinship and adoptive families) at risk or in crisis, including—
(A)
service programs designed to help children—
(i)
where safe and appropriate, return to families from which they have been removed; or
(ii)
be placed for adoption, with a legal guardian, or, if adoption or legal guardianship is determined not to be safe and appropriate for a child, in some other planned, permanent living arrangement;
(B)
preplacement preventive services programs, such as intensive family preservation programs, designed to help children at risk of foster care placement remain safely with their families;
(C)
service programs designed to provide followup care to families to whom a child has been returned after a foster care placement;
(D)
respite care of children to provide temporary relief for parents, kinship caregivers, and foster parents;
(E)
services designed to improve parenting skills (by reinforcing parents' confidence in their strengths, and helping them to identify where improvement is needed and to obtain assistance in improving those skills) with respect to matters such as child development, family budgeting, coping with stress, health, and nutrition;
(F)
infant safe haven programs to provide a way for a parent to safely relinquish a newborn infant at a safe haven designated pursuant to a State law;
(G)
(i)
peer-to-peer mentoring and support programs with demonstrated experience fostering constructive relationships between children and families and mentors with relevant lived experience or interactions with the child welfare system; and
(ii)
for purposes of this subpart, an expenditure for a service described in clause (i) may be treated as an expenditure for any 1 or more of family support services, family preservation services, family reunification services, or adoption promotion and support services, as long as the expenditure is related to serving the children and families in the specified category and consistent with the overall purpose of the category; and
(H)
(i)
services providing nonrecurring short term benefits (including supports related to housing instability, utilities, transportation, and food assistance, among other basic needs) that address immediate needs related to a specific crisis, situation, or event affecting the ability of a child to remain in a home established for the child that is not intended to meet an ongoing need; and
(ii)
for purposes of this subpart, an expenditure for a service described in clause (i) may be treated as an expenditure for any 1 or more of family support services, family preservation services, family reunification services, or adoption promotion and support services as long as the expenditure is related to serving the children and families in the specified category and consistent with the overall purpose of the category.
(2)

Family support services.—
(A)

In general.—
The term “family support services” means community-based services, including services provided by family resource centers, designed to carry out the purposes described in subparagraph (B).
(B)

Purposes described.—
The purposes described in this subparagraph are the following:
(i)
To promote the safety and well-being of children, youth, and families.
(ii)
To increase the strength and stability of families (including adoptive, foster, and kinship families).
(iii)
To support and retain foster families so they can provide quality family-based settings for children in foster care.
(iv)
To increase parents' confidence and competence in their parenting abilities.
(v)
To afford children a safe, stable, and supportive family environment.
(vi)
To strengthen parental relationships and promote healthy marriages.
(vii)
To enhance child development, including through mentoring .
(3)

State agency.—
The term “State agency” means the State agency responsible for administering the program under subpart 1.
(4)

State.—
The term “State” includes an Indian tribe or tribal organization, in addition to the meaning given such term for purposes of subpart 1.
(5)

Indian tribe.—
The term “Indian tribe” has the meaning given the term in section 428(d).
(6)

Tribal organization.—
The term “tribal organization” has the meaning given the term in section 428(d).
(7)

Family reunification services.—
(A)

In general.—
The term “family reunification services” means the services and activities described in subparagraph (B) that are provided to a child that is removed from the child's home and placed with kinship caregivers or in a foster family home or a child care institution or a child who has been returned home and to the parents or primary caregiver of such a child, in order to facilitate the reunification of the child safely and appropriately within a timely fashion and to ensure the strength and stability of the reunification. In the case of a child who has been returned home, the services and activities shall only be provided during the 15-month period that begins on the date that the child returns home.
(B)

Services and activities described.—
The services and activities described in this subparagraph are the following:
(i)
Individual, group, and family counseling.
(ii)
Inpatient, residential, or outpatient substance abuse treatment services.
(iii)
Mental health services.
(iv)
Assistance to address domestic violence.
(v)
Services designed to provide temporary child care and therapeutic services for families, including crisis nurseries.
(vi)
Peer-to-peer mentoring and support groups for parents and primary caregivers.
(vii)
Services and activities designed to facilitate access to and visitation of children by parents and siblings.
(viii)
Transportation to or from any of the services and activities described in this subparagraph.
(8)

Adoption promotion and support services.—
The term “adoption promotion and support services” means services and activities designed to encourage more adoptions out of the foster care system, when adoptions promote the best interests of children, including such activities as pre- and post-adoptive services and activities designed to expedite the adoption process and support adoptive families.
(9)

Non-federal funds.—
The term “non-Federal funds” means State funds, or at the option of a State, State and local funds.
(10)

Family resource center.—
(A)

In general.—
The term “family resource center” means a community or school-based hub of support services for families that—
(i)
utilizes an approach that is multi-generational, strengths-based, and family-centered;
(ii)
reflects, and is responsive to, community needs and interests;
(iii)
provides support at no or low cost for participants; and
(iv)
builds communities of peer support for families, including kinship families, to develop social connections that reduce isolation and stress.
(B)

Special rule.—
For purposes of this subpart, an expenditure for a service provided by a family resource center may be treated as an expenditure for any 1 or more of family support services, family preservation services, family reunification services, or adoption promotion and support services as long as the expenditure is related to serving the children and families in the specified category and consistent with the overall purpose of the category.
(11)

Youth.—
The term “youth” means an individual who has not attained 26 years of age.
(12)

Mentoring.—
The term “mentoring” means a structured, managed program in which children are appropriately matched with screened and trained adult volunteers for one on-one relationships, involving meetings and activities on a regular basis, intended to meet, in part, the child’s need for involvement with a caring and supportive adult who provides a positive role model.
(b)

Other Terms.—
For other definitions of other terms used in this subpart, see section 475.
(c)

Use of Technology.—
(1)

Use of portal.—
The services referred to in subsection (a) may include the means of access to and use of an electronic or digital portal to facilitate the provision of community support to care for and meet specific needs of families and children.
(2)

Limitation.—
Such a portal shall not retain or share personally identifiable information about a beneficiary without consent or for any purpose other than referral.
SEC. 432.
[42 U.S.C. 629b]

STATE PLANS.
(a)

Plan Requirements.—
A State plan meets the requirements of this subsection if the plan—
(1)
provides that the State agency shall administer, or supervise the administration of, the State program under this subpart;
(2)
(A)
(i)
sets forth the goals intended to be accomplished under the plan by the end of the 5th fiscal year in which the plan is in operation in the State, and (ii) is updated periodically to set forth the goals intended to be accomplished under the plan by the end of each 5th fiscal year thereafter;
(B)
describes the methods to be used in measuring progress toward accomplishment of the goals;
(C)
contains assurances that the State—
(i)
after the end of each of the 1st 4 fiscal years covered by a set of goals, will perform an interim review of progress toward accomplishment of the goals, and on the basis of the interim review will revise the statement of goals in the plan, if necessary, to reflect changed circumstances; and
(ii)
after the end of the last fiscal year covered by a set of goals, will perform a final review of progress toward accomplishment of the goals, and on the basis of the final review (I) will prepare, transmit to the Secretary, and make available to the public a final report on progress toward accomplishment of the goals, and (II) will develop (in consultation with the entities required to be consulted pursuant to subsection (b)) and add to the plan a statement of the goals intended to be accomplished by the end of the 5th succeeding fiscal year;
(3)
provides for coordination, to the extent feasible and appropriate, of the provision of services under the plan and the provision of services or benefits under other Federal or federally assisted programs serving the same populations;
(4)
contains assurances that not more than 10 percent of expenditures under the plan for any fiscal year with respect to which the State is eligible for payment under section 434 for the fiscal year shall be for administrative costs, and that the remaining expenditures shall be for programs of family preservation services, community-based family support services, family reunification services, and adoption promotion and support services, with significant portions of such expenditures for each such program;
(5)
contains assurances that the State will—
(A)
annually prepare, furnish to the Secretary, and make available to the public a description (including separate descriptions with respect to family preservation services, community-based family support services, family reunification services, and adoption promotion and support services) of—
(i)
the service programs to be made available under the plan in the immediately succeeding fiscal year;
(ii)
the populations which the programs will serve; and
(iii)
the geographic areas in the State in which the services will be available; and
(B)
perform the activities described in subparagraph (A)—
(i)
in the case of the 1st fiscal year under the plan, at the time the State submits its initial plan; and
(ii)
in the case of each succeeding fiscal year, by the end of the 3rd quarter of the immediately preceding fiscal year;
(6)
provides for such methods of administration as the Secretary finds to be necessary for the proper and efficient operation of the plan;
(7)
(A)
contains assurances that Federal funds provided to the State under this subpart will not be used to supplant Federal or non-Federal funds for existing services and activities which promote the purposes of this subpart; and
(B)
provides that the State will furnish reports to the Secretary, at such times, in such format, and containing such information as the Secretary may require, that demonstrate the State's compliance with the prohibition contained in subparagraph (A);
(8)
(A)
provides that the State agency will furnish such reports, containing such information, and participate in such evaluations, as the Secretary may require; and
(B)
provides that, not later than June 30 of each year, the State will submit to the Secretary—
(i)
copies of form CFS–101 (including all parts and any successor forms) that report on planned child and family services expenditures by the agency for the immediately succeeding fiscal year; and
(ii)
copies of form CFS–101 (including all parts and any successor forms) that provide, with respect to the programs authorized under this subpart and subpart 1 and, at State option, other programs included on such forms, for the most recent preceding fiscal year for which reporting of actual expenditures is complete—
(I)
the numbers of families and of children served by the State agency;
(II)
the population served by the State agency;
(III)
the geographic areas served by the State agency; and
(IV)
the actual expenditures of funds provided to the State agency;
(9)
contains assurances that in administering and conducting service programs under the plan, the safety of the children to be served shall be of paramount concern;
(10)
describes how the State identifies which populations are at the greatest risk of maltreatment and how services are targeted to the populations; and
(11)
provides a description of policies in place, including training for employees, to address child welfare reports and investigations of neglect concerning the living arrangements or subsistence needs of a child with the goal to prevent the separation of a child from a parent of the child solely due to poverty, to ensure access to services described in section 431(a)(1)(H).
(b)

Approval of Plans.—
(1)

In general.—
The Secretary shall approve a plan that meets the requirements of subsection (a) only if—
(A)
the plan was developed jointly by the Secretary and the State, and the State, in developing the plan, consulted with—
(i)
appropriate public and nonprofit private agencies;
(ii)
community-based organizations involved in providing services for children and families in the areas of family preservation, family support, family reunification, foster care, kinship, and adoption promotion and support;
(iii)
parents with child welfare experience, foster parents, adoptive parents, and kinship caregivers; and
(iv)
children, youth, and young adults with experience in the child welfare system, including State boards and councils comprised of youth with lived experience who represent the diversity of children in the State to whom the plan would apply; and
(B)
the State has made publicly accessible on a website of the State agency a report that outlines how the State has implemented the suggestions of the children and youth referred to in subparagraph (A)(iv).
(2)

Plans of indian tribes or tribal consortia.—
(A)

Exemption from inappropriate requirements.—
The Secretary may exempt a plan submitted by an Indian tribe or tribal consortium from the requirements of subsection (a)(4) of this section to the extent that the Secretary determines those requirements would be inappropriate to apply to the Indian tribe or tribal consortium, taking into account the resources, needs, and other circumstances of the Indian tribe or tribal consortium.
(B)

Special rule.—
Notwithstanding subparagraph (A) of this paragraph, the Secretary may not approve a plan of an Indian tribe or tribal consortium under this subpart to which (but for this subparagraph) an allotment of less than $10,000 would be made under sections 433(a) and 437(c)(1) combined if allotments were made under such sections to all Indian tribes and tribal consortia with plans approved under this subpart with the same or larger numbers of children.
(c)

Annual Submission of State Reports to Congress.—
(1)

In general.—
The Secretary shall compile the reports required under subsection (a)(8)(B) and, not later than September 30 of each year, submit such compilation to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.
(2)

Information to be included.—
The compilation shall include the individual State reports and tables that synthesize State information into national totals for each element required to be included in the reports, including planned and actual spending by service category for the program authorized under this subpart and planned spending by service category for the program authorized under subpart 1.
(3)

Public accessibility.—
Not later than September 30 of each year, the Secretary shall publish the compilation on the website of the Department of Health and Human Services in a location easily accessible by the public.
SEC. 433.
[42 U.S.C. 629c]

ALLOTMENTS TO STATES.
(a)

Indian Tribes or Tribal Consortia.—
From the amount reserved pursuant to section 436(b)(2) for any fiscal year, the Secretary shall allot to each Indian tribe with a plan approved under this subpart an amount that bears the same ratio to such reserved amount as the number of children in the Indian tribe bears to the total number of children in all Indian tribes with State plans so approved, as determined by the Secretary on the basis of the most current and reliable information available to the Secretary. If a consortium of Indian tribes submits a plan approved under this subpart, the Secretary shall allot to the consortium an amount equal to the sum of the allotments determined for each Indian tribe that is part of the consortium.
(b)

Territories.—
From the amount described in section 436(a) for any fiscal year that remains after applying section 436(b) for the fiscal year, the Secretary shall allot to each of the jurisdictions of Puerto Rico, Guam, the Virgin Islands, the Northern Mariana Islands, and American Samoa an amount determined in the same manner as the allotment to each of such jurisdictions is determined under section 423.
(c)

Other States.—
(1)

In general.—
From the amount described in section 436(a) for any fiscal year that remains after applying section 436(b) and subsection (b) of this section for the fiscal year, the Secretary shall allot to each State (other than an Indian tribe) which is not specified in subsection (b) of this section an amount equal to such remaining amount multiplied by the supplemental nutrition assistance program benefits percentage of the State for the fiscal year.
(2)

Supplemental nutrition assistance program benefits percentage defined.—
(A)

In general.—
As used in paragraph (1) of this subsection, the term “supplemental nutrition assistance program benefits percentage” means, with respect to a State and a fiscal year, the average monthly number of children receiving supplemental nutrition assistance program benefits in the State for months in the 3 fiscal years referred to in subparagraph (B) of this paragraph, as determined from sample surveys made under section 16(c) of the Food and Nutrition Act of 2008, expressed as a percentage of the average monthly number of children receiving supplemental nutrition assistance program benefits in the States described in such paragraph (1) for months in such 3 fiscal years, as so determined.
(B)

Fiscal years used in calculation.—
For purposes of the calculation pursuant to subparagraph (A), the Secretary shall use data for the 3 most recent fiscal years, preceding the fiscal year for which the State's allotment is calculated under this subsection, for which such data are available to the Secretary.
(d)

Reallotments.—
The amount of any allotment to a State under subsection (a), (b), or (c) of this section for any fiscal year that the State certifies to the Secretary will not be required for carrying out the State plan under section 432 shall be available for reallotment using the allotment methodology specified in subsection (a), (b), or (c) of this section. Any amount so reallotted to a State is deemed part of the allotment of the State under the preceding provisions of this section.
(e)

Allotment of Funds Reserved To Support Monthly Caseworker Visits.—
(1)

Base allotment.—
From the amount reserved pursuant to section 436(b)(3)(A) for any fiscal year, the Secretary shall first allot to each State (other than an Indian tribe) that has provided to the Secretary such documentation as may be necessary to verify that the jurisdiction has complied with section 436(b)(4)(B)(ii) during the fiscal year, a base allotment of $100,000, and shall then allot to each of those States an amount determined in paragraph (2) or (3) of this subsection, as applicable.
(2)

Territories.—
From the amount reserved pursuant to section 436(b)(3)(A) for any fiscal year that remains after applying paragraph (1) of this subsection for the fiscal year, the Secretary shall allot to each jurisdiction specified in subsection (b) of this section to which a base allotment is made under such paragraph (1) an amount determined in the same manner as the allotment to each of such jurisdictions is determined under section 423 (without regard to the initial allotment of $70,000 to each State).
(3)

Other states.—
From the amount reserved pursuant to section 436(b)(3)(A) for any fiscal year that remains after applying paragraphs (1) and (2) of this subsection for the fiscal year, the Secretary shall allot to each State (other than an Indian tribe) not specified in subsection (b) of this section to which a base allotment was made under paragraph (1) of this subsection an amount equal to such remaining amount multiplied by the supplemental nutrition assistance program benefits percentage of the State (as defined in subsection (c)(2) of this section) for the fiscal year, except that in applying subsection (c)(2)(A) of this section, “subsection (e)(3)” shall be substituted for “such paragraph (1)”.
SEC. 434.
[42 U.S.C. 629d]

PAYMENTS TO STATES.
(a)

Entitlement.—
Each State that has a plan approved under section 432 shall, subject to subsection (d), be entitled to payment of the sum of—
(1)
the lesser of—
(A)
75 percent of the total expenditures by the State for activities under the plan during the fiscal year or the immediately succeeding fiscal year; or
(B)
the allotment of the State under subsection (a), (b), or (c) of section 433, whichever is applicable, for the fiscal year; and
(2)
the lesser of—
(A)
75 percent of the total expenditures by the State in accordance with section 436(b)(3)(B) during the fiscal year or the immediately succeeding fiscal year; or
(B)
the allotment of the State under section 433(e) for the fiscal year.
(b)

Prohibitions.—
(1)

No use of other federal funds for state match.—
Each State receiving an amount paid under subsection (a) may not expend any Federal funds to meet the costs of services under the State plan under section 432 not covered by the amount so paid.
(2)

Availability of funds.—
A State may not expend any amount paid under subsection (a) for any fiscal year after the end of the immediately succeeding fiscal year.
(c)

Direct Payments to Tribal Organizations of Indian Tribes or Tribal Consortia.—
The Secretary shall pay any amount to which an Indian tribe or tribal consortium is entitled under this section directly to the tribal organization of the Indian tribe or in the case of a payment to a tribal consortium, such tribal organizations of, or entity established by, the Indian tribes that are part of the consortium as the consortium shall designate.
(d)26

Limitation on Reimbursement for Administrative Costs.—
The Secretary shall not make a payment to a State under this section with respect to expenditures for administrative costs during a fiscal year, to the extent that the total amount of the expenditures exceeds 10 percent of the total expenditures of the State during the fiscal year under the State plan approved under section 432.
^{26}
Subsection (d) (and the amendment to insert the reference to such subsection in subsection (a)) as added by section 3(f)(1)(B) of Public Law 109–288 applies to expenditures made on or after October 1, 2007 pursuant to paragraph (2) of section 3(f) of such Public Law.
SEC. 435.
[42 U.S.C. 629e]

EVALUATIONS; RESEARCH; TECHNICAL ASSISTANCE.
(a)

Evaluations.—
(1)

In general.—
The Secretary shall evaluate and report to the Congress biennially on the effectiveness of the programs carried out pursuant to this subpart in accomplishing the purposes of this subpart, and may evaluate any other Federal, State, or local program, regardless of whether federally assisted, that is designed to achieve the same purposes as the program under this subpart, in accordance with criteria established in accordance with paragraph (2).
(2)

Criteria to be used.—
In developing the criteria to be used in evaluations under paragraph (1), the Secretary shall consult with appropriate parties, such as—
(A)
State agencies administering programs under this part and part E;
(B)
persons administering child and family services programs (including family preservation and family support programs) for private, nonprofit organizations with an interest in child welfare including community-based partners with expertise in preventing unnecessary child welfare system involvement; and
(C)
other persons with recognized expertise in the evaluation of child and family services programs (including family preservation and family support programs) or other related programs.
(3)

Timing of report.—
Beginning in 2003, the Secretary shall submit the biennial report required by this subsection not later than April 1 of every other year, and shall include in each such report the funding level, the status of ongoing evaluations, findings to date, and the nature of any technical assistance provided to States under subsection (d).
(b)

Coordination of Evaluations.—
The Secretary shall develop procedures to coordinate evaluations under this section, to the extent feasible, with evaluations by the States of the effectiveness of programs under this subpart.
(c)

Evaluation, Research, and Technical Assistance With Respect to Targeted Program Resources.—
Of the amount reserved under section 437(b)(1) for a fiscal year, the Secretary shall use not less than—
(1)
$1,000,000 for technical assistance to grantees under section 437(f) and to support design of local site evaluations with the goal of publishing and submitting evaluation findings to the clearinghouse established under section 476(d), or to award grants to allow current or former grantees under section 437(f) to analyze, publish, and submit to the clearinghouse data collected during past grants; and
(2)
$1,000,000 for technical assistance required under section 429B of this Act to support effective implementation of the Indian Child Welfare Act of 1978 and to support development of associated State plan measures described pursuant to section 422(b)(9) of this Act.
(d)

Technical Assistance.—
To the extent funds are available therefor, the Secretary shall provide technical assistance that helps States and Indian tribes or tribal consortia to—
(1)
develop research-based protocols for identifying families at risk of abuse and neglect of use in the field;
(2)
develop treatment models that address the needs of families at risk, particularly families with substance abuse issues;
(3)
implement programs with well-articulated theories of how the intervention will result in desired changes among families at risk;
(4)
establish mechanisms to ensure that service provision matches the treatment model;
(5)
establish mechanisms to ensure that postadoption services meet the needs of the individual families and develop models to reduce the disruption rates of adoption; and
(6)
use grants under section 437(f) in coordination with other Federal funds to better serve families in the child welfare system that are affected by a substance use disorder.
(e)

Family Recovery and Reunification Program Replication Project.—
(1)

Purpose.—
The purpose of this subsection is to provide resources to the Secretary to support the conduct and evaluation of a family recovery and reunification program replication project (referred to in this subsection as the “project”) and to determine the extent to which such programs may be appropriate for use at different intervention points (such as when a child is at risk of entering foster care or when a child is living with a guardian while a parent is in treatment). The family recovery and reunification program conducted under the project shall use a recovery coach model that is designed to help reunify families and protect children by working with parents or guardians with a substance use disorder who have temporarily lost custody of their children.
(2)

Program components.—
The family recovery and reunification program conducted under the project shall adhere closely to the elements and protocol determined to be most effective in other recovery coaching programs that have been rigorously evaluated and shown to increase family reunification and protect children and, consistent with such elements and protocol, shall provide such items and services as—
(A)
assessments to evaluate the needs of the parent or guardian;
(B)
assistance in receiving the appropriate benefits to aid the parent or guardian in recovery;
(C)
services to assist the parent or guardian in prioritizing issues identified in assessments, establishing goals for resolving such issues that are consistent with the goals of the treatment provider, child welfare agency, courts, and other agencies involved with the parent or guardian or their children, and making a coordinated plan for achieving such goals;
(D)
home visiting services coordinated with the child welfare agency and treatment provider involved with the parent or guardian or their children;
(E)
case management services to remove barriers for the parent or guardian to participate and continue in treatment, as well as to re-engage a parent or guardian who is not participating or progressing in treatment;
(F)
access to services needed to monitor the parent’s or guardian's compliance with program requirements;
(G)
frequent reporting between the treatment provider, child welfare agency, courts, and other agencies involved with the parent or guardian or their children to ensure appropriate information on the parent’s or guardian's status is available to inform decision-making; and
(H)
assessments and recommendations provided by a recovery coach to the child welfare caseworker responsible for documenting the parent’s or guardian's progress in treatment and recovery as well as the status of other areas identified in the treatment plan for the parent or guardian, including a recommendation regarding the expected safety of the child if the child is returned to the custody of the parent or guardian that can be used by the caseworker and a court to make permanency decisions regarding the child.
(3)

Responsibilities of the secretary.—
(A)

In general.—
The Secretary shall, through a grant or contract with 1 or more entities, conduct and evaluate the family recovery and reunification program under the project.
(B)

Requirements.—
In identifying 1 or more entities to conduct the evaluation of the family recovery and reunification program, the Secretary shall—
(i)
determine that the area or areas in which the program will be conducted have sufficient substance use disorder treatment providers and other resources (other than those provided with funds made available to carry out the project) to successfully conduct the program;
(ii)
determine that the area or areas in which the program will be conducted have enough potential program participants, and will serve a sufficient number of parents or guardians and their children, so as to allow for the formation of a control group, evaluation results to be adequately powered, and preliminary results of the evaluation to be available within 4 years of the program's implementation;
(iii)
provide the entity or entities with technical assistance for the program design, including by working with 1 or more entities that are or have been involved in recovery coaching programs that have been rigorously evaluated and shown to increase family reunification and protect children so as to make sure the program conducted under the project adheres closely to the elements and protocol determined to be most effective in such other recovery coaching programs;
(iv)
assist the entity or entities in securing adequate coaching, treatment, child welfare, court, and other resources needed to successfully conduct the family recovery and reunification program under the project; and
(v)
ensure the entity or entities will be able to monitor the impacts of the program in the area or areas in which it is conducted for at least 5 years after parents or guardians and their children are randomly assigned to participate in the program or to be part of the program's control group.
(4)

Evaluation requirements.—
(A)

In general.—
The Secretary, in consultation with the entity or entities conducting the family recovery and reunification program under the project, shall conduct an evaluation to determine whether the program has been implemented effectively and resulted in improvements for children and families. The evaluation shall have 3 components: a pilot phase, an impact study, and an implementation study.
(B)

Pilot phase.—
The pilot phase component of the evaluation shall consist of the Secretary providing technical assistance to the entity or entities conducting the family recovery and reunification program under the project to ensure—
(i)
the program's implementation adheres closely to the elements and protocol determined to be most effective in other recovery coaching programs that have been rigorously evaluated and shown to increase family reunification and protect children; and
(ii)
random assignment of parents or guardians and their children to be participants in the program or to be part of the program's control group is being carried out.
(C)

Impact study.—
The impact study component of the evaluation shall determine the impacts of the family recovery and reunification program conducted under the project on the parents and guardians and their children participating in the program. The impact study component shall—
(i)
be conducted using an experimental design that uses a random assignment research methodology;
(ii)
consistent with previous studies of other recovery coaching programs that have been rigorously evaluated and shown to increase family reunification and protect children, measure outcomes for parents and guardians and their children over multiple time periods, including for a period of 5 years; and
(iii)
include measurements of family stability and parent, guardian, and child safety for program participants and the program control group that are consistent with measurements of such factors for participants and control groups from previous studies of other recovery coaching programs so as to allow results of the impact study to be compared with the results of such prior studies, including with respect to comparisons between program participants and the program control group regarding—
(I)
safe family reunification;
(II)
time to reunification;
(III)
permanency (such as through measures of reunification, adoption, or placement with guardians);
(IV)
safety (such as through measures of subsequent maltreatment);
(V)
parental or guardian treatment persistence and engagement;
(VI)
parental or guardian substance use;
(VII)
juvenile delinquency;
(VIII)
cost; and
(IX)
other measurements agreed upon by the Secretary and the entity or entities operating the family recovery and reunification program under the project.
(D)

Implementation study.—
The implementation study component of the evaluation shall be conducted concurrently with the conduct of the impact study component and shall include, in addition to such other information as the Secretary may determine, descriptions and analyses of—
(i)
the adherence of the family recovery and reunification program conducted under the project to other recovery coaching programs that have been rigorously evaluated and shown to increase family reunification and protect children; and
(ii)
the difference in services received or proposed to be received by the program participants and the program control group.
(E)

Report.—
The Secretary shall publish on an internet website maintained by the Secretary the following information:
(i)
A report on the pilot phase component of the evaluation.
(ii)
A report on the impact study component of the evaluation.
(iii)
A report on the implementation study component of the evaluation.
(iv)
A report that includes—
(I)
analyses of the extent to which the program has resulted in increased reunifications, increased permanency, case closures, net savings to the State or States involved (taking into account both costs borne by States and the Federal government), or other outcomes, or if the program did not produce such outcomes, an analysis of why the replication of the program did not yield such results;
(II)
if, based on such analyses, the Secretary determines the program should be replicated, a replication plan; and
(III)
such recommendations for legislation and administrative action as the Secretary determines appropriate.
(5)

Appropriation.—
In addition to any amounts otherwise made available to carry out this subpart, out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated $15,000,000 for fiscal year 2019 to carry out the project, which shall remain available through fiscal year 2026.
(f)

Prevention Services Evaluation Partnerships.—
(1)

Purpose.—
The purpose of this subsection is to authorize the Secretary to make competitive grants to support the timely evaluation of—
(A)
services and programs described in section 471(e); or
(B)
kinship navigator programs described in section 474(a)(7).
(2)

Grants.—
In accordance with applications approved under this subsection, the Secretary may make grants, on a competitive basis, to eligible entities to carry out projects designed to evaluate a service or program provided by the eligible entity, or an entity in partnership with the eligible entity, with respect to the requirements for a promising practice, supported practice, or well-supported practice described in section 471(e)(4)(C).
(3)

Applications.—
(A)

In general.—
An eligible entity may apply to the Secretary for a grant under this subsection to carry out a project that meets the following requirements:
(i)
The project is designed in accordance with paragraph (2).
(ii)
The project is to be carried out by the applicant in partnership with—
(I)
a State agency that administers, or supervises the administration of, the State plan approved under part E, or an agency administering the plan under the supervision of the State agency; and
(II)
if the applicant is unable or unwilling to do so, at least 1 external evaluator to carry out the evaluation of the service or program provided by the applicant.
(B)

Contents.—
The application shall contain the following:
(i)
A description of the project, including—
(I)
a statement explaining why a grant is necessary to carry out the project; and
(II)
the amount of grant funds that would be disbursed to each entity described in subparagraph (A)(ii) in partnership with the applicant.
(ii)
A certification from each entity described in subparagraph (A)(ii) that provides assurances that the individual or entity is in partnership with the applicant and will fulfill the responsibilities of the entity specified in the description provided pursuant to clause (i) of this subparagraph.
(iii)
A certification from the applicant that provides assurances that the applicant intends to comply with subparagraph (A)(ii)(II), if applicable.
(iv)
At the option of the eligible entity, a certification from the applicant that the applicant requires an external evaluator secured by the Secretary pursuant to paragraph (5), if applicable.
(4)

Priorities.—
In approving applications under this subsection, the Secretary shall prioritize the following:
(A)
Addressing, with respect to the clearinghouse of practices described in section 476(d)(2), deficiencies or gaps identified by the Secretary in consultation with—
(i)
States, political subdivisions of a State, and tribal communities carrying out, or receiving the benefits of, a service or program; and
(ii)
child welfare experts, including individuals with lived experience.
(B)
Maximizing the number of evidence-based services or programs to be included in the clearinghouse of practices described in section 476(d)(2).
(C)
Timely completion of evaluations and the production of evidence.
(D)
Supporting services or programs that are based on, or are adaptations to new population settings of, a service or program with reliable evidence about the benefits and risks of the service or program.
(5)

Availability of external evaluators.—
(A)

In general.—
Before accepting applications under this subsection, the Secretary shall make reasonable efforts to identify at least 1 entity to serve as an external evaluator for any eligible entity that includes a certification under paragraph (3)(B)(iv) with an application under this subsection.
(B)

No effect on consideration of application.—
The Secretary may not consider whether an eligible entity is in partnership with an external evaluator described in paragraph (A) in approving an application under this subsection submitted by the eligible entity.
(6)

Reports.—
(A)

By grant recipients.—
Within 1 year after receiving a grant under this subsection, and every year thereafter for the next 5 years, the grant recipient shall submit to the Secretary a written report on—
(i)
the use of grant funds;
(ii)
whether the program or service evaluated by the project meets a requirement specified in section 471(e)(4)(C), including information about—
(I)
how the program or service is being carried out in accordance with standards specified in the requirement;
(II)
any outcomes of the program or service; and
(III)
any outcome with respect to which the service or program compares favorably to a comparison practice; and
(iii)
whether the Secretary has included the program or service in an update to the clearinghouse of practices described in section 476(d)(2).
(B)

By the secretary.—
The Secretary shall submit to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate an annual written report on—
(i)
the grants awarded under this subsection;
(ii)
the programs funded by the grants;
(iii)
any technical assistance provided by the Secretary in carrying out this subsection, including with respect to the efforts to secure external evaluators pursuant to paragraph (5); and
(iv)
any efforts by the Secretary to support program evaluation and review pursuant to section 471(e) and inclusion of programs in the pre-approved list of services and programs described in section 471(e)(4)(D) or the clearinghouse of practices described in section 476(d)(2).
(7)

Funding.—
(A)

Limitations.—
Of the amounts available to carry out this subsection, the Secretary may use not more than 5 percent to provide technical assistance.
(B)

Carryover.—
Amounts made available to carry out this subsection shall remain available until expended.
(8)

Definitions.—
In this subsection:
(A)

Eligible entity.—
The term “eligible entity” means any of the following providing a service or program or, in the sole determination of the Secretary, able to provide a service or program if awarded a grant under this subsection:
(i)
A State, a political subdivision of a State, or an agency or department of a State or political subdivision of a State.
(ii)
An entity described in subparagraph (A) or (B) of section 426(a)(1).
(iii)
An Indian tribe or tribal organization.
(B)

External evaluator.—
The term “external evaluator” means an entity with the ability and willingness to evaluate a service or program pursuant to paragraph (2) that is not provided by the entity.
(C)

Service or program.—
The term “service or program”—
(i)
means a service or program described in section 471(e); and
(ii)
includes a kinship navigator program described in section 474(a)(7).
SEC. 436.
[42 U.S.C. 629f]

AUTHORIZATION OF APPROPRIATIONS; RESERVATION OF CERTAIN AMOUNTS.
(a)

Authorization.—
In addition to any amount otherwise made available to carry out this subpart, there are authorized to be appropriated to carry out this subpart $345,000,000 for fiscal year 2025 and $420,000,000 for each of fiscal years 2026 through 2029.
(b)

Reservation of Certain Amounts.—
From the amount specified in subsection (a) for a fiscal year, the Secretary shall reserve amounts as follows:
(1)

State court improvements.—
The Secretary shall reserve $30,000,000 for fiscal year 2025 and $40,000,000 for fiscal year 2026 and each succeeding fiscal year for grants under section 438.
(2)

Indian tribes or tribal consortia.—
The Secretary shall reserve 3 percent for allotment to Indian tribes or tribal consortia in accordance with section 433(a).
(3)

Support for monthly caseworker visits.—
(A)

Reservation.—
The Secretary shall reserve for allotment in accordance with section 433(e) $20,000,000 for fiscal year 2025 and $26,000,000 for fiscal year 2026 and each succeeding fiscal year.
(B)

Use of funds.—
(i)

In general.—
A State to which an amount is paid from amounts reserved under subparagraph (A) shall use the amount to improve the quality of monthly caseworker visits with children who are in foster care under the responsibility of the State, with an emphasis on—
(I)
reducing caseload ratios and the administrative burden on caseworkers, to improve caseworker decision making on the safety, permanency, and well-being of foster children and on activities designed to increase retention, recruitment, and training of caseworkers;
(II)
implementing technology solutions to streamline caseworker duties and modernize systems, ensuring improved efficiency and effectiveness in child welfare services;
(III)
improving caseworker safety;
(IV)
mental health resources to support caseworker well-being, including peer-to-peer support programs; and
(V)
recruitment campaigns aimed at attracting qualified caseworker candidates.
(ii)

Nonsupplantation.—
A State to which an amount is paid from amounts reserved pursuant to subparagraph (A) shall not use the amount to supplant any Federal funds paid to the State under part E that could be used as described in clause (i).
(4)

Regional partnership grants.—
The Secretary shall reserve for awarding grants under section 437(f) $20,000,000 for fiscal year 2025 and $30,000,000 for fiscal year 2026 and each succeeding fiscal year.
(c)

Support for Foster Family Homes.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to the Secretary for fiscal year 2018, $8,000,000 for the Secretary to make competitive grants to States, Indian tribes, or tribal consortia to support the recruitment and retention of high-quality foster families to increase their capacity to place more children in family settings, focused on States, Indian tribes, or tribal consortia with the highest percentage of children in non-family settings. The amount appropriated under this subparagraph shall remain available through fiscal year 2022.
SEC. 437.
[42 U.S.C. 629g]

DISCRETIONARY AND TARGETED GRANTS.
(a)

Limitations on Authorization of Appropriations.—
In addition to any amount appropriated pursuant to section 436, there are authorized to be appropriated to carry out this section $200,000,000 for each of fiscal years 2025 through 2029.
(b)

Reservation of Certain Amounts.—
From the amount (if any) appropriated pursuant to subsection (a) for a fiscal year, the Secretary shall reserve amounts as follows:
(1)

Evaluation, research, training, and technical assistance.—
The Secretary shall reserve 3.3 percent for expenditure by the Secretary for the activities described in section 435.
(2)

State court improvements.—
The Secretary shall reserve 3.3 percent for grants under section 438.
(3)

Indian tribes or tribal consortia.—
The Secretary shall reserve 3 percent for allotment to Indian tribes or tribal consortia in accordance with subsection (c)(1).
(4)

Improving the interstate placement of children.—
The Secretary shall reserve $5,000,000 of the amount made available for fiscal year 2018 for grants under subsection (g), and the amount so reserved shall remain available through fiscal year 2022.
(5)

Preventive services evaluation partnerships.—
The Secretary shall reserve $5,000,000 for grants under section 435(f) for each of fiscal years 2026 through 2029.
(6)

Kinship navigators.—
The Secretary shall reserve $10,000,000 for grants under section 427 for each of fiscal years 2026 through 2029.
(c)

Allotments.—
(1)

Indian tribes or tribal consortia.—
From the amount (if any) reserved pursuant to subsection (b)(3) for any fiscal year, the Secretary shall allot to each Indian tribe with a plan approved under this subpart an amount that bears the same ratio to such reserved amount as the number of children in the Indian tribe bears to the total number of children in all Indian tribes with State plans so approved, as determined by the Secretary on the basis of the most current and reliable information available to the Secretary. If a consortium of Indian tribes applies and is approved for a grant under this section, the Secretary shall allot to the consortium an amount equal to the sum of the allotments determined for each Indian tribe that is part of the consortium.
(2)

Territories.—
From the amount (if any) appropriated pursuant to subsection (a) for any fiscal year that remains after applying subection 27 (b) for the fiscal year, the Secretary shall allot to each of the jurisdictions of Puerto Rico, Guam, the Virgin Islands, the Northern Mariana Islands, and American Samoa an amount determined in the same manner as the allotment to each of such jurisdictions is determined under section 423.
^{27}
So in law. The word “subection” in subsection (c)(2) probably should read “subsection”.
(3)

Other states.—
From the amount (if any) appropriated pursuant to subsection (a) for any fiscal year that remains after applying subsection (b) and paragraph (2) of this subsection for the fiscal year, the Secretary shall allot to each State (other than an Indian tribe) which is not specified in paragraph (2) of this subsection an amount equal to such remaining amount multiplied by the supplemental nutrition assistance program benefits percentage (as defined in section 433(c)(2)) of the State for the fiscal year.
(d)

Grants.—
The Secretary may make a grant to a State which has a plan approved under this subpart in an amount equal to the lesser of—
(1)
75 percent of the total expenditures by the State for activities under the plan during the fiscal year or the immediately succeeding fiscal year; or
(2)
the allotment of the State under subsection (c) for the fiscal year.
(e)

Applicability of Certain Rules.—
The rules of subsections (b) and (c) of section 434 shall apply in like manner to the amounts made available pursuant to subsection (a).
(f)

Targeted Grants To Implement IV–E Prevention Services, and Improve the Well-Being of, and Improve Permanency Outcomes for, Children and Families Affected by Heroin, Opioids, and Other Substance Abuse.—
(1)

Purpose.—
The purpose of this subsection is to authorize the Secretary to make competitive grants to regional partnerships to provide, through interagency collaboration and integration of programs and services, services and activities that are designed to increase the well-being of, improve permanency outcomes for, and enhance the safety of children who are in an out-of-home placement or are at risk of being placed in an out-of-home placement as a result of a parent's or caretaker's substance abuse, and expand the scope of the evidence-based services that may be approved by the clearinghouse established under section 476(d).
(2)

Regional partnership defined.—
In this subsection, the term “regional partnership” means a collaborative agreement (which may be established on an interstate, State, or intrastate basis) entered into by the following:
(A)

Mandatory partners for all partnership grants.—
(i)
The State child welfare agency that is responsible for the administration of the State plan under this part and part E.
(ii)
The State agency responsible for administering the substance abuse prevention and treatment block grant provided under subpart II of part B of title XIX of the Public Health Service Act.
(iii)
The most appropriate administrative office of the juvenile court or State court overseeing court proceedings involving families who come to the attention of the court due to child abuse or neglect.
(B)

Optional partners.—
At the option of the partnership, any of the following:
(i)
An Indian tribe or tribal consortium.
(ii)
Nonprofit child welfare service providers.
(iii)
For-profit child welfare service providers.
(iv)
Community health service providers, including substance abuse treatment providers.
(v)
Community mental health providers.
(vi)
Local law enforcement agencies.
(vii)
School personnel.
(viii)
Tribal child welfare agencies (or a consortia of the agencies).
(ix)
State or local agencies that administer Federal health care, housing, family support, or other related programs.
(x)
Any other providers, agencies, personnel, officials, or entities that are related to the provision of child and family services under a State plan approved under this subpart.
(C)

Exception for regional partnerships where the lead applicant is an indian tribe or tribal consortia.—
If an Indian tribe or tribal consortium enters into a regional partnership for purposes of this subsection, the Indian tribe or tribal consortium—
(i)
may (but is not required to) include the State child welfare agency as a partner in the collaborative agreement; and
(ii)
may not enter into a collaborative agreement only with tribal child welfare agencies (or a consortium of the agencies).
(3)

Authority to award grants.—
(A)

In general.—
The Secretary shall award grants under this subsection, from the amounts reserved for each of fiscal years 2025 through 2029 under section 436(b)(4), to regional partnerships that satisfy the requirements of this subsection, in amounts that are not less than $250,000 and not more than $1,000,000 per grant per fiscal year.
(B)

Required minimum period of approval; planning.—
(i)

In general.—
A grant shall be awarded under this subsection for a period of not less than 2, and not more than 5, fiscal years, subject to clauses (ii) and (iii).
(ii)

Extension of grant.—
On application of the grantee, the Secretary may extend for not more than 2 fiscal years the period for which a grant is awarded under this subsection.
(iii)

Sufficient planning.—
(I)

In general.—
A grant awarded under this subsection shall be disbursed in two phases: a planning phase (not to exceed 2 years) and an implementation phase. The total disbursement to a grantee for the planning phase may not exceed the total anticipated funding for the implementation phase.
(II)

Exception.—
The Secretary, on a case-by-case basis, may waive the planning phase for a partnership that demonstrates that the partnership has engaged in sufficient planning before submitting an application for a grant under this subsection.
(C)

Multiple grants allowed.—
This subsection shall not be interpreted to prevent a grantee from applying for, or being awarded, separate grants under this subsection.
(D)

Limitation on payment for a fiscal year.—
No payment shall be made under subparagraph (A) or (C) for a fiscal year until the Secretary determines that the eligible partnership has made sufficient progress in meeting the goals of the grant and that the members of the eligible partnership are coordinating to a reasonable degree with the other members of the eligible partnership.
(4)

Application requirements.—
To be eligible for a grant under this subsection, a regional partnership shall submit to the Secretary a written application containing the following:
(A)
Recent evidence demonstrating that substance abuse has had a substantial impact on the number of out-of-home placements for children, or the number of children who are at risk of being placed in an out-of-home placement, in the partnership region.
(B)
A description of the goals and outcomes to be achieved during the funding period for the grant that will—
(i)
enhance the well-being of children, parents, and families receiving services or taking part in activities conducted with funds provided under the grant;
(ii)
lead to safe, permanent caregiving relationships for the children;
(iii)
improve the substance abuse treatment outcomes for parents including retention in treatment and successful completion of treatment;
(iv)
facilitate the implementation, delivery, and effectiveness of prevention services and programs under section 471(e); and
(v)
decrease the number of out-of-home placements for children, increase reunification rates for children who have been placed in out-of-home care, or decrease the number of children who are at risk of being placed in an out-of-home placement, in the partnership region.
(C)
A description of the joint activities to be funded in whole or in part with the funds provided under the grant, including the sequencing of the activities proposed to be conducted under the funding period for the grant.
(D)
A description of the strategies for integrating programs and services determined to be appropriate for the child and the child's family.
(E)
A description of a plan for sustaining the services provided by or activities funded under the grant after the conclusion of the grant period, including through the use of prevention services and programs under section 471(e) and other funds provided to the State for child welfare and substance abuse prevention and treatment services.
(F)
Additional information needed by the Secretary to determine that the proposed activities and implementation will be consistent with research or evaluations showing which practices and approaches are most effective.
(5)

Use of funds.—
Funds made available under a grant made under this subsection shall only be used for services or activities that are consistent with the purpose of this subsection and may include the following:
(A)
Family-based comprehensive long-term substance use disorder treatment including medication assisted treatment and in-home substance abuse disorder treatment and recovery services.
(B)
Early intervention and preventative services.
(C)
Children and family counseling.
(D)
Mental health services.
(E)
Parenting skills training.
(F)
Replication of successful models for providing family-based comprehensive long-term substance abuse treatment services.
(6)

Matching requirement.—
(A)

Federal share.—
A grant awarded under this subsection shall be available to pay a percentage share of the costs of services provided or activities conducted under such grant, not to exceed—
(i)
85 percent for the first and second fiscal years for which the grant is awarded to a recipient;
(ii)
80 percent for the third and fourth such fiscal years;
(iii)
75 percent for the fifth such fiscal year;
(iv)
70 percent for the sixth such fiscal year; and
(v)
65 percent for the seventh such fiscal year.
(B)

Non-federal share.—
The non-Federal share of the cost of services provided or activities conducted under a grant awarded under this subsection may be in cash or in kind. In determining the amount of the non-Federal share, the Secretary may attribute fair market value to goods, services, and facilities contributed from non-Federal sources.
(7)

Considerations in awarding grants.—
In awarding grants under this subsection, the Secretary shall take into consideration the extent to which applicant regional partnerships—
(A)
demonstrate that substance abuse by parents or caretakers has had a substantial impact on the number of out-of-home placements for children, or the number of children who are at risk of being placed in an out-of-home placement, in the partnership region;
(B)
have limited resources for addressing the needs of children affected by such abuse;
(C)
have a lack of capacity for, or access to, comprehensive family treatment services;
(D)
demonstrate a track record of successful collaboration among child welfare, substance abuse disorder treatment and mental health agencies;
(E)
demonstrate a plan for sustaining the services provided by or activities funded under the grant after the conclusion of the grant period;
(F)
have submitted information pursuant to paragraph (4)(F) that demonstrates the capability to participate in rigorous evaluation of program effectiveness; and
(G)
are a State or public agency, or outline a plan to increase the availability of services funded under the grant statewide.
(8)

Performance indicators.—
(A)

In general.—
Not later than 9 months after the date of enactment of the Protecting America’s Children by Strengthening Families Act, the Secretary shall review indicators that are used to assess periodically the performance of the grant recipients under this subsection and establish a set of core indicators related to child safety, child permanency, reunification, re-entry into care, parental recovery, parenting capacity, and family well-being. In developing the core indicators, to the extent possible, indicators shall be made consistent with the outcome measures described in section 471(e)(6), and access to services for families with substance use disorder, including those with children who are overrepresented in foster care, difficult to place, or have disproportionately low permanency rates.
(B)

Consultation required.—
In establishing the performance indicators required by subparagraph (A), the Secretary shall base the performance measures on lessons learned from prior rounds of regional partnership grants under this subsection, and consult with the following:
(i)
The Assistant Secretary for the Administration for Children and Families.
(ii)
The Administrator of the Substance Abuse and Mental Health Services Administration.
(iii)
The Administrator of the National Institute on Drug Abuse.
(iv)
Other stakeholders or constituencies as determined by the Secretary.
(9)

Reports.—
(A)

Grantee reports.—
(i)

Semiannual reports.—
Not later than September 30 of each fiscal year in which a recipient of a grant under this subsection is paid funds under the grant, and every 6 months thereafter, the grant recipient shall submit to the Secretary a report on the services provided and activities carried out during the reporting period, progress made in achieving the goals of the program, the number of children, adults, and families receiving services, and such additional information as the Secretary determines is necessary. The report due not later than September 30 of the last such fiscal year shall include, at a minimum, data on each of the performance indicators included in the evaluation of the regional partnership.
(ii)

Incorporation of information related to performance indicators.—
Each recipient of a grant under this subsection shall incorporate into the first annual report required by clause (i) that is submitted after the establishment of performance indicators under paragraph (8), information required in relation to such indicators.
(B)

Reports to congress.—
On the basis of the reports submitted under subparagraph (A), the Secretary annually shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on—
(i)
the services provided and activities conducted with funds provided under grants awarded under this subsection;
(ii)
the performance indicators established under paragraph (8);
(iii)
the progress that has been made in addressing the needs of families with substance abuse problems who come to the attention of the child welfare system and in achieving the goals of child safety, permanence, and family stability; and
(iv)
whether any programs funded by the grants were submitted to the clearinghouse established under section 476(d) for review and the results of any such review.
(10)

Limitation on use of funds for administrative expenses of the secretary.—
Not more than 5 percent of the amounts appropriated or reserved for awarding grants under this subsection may be used by the Secretary for salaries and Department of Health and Human Services administrative expenses in administering this subsection.
(g)

Funding for the Development of an Electronic Interstate Case-processing System to Expedite the Interstate Placement of Children in Foster Care or Guardianship, or for Adoption.—
(1)

Purpose.—
The purpose of this subsection is to facilitate the development of an electronic interstate case-processing system for the exchange of data and documents to expedite the placements of children in foster, guardianship, or adoptive homes across State lines.
(2)

Requirements.—
A State that seeks funding under this subsection shall submit to the Secretary the following:
(A)
A description of the goals and outcomes to be achieved, which goals and outcomes must result in—
(i)
reducing the time it takes for a child to be provided with a safe and appropriate permanent living arrangement across State lines;
(ii)
improving administrative processes and reducing costs in the foster care system; and
(iii)
the secure exchange of relevant case files and other necessary materials in real time, and timely communications and placement decisions regarding interstate placements of children.
(B)
A description of the activities to be funded in whole or in part with the funds, including the sequencing of the activities.
(C)
A description of the strategies for integrating programs and services for children who are placed across State lines.
(D)
Such other information as the Secretary may require.
(3)

Funding authority.—
The Secretary may provide funds to a State that complies with paragraph (2). In providing funds under this subsection, the Secretary shall prioritize States that are not yet connected with the electronic interstate case-processing system referred to in paragraph (1).
(4)

Use of funds.—
A State to which funding is provided under this subsection shall use the funding to support the State in connecting with, or enhancing or expediting services provided under, the electronic interstate case-processing system referred to in paragraph (1).
(5)

Evaluations.—
Not later than 1 year after the final year in which funds are awarded under this subsection, the Secretary shall submit to the Congress, and make available to the general public by posting on a website, a report that contains the following information:
(A)
How using the electronic interstate case-processing system developed pursuant to paragraph (4) has changed the time it takes for children to be placed across State lines.
(B)
The number of cases subject to the Interstate Compact on the Placement of Children that were processed through the electronic interstate case-processing system, and the number of interstate child placement cases that were processed outside the electronic interstate case-processing system, by each State in each year.
(C)
The progress made by States in implementing the electronic interstate case-processing system.
(D)
How using the electronic interstate case-processing system has affected various metrics related to child safety and well-being, including the time it takes for children to be placed across State lines.
(E)
How using the electronic interstate case-processing system has affected administrative costs and caseworker time spent on placing children across State lines.
(6)

Data integration.—
The Secretary, in consultation with the Secretariat for the Interstate Compact on the Placement of Children and the States, shall assess how the electronic interstate case-processing system developed pursuant to paragraph (4) could be used to better serve and protect children that come to the attention of the child welfare system, by—
(A)
connecting the system with other data systems (such as systems operated by State law enforcement and judicial agencies, systems operated by the Federal Bureau of Investigation for the purposes of the Innocence Lost National Initiative, and other systems);
(B)
simplifying and improving reporting related to paragraphs (34) and (35) of section 471(a) regarding children or youth who have been identified as being a sex trafficking victim or children missing from foster care; and
(C)
improving the ability of States to quickly comply with background check requirements of section 471(a)(20), including checks of child abuse and neglect registries as required by section 471(a)(20)(B).
SEC. 438.
[42 U.S.C. 629h]

ENTITLEMENT FUNDING FOR STATE COURTS TO ASSESS AND IMPROVE HANDLING OF PROCEEDINGS RELATING TO FOSTER CARE AND ADOPTION.
(a)

In General.—
The Secretary shall make grants, in accordance with this section, to the highest State courts in States participating in the program under part E, for the purpose of enabling such courts—
(1)
to conduct assessments, in accordance with such requirements as the Secretary shall publish, of the role, responsibilities, and effectiveness of State courts in carrying out State laws requiring proceedings (conducted by or under the supervision of the courts)—
(A)
that implement parts B and E;
(B)
that determine the advisability or appropriateness of foster care placement;
(C)
that determine whether to terminate parental rights;
(D)
that determine whether to approve the adoption or other permanent placement of a child;
(E)
that determine the best strategy to use to expedite the interstate placement of children, including—
(i)
requiring courts in different States to cooperate in the sharing of information;
(ii)
authorizing courts to obtain information and testimony from agencies and parties in other States without requiring interstate travel by the agencies and parties; and
(iii)
permitting the participation of parents, children, other necessary parties, and attorneys in cases involving interstate placement without requiring their interstate travel; and
(F)
that determine the appropriateness and best practices for use of technology to conduct remote hearings, subject to participant consent, including to ensure maximum participation of individuals involved in proceedings and to enable courts to maintain operations in times of public health or other emergencies;
(2)
to implement improvements the highest state 28 courts deem necessary as a result of the assessments, including—
^{28}
So in law. The word “state” probably should read “State”.
(A)
to provide for the safety, well-being, and permanence of children in foster care in a timely and complete manner, as set forth in the Adoption and Safe Families Act of 1997 (Public Law 105–89), including the requirements in the Act related to concurrent planning;
(B)
to implement a corrective action plan, as necessary, resulting from reviews of child and family service programs under section 1123A of this Act; and
(C)
to increase and improve engagement of the entire family in court processes relating to child welfare, family preservation, family reunification, and adoption, including by training judges, attorneys, and other legal personnel and supporting optimal use of remote hearing technology; and
(3)
to ensure continuity of needed court services, prevent disruption of the services, and enable their recovery from threats such as public health crises, natural disasters or cyberattacks, including through—
(A)
support for technology that allows court proceedings to occur remotely subject to participant consent, including hearings and legal representation;
(B)
the development of guidance and protocols for responding to the occurrences and coordinating with other agencies; and
(C)
other activities carried out to ensure backup systems are in place.
(b)

Applications.—
In order to be eligible to receive a grant under this section, a highest State court shall have in effect a rule requiring State courts to ensure that foster parents, pre-adoptive parents, and relative caregivers of a child in foster care under the responsibility of the State are notified of any proceeding to be held with respect to the child, shall provide for the training of judges, attorneys, and other legal personnel in child welfare cases on Federal child welfare policies and payment limitations with respect to children in foster care who are placed in settings that are not a foster family home, and shall submit to the Secretary an application at such time, in such form, and including such information and assurances as the Secretary may require, including—
(1)
a description of how courts and child welfare agencies on the local and State levels will use not less than 30 percent of grant funds to collaborate and jointly plan for the collection and sharing of all relevant data and information to demonstrate how improved case tracking and analysis of child abuse and neglect cases will produce safe and timely permanency decisions;
(2)
a demonstration that a portion of the grant will be used for cross-training initiatives that are jointly planned and executed with the State agency or any other agency under contract with the State to administer the State program under the State plan under subpart 1, the State plan approved under section 434, or the State plan approved under part E; and
(C)
in the case of a grant for any purpose described in subsection (a),29 a demonstration of meaningful and ongoing collaboration among the courts in the State, the State agency or any other agency under contract with the State who is responsible for administering the State program under part B or E, and, where applicable, Indian tribes.
^{29}
Subparagraph (C) is so in law. The amendment by clause (iv) of section 305(b)(2)(C) of division CC of Public Law 116–260 to subparagraph (C) to strike “(C) in the case of a grant for the purpose described in subsection (a),’’ and inserting ‘‘(3)” does not execute because the phrase being struck does not appear in law.
(c)

Amount of Grant.—
(1)

In general.—
From the amounts reserved under sections 436(b)(1) and 437(b)(2) for a fiscal year, each highest State court that has an application approved under this section for the fiscal year shall be entitled to payment of an amount equal to the sum of—
(A)
$255,000; and
(B)
the amount described in paragraph (2) with respect to the court and the fiscal year.
(2)

Amount described.—
The amount described in this paragraph with respect to a court and a fiscal year is the amount that bears the same ratio to the total of the amounts reserved under sections 436(b)(1)) and 437(b)(2) for grants under this section for the fiscal year (after applying paragraphs (1)(A) and (3) of this subsection) as the number of individuals in the State in which the court is located who have not attained 21 years of age bears to the total number of such individuals in all States with a highest State court that has an approved application under this section for the fiscal year.
(3)

Indian tribes.—
From the amounts reserved under section 436(b)(1) for a fiscal year, the Secretary shall, before applying paragraph (1) of this subsection, allocate $1,000,000 for fiscal year 2025, and $2,000,000 for each of fiscal years 2026 through 2029, for grants to be awarded on a competitive basis among the highest courts of Indian tribes or tribal consortia that—
(A)
are operating a program under part E, in accordance with section 479B;
(B)
are seeking to operate a program under part E and have received an implementation grant under section 476; or
(C)
have a court responsible for proceedings related to foster care or adoption.
(d)

Federal Share.—
Each highest State court which receives funds paid under this section may use such funds to pay not more than 75 percent of the cost of activities under this section in each of fiscal years 2025 through 2029.
(e)

Guidance.—
(1)

In general.—
Every 5 years, the Secretary shall issue implementation guidance for sharing information on best practices for—
(A)
technological changes needed for court proceedings for foster care, guardianship, or adoption to be conducted remotely in a way that maximizes engagement and protects the privacy of participants; and
(B)
the manner in which the proceedings should be conducted.
(2)

Initial issuance.—
The Secretary shall issue initial guidance required by paragraph (1) with preliminary information on best practices not later than October 1, 2025.
(3)

Additional consultation.—
The Secretary shall consult with Indian tribes on the development of appropriate guidelines for State court proceedings involving Indian children to maximize engagement of Indian tribes and provide appropriate guidelines on conducting State court proceedings subject to the Indian Child Welfare Act of 1978 (25 U.S.C. 1901 et seq.).
SEC. 439.
[42 U.S.C. 629i]

STATE PARTNERSHIP PLANNING AND DEMONSTRATION GRANTS TO SUPPORT MEANINGFUL RELATIONSHIPS BETWEEN FOSTER CHILDREN AND THE INCARCERATED PARENTS OF THE CHILDREN.
(a)

Authority.—
(1)

In general.—
The Secretary may make demonstration grants to eligible State partnerships to develop, implement, and provide support for programs that enable and sustain meaningful relationships between covered foster children and the incarcerated parents of the children.
(2)

Payment of annual installments.—
The Secretary shall pay each demonstration grant in 5 annual installments.
(3)

1-year planning grants.—
The Secretary may make a planning grant to a recipient of a demonstration grant, to be paid to the recipient 1 year before payment of the 1st annual installment of the demonstration grant and in an amount not greater than any installment of the demonstration grant, if—
(A)
the recipient includes a request for a planning grant in the application under subsection (c); and
(B)
the Secretary determines that a planning grant would assist the recipient and improve the effectiveness of the demonstration grant.
(b)

Eligible State Partnership Defined.—
(1)

In general.—
In this section, the term “eligible State partnership” means an agreement entered into by, at a minimum, the following:
(A)
The State child welfare agency responsible for the administration of the State plans under this part.
(B)
The State agency responsible for adult corrections.
(2)

Additional partners.—
For purposes of this section, an eligible State partnership may include any entity with experience in serving incarcerated parents and their children.
(3)

Partnerships entered into by indian tribes or tribal consortia.—
Notwithstanding paragraph (1), if an Indian tribe or tribal consortium enters into a partnership pursuant to this section that does not consist solely of tribal child welfare agencies (or a consortium of the agencies), the partnership shall be considered an eligible State partnership for purposes of this section.
(c)

Application Requirements.—
An eligible State partnership seeking a demonstration grant under this section to carry out a program described in subsection (a)(1) shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may require. The application shall include the following:
(1)
A summary of the program, including how the program will support a meaningful relationship between a covered foster child and an incarcerated parent of the child.
(2)
A description of the activities to be carried out by the program, which must include all of the activities described in subsection (d) that are in the best interest of the covered foster child.
(3)
A framework for identifying—
(A)
each covered foster child eligible for services under the program, including, to the extent practicable, coordination of data between relevant State child welfare agencies and court systems; and
(B)
the roles and responsibilities of the entities in the partnership.
(4)
Documentation that the applicant is an eligible State partnership.
(5)
Assurances that the applicant will participate fully in the evaluation described in subsection (f)(2) and shall maintain records for the program, including demographic information disaggregated by relevant characteristics with respect to covered foster children and incarcerated parents who participate in the program.
(d)

Program Activities.—
To the extent that the activities are in the best interest of the covered foster child, the activities referred to in subsection (c)(2) shall include the following:
(1)

Revision of policies.—
Through consultation with incarcerated parents and their families, grantees shall promote organizational policies of participating child welfare entities and collaborating correctional facilities to promote meaningful relationships through regular and developmentally appropriate communication and visitation between covered foster children and the incarcerated parents, including, when appropriate, the following:
(A)
For child welfare entities—
(i)
inclusion of parents in case planning and decision making for children;
(ii)
regular sharing of information and responses to requests for information between caseworkers and incarcerated parents with respect to the case information of a child, any changes to a case, permanency plans, requirements to maintain parental rights, and any efforts to terminate parental rights;
(iii)
appropriate opportunities for incarcerated parents to demonstrate their relationship with a covered foster child given their incarceration, including training and courses required for a service plan; and
(iv)
the enhanced visitation described in paragraph (2).
(B)
For correctional facilities, fostering visitation and communication that is developmentally appropriate in terms of—
(i)
the nature of communication and visitation, including—
(I)
the ability to physically touch parents;
(II)
engaging with parents in locations that are appropriate for the age and development of the child;
(III)
exchanging items that are appropriate to the age and development of the child, include expectations that are appropriate for the age and development of the child related to behavior, attire, and wait times; and
(IV)
allowing appropriate adults to bring children if legal guardians are not available to promote regular contact;
(ii)
reasonable inclusion of all children of the parent;
(iii)
communication and visitation at times when the children are available;
(iv)
security procedures to comfort children and be minimally invasive; and
(v)
promoting parent-child relationships regardless of the sentence imposed on the parent.
(2)

Enhanced visitation.—
(A)
Grantees shall facilitate weekly communication and, for at least 9 days each year, in-person visitation between a covered foster child and any incarcerated parent of the child.
(B)
Electronic visitation (such as live video visits, phone calls, and recorded books) may be used but shall not be the sole method to promote a meaningful relationship for purposes of the grant.
(C)
Enhanced visitation programs shall—
(i)
integrate best practices for visitation programs with incarcerated parents and their children;
(ii)
adopt developmentally appropriate visitation policies and procedures such as those described in paragraph (1)(B);
(iii)
reduce or eliminate the cost of developmentally appropriate communication and visitation for the covered foster child, which may include the purchase of communication technology, covering transportation, insurance, and lodging costs, costs related to providing appropriate visitation spaces and activities, and other relevant costs;
(iv)
to the extent practicable, integrate appropriate parenting education to help prepare and process visits; and
(v)
avoid restricting visitation and communication as a punishment for the incarcerated parents.
(3)

Training.—
Grantees shall incorporate ongoing training for child welfare workers, correctional facility staff, and other program providers to understand the importance of promoting meaningful relationships between children and incarcerated parents.
(4)

Case management.—
Grantees shall provide case management services for the incarcerated parents of a covered foster child to promote the relationship, access to services, and coordination with the caseworkers of the covered foster child to strengthen the relationship.
(5)

Legal assistance.—
Grantees shall facilitate access to necessary legal services and may use grant funds for services that are not reimbursable under other Federal programs.
(e)

Federal Share.—
The Federal share of the cost of any activity carried out using a grant made under this section shall be not greater than 75 percent.
(f)

Technical Assistance, Evaluations, and Reports.—
(1)

Technical assistance.—
The Secretary shall provide technical assistance with respect to grants under this section, including by—
(A)
assisting grantees in understanding best practices in promoting meaningful relationships between incarcerated parents and their children as well as consulting with appropriate stakeholders when developing their programs;
(B)
assisting grantees with establishing and analyzing implementation and performance indicators; and
(C)
conducting an annual technical assistance and training meeting and an annual grantee meeting so that grantees can learn from the experiences of other grantees.
(2)

Evaluations.—
The Secretary shall conduct an evaluation of program outcomes, including with respect to parent and child well-being, parent-child interactions, parental involvement, awareness of child development and parenting practices, placement stability, and termination of parental rights with respect to covered foster children and incarcerated parents, to measure program effectiveness, as determined by the Secretary, and identify opportunities for improved program practices and implementation.
(3)

Reports to the congress.—
(A)

Initial report.—
Not later than 3 years after the date of the enactment of this section, the Secretary shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report that includes—
(i)
the number of applications for grants under this section;
(ii)
the number of grants awarded, and the amounts for each grant; and
(iii)
information on the grants, including—
(I)
interim results of the evaluation described in paragraph (2);
(II)
disaggregated data on covered foster children and incarcerated parents;
(III)
information on the composition of eligible State partnerships;
(IV)
best practices for facilitating meaningful relationships between covered foster children and incarcerated parents; and
(V)
barriers to implementation or expansion of programs funded under this section.
(B)

Final report.—
Not later than 6 years after the date of the enactment of this section, the Secretary shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report that includes—
(i)
the final results of the evaluation described in paragraph (2); and
(ii)
recommendations for refinements to grant requirements to improve program outcomes.
(g)

Authority of Secretary With Respect to Indian Tribes and Tribal Organizations.—
(1)

Waiver or modification of requirements.—
In making a grant to an Indian tribe or tribal organization under this section, the Secretary may waive the matching requirement of subsection (e) or modify an application requirement imposed by or under subsection (c) if the Secretary determines that the waiver or modification is appropriate to the needs, culture, and circumstances of the Indian tribe or tribal organization.
(2)

Evaluation.—
The Secretary shall use tribally relevant data in carrying out the evaluation under subsection (f)(2) with respect to an Indian tribe or tribal organization.
(h)

Limitations on Authorization of Appropriations.—
There is authorized to be appropriated to the Secretary not more than $35,000,000 for each of fiscal years 2026 through 2029 to carry out this section.
(i)

Definition of Covered Foster Child.—
In this section, the term “covered foster child” means a child that—
(1)
is in foster care; and
(2)
has at least 1 parent incarcerated in a Federal, State, or local correctional facility.
Subpart 3—

Common Provisions
SEC. 441.
[42 U.S.C. 629k]

REDUCTION OF ADMINISTRATIVE BURDEN.
(a)

In General.—
The Secretary shall reduce the burden of administering this part imposed on the recipients of funds under this part, by—
(1)
reviewing and revising administrative data collection instruments and forms to eliminate duplication and streamline reporting requirements for the recipients while collecting all data required under this part;
(2)
in coordination with activities required under the Paperwork Reduction Act, conducting an analysis of the total number of hours reported by the recipients to comply with paperwork requirements and exploring, in consultation with the recipients, how to reduce the number of hours required for the compliance by at least 15 percent;
(3)
collecting input from the recipients with respect to fiscal and oversight requirements and making changes to ensure consistency with standards and guidelines for other Federal formula grant programs based on the input; and
(4)
respecting the sovereignty of Indian tribes when complying with this subsection.
(b)

Limitation on Applicability.—
Subsection (a) of this section shall not apply to any reporting or data collection otherwise required by law that would affect the ability of the Secretary to monitor and ensure compliance with State plans approved under this part or ensure that funds are expended consistent with this part.
SEC. 442.
[42 U.S.C. 629l]

PUBLIC ACCESS TO STATE PLANS.
The Secretary shall—
(1)
create a standardized format for State plans required under sections 422 and 432 used to monitor compliance with those sections;
(2)
produce comparisons and analyses of trends in State plans to inform future technical assistance and policy development;
(3)
make the State plans available on a public website; and
(4)
include on the website aggregated national summaries of State submissions as the Secretary deems appropriate.
SEC. 443.
[42 U.S.C. 629m]

DATA EXCHANGE STANDARDS FOR IMPROVED INTEROPERABILITY.
(a)

Designation.—
The Secretary shall, in consultation with an interagency work group established by the Office of Management and Budget and considering State government perspectives, by rule, designate data exchange standards to govern, under this part and part E—
(1)
necessary categories of information that State agencies operating programs under State plans approved under this part are required under applicable Federal law to electronically exchange with another State agency; and
(2)
Federal reporting and data exchange required under applicable Federal law.
(b)

Requirements.—
The data exchange standards required by paragraph (1) shall, to the extent practicable—
(1)
incorporate a widely accepted, non-proprietary, searchable, computer-readable format, such as the Extensible Markup Language;
(2)
contain interoperable standards developed and maintained by intergovernmental partnerships, such as the National Information Exchange Model;
(3)
incorporate interoperable standards developed and maintained by Federal entities with authority over contracting and financial assistance;
(4)
be consistent with and implement applicable accounting principles;
(5)
be implemented in a manner that is cost-effective and improves program efficiency and effectiveness; and
(6)
be capable of being continually upgraded as necessary.
(c)

Rule of Construction.—
Nothing in this subsection shall be construed to require a change to existing data exchange standards found to be effective and efficient.
[Part C—Repealed]
Part D—

Child Support and Establishment of Paternity

APPROPRIATION
Sec. 451.
[42 U.S.C. 651]
For the purpose of enforcing the support obligations owed by noncustodial parents to their children and the spouse (or former spouse) with whom such children are living, locating noncustodial parents, establishing paternity, obtaining child and spousal support, and assuring that assistance in obtaining support will be available under this part to all children (whether or not eligible for assistance under a State program funded under part A) for whom such assistance is requested, there is hereby authorized to be appropriated for each fiscal year a sum sufficient to carry out the purposes of this part.

DUTIES OF THE SECRETARY
Sec. 452.
[42 U.S.C. 652]
(a)
The Secretary shall establish, within the Department of Health and Human Services a separate organizational unit, under the direction of a designee of the Secretary, who shall report directly to the Secretary and who shall—
(1)
establish such standards for State programs for locating noncustodial parents, establishing paternity, and obtaining child support and support for the spouse (or former spouse) with whom the noncustodial parent's child is living as he determines to be necessary to assure that such programs will be effective;
(2)
establish minimum organizational and staffing requirements for State units engaged in carrying out such programs under plans approved under this part;
(3)
review and approve State plans for such programs;
(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 subsection (g) of this section and section 458;
(B)
review annual reports submitted pursuant to section 454(15)(A) and, as appropriate, provide to the State comments, recommendations for additional or alternative corrective actions, and technical assistance; and
(C)
conduct audits, in accordance with the Government auditing standards of the Comptroller General of the United States—
(i)
at least once every 3 years (or more frequently, in the case of a State which fails to meet the requirements of this part 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 in calculating performance indicators under subsection (g) of this section and section 458;
(ii)
of the adequacy of financial management of the State program operated under the State plan approved under this part, including assessments of—
(I)
whether Federal and other funds made available to carry out the State program are being appropriately expended, and are properly and fully accounted for; and
(II)
whether collections and disbursements of support payments are carried out correctly and are fully accounted for; and
(iii)
for such other purposes as the Secretary may find necessary;
(5)
assist States in establishing adequate reporting procedures and maintain records of the operations of programs established pursuant to this part in each State, 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) to be applied in following such procedures;
(6)
maintain records of all amounts collected and disbursed under programs established pursuant to the provisions of this part and of the costs incurred in collecting such amounts;
(7)
provide technical assistance to the States to help them establish effective systems for collecting child and spousal support and establishing paternity, and specify the minimum requirements of an affidavit to be used for the voluntary acknowledgment of paternity which shall include the social security number of each parent and, after consultation with the States, other common elements as determined by such designee;
(8)
receive applications from States for permission to utilize the courts of the United States to enforce court orders for support against noncustodial parents and, upon a finding that (A) another State has not undertaken to enforce the court order of the originating State against the noncustodial parent within a reasonable time, and (B) that utilization of the Federal courts is the only reasonable method of enforcing such order, approve such applications;
(9)
operate the Federal Parent Locator Service established by section 453;
(10)
not later than three months after the end of each fiscal year, beginning with the year 1977, submit to the Congress a full and complete report on all activities undertaken pursuant to the provisions of this part, which report shall include, but not be limited to, the following:
(A)
total program costs and collections set forth in sufficient detail to show the cost to the States and the Federal Government, the distribution of collections to families, State and local governmental units, and the Federal Government; and an identification of the financial impact of the provisions of this part, including—
(i)
the total amount of child support payments collected as a result of services furnished during the fiscal year to individuals receiving services under this part;
(ii)
the cost to the States and to the Federal Government of so furnishing the services; and
(iii)
the number of cases involving families—
(I)
who became ineligible for assistance under State programs funded under part A during a month in the fiscal year; and
(II)
with respect to whom a child support payment was received in the month;
(B)
costs and staff associated with the Office of Child Support Enforcement;
(C)
the following data, separately stated for cases where the child is receiving assistance under a State program funded under part A (or foster care maintenance payments under part E), or formerly received such assistance or payments and the State is continuing to collect support assigned to it pursuant to section 408(a)(3) or under section 471(a)(17) or 1912, and for all other cases under this part:
(i)
the total number of cases in which a support obligation has been established in the fiscal year for which the report is submitted;
(ii)
the total number of cases in which a support obligation has been established;
(iii)
the number of cases in which support was collected during the fiscal year;
(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
(vii)
the number of child support cases filed in each State in such fiscal year, and the amount of the collections made in each State in such fiscal year, on behalf of children residing in another State or against parents residing in another State;
(D)
the status of all State plans under this part as of the end of the fiscal year last ending before the report is submitted, together with an explanation of any problems which are delaying or preventing approval of State plans under this part;
(E)
data, by State, on the use of the Federal Parent Locator Service, and the number of locate requests submitted without the noncustodial parent's social security account number;
(F)
the number of cases, by State, in which an applicant for or recipient of assistance under a State program funded under part A has refused to cooperate in identifying and locating the noncustodial parent and the number of cases in which refusal so to cooperate is based on good cause (as determined by the State);
(G)
data, by State, on use of the Internal Revenue Service for collections, the number of court orders on which collections were made, the number of paternity determinations made and the number of parents located, in sufficient detail to show the cost and benefits to the States and to the Federal Government;
(H)
the major problems encountered which have delayed or prevented implementation of the provisions of this part during the fiscal year last ending prior to the submission of such report; and
(I)
compliance, by State, with the standards established pursuant to subsections (h) and (i); and
(11)
not later than October 1, 1996, after consulting with the State directors of programs under this part, promulgate forms to be used by States in interstate cases for—
(A)
collection of child support through income withholding;
(B)
imposition of liens; and
(C)
administrative subpoenas.
(b)
The Secretary shall, upon the request of any State having in effect a State plan approved under this part, certify to the Secretary of the Treasury for collection pursuant to the provisions of section 6305 of the Internal Revenue Code of 195430 the amount of any child support obligation (including any support obligation with respect to the parent who is living with the child and receiving assistance under the State program funded under part A) which is assigned to such State or is undertaken to be collected by such State pursuant to section 454(4). No amount may be certified for collection under this subsection except the amount of the delinquency under a court or administrative order for support and upon a showing by the State that such State has made diligent and reasonable efforts to collect such amounts utilizing its own collection mechanisms, and upon an agreement that the State will reimburse the Secretary of the Treasury for any costs involved in making the collection. All reimbursements shall be credited to the appropriation accounts which bore all or part of the costs involved in making the collections. The Secretary after consultation with the Secretary of the Treasury may, by regulation, establish criteria for accepting amounts for collection and for making certification under this subsection including imposing such limitations on the frequency of making such certifications under this subsection.
^{30}
So in law. The reference to the Internal Revenue Code of 1954 probably should be to the Internal Revenue Code of 1986. See section 2 of Public Law 99–514.
(c)
The Secretary of the Treasury shall from time to time pay to each State for distribution in accordance with the provisions of section 457 the amount of each collection made on behalf of such State pursuant to subsection (b).
(d)
(1)
Except as provided in paragraph (3), the Secretary shall not approve the initial and annually updated advance automated data processing planning document, referred to in section 454(16), unless he finds that such document, when implemented, will generally carry out the objectives of the management system referred to in such subsection, and such document
(A)
provides for the conduct of, and reflects the results of, requirements analysis studies, which include consideration of the program mission, functions, organization, services, constraints, and current support, of, in, or relating to, such system,
(B)
contains a description of the proposed management system referred to in section 454(16), including a description of information flows, input data, and output reports and uses,
(C)
sets forth the security and interface requirements to be employed in such management system,
(D)
describes the projected resource requirements for staff and other needs, and the resources available or expected to be available to meet such requirements,
(E)
contains an implementation plan and backup procedures to handle possible failures,
(F)
contains a summary of proposed improvement of such management system in terms of qualitative and quantitative benefits, and
(G)
provides such other information as the Secretary determines under regulation is necessary.
(2)
(A)
The Secretary shall through the separate organizational unit established pursuant to subsection (a), on a continuing basis, review, assess, and inspect the planning, design, and operation of, management information systems referred to in section 454(16), with a view to determining whether, and to what extent, such systems meet and continue to meet requirements imposed under paragraph (1) and the conditions specified under section 454(16).
(B)
If the Secretary finds with respect to any statewide management information system referred to in section 454(16) that there is a failure substantially to comply with criteria, requirements, and other undertakings, prescribed by the advance automated data processing planning document theretofore approved by the Secretary with respect to such system, then the Secretary shall suspend his approval of such document until there is no longer any such failure of such system to comply with such criteria, requirements, and other undertakings so prescribed.
(3)
The Secretary may waive any requirement of paragraph (1) or any condition specified under section 454(16), and shall waive the single statewide system requirement under sections 454(16) and 454A, with respect to a State if—
(A)
the State demonstrates to the satisfaction of the
Secretary that the State has or can develop an alternative system or systems that enable the State—
(i)
for purposes of section 409(a)(8), to achieve the paternity establishment percentages (as defined in section 452(g)(2)) and other performance measures that may be established by the Secretary;
(ii)
to submit data under section 454(15)(B) that is complete and reliable;
(iii)
to substantially comply with the requirements of this part; and
(iv)
in the case of a request to waive the single statewide system requirement, to—
(I)
meet all functional requirements of sections 454(16) and 454A;
(II)
ensure that calculation of distributions meets the requirements of section 457 and accounts for
distributions to children in different families or in
different States or sub-State jurisdictions, and for distributions to other States;
(III)
ensure that there is only one point of contact in the State which provides seamless case processing for all interstate case processing and coordinated, automated intrastate case management;
(IV)
ensure that standardized data elements, forms, and definitions are used throughout the State;
(V)
complete the alternative system in no more time than it would take to complete a single statewide system that meets such requirement; and
(VI)
process child support cases as quickly,
efficiently, and effectively as such cases would be processed through a single statewide system that meets such requirement;
(B)
(i)
the waiver meets the criteria of paragraphs (1), (2), and (3) of section 1115(c); or
(ii)
the State provides assurances to the Secretary that steps will be taken to otherwise improve the State's child support enforcement program; and
(C)
in the case of a request to waive the single statewide system requirement, the State has submitted to the Secretary separate estimates of the total cost of a single statewide system that meets such requirement, and of any such alternative system or systems, which shall include estimates of the cost of developing and completing the system and of operating and maintaining the system for 5 years, and the Secretary has agreed with the estimates.
(e)
The Secretary shall provide such technical assistance to States as he determines necessary to assist States to plan, design, develop, or install and provide for the security of, the management information systems referred to in section 454(16).
(f)
The Secretary shall issue regulations to require that State agencies administering the child support enforcement program under this part enforce medical support included as part of a child support order whenever health care coverage is available to the noncustodial parent at a reasonable cost. A State agency administering the program under this part may enforce medical support against a custodial parent if health care coverage is available to the custodial parent at a reasonable cost, notwithstanding any other provision of this part. Such regulation shall also provide for improved information exchange between such State agencies and the State agencies administering the State medicaid programs under title XIX with respect to the availability of health insurance coverage. For purposes of this part, the term “medical support” may include health care coverage, such as coverage under a health insurance plan (including payment of costs of premiums, co-payments, and deductibles) and payment for medical expenses incurred on behalf of a child.
(g)
(1)
A State's program under this part shall be found, for purposes of section 409(a)(8), not to have complied substantially with the requirements of this part unless, for any fiscal year beginning on or after October 1, 1994, its paternity establishment percentage for such fiscal year is based on reliable data and (rounded to the nearest whole percentage point) equals or exceeds—
(A)
90 percent;
(B)
for a State with a paternity establishment percentage of not less than 75 percent but less than 90 percent for such fiscal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 2 percentage points;
(C)
for a State with a paternity establishment percentage of not less than 50 percent but less than 75 percent for such fiscal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 3 percentage points;
(D)
for a State with a paternity establishment percentage of not less than 45 percent but less than 50 percent for such fiscal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 4 percentage points;
(E)
for a State with a paternity establishment percentage of not less than 40 percent but less than 45 percent for such fiscal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 5 percentage points; or
(F)
for a State with a paternity establishment percentage of less than 40 percent for such fiscal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 6 percentage points.
In determining compliance under this section, a State may use as its paternity establishment percentage either the State's IV–D paternity establishment percentage (as defined in paragraph (2)(A)) or the State's statewide paternity establishment percentage (as defined in paragraph (2)(B)).
(2)
For purposes of this section—
(A)
the term “IV–D paternity establishment percentage” means, with respect to a State for a fiscal year, the ratio (expressed as a percentage) that the total number of children—
(i)
who have been born out of wedlock,
(ii)
(I)
except as provided in the last sentence of this paragraph, with respect to whom assistance is being provided under the State program funded under part A in the fiscal year or, at the option of the State, as of the end of such year, or (II) with respect to whom services are being provided under the State's plan approved under this part in the fiscal year or, at the option of the State, as of the end of such year pursuant to an application submitted under section 454(4)(A)(ii), and
(iii)
the paternity of whom has been established or acknowledged,
bears to the total number of children born out of wedlock and (except as provided in such last sentence) with respect to whom assistance was being provided under the State program funded under part A as of the end of the preceding fiscal year or with respect to whom services were being provided under the State's plan approved under this part as of the end of the preceding fiscal year pursuant to an application submitted under section 454(4)(A)(ii);
(B)
the term “statewide paternity establishment percentage” means, with respect to a State for a fiscal year, the ratio (expressed as a percentage) that the total number of minor children—
(i)
who have been born out of wedlock, and
(ii)
the paternity of whom has been established or acknowledged during the fiscal year,
bears to the total number of children born out of wedlock during the preceding fiscal year; and
(C)
the term “reliable data” means the most recent data available which are found by the Secretary to be reliable for purposes of this section.
For purposes of subparagraphs (A) and (B), the total number of children shall not include any child with respect to whom assistance is being provided under the State program funded under part A by reason of the death of a parent unless paternity is established for such child or any child with respect to whom an applicant or recipient is found by the State to qualify for a good cause or other exception to cooperation pursuant to section 454(29).
(3)
(A)
The Secretary may modify the requirements of this subsection to take into account such additional variables as the Secretary identifies (including the percentage of children in a State who are born out of wedlock or for whom support has not been established) that affect the ability of a State to meet the requirements of this subsection.
(B)
The Secretary shall submit an annual report to the Congress that sets forth the data upon which the paternity establishment percentages for States for a fiscal year are based, lists any additional variables the Secretary has identified under subparagraph (A), and describes State performance in establishing paternity.
(h)
The standards required by subsection (a)(1) shall include standards establishing time limits governing the period or periods within which a State must accept and respond to requests (from States, jurisdictions thereof, or individuals who apply for services furnished by the State agency under this part or with respect to whom an assignment pursuant to section 408(a)(3) is in effect) for assistance in establishing and enforcing support orders, including requests to locate noncustodial parents, establish paternity, and initiate proceedings to establish and collect child support awards.
(i)
The standards required by subsection (a)(1) shall include standards establishing time limits governing the period or periods within which a State must distribute, in accordance with section 457, amounts collected as child support pursuant to the State's plan approved under this part.
(j)
Out of any money in the Treasury of the United States not otherwise appropriated, there is hereby appropriated to the Secretary for each fiscal year an amount equal to 1 percent of the total amount paid to the Federal Government pursuant to a plan approved under this part during the immediately 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) or the amount appropriated under this paragraph 31 for fiscal year 2002, whichever is greater, which shall be available for use by the Secretary, either directly or through grants, contracts, or interagency agreements, for—
^{31}
So in law. The word “paragraph” in subsection (j) probably should read “subsection”.
(1)
information dissemination and technical assistance to States, training of State and Federal staff, staffing studies, and related activities needed to improve programs under this part (including technical assistance concerning State automated systems required by this part); and
(2)
research, demonstration, and special projects of regional or national significance relating to the operation of State programs under this part.
The amount appropriated under this subsection shall remain available until expended.
(k)
(1)
If the Secretary receives a certification by a State agency in accordance with the requirements of section 454(31) that an individual owes arrearages of child support in an amount exceeding $2,500, the Secretary shall transmit such certification to the Secretary of State for action (with respect to denial, revocation, or limitation of passports) pursuant to paragraph (2).
(2)
The Secretary of State shall, upon certification by the Secretary transmitted under paragraph (1), refuse to issue a passport to such individual, and may revoke, restrict, or limit a passport issued previously to such individual.
(3)
The Secretary and 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.
(l)
The Secretary, through the Federal Parent Locator Service, may aid State agencies providing services under State programs operated pursuant to this part and financial institutions doing business in two or more States in reaching agreements regarding the receipt from such institutions, and the transfer to the State agencies, of information that may be provided pursuant to section 466(a)(17)(A)(i), except that any State that, as of the date of the enactment of this subsection, is conducting data matches pursuant to section 466(a)(17)(A)(i) shall have until January 1, 2000, to allow the Secretary to obtain such information from such institutions that are operating in the State. For purposes of section 1113(d) of the Right to Financial Privacy Act of 1978, a disclosure pursuant to this subsection shall be considered a disclosure pursuant to a Federal statute.
(m)

Comparisons With Insurance Information.—
(1)

In general.—
The Secretary, through the Federal Parent Locator Service, may—
(A)
compare information concerning individuals owing past-due support with information maintained by insurers (or their agents) concerning insurance claims, settlements, awards, and payments; and
(B)
furnish information resulting from the data matches to the State agencies responsible for collecting child support from the individuals.
(2)

Liability.—
An insurer (including any agent of an insurer) shall not be liable under any Federal or State law to any person for any disclosure provided for under this subsection, or for any other action taken in good faith in accordance with this subsection.
(n)
The Secretary shall use the authorities otherwise provided by law to ensure the compliance of the United States with any multilateral child support convention to which the United States is a party.
(o)

Data Exchange Standards for Improved Interoperability.—
(1)

Designation.—
The Secretary shall, in consultation with an interagency work group established by the Office of Management and Budget and considering State government perspectives, by rule, designate data exchange standards to govern, under this part—
(A)
necessary categories of information that State agencies operating programs under State plans approved under this part are required under applicable Federal law to electronically exchange with another State agency; and
(B)
Federal reporting and data exchange required under applicable Federal law.
(2)

Requirements.—
The data exchange standards required by paragraph (1) shall, to the extent practicable—
(A)
incorporate a widely accepted, non-proprietary, searchable, computer-readable format, such as the eXtensible Markup Language;
(B)
contain interoperable standards developed and maintained by intergovernmental partnerships, such as the National Information Exchange Model;
(C)
incorporate interoperable standards developed and maintained by Federal entities with authority over contracting and financial assistance;
(D)
be consistent with and implement applicable accounting principles;
(E)
be implemented in a manner that is cost-effective and improves program efficiency and effectiveness; and
(F)
be capable of being continually upgraded as necessary.
(3)

Rule of construction.—
Nothing in this subsection shall be construed to require a change to existing data exchange standards found to be effective and efficient.

FEDERAL PARENT LOCATOR SERVICE
Sec. 453.
[42 U.S.C. 653]
(a)
(1)
The Secretary shall establish and conduct a Federal Parent Locator Service, under the direction of the designee of the Secretary referred to in section 452(a), which shall be used for the purposes specified in paragraphs (2) and (3).
(2)
For the purpose of establishing parentage or establishing, setting the amount of, modifying, or enforcing child support obligations, the Federal Parent Locator Service shall obtain and transmit to any authorized person specified in subsection (c)—
(A)
information on, or facilitating the discovery of, the location of any individual—
(i)
who is under an obligation to pay child support;
(ii)
against whom such an obligation is sought;
(iii)
to whom such an obligation is owed; or
(iv)
who has or may have parental rights with respect to a child,
including the individual's social security number (or numbers), most recent address, and the name, address, and employer identification number of the individual's employer;
(B)
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
(C)
information on the type, status, location, and amount of any assets of, or debts owed by or to, any such individual.
(3)
For the purpose of enforcing any Federal or State law with respect to the unlawful taking or restraint of a child, or making or enforcing a child custody or visitation determination, as defined in section 463(d)(1), the Federal Parent Locator Service shall be used to obtain and transmit the information specified in section 463(c) to the authorized persons specified in section 463(d)(2).
(b)
(1)
Upon request, filed in accordance with subsection (d), of any authorized person, as defined in subsection (c) for the information described in subsection (a)(2), or of any authorized person, as defined in section 463(d)(2) for the information described in section 463(c), the Secretary shall, notwithstanding any other provision of law, provide through the Federal Parent Locator Service such information to such person, if such information—
(A)
is contained in any files or records maintained by the Secretary or by the Department of Health and Human Services; or
(B)
is not contained in such files or records, but can be obtained by the Secretary, under the authority conferred by subsection (e), from any other department, agency, or instrumentality of the United States or of any State,
and is not prohibited from disclosure under paragraph (2).
(2)
No information shall be disclosed to any person if the disclosure of such information would contravene the national policy or security interests of the United States or the confidentiality of census data. The Secretary shall give priority to requests made by any authorized person described in subsection (c)(1). No information shall be disclosed to any person if the State has notified the Secretary that the State has reasonable evidence of domestic violence or child abuse and the disclosure of such information could be harmful to the custodial parent or the child of such parent, provided that—
(A)
in response to a request from an authorized person (as defined in subsection (c) of this section and section 463(d)(2)), the Secretary shall advise the authorized person that the Secretary has been notified that there is reasonable evidence of domestic violence or child abuse and that information can only be disclosed to a court or an agent of a court pursuant to subparagraph (B); and
(B)
information may be disclosed to a court or an agent of a court described in subsection (c)(2) of this section or section 463(d)(2)(B), if—
(i)
upon receipt of information from the Secretary, the court determines whether disclosure to any other person of that information could be harmful to the parent or the child; and
(ii)
if the court determines that disclosure of such information to any other person could be harmful, the court and its agents shall not make any such disclosure.
(3)
Information received or transmitted pursuant to this section shall be subject to the safeguard provisions contained in section 454(26).
(c)
As used in subsection (a), the term “authorized person” means—
(1)
any agent or attorney of any State or Indian tribe or tribal organization (as defined in subsections (e) and (l) of section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b)), having in effect a plan approved under this part, who has the duty or authority under such plans to seek to recover any amounts owed as child and spousal support (including, when authorized under the State plan, any official of a political subdivision);
(2)
the court which has authority to issue an order or to serve as the initiating court in an action to seek an order against a noncustodial parent for the support and maintenance of a child, or any agent of such court;
(3)
the resident parent, legal guardian, attorney, or agent of a child (other than a child receiving assistance under a State program funded under part A (as determined by regulations prescribed by the Secretary) without regard to the existence of a court order against a noncustodial parent who has a duty to support and maintain any such child;
(4)
a State agency that is administering a program operated under a State plan under subpart 1 of part B, or a State plan approved under subpart 2 of part B or under part E; and
(5)
an entity designated as a Central Authority for child support enforcement in a foreign reciprocating country or a foreign treaty country for purposes specified in section 459A(c)(2).
(d)
A request for information under this section shall be filed in such manner and form as the Secretary shall by regulation prescribe and shall be accompanied or supported by such documents as the Secretary may determine to be necessary.
(e)
(1)
Whenever the Secretary receives a request submitted under subsection (b) which he is reasonably satisfied meets the criteria established by subsections (a), (b), and (c), he shall promptly undertake to provide the information requested from the files and records maintained by any of the departments, agencies, or instrumentalities of the United States or of any State.
(2)
Notwithstanding any other provision of law, whenever the individual who is the head of any department, agency, or instrumentality of the United States receives a request from the Secretary for information authorized to be provided by the Secretary under this section, such individual shall promptly cause a search to be made of the files and records maintained by such department, agency, or instrumentality with a view to determining whether the information requested is contained in any such files or records. If such search discloses the information requested, such individual shall immediately transmit such information to the Secretary, except that if any information is obtained the disclosure of which would contravene national policy or security interests of the United States or the confidentiality of census data, such information shall not be transmitted and such individual shall immediately notify the Secretary. If such search fails to disclose the information requested, such individual shall immediately so notify the Secretary. The costs incurred by any such department, agency, or instrumentality of the United States or of any State in providing such information to the Secretary shall be reimbursed by him in an amount which the Secretary determines to be reasonable payment for the information exchange (which amount shall not include payment for the costs of obtaining, compiling, or maintaining the information). Whenever such services are furnished to an individual specified in subsection (c)(3), a fee shall be charged such individual. The fee so charged shall be used to reimburse the Secretary or his delegate for the expense of providing such services.
(3)
The Secretary of Labor shall enter into an agreement with the Secretary to provide prompt access for the Secretary (in accordance with this subsection) to the wage and unemployment compensation claims information and data maintained by or for the Department of Labor or State employment security agencies.
(f)
The Secretary, in carrying out his duties and functions under this section, shall enter into arrangements with State and tribal agencies administering State and tribal plans approved under this part for such State and tribal agencies to accept from resident parents, legal guardians, or agents of a child described in subsection (c)(3) and to transmit to the Secretary requests for information with regard to the whereabouts of noncustodial parents and otherwise to cooperate with the Secretary in carrying out the purposes of this section.
(g)

Reimbursement for Reports by Agencies.—
The Secretary may reimburse Federal, State, and tribal agencies for the costs incurred by such entities in furnishing information requested by the Secretary under this section in an amount which the Secretary determines to be reasonable payment for the information exchange (which amount shall not include payment for the costs of obtaining, compiling, or maintaining the information).
(h)

Federal Case Registry of Child Support Orders.—
(1)

In general.—
Not later than October 1, 1998, in order to assist States in administering programs under State plans approved under this part and programs funded under part A, and for the other purposes specified in this section, the Secretary shall establish and maintain in the Federal Parent Locator Service an automated registry (which shall be known as the “Federal Case Registry of Child Support Orders”), which shall contain abstracts of support orders and other information described in paragraph (2) with respect to each case and order in each State 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 and order information.—
The information referred to in paragraph (1) with respect to a case or an order shall be such information as the Secretary may specify in regulations (including the 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 the case or order. Beginning not later than October 1, 1999, the information referred to in paragraph (1) shall include the names and social security numbers of the children of such individuals.
(3)

Administration of federal tax laws.—
The Secretary of the Treasury shall have access to the information described in paragraph (2) for the purpose of administering those sections of the Internal Revenue Code of 1986 which grant tax benefits based on support or residence of children.
(i)

National Directory of New Hires.—
(1)

In general.—
In order to assist States in administering programs under State plans approved under this part and programs funded under part A, and for the other purposes specified in this section, the Secretary shall, not later than October 1, 1997, establish and maintain in the Federal Parent Locator Service an automated directory to be known as the National Directory of New Hires, which shall contain the information supplied pursuant to section 453A(g)(2).
(2)

Data entry and deletion requirements.—
(A)

In general.—
Information provided pursuant to section 453A(g)(2) shall be entered into the data base maintained by the National Directory of New Hires within two business days after receipt, and shall be deleted from the data base 24 months after the date of entry.
(B)

12-month limit on access to wage and unemployment compensation information.—
The Secretary shall not have access for child support enforcement purposes to information in the National Directory of New Hires that is provided pursuant to section 453A(g)(2)(B), if 12 months has elapsed since the date the information is so provided and there has not been a match resulting from the use of such information in any information comparison under this subsection.
(C)

Retention of data for research purposes.—
Notwithstanding subparagraphs (A) and (B), the Secretary may retain such samples of data entered in the National Directory of New Hires as the Secretary may find necessary to assist in carrying out subsection (j)(5).
(3)

Administration of federal tax laws.—
The Secretary of the Treasury shall have access to the information in the National Directory of New Hires for purposes of administering section 32 of the Internal Revenue Code of 1986, or the advance payment of the earned income tax credit under section 3507 of such Code, and verifying a claim with respect to employment in a tax return.
(4)

List of multistate employers.—
The Secretary shall maintain within the National Directory of New Hires a list of multistate employers that report information regarding newly hired employees pursuant to section 453A(b)(1)(B), and the State which each such employer has designated to receive such information.
(j)

Information Comparisons and Other Disclosures.—
(1)

Verification by social security administration.—
(A)

In general.—
The Secretary shall transmit information 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)

Verification by ssa.—
The Social Security Administration shall verify the accuracy of, correct, or supply to the extent possible, and report to the Secretary, the following information supplied by the Secretary pursuant to subparagraph (A):
(i)
The name, social security number, and birth date of each such individual.
(ii)
The employer identification number of each such employer.
(2)

Information comparisons.—
For the purpose of locating individuals in a paternity establishment case or a case involving the establishment, modification, or enforcement of a support order, the Secretary shall—
(A)
compare information in the National Directory of New Hires against information in the support case abstracts in the Federal Case Registry of Child Support Orders not less often than every 2 business days; and
(B)
within 2 business days after such a comparison reveals a match with respect to an individual, report the information to the State agency responsible for the case.
(3)

Information comparisons and disclosures of information in all registries for title iv program purposes.—
To the extent and with the frequency that the Secretary determines to be effective in assisting States to carry out their responsibilities under programs operated under this part, part B, or part E and programs funded under part A, the Secretary shall—
(A)
compare the information in each component of the Federal Parent Locator Service maintained under this section against the information in each other such component (other than the comparison required by paragraph (2)), and report instances in which such a comparison reveals a match with respect to an individual to State agencies operating such programs; and
(B)
disclose information in such components to such State agencies.
(4)

Provision of new hire information to the social security administration.—
The National Directory of New Hires shall provide the Commissioner of Social Security with all information in the National Directory.
(5)

Research.—
The Secretary may provide access to data in each component of the Federal Parent Locator Service maintained under this section and to information reported by employers pursuant to section 453A(b) for research purposes found by the Secretary to be likely to contribute to achieving the purposes of part A or this part, but without personal identifiers.
(6)

Information comparisons and disclosure for enforcement of obligations on higher education act loans and grants.—
(A)

Furnishing of information by the secretary of education.—
The Secretary of Education shall furnish to the Secretary, on a quarterly basis or at such less frequent intervals as may be determined by the Secretary of Education, information in the custody of the Secretary of Education for comparison with information in the National Directory of New Hires, in order to obtain the information in such directory with respect to individuals who—
(i)
are borrowers of loans made under title IV of the Higher Education Act of 1965 that are in default; or
(ii)
owe an obligation to refund an overpayment of a grant awarded under such title.
(B)

Requirement to seek minimum information necessary.—
The Secretary of Education shall seek information pursuant to this section only to the extent essential to improving collection of the debt described in subparagraph (A).
(C)

Duties of the secretary.—
(i)

Information comparison; disclosure to the secretary of education.—
The Secretary, in cooperation with the Secretary of Education, shall compare information in the National Directory of New Hires with information in the custody of the Secretary of Education, and disclose information in that Directory to the Secretary of Education, in accordance with this paragraph, for the purposes specified in this paragraph.
(ii)

Condition on disclosure.—
The Secretary shall make disclosures in accordance with clause (i) only to the extent that the Secretary determines that such disclosures do not interfere with the effective operation of the program under this part. Support collection under section 466(b) shall be given priority over collection of any defaulted student loan or grant overpayment against the same income.
(D)

Use of information by the secretary of education.—
The Secretary of Education may use information resulting from a data match pursuant to this paragraph only—
(i)
for the purpose of collection of the debt described in subparagraph (A) owed by an individual whose annualized wage level (determined by taking into consideration information from the National Directory of New Hires) exceeds $16,000; and
(ii)
after removal of personal identifiers, to conduct analyses of student loan defaults.
(E)

Disclosure of information by the secretary of education.—
(i)

Disclosures permitted.—
The Secretary of Education may disclose information resulting from a data match pursuant to this paragraph only to—
(I)
a guaranty agency holding a loan made under part B of title IV of the Higher Education Act of 1965 on which the individual is obligated;
(II)
a contractor or agent of the guaranty agency described in subclause (I);
(III)
a contractor or agent of the Secretary; and
(IV)
the Attorney General.
(ii)

Purpose of disclosure.—
The Secretary of Education may make a disclosure under clause (i) only for the purpose of collection of the debts owed on defaulted student loans, or overpayments of grants, made under title IV of the Higher Education Act of 1965.
(iii)

Restriction on redisclosure.—
An entity to which information is disclosed under clause (i) may use or disclose such information only as needed for the purpose of collecting on defaulted student loans, or overpayments of grants, made under title IV of the Higher Education Act of 1965.
(F)

Reimbursement of hhs costs.—
The Secretary of Education shall reimburse the Secretary, in accordance with subsection (k)(3), for the additional costs incurred by the Secretary in furnishing the information requested under this subparagraph.
(7)

Information comparisons for housing assistance programs.—
(A)

Furnishing of information by hud.—
Subject to subparagraph (G), the Secretary of Housing and Urban Development shall furnish to the Secretary, on such periodic basis as determined by the Secretary of Housing and Urban Development in consultation with the Secretary, information in the custody of the Secretary of Housing and Urban Development for comparison with information in the National Directory of New Hires, in order to obtain information in such Directory with respect to individuals who are participating in any program under—
(i)
the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.);
(ii)
section 202 of the Housing Act of 1959 (12 U.S.C. 1701q);
(iii)
section 221(d)(3), 221(d)(5), or 236 of the National Housing Act (12 U.S.C. 1715l(d) and 1715z–1);
(iv)
section 811 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013); or
(v)
section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s).
(B)

Requirement to seek minimum information.—
The Secretary of Housing and Urban Development shall seek information pursuant to this section only to the extent necessary to verify the employment and income of individuals described in subparagraph (A).
(C)

Duties of the secretary.—
(i)

Information disclosure.—
The Secretary, in cooperation with the Secretary of Housing and Urban Development, shall compare information in the National Directory of New Hires with information provided by the Secretary of Housing and Urban Development with respect to individuals described in subparagraph (A), and shall disclose information in such Directory regarding such individuals to the Secretary of Housing and Urban Development, in accordance with this paragraph, for the purposes specified in this paragraph.
(ii)

Condition on disclosure.—
The Secretary shall make disclosures in accordance with clause (i) only to the extent that the Secretary determines that such disclosures do not interfere with the effective operation of the program under this part.
(D)

Use of information by hud.—
The Secretary of Housing and Urban Development may use information resulting from a data match pursuant to this paragraph only—
(i)
for the purpose of verifying the employment and income of individuals described in subparagraph (A); and
(ii)
after removal of personal identifiers, to conduct analyses of the employment and income reporting of individuals described in subparagraph (A).
(E)

Disclosure of information by hud.—
(i)

Purpose of disclosure.—
The Secretary of Housing and Urban Development may make a disclosure under this subparagraph only for the purpose of verifying the employment and income of individuals described in subparagraph (A).
(ii)

Disclosures permitted.—
Subject to clause (iii), the Secretary of Housing and Urban Development may disclose information resulting from a data match pursuant to this paragraph only to a public housing agency, the Inspector General of the Department of Housing and Urban Development, and the Attorney General in connection with the administration of a program described in subparagraph (A). Information obtained by the Secretary of Housing and Urban Development pursuant to this paragraph shall not be made available under section 552 of title 5, United States Code.
(iii)

Conditions on disclosure.—
Disclosures under this paragraph shall be—
(I)
made in accordance with data security and control policies established by the Secretary of Housing and Urban Development and approved by the Secretary;
(II)
subject to audit in a manner satisfactory to the Secretary; and
(III)
subject to the sanctions under subsection (l)(2).
(iv)

Additional disclosures.—
(I)

Determination by secretaries.—
The Secretary of Housing and Urban Development and the Secretary shall determine whether to permit disclosure of information under this paragraph to persons or entities described in subclause (II), based on an evaluation made by the Secretary of Housing and Urban Development (in consultation with and approved by the Secretary), of the costs and benefits of disclosures made under clause (ii) and the adequacy of measures used to safeguard the security and confidentiality of information so disclosed.
(II)

Permitted persons or entities.—
If the Secretary of Housing and Urban Development and the Secretary determine pursuant to subclause (I) that disclosures to additional persons or entities shall be permitted, information under this paragraph may be disclosed by the Secretary of Housing and Urban Development to a private owner, a management agent, and a contract administrator in connection with the administration of a program described in subparagraph (A), subject to the conditions in clause (iii) and such additional conditions as agreed to by the Secretaries.
(v)

Restrictions on redisclosure.—
A person or entity to which information is disclosed under this subparagraph may use or disclose such information only as needed for verifying the employment and income of individuals described in subparagraph (A), subject to the conditions in clause (iii) and such additional conditions as agreed to by the Secretaries.
(F)

Reimbursement of hhs costs.—
The Secretary of Housing and Urban Development shall reimburse the Secretary, in accordance with subsection (k)(3), for the costs incurred by the Secretary in furnishing the information requested under this paragraph.
(G)

Consent.—
The Secretary of Housing and Urban Development shall not seek, use, or disclose information under this paragraph relating to an individual without the prior written consent of such individual (or of a person legally authorized to consent on behalf of such individual).
(8)

Information comparisons and disclosure to assist in administration of unemployment compensation programs.—
(A)

In general.—
If, for purposes of administering an unemployment compensation program under Federal or State law, a State agency responsible for the administration of such program transmits to the Secretary the names and social security account numbers of individuals, the Secretary shall disclose to such State agency information on such individuals and their employers maintained in the National Directory of New Hires, subject to this paragraph.
(B)

Condition on disclosure by the secretary.—
The Secretary shall make a disclosure under subparagraph (A) only to the extent that the Secretary determines that the disclosure would not interfere with the effective operation of the program under this part.
(C)

Use and disclosure of information by state agencies.—
(i)

In general.—
A State agency may not use or disclose information provided under this paragraph except for purposes of administering a program referred to in subparagraph (A).
(ii)

Information security.—
The State agency shall have in effect data security and control policies that the Secretary finds adequate to ensure the security of information obtained under this paragraph and to ensure that access to such information is restricted to authorized persons for purposes of authorized uses and disclosures.
(iii)

Penalty for misuse of information.—
An officer or employee of the State agency who fails to comply with this subparagraph shall be subject to the sanctions under subsection (l)(2) to the same extent as if such officer or employee was an officer or employee of the United States.
(D)

Procedural requirements.—
State agencies requesting information under this paragraph shall adhere to uniform procedures established by the Secretary governing information requests and data matching under this paragraph.
(E)

Reimbursement of costs.—
The State agency shall reimburse the Secretary, in accordance with subsection (k)(3), for the costs incurred by the Secretary in furnishing the information requested under this paragraph.
(9)

Information comparisons and disclosure to assist in federal debt collection.—
(A)

Furnishing of information by the secretary of the treasury.—
The Secretary of the Treasury shall furnish to the Secretary, on such periodic basis as determined by the Secretary of the Treasury in consultation with the Secretary, information in the custody of the Secretary of the Treasury for comparison with information in the National Directory of New Hires, in order to obtain information in such Directory with respect to persons—
(i)
who owe delinquent nontax debt to the United States; and
(ii)
whose debt has been referred to the Secretary of the Treasury in accordance with 31 U.S.C. 3711(g).
(B)

Requirement to seek minimum information.—
The Secretary of the Treasury shall seek information pursuant to this section only to the extent necessary to improve collection of the debt described in subparagraph (A).
(C)

Duties of the secretary.—
(i)

Information disclosure.—
The Secretary, in cooperation with the Secretary of the Treasury, shall compare information in the National Directory of New Hires with information provided by the Secretary of the Treasury with respect to persons described in subparagraph (A) and shall disclose information in such Directory regarding such persons to the Secretary of the Treasury in accordance with this paragraph, for the purposes specified in this paragraph. Such comparison of information shall not be considered a matching program as defined in 5 U.S.C. 552a.
(ii)

Condition on disclosure.—
The Secretary shall make disclosures in accordance with clause (i) only to the extent that the Secretary determines that such disclosures do not interfere with the effective operation of the program under this part. Support collection under section 466(b) of this title shall be given priority over collection of any delinquent Federal nontax debt against the same income.
(D)

Use of information by the secretary of the treasury.—
The Secretary of the Treasury may use information provided under this paragraph only for purposes of collecting the debt described in subparagraph (A).
(E)

Disclosure of information by the secretary of the treasury.—
(i)

Purpose of disclosure.—
The Secretary of the Treasury may make a disclosure under this subparagraph only for purposes of collecting the debt described in subparagraph (A).
(ii)

Disclosures permitted.—
Subject to clauses (iii) and (iv), the Secretary of the Treasury may disclose information resulting from a data match pursuant to this paragraph only to the Attorney General in connection with collecting the debt described in subparagraph (A).
(iii)

Conditions on disclosure.—
Disclosures under this subparagraph shall be—
(I)
made in accordance with data security and control policies established by the Secretary of the Treasury and approved by the Secretary;
(II)
subject to audit in a manner satisfactory to the Secretary; and
(III)
subject to the sanctions under subsection (l)(2).
(iv)

Additional disclosures.—
(I)

Determination by secretaries.—
The Secretary of the Treasury and the Secretary shall determine whether to permit disclosure of information under this paragraph to persons or entities described in subclause (II), based on an evaluation made by the Secretary of the Treasury (in consultation with and approved by the Secretary), of the costs and benefits of such disclosures and the adequacy of measures used to safeguard the security and confidentiality of information so disclosed.
(II)

Permitted persons or entities.—
If the Secretary of the Treasury and the Secretary determine pursuant to subclause (I) that disclosures to additional persons or entities shall be permitted, information under this paragraph may be disclosed by the Secretary of the Treasury, in connection with collecting the debt described in subparagraph (A), to a contractor or agent of either Secretary and to the Federal agency that referred such debt to the Secretary of the Treasury for collection, subject to the conditions in clause (iii) and such additional conditions as agreed to by the Secretaries.
(v)

Restrictions on redisclosure.—
A person or entity to which information is disclosed under this subparagraph may use or disclose such information only as needed for collecting the debt described in subparagraph (A), subject to the conditions in clause (iii) and such additional conditions as agreed to by the Secretaries.
(F)

Reimbursement of hhs costs.—
The Secretary of the Treasury shall reimburse the Secretary, in accordance with subsection (k)(3), for the costs incurred by the Secretary in furnishing the information requested under this paragraph. Any such costs paid by the Secretary of the Treasury shall be considered costs of implementing 31 U.S.C. 3711(g) in accordance with 31 U.S.C. 3711(g)(6) and may be paid from the account established pursuant to 31 U.S.C. 3711(g)(7).
(10)

Information comparisons and disclosure to assist in administration of supplemental nutrition assistance program benefits.—
^{32}
So in law. Probably should read “supplemental nutrition assistance program benefits”. See amendments made by section 4002(b)(1) and (2) of Public Law 110–234.
(A)

In general.—
If, for purposes of administering a supplemental nutrition assistance program under the Food and Nutrition Act of 2008, a State agency responsible for the administration of the program transmits to the Secretary the names and social security account numbers of individuals, the Secretary shall disclose to the State agency information on the individuals and their employers maintained in the National Directory of New Hires, subject to this paragraph.
(B)

Condition on disclosure by the secretary.—
The Secretary shall make a disclosure under subparagraph (A) only to the extent that the Secretary determines that the disclosure would not interfere with the effective operation of the program under this part.
(C)

Use and disclosure of information by state agencies.—
(i)

In general.—
A State agency may not use or disclose information provided under this paragraph except for purposes of administering a program referred to in subparagraph (A).
(ii)

Information security.—
The State agency shall have in effect data security and control policies that the Secretary finds adequate to ensure the security of information obtained under this paragraph and to ensure that access to such information is restricted to authorized persons for purposes of authorized uses and disclosures.
(iii)

Penalty for misuse of information.—
An officer or employee of the State agency who fails to comply with this subparagraph shall be subject to the sanctions under subsection (l)(2) to the same extent as if the officer or employee were an officer or employee of the United States.
(D)

Procedural requirements.—
State agencies requesting information under this paragraph shall adhere to uniform procedures established by the Secretary governing information requests and data matching under this paragraph.
(E)

Reimbursement of costs.—
The State agency shall reimburse the Secretary, in accordance with subsection (k)(3), for the costs incurred by the Secretary in furnishing the information requested under this paragraph.
(11)

Information comparisons and disclosures to assist in administration of certain veterans benefits.—
(A)

Furnishing of information by secretary of veterans affairs.—
Subject to the provisions of this paragraph, the Secretary of Veterans Affairs shall furnish to the Secretary, on such periodic basis as determined by the Secretary of Veterans Affairs in consultation with the Secretary, information in the custody of the Secretary of Veterans Affairs for comparison with information in the National Directory of New Hires, in order to obtain information in such Directory with respect to individuals who are applying for or receiving—
(i)
needs-based pension benefits provided under chapter 15 of title 38, United States Code, or under any other law administered by the Secretary of Veterans Affairs;
(ii)
parents' dependency and indemnity compensation provided under section 1315 of title 38, United States Code;
(iii)
health care services furnished under subsections (a)(2)(G), (a)(3), or (b) of section 1710 of title 38, United States Code; or
(iv)
compensation paid under chapter 11 of title 38, United States Code, at the 100 percent rate based solely on unemployability and without regard to the fact that the disability or disabilities are not rated as 100 percent disabling under the rating schedule.
(B)

Requirement to seek minimum information.—
The Secretary of Veterans Affairs shall seek information pursuant to this paragraph only to the extent necessary to verify the employment and income of individuals described in subparagraph (A).
(C)

Duties of the secretary.—
(i)

Information disclosure.—
The Secretary, in cooperation with the Secretary of Veterans Affairs, shall compare information in the National Directory of New Hires with information provided by the Secretary of Veterans Affairs with respect to individuals described in subparagraph (A), and shall disclose information in such Directory regarding such individuals to the Secretary of Veterans Affairs, in accordance with this paragraph, for the purposes specified in this paragraph.
(ii)

Condition on disclosure.—
The Secretary shall make disclosures in accordance with clause (i) only to the extent that the Secretary determines that such disclosures do not interfere with the effective operation of the program under this part.
(D)

Use of information by secretary of veterans affairs.—
The Secretary of Veterans Affairs may use information resulting from a data match pursuant to this paragraph only—
(i)
for the purposes specified in subparagraph (B); and
(ii)
after removal of personal identifiers, to conduct analyses of the employment and income reporting of individuals described in subparagraph (A).
(E)

Reimbursement of hhs costs.—
The Secretary of Veterans Affairs shall reimburse the Secretary, in accordance with subsection (k)(3), for the costs incurred by the Secretary in furnishing the information requested under this paragraph.
(F)

Consent.—
The Secretary of Veterans Affairs shall not seek, use, or disclose information under this paragraph relating to an individual without the prior written consent of such individual (or of a person legally authorized to consent on behalf of such individual).
(G)

Expiration of authority.—
The authority under this paragraph shall be in effect as follows:
(i)
During the period beginning on December 26, 2007, and ending on November 18, 2011.
(ii)
During the period beginning on the date of the enactment of the Department of Veterans Affairs Expiring Authorities Act of 2013 and ending 180 days after that date.
(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, for the costs incurred by the Commissioner in performing the verification services described in subsection (j).
(2)

For information from state directories of new hires.—
The Secretary shall reimburse costs incurred by State directories of new hires in furnishing information as required by section 453A(g)(2), at rates which the Secretary determines to be reasonable (which rates shall not include payment for the costs of obtaining, compiling, or maintaining such information).
(3)

For information furnished to state and federal agencies.—
A State or Federal agency that receives information from the Secretary pursuant to this section or section 452(m) shall reimburse the Secretary for costs incurred by the Secretary in furnishing the information, at rates which the Secretary determines to be reasonable (which rates shall include payment for the costs of obtaining, verifying, maintaining, and comparing the information).
(l)

Restriction on Disclosure and Use.—
(1)

In general.—
Information in the Federal Parent Locator Service, and information resulting from comparisons using such information, shall not be used or disclosed except as expressly provided in this section, subject to section 6103 of the Internal Revenue Code of 1986.
(2)

Penalty for misuse of information in the national directory of new hires.—
The Secretary shall require the imposition of an administrative penalty (up to and including dismissal from employment), and a fine of $1,000, for each act of unauthorized access to, disclosure of, or use of, information in the National Directory of New Hires established under subsection (i) by any officer or employee of the United States or any other person who knowingly and willfully violates this paragraph.
(m)

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.
(n)

Federal Government Reporting.—
Each department, agency, and instrumentality of the United States shall on a quarterly basis report to the Federal Parent Locator Service the name and social security number of each employee and the wages paid to the employee during the previous quarter, except that such a report shall not be filed with respect to an employee of a department, agency, or instrumentality performing intelligence or counterintelligence functions, if the head of such department, agency, or instrumentality has determined that filing such a report could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission.
(o)

Use of Set-Aside Funds.—
Out of any money in the Treasury of the United States not otherwise appropriated, there is hereby appropriated to the Secretary for each fiscal year an amount equal to 2 percent of the total amount paid to the Federal Government pursuant to a plan approved under this part during the immediately 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) or the amount appropriated under this paragraph for fiscal year 2002, whichever is greater, which shall be available for use by the Secretary, either directly or through grants, contracts, or interagency agreements, for operation of the Federal Parent Locator Service under this section, to the extent such costs are not recovered through user fees. Amounts appropriated under this subsection shall remain available until expended.
(p)

Support Order Defined.—
As used in this part, the term “support order” means a judgment, decree, or order, whether temporary, final, or subject to modification, issued by a court or an administrative agency of competent jurisdiction, for the support and maintenance of a child, including a child who has attained the age of majority under the law of the issuing State, or of the parent with whom the child is living, which provides for monetary support, health care, arrearages, or reimbursement, and which may include related costs and fees, interest and penalties, income withholding, attorneys' fees, and other relief.
SEC. 453A.
[42 U.S.C. 653a]

STATE DIRECTORY OF NEW HIRES.
(a)

Establishment.—
(1)

In general.—
(A)

Requirement for States that have no directory.—
Except as provided in subparagraph (B), not later than October 1, 1997, each State shall establish an automated directory (to be known as the “State Directory of New Hires”) which shall contain information supplied in accordance with subsection (b) by employers on each newly hired employee.
(B)

States with new hire reporting law in existence.—
A State which has a new hire reporting law in existence on the date of the enactment of this section may continue to operate under the State law, but the State must meet the requirements of subsection (g)(2) not later than October 1, 1997, and the requirements of this section (other than subsection (g)(2)) not later than October 1, 1998.
(2)

Definitions.—
As used in this section:
(A)

Employee.—
The term “employee”—
(i)
means an individual who is an employee within the meaning of chapter 24 of the Internal Revenue Code of 1986; and
(ii)
does not include an employee of a Federal or State agency performing intelligence or counterintelligence functions, if the head of such agency has determined that reporting pursuant to paragraph (1) with respect to the employee could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission.
(B)

Employer.—
(i)

In general.—
The term “employer” has the meaning given such term in section 3401(d) of the Internal Revenue Code of 1986 and includes any governmental entity and any labor organization.
(ii)

Labor organization.—
The term “labor organization” shall have the meaning given such term in section 2(5) of the National Labor Relations Act, and includes any entity (also known as a “hiring hall”) which is used by the organization and an employer to carry out requirements described in section 8(f)(3) of such Act of an agreement between the organization and the employer.
(C)

Newly hired employee.—
The term “newly hired employee” means an employee who—
(i)
has not previously been employed by the employer; or
(ii)
was previously employed by the employer but has been separated from such prior employment for at least 60 consecutive days.
(b)

Employer Information.—
(1)

Reporting requirement.—
(A)

In general.—
Except as provided in subparagraphs (B) and (C), each employer shall furnish to the Directory of New Hires of the State in which a newly hired employee works, a report that contains the name, address, and social security number of the employee, the date services for remuneration were first performed by the employee, and the name and address of, and identifying number assigned under section 6109 of the Internal Revenue Code of 1986 to, the employer.
(B)

Multistate employers.—
An employer that has employees who are employed in 2 or more States and that transmits reports magnetically or electronically may comply with subparagraph (A) by designating 1 State in which such employer has employees to which the employer will transmit the report described in subparagraph (A), and transmitting such report to such State. Any employer that transmits reports pursuant to this subparagraph shall notify the Secretary in writing as to which State such employer designates for the purpose of sending reports.
(C)

Federal government employers.—
Any department, agency, or instrumentality of the United States shall comply with subparagraph (A) by transmitting the report described in subparagraph (A) to the National Directory of New Hires established pursuant to section 453.
(2)

Timing of report.—
Each State may provide the time within which the report required by paragraph (1) shall be made with respect to an employee, but such report shall be made—
(A)
not later than 20 days after the date the employer hires the employee; or
(B)
in the case of an employer transmitting reports magnetically or electronically, by 2 monthly transmissions (if necessary) not less than 12 days nor more than 16 days apart.
(c)

Reporting Format and Method.—
Each report required by subsection (b) shall, to the extent practicable, be made on a W–4 form or, at the option of the employer, an equivalent form, and may be transmitted by 1st class mail, magnetically, or electronically.
(d)

Civil Money Penalties on Noncomplying Employers.—
The State shall have the option to set a State civil money penalty which shall not exceed—
(1)
$25 per failure to meet the requirements of this section with respect to a newly hired employee; or
(2)
$500 if, under State law, the failure is the result of a conspiracy between the employer and the employee to not supply the required report or to supply a false or incomplete report.
(e)

Entry of Employer Information.—
Information shall be entered into the data base maintained by the State Directory of New Hires within 5 business days of receipt from an employer pursuant to subsection (b).
(f)

Information Comparisons.—
(1)

In general.—
Not later than May 1, 1998, an agency designated by the State shall, directly or by contract, conduct automated comparisons of the social security numbers reported by employers pursuant to subsection (b) and the social security numbers appearing in the records of the State case registry for cases being enforced under the State plan.
(2)

Notice of match.—
When an information comparison conducted under paragraph (1) reveals a match with respect to the social security number of an individual required to provide support under a support order, the State Directory of New Hires shall provide the agency administering the State plan approved under this part of the appropriate State with the name, address, and social security number of the employee to whom the social security number is assigned, and the name and address of, and identifying number assigned under section 6109 of the Internal Revenue Code of 1986 to, the employer.
(g)

Transmission of Information.—
(1)

Transmission of wage withholding notices to employers.—
Within 2 business days after the date information regarding a newly hired employee is entered into the State Directory of New Hires, the State agency enforcing the employee's child support obligation shall transmit a notice to the employer of the employee directing the employer to withhold from the income of the employee an amount equal to the monthly (or other periodic) child support obligation (including any past due support obligation) of the employee, unless the employee's income is not subject to withholding pursuant to section 466(b)(3).
(2)

Transmissions to the national directory of new hires.—
(A)

New hire information.—
Within 3 business days after the date information regarding a newly hired employee is entered into the State Directory of New Hires, the State Directory of New Hires shall furnish the information to the National Directory of New Hires.
(B)

Wage and unemployment compensation information.—
The State Directory of New Hires shall, on a quarterly basis, furnish to the National Directory of New Hires information concerning the wages and unemployment compensation paid to individuals, by such dates, in such format, and containing such information as the Secretary of Health and Human Services shall specify in regulations.
(3)

Business day defined.—
As used in this subsection, the term “business day” means a day on which State offices are open for regular business.
(h)

Other Uses of New Hire Information.—
(1)

Location of child support obligors.—
The agency administering the State plan approved under this part shall use information received pursuant to subsection (f)(2) to locate individuals for purposes of establishing paternity and establishing, modifying, and enforcing child support obligations, and may disclose such information to any agent of the agency that is under contract with the agency to carry out such purposes.
(2)

Verification of eligibility for certain programs.—
A State agency responsible for administering a program specified in section 1137(b) shall have access to information reported by employers pursuant to subsection (b) of this section for purposes of verifying eligibility for the program.
(3)

Administration of employment security and workers' compensation.—
State agencies operating employment security and workers' compensation programs shall have access to information reported by employers pursuant to subsection (b) for the purposes of administering such programs.
(4)

Veteran employment.—
The Secretaries of Labor and of Veterans Affairs shall have access to information reported by employers pursuant to subsection (b) of this section for purposes of tracking employment of veterans.

STATE PLAN FOR CHILD AND SPOUSAL SUPPORT
Sec. 454.
[42 U.S.C. 654]
A State plan for child and spousal support must—
(1)
provide that it shall be in effect in all political subdivisions of the State;
(2)
provide for financial participation by the State;
(3)
provide for the establishment or designation of a single and separate organizational unit, which meets such staffing and organizational requirements as the Secretary may by regulation prescribe, within the State to administer the plan;
(4)
provide that the State will—
(A)
provide services relating to the establishment of paternity or the establishment, modification, or enforcement of child support obligations, as appropriate, under the plan with respect to—
(i)
each child for whom (I) assistance is provided under the State program funded under part A of this title, (II) benefits or services for foster care maintenance are provided under the State program funded under part E of this title, (III) medical assistance is provided under the State plan approved under title XIX, or (IV) cooperation is required pursuant to section 6(l)(1) of the Food and Nutrition Act of 2008 (7 U.S.C. 2015(l)(1)), unless, in accordance with paragraph (29), good cause or other exceptions exist;
(ii)
any other child, if an individual applies for such services with respect to the child (except that, if the individual applying for the services resides in a foreign reciprocating country or foreign treaty country, the State may opt to require the individual to request the services through the Central Authority for child support enforcement in the foreign reciprocating country or the foreign treaty country, and if the individual resides in a foreign country that is not a foreign reciprocating country or a foreign treaty country, a State may accept or reject the application); and
(B)
enforce any support obligation established with respect to—
(i)
a child with respect to whom the State provides services under the plan; or
(ii)
the custodial parent of such a child;
(5)
provide that (A) in any case in which support payments are collected for an individual with respect to whom an assignment pursuant to section 408(a)(3) is effective, such payments shall be made to the State for distribution pursuant to section 457 and shall not be paid directly to the family, and the individual will be notified on a monthly basis (or on a quarterly basis for so long as the Secretary determines with respect to a State that requiring such notice on a monthly basis would impose an unreasonable administrative burden) of the amount of the support payments collected, and (B) in any case in which support payments are collected for an individual pursuant to the assignment made under section 1912, such payments shall be made to the State for distribution pursuant to section 1912, except that this clause shall not apply to such payments for any month after the month in which the individual ceases to be eligible for medical assistance;
(6)
provide that—
(A)
services under the plan shall be made available to residents of other States on the same terms as to residents of the State submitting the plan;
(B)
(i)
an application fee for furnishing such services shall be imposed on an individual, other than an individual receiving assistance under a State program funded under part A or E, or under a State plan approved under title XIX, or who is required by the State to cooperate with the State agency administering the program under this part pursuant to subsection (l) or (m) of section 6 of the Food and Nutrition Act of 2008, and shall be paid by the individual applying for such services, or recovered from the absent parent, or paid by the State out of its own funds (the payment of which from State funds shall not be considered as an administrative cost of the State for the operation of the plan, and shall be considered income to the program), the amount of which (I) will not exceed $25 (or such higher or lower amount (which shall be uniform for all States) as the Secretary may determine to be appropriate for any fiscal year to reflect increases or decreases in administrative costs), and (II) may vary among such individuals on the basis of ability to pay (as determined by the State); and
(ii)
in the case of an individual who has never received assistance under a State program funded under part A and for whom the State has collected at least $550 of support, the State shall impose an annual fee of $35 for each case in which services are furnished, which shall be retained by the State from support collected on behalf of the individual (but not from the first $550 so collected), paid by the individual applying for the services, recovered from the absent parent, or paid by the State out of its own funds (the payment of which from State funds shall not be considered as an administrative cost of the State for the operation of the plan, and the fees shall be considered income to the program);
(C)
a fee of not more than $25 may be imposed in any case where the State requests the Secretary of the Treasury to withhold past-due support owed to or on behalf of such individual from a tax refund pursuant to section 464(a)(2);
(D)
a fee (in accordance with regulations of the Secretary) for performing genetic tests may be imposed on any individual who is not a recipient of assistance under a State program funded under part A; and
(E)
any costs in excess of the fees so imposed may be collected—
(i)
from the parent who owes the child or spousal support obligation involved; or
(ii)
at the option of the State, from the individual to whom such services are made available, but only if such State has in effect a procedure whereby all persons in such State having authority to order child or spousal support are informed that such costs are to be collected from the individual to whom such services were made available;
(7)
provide for entering into cooperative arrangements with appropriate courts and law enforcement officials and Indian tribes or tribal organizations (as defined in subsections (e) and (l) of section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304)) (A) to assist the agency administering the plan, including the entering into of financial arrangements with such courts and officials in order to assure optimum results under such program, and (B) with respect to any other matters of common concern to such courts or officials and the agency administering the plan;
(8)
provide that, for the purpose of establishing parentage, establishing, setting the amount of, modifying, or enforcing child support obligations, or making or enforcing a child custody or visitation determination, as defined in section 463(d)(1)33 the agency administering the plan will establish a service to locate parents utilizing—
^{33}
So in original. Probably there should be a comma after “(1)”.
(A)
all sources of information and available records; and
(B)
the Federal Parent Locator Service established under section 453,
and shall, subject to the privacy safeguards required under paragraph (26), disclose only the information described in sections 453 and 463 to the authorized persons specified in such sections for the purposes specified in such sections;
(9)
provide that the State will, in accordance with standards prescribed by the Secretary, cooperate with any other State—
(A)
in establishing paternity, if necessary;
(B)
in locating a noncustodial parent residing in the State (whether or not permanently) against whom any action is being taken under a program established under a plan approved under this part in another State;
(C)
in securing compliance by a noncustodial parent residing in such State (whether or not permanently) with an order issued by a court of competent jurisdiction against such parent for the support and maintenance of the child or children or the parent of such child or children with respect to whom aid is being provided under the plan of such other State;
(D)
in carrying out other functions required under a plan approved under this part; and
(E)
not later than March 1, 1997, in using the forms promulgated pursuant to section 452(a)(11) for income withholding, imposition of liens, and issuance of administrative subpoenas in interstate child support cases;
(10)
provide that the State will maintain a full record of collections and disbursements made under the plan and have an adequate reporting system;
(11)
(A)
provide that amounts collected as support shall be distributed as provided in section 457; and
(B)
provide that any payment required to be made under section 456 or 457 to a family shall be made to the resident parent, legal guardian, or caretaker relative having custody of or responsibility for the child or children;
(12)
provide for the establishment of procedures to require the State to provide individuals who are applying for or receiving services under the State plan, or who are parties to cases in which services are being provided under the State plan—
(A)
with notice of all proceedings in which support obligations might be established or modified; and
(B)
with 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;
(13)
provide that the State will comply with such other requirements and standards as the Secretary determines to be necessary to the establishment of an effective program for locating noncustodial parents, establishing paternity, obtaining support orders, and collecting support payments and provide that information requests by parents who are residents of other States be treated with the same priority as requests by parents who are residents of the State submitting the plan;
(14)
(A)
comply with such bonding requirements, for employees who receive, disburse, handle, or have access to, cash, as the Secretary shall by regulations prescribe;
(B)
maintain methods of administration which are designed to assure that persons responsible for handling cash receipts shall not participate in accounting or operating functions which would permit them to conceal in the accounting records the misuse of cash receipts (except that the Secretary shall by regulations provide for exceptions to this requirement in the case of sparsely populated areas where the hiring of unreasonable additional staff would otherwise be necessary);
(15)
provide for—
(A)
a process for annual reviews of and reports to the Secretary on the State program operated under the State plan approved under this part, including such information as may be necessary to measure State compliance with Federal requirements for expedited procedures, using such standards and procedures as are required by the Secretary, under which the State agency will determine the extent to which the program is operated in compliance with this part; and
(B)
a process of extracting from the automated data processing system required by paragraph (16) and transmitting to the Secretary data and calculations concerning the levels of accomplishment (and rates of improvement) with respect to applicable performance indicators (including paternity establishment percentages) to the extent necessary for purposes of sections 452(g) and 458;
(16)
provide for the establishment and operation by the State agency, in accordance with an (initial and annually updated) advance automated data processing planning document approved under section 452(d), of a statewide automated data processing and information retrieval system meeting the requirements of section 454A designed effectively and efficiently to assist management in the administration of the State plan, so as to control, account for, and monitor all the factors in the support enforcement collection and paternity determination process under such plan;
(17)
provide that the State will have in effect an agreement with the Secretary entered into pursuant to section 463 for the use of the Parent Locator Service established under section 453, and provide that the State will accept and transmit to the Secretary requests for information authorized under the provisions of the agreement to be furnished by such Service to authorized persons, will impose and collect (in accordance with regulations of the Secretary) a fee sufficient to cover the costs to the State and to the Secretary incurred by reason of such requests, will transmit to the Secretary from time to time (in accordance with such regulations) so much of the fees collected as are attributable to such costs to the Secretary so incurred, and during the period that such agreement is in effect will otherwise comply with such agreement and regulations of the Secretary with respect thereto;
(18)
provide that the State has in effect procedures necessary to obtain payment of past-due support from overpayments made to the Secretary of the Treasury as set forth in section 464, and take all steps necessary to implement and utilize such procedures;
(19)
provide that the agency administering the plan—
(A)
shall determine on a periodic basis, from information supplied pursuant to section 508 of the Unemployment Compensation Amendments of 1976, whether any individuals receiving compensation under the State's unemployment compensation law (including amounts payable pursuant to any agreement under any Federal unemployment compensation law) owe child support obligations which are being enforced by such agency; and
(B)
shall enforce any such child support obligations which are owed by such an individual but are not being met—
(i)
through an agreement with such individual to have specified amounts withheld from compensation otherwise payable to such individual and by submitting a copy of any such agreement to the State agency administering the unemployment compensation law; or
(ii)
in the absence of such an agreement, by bringing legal process (as defined in section 459(i)(5) of this Act) to require the withholding of amounts from such compensation;
(20)
provide, to the extent required by section 466, that the State (A) shall have in effect all of the laws to improve child support enforcement effectiveness which are referred to in that section, and (B) shall implement the procedures which are prescribed in or pursuant to such laws;
(21)
(A)
at the option of the State, impose a late payment fee on all overdue support (as defined in section 466(e)) under any obligation being enforced under this part, in an amount equal to a uniform percentage determined by the State (not less than 3 percent nor more than 6 percent) of the overdue support, which shall be payable by the noncustodial parent owing the overdue support; and
(B)
assure that the fee will be collected in addition to, and only after full payment of, the overdue support, and that the imposition of the late payment fee shall not directly or indirectly result in a decrease in the amount of the support which is paid to the child (or spouse) to whom, or on whose behalf, it is owed;
(22)
in order for the State to be eligible to receive any incentive payments under section 458, provide that, if one or more political subdivisions of the State participate in the costs of carrying out activities under the State plan during any period, each such subdivision shall be entitled to receive an appropriate share (as determined by the State) of any such incentive payments made to the State for such period, taking into account the efficiency and effectiveness of the activities carried out under the State plan by such political subdivision;
(23)
provide that the State will regularly and frequently publicize, through public service announcements, the availability of child support enforcement services under the plan and otherwise, including information as to any application fees for such services and a telephone number or postal address at which further information may be obtained and will publicize the availability and encourage the use of procedures for voluntary establishment of paternity and child support by means the State deems appropriate;
(24)
provide that the State will have in effect an automated data processing and information retrieval system—
(A)
by October 1, 1997, which meets 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, 2000, which meets all requirements of this part enacted on or before the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, 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 344(a)(3) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996;
(25)
provide that if a family with respect to which services are provided under the plan ceases to receive assistance under the State program funded under part A, the State shall provide appropriate notice to the family and continue to provide such services, subject to the same conditions and on the same basis as in the case of other individuals to whom services are furnished under the plan, except that an application or other request to continue services shall not be required of such a family and paragraph (6)(B) shall not apply to the family;
(26)
have in effect safeguards, applicable to all confidential information handled by the State agency, that are 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 modify, or enforce support, or to make or enforce a child custody determination;
(B)
prohibitions against the release of information on the whereabouts of 1 party or the child to another party against whom a protective order with respect to the former party or the child has been entered;
(C)
prohibitions against the release of information on the whereabouts of 1 party or the child to another person if the State has reason to believe that the release of the information to that person may result in physical or emotional harm to the party or the child;
(D)
in cases in which the prohibitions under subparagraphs (B) and (C) apply, the requirement to notify the Secretary, for purposes of section 453(b)(2), that the State has reasonable evidence of domestic violence or child abuse against a party or the child and that the disclosure of such information could be harmful to the party or the child; and
(E)
procedures providing that when the Secretary discloses information about a parent or child to a State court or an agent of a State court described in section 453(c)(2) or 463(d)(2)(B), and advises that court or agent that the Secretary has been notified that there is reasonable evidence of domestic violence or child abuse pursuant to section 453(b)(2), the court shall determine whether disclosure to any other person of information received from the Secretary could be harmful to the parent or child and, if the court determines that disclosure to any other person could be harmful, the court and its agents shall not make any such disclosure;
(27)
provide that, on and after October 1, 1998, the State agency will—
(A)
operate a State disbursement unit in accordance with section 454B; and
(B)
have sufficient State staff (consisting of State employees) and (at State option) contractors reporting directly to the State agency to—
(i)
monitor and enforce support collections through the unit in cases being enforced by the State pursuant to section 454(4) (including carrying out the automated data processing responsibilities described in section 454A(g)); and
(ii)
take the actions described in section 466(c)(1) in appropriate cases;
(28)
provide that, on and after October 1, 1997, the State will operate a State Directory of New Hires in accordance with section 453A;
(29)
provide that the State agency responsible for administering the State plan—
(A)
shall make the determination (and redetermination at appropriate intervals) as to whether an individual who has applied for or is receiving assistance under the State program funded under part A, the State program under part E, the State program under title XIX, or the supplemental nutrition assistance program, as defined under section 3(h)34 of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(h)), is cooperating in good faith with the State in establishing the paternity of, or in establishing, modifying, or enforcing a support order for, any child of the individual by providing the State agency with the name of, and such other information as the State agency may require with respect to, the noncustodial parent of the child, subject to good cause and other exceptions which—
^{34}
Subparagraph (H) of section 4115(c)(2) of the Food, Conservation, and Energy Act of 2008 provides as follows:
(H) Section 531 of the Social Security Act (42 U.S.C. 654) is amended by striking “section 3(h)” each place it appears and inserting “section 3(l)”.
The amendment probably should have been made to section 454.
(i)
in the case of the State program funded under part A, the State program under part E, or the State program under title XIX shall, at the option of the State, be defined, taking into account the best interests of the child, and applied in each case, by the State agency administering such program; and
(ii)
in the case of the supplemental nutrition assistance program, as defined under section 3(h)34 of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(h)), shall be defined and applied in each case under that program in accordance with section 6(l)(2) of the Food and Nutrition Act of 2008 (7 U.S.C. 2015(l)(2));
(B)
shall require the individual to supply additional necessary information and appear at interviews, hearings, and legal proceedings;
(C)
shall require the individual and the child to submit to genetic tests pursuant to judicial or administrative order;
(D)
may request that the individual sign a voluntary acknowledgment of paternity, after notice of the rights and consequences of such an acknowledgment, but may not require the individual to sign an acknowledgment or otherwise relinquish the right to genetic tests as a condition of cooperation and eligibility for assistance under the State program funded under part A, the State program under part E, the State program under title XIX, or the supplemental nutrition assistance program, as defined under section 3(h)35 of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(h)); and
^{35}
See footnote in paragraph (29)(A).
(E)
shall promptly notify the individual and the State agency administering the State program funded under part A, the State agency administering the State program under part E, the State agency administering the State program under title XIX, or the State agency administering the supplemental nutrition assistance program, as defined under section 3(h)35 of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(h)), of each such determination, and if noncooperation is determined, the basis therefor;
(30)
provide that the State shall use the definitions established under section 452(a)(5) in collecting and reporting information as required under this part;
(31)
provide that the State agency will have in effect a procedure for certifying to the Secretary, for purposes of the procedure under section 452(k), determinations that individuals owe arrearages of child support in an amount exceeding $2,500, 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;
(32)
(A)
provide that any request for services under this part by a foreign reciprocating country, a foreign treaty country, or a foreign country with which the State has an arrangement described in section 459A(d) shall be treated as a request by a State;
(B)
provide, at State option, notwithstanding paragraph (4) or any other provision of this part, for services under the plan for enforcement of a spousal support order not described in paragraph (4)(B) entered by such a country (or subdivision); and
(C)
provide that no applications will be required from, and no costs will be assessed for such services against, the foreign reciprocating country, foreign treaty country, or foreign individual (but costs may at State option be assessed against the obligor);
(33)
provide that a State that receives funding pursuant to section 428 and that has within its borders Indian country (as defined in section 1151 of title 18, United States Code) may enter into cooperative agreements with an Indian tribe or tribal organization (as defined in subsections (e) and (l) of section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304)), if the Indian tribe or tribal organization demonstrates that such tribe or organization has an established tribal court system or a Court of Indian Offenses with the authority to establish paternity, establish, modify, or enforce support orders, or to enter support orders in accordance with child support guidelines established or adopted by such tribe or organization, under which the State and tribe or organization shall provide for the cooperative delivery of child support enforcement services in Indian country and for the forwarding of all collections pursuant to the functions performed by the tribe or organization to the State agency, or conversely, by the State agency to the tribe or organization, which shall distribute such collections in accordance with such agreement; and
(34)
include an election by the State to apply section 457(a)(2)(B) of this Act or former section 457(a)(2)(B) of this Act (as in effect for the State immediately before the date this paragraph first applies to the State) to the distribution of the amounts which are the subject of such sections and, for so long as the State elects to so apply such former section, the amendments made by subsection (b)(1) of section 7301 of the Deficit Reduction Act of 2005 shall not apply with respect to the State, notwithstanding subsection (e) of such section 7301.
The State may allow the jurisdiction which makes the collection involved to retain any application fee under paragraph (6)(B) or any late payment fee under paragraph (21). Nothing in paragraph (33) shall void any provision of any cooperative agreement entered into before the date of the enactment of such paragraph, nor shall such paragraph deprive any State of jurisdiction over Indian country (as so defined) that is lawfully exercised under section 402 of the Act entitled “An Act to prescribe penalties for certain acts of violence or intimidation, and for other purposes”, approved April 11, 1968 (25 U.S.C. 1322).
SEC. 454A.
[42 U.S.C. 654a]

AUTOMATED DATA PROCESSING.
(a)

In General.—
In order for a State to meet the requirements of this section, the State agency administering the State program under this part 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 with the frequency and in the manner required by or under this part.
(b)

Program Management.—
The automated system required by this section shall perform such functions as the Secretary may specify relating to management of the State program under this part, including—
(1)
controlling and accounting for use of Federal, State, and local funds in carrying out the program; and
(2)
maintaining the data necessary to meet Federal reporting requirements under this part on a timely basis.
(c)

Calculation of Performance Indicators.—
In order to enable the Secretary to determine the incentive payments 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 paternity establishment percentage for the State for each fiscal year; and
(2)
have in place systems controls to ensure the com-pleteness 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 by this section, which shall include the following (in addition to such other safeguards as the Secretary may specify 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 the State program under this part; and
(B)
specify the data which may be used for particular program purposes, and the personnel permitted access to such data.
(2)

Systems controls.—
Systems controls (such as passwords or blocking of fields) to ensure strict adherence to the policies described in 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.—
Procedures to ensure that all personnel (including State and local agency staff and contractors) who may have access to or be required to use confidential program data are informed of applicable requirements and penalties (including those in section 6103 of the Internal Revenue Code of 1986), and are adequately trained in security procedures.
(5)

Penalties.—
Administrative penalties (up to and including dismissal from employment) for unauthorized access to, or disclosure or use of, confidential data.
(e)

State Case Registry.—
(1)

Contents.—
The automated system required by this section shall include a registry (which shall be known as the “State case registry”) that contains records with respect to—
(A)
each case in which services are being provided by the State agency under the State plan approved under this part; and
(B)
each support order established or modified in the State on or after October 1, 1998.
(2)

Linking of local registries.—
The State case registry may be established by linking local case registries of support orders through an automated information network, subject to this section.
(3)

Use of standardized data elements.—
Such records shall use standardized data elements for both parents (such as names, social security numbers and other uniform identification numbers, dates of birth, and case identification numbers), and contain such other information (such as on case status) as the Secretary may require.
(4)

Payment records.—
Each case record in the State case registry with respect to which services are being provided under the State plan approved under this part and with respect to which a support order has been established shall include a record of—
(A)
the amount of monthly (or other periodic) support owed under the order, and other amounts (including arrearages, interest or late payment penalties, and fees) due or overdue under the order;
(B)
any amount described in subparagraph (A) that has been collected;
(C)
the distribution of such collected amounts;
(D)
the birth date and, beginning not later than October 1, 1999, the social security number, of any child for whom the order requires the provision of support; and
(E)
the amount of any lien imposed with respect to the order pursuant to section 466(a)(4).
(5)

Updating and monitoring.—
The State agency operating the automated system required by this section shall promptly establish and update, maintain, and regularly monitor, case records in the State case registry with respect to which services are being provided under the State plan approved under this part, 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 comparison with Federal, State, or local sources of information;
(C)
information on support collections and distributions; and
(D)
any other relevant information.
(f)

Information Comparisons and Other Disclosures of Information.—
The State shall use the automated system required by this section to extract information from (at such times, and in such standardized format or formats, as may be required by the Secretary), to share and compare information with, and to receive information from, other data bases and information comparison services, in order to obtain (or provide) information necessary to enable the State agency (or the Secretary or other State or Federal agencies) to carry out this part, subject to section 6103 of the Internal Revenue Code of 1986. Such information comparison activities shall include the following:
(1)

Federal case registry of child support orders.—
Furnishing to the Federal Case Registry of Child Support Orders established under section 453(h) (and update as necessary, with information including notice of expiration of orders) the minimum amount of information on child support cases recorded in the State case registry that is necessary to operate the registry (as specified by the Secretary in regulations).
(2)

Federal parent locator service.—
Exchanging information with the Federal Parent Locator Service for the purposes specified in section 453.
(3)

Temporary family assistance and medicaid agencies.—
Exchanging information with State agencies (of the State and of other States) administering programs funded under part A, programs operated under a State plan approved under title XIX, and other programs designated by the Secretary, as necessary to perform State agency responsibilities under this part and under such programs.
(4)

Intrastate and interstate information comparisons.—
Exchanging information 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.
(5)

Private industry councils receiving welfare-to-work grants.—
Disclosing to a private industry council (as defined in section 403(a)(5)(D)(ii)) to which funds are provided under section 403(a)(5) the names, addresses, telephone numbers, and identifying case number information in the State program funded under part A, of noncustodial parents residing in the service delivery area of the private industry council, for the purpose of identifying and contacting noncustodial parents regarding participation in the program under section 403(a)(5).
(g)

Collection and Distribution of Support Payments.—
(1)

In general.—
The State shall use the automated system required by this section to assist and facilitate the collection and disbursement of support payments through the State disbursement unit operated under section 454B, through the performance of functions, including, at a minimum—
(A)
transmission of orders and notices to employers (and other debtors) for the withholding of income—
(i)
within 2 business days after receipt of notice of, and the income source subject to, such withholding from a court, another State, an employer, the Federal Parent Locator Service, or another source recognized by the State;
(ii)
using uniform formats prescribed by the Secretary; and
(iii)
at the option of the employer, using the electronic transmission methods prescribed by the Secretary;
(B)
ongoing monitoring to promptly identify failures to make timely payment of support; and
(C)
automatic use of enforcement procedures (including procedures authorized pursuant to section 466(c)) if payments are not timely made.
(2)

Business day defined.—
As used in paragraph (1), the term “business day” means a day on which State offices are open for regular business.
(h)

Expedited Administrative Procedures.—
The automated system required by this section shall be used, to the maximum extent feasible, to implement the expedited administrative procedures required by section 466(c).
SEC. 454B.
[42 U.S.C. 654b]

COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS.
(a)

State Disbursement Unit.—
(1)

In general.—
In order for a State to meet the requirements of this section, the State agency must establish and operate a unit (which shall be known as the “State disbursement unit”) for the collection and disbursement of payments under support orders—
(A)
in all cases being enforced by the State pursuant to section 454(4); and
(B)
in all cases not being enforced by the State under this part in which the support order is initially issued in the State on or after January 1, 1994, and in which the income of the noncustodial parent is subject to withholding pursuant to section 466(a)(8)(B).
(2)

Operation.—
The State disbursement unit shall be operated—
(A)
directly by the State agency (or 2 or more State agencies under a regional cooperative agreement), or (to the extent appropriate) by a contractor responsible directly to the State agency; and
(B)
except in cases described in paragraph (1)(B), in coordination with the automated system established by the State pursuant to section 454A.
(3)

Linking of local disbursement units.—
The State disbursement unit may be established by linking local disbursement units through an automated information network, subject to this section, if the Secretary agrees that the system will not cost more nor take more time to establish or operate than a centralized system. In addition, employers shall be given 1 location to which income withholding is sent.
(b)

Required Procedures.—
The State disbursement 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 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 any parent, upon request, timely information on the current status of support payments under an order requiring payments to be made by or to the parent, except that in cases described in subsection (a)(1)(B), the State disbursement unit shall not be required to convert and maintain in automated form records of payments kept pursuant to section 466(a)(8)(B)(iii) before the effective date of this section.
(c)

Timing of Disbursements.—
(1)

In general.—
Except as provided in paragraph (2), the State disbursement unit shall distribute all amounts payable under section 457(a) within 2 business days after receipt from the employer or other source of periodic income, if sufficient information identifying the payee is provided. The date of collection for amounts collected and distributed under this part is the date of receipt by the State disbursement unit, except that if current support is withheld by an employer in the month when due and is received by the State disbursement unit in a month other than the month when due, the date of withholding may be deemed to be the date of collection.
(2)

Permissive retention of arrearages.—
The State disbursement unit may delay the distribution of collections toward arrearages until the resolution of any timely appeal with respect to such arrearages.
(d)

Business Day Defined.—
As used in this section, the term “business day” means a day on which State offices are open for regular business.

PAYMENTS TO STATES
Sec. 455.
[42 U.S.C. 655]
(a)
(1)
From the sums appropriated therefor, the Secretary shall pay to each State for each quarter an amount—
(A)
equal to the percent specified in paragraph (2) of the total amounts expended by such State during such quarter for the operation of the plan approved under section 454,
(B)36
equal to the percent specified in paragraph (3) of the sums expended during such quarter that are attributable to the planning, design, development, installation or enhancement of an automatic data processing and information retrieval system (including in such sums the full cost of the hardware components of such system); and 37
^{36}
Margin so in law.
^{37}
So in law. The phrase “; and” at the end of subsection (a)(1)(B) probably should be a comma.
(C)
equal to 66 percent of so much of the sums expended during such quarter as are attributable to laboratory costs incurred in determining paternity, and
(D)
equal to 66 percent of the sums expended by the State during the quarter for an alternative statewide system for which a waiver has been granted under section 452(d)(3), but only to the extent that the total of the sums so expended by the State on or after the date of the enactment of this subparagraph does not exceed the least total cost estimate submitted by the State pursuant to section 452(d)(3)(C) in the request for the waiver;
except that no amount shall be paid to any State on account of amounts expended from amounts paid to the State under section 458 or to carry out an agreement which it has entered into pursuant to section 463. In determining the total amounts expended by any State during a quarter, for purposes of this subsection, there shall be excluded an amount equal to the total of any fees collected or other income resulting from services provided under the plan approved under this part.
(2)
The percent applicable to quarters in a fiscal year for purposes of paragraph (1)(A) is—
(A)
70 percent for fiscal years 1984, 1985, 1986, and 1987,
(B)
68 percent for fiscal years 1988 and 1989, and
(C)
66 percent for fiscal year 1990 and each fiscal year thereafter.
(3)
(A)
The Secretary shall pay to each State, for each quarter in fiscal years 1996 and 1997, 90 percent of so much of the State expenditures described in paragraph (1)(B) as the Secretary finds are for a system meeting the requirements specified in section 454(16) (as in effect on September 30, 1995) but limited to the amount approved for States in the advance planning documents of such States submitted on or before September 30, 1995.
(B)
(i)
The Secretary shall pay to each State or system described in clause (iii), for each quarter in fiscal years 1996 through 2001, the percentage specified in clause (ii) of so much of the State or system expenditures described in paragraph (1)(B) as the Secretary finds are for a system meeting the requirements of sections 454(16) and 454A.
(ii)
The percentage specified in this clause is 80 percent.
(iii)
For purposes of clause (i), a system described in this clause is a system that has been approved by the Secretary to receive enhanced funding pursuant to the Family Support Act of 1988 (Public Law 100–485; 102 Stat. 2343) for the purpose of developing a system that meets the requirements of sections 454(16) (as in effect on and after September 30, 1995) and 454A, including systems that have received funding for such purpose pursuant to a waiver under section 1115(a).
(4)
(A)
(i)
If—
(I)
the Secretary determines that a State plan under section 454 would (in the absence of this paragraph) be disapproved for the failure of the State to comply with a particular subparagraph of section 454(24), and that the State has made and is continuing to make a good faith effort to so comply; and
(II)
the State has submitted to the Secretary a corrective compliance plan that describes how, by when, and at what cost the State will achieve such compliance, which has been approved by the Secretary,
then the Secretary shall not disapprove the State plan under section 454, and the Secretary shall reduce the amount otherwise payable to the State under paragraph (1)(A) of this subsection for the fiscal year by the penalty amount.
(ii)
All failures of a State during a fiscal year to comply with any of the requirements referred to in the same subparagraph of section 454(24) shall be considered a single failure of the State to comply with that subparagraph during the fiscal year for purposes of this paragraph.
(B)
In this paragraph:
(i)
The term “penalty amount” means, with respect to a failure of a State to comply with a subparagraph of section 454(24)—
(I)
4 percent of the penalty base, in the case of the first fiscal year in which such a failure by the State occurs (regardless of whether a penalty is imposed under this paragraph with respect to the failure);
(II)
8 percent of the penalty base, in the case of the second such fiscal year;
(III)
16 percent of the penalty base, in the case of the third such fiscal year;
(IV)
25 percent of the penalty base, in the case of the fourth such fiscal year; or
(V)
30 percent of the penalty base, in the case of the fifth or any subsequent such fiscal year.
(ii)
The term “penalty base” means, with respect to a failure of a State to comply with a subparagraph of section 454(24) during a fiscal year, the amount otherwise payable to the State under paragraph (1)(A) of this subsection for the preceding fiscal year.
(C)
(i)
The Secretary shall waive a penalty under this paragraph for any failure of a State to comply with section 454(24)(A) during fiscal year 1998 if—
(I)
on or before August 1, 1998, the State has submitted to the Secretary a request that the Secretary certify the State as having met the requirements of such section;
(II)
the Secretary subsequently provides the certification as a result of a timely review conducted pursuant to the request; and
(III)
the State has not failed such a review.
(ii)
If a State with respect to which a reduction is made under this paragraph for a fiscal year with respect to a failure to comply with a subparagraph of section 454(24) achieves compliance with such subparagraph by the beginning of the succeeding fiscal year, the Secretary shall increase the amount otherwise payable to the State under paragraph (1)(A) of this subsection for the succeeding fiscal year by an amount equal to 90 percent of the reduction for the fiscal year.
(iii)
The Secretary shall reduce the amount of any reduction that, in the absence of this clause, would be required to be made under this paragraph by reason of the failure of a State to achieve compliance with section 454(24)(B) during the fiscal year, by an amount equal to 20 percent of the amount of the otherwise required reduction, for each State performance measure described in section 458A(b)(4) with respect to which the applicable percentage under section 458A(b)(6) for the fiscal year is 100 percent, if the Secretary has made the determination described in section 458A(b)(5)(B) with respect to the State for the fiscal year.
(D)
The Secretary may not impose a penalty under this paragraph against a State with respect to a failure to comply with section 454(24)(B) for a fiscal year if the Secretary is required to impose a penalty under this paragraph against the State with respect to a failure to comply with section 454(24)(A) for the fiscal year.
(5)
(A)
(i)
If—
(I)
the Secretary determines that a State plan under section 454 would (in the absence of this paragraph) be disapproved for the failure of the State to comply with subparagraphs (A) and (B)(i) of section 454(27), and that the State has made and is continuing to make a good faith effort to so comply; and
(II)
the State has submitted to the Secretary, not later than April 1, 2000, a corrective compliance plan that describes how, by when, and at what cost the State will achieve such compliance, which has been approved by the Secretary,
then the Secretary shall not disapprove the State plan under section 454, and the Secretary shall reduce the amount otherwise payable to the State under paragraph (1)(A) of this subsection for the fiscal year by the penalty amount.
(ii)
All failures of a State during a fiscal year to comply with any of the requirements of section 454B shall be considered a single failure of the State to comply with subparagraphs (A) and (B)(i) of section 454(27) during the fiscal year for purposes of this paragraph.
(B)
In this paragraph:
(i)
The term “penalty amount” means, with respect to a failure of a State to comply with subparagraphs (A) and (B)(i) of section 454(27)—
(I)
4 percent of the penalty base, in the case of the 1st fiscal year in which such a failure by the State occurs (regardless of whether a penalty is imposed in that fiscal year under this paragraph with respect to the failure), except as provided in subparagraph (C)(ii) of this paragraph;
(II)
8 percent of the penalty base, in the case of the 2nd such fiscal year;
(III)
16 percent of the penalty base, in the case of the 3rd such fiscal year;
(IV)
25 percent of the penalty base, in the case of the 4th such fiscal year; or
(V)
30 percent of the penalty base, in the case of the 5th or any subsequent such fiscal year.
(ii)
The term “penalty base” means, with respect to a failure of a State to comply with subparagraphs (A) and (B)(i) of section 454(27) during a fiscal year, the amount otherwise payable to the State under paragraph (1)(A) of this subsection for the preceding fiscal year.
(C)
(i)
The Secretary shall waive all penalties imposed against a State under this paragraph for any failure of the State to comply with subparagraphs (A) and (B)(i) of section 454(27) if the Secretary determines that, before April 1, 2000, the State has achieved such compliance.
(ii)
If a State with respect to which a reduction is required to be made under this paragraph with respect to a failure to comply with subparagraphs (A) and (B)(i) of section 454(27) achieves such compliance on or after April 1, 2000, and on or before September 30, 2000, then the penalty amount applicable to the State shall be 1 percent of the penalty base with respect to the failure involved.
(D)
The Secretary may not impose a penalty under this paragraph against a State for a fiscal year for which the amount otherwise payable to the State under paragraph (1)(A) of this subsection is reduced under paragraph (4) of this subsection for failure to comply with section 454(24)(A).
(b)
(1)
Prior to the beginning of each quarter, the Secretary shall estimate the amount to which a State will be entitled under subsection (a) for such quarter, such estimates 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, and (B) such other investigation as the Secretary may find necessary.
(2)
Subject to subsection (d), the Secretary shall then pay, in such installments as he may determine, to the State the amount so estimated, reduced or increased to the extent of any overpayment or underpayment which the Secretary determines was made under this section to such State for any prior quarter and with respect to which adjustment has not already been made under this subsection.
(3)
Upon the making of any estimate by the Secretary under this subsection, any appropriations available for payments under this section shall be deemed obligated.
[(c)
Repealed.]
(d)
Notwithstanding any other provision of law, no amount shall be paid to any State under this section for any quarter, prior to the close of such quarter, unless for the period consisting of all prior quarters for which payment is authorized to be made to such State under subsection (a), there shall have been submitted by the State to the Secretary, with respect to each quarter in such period (other than the last two quarters in such period), a full and complete report (in such form and manner and containing such information as the Secretary shall prescribe or require) as to the amount of child support collected and disbursed and all expenditures with respect to which payment is authorized under subsection (a).
(e)
(1)
In order to encourage and promote the development and use of more effective methods of enforcing support obligations under this part in cases where either the children on whose behalf the support is sought or their noncustodial parents do not reside in the State where such cases are filed, the Secretary is authorized to make grants, in such amounts and on such terms and conditions as the Secretary determines to be appropriate, to States which propose to undertake new or innovative methods of support collection in such cases and which will use the proceeds of such grants to carry out special projects designed to demonstrate and test such methods.
(2)
A grant under this subsection shall be made only upon a finding by the Secretary that the project involved is likely to be of significant assistance in carrying out the purpose of this subsection; and with respect to such project the Secretary may waive any of the requirements of this part which would otherwise be applicable, to such extent and for such period as the Secretary determines is necessary or desirable in order to enable the State to carry out the project.
(3)
At the time of its application for a grant under this subsection the State shall submit to the Secretary a statement describing in reasonable detail the project for which the proceeds of the grant are to be used, and the State shall from time to time thereafter submit to the Secretary such reports with respect to the project as the Secretary may specify.
(4)
Amounts expended by a State in carrying out a special project assisted under this section shall be considered, for purposes of section 458(b) (as amended by section 5(a) of the Child Support Enforcement Amendments of 1984, to have been expended for the operation of the State's plan approved under section 454.
(5)
There is authorized to be appropriated the sum of $7,000,000 for fiscal year 1985, $12,000,000 for fiscal year 1986, and $15,000,000 for each fiscal year thereafter, to be used by the Secretary in making grants under this subsection.
(f)
The Secretary may make direct payments under this part to an Indian tribe or tribal organization that demonstrates to the satisfaction of the Secretary that it has the capacity to operate a child support enforcement program meeting the objectives of this part, including establishment of paternity, establishment, modification, and enforcement of support orders, and location of absent parents. The Secretary shall promulgate regulations establishing the requirements which must be met by an Indian tribe or tribal organization to be eligible for a grant under this subsection.

SUPPORT OBLIGATIONS
Sec. 456.
[42 U.S.C. 656]
(a)
(1)
The support rights assigned to the State pursuant to section 408(a)(3) or secured on behalf of a child receiving foster care maintenance payments shall constitute an obligation owed to such State by the individual responsible for providing such support. Such obligation shall be deemed for collection purposes to be collectible under all applicable State and local processes.
(2)
The amount of such obligation shall be—
(A)
the amount specified in a court order which covers the assigned support rights, or
(B)
if there is no court order, an amount determined by the State in accordance with a formula approved by the Secretary.
(3)
Any amounts collected from a noncustodial parent under the plan shall reduce, dollar for dollar, the amount of his obligation under subparagraphs (A) and (B) of paragraph (2).
(b)

Nondischargeability.—
A debt (as defined in section 101 of title 11 of the United States Code) owed under State law to a State (as defined in such section) or municipality (as defined in such section) that is in the nature of support and that is enforceable under this part is not released by a discharge in bankruptcy under title 11 of the United States Code.
SEC. 457.
[42 U.S.C. 657]

DISTRIBUTION OF COLLECTED SUPPORT.
(a)

In General.—
Subject to subsections (d) and (e), the amounts collected on behalf of a family as support by a State pursuant to a plan approved under this part shall be distributed as follows:
(1)

Families receiving assistance.—
In the case of a family receiving assistance from the State, the State shall—
(A)
pay to the Federal Government the Federal share of the amount collected, subject to paragraph (3)(A);
(B)
retain, or pay to the family, the State share of the amount collected, subject to paragraph (3)(B); and
(C)
pay to the family any remaining amount.
(2)

Families that formerly received assistance.—
In the case of a family that formerly received assistance from the State:
(A)

Current support.—
To the extent that the amount collected does not exceed the current support amount, the State shall pay the amount to the family.
(B)

Arrearages.—
Except as otherwise provided in an election made under section 454(34), to the extent that the amount collected exceeds the current support amount, the State—
(i)
shall first pay to the family the excess amount, to the extent necessary to satisfy support arrearages not assigned pursuant to section 408(a)(3);
(ii)
if the amount collected exceeds the amount required to be paid to the family under clause (i), shall—
(I)
pay to the Federal Government the Federal share of the excess amount described in this clause, subject to paragraph (3)(A); and
(II)
retain, or pay to the family, the State share of the excess amount described in this clause, subject to paragraph (3)(B); and
(iii)
shall pay to the family any remaining amount.
(3)

Limitations.—
(A)

Federal reimbursements.—
The total of the amounts paid by the State to the Federal Government under paragraphs (1) and (2) of this subsection with respect to a family shall not exceed the Federal share of the amount assigned with respect to the family pursuant to section 408(a)(3).
(B)

State reimbursements.—
The total of the amounts retained by the State under paragraphs (1) and (2) of this subsection with respect to a family shall not exceed the State share of the amount assigned with respect to the family pursuant to section 408(a)(3).
(4)

Families that never received assistance.—
In the case of any other family, the State shall distribute to the family the portion of the amount so collected that remains after withholding any fee pursuant to section 454(6)(B)(ii).
(5)

Families under certain agreements.—
Notwithstanding paragraphs (1) through (3), in the case of an amount collected for a family in accordance with a cooperative agreement under section 454(33), the State shall distribute the amount collected pursuant to the terms of the agreement.
(6)

State option to pass through additional support with federal financial participation.—
(A)

Families that formerly received assistance.—
Notwithstanding paragraph (2), a State shall not be required to pay to the Federal Government the Federal share of an amount collected on behalf of a family that formerly received assistance from the State to the extent that the State pays the amount to the family.
(B)

Families that currently receive assistance.—
(i)

In general.—
Notwithstanding paragraph (1), in the case of a family that receives assistance from the State, a State shall not be required to pay to the Federal Government the Federal share of the excepted portion (as defined in clause (ii)) of any amount collected on behalf of such family during a month to the extent that—
(I)
the State pays the excepted portion to the family; and
(II)
the excepted portion is disregarded in determining the amount and type of assistance provided to the family under such program.
(ii)

Excepted portion defined.—
For purposes of this subparagraph, the term “excepted portion” means that portion of the amount collected on behalf of a family during a month that does not exceed $100 per month, or in the case of a family that includes 2 or more children, that does not exceed an amount established by the State that is not more than $200 per month.
(b)

Continuation of Assignments.—
(1)

State option to discontinue pre-1997 support assignments.—
(A)

In general.—
Any rights to support obligations assigned to a State as a condition of receiving assistance from the State under part A and in effect on September 30, 1997 (or such earlier date on or after August 22, 1996, as the State may choose), may remain assigned after such date.
(B)

Distribution of amounts after assignment discontinuation.—
If a State chooses to discontinue the assignment of a support obligation described in subparagraph (A), the State may treat amounts collected pursuant to the assignment as if the amounts had never been assigned and may distribute the amounts to the family in accordance with subsection (a)(4).
(2)

State option to discontinue post-1997 assignments.—
(A)

In general.—
Any rights to support obligations accruing before the date on which a family first receives assistance under part A that are assigned to a State under that part and in effect before the implementation date of this section may remain assigned after such date.
(B)

Distribution of amounts after assignment discontinuation.—
If a State chooses to discontinue the assignment of a support obligation described in subparagraph (A), the State may treat amounts collected pursuant to the assignment as if the amounts had never been assigned and may distribute the amounts to the family in accordance with subsection (a)(4).
(c)

Definitions.—
As used in subsection (a):
(1)

Assistance.—
The term “assistance from the State” means—
(A)
assistance under the State program funded under part A or under the State plan approved under part A of this title (as in effect on the day before the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996); and
(B)
foster care maintenance payments under the State plan approved under part E of this title.
(2)

Federal share.—
The term “Federal share” means that portion of the amount collected resulting from the application of the Federal medical assistance percentage in effect for the fiscal year in which the amount is distributed.
(3)

Federal medical assistance percentage.—
The term “Federal medical assistance percentage” means—
(A)
75 percent, in the case of Puerto Rico, the Virgin Islands, Guam, and American Samoa; or
(B)
the Federal medical assistance percentage (as defined in section 1905(b), as such section was in effect on September 30, 1995) in the case of any other State.
(4)

State share.—
The term “State share” means 100 percent minus the Federal share.
(5)

Current support amount.—
The term “current support amount” means, with respect to amounts collected as support on behalf of a family, the amount designated as the monthly support obligation of the noncustodial parent in the order requiring the support or calculated by the State based on the order.
(d)

Gap Payments Not Subject to Distribution Under This Section.—
At State option, this section shall not apply to any amount collected on behalf of a family as support by the State (and paid to the family in addition to the amount of assistance otherwise payable to the family) pursuant to a plan approved under this part if such amount would have been paid to the family by the State under section 402(a)(28), as in effect and applied on the day before the date of the enactment of section 302 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
(e)
Notwithstanding the preceding provisions of this section, amounts collected by a State as child support for months in any period on behalf of a child for whom a public agency is making foster care maintenance payments under part E—
(1)
shall be retained by the State to the extent necessary to reimburse it for the foster care maintenance payments made with respect to the child during such period (with appropriate reimbursement of the Federal Government to the extent of its participation in the financing);
(2)
shall be paid to the public agency responsible for supervising the placement of the child to the extent that the amounts collected exceed the foster care maintenance payments made with respect to the child during such period but not the amounts required by a court or administrative order to be paid as support on behalf of the child during such period; and the responsible agency may use the payments in the manner it determines will serve the best interests of the child, including setting such payments aside for the child's future needs or making all or a part thereof available to the person responsible for meeting the child's day-to-day needs; and
(3)
shall be retained by the State, if any portion of the amounts collected remains after making the payments required under paragraphs (1) and (2), to the extent that such portion is necessary to reimburse the State (with appropriate reimbursement to the Federal Government to the extent of its participation in the financing) for any past foster care maintenance payments (or payments of assistance under the State program funded under part A) which were made with respect to the child (and with respect to which past collections have not previously been retained);
and any balance shall be paid to the State agency responsible for supervising the placement of the child, for use by such agency in accordance with paragraph (2).
SEC. 458.
[42 U.S.C. 658a]

INCENTIVE PAYMENTS TO STATES.
(a)

In General.—
In addition to any other payment under this part, the Secretary shall, subject to subsection (f), make an incentive payment to each State for each fiscal year in an amount determined under subsection (b).
(b)

Amount of Incentive Payment.—
(1)

In general.—
The incentive payment for a State for a fiscal year is equal to the incentive payment pool for the fiscal year, multiplied by the State incentive payment share for the fiscal year.
(2)

Incentive payment pool.—
(A)

In general.—
In paragraph (1), the term “incentive payment pool” means—
(i)
$422,000,000 for fiscal year 2000;
(ii)
$429,000,000 for fiscal year 2001;
(iii)
$450,000,000 for fiscal year 2002;
(iv)
$461,000,000 for fiscal year 2003;
(v)
$454,000,000 for fiscal year 2004;
(vi)
$446,000,000 for fiscal year 2005;
(vii)
$458,000,000 for fiscal year 2006;
(viii)
$471,000,000 for fiscal year 2007;
(ix)
$483,000,000 for fiscal year 2008; and
(x)
for any succeeding fiscal year, the amount of the incentive payment pool for the fiscal year that precedes such succeeding fiscal year, multiplied by the percentage (if any) by which the CPI for such preceding fiscal year exceeds the CPI for the second preceding fiscal year.
(B)

CPI.—
For purposes of subparagraph (A), the CPI for a fiscal year is the average of the Consumer Price Index for the 12-month period ending on September 30 of the fiscal year. As used in the preceding sentence, the term “Consumer Price Index” means the last Consumer Price Index for all-urban consumers published by the Department of Labor.
(3)

State incentive payment share.—
In paragraph (1), the term “State incentive payment share” means, with respect to a fiscal year—
(A)
the incentive base amount for the State for the fiscal year; divided by
(B)
the sum of the incentive base amounts for all of the States for the fiscal year.
(4)

Incentive base amount.—
In paragraph (3), the term “incentive base amount” means, with respect to a State and a fiscal year, the sum of the applicable percentages (determined in accordance with paragraph (6)) multiplied by the corresponding maximum incentive base amounts for the State for the fiscal year, with respect to each of the following measures of State performance for the fiscal year:
(A)
The paternity establishment performance level.
(B)
The support order performance level.
(C)
The current payment performance level.
(D)
The arrearage payment performance level.
(E)
The cost-effectiveness performance level.
(5)

Maximum incentive base amount.—
(A)

In general.—
For purposes of paragraph (4), the maximum incentive base amount for a State for a fiscal year is—
(i)
with respect to the performance measures described in subparagraphs (A), (B), and (C) of paragraph (4), the State collections base for the fiscal year; and
(ii)
with respect to the performance measures described in subparagraphs (D) and (E) of paragraph (4), 75 percent of the State collections base for the fiscal year.
(B)

Data required to be complete and reliable.—
Notwithstanding subparagraph (A), the maximum incentive base amount for a State for a fiscal year with respect to a performance measure described in paragraph (4) is zero, unless the Secretary determines, on the basis of an audit performed under section 452(a)(4)(C)(i), that the data which the State submitted pursuant to section 454(15)(B) for the fiscal year and which is used to determine the performance level involved is complete and reliable.
(C)

State collections base.—
For purposes of subparagraph (A), the State collections base for a fiscal year is equal to the sum of—
(i)
2 times the sum of—
(I)
the total amount of support collected during the fiscal year under the State plan approved under this part in cases in which the support obligation involved is required to be assigned to the State pursuant to part A or E of this title or title XIX; and
(II)
the total amount of support collected during the fiscal year under the State plan approved under this part in cases in which the support obligation involved was so assigned but, at the time of collection, is not required to be so assigned; and
(ii)
the total amount of support collected during the fiscal year under the State plan approved under this part in all other cases.
(6)

Determination of applicable percentages based on performance levels.—
(A)

Paternity establishment.—
(i)

Determination of paternity establishment performance level.—
The paternity establishment performance level for a State for a fiscal year is, at the option of the State, the IV–D paternity establishment percentage determined under section 452(g)(2)(A) or the statewide paternity establishment percentage determined under section 452(g)(2)(B).
(ii)

Determination of applicable percentage.—
The applicable percentage with respect to a State's paternity establishment performance level is as follows:
If the paternity establishment performance level is: | The applicable percentage is:
At least: | But less than:
80% | | 100
79% | 80% | 98
78% | 79% | 96
77% | 78% | 94
76% | 77% | 92
75% | 76% | 90
74% | 75% | 88
73% | 74% | 86
72% | 73% | 84
71% | 72% | 82
70% | 71% | 80
69% | 70% | 79
68% | 69% | 78
67% | 68% | 77
66% | 67% | 76
65% | 66% | 75
64% | 65% | 74
63% | 64% | 73
62% | 63% | 72
61% | 62% | 71
60% | 61% | 70
59% | 60% | 69
58% | 59% | 68
57% | 58% | 67
56% | 57% | 66
55% | 56% | 65
54% | 55% | 64
53% | 54% | 63
52% | 53% | 62
51% | 52% | 61
50% | 51% | 60
0% | 50% | 0.
Notwithstanding the preceding sentence, if the paternity establishment performance level of a State for a fiscal year is less than 50 percent but exceeds by at least 10 percentage points the paternity establishment performance level of the State for the immediately preceding fiscal year, then the applicable percentage with respect to the State's paternity establishment performance level is 50 percent.
(B)

Establishment of child support orders.—
(i)

Determination of support order performance level.—
The support order performance level for a State for a fiscal year is the percentage of the total number of cases under the State plan approved under this part in which there is a support order during the fiscal year.
(ii)

Determination of applicable percentage.—
The applicable percentage with respect to a State's support order performance level is as follows:
If the support order performance level is: | The applicable percentage is:
At least: | But less than:
80% | | 100
79% | 80% | 98
78% | 79% | 96
77% | 78% | 94
76% | 77% | 92
75% | 76% | 90
74% | 75% | 88
73% | 74% | 86
72% | 73% | 84
71% | 72% | 82
70% | 71% | 80
69% | 70% | 79
68% | 69% | 78
67% | 68% | 77
66% | 67% | 76
65% | 66% | 75
64% | 65% | 74
63% | 64% | 73
62% | 63% | 72
61% | 62% | 71
60% | 61% | 70
59% | 60% | 69
58% | 59% | 68
57% | 58% | 67
56% | 57% | 66
55% | 56% | 65
54% | 55% | 64
53% | 54% | 63
52% | 53% | 62
51% | 52% | 61
50% | 51% | 60
0% | 50% | 0.
Notwithstanding the preceding sentence, if the support order performance level of a State for a fiscal year is less than 50 percent but exceeds by at least 5 percentage points the support order performance level of the State for the immediately preceding fiscal year, then the applicable percentage with respect to the State's support order performance level is 50 percent.
(C)

Collections on current child support due.—
(i)

Determination of current payment performance level.—
The current payment performance level for a State for a fiscal year is equal to the total amount of current support collected during the fiscal year under the State plan approved under this part divided by the total amount of current support owed during the fiscal year in all cases under the State plan, expressed as a percentage.
(ii)

Determination of applicable percentage.—
The applicable percentage with respect to a State's current payment performance level is as follows:
If the current payment performance level is: | The applicable percentage is:
At least: | But less than:
80% | | 100
79% | 80% | 98
78% | 79% | 96
77% | 78% | 94
76% | 77% | 92
75% | 76% | 90
74% | 75% | 88
73% | 74% | 86
72% | 73% | 84
71% | 72% | 82
70% | 71% | 80
69% | 70% | 79
68% | 69% | 78
67% | 68% | 77
66% | 67% | 76
65% | 66% | 75
64% | 65% | 74
63% | 64% | 73
62% | 63% | 72
61% | 62% | 71
60% | 61% | 70
59% | 60% | 69
58% | 59% | 68
57% | 58% | 67
56% | 57% | 66
55% | 56% | 65
54% | 55% | 64
53% | 54% | 63
52% | 53% | 62
51% | 52% | 61
50% | 51% | 60
49% | 50% | 59
48% | 49% | 58
47% | 48% | 57
46% | 47% | 56
45% | 46% | 55
44% | 45% | 54
43% | 44% | 53
42% | 43% | 52
41% | 42% | 51
40% | 41% | 50
0% | 40% | 0.
Notwithstanding the preceding sentence, if the current payment performance level of a State for a fiscal year is less than 40 percent but exceeds by at least 5 percentage points the current payment performance level of the State for the immediately preceding fiscal year, then the applicable percentage with respect to the State's current payment performance level is 50 percent.
(D)

Collections on child support arrearages.—
(i)

Determination of arrearage payment performance level.—
The arrearage payment performance level for a State for a fiscal year is equal to the total number of cases under the State plan approved under this part in which payments of past-due child support were received during the fiscal year and part or all of the payments were distributed to the family to whom the past-due child support was owed (or, if all past-due child support owed to the family was, at the time of receipt, subject to an assignment to the State, part or all of the payments were retained by the State) divided by the total number of cases under the State plan in which there is past-due child support, expressed as a percentage.
(ii)

Determination of applicable percentage.—
The applicable percentage with respect to a State's arrearage payment performance level is as
follows:
If the arrearage payment performance level is: | The applicable percentage is:
At least: | But less than:
80% | | 100
79% | 80% | 98
78% | 79% | 96
77% | 78% | 94
76% | 77% | 92
75% | 76% | 90
74% | 75% | 88
73% | 74% | 86
72% | 73% | 84
71% | 72% | 82
70% | 71% | 80
69% | 70% | 79
68% | 69% | 78
67% | 68% | 77
66% | 67% | 76
65% | 66% | 75
64% | 65% | 74
63% | 64% | 73
62% | 63% | 72
61% | 62% | 71
60% | 61% | 70
59% | 60% | 69
58% | 59% | 68
57% | 58% | 67
56% | 57% | 66
55% | 56% | 65
54% | 55% | 64
53% | 54% | 63
52% | 53% | 62
51% | 52% | 61
50% | 51% | 60
49% | 50% | 59
48% | 49% | 58
47% | 48% | 57
46% | 47% | 56
45% | 46% | 55
44% | 45% | 54
43% | 44% | 53
42% | 43% | 52
41% | 42% | 51
40% | 41% | 50
0% | 40% | 0.
Notwithstanding the preceding sentence, if the arrearage payment performance level of a State for a fiscal year is less than 40 percent but exceeds by at least 5 percentage points the arrearage payment performance level of the State for the immediately preceding fiscal year, then the applicable percentage with respect to the State's arrearage payment performance level is 50 percent.
(E)

Cost-effectiveness.—
(i)

Determination of cost-effectiveness performance level.—
The cost-effectiveness performance level for a State for a fiscal year is equal to the total amount collected during the fiscal year under the State plan approved under this part divided by the total amount expended during the fiscal year under the State plan, expressed as a ratio.
(ii)

Determination of applicable percentage.—
The applicable percentage with respect to a State's cost-effectiveness performance level is as
follows:
If the cost-effectiveness performance level is: | The applicable percentage is:
At least: | But less than:
5.00 | | 100
4.50 | 4.99 | 90
4.00 | 4.50 | 80
3.50 | 4.00 | 70
3.00 | 3.50 | 60
2.50 | 3.00 | 50
2.00 | 2.50 | 40
0.00 | 2.00 | 0.
(c)

Treatment of Interstate Collections.—
In computing incentive payments under this section, support which is collected by a State at the request of another State shall be treated as having been collected in full by both States, and any amounts expended by a State in carrying out a special project assisted under section 455(e) shall be excluded.
(d)

Administrative Provisions.—
The amounts of the incentive payments to be made to the States under this section for a fiscal year shall be estimated by the Secretary at/or before the beginning of the fiscal year on the basis of the best information available. The Secretary shall make the payments for the fiscal year, on a quarterly basis (with each quarterly payment being made no later than the beginning of the quarter involved), in the amounts so estimated, reduced or increased to the extent of any overpayments or underpayments which the Secretary determines were made under this section to the States involved for prior periods and with respect to which adjustment has not already been made under this subsection. Upon the making of any estimate by the Secretary under the preceding sentence, any appropriations available for payments under this section are deemed obligated.
(e)

Regulations.—
The Secretary shall prescribe such regulations as may be necessary governing the calculation of incentive payments under this section, including directions for excluding from the calculations certain closed cases and cases over which the States do not have jurisdiction.
(f)

Reinvestment.—
A State to which a payment is made under this section shall expend the full amount of the payment to supplement, and not supplant, other funds used by the State—
(1)
to carry out the State plan approved under this
part; or
(2)
for any activity (including cost-effective contracts with local agencies) approved by the Secretary, whether or not the expenditures for the activity are eligible for reimbursement under this part, which may contribute to improving the effectiveness or efficiency of the State program operated under this part.
SEC. 459.
[42 U.S.C. 659]

CONSENT BY THE UNITED STATES TO INCOME WITHHOLDING, GARNISHMENT, AND SIMILAR PROCEEDINGS FOR ENFORCEMENT OF CHILD SUPPORT AND ALIMONY OBLIGATIONS.
(a)

Consent to Support Enforcement.—
Notwithstanding any other provision of law (including section 207 of this Act and section 5301 of title 38, United States Code), effective January 1, 1975, moneys (the entitlement to which is based upon remuneration for employment) due from, or payable by, the United States or the District of Columbia (including any agency, subdivision, or instrumentality thereof) to any individual, including members of the Armed Forces of the United States, shall be subject, in like manner and to the same extent as if the United States or the District of Columbia were a private person, to withholding in accordance with State law enacted pursuant to subsections (a)(1) and (b) of section 466 and regulations of the Secretary under such subsections, and to any other legal process brought, by a State agency administering a program under a State plan approved under this part or by an individual obligee, to enforce the legal obligation of the individual to provide child support or alimony.
(b)

Consent to Requirements Applicable to Private Person.—
With respect to notice to withhold income pursuant to subsection (a)(1) or (b) of section 466, or any other order or process to enforce support obligations against an individual (if the order or process contains or is accompanied by sufficient data to permit prompt identification of the individual and the moneys involved), each governmental entity specified in subsection (a) shall be subject to the same requirements as would apply if the entity were a private person, except as otherwise provided in this section.
(c)

Designation of Agent; Response to Notice or Process—
(1)

Designation of agent.—
The head of each agency subject to this section shall—
(A)
designate an agent or agents to receive orders and accept service of process in matters relating to child support or alimony; and
(B)
annually publish in the Federal Register the designation of the agent or agents, identified by title or position, mailing address, and telephone number.
(2)

Response to notice or process.—
If an agent designated pursuant to paragraph (1) of this subsection receives notice pursuant to State procedures in effect pursuant to subsection (a)(1) or (b) of section 466, or is effectively served with any order, process, or interrogatory, with respect to an individual's child support or alimony payment obligations, the agent shall—
(A)
as soon as possible (but not later than 15 days) thereafter, send written notice of the notice or service (together with a copy of the notice or service) to the individual at the duty station or last-known home address of the individual;
(B)
within 30 days (or such longer period as may be prescribed by applicable State law) after receipt of a notice pursuant to such State procedures, comply with all applicable provisions of 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 interrogatory, withhold available sums in response to the order or process, or answer the interrogatory.
(d)

Priority of Claims.—
If a governmental entity specified in subsection (a) receives notice or is served with process, as provided in this section, concerning amounts owed by an individual to more than 1 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 section 466(b) and the regulations prescribed under such section; and
(3)
such moneys as remain after compliance with paragraphs (1) and (2) 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.
(e)

No Requirement To Vary Pay Cycles.—
A governmental entity that is affected by legal process served for the enforcement of an individual's child support or alimony payment obligations shall not be required to vary its normal pay and disbursement cycle in order to comply with the legal process.
(f)

Relief From Liability.—
(1)
Neither the United States, nor the government of the District of Columbia, nor any disbursing officer shall be liable with respect to any payment made from moneys due or payable from the United States to any individual pursuant to legal process regular on its face, if the payment is made in accordance with this section and the regulations issued to carry out this section.
(2)
No Federal employee whose duties include taking actions necessary to comply with the requirements of subsection (a) with regard to any individual shall be subject under any law to any disciplinary action or civil or criminal liability or penalty for, or on account of, any disclosure of information made by the employee in connection with the carrying out of such actions.
(g)

Regulations.—
Authority to promulgate regulations for the implementation of this section shall, insofar as this section applies to moneys due from (or payable by)—
(1)
the United States (other than the legislative or judicial branches of the Federal Government) or the government of the District of Columbia, be vested in the President (or the designee of the President);
(2)
the legislative branch of the Federal Government, be vested jointly in the President pro tempore of the Senate and the Speaker of the House of Representatives (or their designees),38 and
^{38}
So in law. The comma before “and” at the end of subsection (g)(2) probably should be a semicolon.
(3)
the judicial branch of the Federal Government, be vested in the Chief Justice of the United States (or the designee of the Chief Justice).
(h)

Moneys Subject to Process.—
(1)

In general.—
Subject to paragraph (2), moneys payable to an individual which are considered to be based upon remuneration for employment, for purposes of this section—
(A)
consist of—
(i)
compensation payable for personal services of the individual, whether the 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 compensation for a service-connected disability paid by the Secretary to a former member of the Armed Forces who is in receipt of retired or retainer pay if the former member has waived a portion of the retired or retainer pay in order to receive such compensation;
(iii)
worker's compensation benefits paid or payable under Federal or State law;
(iv)
benefits paid or payable under the Railroad Retirement System,39 and
^{39}
So in law. The comma before “and” at the end of subsection (h)(1)(A)(iv) probably should be a semicolon.
(v)
special benefits for certain World War II veterans payable under title VIII; but
(B)
do not include any payment—
(i)
by way of reimbursement or otherwise, to defray expenses incurred by the individual in carrying out duties associated with the employment of the individual;
(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; or
(iii)
of periodic benefits under title 38, United States Code, except as provided in subparagraph (A)(ii)(V).
(2)

Certain amounts excluded.—
In determining the amount of any moneys due from, or payable by, the United States to any individual, there shall be excluded amounts which—
(A)
are owed by the individual to the United States;
(B)
are required by law to be, and are, deducted from the remuneration or other payment involved, including Federal employment taxes, and fines and forfeitures ordered by court-martial;
(C)
are properly withheld for Federal, State, or local income tax purposes, if the withholding of the amounts is authorized or required by law and if amounts withheld are not greater than would be the case if the individual claimed all dependents to which he was entitled (the withholding of additional amounts pursuant to section 3402(i) of the Internal Revenue Code of 1986 may be permitted only when the individual presents evidence of a tax obligation which supports the additional withholding);
(D)
are deducted as health insurance premiums;
(E)
are deducted as normal retirement contributions (not including amounts deducted for supplementary coverage); or
(F)
are deducted as normal life insurance premiums from salary or other remuneration for employment (not including amounts deducted for supplementary coverage).
(i)

Definitions.—
For purposes of this section—
(1)

United states.—
The term “United States” includes any department, agency, or instrumentality of the legislative, judicial, or executive branch of the Federal Government, the United States Postal Service, the Postal Rate Commission 40, any Federal corporation created by an Act of Congress that is wholly owned by the Federal Government, and the governments of the territories and possessions of the United States.
^{40}
So in law. The phrase “the Postal Rate Commission” in subsection (i)(1) probably should read “Potal Regulatory Commisssion”. See section 604(f) of Public Law 109–435 (120 Stat. 3242).
(2)

Child support.—
The term “child support”, when used in reference to the legal obligations of an individual to provide such support, means amounts required to be paid under a judgment, decree, or order, whether temporary, final, or subject to modification, issued by a court or an administrative agency of competent jurisdiction, for the support and maintenance of a child, including a child who has attained the age of majority under the law of the issuing State, or a child and the parent with whom the child is living, which provides for monetary support, health care, arrearages or reimbursement, and which may include other related costs and fees, interest and penalties, income withholding, attorney's fees, and other relief.
(3)

Alimony.—
(A)

In general.—
The term “alimony”, when used in reference to the legal obligations of an individual to provide the same, means periodic payments of funds for the support and maintenance of the spouse (or former spouse) of the individual, and (subject to and in accordance with State law) includes separate maintenance, alimony pendente lite, maintenance, and spousal support, and includes attorney's fees, interest, and court costs when and to the extent that the same are expressly made recoverable as such pursuant to a decree, order, or judgment issued in accordance with applicable State law by a court of competent jurisdiction.
(B)

Exceptions.—
Such term does not include—
(i)
any child support; or
(ii)
any payment or transfer of property or its value by an individual to the spouse or a former spouse of the individual in compliance with any community property settlement, equitable distribution of property, or other division of property between spouses or former spouses.
(4)

Private person.—
The term “private person” means a person who does not have sovereign or other special immunity or privilege which causes the person not to be subject to legal process.
(5)

Legal process.—
The term “legal process” means any writ, order, summons, or other similar process in the nature of garnishment—
(A)
which is issued by—
(i)
a court or an administrative agency of competent jurisdiction in any State, territory, or possession of the United States;
(ii)
a court or an administrative agency of competent jurisdiction in any foreign country with which the United States has entered into an agreement which requires the United States to honor the process; or
(iii)
an authorized official pursuant to an order of such a court or an administrative agency of competent jurisdiction or pursuant to State or local law; and
(B)
which is directed to, and the purpose of which is to compel, a governmental entity which holds moneys which are otherwise payable to an individual to make a payment from the moneys to another party in order to satisfy a legal obligation of the individual to provide child support or make alimony payments.
SEC. 459A.
[42 U.S.C. 659a]

INTERNATIONAL SUPPORT ENFORCEMENT.
(a)

Authority for Declarations.—
(1)

Declaration.—
The Secretary of State, with the concurrence of the Secretary of Health and Human Services, is authorized to declare any foreign country (or a political subdivision thereof) to be a foreign reciprocating country if the foreign country has established, or undertakes to establish, procedures for the establishment and enforcement of duties of support owed to obligees who are residents of the United States, and such procedures are substantially in conformity with the standards prescribed under subsection (b).
(2)

Revocation.—
A declaration with respect to a foreign country made pursuant to paragraph (1) may be revoked if the Secretaries of State and Health and Human Services determine that—
(A)
the procedures established by the foreign country regarding the establishment and enforcement of duties of support have been so changed, or the foreign country's implementation of such procedures is so unsatisfactory, that such procedures do not meet the criteria for such a declaration; or
(B)
continued operation of the declaration is not consistent with the purposes of this part.
(3)

Form of declaration.—
A declaration under paragraph (1) may be made in the form of an international agreement, in connection with an international agreement or corresponding foreign declaration, or on a unilateral basis.
(b)

Standards for Foreign Support Enforcement Procedures.—
(1)

Mandatory elements.—
Support enforcement procedures of a foreign country which may be the subject of a declaration pursuant to subsection (a)(1) shall include the following elements:
(A)
The foreign country (or political subdivision thereof) has in effect procedures, available to residents of the United States—
(i)
for establishment of paternity, and for establishment of orders of support for children and custodial parents; and
(ii)
for enforcement of orders to provide support to children and custodial parents, including procedures for collection and appropriate distribution of support payments under such orders.
(B)
The procedures described in subparagraph (A), including legal and administrative assistance, are provided to residents of the United States at no cost.
(C)
An agency of the foreign country is designated as a Central Authority responsible for—
(i)
facilitating support enforcement in cases involving residents of the foreign country and residents of the United States; and
(ii)
ensuring compliance with the standards established pursuant to this subsection.
(2)

Additional elements.—
The Secretary of Health and Human Services and the Secretary of State, in consultation with the States, may establish such additional standards as may be considered necessary to further the purposes of this section.
(c)

Designation of United States Central Authority.—
It shall be the responsibility of the Secretary of Health and Human Services to facilitate support enforcement in cases involving residents of the United States and residents of foreign reciprocating countries or foreign treaty countries, by activities including—
(1)
development of uniform forms and procedures for use in such cases;
(2)
notification of foreign reciprocating countries and foreign treaty countries of the State of residence of individuals sought for support enforcement purposes, on the basis of information provided by the Federal Parent Locator Service; and
(3)
such other oversight, assistance, and coordination activities as the Secretary may find necessary and appropriate.
(d)

Effect on Other Laws.—
States may enter into reciprocal arrangements for the establishment and enforcement of support obligations with foreign countries that are not foreign reciprocating countries or foreign treaty countries, to the extent consistent with Federal law.
(e)

References.—
In this part:
(1)

Foreign reciprocating country.—
The term “foreign reciprocating country” means a foreign country (or political subdivision thereof) with respect to which the Secretary has made a declaration pursuant to subsection (a).
(2)

Foreign treaty country.—
The term “foreign treaty country” means a foreign country for which the 2007 Family Maintenance Convention is in force.
(3)

2007 family maintenance convention.—
The term “2007 Family Maintenance Convention” means the Hague Convention of 23 November 2007 on the International Recovery of Child Support and Other Forms of Family Maintenance.

CIVIL ACTIONS TO ENFORCE SUPPORT OBLIGATIONS
Sec. 460.
[42 U.S.C. 660]
The district courts of the United States shall have jurisdiction, without regard to any amount in controversy, to hear and determine any civil action certified by the Secretary of Health and Human Services under section 452(a)(8) of this Act. A civil action under this section may be brought in any judicial district in which the claim arose, the plaintiff resides, or the defendant resides.
[Sections 461 and 462 repealed by section 362(b)(1) of Public Law 104–193, Enacted August 22, 1996.]

USE OF FEDERAL PARENT LOCATOR SERVICE IN CONNECTION WITH THE ENFORCEMENT OR DETERMINATION OF CHILD CUSTODY AND IN CASES OF PARENTAL KIDNAPING OF A CHILD
Sec. 463.
[42 U.S.C. 663]
(a)
The Secretary shall enter into an agreement with every State under which the services of the Federal Parent Locator Service established under section 453 shall be made available to each State for the purpose of determining the whereabouts of any parent or child when such information is to be used to locate such parent or child for the purpose of—
(1)
enforcing any State or Federal law with respect to the unlawful taking or restraint of a child; or
(2)
making or enforcing a child custody or visitation determination.
(b)
An agreement entered into under subsection (a) shall provide that the State agency described in section 454 will, under procedures prescribed by the Secretary in regulations, receive and transmit to the Secretary requests from authorized persons for information as to (or useful in determining) the whereabouts of any parent or child when such information is to be used to locate such parent or child for the purpose of—
(1)
enforcing any State or Federal law with respect to the unlawful taking or restraint of a child; or
(2)
making or enforcing a child custody or visitation determination.
(c)
Information authorized to be provided by the Secretary under subsection (a), (b), (e), or (f) shall be subject to the same conditions with respect to disclosure as information authorized to be provided under section 453, and a request for information by the Secretary under this section shall be considered to be a request for information under section 453 which is authorized to be provided under such section. Only information as to the most recent address and place of employment of any parent or child shall be provided under this section.
(d)
For purposes of this section—
(1)
the term “custody determination” means a judgment, decree, or other order of a court providing for the custody or visitation of a child, and includes permanent and temporary orders, and initial orders and modification;
(2)
the term “authorized person” means—
(A)
any agent or attorney of any State having an agreement under this section, who has the duty or authority under the law of such State to enforce a child custody or visitation determination;
(B)
any court having jurisdiction to make or enforce such a child custody or visitation determination, or any agent of such court; and
(C)
any agent or attorney of the United States, or of a State having an agreement under this section, who has the duty or authority to investigate, enforce, or bring a prosecution with respect to the unlawful taking or restraint of a child.
(e)
The Secretary shall enter into an agreement with the Central Authority designated by the President in accordance with section 7 of the International Child Abduction Remedies Act, under which the services of the Federal Parent Locator Service established under section 453 shall be made available to such Central Authority upon its request for the purpose of locating any parent or child on behalf of an applicant to such Central Authority within the meaning of section 3(1) of that Act. The Federal Parent Locator Service shall charge no fees for services requested pursuant to this subsection.
(f)
The Secretary shall enter into an agreement with the Attorney General of the United States, under which the services of the Federal Parent Locator Service established under section 453 shall be made available to the Office of Juvenile Justice and Delinquency Prevention upon its request to locate any parent or child on behalf of such Office for the purpose of—
(1)
enforcing any State or Federal law with respect to the unlawful taking or restraint of a child, or
(2)
making or enforcing a child custody or visitation determination.
The Federal Parent Locator Service shall charge no fees for services requested pursuant to this subsection.

COLLECTION OF PAST-DUE SUPPORT FROM FEDERAL TAX REFUNDS
Sec. 464.
[42 U.S.C. 664]
(a)
(1)
Upon receiving notice from a State agency administering a plan approved under this part that a named individual owes past-due support which has been assigned to such State pursuant to section 408(a)(3) or section 471(a)(17), the Secretary of the Treasury shall determine whether any amounts, as refunds of Federal taxes paid, are payable to such individual (regardless of whether such individual filed a tax return as a married or unmarried individual). If the Secretary of the Treasury finds that any such amount is payable, he shall withhold from such refunds an amount equal to the past-due support, shall concurrently send notice to such individual that the withholding has been made (including in or with such notice a notification to any other person who may have filed a joint return with such individual of the steps which such other person may take in order to secure his or her proper share of the refund), and shall pay such amount to the State agency (together with notice of the individual's home address) for distribution in accordance with section 457. This subsection may be executed by the disbursing official of the Department of the Treasury.
(2)
(A)
Upon receiving notice from a State agency administering a plan approved under this part that a named individual owes past-due support which such State has agreed to collect under paragraph (4)(A)(ii) or (32) of section 454, and that the State agency has sent notice to such individual in accordance with paragraph (3)(A), the Secretary of the Treasury shall determine whether any amounts, as refunds of Federal taxes paid, are payable to such individual (regardless of whether such individual filed a tax return as a married or unmarried individual). If the Secretary of the Treasury finds that any such amount is payable, he shall withhold from such refunds an amount equal to such past-due support, and shall concurrently send notice to such individual that the withholding has been made, including in or with such notice a notification to any other person who may have filed a joint return with such individual of the steps which such other person may take in order to secure his or her proper share of the refund. The Secretary of the Treasury shall pay the amount withheld to the State agency, and the State shall pay to the Secretary of the Treasury any fee imposed by the Secretary of the Treasury to cover the costs of the withholding and any required notification. The State agency shall, subject to paragraph (3)(B), distribute such amount to or on behalf of the child to whom the support was owed in accordance with section 457. This subsection may be executed by the Secretary of the Department of the Treasury or his designee.
(B)
This paragraph shall apply only with respect to refunds payable under section 6402 of the Internal Revenue Code of 195441 after December 31, 1985.
^{41}
So in law. The reference to the Internal Revenue Code of 1954 probably should be to the Internal Revenue Code of 1986. See section 2 of Public Law 99–514.
(3)
(A)
Prior to notifying the Secretary of the Treasury under paragraph (1) or (2) that an individual owes past-due support, the State shall send notice to such individual that a withholding will be made from any refund otherwise payable to such individual. The notice shall also (i) instruct the individual owing the past-due support of the steps which may be taken to contest the State's determination that past-due support is owed or the amount of the past-due support, and (ii) provide information, as may be prescribed by the Secretary of Health and Human Services by regulation in consultation with the Secretary of the Treasury, with respect to procedures to be followed, in the case of a joint return, to protect the share of the refund which may be payable to another person.
(B)
If the Secretary of the Treasury determines that an amount should be withheld under paragraph (1) or (2), and that the refund from which it should be withheld is based upon a joint return, the Secretary of the Treasury shall notify the State that the withholding is being made from a refund based upon a joint return, and shall furnish to the State the names and addresses of each taxpayer filing such joint return. In the case of a withholding under paragraph (2), the State may delay distribution of the amount withheld until the State has been notified by the Secretary of the Treasury that the other person filing the joint return has received his or her proper share of the refund, but such delay may not exceed six months.
(C)
If the other person filing the joint return with the named individual owing the past-due support takes appropriate action to secure his or her proper share of a refund from which a withholding was made under paragraph (1) or (2), the Secretary of the Treasury shall pay such share to such other person. The Secretary of the Treasury shall deduct the amount of such payment from amounts subsequently payable to the State agency to which the amount originally withheld from such refund was paid.
(D)
In any case in which an amount was withheld under paragraph (1) or (2) and paid to a State, and the State subsequently determines that the amount certified as past-due support was in excess of the amount actually owed at the time the amount withheld is to be distributed to or on behalf of the child, the State shall pay the excess amount withheld to the named individual thought to have owed the past-due support (or, in the case of amounts withheld on the basis of a joint return, jointly to the parties filing such return).
(b)
(1)
The Secretary of the Treasury shall issue regulations, approved by the Secretary of Health and Human Services, prescribing the time or times at which States must submit notices of past-due support, the manner in which such notices must be submitted, and the necessary information that must be contained in or accompany the notices. The regulations shall be consistent with the provisions of subsection (a)(3), shall specify the minimum amount of past-due support to which the offset procedure established by subsection (a) may be applied, and the fee that a State must pay to reimburse the Secretary of the Treasury for the full cost of applying the offset procedure, and shall provide that the Secretary of the Treasury will advise the Secretary of Health and Human Services, not less frequently than annually, of the States which have furnished notices of past-due support under subsection (a), the number of cases in each State with respect to which such notices have been furnished, the amount of support sought to be collected under this subsection by each State, and the amount of such collections actually made in the case of each State. Any fee paid to the Secretary of the Treasury pursuant to this subsection may be used to reimburse appropriations which bore all or part of the cost of applying such procedure.
(2)
In the case of withholdings made under subsection (a)(2), the regulations promulgated pursuant to this subsection shall include the following requirements:
(A)
The withholding shall apply only in the case where the State determines that the amount of the past-due support which will be owed at the time the withholding is to be made, based upon the pattern of payment of support and other enforcement actions being pursued to collect the past-due support, is equal to or greater than $500. The State may limit the $500 threshold amount to amounts of past-due support accrued since the time that the State first began to enforce the child support order involved under the State plan, and may limit the application of the withholding to past-due support accrued since such time.
(B)
The fee which the Secretary of the Treasury may impose to cover the costs of the withholding and notification may not exceed $25 per case submitted.
(c)
In this part the term “past-due support” means the amount of a delinquency, determined under a court order, or an order of an administrative process established under State law, for support and maintenance of a child (whether or not a minor), or of a child (whether or not a minor) and the parent with whom the child is living.
(d)

Applicability to Indian Tribes and Tribal Organizations Receiving a Grant Under This Part.—
This section, except for the requirement to distribute amounts in accordance with section 457, shall apply to an Indian tribe or tribal organization receiving a grant under section 455(f) in the same manner in which this section applies to a State with a plan approved under this part.

ALLOTMENTS FROM PAY FOR CHILD AND SPOUSAL SUPPORT OWED BY MEMBERS OF THE UNIFORMED SERVICES ON ACTIVE DUTY
Sec. 465.
[42 U.S.C. 665]
(a)
(1)
In any case in which child support payments or child and spousal support payments are owed by a member of one of the uniformed services (as defined in section 101(3) of title 37, United States Code) on active duty, such member shall be required to make allotments from his pay and allowances (under chapter 13 of title 37, United States Code) as payment of such support, when he has failed to make periodic payments under a support order that meets the criteria specified in section 303(b)(1)(A) of the Consumer Credit Protection Act (15 U.S.C. 1673(b)(1)(A)) and the resulting delinquency in such payments is in a total amount equal to the support payable for two months or longer. Failure to make such payments shall be established by notice from an authorized person (as defined in subsection (b)) to the designated official in the appropriate uniformed service. Such notice (which shall in turn be given to the affected member) shall also specify the person to whom the allotment is to be payable. The amount of the allotment shall be the amount necessary to comply with the order (which, if the order so provides, may include arrearages as well as amounts for current support), except that the amount of the allotment, together with any other amounts withheld for support from the wages of the member, as a percentage of his pay from the uniformed service, shall not exceed the limits prescribed in sections 303(b) and (c) of the Consumer Credit Protection Act (15 U.S.C. 1673(b) and (c)). An allotment under this subsection shall be adjusted or discontinued upon notice from the authorized person.
(2)
Notwithstanding the preceding provisions of this subsection, no action shall be taken to require an allotment from the pay and allowances of any member of one of the uniformed services under such provisions (A) until such member has had a consultation with a judge advocate of the service involved (as defined in section 801(13) of title 10, United States Code), or with a judge advocate (as defined in section 801(11) of such title 42) in the case of the Coast Guard, or with a legal officer designated by the Secretary concerned (as defined in section 101(5) of title 37, United States Code) in any other case, in person, to discuss the legal and other factors involved with respect to the member's support obligation and his failure to make payments thereon, or (B) until 30 days have elapsed after the notice described in the second sentence of paragraph (1) is given to the affected member in any case where it has not been possible, despite continuing good faith efforts, to arrange such a consultation.
^{42}
So in law. Section 801(11) of title 10, United States Code, referred to in subsection (a)(2), was repealed by section 218(a)(1) of Public Law 109–241, 120 Stat. 526. However, the term “judge advocate” is defined in section 801(13) of title 10, United States Code.
(b)
For purposes of this section the term “authorized person” with respect to any member of the uniformed services means—
(1)
any agent or attorney of a State having in effect a plan approved under this part who has the duty or authority under such plan to seek to recover any amounts owed by such member as child or child and spousal support (including, when authorized under the State plan, any official of a political subdivision); and
(2)
the court which has authority to issue an order against such member for the support and maintenance of a child, or any agent of such court.
(c)
The Secretary of Defense, in the case of the Army, Navy, Air Force, and Marine Corps, and the Secretary concerned (as defined in section 101(5) of title 37, United States Code) in the case of each of the other uniformed services, shall each issue regulations applicable to allotments to be made under this section, designating the officials to whom notice of failure to make support payments, or notice to discontinue or adjust an allotment, should be given, prescribing the form and content of the notice and specifying any other rules necessary for such Secretary to implement this section.

REQUIREMENT OF STATUTORILY PRESCRIBED PROCEDURES TO IMPROVE EFFECTIVENESS OF CHILD SUPPORT ENFORCEMENT
Sec. 466.
[42 U.S.C. 666]
(a)
In order to satisfy section 454(20)(A), each State must have in effect laws requiring the use of the following procedures, consistent with this section and with regulations of the Secretary, to increase the effectiveness of the program which the State administers under this part:
(1)
(A)
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)
Procedures under which the income of a person with a support obligation imposed by a support order issued (or modified) in the State before January 1, 1994, if not otherwise subject to withholding under subsection (b), shall become subject to withholding as provided in subsection (b) if arrearages occur, without the need for a judicial or administrative hearing.
(2)
Expedited administrative and judicial procedures (including the procedures specified in subsection (c)) for establishing paternity and for establishing, modifying, and enforcing support obligations. The Secretary may waive the provisions of this paragraph with respect to one or more political subdivisions within the State on the basis of the effectiveness and timeliness of support order issuance and enforcement or paternity establishment within the political subdivision (in accordance with the general rule for exemptions under subsection (d)).
(3)
Procedures under which the State child support enforcement agency shall request, and the State shall provide, that for the purpose of enforcing a support order under any State plan approved under this part—
(A)
any refund of State income tax which would otherwise be payable to a noncustodial parent will be reduced, after notice has been sent to that noncustodial parent of the proposed reduction and the procedures to be followed to contest it (and after full compliance with all procedural due process requirements of the State), by the amount of any overdue support owed by such noncustodial parent;
(B)
the amount by which such refund is reduced shall be distributed in accordance with section 457 in the case of overdue support assigned to a State pursuant to section 408(a)(3) or 471(a)(17), or, in any other case, shall be distributed, after deduction of any fees imposed by the State to cover the costs of collection, to the child or parent to whom such support is owed; and
(C)
notice of the noncustodial parent's social security account number (or numbers, if he has more than one such number) and home address shall be furnished to the State agency requesting the refund offset, and to the State agency enforcing the order.
(4)

Liens.—
Procedures under which—
(A)
liens arise by operation of law against real and personal property for amounts of overdue support owed by a noncustodial parent who resides or owns property in the State; and
(B)
the State accords full faith and credit to liens described in subparagraph (A) arising in another State, when the State agency, party, or other entity seeking to enforce such a lien complies with the procedural rules relating to recording or serving liens that arise within the State, except that such rules may not require judicial notice or hearing prior to the enforcement of such a lien.
(5)

Procedures concerning paternity establishment.—
(A)

Establishment process available from birth until age 18.—
(i)
Procedures which permit the establishment of the paternity of a child at any time before the child attains 18 years of age.
(ii)
As of August 16, 1984, clause (i) shall also apply to a child for whom paternity has not been established or for whom a paternity action was brought but dismissed because a statute of limitations of less than 18 years was then in effect in the State.
(B)

Procedures concerning genetic testing.—
(i)

Genetic testing required in certain contested cases.—
Procedures under which the State is required, in a contested paternity case (unless otherwise barred by State law) to require the child and all other parties (other than individuals found under section 454(29) to have good cause and other exceptions for refusing to cooperate) to submit to genetic tests upon the request of any such party, if the request is supported by a sworn statement by the party—
(I)
alleging paternity, and setting forth facts establishing a reasonable possibility of the requisite sexual contact between the parties; or
(II)
denying paternity, and setting forth facts establishing a reasonable possibility of the nonexistence of sexual contact between the parties.
(ii)

Other requirements.—
Procedures which require the State agency, in any case in which the agency orders genetic testing—
(I)
to pay costs of such tests, subject to recoupment (if the State so elects) from the alleged father if paternity is established; and
(II)
to obtain additional testing in any case if an original test result is contested, upon request and advance payment by the contestant.
(C)

Voluntary paternity acknowledgment.—
(i)

Simple civil process.—
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 mother and the putative father must be given notice, orally, or through the use of video or audio equipment, and in writing, 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)

Hospital-based program.—
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)

Paternity establishment services.—
(I)

State-offered services.—
Such procedures must require the State agency responsible for maintaining birth records to offer voluntary paternity establishment services.
(II)

Regulations.—
- (aa)

Services offered by hospitals and birth record agencies.—
The Secretary shall prescribe regulations governing voluntary paternity establishment services offered by hospitals and birth record agencies.
- (bb)

Services offered by other entities.—
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, use 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 the provision of such services is evaluated by, voluntary paternity establishment programs of hospitals and birth record agencies.
(iv)

Use of paternity acknowledgment affidavit.—
Such procedures must require the State to develop and use an affidavit for the voluntary acknowledgment of paternity which includes the minimum requirements of the affidavit specified by the Secretary 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 according to its procedures.
(D)

Status of signed paternity acknowledgment.—
(i)

Inclusion in birth records.—
Procedures under which the name of the father shall be included on the record of birth of the child of unmarried parents only if—
(I)
the father and mother have signed a voluntary acknowledgment of paternity; or
(II)
a court or an administrative agency of competent jurisdiction has issued an adjudication of paternity.
Nothing in this clause shall preclude a State agency from obtaining an admission of paternity from the father for submission in a judicial or administrative proceeding, or prohibit the issuance of an order in a judicial or administrative proceeding which bases a legal finding of paternity on an admission of paternity by the father and any other additional showing required by State law.
(ii)

Legal finding of paternity.—
Procedures under which a signed voluntary acknowledgment of paternity is considered a legal finding of paternity, subject to the right of any signatory to rescind the acknowledgment within the earlier of—
(I)
60 days; or
(II)
the date of an administrative or judicial proceeding relating to the child (including a proceeding to establish a support order) in which the signatory is a party.
(iii)

Contest.—
Procedures under which, after the 60-day period referred to in clause (ii), a signed voluntary 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.
(E)

Bar on acknowledgment ratification proceedings.—
Procedures under which judicial or administrative proceedings are not required or permitted to ratify an unchallenged acknowledgment of paternity.
(F)

Admissibility of genetic testing results.—
Procedures—
(i)
requiring the admission into evidence, for purposes of establishing paternity, of the results of any genetic test that is—
(I)
of a type generally acknowledged as reliable by accreditation bodies designated by the Secretary; and
(II)
performed by a laboratory approved by such an accreditation body;
(ii)
requiring an objection to genetic testing results to be made in writing not later than a specified number of days before any hearing at which the results may be introduced into evidence (or, at State option, not later than a specified number of days after receipt of the results); and
(iii)
making the test results admissible as evidence of paternity without the need for foundation testimony or other proof of authenticity or accuracy, unless objection is made.
(G)

Presumption of paternity in certain cases.—
Procedures which create a rebuttable or, at the option of the State, conclusive presumption of paternity upon genetic testing results indicating a threshold probability that the alleged father is the father of the child.
(H)

Default orders.—
Procedures requiring a default order to be entered in a paternity case upon a showing of service of process on the defendant and any additional showing required by State law.
(I)

No right to jury trial.—
Procedures providing that the parties to an action to establish paternity are not entitled to a trial by jury.
(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, if 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 or for testing on behalf of the child.
(L)

Standing of putative fathers.—
Procedures ensuring that the putative father has a reasonable opportunity to initiate a paternity action.
(M)

Filing of acknowledgments and adjudications in state registry of birth records.—
Procedures under which voluntary acknowledgments and adjudications of paternity by judicial or administrative processes are filed with the State registry of birth records for comparison with information in the State case registry.
(6)
Procedures which require that a noncustodial parent give security, post a bond, or give some other guarantee to secure payment of overdue support, after notice has been sent to such noncustodial parent of the proposed action and of the procedures to be followed to contest it (and after full compliance with all procedural due process requirements of the State).
(7)

Reporting arrearages to credit bureaus.—
(A)

In general.—
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 noncustodial parent who is delinquent in the payment of support, and the amount of overdue support owed by such parent.
(B)

Safeguards.—
Procedures ensuring that, in carrying out subparagraph (A), information with respect to a noncustodial 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 (as so defined).
(8)
(A)
Procedures under which all child support orders not described in subparagraph (B) will include provision for withholding from income, in order to assure that withholding as a means of collecting child support is available if arrearages occur without the necessity of filing application for services under this part.
(B)
Procedures under which all child support orders which are initially issued in the State on or after January 1, 1994, and are not being enforced under this part will include the following requirements:
(i)
The income of a noncustodial parent shall be subject to withholding, regardless of whether support payments by such parent are in arrears, on the effective date of the order; except that such income shall not be subject to withholding under this clause in any case where (I) one of the parties demonstrates, and the court (or administrative process) finds, that there is good cause not to require immediate income withholding, or (II) a written agreement is reached between both parties which provides for an alternative arrangement.
(ii)
The requirements of subsection (b)(1) (which shall apply in the case of each noncustodial parent against whom a support order is or has been issued or modified in the State, without regard to whether the order is being enforced under the State plan).
(iii)
The requirements of paragraphs (2), (5), (6), (7), (8), (9), and (10) of subsection (b), where applicable.
(iv)
Withholding from income of amounts payable as support must be carried out in full compliance with all procedural due process requirements of the State.
(9)
Procedures which require that any payment or installment of support under any child support order, whether ordered through the State judicial system or through the expedited processes required by paragraph (2), is (on and after the date it is due)—
(A)
a judgment by operation of law, with the full force, effect, and attributes of a judgment of the State, including the ability to be enforced,
(B)
entitled as a judgment to full faith and credit in such State and in any other State, and
(C)
not subject to retroactive modification by such State or by any other State;
except that such procedures may permit modification with respect to any period during which there is pending a petition for modification, but only from the date that notice of such petition has been given, either directly or through the appropriate agent, to the obligee or (where the obligee is the petitioner) to the obligor.
(10)

Review and adjustment of support orders upon request.—
(A)

3-year cycle.—
(i)

In general.—
Procedures under which every 3 years (or such shorter cycle as the State may determine), upon the request of either parent or if there is an assignment under part A, the State shall with respect to a support order being enforced under this part, taking into account the best interests of the child involved—
(I)
review and, if appropriate, adjust the order in accordance with the guidelines established pursuant to 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 the guidelines;
(II)
apply a cost-of-living adjustment to the order in accordance with a formula developed by the State; or
(III)
use automated methods (including automated comparisons with wage or State income tax data) to identify orders eligible for review, conduct the review, identify orders eligible for adjustment, and apply the appropriate adjustment to the orders eligible for adjustment under any threshold that may be established by the State.
(ii)

Opportunity to request review of adjustment.—
If the State elects to conduct the review under subclause (II) or (III) of clause (i), procedures which permit either party to contest the adjustment, within 30 days after the date of the notice of the adjustment, by making a request for review and, if appropriate, adjustment of the order in accordance with the child support guidelines established pursuant to section 467(a).
(iii)

No proof of change in circumstances necessary in 3-year cycle review.—
Procedures which provide that any adjustment under clause (i) shall be made without a requirement for proof or showing of a change in circumstances.
(B)

Proof of substantial change in circumstances necessary in request for review outside 3-year cycle.—
Procedures under which, in the case of a request for a review, and if appropriate, an adjustment outside the 3-year cycle (or such shorter cycle as the State may determine) under clause (i), the State shall review and, if the requesting party demonstrates a substantial change in circumstances, adjust the order in accordance with the guidelines established pursuant to section 467(a).
(C)

Notice of right to review.—
Procedures which require the State to provide notice not less than once every 3 years to the parents subject to the order informing the parents of their right to request the State to review and, if appropriate, adjust the order pursuant to this paragraph. The notice may be included in the order.
(11)
Procedures under which a State must give full faith and credit to a determination of paternity made by any other State, whether established through voluntary acknowledgment or through administrative or judicial processes.
(12)

Locator information from interstate networks.—
Procedures to ensure that all Federal and State agencies conducting activities under this part have access to any system used by the State to locate an individual for purposes relating to motor vehicles or law enforcement.
(13)

Recording of social security numbers in certain family matters.—
Procedures requiring that the social security number of—
(A)
any applicant for a professional license, driver's license, occupational license, recreational license, or marriage license be recorded on the application;
(B)
any individual who is subject to a divorce decree, support order, or paternity determination or acknowledgment be placed in the records relating to the matter; and
(C)
any individual who has died be placed in the records relating to the death and be recorded on the death certificate.
For purposes of subparagraph (A), if a State allows the use of a number other than the social security number to be used on the face of the document while the social security number is kept on file at the agency, the State shall so advise any applicants.
(14)

High-volume, automated administrative enforcement in interstate cases.—
(A)

In general.—
Procedures under which—
(i)
the State shall use high-volume automated administrative enforcement, to the same extent as used for intrastate cases, in response to a request made by another State to enforce support orders, and shall promptly report the results of such enforcement procedure to the requesting State;
(ii)
the State may, by electronic or other means, transmit to another State a request for assistance in enforcing support orders through high-volume, automated administrative enforcement, which request—
(I)
shall include such information as will enable the State to which the request is transmitted to compare the information about the cases to the information in the data bases of the State; and
(II)
shall constitute a certification by the requesting State—
- (aa)
of the amount of support under an order the payment of which is in arrears; and
- (bb)
that the requesting State has complied with all procedural due process requirements applicable to each case;
(iii)
if the State provides assistance to another State pursuant to this paragraph with respect to a case, neither State shall consider the case to be transferred to the caseload of such other State (but the assisting State may establish a corresponding case based on such other State's request for assistance); and
(iv)
the State shall maintain records of—
(I)
the number of such requests for assistance received by the State;
(II)
the number of cases for which the State collected support in response to such a request; and
(III)
the amount of such collected support.
(B)

High-volume automated administrative enforcement.—
In this part, the term “high-volume automated administrative enforcement”, in interstate cases, means, on request of another State, the identification by a State, through automated data matches with financial institutions and other entities where assets may be found, of assets owned by persons who owe child support in other States, and the seizure of such assets by the State, through levy or other appropriate processes.
(15)

Procedures to ensure that persons owing overdue support work or have a plan for payment of such support.—
Procedures under which the State has the authority, in any case in which an individual owes overdue support with respect to a child receiving assistance under a State program funded under part A, to issue an order or to request that a court or an administrative process established pursuant to State law issue an order that requires the individual to—
(A)
pay such support in accordance with a plan approved by the court, or, at the option of the State, a plan approved by the State agency administering the State program under this part; or
(B)
if the individual is subject to such a plan and is not incapacitated, participate in such work activities (as defined in section 407(d)) as the court, or, at the option of the State, the State agency administering the State program under this part, deems appropriate.
(16)

Authority to withhold or suspend licenses.—
Procedures under which the State has (and uses in appropriate cases) authority to withhold or suspend, or to restrict the use of driver's licenses, professional and occupational licenses, and recreational and sporting licenses of individuals owing overdue support or failing, after receiving appropriate notice, to comply with subpoenas or warrants relating to paternity or child support proceedings.
(17)

Financial institution data matches.—
(A)

In general.—
Procedures under which the State agency shall enter into agreements with financial institutions doing business in the State—
(i)
to develop and operate, in coordination with such financial institutions, and the Federal Parent Locator Service in the case of financial institutions doing business in two or more States, a data match system, using automated data exchanges to the maximum extent feasible, in which each such financial institution is required to provide for each calendar quarter the name, record address, social security number or other taxpayer identification number, and other identifying information for each noncustodial parent who maintains an account at such institution and who owes past-due support, as identified by the State by name and social security number or other taxpayer identification number; and
(ii)
in response to a notice of lien or levy, encumber or surrender, as the case may be, assets held by such institution on behalf of any noncustodial parent who is subject to a child support lien pursuant to paragraph (4).
(B)

Reasonable fees.—
The State agency may pay a reasonable fee to a financial institution for conducting the data match provided for in subparagraph (A)(i), not to exceed the actual costs incurred by such financial institution.
(C)

Liability.—
A financial institution shall not be liable under any Federal or State law to any person—
(i)
for any disclosure of information to the State agency under subparagraph (A)(i);
(ii)
for encumbering or surrendering any assets held by such financial institution in response to a notice of lien or levy issued by the State agency as provided for in subparagraph (A)(ii); or
(iii)
for any other action taken in good faith to comply with the requirements of subparagraph (A).
(D)

Definitions.—
For purposes of this paragraph—
(i)

Financial institution.—
The term “financial institution” has the meaning given to such term by section 469A(d)(1).
(ii)

Account.—
The term “account” means a demand deposit account, checking or negotiable withdrawal order account, savings account, time deposit account, or money-market mutual fund account.
(18)

Enforcement of orders against paternal or maternal grandparents.—
Procedures under which, at the State's option, any child support order enforced under this part with respect to a child of minor parents, if the custodial parent of such child is receiving assistance under the State program under part A, shall be enforceable, jointly and severally, against the parents of the noncustodial parent of such child.
(19)

Health care coverage.—
Procedures under which—
(A)
effective as provided in section 401(c)(3) of the Child Support Performance and Incentive Act of 1998, all child support orders enforced pursuant to this part shall include a provision for medical support for the child to be provided by either or both parents, and shall be enforced, where appropriate, through the use of the National Medical Support Notice promulgated pursuant to section 401(b) of the Child Support Performance and Incentive Act of 1998 (and referred to in section 609(a)(5)(C) of the Employee Retirement Income Security Act of 1974 in connection with group health plans covered under title I of such Act, in section 401(e) of the Child Support Performance and Incentive Act of 1998 in connection with State or local group health plans, and in section 401(f) of such Act in connection with church group health plans);
(B)
unless alternative coverage is allowed for in any order of the court (or other entity issuing the child support order), in any case in which a parent is required under the child support order to provide such health care coverage and the employer of such parent is known to the State agency—
(i)
the State agency uses the National Medical Support Notice to transfer notice of the provision for the health care coverage of the child to the employer;
(ii)
within 20 business days after the date of the National Medical Support Notice, the employer is required to transfer the Notice, excluding the severable employer withholding notice described in section 401(b)(2)(C) of the Child Support Performance and Incentive Act of 1998, to the appropriate plan providing any such health care coverage for which the child is eligible;
(iii)
in any case in which the parent is a newly hired employee entered in the State Directory of New Hires pursuant to section 453A(e), the State agency provides, where appropriate, the National Medical Support Notice, together with an income withholding notice issued pursuant to subsection (b), within two days after the date of the entry of such employee in such Directory; and
(iv)
in any case in which the employment of the parent with any employer who has received a National Medical Support Notice is terminated, such employer is required to notify the State agency of such termination; and
(C)
any liability of the obligated parent to such plan for employee contributions which are required under such plan for enrollment of the child is effectively subject to appropriate enforcement, unless the obligated parent contests such enforcement based on a mistake of fact.
Notwithstanding section 454(20)(B), the procedures which are required under paragraphs (3), (4), (6), (7), and (15) need not be used or applied in cases where the State determines (using guidelines which are generally available within the State and which take into account the payment record of the noncustodial parent, the availability of other remedies, and other relevant considerations) that such use or application would not carry out the purposes of this part or would be otherwise inappropriate in the circumstances.
(b)
The procedures referred to in subsection (a)(1)(A) (relating to the withholding from income of amounts payable as support) must provide for the following:
(1)
In the case of each noncustodial parent against whom a support order is or has been issued or modified in the State, and is being enforced under the State plan, so much of such parent's income must be withheld, in accordance with the succeeding provisions of this subsection, as is necessary to comply with the order and provide for the payment of any fee to the employer which may be required under paragraph (6)(A), up to the maximum amount permitted under section 303(b) of the Consumer Credit Protection Act (15 U.S.C. 1673(b)). If there are arrearages to be collected, amounts withheld to satisfy such arrearages, when added to the amounts withheld to pay current support and provide for the fee, may not exceed the limit permitted under such section 303(b), but the State need not withhold up to the maximum amount permitted under such section in order to satisfy arrearages.
(2)
Such withholding must be provided without the necessity of any application therefor in the case of a child (whether or not eligible for assistance under a State program funded under part A) with respect to whom services are already being provided under the State plan under this part, and must be provided in accordance with this subsection on the basis of an application for services under the State plan in the case of any other child in whose behalf a support order has been issued or modified in the State. In either case such withholding must occur without the need for any amendment to the support order involved or for any further action (other than those actions required under this part) by the court or other entity which issued such order.
(3)
(A)
The income of a noncustodial parent shall be subject to such withholding, regardless of whether support payments by such parent are in arrears, in the case of a support order being enforced under this part that is issued or modified on or after the first day of the 25th month beginning after the date of the enactment of this paragraph, on the effective date of the order; except that such income shall not be subject to such withholding under this subparagraph in any case where (i) one of the parties demonstrates, and the court (or administrative process) finds, that there is good cause not to require immediate income withholding, or (ii) a written agreement is reached between both parties which provides for an alternative arrangement.
(B)
The income of a noncustodial parent shall become subject to such withholding, in the case of income not subject to withholding under subparagraph (A), on the date on which the payments which the noncustodial parent has failed to make under a support order are at least equal to the support payable for one month or, if earlier, and without regard to whether there is an arrearage, the earliest of—
(i)
the date as of which the noncustodial parent requests that such withholding begin,
(ii)
the date as of which the custodial parent requests that such withholding begin, if the State determines, in accordance with such procedures and standards as it may establish, that the request should be approved, or
(iii)
such earlier date as the State may select.
(4)
(A)
Such withholding must be carried out in full compliance with all procedural due process requirements of the State, and the State must send notice to each noncustodial parent to whom paragraph (1) applies—
(i)
that the withholding has commenced; and
(ii)
of the procedures to follow if the noncustodial parent desires to contest such withholding on the grounds that the withholding or the amount withheld is improper due to a mistake of fact.
(B)
The notice under subparagraph (A) of this paragraph shall include the information provided to the employer under paragraph (6)(A).
(5)
Such withholding must be administered by the State through the State disbursement unit established pursuant to section 454B, in accordance with the requirements of section 454B.
(6)
(A)
(i)
The employer of any noncustodial parent to whom paragraph (1) applies, upon being given notice as described in clause (ii), must be required to withhold from such noncustodial parent's income the amount specified by such notice (which may include a fee, established by the State, to be paid to the employer unless waived by such employer) and pay such amount (after deducting and retaining any portion thereof which represents the fee so established) to the State disbursement unit within 7 business days after the date the amount would (but for this subsection) have been paid or credited to the employee, for distribution in accordance with this part. The employer shall withhold funds as directed in the notice, except that when an employer receives an income withholding order issued by another State, the employer shall apply the income withholding law of the State of the obligor's principal place of employment in determining—
(I)
the employer's fee for processing an income withholding order;
(II)
the maximum amount permitted to be withheld from the obligor's income;
(III)
the time periods within which the employer must implement the income withholding order and forward the child support payment;
(IV)
the priorities for withholding and allocating income withheld for multiple child support obligees; and
(V)
any withholding terms or conditions not specified in the order.
An employer who complies with an income withholding notice that is regular on its face shall not be subject to civil liability to any individual or agency for conduct in compliance with the notice.
(ii)
The notice given to the employer shall be in a standard format prescribed by the Secretary, and contain only such information as may be necessary for the employer to comply with the withholding order.
(iii)
As used in this subparagraph, the term “business day” means a day on which State offices are open for regular business.
(B)
Methods must be established by the State to simplify the withholding process for employers to the greatest extent possible, including permitting any employer to combine all withheld amounts into a single payment to each appropriate agency or entity (with the portion thereof which is attributable to each individual employee being separately designated).
(C)
The employer must be held liable to the State for any amount which such employer fails to withhold from income due an employee following receipt by such employer of proper notice under subparagraph (A), but such employer shall not be required to vary the normal pay and disbursement cycles in order to comply with this paragraph.
(D)
Provision must be made for the imposition of a fine against any employer who—
(i)
discharges from employment, refuses to employ, or takes disciplinary action against any noncustodial parent subject to income withholding required by this subsection because of the existence of such withholding and the obligations or additional obligations which it imposes upon the employer; or
(ii)
fails to withhold support from income or to pay such amounts to the State disbursement unit in accordance with this subsection.
(7)
Support collection under this subsection must be given priority over any other legal process under State law against the same income.
(8)
For purposes of subsection (a) and this subsection, the term “income” means any periodic form of payment due to an individual, regardless of source, including wages, salaries, commissions, bonuses, worker's compensation, disability, payments pursuant to a pension or retirement program, and interest.
(9)
The State must extend its withholding system under this subsection so that such system will include withholding from income derived within such State in cases where the applicable support orders were issued in other States, in order to assure that child support owed by noncustodial parents in such State or any other State will be collected without regard to the residence of the child for whom the support is payable or of such child's custodial parent.
(10)
Provision must be made for terminating withholding.
(11)
Procedures under which the agency administering the State plan approved under this part may execute a withholding order without advance notice to the obligor, including issuing the withholding order through electronic means.
(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 to take the following actions relating to establishment of paternity or to establishment, modification, or enforcement of support orders, without the necessity of obtaining an order from any other judicial or administrative tribunal, and to recognize and enforce the authority of State agencies of other States to take the following actions:
(A)

Genetic testing.—
To order genetic testing for the purpose of paternity establishment as provided in section 466(a)(5).
(B)

Financial or other information.—
To subpoena any financial or other information needed to establish, modify, or enforce a support order, and to impose penalties for failure to respond to such a subpoena.
(C)

Response to state agency request.—
To require all entities in the State (including for-profit, nonprofit, and governmental employers) 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, and to sanction failure to respond to any such request.
(D)

Access to information contained in certain records.—
To obtain access, subject to safeguards on privacy and information security, and subject to the nonliability of entities that afford such access under this subparagraph, to information contained in 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.
(ii)
Certain records held by private entities with respect to individuals who owe or are owed support (or against or with respect to whom a support obligation is sought), consisting of—
(I)
the names and addresses of such individuals and the names and addresses of the employers of such individuals, as appearing in customer records of public utilities and cable television companies, pursuant to an administrative subpoena authorized by subparagraph (B); and
(II)
information (including information on assets and liabilities) on such individuals held by financial institutions.
(E)

Change in payee.—
In cases in which support is subject to an assignment in order to comply with a requirement imposed pursuant to part A, part E, or section 1912, or to a requirement to pay through the State disbursement unit established pursuant to 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.
(F)

Income withholding.—
To order income withholding in accordance with subsections (a)(1)(A) and (b).
(G)

Securing assets.—
In cases in which there is a support arrearage, to secure assets to satisfy any current support obligation and the arrearage by—
(i)
intercepting or seizing periodic or lump-sum payments from—
(I)
a State or local agency, including unemployment compensation, workers' compensation, and other benefits; and
(II)
judgments, settlements, and lotteries;
(ii)
attaching and seizing assets of the obligor held in financial institutions;
(iii)
attaching public and private retirement funds; and
(iv)
imposing liens in accordance with subsection (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 limitations as the State may provide.
Such procedures shall be 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.
(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)
each party to any paternity or child support proceeding is required (subject to privacy safeguards) to file with the State case registry upon entry of an order, and to update as appropriate, information on location and identity of the party, 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 parties, upon sufficient showing that diligent effort has been made to ascertain the location of such a party, the court or administrative agency of competent jurisdiction shall deem State due process requirements for notice and service of process to be met with respect to the party, upon delivery of written notice to the most recent residential or employer address filed with the State case registry 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
(ii)
in a State in which orders are issued by courts or administrative tribunals, a case may be transferred between local 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.
(3)

Coordination with erisa.—
Notwithstanding subsection (d) of section 514 of the Employee Retirement Income Security Act of 1974 (relating to effect on other laws), nothing in this subsection shall be construed to alter, amend, modify, invalidate, impair, or supersede subsections (a), (b), and (c) of such section 514 as it applies with respect to any procedure referred to in paragraph (1) and any expedited procedure referred to in paragraph (2), except to the extent that such procedure would be consistent with the requirements of section 206(d)(3) of such Act (relating to qualified domestic relations orders) or the requirements of section 609(a) of such Act (relating to qualified medical child support orders) if the reference in such section 206(d)(3) to a domestic relations order and the reference in such section 609(a) to a medical child support order were a reference to a support order referred to in paragraphs (1) and (2) relating to the same matters, respectively.
(d)
If a State demonstrates to the satisfaction of the Secretary, through the presentation to the Secretary of such data pertaining to caseloads, processing times, administrative costs, and average support collections, and such other data or estimates as the Secretary may specify, that the enactment of any law or the use of any procedure or procedures required by or pursuant to this section will not increase the effectiveness and efficiency of the State child support enforcement program, the Secretary may exempt the State, subject to the Secretary's continuing review and to termination of the exemption should circumstances change, from the requirement to enact the law or use the procedure or procedures involved.
(e)
For purposes of this section, the term “overdue support” means the amount of a delinquency pursuant to an obligation determined under a court order, or an order of an administrative process established under State law, for support and maintenance of a minor child which is owed to or on behalf of such child, or for support and maintenance of the noncustodial parent's spouse (or former spouse) with whom the child is living if and to the extent that spousal support (with respect to such spouse or former spouse) would be included for purposes of section 454(4). At the option of the State, overdue support may include amounts which otherwise meet the definition in the first sentence of this subsection but which are owed to or on behalf of a child who is not a minor child. The option to include support owed to children who are not minors shall apply independently to each procedure specified under this section.
(f)

Uniform Interstate Family Support Act.—
In order to satisfy section 454(20)(A), each State must have in effect the Uniform Interstate Family Support Act, as approved by the American Bar Association on February 9, 1993, including any amendments officially adopted as of September 30, 2008 by the National Conference of Commissioners on Uniform State Laws.
(g)

Laws Voiding Fraudulent Transfers.—
In order to satisfy section 454(20)(A), each State must have in effect—
(1)
(A)
the Uniform Fraudulent Conveyance Act of 1981;
(B)
the Uniform Fraudulent Transfer Act of 1984; or
(C)
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
(2)
procedures under which, 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—
(A)
seek to void such transfer; or
(B)
obtain a settlement in the best interests of the child support creditor.

STATE GUIDELINES FOR CHILD SUPPORT AWARDS
Sec. 467.
[42 U.S.C. 667]
(a)
Each State, as a condition for having its State plan approved under this part, must establish guidelines for child support award amounts within the State. The guidelines may be established by law or by judicial or administrative action, and shall be reviewed at least once every 4 years to ensure that their application results in the determination of appropriate child support award amounts.
(b)
(1)
The guidelines established pursuant to subsection (a) shall be made available to all judges and other officials who have the power to determine child support awards within such State.
(2)
There shall be a rebuttable presumption, in any judicial or administrative proceeding for the award of child support, that the amount of the award which would result from the application of such guidelines is the correct amount of child support to be awarded. A written finding or specific finding on the record that the application of the guidelines would be unjust or inappropriate in a particular case, as determined under criteria established by the State, shall be sufficient to rebut the presumption in that case.
(c)
The Secretary shall furnish technical assistance to the States for establishing the guidelines, and each State shall furnish the Secretary with copies of its guidelines.

ENCOURAGEMENT OF STATES TO ADOPT SIMPLE CIVIL PROCESS FOR VOLUNTARILY ACKNOWLEDGING PATERNITY AND A CIVIL PROCEDURE FOR ESTABLISHING PATERNITY IN CONTESTED CASES
Sec. 468.
[42 U.S.C. 668]
In the administration of the child support enforcement program under this part, each State is encouraged to establish and implement a civil procedure for establishing paternity in contested cases.
SEC. 469.
[42 U.S.C. 669]

COLLECTION AND REPORTING OF CHILD SUPPORT ENFORCEMENT DATA.
(a)

In General.—
With respect to each type of service described in subsection (b), the Secretary shall collect and maintain up-to-date statistics, by State, and on a fiscal year basis, on—
(1)
the number of cases in the caseload of the State agency administering the plan approved under this part in which the service is needed; and
(2)
the number of such cases in which the service has actually been provided.
(b)

Types of Services.—
The statistics required by subsection (a) shall be separately stated with respect to paternity establishment services and child support obligation establishment services.
(c)

Types of Service Recipients.—
The statistics required by subsection (a) shall be separately stated with respect to—
(1)
recipients of assistance under a State program funded under part A or of payments or services under a State plan approved under part E; and
(2)
individuals who are not such recipients.
(d)

Rule of Interpretation.—
For purposes of subsection (a)(2), a service has actually been provided when the task described by the service has been accomplished.
SEC. 469A.
[42 U.S.C. 669a]

NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL RECORDS TO STATE CHILD SUPPORT ENFORCEMENT AGENCIES IN CHILD SUPPORT CASES.
(a)

In General.—
Notwithstanding any other provision of Federal or State law, a financial institution shall not be liable under any Federal or State law to any person for disclosing any financial record of an individual to a State child support enforcement agency attempting to establish, modify, or enforce a child support obligation of such individual, or for disclosing any such record to the Federal Parent Locator Service pursuant to section 466(a)(17)(A).
(b)

Prohibition of Disclosure of Financial Record Obtained by State Child Support Enforcement Agency.—
A State child support enforcement agency which obtains a financial record of an individual from a financial institution pursuant to subsection (a) may disclose such financial record only for the purpose of, and to the extent necessary in, establishing, modifying, or enforcing a child support obligation of such individual.
(c)

Civil Damages for Unauthorized Disclosure.—
(1)

Disclosure by state officer or employee.—
If any person knowingly, or by reason of negligence, discloses a financial record of an individual in violation of subsection (b), such individual may bring a civil action for damages against such person in a district court of the United States.
(2)

No liability for good faith but erroneous interpretation.—
No liability shall arise under this subsection with respect to any disclosure which results from a good faith, but erroneous, interpretation of subsection (b).
(3)

Damages.—
In any action brought under paragraph (1), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of—
(A)
the greater of—
(i)
$1,000 for each act of unauthorized disclosure of a financial record with respect to which such defendant is found liable; or
(ii)
the sum of—
(I)
the actual damages sustained by the plaintiff as a result of such unauthorized disclosure; plus
(II)
in the case of a willful disclosure or a disclosure which is the result of gross negligence, punitive damages; plus
(B)
the costs (including attorney's fees) of the action.
(d)

Definitions.—
For purposes of this section—
(1)

Financial institution.—
The term “financial institution” means—
(A)
a depository institution, as defined in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c));
(B)
an institution-affiliated party, as defined in section 3(u) of such Act (12 U.S.C. 1813(u));
(C)
any Federal credit union or State credit union, as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752), including an institution-affiliated party of such a credit union, as defined in section 206(r) of such Act (12 U.S.C. 1786(r)); and
(D)
any benefit association, insurance company, safe deposit company, money-market mutual fund, or similar entity authorized to do business in the State.
(2)

Financial record.—
The term “financial record” has the meaning given such term in section 1101 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401).
SEC. 469B.
[42 U.S.C. 669b]

GRANTS TO STATES FOR ACCESS AND VISITATION PROGRAMS.
(a)

In General.—
The Administration for Children and Families shall make grants under this section to enable States to establish and administer programs to support and facilitate noncustodial parents' access to and visitation of their children, by means of activities including mediation (both voluntary and mandatory), counseling, education, development of parenting plans, visitation enforcement (including monitoring, supervision and neutral drop-off and pickup), and development of guidelines for visitation and alternative custody arrangements.
(b)

Amount of Grant.—
The amount of the grant to be made to a State under this section for a fiscal year shall be an amount equal to the lesser of—
(1)
90 percent of State expenditures during the fiscal year for activities described in subsection (a); or
(2)
the allotment of the State under subsection (c) for the fiscal year.
(c)

Allotments to States.—
(1)

In general.—
The allotment of a State for a fiscal year is the amount that bears the same ratio to $10,000,000 for grants under this section for the fiscal year as the number of children in the State living with only 1 biological parent bears to the total number of such children in all States.
(2)

Minimum allotment.—
The Administration for Children and Families shall adjust allotments to States under paragraph (1) as necessary to ensure that no State is allotted less than—
(A)
$50,000 for fiscal year 1997 or 1998; or
(B)
$100,000 for any succeeding fiscal year.
(d)

No Supplantation of State Expenditures for Similar Activities.—
A State to which a grant is made under this section may not use the grant to supplant expenditures by the State for activities specified in subsection (a), but shall use the grant to supplement such expenditures at a level at least equal to the level of such expenditures for fiscal year 1995.
(e)

State Administration.—
Each State to which a grant is made under this section—
(1)
may administer State programs funded with the grant, directly or through grants to or contracts with courts, local public agencies, or nonprofit private entities;
(2)
shall not be required to operate such programs on a statewide basis; and
(3)
shall monitor, evaluate, and report on such programs in accordance with regulations prescribed by the Secretary.
PART E—

FEDERAL PAYMENTS FOR FOSTER CARE, PREVENTION, AND PERMANENCY

PURPOSE: APPROPRIATION
Sec. 470.
[42 U.S.C. 670]
For the purpose of enabling each State to provide, in appropriate cases, foster care and transitional independent living programs for children who otherwise would have been eligible for assistance under the State's plan approved under part A (as such plan was in effect on June 1, 1995), adoption assistance for children with special needs, kinship guardianship assistance, and prevention services or programs specified in section 471(e)(1), there are authorized to be appropriated for each fiscal year such sums as may be necessary to carry out the provisions of this part. The sums made available under this section shall be used for making payments to States which have submitted, and had approved by the Secretary, State plans under this part.

STATE PLAN FOR FOSTER CARE AND ADOPTION ASSISTANCE
Sec. 471.
[42 U.S.C. 671]
(a)
In order for a State to be eligible for payments under this part, it shall have a plan approved by the Secretary which—
(1)
provides for foster care maintenance payments in accordance with section 472, adoption assistance in accordance with section 473, and, at the option of the State, services or programs specified in subsection (e)(1) of this section for children who are candidates for foster care or who are pregnant or parenting foster youth and the parents or kin caregivers of the children, in accordance with the requirements of that subsection;
(2)
provides that the State agency responsible for administering the program authorized by subpart 1 of part B of this title shall administer, or supervise the administration of, the program authorized by this part;
(3)
provides that the plan shall be in effect in all political subdivisions of the State, and, if administered by them, be mandatory upon them;
(4)
provides that the State shall assure that the programs at the local level assisted under this part will be coordinated with the programs at the State or local level assisted under parts A and B of this title, under subtitle 1 of title XX 43 of this Act, and under any other appropriate provision of Federal law;
^{43}
So in law. The reference to “subtitle 1” in paragraph (4) probably should be to “subtitle A”.
(5)
provides that the State will, in the administration of its programs under this part, use such methods relating to the establishment and maintenance of personnel standards on a merit basis as are found by the Secretary to be necessary for the proper and efficient operation of the programs, except that the Secretary shall exercise no authority with respect to the selection, tenure of office, or compensation of any individual employed in accordance with such methods;
(6)
provides that the State agency referred to in paragraph (2) (hereinafter in this part referred to as the “State agency”) will make such reports, in such form and containing such information as the Secretary may from time to time require, and comply with such provisions as the Secretary may from time to time find necessary to assure the correctness and verification of such reports;
(7)
provides that the State agency will monitor and conduct periodic evaluations of activities carried out under this part;
(8)
subject to subsection (c), provides safeguards which restrict the use of or disclosure of information concerning individuals assisted under the State plan to purposes directly connected with (A) the administration of the plan of the State approved under this part, the plan or program of the State under part A, B, or D of this title or under title I, V, X, XIV, XVI (as in effect in Puerto Rico, Guam, and the Virgin Islands), XIX, or XX, the program established by title II, or the supplemental security income program established by title XVI, (B) any investigation, prosecution, or criminal or civil proceeding, conducted in connection with the administration of any such plan or program, (C) the administration of any other Federal or federally assisted program which provides assistance, in cash or in kind, or services, directly to individuals on the basis of need, (D) any audit or similar activity conducted in connection with the administration of any such plan or program by any governmental agency which is authorized by law to conduct such audit or activity, and (E) reporting and providing information pursuant to paragraph (9) to appropriate authorities with respect to known or suspected child abuse or neglect; and the safeguards so provided shall prohibit disclosure, to any committee or legislative body (other than an agency referred to in clause (D) with respect to an activity referred to in such clause), of any information which identifies by name or address any such applicant or recipient; except that nothing contained herein shall preclude a State from providing standards which restrict disclosures to purposes more limited than those specified herein, or which, in the case of adoptions, prevent disclosure entirely;
(9)
provides that the State agency will—
(A)
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 aid under part B or this part under circumstances which indicate that the child's health or welfare is threatened thereby;
(B)
provide such information with respect to a situation described in subparagraph (A) as the State agency may have; and
(C)
not later than—
(i)
1 year after the date of enactment of this subparagraph, demonstrate to the Secretary that the State agency has developed, in consultation with State and local law enforcement, juvenile justice systems, health care providers, education agencies, and organizations with experience in dealing with at-risk children and youth, policies and procedures (including relevant training for caseworkers) for identifying, documenting in agency records, and determining appropriate services with respect to—
(I)
any child or youth over whom the State agency has responsibility for placement, care, or supervision and who the State has reasonable cause to believe is, or is at risk of being, a sex trafficking victim (including children for whom a State child welfare agency has an open case file but who have not been removed from the home, children who have run away from foster care and who have not attained 18 years of age or such older age as the State has elected under section 475(8) of this Act, and youth who are not in foster care but are receiving services under section 477 of this Act); and
(II)
at the option of the State, any individual who has not attained 26 years of age, without regard to whether the individual is or was in foster care under the responsibility of the State; and
(ii)
2 years after such date of enactment, demonstrate to the Secretary that the State agency is implementing the policies and procedures referred to in clause (i).
(10)
provides—
(A)
for the establishment or designation of a State authority or authorities that shall be responsible for establishing and maintaining standards for foster family homes and child care institutions which are reasonably in accord with recommended standards of national organizations concerned with standards for the institutions or homes, including standards related to admission policies, safety, sanitation, and protection of civil rights, and which shall permit use of the reasonable and prudent parenting standard;
(B)
that the standards established pursuant to subparagraph (A) shall be applied by the State to any foster family home or child care institution receiving funds under this part or part B and shall require, as a condition of each contract entered into by a child care institution to provide foster care, the presence on-site of at least 1 official who, with respect to any child placed at the child care institution, is designated to be the caregiver who is authorized to apply the reasonable and prudent parent standard to decisions involving the participation of the child in age or developmentally-appropriate activities, and who is provided with training in how to use and apply the reasonable and prudent parent standard in the same manner as prospective foster parents are provided the training pursuant to paragraph (24);
(C)
that the standards established pursuant to subparagraph (A) shall include policies related to the liability of foster parents and private entities under contract by the State involving the application of the reasonable and prudent parent standard, to ensure appropriate liability for caregivers when a child participates in an approved activity and the caregiver approving the activity acts in accordance with the reasonable and prudent parent standard; and
(D)
that a waiver of any standards established pursuant to subparagraph (A) may be made only on a case-by-case basis for nonsafety standards (as determined by the State) in relative foster family homes for specific children in care;
(11)
provides for periodic review of the standards referred to in the preceding paragraph and amounts paid as foster care maintenance payments and adoption assistance to assure their continuing appropriateness;
(12)
provides for granting an opportunity for a fair hearing before the State agency to any individual whose claim for benefits available pursuant to this part is denied or is not acted upon with reasonable promptness;
(13)
provides that the State shall arrange for a periodic and independently conducted audit of the programs assisted under this part and part B of this title, which shall be conducted no less frequently than once every three years;
(14)
provides (A) specific goals (which shall be established by State law on or before October 1, 1982) for each fiscal year (commencing with the fiscal year which begins on October 1, 1983) as to the maximum number of children (in absolute numbers or as a percentage of all children in foster care with respect to whom assistance under the plan is provided during such year) who, at any time during such year, will remain in foster care after having been in such care for a period in excess of twenty-four months, and (B) a description of the steps which will be taken by the State to achieve such goals;
(15)
provides that—
(A)
in determining reasonable efforts to be made with respect to a child, as described in this paragraph, and in making such reasonable efforts, the child's health and safety shall be the paramount concern;
(B)
except as provided in subparagraph (D), reasonable efforts shall be made to preserve and reunify
families—
(i)
prior to the placement of a child in foster care, to prevent or eliminate the need for removing the child from the child's home; and
(ii)
to make it possible for a child to safely return to the child's home;
(C)
if continuation of reasonable efforts of the type described in subparagraph (B) is determined to be inconsistent with the permanency plan for the child, reasonable efforts shall be made to place the child in a timely manner in accordance with the permanency plan (including, if appropriate, through an interstate placement), and to complete whatever steps are necessary to finalize the permanent placement of the child;
(D)
reasonable efforts of the type described in subparagraph (B) shall not be required to be made with respect to a parent of a child if a court of competent jurisdiction has determined that—
(i)
the parent has subjected the child to aggravated circumstances (as defined in State law, which definition may include but need not be limited to abandonment, torture, chronic abuse, and sexual abuse);
(ii)
the parent has—
(I)
committed murder (which would have been an offense under section 1111(a) of title 18, United States Code, if the offense had occurred in the special maritime or territorial jurisdiction of the United States) of another child of the parent;
(II)
committed voluntary manslaughter (which would have been an offense under section 1112(a) of title 18, United States Code, if the offense had occurred in the special maritime or territorial jurisdiction of the United States) of another child of the parent;
(III)
aided or abetted, attempted, conspired, or solicited to commit such a murder or such a voluntary manslaughter; or
(IV)
committed a felony assault that results in serious bodily injury to the child or another child of the parent; or
(iii)
the parental rights of the parent to a sibling have been terminated involuntarily;
(E)
if reasonable efforts of the type described in subparagraph (B) are not made with respect to a child as a result of a determination made by a court of competent jurisdiction in accordance with subparagraph (D)—
(i)
a permanency hearing (as described in section 475(5)(C)), which considers in-State and out-of-State permanent placement options for the child, shall be held for the child within 30 days after the determination; and
(ii)
reasonable efforts shall be made to place the child in a timely manner in accordance with the permanency plan, and to complete whatever steps are necessary to finalize the permanent placement of the child; and
(F)
reasonable efforts to place a child for adoption or with a legal guardian, including identifying appropriate in-State and out-of-State placements 44 may be made concurrently with reasonable efforts of the type described in subparagraph (B);
^{44}
So in law. The word “placements” in paragraph (15)(F) probably should read “placements,”.
(16)
provides for the development of a case plan (as defined in section 475(1) and in accordance with the requirements of section 475A) for each child receiving foster care maintenance payments under the State plan and provides for a case review system which meets the requirements described in sections 475(5) and 475A with respect to each such child;
(17)
provides that, where appropriate, all steps will be taken, including cooperative efforts with the State agencies administering the program funded under part A and plan approved under part D, to secure an assignment to the State of any rights to support on behalf of each child receiving foster care maintenance payments under this part;
(18)
not later than January 1, 1997, provides that neither the State nor any other entity in the State that receives funds from the Federal Government and is involved in adoption or foster care placements may—
(A)
deny to any person the opportunity to become an adoptive or a foster parent, on the basis of the race, color, or national origin of the person, or of the child, involved; or
(B)
delay or deny the placement of a child for adoption or into foster care, on the basis of the race, color, or national origin of the adoptive or foster parent, or the child, involved;
(19)
provides that the State shall consider giving preference to an adult relative over a non-related caregiver when determining a placement for a child, provided that the relative caregiver meets all relevant State child protection standards;
(20)
(A)
provides procedures for criminal records checks, including fingerprint-based checks of national crime information databases (as defined in section 534(f)(3)(A) of title 28, United States Code),45 for any prospective foster or adoptive parent before the foster or adoptive parent may be finally approved for placement of a child regardless of whether foster care maintenance payments or adoption assistance payments are to be made on behalf of the child under the State plan under this part, including procedures requiring that—
^{45}
So in law. This amendment was carried out as to the probable intent of the Congress. See Public Law 109–248 (120 Stat. 608).
(i)
in any case involving a child on whose behalf such payments are to be so made in which a record check reveals a felony conviction for child abuse or neglect, for spousal abuse, for a crime against children (including child pornography), or for a crime involving violence, including rape, sexual assault, or homicide, but not including other physical assault or battery, if a State finds that a court of competent jurisdiction has determined that the felony was committed at any time, such final approval shall not be granted; and
(ii)
in any case involving a child on whose behalf such payments are to be so made in which a record check reveals a felony conviction for physical assault, battery, or a drug-related offense, if a State finds that a court of competent jurisdiction has determined that the felony was committed within the past 5 years, such final approval shall not be granted;
(B)
provides that the State shall—
(i)
check any child abuse and neglect registry maintained by the State for information on any prospective foster or adoptive parent and on any other adult living in the home of such a prospective parent, and request any other State in which any such prospective parent or other adult has resided in the preceding 5 years, to enable the State to check any child abuse and neglect registry maintained by such other State for such information, before the prospective foster or adoptive parent may be finally approved for placement of a child, regardless of whether foster care maintenance payments or adoption assistance payments are to be made on behalf of the child under the State plan under this part;
(ii)
comply with any request described in clause (i) that is received from another State; and
(iii)
have in place safeguards to prevent the unauthorized disclosure of information in any child abuse and neglect registry maintained by the State, and to prevent any such information obtained pursuant to this subparagraph from being used for a purpose other than the conducting of background checks in foster or adoptive placement cases;
(C)
provides procedures for criminal records checks, including fingerprint-based checks of national crime information databases (as defined in section 534(f)(3)(A) of title 28, United States Code), on any relative guardian, and for checks described in subparagraph (B) of this paragraph on any relative guardian and any other adult living in the home of any relative guardian, before the relative guardian may receive kinship guardianship assistance payments on behalf of the child under the State plan under this part; and
(D)46
provides procedures for any child-care institution, including a group home, residential treatment center, shelter, or other congregate care setting, to conduct criminal records checks, including fingerprint-based checks of national crime information databases (as defined in section 534(f)(3)(A) of title 28, United States Code), and checks described in subparagraph (B) of this paragraph, on any adult working in a child-care institution, including a group home, residential treatment center, shelter, or other congregate care setting, unless the State reports to the Secretary the alternative criminal records checks and child abuse registry checks the State conducts on any adult working in a child-care institution, including a group home, residential treatment center, shelter, or other congregate care setting, and why the checks specified in this subparagraph are not appropriate for the State;
^{46}
The margin for subparagraph (D) is so in law.
(21)
provides for health insurance coverage (including, at State option, through the program under the State plan approved under title XIX) for any child who has been determined to be a child with special needs, for whom there is in effect an adoption assistance agreement (other than an agreement under this part) between the State and an adoptive parent or parents, and who the State has determined cannot be placed with an adoptive parent or parents without medical assistance because such child has special needs for medical, mental health, or rehabilitative care, and that with respect to the provision of such health insurance coverage—
(A)
such coverage may be provided through 1 or more State medical assistance programs;
(B)
the State, in providing such coverage, shall ensure that the medical benefits, including mental health benefits, provided are of the same type and kind as those that would be provided for children by the State under title XIX;
(C)
in the event that the State provides such coverage through a State medical assistance program other than the program under title XIX, and the State exceeds its funding for services under such other program, any such child shall be deemed to be receiving aid or assistance under the State plan under this part for purposes of section 1902(a)(10)(A)(i)(I); and
(D)
in determining cost-sharing requirements, the State shall take into consideration the circumstances of the adopting parent or parents and the needs of the child being adopted consistent, to the extent coverage is provided through a State medical assistance program, with the rules under such program;
(22)
provides that, not later than January 1, 1999, the State shall develop and implement standards to ensure that children in foster care placements in public or private agencies are provided quality services that protect the safety and health of the children;
(23)
provides that the State shall not—
(A)
deny or delay the placement of a child for adoption when an approved family is available outside of the jurisdiction with responsibility for handling the case of the child; or
(B)
fail to grant an opportunity for a fair hearing, as described in paragraph (12), to an individual whose allegation of a violation of subparagraph (A) of this paragraph is denied by the State or not acted upon by the State with reasonable promptness;
(24)
includes a certification that, before a child in foster care under the responsibility of the State is placed with prospective foster parents, the prospective foster parents will be prepared adequately with the appropriate knowledge and skills to provide for the needs of the child, that the preparation will be continued, as necessary, after the placement of the child, and that the preparation shall include knowledge and skills relating to the reasonable and prudent parent standard for the participation of the child in age or developmentally-appropriate activities, including knowledge and skills relating to the developmental stages of the cognitive, emotional, physical, and behavioral capacities of a child, and knowledge and skills relating to applying the standard to decisions such as whether to allow the child to engage in social, extracurricular, enrichment, cultural, and social activities, including sports, field trips, and overnight activities lasting 1 or more days, and to decisions involving the signing of permission slips and arranging of transportation for the child to and from extracurricular, enrichment, and social activities;
(25)
provides that the State shall have in effect procedures for the orderly and timely interstate placement of children, which, in the case of a State other than the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, or American Samoa, not later than October 1, 2027, shall include the use of an electronic interstate case-processing system; and procedures implemented in accordance with an interstate compact, if incorporating with the procedures prescribed by paragraph (26), shall be considered to satisfy the requirement of this paragraph;
(26)
provides that—
(A)
(i)
within 60 days after the State receives from another State a request to conduct a study of a home environment for purposes of assessing the safety and suitability of placing a child in the home, the State shall, directly or by contract—
(I)
conduct and complete the study; and
(II)
return to the other State a report on the results of the study, which shall address the extent to which placement in the home would meet the needs of the child; and
(ii)
in the case of a home study begun on or before September 30, 2008, if the State fails to comply with clause (i) within the 60-day period as a result of circumstances beyond the control of the State (such as a failure by a Federal agency to provide the results of a background check, or the failure by any entity to provide completed medical forms, requested by the State at least 45 days before the end of the 60-day period), the State shall have 75 days to comply with clause (i) if the State documents the circumstances involved and certifies that completing the home study is in the best interests of the child; except that
(iii)
this subparagraph shall not be construed to require the State to have completed, within the applicable period, the parts of the home study involving the education and training of the prospective foster or adoptive parents;
(B)
the State shall treat any report described in subparagraph (A) that is received from another State or an Indian tribe (or from a private agency under contract with another State) as meeting any requirements imposed by the State for the completion of a home study before placing a child in the home, unless, within 14 days after receipt of the report, the State determines, based on grounds that are specific to the content of the report, that making a decision in reliance on the report would be contrary to the welfare of the child; and
(C)
the State shall not impose any restriction on the ability of a State agency administering, or supervising the administration of, a State program operated under a State plan approved under this part to contract with a private agency for the conduct of a home study described in subparagraph (A);
(27)
provides that, with respect to any child in foster care under the responsibility of the State under this part or part B and without regard to whether foster care maintenance payments are made under section 472 on behalf of the child, the State has in effect procedures for verifying the citizenship or immigration status of the child;
(28)
at the option of the State, provides for the State to enter into kinship guardianship assistance agreements to provide kinship guardianship assistance payments on behalf of children to grandparents and other relatives who have assumed legal guardianship of the children for whom they have cared as foster parents and for whom they have committed to care on a permanent basis, as provided in section 473(d);
(29)
provides that, within 30 days after the removal of a child from the custody of the parent or parents of the child, the State shall exercise due diligence to identify and provide notice to the following relatives: all adult grandparents, all parents of a sibling of the child, where such parent has legal custody of such sibling, and other adult relatives of the child (including any other adult relatives suggested by the parents), subject to exceptions due to family or domestic violence, that—
(A)
specifies that the child has been or is being removed from the custody of the parent or parents of the child;
(B)
explains the options the relative has under Federal, State, and local law to participate in the care and placement of the child, including any options that may be lost by failing to respond to the notice;
(C)
describes the requirements under paragraph (10) of this subsection to become a foster family home and the additional services and supports that are available for children placed in such a home; and
(D)
if the State has elected the option to make kinship guardianship assistance payments under paragraph (28) of this subsection, describes how the relative guardian of the child may subsequently enter into an agreement with the State under section 473(d) to receive the payments;
(30)
provides assurances that each child who has attained the minimum age for compulsory school attendance under State law and with respect to whom there is eligibility for a payment under the State plan is a full-time elementary or secondary school student or has completed secondary school, and for purposes of this paragraph, the term “elementary or secondary school student” means, with respect to a child, that the child is—
(A)
enrolled (or in the process of enrolling) in an institution which provides elementary or secondary education, as determined under the law of the State or other jurisdiction in which the institution is located;
(B)
instructed in elementary or secondary education at home in accordance with a home school law of the State or other jurisdiction in which the home is located;
(C)
in an independent study elementary or secondary education program in accordance with the law of the State or other jurisdiction in which the program is located, which is administered by the local school or school district; or
(D)
incapable of attending school on a full-time basis due to the medical condition of the child, which incapability is supported by regularly updated information in the case plan of the child;
(31)
provides that reasonable efforts shall be made—
(A)
to place siblings removed from their home in the same foster care, kinship guardianship, or adoptive placement, unless the State documents that such a joint placement would be contrary to the safety or well-being of any of the siblings; and
(B)
in the case of siblings removed from their home who are not so jointly placed, to provide for frequent visitation or other ongoing interaction between the siblings, unless that State documents that frequent visitation or other ongoing interaction would be contrary to the safety or well-being of any of the siblings;
(32)
provides that the State will negotiate in good faith with any Indian tribe, tribal organization or tribal consortium in the State that requests to develop an agreement with the State to administer all or part of the program under this part on behalf of Indian children who are under the authority of the tribe, organization, or consortium, including foster care maintenance payments on behalf of children who are placed in State or tribally licensed foster family homes, adoption assistance payments, and, if the State has elected to provide such payments, kinship guardianship assistance payments under section 473(d), and tribal access to resources for administration, training, and data collection under this part;
(33)
provides that the State will inform any individual who is adopting, or whom the State is made aware is considering adopting, a child who is in foster care under the responsibility of the State of the potential eligibility of the individual for a Federal tax credit under section 23 of the Internal Revenue Code of 1986;
(34)
provides that, for each child or youth described in paragraph (9)(C)(i)(I), the State agency shall—
(A)
not later than 2 years after the date of the enactment of this paragraph, report immediately, and in no case later than 24 hours after receiving information on children or youth who have been identified as being a sex trafficking victim, to the law enforcement authorities; and
(B)
not later than 3 years after such date of enactment and annually thereafter, report to the Secretary the total number of children and youth who are sex trafficking victims;
(35)
provides that—
(A)
not later than 1 year after the date of the enactment of this paragraph, the State shall develop and implement specific protocols for—
(i)
expeditiously locating any child missing from foster care;
(ii)
determining the primary factors that contributed to the child’s running away or otherwise being absent from care, and to the extent possible and appropriate, responding to those factors in current and subsequent placements;
(iii)
determining the child’s experiences while absent from care, including screening the child to determine if the child is a possible sex trafficking victim (as defined in section 475(9)(A)); and
(iv)
reporting such related information as required by the Secretary; and
(B)
not later than 2 years after such date of enactment, for each child and youth described in paragraph (9)(C)(i)(I) of this subsection, the State agency shall report immediately, and in no case later than 24 hours after receiving, information on missing or abducted children or youth to the law enforcement authorities for entry into the National Crime Information Center (NCIC) database of the Federal Bureau of Investigation, established pursuant to section 534 of title 28, United States Code, and to the National Center for Missing and Exploited Children (referred to in this subparagraph as “NCMEC”), and that the State agency shall maintain regular communication with law enforcement agencies and NCMEC in efforts to provide a safe recovery of a missing or abducted child or youth, including by sharing information pertaining to the child’s or youth's recovery and circumstances related to the recovery, and that the State report submitted to law enforcement agencies and NCMEC shall include where reasonably possible—
(i)
a photo of the missing or abducted child or youth;
(ii)
a description of the child's or youth's physical features, such as height, weight, sex, ethnicity, race, hair color, and eye color; and
(iii)
endangerment information, such as the child's or youth's pregnancy status, prescription medications, suicidal tendencies, vulnerability to being sex trafficked, and other health or risk factors;
(36)
provides that, not later than April 1, 2019, the State shall submit to the Secretary information addressing—
(A)
whether the State licensing standards are in accord with model standards identified by the Secretary, and if not, the reason for the specific deviation and a description as to why having a standard that is reasonably in accord with the corresponding national model standards is not appropriate for the State;
(B)
whether the State has elected to waive standards established in 471(a)(10)(A) for relative foster family homes (pursuant to waiver authority provided by 471(a)(10)(D)), a description of which standards the State most commonly waives, and if the State has not elected to waive the standards, the reason for not waiving these standards;
(C)
if the State has elected to waive standards specified in subparagraph (B), how caseworkers are trained to use the waiver authority and whether the State has developed a process or provided tools to assist caseworkers in waiving nonsafety standards per the authority provided in 471(a)(10)(D) to quickly place children with relatives; and
(D)
a description of the steps the State is taking to improve caseworker training or the process, if any; and
(37)
includes a certification that, in response to the limitation imposed under section 472(k) with respect to foster care maintenance payments made on behalf of any child who is placed in a setting that is not a foster family home, the State will not enact or advance policies or practices that would result in a significant increase in the population of youth in the State’s juvenile justice system.
(b)
The Secretary shall approve any plan which complies with the provisions of subsection (a) of this section.
(c)

Use of Child Welfare Records in State Court Proceedings.—
Subsection (a)(8) shall not be construed to limit the flexibility of a State in determining State policies relating to public access to court proceedings to determine child abuse and neglect or other court hearings held pursuant to part B or this part, except that such policies shall, at a minimum, ensure the safety and well-being of the child, parents, and family.
(d)

Annual Reports by the Secretary on Number of Children and Youth Reported by States To Be Sex Trafficking Victims.—
Not later than 4 years after the date of the enactment of this subsection and annually thereafter, the Secretary shall report to the Congress and make available to the public on the Internet website of the Department of Health and Human Services the number of children and youth reported in accordance with subsection (a)(34)(B) of this section to be sex trafficking victims (as defined in section 475(9)(A)).
(e)

Prevention and Family Services and Programs.—
(1)

In general.—
Subject to the succeeding provisions of this subsection, the Secretary may make a payment to a State for providing the following services or programs for a child described in paragraph (2) and the parents or kin caregivers of the child when the need of the child, such a parent, or such a caregiver for the services or programs are directly related to the safety, permanence, or well-being of the child or to preventing the child from entering foster care:
(A)

Mental health and substance abuse prevention and treatment services.—
Mental health and substance abuse prevention and treatment services provided by a qualified clinician for not more than a 12-month period that begins on any date described in paragraph (3) with respect to the child.
(B)

In-home parent skill-based programs.—
In-home parent skill-based programs for not more than a 12-month period that begins on any date described in paragraph (3) with respect to the child and that include parenting skills training, parent education, and individual and family counseling.
(2)

Child described.—
For purposes of paragraph (1), a child described in this paragraph is the following:
(A)
A child who is a candidate for foster care (as defined in section 475(13)) but can remain safely at home or in a kinship placement with receipt of services or programs specified in paragraph (1).
(B)
A child in foster care who is a pregnant or parenting foster youth.
(3)

Date described.—
For purposes of paragraph (1), the dates described in this paragraph are the following:
(A)
The date on which a child is identified in a prevention plan maintained under paragraph (4) as a child who is a candidate for foster care (as defined in section 475(13)).
(B)
The date on which a child is identified in a prevention plan maintained under paragraph (4) as a pregnant or parenting foster youth in need of services or programs specified in paragraph (1).
(4)

Requirements related to providing services and programs.—
Services and programs specified in paragraph (1) may be provided under this subsection only if specified in advance in the child’s prevention plan described in subparagraph (A) and the requirements in subparagraphs (B) through (E) are met:
(A)

Prevention plan.—
The State maintains a written prevention plan for the child that meets the following requirements (as applicable):
(i)

Candidates.—
In the case of a child who is a candidate for foster care described in paragraph (2)(A), the prevention plan shall—
(I)
identify the foster care prevention strategy for the child so that the child may remain safely at home, live temporarily with a kin caregiver until reunification can be safely achieved, or live permanently with a kin caregiver;
(II)
list the services or programs to be provided to or on behalf of the child to ensure the success of that prevention strategy; and
(III)
comply with such other requirements as the Secretary shall establish.
(ii)

Pregnant or parenting foster youth.—
In the case of a child who is a pregnant or parenting foster youth described in paragraph (2)(B), the prevention plan shall—
(I)
be included in the child's case plan required under section 475(1);
(II)
list the services or programs to be provided to or on behalf of the youth to ensure that the youth is prepared (in the case of a pregnant foster youth) or able (in the case of a parenting foster youth) to be a parent;
(III)
describe the foster care prevention strategy for any child born to the youth; and
(IV)
comply with such other requirements as the Secretary shall establish.
(B)

Trauma-informed.—
The services or programs to be provided to or on behalf of a child are provided under an organizational structure and treatment framework that involves understanding, recognizing, and responding to the effects of all types of trauma and in accordance with recognized principles of a trauma-informed approach and trauma-specific interventions to address trauma’s consequences and facilitate healing.
(C)

Only services and programs provided in accordance with promising, supported, or well-supported practices permitted.—
(i)

In general.—
Only State expenditures for services or programs specified in subparagraph (A) or (B) of paragraph (1) that are provided in accordance with practices that meet the requirements specified in clause (ii) of this subparagraph and that meet the requirements specified in clause (iii), (iv), or (v), respectively, for being a promising, supported, or well-supported practice, shall be eligible for a Federal matching payment under section 474(a)(6)(A).
(ii)

General practice requirements.—
The general practice requirements specified in this clause are the following:
(I)
The practice has a book, manual, or other available writings that specify the components of the practice protocol and describe how to administer the practice.
(II)
There is no empirical basis suggesting that, compared to its likely benefits, the practice constitutes a risk of harm to those receiving it.
(III)
If multiple outcome studies have been conducted, the overall weight of evidence supports the benefits of the practice.
(IV)
Outcome measures are reliable and valid, and are administrated consistently and accurately across all those receiving the practice.
(V)
There is no case data suggesting a risk of harm that was probably caused by the treatment and that was severe or frequent.
(iii)

Promising practice.—
A practice shall be considered to be a “promising practice” if the practice is superior to an appropriate comparison practice using conventional standards of statistical significance (in terms of demonstrated meaningful improvements in validated measures of important child and parent outcomes, such as mental health, substance abuse, and child safety and well-being), as established by the results or outcomes of at least one study that—
(I)
was rated by an independent systematic review for the quality of the study design and execution and determined to be well-designed and well-executed; and
(II)
utilized some form of control (such as an untreated group, a placebo group, or a wait list study).
(iv)

Supported practice.—
A practice shall be considered to be a “supported practice” if—
(I)
the practice is superior to an appropriate comparison practice using conventional standards of statistical significance (in terms of demonstrated meaningful improvements in validated measures of important child and parent outcomes, such as mental health, substance abuse, and child safety and well-being), as established by the results or outcomes of at least one study that—
- (aa)
was rated by an independent systematic review for the quality of the study design and execution and determined to be well-designed and well-executed;
- (bb)
was a rigorous random-controlled trial (or, if not available, a study using a rigorous quasi-experimental research design); and
- (cc)
was carried out in a usual care or practice setting; and
(II)
the study described in subclause (I) established that the practice has a sustained effect (when compared to a control group) for at least 6 months beyond the end of the treatment.
(v)

Well-supported practice.—
A practice shall be considered to be a “well-supported practice” if—
(I)
the practice is superior to an appropriate comparison practice using conventional standards of statistical significance (in terms of demonstrated meaningful improvements in validated measures of important child and parent outcomes, such as mental health, substance abuse, and child safety and well-being), as established by the results or outcomes of at least two studies that—
- (aa)
were rated by an independent systematic review for the quality of the study design and execution and determined to be well-designed and well-executed;
- (bb)
were rigorous random-controlled trials (or, if not available, studies using a rigorous quasi-experimental research design); and
- (cc)
were carried out in a usual care or practice setting; and
(II)
at least one of the studies described in subclause (I) established that the practice has a sustained effect (when compared to a control group) for at least 1 year beyond the end of treatment.
(D)

Guidance on practices criteria and pre-approved services and programs.—
(i)

In general.—
Not later than October 1, 2018, the Secretary shall issue guidance to States regarding the practices criteria required for services or programs to satisfy the requirements of subparagraph (C). The guidance shall include a pre-approved list of services and programs that satisfy the requirements.
(ii)

Updates.—
The Secretary shall issue updates to the guidance required by clause (i) as often as the Secretary determines necessary.
(E)

Outcome assessment and reporting.—
The State shall collect and report to the Secretary the following information with respect to each child for whom, or on whose behalf mental health and substance abuse prevention and treatment services or in-home parent skill-based programs are provided during a 12-month period beginning on the date the child is determined by the State to be a child described in paragraph (2):
(i)
The specific services or programs provided and the total expenditures for each of the services or programs.
(ii)
The duration of the services or programs provided.
(iii)
In the case of a child described in paragraph (2)(A), the child’s placement status at the beginning, and at the end, of the 1-year period, respectively, and whether the child entered foster care within 2 years after being determined a candidate for foster care.
(5)

State plan component.—
(A)

In general.—
A State electing to provide services or programs specified in paragraph (1) shall submit as part of the State plan required by subsection (a) a prevention services and programs plan component that meets the requirements of subparagraph (B).
(B)

Prevention services and programs plan component.—
In order to meet the requirements of this subparagraph, a prevention services and programs plan component, with respect to each 5-year period for which the plan component is in operation in the State, shall include the following:
(i)
How providing services and programs specified in paragraph (1) is expected to improve specific outcomes for children and families.
(ii)
How the State will monitor and oversee the safety of children who receive services and programs specified in paragraph (1), including through periodic risk assessments throughout the period in which the services and programs are provided on behalf of a child and reexamination of the prevention plan maintained for the child under paragraph (4) for the provision of the services or programs if the State determines the risk of the child entering foster care remains high despite the provision of the services or programs.
(iii)
With respect to the services and programs specified in subparagraphs (A) and (B) of paragraph (1), information on the specific promising, supported, or well-supported practices the State plans to use to provide the services or programs, including a description of—
(I)
the services or programs and whether the practices used are promising, supported, or well-supported;
(II)
how the State plans to implement the services or programs, including how implementation of the services or programs will be continuously monitored to ensure fidelity to the practice model and to determine outcomes achieved and how information learned from the monitoring will be used to refine and improve practices;
(III)
how the State selected the services or programs;
(IV)
the target population for the services or programs; and
(V)
how each service or program provided will be evaluated through a well-designed and rigorous process, which may consist of an ongoing, cross-site evaluation approved by the Secretary.
(iv)
A description of the consultation that the State agencies responsible for administering the State plans under this part and part B engage in with other State agencies responsible for administering health programs, including mental health and substance abuse prevention and treatment services, and with other public and private agencies with experience in administering child and family services, including community-based organizations, in order to foster a continuum of care for children described in paragraph (2) and their parents or kin caregivers.
(v)
A description of how the State shall assess children and their parents or kin caregivers to determine eligibility for services or programs specified in paragraph (1).
(vi)
A description of how the services or programs specified in paragraph (1) that are provided for or on behalf of a child and the parents or kin caregivers of the child will be coordinated with other child and family services provided to the child and the parents or kin caregivers of the child under the State plans in effect under subparts 1 and 2 of part B.
(vii)
Descriptions of steps the State is taking to support and enhance a competent, skilled, and professional child welfare workforce to deliver trauma-informed and evidence-based services, including—
(I)
ensuring that staff is qualified to provide services or programs that are consistent with the promising, supported, or well-supported practice models selected; and
(II)
developing appropriate prevention plans, and conducting the risk assessments required under clause (iii).
(viii)
A description of how the State will provide training and support for caseworkers in assessing what children and their families need, connecting to the families served, knowing how to access and deliver the needed trauma-informed and evidence-based services, and overseeing and evaluating the continuing appropriateness of the services.
(ix)
A description of how caseload size and type for prevention caseworkers will be determined, managed, and overseen.
(x)
An assurance that the State will report to the Secretary such information and data as the Secretary may require with respect to the provision of services and programs specified in paragraph (1), including information and data necessary to determine the performance measures for the State under paragraph (6) and compliance with paragraph (7).
(C)

Reimbursement for services under the prevention plan component.—
(i)

Limitation.—
Except as provided in subclause (ii), a State may not receive a Federal payment under this part for a given promising, supported, or well-supported practice unless (in accordance with subparagraph (B)(iii)(V)) the plan includes a well-designed and rigorous evaluation strategy for that practice.
(ii)

Waiver of limitation.—
The Secretary may waive the requirement for a well-designed and rigorous evaluation of any well-supported practice if the Secretary deems the evidence of the effectiveness of the practice to be compelling and the State meets the continuous quality improvement requirements included in subparagraph (B)(iii)(II) with regard to the practice.
(6)

Prevention services measures.—
(A)

Establishment; annual updates.—
Beginning with fiscal year 2021, and annually thereafter, the Secretary shall establish the following prevention services measures based on information and data reported by States that elect to provide services and programs specified in paragraph (1):
(i)

Percentage of candidates for foster care who do not enter foster care.—
The percentage of candidates for foster care for whom, or on whose behalf, the services or programs are provided who do not enter foster care, including those placed with a kin caregiver outside of foster care, during the 12-month period in which the services or programs are provided and through the end of the succeeding 12-month period.
(ii)

Per-child spending.—
The total amount of expenditures made for mental health and substance abuse prevention and treatment services or in-home parent skill-based programs, respectively, for, or on behalf of, each child described in paragraph (2).
(B)

Data.—
The Secretary shall establish and annually update the prevention services measures—
(i)
based on the median State values of the information reported under each clause of subparagraph (A) for the 3 then most recent years; and
(ii)
taking into account State differences in the price levels of consumption goods and services using the most recent regional price parities published by the Bureau of Economic Analysis of the Department of Commerce or such other data as the Secretary determines appropriate.
(C)

Publication of state prevention services measures.—
The Secretary shall annually make available to the public the prevention services measures of each State.
(7)

Maintenance of effort for state foster care prevention expenditures.—
(A)

In general.—
If a State elects to provide services and programs specified in paragraph (1) for a fiscal year, the State foster care prevention expenditures for the fiscal year shall not be less than the amount of the expenditures for fiscal year 2014 (or, at the option of a State described in subparagraph (E), fiscal year 2015 or fiscal year 2016 (whichever the State elects)).
(B)

State foster care prevention expenditures.—
The term “State foster care prevention expenditures” means the following:
(i)

TANF; iv–b; ssbg.—
State expenditures for foster care prevention services and activities under the State program funded under part A (including from amounts made available by the Federal Government), under the State plan developed under part B (including any such amounts), or under the Social Services Block Grant Programs under subtitle A of title XX (including any such amounts).
(ii)

Other state programs.—
State expenditures for foster care prevention services and activities under any State program that is not described in clause (i) (other than any State expenditures for foster care prevention services and activities under the State program under this part (including under a waiver of the program)).
(C)

State expenditures.—
The term “State expenditures” means all State or local funds that are expended by the State or a local agency including State or local funds that are matched or reimbursed by the Federal Government and State or local funds that are not matched or reimbursed by the Federal Government.
(D)

Determination of prevention services and activities.—
The Secretary shall require each State that elects to provide services and programs specified in paragraph (1) to report the expenditures specified in subparagraph (B) for fiscal year 2014 and for such fiscal years thereafter as are necessary to determine whether the State is complying with the maintenance of effort requirement in subparagraph (A). The Secretary shall specify the specific services and activities under each program referred to in subparagraph (B) that are “prevention services and activities” for purposes of the reports.
(E)

State described.—
For purposes of subparagraph (A), a State is described in this subparagraph if the population of children in the State in 2014 was less than 200,000 (as determined by the United States Census Bureau).
(8)

Prohibition against use of state foster care prevention expenditures and federal iv–e prevention funds for matching or expenditure requirement.—
A State that elects to provide services and programs specified in paragraph (1) shall not use any State foster care prevention expenditures for a fiscal year for the State share of expenditures under section 474(a)(6) for a fiscal year.
(9)

Administrative costs.—
Expenditures described in section 474(a)(6)(B)—
(A)
shall not be eligible for payment under subparagraph (A), (B), or (E) of section 474(a)(3); and
(B)
shall be eligible for payment under section 474(a)(6)(B) without regard to whether the expenditures are incurred on behalf of a child who is, or is potentially, eligible for foster care maintenance payments under this part.
(10)

Application.—
(A)

In general.—
The provision of services or programs under this subsection to or on behalf of a child described in paragraph (2) shall not be considered to be receipt of aid or assistance under the State plan under this part for purposes of eligibility for any other program established under this Act, nor shall the provision of such services or programs be construed to permit the State to reduce medical or other assistance available to a recipient of such services or programs.
(B)

Candidates in kinship care.—
A child described in paragraph (2) for whom such services or programs under this subsection are provided for more than 6 months while in the home of a kin caregiver, and who would satisfy the AFDC eligibility requirement of section 472(a)(3)(A)(ii)(II) but for residing in the home of the caregiver for more than 6 months, is deemed to satisfy that requirement for purposes of determining whether the child is eligible for foster care maintenance payments under section 472.
(C)

Payer of last resort.—
In carrying out its responsibilities to ensure access to services or programs under this subsection, the State agency shall not be considered to be a legally liable third party for purposes of satisfying a financial commitment for the cost of providing such services or programs with respect to any individual for whom such cost would have been paid for from another public or private source but for the enactment of this subsection (except that whenever considered necessary to prevent a delay in the receipt of appropriate early intervention services by a child or family in a timely fashion, funds provided under section 474(a)(6) may be used to pay the provider of services or programs pending reimbursement from the public or private source that has ultimate responsibility for the payment).

FOSTER CARE MAINTENANCE PAYMENTS PROGRAM
Sec. 472.
[42 U.S.C. 672]
(a)

In General.—
(1)

Eligibility.—
Each State with a plan approved under this part shall make foster care maintenance payments on behalf of each child who has been removed from the home of a relative specified in section 406(a) (as in effect on July 16, 1996) into foster care if—
(A)
the removal and foster care placement met, and the placement continues to meet, the requirements of paragraph (2); and
(B)
the child, while in the home, would have met the AFDC eligibility requirement of paragraph (3).
(2)

Removal and foster care placement requirements.—
The removal and foster care placement of a child meet the requirements of this paragraph if—
(A)
the removal and foster care placement are in accordance with—
(i)
a voluntary placement agreement entered into by a parent or legal guardian of the child who is the relative referred to in paragraph (1); or
(ii)
a judicial determination to the effect that continuation in the home from which removed would be contrary to the welfare of the child and that reasonable efforts of the type described in section 471(a)(15) for a child have been made;
(B)
the child's placement and care are the responsibility of—
(i)
the State agency administering the State plan approved under section 471;
(ii)
any other public agency with which the State agency administering or supervising the administration of the State plan has made an agreement which is in effect; or
(iii)
an Indian tribe or a tribal organization (as defined in section 479B(a)) or a tribal consortium that has a plan approved under section 471 in accordance with section 479B; and
(C)
the child has been placed in a foster family home, with a parent residing in a licensed residential family-based treatment facility, but only to the extent permitted under subsection (j), or in a child-care institution, but only to the extent permitted under subsection (k).
(3)

AFDC eligibility requirement.—
(A)

In general.—
A child in the home referred to in paragraph (1) would have met the AFDC eligibility requirement of this paragraph if the child—
(i)
would have received aid under the State plan approved under section 402 (as in effect on July 16, 1996) in the home, in or for the month in which the agreement was entered into or court proceedings leading to the determination referred to in paragraph (2)(A)(ii) of this subsection were initiated; or
(ii)
(I)
would have received the aid in the home, in or for the month referred to in clause (i), if application had been made therefor; or
(II)
had been living in the home within 6 months before the month in which the agreement was entered into or the proceedings were initiated, and would have received the aid in or for such month, if, in such month, the child had been living in the home with the relative referred to in paragraph (1) and application for the aid had been made.
(B)

Resources determination.—
For purposes of subparagraph (A), in determining whether a child would have received aid under a State plan approved under section 402 (as in effect on July 16, 1996), a child whose resources (determined pursuant to section 402(a)(7)(B), as so in effect) have a combined value of not more than $10,000 shall be considered a child whose resources have a combined value of not more than $1,000 (or such lower amount as the State may determine for purposes of section 402(a)(7)(B)).
(4)

Eligibility of certain alien children.—
Subject to title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, if the child is an alien disqualified under section 245A(h) or 210(f) of the Immigration and Nationality Act from receiving aid under the State plan approved under section 402 in or for the month in which the agreement described in paragraph (2)(A)(i) was entered into or court proceedings leading to the determination described in paragraph (2)(A)(ii) were initiated, the child shall be considered to satisfy the requirements of paragraph (3), with respect to the month, if the child would have satisfied the requirements but for the disqualification.
(b)
Foster care maintenance payments may be made under this part only on behalf of a child described in subsection (a) of this section who is—
(1)
in the foster family home of an individual, whether the payments therefor are made to such individual or to a public or private child-placement or child-care agency, or
(2)
in a child-care institution, whether the payments therefor are made to such institution or to a public or private child-placement or child-care agency, which payments shall be limited so as to include in such payments only those items which are included in the term “foster care maintenance payments” (as defined in section 475(4)).
(c)

Definitions.—
For purposes of this part:
(1)

Foster family home.—
(A)

In general.—
The term “foster family home” means the home of an individual or family—
(i)
that is licensed or approved by the State in which it is situated as a foster family home that meets the standards established for the licensing or approval; and
(ii)
in which a child in foster care has been placed in the care of an individual, who resides with the child and who has been licensed or approved by the State to be a foster parent—
(I)
that the State deems capable of adhering to the reasonable and prudent parent standard;
(II)
that provides 24-hour substitute care for children placed away from their parents or other caretakers; and
(III)
that provides the care for not more than six children in foster care.
(B)

State flexibility.—
The number of foster children that may be cared for in a home under subparagraph (A) may exceed the numerical limitation in subparagraph (A)(ii)(III), at the option of the State, for any of the following reasons:
(i)
To allow a parenting youth in foster care to remain with the child of the parenting youth.
(ii)
To allow siblings to remain together.
(iii)
To allow a child with an established meaningful relationship with the family to remain with the family.
(iv)
To allow a family with special training or skills to provide care to a child who has a severe disability.
(C)

Rule of construction.—
Subparagraph (A) shall not be construed as prohibiting a foster parent from renting the home in which the parent cares for a foster child placed in the parent’s care.
(2)

Child-care institution.—
(A)

In general.—
The term “child-care institution” means a private child-care institution, or a public child-care institution which accommodates no more than 25 children, which is licensed by the State in which it is situated or has been approved by the agency of the State responsible for licensing or approval of institutions of this type as meeting the standards established for the licensing.
(B)

Supervised settings.—
In the case of a child who has attained 18 years of age, the term shall include a supervised setting in which the individual is living independently, in accordance with such conditions as the Secretary shall establish in regulations.
(C)

Exclusions.—
The term shall not include detention facilities, forestry camps, training schools, or any other facility operated primarily for the detention of children who are determined to be delinquent.
(d)
Notwithstanding any other provision of this title, Federal payments may be made under this part with respect to amounts expended by any State as foster care maintenance payments under this section, in the case of children removed from their homes pursuant to voluntary placement agreements as described in subsection (a), only if (at the time such amounts were expended) the State has fulfilled all of the requirements of section 422(b)(8).
(e)
No Federal payment may be made under this part with respect to amounts expended by any State as foster care maintenance payments under this section, in the case of any child who was removed from his or her home pursuant to a voluntary placement agreement as described in subsection (a) and has remained in voluntary placement for a period in excess of 180 days, unless there has been a judicial determination by a court of competent jurisdiction (within the first 180 days of such placement) to the effect that such placement is in the best interests of the child.
(f)
For the purposes of this part and part B of this title, (1) the term “voluntary placement” means an out-of-home placement of a minor, by or with participation of a State agency, after the parents or guardians of the minor have requested the assistance of the agency and signed a voluntary placement agreement; and (2) the term “voluntary placement agreement” means a written agreement, binding on the parties to the agreement, between the State agency, any other agency acting on its behalf, and the parents or guardians of a minor child which specifies, at a minimum, the legal status of the child and the rights and obligations of the parents or guardians, the child, and the agency while the child is in placement.
(g)
In any case where—
(1)
the placement of a minor child in foster care occurred pursuant to a voluntary placement agreement entered into by the parents or guardians of such child as provided in subsection (a), and
(2)
such parents or guardians request (in such manner and form as the Secretary may prescribe) that the child be returned to their home or to the home of a relative,
the voluntary placement agreement shall be deemed to be revoked unless the State agency opposes such request and obtains a judicial determination, by a court of competent jurisdiction, that the return of the child to such home would be contrary to the child's best interests.
(h)
(1)
For purposes of title XIX, any child with respect to whom foster care maintenance payments are made under this section is deemed to be a dependent child as defined in section 406 (as in effect as of July 16, 1996) and deemed to be a recipient of aid to families with dependent children under part A of this title (as so in effect). For purposes of subtitle 1 of title XX 47, any child with respect to whom foster care maintenance payments are made under this section is deemed to be a minor child in a needy family under a State program funded under part A of this title and is deemed to be a recipient of assistance under such part.
^{47}
So in law. The reference to “subtitle 1” in subsection (h)(1) probably should read “subtitle A”.
(2)
For purposes of paragraph (1), a child whose costs in a foster family home or child care institution are covered by the foster care maintenance payments being made with respect to the child's minor parent, as provided in section 475(4)(B), shall be considered a child with respect to whom foster care maintenance payments are made under this section.
(i)

Administrative Costs Associated With Otherwise Eligible Children Not in Licensed Foster Care Settings.—
Expenditures by a State that would be considered administrative expenditures for purposes of section 474(a)(3) if made with respect to a child who was residing in a foster family home or child-care institution shall be so considered with respect to a child not residing in such a home or institution—
(1)
in the case of a child who has been removed in accordance with subsection (a) of this section from the home of a relative specified in section 406(a) (as in effect on July 16, 1996), only for expenditures—
(A)
with respect to a period of not more than the lesser of 12 months or the average length of time it takes for the State to license or approve a home as a foster home, in which the child is in the home of a relative and an application is pending for licensing or approval of the home as a foster family home; or
(B)
with respect to a period of not more than 1 calendar month when a child moves from a facility not eligible for payments under this part into a foster family home or child care institution licensed or approved by the State; and
(2)
in the case of any other child who is potentially eligible for benefits under a State plan approved under this part and at imminent risk of removal from the home, only if—
(A)
reasonable efforts are being made in accordance with section 471(a)(15) to prevent the need for, or if necessary to pursue, removal of the child from the home; and
(B)
the State agency has made, not less often than every 6 months, a determination (or redetermination) as to whether the child remains at imminent risk of removal from the home.
(j)

Children Placed With a Parent Residing in a Licensed Residential Family-Based Treatment Facility for Substance Abuse.—
(1)

In general.—
Notwithstanding the preceding provisions of this section, a child who is eligible for foster care maintenance payments under this section, or who would be eligible for the payments if the eligibility were determined without regard to paragraphs (1)(B) and (3) of subsection (a), shall be eligible for the payments for a period of not more than 12 months during which the child is placed with a parent who is in a licensed residential family-based treatment facility for substance abuse, but only if—
(A)
the recommendation for the placement is specified in the child's case plan before the placement;
(B)
the treatment facility provides, as part of the treatment for substance abuse, parenting skills training, parent education, and individual and family counseling; and
(C)
the substance abuse treatment, parenting skills training, parent education, and individual and family counseling is provided under an organizational structure and treatment framework that involves understanding, recognizing, and responding to the effects of all types of trauma and in accordance with recognized principles of a trauma-informed approach and trauma-specific interventions to address the consequences of trauma and facilitate healing.
(2)

Application.—
With respect to children for whom foster care maintenance payments are made under paragraph (1), only the children who satisfy the requirements of paragraphs (1)(B) and (3) of subsection (a) shall be considered to be children with respect to whom foster care maintenance payments are made under this section for purposes of subsection (h) or section 473(b)(3)(B).
(k)

Limitation on Federal Financial Participation.—
(1)

In general.—
Beginning with the third week for which foster care maintenance payments are made under this section on behalf of a child placed in a child-care institution, no Federal payment shall be made to the State under section 474(a)(1) for amounts expended for foster care maintenance payments on behalf of the child unless—
(A)
the child is placed in a child-care institution that is a setting specified in paragraph (2) (or is placed in a licensed residential family-based treatment facility consistent with subsection (j)); and
(B)
in the case of a child placed in a qualified residential treatment program (as defined in paragraph (4)), the requirements specified in paragraph (3) and section 475A(c) are met.
(2)

Specified settings for placement.—
The settings for placement specified in this paragraph are the following:
(A)
A qualified residential treatment program (as defined in paragraph (4)).
(B)
A setting specializing in providing prenatal, post-partum, or parenting supports for youth.
(C)
In the case of a child who has attained 18 years of age, a supervised setting in which the child is living independently.
(D)
A setting providing high-quality residential care and supportive services to children and youth who have been found to be, or are at risk of becoming, sex trafficking victims, in accordance with section 471(a)(9)(C).
(3)

Assessment to determine appropriateness of placement in a qualified residential treatment program.—
(A)

Deadline for assessment.—
In the case of a child who is placed in a qualified residential treatment program, if the assessment required under section 475A(c)(1) is not completed within 30 days after the placement is made, no Federal payment shall be made to the State under section 474(a)(1) for any amounts expended for foster care maintenance payments on behalf of the child during the placement.
(B)

Deadline for transition out of placement.—
If the assessment required under section 475A(c)(1) determines that the placement of a child in a qualified residential treatment program is not appropriate, a court disapproves such a placement under section 475A(c)(2), or a child who has been in an approved placement in a qualified residential treatment program is going to return home or be placed with a fit and willing relative, a legal guardian, or an adoptive parent, or in a foster family home, Federal payments shall be made to the State under section 474(a)(1) for amounts expended for foster care maintenance payments on behalf of the child while the child remains in the qualified residential treatment program only during the period necessary for the child to transition home or to such a placement. In no event shall a State receive Federal payments under section 474(a)(1) for amounts expended for foster care maintenance payments on behalf of a child who remains placed in a qualified residential treatment program after the end of the 30-day period that begins on the date a determination is made that the placement is no longer the recommended or approved placement for the child.
(4)

Qualified residential treatment program.—
For purposes of this part, the term “qualified residential treatment program” means a program that—
(A)
has a trauma-informed treatment model that is designed to address the needs, including clinical needs as appropriate, of children with serious emotional or behavioral disorders or disturbances and, with respect to a child, is able to implement the treatment identified for the child by the assessment of the child required under section 475A(c);
(B)
subject to paragraphs (5) and (6), has registered or licensed nursing staff and other licensed clinical staff who—
(i)
provide care within the scope of their practice as defined by State law;
(ii)
are on-site according to the treatment model referred to in subparagraph (A); and
(iii)
are available 24 hours a day and 7 days a week;
(C)
to extent appropriate, and in accordance with the child’s best interests, facilitates participation of family members in the child’s treatment program;
(D)
facilitates outreach to the family members of the child, including siblings, documents how the outreach is made (including contact information), and maintains contact information for any known biological family and fictive kin of the child;
(E)
documents how family members are integrated into the treatment process for the child, including post-discharge, and how sibling connections are maintained;
(F)
provides discharge planning and family-based aftercare support for at least 6 months post-discharge; and
(G)
is licensed in accordance with section 471(a)(10) and is accredited by any of the following independent, not-for-profit organizations:
(i)
The Commission on Accreditation of Rehabilitation Facilities (CARF).
(ii)
The Joint Commission on Accreditation of Healthcare Organizations (JCAHO).
(iii)
The Council on Accreditation (COA).
(iv)
Any other independent, not-for-profit accrediting organization approved by the Secretary.
(5)

Administrative costs.—
The prohibition in paragraph (1) on Federal payments under section 474(a)(1) shall not be construed as prohibiting Federal payments for administrative expenditures incurred on behalf of a child placed in a child-care institution and for which payment is available under section 474(a)(3).
(6)

Rule of construction.—
The requirements in paragraph (4)(B) shall not be construed as requiring a qualified residential treatment program to acquire nursing and behavioral health staff solely through means of a direct employer to employee relationship.

ADOPTION AND GUARDIANSHIP ASSISTANCE PROGRAM
Sec. 473.
[42 U.S.C. 673]
(a)
(1)
(A)
Each State having a plan approved under this part shall enter into adoption assistance agreements (as defined in section 475(3)) with the adoptive parents of children with special needs.
(B)
Under any adoption assistance agreement entered into by a State with parents who adopt a child with special needs, the State—
(i)
shall make payments of nonrecurring adoption expenses incurred by or on behalf of such parents in connection with the adoption of such child, directly through the State agency or through another public or nonprofit private agency, in amounts determined under paragraph (3), and
(ii)
in any case where the child meets the requirements of paragraph (2), may make adoption assistance payments to such parents, directly through the State agency or through another public or nonprofit private agency, in amounts so determined.
(2)
(A)
For purposes of paragraph (1)(B)(ii), a child meets the requirements of this paragraph if—
(i)
in the case of a child who is not an applicable child for the fiscal year (as defined in subsection (e)), the child—
(I)
- (aa)
(AA)
was removed from the home of a relative specified in section 406(a) (as in effect on July 16, 1996) and placed in foster care in accordance with a voluntary placement agreement with respect to which Federal payments are provided under section 474 (or section 403, as such section was in effect on July 16, 1996), or in accordance with a judicial determination to the effect that continuation in the home would be contrary to the welfare of the child; and
(BB)
met the requirements of section 472(a)(3) with respect to the home referred to in subitem (AA) of this item;
- (bb)
meets all of the requirements of title XVI with respect to eligibility for supplemental security income benefits; or
- (cc)
is a child whose costs in a foster family home or child-care institution are covered by the foster care maintenance payments being made with respect to the minor parent of the child as provided in section 475(4)(B); and
(II)
has been determined by the State, pursuant to subsection (c)(1) of this section, to be a child with special needs; or
(ii)
in the case of a child who is an applicable child for the fiscal year (as so defined), the child—
(I)
- (aa)
at the time of initiation of adoption proceedings was in the care of a public or licensed private child placement agency or Indian tribal organization pursuant to—
(AA)
an involuntary removal of the child from the home in accordance with a judicial determination to the effect that continuation in the home would be contrary to the welfare of the child; or
(BB)
a voluntary placement agreement or voluntary relinquishment;
- (bb)
meets all medical or disability requirements of title XVI with respect to eligibility for supplemental security income benefits; or
- (cc)
was residing in a foster family home or child care institution with the child's minor parent, and the child's minor parent was in such foster family home or child care institution pursuant to—
(AA)
an involuntary removal of the child from the home in accordance with a judicial determination to the effect that continuation in the home would be contrary to the welfare of the child; or
(BB)
a voluntary placement agreement or voluntary relinquishment; and
(II)
has been determined by the State, pursuant to subsection (c)(2), to be a child with special needs.
(B)
Section 472(a)(4) shall apply for purposes of subparagraph (A) of this paragraph, in any case in which the child is an alien described in such section.
(C)
A child shall be treated as meeting the requirements of this paragraph for the purpose of paragraph (1)(B)(ii) if—
(i)
in the case of a child who is not an applicable child for the fiscal year (as defined in subsection (e)), the child—
(I)
meets the requirements of subparagraph (A)(i)(II);
(II)
was determined eligible for adoption assistance payments under this part with respect to a prior adoption;
(III)
is available for adoption because—
- (aa)
the prior adoption has been dissolved, and the parental rights of the adoptive parents have been terminated; or
- (bb)
the child's adoptive parents have died; and
(IV)
fails to meet the requirements of subparagraph (A)(i) but would meet such requirements if—
- (aa)
the child were treated as if the child were in the same financial and other circumstances the child was in the last time the child was determined eligible for adoption assistance payments under this part; and
- (bb)
the prior adoption were treated as never having occurred; or
(ii)
in the case of a child who is an applicable child for the fiscal year (as so defined), the child meets the requirements of subparagraph (A)(ii)(II), is determined eligible for adoption assistance payments under this part with respect to a prior adoption (or who would have been determined eligible for such payments had the Adoption and Safe Families Act of 1997 been in effect at the time that such determination would have been made), and is available for adoption because the prior adoption has been dissolved and the parental rights of the adoptive parents have been terminated or because the child's adoptive parents have died.
(D)
In determining the eligibility for adoption assistance payments of a child in a legal guardianship arrangement described in section 471(a)(28), the placement of the child with the relative guardian involved and any kinship guardianship assistance payments made on behalf of the child shall be considered never to have been made.
(3)
The amount of the payments to be made in any case under clauses (i) and (ii) of paragraph (1)(B) shall be determined through agreement between the adoptive parents and the State or local agency administering the program under this section, which shall take into consideration the circumstances of the adopting parents and the needs of the child being adopted, and may be readjusted periodically, with the concurrence of the adopting parents (which may be specified in the adoption assistance agreement), depending upon changes in such circumstances. However, in no case may the amount of the adoption assistance payment made under clause (ii) of paragraph (1)(B) exceed the foster care maintenance payment which would have been paid during the period if the child with respect to whom the adoption assistance payment is made had been in a foster family home.
(4)
(A)
Notwithstanding any other provision of this section, a payment may not be made pursuant to this section to parents or relative guardians with respect to a child—
(i)
who has attained—
(I)
18 years of age, or such greater age as the State may elect under section 475(8)(B)(iii); or
(II)
21 years of age, if the State determines that the child has a mental or physical handicap which warrants the continuation of assistance;
(ii)
who has not attained 18 years of age, if the State determines that the parents or relative guardians, as the case may be, are no longer legally responsible for the support of the child; or
(iii)
if the State determines that the child is no longer receiving any support from the parents or relative guardians, as the case may be.
(B)
Parents or relative guardians who have been receiving adoption assistance payments or kinship guardianship assistance payments under this section shall keep the State or local agency administering the program under this section informed of circumstances which would, pursuant to this subsection, make them ineligible for the payments, or eligible for the payments in a different amount.
(5)
For purposes of this part, individuals with whom a child (who has been determined by the State, pursuant to subsection (c), to be a child with special needs) is placed for adoption in accordance with applicable State and local law shall be eligible for such payments, during the period of the placement, on the same terms and subject to the same conditions as if such individuals had adopted such child.
(6)
(A)
For purposes of paragraph (1)(B)(i), the term “nonrecurring adoption expenses” means reasonable and necessary adoption fees, court costs, attorney fees, and other expenses which are directly related to the legal adoption of a child with special needs and which are not incurred in violation of State or Federal law.
(B)
A State's payment of nonrecurring adoption expenses under an adoption assistance agreement shall be treated as an expenditure made for the proper and efficient administration of the State plan for purposes of section 474(a)(3)(E).
(7)
(A)
Notwithstanding any other provision of this subsection, no payment may be made to parents with respect to any applicable child for a fiscal year that—
(i)
would be considered a child with special needs under subsection (c)(2);
(ii)
is not a citizen or resident of the United States; and
(iii)
was adopted outside of the United States or was brought into the United States for the purpose of being adopted.
(B)
Subparagraph (A) shall not be construed as prohibiting payments under this part for an applicable child described in subparagraph (A) that is placed in foster care subsequent to the failure, as determined by the State, of the initial adoption of the child by the parents described in subparagraph (A).
(8)
(A)
A State shall calculate the savings (if any) resulting from the application of paragraph (2)(A)(ii) to all applicable children for a fiscal year, using a methodology specified by the Secretary or an alternate methodology proposed by the State and approved by the Secretary.
(B)
A State shall annually report to the Secretary—
(i)
the methodology used to make the calculation described in subparagraph (A), without regard to whether any savings are found;
(ii)
the amount of any savings referred to in subparagraph (A); and
(iii)
how any such savings are spent, accounting for and reporting the spending separately from any other spending reported to the Secretary under part B or this part.
(C)
The Secretary shall make all information reported pursuant to subparagraph (B) available on the website of the Department of Health and Human Services in a location easily accessible to the public.
(D)
(i)
A State shall spend an amount equal to the amount of the savings (if any) in State expenditures under this part resulting from the application of paragraph (2)(A)(ii) to all applicable children for a fiscal year, to provide to children of families any service that may be provided under part B or this part. A State shall spend not less than 30 percent of any such savings on post-adoption services, post-guardianship services, and services to support and sustain positive permanent outcomes for children who otherwise might enter into foster care under the responsibility of the State, with at least ⅔ of the spending by the State to comply with such 30 percent requirement being spent on post-adoption and post-guardianship services.
(ii)
Any State spending required under clause (i) shall be used to supplement, and not supplant, any Federal or non-Federal funds used to provide any service under part B or this part.
(b)
(1)
For purposes of title XIX, any child who is described in paragraph (3) is deemed to be a dependent child as defined in section 406 (as in effect as of July 16, 1996) and deemed to be a recipient of aid to families with dependent children under part A of this title (as so in effect) in the State where such child resides.
(2)
For purposes of subtitle 1 of title XX 48, any child who is described in paragraph (3) is deemed to be a minor child in a needy family under a State program funded under part A of this title and deemed to be a recipient of assistance under such part.
^{48}
So in law. The reference to “subtitle 1” in subsection (b)(2) probably should read “subtitle A”.
(3)
A child described in this paragraph is any child—
(A)
(i)
who is a child described in subsection (a)(2), and
(ii)
with respect to whom an adoption assistance agreement is in effect under this section (whether or not adoption assistance payments are provided under the agreement or are being made under this section), including any such child who has been placed for adoption in accordance with applicable State and local law (whether or not an interlocutory or other judicial decree of adoption has been issued),
(B)
with respect to whom foster care maintenance payments are being made under section 472, or
(C)
with respect to whom kinship guardianship assistance payments are being made pursuant to subsection (d).
(4)
For purposes of paragraphs (1) and (2), a child whose costs in a foster family home or child-care institution are covered by the foster care maintenance payments being made with respect to the child's minor parent, as provided in section 475(4)(B), shall be considered a child with respect to whom foster care maintenance payments are being made under section 472.
(c)
For purposes of this section—
(1)
in the case of a child who is not an applicable child for a fiscal year, the child shall not be considered a child with special needs unless—
(A)
the State has determined that the child cannot or should not be returned to the home of his parents; and
(B)
the State had first determined (A) that there exists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance under this section or medical assistance under title XIX, and (B) that, except where it would be against the best interests of the child because of such factors as the existence of significant emotional ties with prospective adoptive parents while in the care of such parents as a foster child, a reasonable, but unsuccessful, effort has been made to place the child with appropriate adoptive parents without providing adoption assistance under this section or medical assistance under title XIX; or
(2)
in the case of a child who is an applicable child for a fiscal year, the child shall not be considered a child with special needs unless—
(A)
the State has determined, pursuant to a criterion or criteria established by the State, that the child cannot or should not be returned to the home of his parents;
(B)
(i)
the State has determined that there exists with respect to the child a specific factor or condition (such as ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that the child cannot be placed with adoptive parents without providing adoption assistance under this section and medical assistance under title XIX; or
(ii)
the child meets all medical or disability requirements of title XVI with respect to eligibility for supplemental security income benefits; and
(C)
the State has determined that, except where it would be against the best interests of the child because of such factors as the existence of significant emotional ties with prospective adoptive parents while in the care of the parents as a foster child, a reasonable, but unsuccessful, effort has been made to place the child with appropriate adoptive parents without providing adoption assistance under this section or medical assistance under title XIX.
(d)

Kinship Guardianship Assistance Payments for Children.—
(1)

Kinship guardianship assistance agreement.—
(A)

In general.—
In order to receive payments under section 474(a)(5), a State shall—
(i)
negotiate and enter into a written, binding kinship guardianship assistance agreement with the prospective relative guardian of a child who meets the requirements of this paragraph; and
(ii)
provide the prospective relative guardian with a copy of the agreement.
(B)

Minimum requirements.—
The agreement shall specify, at a minimum—
(i)
the amount of, and manner in which, each kinship guardianship assistance payment will be provided under the agreement, and the manner in which the payment may be adjusted periodically, in consultation with the relative guardian, based on the circumstances of the relative guardian and the needs of the child;
(ii)
the additional services and assistance that the child and relative guardian will be eligible for under the agreement;
(iii)
the procedure by which the relative guardian may apply for additional services as needed; and
(iv)
subject to subparagraph (D), that the State will pay the total cost of nonrecurring expenses associated with obtaining legal guardianship of the child, to the extent the total cost does not exceed $2,000.
(C)

Interstate applicability.—
The agreement shall provide that the agreement shall remain in effect without regard to the State residency of the relative guardian.
(D)

No effect on federal reimbursement.—
Nothing in subparagraph (B)(iv) shall be construed as affecting the ability of the State to obtain reimbursement from the Federal Government for costs described in that subparagraph.
(2)

Limitations on amount of kinship guardianship assistance payment.—
A kinship guardianship assistance payment on behalf of a child shall not exceed the foster care maintenance payment which would have been paid on behalf of the child if the child had remained in a foster family home.
(3)

Child's eligibility for a kinship guardianship assistance payment.—
(A)

In general.—
A child is eligible for a kinship guardianship assistance payment under this subsection if the State agency determines the following:
(i)
The child has been—
(I)
removed from his or her home pursuant to a voluntary placement agreement or as a result of a judicial determination to the effect that continuation in the home would be contrary to the welfare of the child; and
(II)
eligible for foster care maintenance payments under section 472 while residing for at least 6 consecutive months in the home of the prospective relative guardian.
(ii)
Being returned home or adopted are not appropriate permanency options for the child.
(iii)
The child demonstrates a strong attachment to the prospective relative guardian and the relative guardian has a strong commitment to caring permanently for the child.
(iv)
With respect to a child who has attained 14 years of age, the child has been consulted regarding the kinship guardianship arrangement.
(B)

Treatment of siblings.—
With respect to a child described in subparagraph (A) whose sibling or siblings are not so described—
(i)
the child and any sibling of the child may be placed in the same kinship guardianship arrangement, in accordance with section 471(a)(31), if the State agency and the relative agree on the appropriateness of the arrangement for the siblings; and
(ii)
kinship guardianship assistance payments may be paid on behalf of each sibling so placed.
(C)

Eligibility not affected by replacement of guardian with a successor guardian.—
In the event of the death or incapacity of the relative guardian, the eligibility of a child for a kinship guardianship assistance payment under this subsection shall not be affected by reason of the replacement of the relative guardian with a successor legal guardian named in the kinship guardianship assistance agreement referred to in paragraph (1) (including in any amendment to the agreement), notwithstanding subparagraph (A) of this paragraph and section 471(a)(28).
(e)

Applicable Child Defined.—
(1)

On the basis of age.—
(A)

In general.—
Subject to paragraphs (2) and (3), in this section, the term “applicable child” means a child for whom an adoption assistance agreement is entered into under this section during any fiscal year described in subparagraph (B) if the child attained the applicable age for that fiscal year before the end of that fiscal year.
(B)

Applicable age.—
For purposes of subparagraph (A), the applicable age for a fiscal year is as follows:
In the case of fiscal year: | The applicable age is:
2010 | 16
2011 | 14
2012 | 12
2013 | 10
2014 | 8
2015 | 6
2016 | 4
2017 through 2023 | 2
2024 | 2 (or, in the case of a child for whom an adoption assistance agreement is entered into under this section on or after July 1, 2024, any age)
2025 or thereafter | any age.
(2)

Exception for duration in care.—
Notwithstanding paragraph (1) of this subsection, beginning with fiscal year 2010, such term shall include a child of any age on the date on which an adoption assistance agreement is entered into on behalf of the child under this section if the child—
(A)
has been in foster care under the responsibility of the State for at least 60 consecutive months; and
(B)
meets the requirements of subsection (a)(2)(A)(ii).
(3)

Exception for member of a sibling group.—
Notwithstanding paragraphs (1) and (2) of this subsection, beginning with fiscal year 2010, such term shall include a child of any age on the date on which an adoption assistance agreement is entered into on behalf of the child under this section without regard to whether the child is described in paragraph (2)(A) of this subsection if the child—
(A)
is a sibling of a child who is an applicable child for the fiscal year under paragraph (1) or (2) of this subsection;
(B)
is to be placed in the same adoption placement as an applicable child for the fiscal year who is their sibling; and
(C)
meets the requirements of subsection (a)(2)(A)(ii).
SEC. 473A.
[42 U.S.C. 673b]

ADOPTION AND LEGAL GUARDIANSHIP INCENTIVE PAYMENTS.
(a)

Grant Authority.—
Subject to the availability of such amounts as may be provided in advance in appropriations Acts for this purpose, the Secretary shall make a grant to each State that is an incentive-eligible State for a fiscal year in an amount equal to the adoption and legal guardianship incentive payment payable to the State under this section for the fiscal year, which shall be payable in the immediately succeeding fiscal year.
(b)

Incentive-Eligible State.—
A State is an incentive-eligible State for a fiscal year if—
(1)
the State has a plan approved under this part for the fiscal year;
(2)
the State is in compliance with subsection (c) for the fiscal year;
(3)
the State provides health insurance coverage to any child with special needs (as determined under section 473(c)) for whom there is in effect an adoption assistance agreement between a State and an adoptive parent or parents; and
(4)
the fiscal year is any of fiscal years 2016 through 2020.
(c)

Data Requirements.—
(1)

In general.—
A State is in compliance with this subsection for a fiscal year if the State has provided to the Secretary the data described in paragraph (2)—
(A)
for fiscal years 1995 through 1997 (or, if the first fiscal year for which the State seeks a grant under this section is after fiscal year 1998, the fiscal year that precedes such first fiscal year); and
(B)
for each succeeding fiscal year that precedes the fiscal year.
(2)

Determination of rates of adoptions and guardianships based on afcars data.—
The Secretary shall determine each of the rates required to be determined under this section with respect to a State and a fiscal year, on the basis of data meeting the requirements of the system established pursuant to section 479, as reported by the State and approved by the Secretary by August 1 of the succeeding fiscal year, and, with respect to the determination of the rates related to foster child guardianships, on the basis of information reported to the Secretary under paragraph (12) of subsection (g).
(3)

No waiver of afcars requirements.—
This section shall not be construed to alter or affect any requirement of section 479 or of any regulation prescribed under such section with respect to reporting of data by States, or to waive any penalty for failure to comply with such a requirement.
(d)

Adoption and Legal Guardianship Incentive Payment.—
(1)

In general.—
Except as provided in paragraphs (2) and (3), the adoption and legal guardianship incentive payment payable to a State for a fiscal year under this section shall be equal to the sum of—
(A)
$5,000, multiplied by the amount (if any) by which—
(i)
the number of foster child adoptions in the State during the fiscal year; exceeds
(ii)
the product (rounded to the nearest whole number) of—
(I)
the base rate of foster child adoptions for the State for the fiscal year; and
(II)
the number of children in foster care under the supervision of the State on the last day of the preceding fiscal year;
(B)
$7,500, multiplied by the amount (if any) by which—
(i)
the number of pre-adolescent child adoptions and pre-adolescent foster child guardianships in the State during the fiscal year; exceeds
(ii)
the product (rounded to the nearest whole number) of—
(I)
the base rate of pre-adolescent child adoptions and pre-adolescent foster child guardianships for the State for the fiscal year; and
(II)
the number of children in foster care under the supervision of the State on the last day of the preceding fiscal year who have attained 9 years of age but not 14 years of age; and
(C)
$10,000, multiplied by the amount (if any) by which—
(i)
the number of older child adoptions and older foster child guardianships in the State during the fiscal year; exceeds
(ii)
the product (rounded to the nearest whole number) of—
(I)
the base rate of older child adoptions and older foster child guardianships for the State for the fiscal year; and
(II)
the number of children in foster care under the supervision of the State on the last day of the preceding fiscal year who have attained 14 years of age; and
(D)
$4,000, multiplied by the amount (if any) by which—
(i)
the number of foster child guardianships in the State during the fiscal year; exceeds
(ii)
the product (rounded to the nearest whole number) of—
(I)
the base rate of foster child guardianships for the State for the fiscal year; and
(II)
the number of children in foster care under the supervision of the State on the last day of the preceding fiscal year.
(2)

Pro rata adjustment if insufficient funds available.—
For any fiscal year, if the total amount of adoption incentive payments otherwise payable under paragraph (1) for a fiscal year exceeds the amount appropriated pursuant to subsection (h) for the fiscal year, the amount of the adoption incentive payment payable to each State under paragraph (1) for the fiscal year shall be—
(A)
the amount of the adoption and legal guardianship incentive payment that would otherwise be payable to the State under paragraph (1) for the fiscal year; multiplied by
(B)
the percentage represented by the amount so appropriated for the fiscal year, divided by the total amount of adoption and legal guardianship incentive payments otherwise payable under paragraph (1) for the fiscal year.
(3)

Increased adoption and legal guardianship incentive payment for timely adoptions.—
(A)

In general.—
If for any of fiscal years 2013 through 2015, the total amount of adoption and legal guardianship incentive payments payable under paragraph (1) of this subsection are less than the amount appropriated under subsection (h) for the fiscal year, then, from the remainder of the amount appropriated for the fiscal year that is not required for such payments (in this paragraph referred to as the “timely adoption award pool”), the Secretary shall increase the adoption incentive payment determined under paragraph (1) for each State that the Secretary determines is a timely adoption award State for the fiscal year by the award amount determined for the fiscal year under subparagraph (C).
(B)

Timely adoption award state defined.—
A State is a timely adoption award State for a fiscal year if the Secretary determines that, for children who were in foster care under the supervision of the State at the time of adoptive placement, the average number of months from removal of children from their home to the placement of children in finalized adoptions is less than 24 months.
(C)

Award amount.—
For purposes of subparagraph (A), the award amount determined under this subparagraph with respect to a fiscal year is the amount equal to the timely adoption award pool for the fiscal year divided by the number of timely adoption award States for the fiscal year.
(e)

36-month 49 Availability of Incentive Payments.—
Payments to a State under this section in a fiscal year shall remain available for use by the State for the 36-month period beginning with the month in which the payments are made.
^{49}
Section 205(1) of Public Law 113–183 provided for an amendment to the heading of subsection (e). The amendment struck “24-month” and inserted “36-month”; but it probably should have been made to strike “24-Month” so that the letter “m” in the word “month” appeared with an initial uppercase or large capital letter. Such amendment was carried out to reflect the probable intent of Congress.
(f)

Limitations on Use of Incentive Payments.—
A State shall not expend an amount paid to the State under this section except to provide to children or families any service (including post-adoption services) that may be provided under part B or E, and shall use the amount to supplement, and not supplant, any Federal or non-Federal funds used to provide any service under part B or E. Amounts expended by a State in accordance with the preceding sentence shall be disregarded in determining State expenditures for purposes of Federal matching payments under sections 424, 434, and 474.
(g)

Definitions.—
As used in this section:
(1)

Foster child adoption rate.—
The term “foster child adoption rate” means, with respect to a State and a fiscal year, the percentage determined by dividing—
(A)
the number of foster child adoptions finalized in the State during the fiscal year; by
(B)
the number of children in foster care under the supervision of the State on the last day of the preceding fiscal year.
(2)

Base rate of foster child adoptions.—
The term “base rate of foster child adoptions” means, with respect to a State and a fiscal year, the lesser of—
(A)
the foster child adoption rate for the State for the then immediately preceding fiscal year; or
(B)
the foster child adoption rate for the State for the average of the then immediately preceding 3 fiscal years.
(3)

Foster child adoption.—
The term “foster child adoption” means the final adoption of a child who, at the time of adoptive placement, was in foster care under the supervision of the State.
(4)

Pre-adolescent child adoption and pre-adolescent foster child guardianship rate.—
The term “pre-adolescent child adoption and pre-adolescent foster child guardianship rate” means, with respect to a State and a fiscal year, the percentage determined by dividing—
(A)
the number of pre-adolescent child adoptions and pre-adolescent foster child guardianships finalized in the State during the fiscal year; by
(B)
the number of children in foster care under the supervision of the State on the last day of the preceding fiscal year, who have attained 9 years of age but not 14 years of age.
(5)

Base rate of pre-adolescent child adoptions and pre-adolescent foster child guardianships.—
The term “base rate of pre-adolescent child adoptions and pre-adolescent foster child guardianships” means, with respect to a State and a fiscal year, the lesser of—
(A)
the pre-adolescent child adoption and pre-adolescent foster child guardianship rate for the State for the then immediately preceding fiscal year; or
(B)
the pre-adolescent child adoption and pre-adolescent foster child guardianship rate for the State for the average of the then immediately preceding 3 fiscal years.
(6)

Pre-adolescent child adoption and pre-adolescent foster child guardianship.—
The term “pre-adolescent child adoption and pre-adolescent foster child guardianship” means the final adoption, or the placement into foster child guardianship (as defined in paragraph (12)) of a child who has attained 9 years of age but not 14 years of age if—
(A)
at the time of the adoptive or foster child guardianship placement, the child was in foster care under the supervision of the State; or
(B)
an adoption assistance agreement was in effect under section 473(a) with respect to the child.
(7)

Older child adoption and older foster child guardianship rate.—
The term “older child adoption and older foster child guardianship rate” means, with respect to a State and a fiscal year, the percentage determined by dividing—
(A)
the number of older child adoptions and older foster child guardianships finalized in the State during the fiscal year; by
(B)
the number of children in foster care under the supervision of the State on the last day of the preceding fiscal year, who have attained 14 years of age.
(8)

Base rate of older child adoptions and older foster child guardianships.—
The term “base rate of older child adoptions and older foster child guardianships” means, with respect to a State and a fiscal year, the lesser of—
(A)
the older child adoption and older foster child guardianship rate for the State for the then immediately preceding fiscal year; or
(B)
the older child adoption and older foster child guardianship rate for the State for the average of the then immediately preceding 3 fiscal years.
(9)

Older child adoption and older foster child guardianship.—
The term “older child adoption and older foster child guardianship” means the final adoption, or the placement into foster child guardianship (as defined in paragraph (12)) of a child who has attained 14 years of age if—
(A)
at the time of the adoptive or foster child guardianship placement, the child was in foster care under the supervision of the State; or
(B)
an adoption assistance agreement was in effect under section 473(a) with respect to the child.
(10)

Foster child guardianship rate.—
The term “foster child guardianship rate” means, with respect to a State and a fiscal year, the percentage determined by dividing—
(A)
the number of foster child guardianships occurring in the State during the fiscal year; by
(B)
the number of children in foster care under the supervision of the State on the last day of the preceding fiscal year.
(11)

Base rate of foster child guardianships.—
The term “base rate of foster child guardianships” means, with respect to a State and a fiscal year, the lesser of—
(A)
the foster child guardianship rate for the State for the then immediately preceding fiscal year; or
(B)
the foster child guardianship rate for the State for the average of the then immediately preceding 3 fiscal years.
(12)

Foster child guardianship.—
The term “foster child guardianship” means, with respect to a State, the exit of a child from foster care under the responsibility of the State to live with a legal guardian, if the State has reported to the Secretary—
(A)
that the State agency has determined that—
(i)
the child has been removed from his or her home pursuant to a voluntary placement agreement or as a result of a judicial determination to the effect that continuation in the home would be contrary to the welfare of the child;
(ii)
being returned home or adopted are not appropriate permanency options for the child;
(iii)
the child demonstrates a strong attachment to the prospective legal guardian, and the prospective legal guardian has a strong commitment to caring permanently for the child; and
(iv)
if the child has attained 14 years of age, the child has been consulted regarding the legal guardianship arrangement; or
(B)
the alternative procedures used by the State to determine that legal guardianship is the appropriate option for the child.
(h)

Limitations on Authorization of Appropriations.—
(1)

In general.—
For grants under subsection (a), there are authorized to be appropriated to the Secretary—
(A)
$20,000,000 for fiscal year 1999;
(B)
$43,000,000 for fiscal year 2000;
(C)
$20,000,000 for each of fiscal years 2001 through 2003; and
(D)
$43,000,000 for each of fiscal years 2004 through 2021.
(2)

Availability.—
Amounts appropriated under paragraph (1), or under any other law for grants under subsection (a), are authorized to remain available until expended, but not after fiscal year 2021.
(i)

Technical Assistance.—
(1)

In general.—
The Secretary may, directly or through grants or contracts, provide technical assistance to assist States and local communities to reach their targets for increased numbers of adoptions and, to the extent that adoption is not possible, alternative permanent placements, for children in foster care.
(2)

Description of the character of the technical assistance.—
The technical assistance provided under paragraph (1) may support the goal of encouraging more adoptions out of the foster care system, when adoptions promote the best interests of children, and may include the following:
(A)
The development of best practice guidelines for expediting termination of parental rights.
(B)
Models to encourage the use of concurrent planning.
(C)
The development of specialized units and expertise in moving children toward adoption as a permanency goal.
(D)
The development of risk assessment tools to facilitate early identification of the children who will be at risk of harm if returned home.
(E)
Models to encourage the fast tracking of children who have not attained 1 year of age into pre-adoptive placements.
(F)
Development of programs that place children into pre-adoptive families without waiting for termination of parental rights.
(3)

Targeting of technical assistance to the courts.—
Not less than 50 percent of any amount appropriated pursuant to paragraph (4) shall be used to provide technical assistance to the courts.
(4)

Limitations on authorization of appropriations.—
To carry out this subsection, there are authorized to be appropriated to the Secretary of Health and Human Services not to exceed $10,000,000 for each of fiscal years 2004 through 2006.
[Section 473B repealed by Pub.Law 109–239; 120 Stat. 512.]

PAYMENTS TO STATES; ALLOTMENTS TO STATES
Sec. 474.
[42 U.S.C. 674]
(a)
For each quarter beginning after September 30, 1980, each State which has a plan approved under this part shall be entitled to a payment equal to the sum of—
(1)
subject to subsections (j) and (k) of section 472, an amount equal to the Federal medical assistance percentage (which shall be as defined in section 1905(b), in the case of a State other than the District of Columbia, or 70 percent, in the case of the District of Columbia) of the total amount expended during such quarter as foster care maintenance payments under section 472 for children in foster family homes or child-care institutions (or, with respect to such payments made during such quarter under a cooperative agreement or contract entered into by the State and an Indian tribe, tribal organization, or tribal consortium for the administration or payment of funds under this part, an amount equal to the Federal medical assistance percentage that would apply under section 479B(d) (in this paragraph referred to as the “tribal FMAP”) if such Indian tribe, tribal organization, or tribal consortium made such payments under a program operated under that section, unless the tribal FMAP is less than the Federal medical assistance percentage that applies to the State); plus
(2)
an amount equal to the Federal medical assistance percentage (which shall be as defined in section 1905(b), in the case of a State other than the District of Columbia, or 70 percent, in the case of the District of Columbia) of the total amount expended during such quarter as adoption assistance payments under section 473 pursuant to adoption assistance agreements (or, with respect to such payments made during such quarter under a cooperative agreement or contract entered into by the State and an Indian tribe, tribal organization, or tribal consortium for the administration or payment of funds under this part, an amount equal to the Federal medical assistance percentage that would apply under section 479B(d) (in this paragraph referred to as the “tribal FMAP”) if such Indian tribe, tribal organization, or tribal consortium made such payments under a program operated under that section, unless the tribal FMAP is less than the Federal medical assistance percentage that applies to the State); plus
(3)
subject to section 472(i) an amount equal to the sum of the following proportions of the total amounts expended during such quarter as found necessary by the Secretary for the provision of child placement services and for the proper and efficient administration of the State plan—
(A)
75 per centum of so much of such expenditures as are for the training (including both short-and 50 long-term training at educational institutions through grants to such institutions or by direct financial assistance to students enrolled in such institutions) of personnel employed or preparing for employment by the State agency or by the local agency administering the plan in the political subdivision,
^{50}
So in law. A space probably should appear after “short-” and “and”.
(B)
75 percent of so much of such expenditures (including travel and per diem expenses) as are for the short-term training of current or prospective foster or adoptive parents or relative guardians, the members of the staff of State-licensed or State-approved child care institutions providing care, or State-licensed or State-approved child welfare agencies providing services, to children receiving assistance under this part, and members of the staff of abuse and neglect courts, agency attorneys, attorneys representing children or parents, guardians ad litem, or other court-appointed special advocates representing children in proceedings of such courts, in ways that increase the ability of such current or prospective parents, guardians, staff members, institutions, attorneys, and advocates to provide support and assistance to foster and adopted children and children living with relative guardians, whether incurred directly by the State or by contract,
(C)
50 percent of so much of such expenditures as are for the planning, design, development, or installation of statewide mechanized data collection and information retrieval systems (including 50 percent of the full amount of expenditures for hardware components for such systems) but only to the extent that such systems—
(i)
meet the requirements imposed by regulations promulgated pursuant to section 479(b)(2);
(ii)
to the extent practicable, are capable of interfacing with the State data collection system that collects information relating to child abuse and neglect;
(iii)
to the extent practicable, have the capability of interfacing with, and retrieving information from, the State data collection system that collects information relating to the eligibility of individuals under part A (for the purposes of facilitating verification of eligibility of foster children); and
(iv)
are determined by the Secretary to be likely to provide more efficient, economical, and effective administration of the programs carried out under a State plan approved under part B or this part; and
(D)
50 percent of so much of such expenditures as are for the operation of the statewide mechanized data collection and information retrieval systems referred to in subparagraph (C); and
(E)
one-half of the remainder of such expenditures; plus
(4)
an amount equal to the amount (if any) by which—
(A)
the lesser of—
(i)
80 percent of the amounts expended by the State during the fiscal year in which the quarter occurs to carry out programs in accordance with the State application approved under section 477(b) for the period in which the quarter occurs (including any amendment that meets the requirements of section 477(b)(5)); or
(ii)
the amount allotted to the State under section 477(c)(1) for the fiscal year in which the quarter occurs, reduced by the total of the amounts payable to the State under this paragraph for all prior quarters in the fiscal year; exceeds
(B)
the total amount of any penalties assessed against the State under section 477(e) during the fiscal year in which the quarter occurs; plus
(5)
an amount equal to the percentage by which the expenditures referred to in paragraph (2) of this subsection are reimbursed of the total amount expended during such quarter as kinship guardianship assistance payments under section 473(d) pursuant to kinship guardianship assistance agreements; plus
(6)
subject to section 471(e)—
(A)
for each quarter—
(i)
subject to clause (ii)—
(I)
beginning after September 30, 2019, and before October 1, 2026, an amount equal to 50 percent of the total amount expended during the quarter for the provision of services or programs specified in subparagraph (A) or (B) of section 471(e)(1) that are provided in accordance with promising, supported, or well-supported practices that meet the applicable criteria specified for the practices in section 471(e)(4)(C); and
(II)
beginning after September 30, 2026, an amount equal to the Federal medical assistance percentage (which shall be as defined in section 1905(b), in the case of a State other than the District of Columbia, or 70 percent, in the case of the District of Columbia) of the total amount expended during the quarter for the provision of services or programs specified in subparagraph (A) or (B) of section 471(e)(1) that are provided in accordance with promising, supported, or well-supported practices that meet the applicable criteria specified for the practices in section 471(e)(4)(C) (or, with respect to the payments made during the quarter under a cooperative agreement or contract entered into by the State and an Indian tribe, tribal organization, or tribal consortium for the administration or payment of funds under this part, an amount equal to the Federal medical assistance percentage that would apply under section 479B(d) (in this paragraph referred to as the “tribal FMAP”) if the Indian tribe, tribal organization, or tribal consortium made the payments under a program operated under that section, unless the tribal FMAP is less than the Federal medical assistance percentage that applies to the State); except that
(ii)
not less than 50 percent of the total amount expended by a State under clause (i) for a fiscal year shall be for the provision of services or programs specified in subparagraph (A) or (B) of section 471(e)(1) that are provided in accordance with well-supported practices; plus
(B)
for each quarter specified in subparagraph (A), an amount equal to the sum of the following proportions of the total amount expended during the quarter—
(i)
50 percent of so much of the expenditures as are found necessary by the Secretary for the proper and efficient administration of the State plan for the provision of services or programs specified in section 471(e)(1), including expenditures for activities approved by the Secretary that promote the development of necessary processes and procedures to establish and implement the provision of the services and programs for individuals who are eligible for the services and programs and expenditures attributable to data collection and reporting; and
(ii)
50 percent of so much of the expenditures with respect to the provision of services and programs specified in section 471(e)(1) as are for training of personnel employed or preparing for employment by the State agency or by the local agency administering the plan in the political subdivision and of the members of the staff of State-licensed or State-approved child welfare agencies providing services to children described in section 471(e)(2) and their parents or kin caregivers, including on how to determine who are individuals eligible for the services or programs, how to identify and provide appropriate services and programs, and how to oversee and evaluate the ongoing appropriateness of the services and programs; plus
(7)
an amount equal to 50 percent of the amounts expended by the State during the quarter as the Secretary determines are for kinship navigator programs that meet the requirements described in section 427(a)(1)51 and that the Secretary determines are operated in accordance with promising, supported, or well-supported practices that meet the applicable criteria specified for the practices in section 471(e)(4)(C), without regard to whether the expenditures are incurred on behalf of children who are, or are potentially, eligible for foster care maintenance payments under this part.
^{51}
Effective on October 1, 2025, subsection (a)(7) is amended by striking “427(a)(1)” and inserting “427(a)” by section 110(b)(3) of Public Law 118–258.
(b)
(1)
The Secretary shall, prior to the beginning of each quarter, estimate the amount to which a State will be entitled under subsections 52 (a) for such quarter, such estimates 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 subsection (a), 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 children in the State receiving assistance under this part, and (C) such other investigation as the Secretary may find necessary.
^{52}
So in law. The word “subsections” in subsection (b)(1) probably should read “subsection”.
(2)
The Secretary shall then pay to the State, in such installments as he may determine, the amounts so estimated, reduced or increased to the extent of any overpayment or underpayment which the Secretary determines was made under this section to such State for any prior quarter and with respect to which adjustment has not already been made under this subsection.
(3)
The pro rata share to which the United States is equitably entitled, as determined by the Secretary, of the net amount recovered during any quarter by the State or any political subdivision thereof with respect to foster care and adoption assistance furnished under the State plan shall be considered an overpayment to be adjusted under this subsection.
(4)
(A)
Within 60 days after receipt of a State claim for expenditures pursuant to subsection (a), the Secretary shall allow, disallow, or defer such claim.
(B)
Within 15 days after a decision to defer such a State claim, the Secretary shall notify the State of the reasons for the deferral and of the additional information necessary to determine the allowability of the claim.
(C)
Within 90 days after receiving such necessary information (in readily reviewable form), the Secretary shall—
(i)
disallow the claim, if able to complete the review and determine that the claim is not allowable, or
(ii)
in any other case, allow the claim, subject to disallowance (as necessary)—
(I)
upon completion of the review, if it is determined that the claim is not allowable; or
(II)
on the basis of findings of an audit or financial management review.
(c)

Automated Data Collection Expenditures.—
The Secretary shall treat as necessary for the proper and efficient administration of the State plan all expenditures of a State necessary in order for the State to plan, design, develop, install, and operate data collection and information retrieval systems described in subsection (a)(3)(C), without regard to whether the systems may be used with respect to foster or adoptive children other than those on behalf of whom foster care maintenance payments or adoption assistance payments may be made under this part.
(d)
(1)
If, during any quarter of a fiscal year, a State's program operated under this part is found, as a result of a review conducted under section 1123A, or otherwise, to have violated paragraph (18) or (23) of section 471(a) with respect to a person or to have failed to implement a corrective action plan within a period of time not to exceed 6 months with respect to such violation, then, notwithstanding subsection (a) of this section and any regulations promulgated under section 1123A(b)(3), the Secretary shall reduce the amount otherwise payable to the State under this part, for that fiscal year quarter and for any subsequent quarter of such fiscal year, until the State program is found, as a result of a subsequent review under section 1123A, to have implemented a corrective action plan with respect to such violation, by—
(A)
2 percent of such otherwise payable amount, in the case of the 1st such finding for the fiscal year with respect to the State;
(B)
3 percent of such otherwise payable amount, in the case of the 2nd such finding for the fiscal year with respect to the State; or
(C)
5 percent of such otherwise payable amount, in the case of the 3rd or subsequent such finding for the fiscal year with respect to the State.
In imposing the penalties described in this paragraph, the Secretary shall not reduce any fiscal year payment to a State by more than 5 percent.
(2)
Any other entity which is in a State that receives funds under this part and which violates paragraph (18) or (23) of section 471(a) during a fiscal year quarter with respect to any person shall remit to the Secretary all funds that were paid by the State to the entity during the quarter from such funds.
(3)
(A)
Any individual who is aggrieved by a violation of section 471(a)(18) by a State or other entity may bring an action seeking relief from the State or other entity in any United States district court.
(B)
An action under this paragraph may not be brought more than 2 years after the date the alleged violation occurred.
(4)
This subsection shall not be construed to affect the application of the Indian Child Welfare Act of 1978.
(e)

Discretionary Grants for Educational and Training Vouchers for Youths Aging out of Foster Care.—
From amounts appropriated pursuant to section 477(h)(2), the Secretary may make a grant to a State with a plan approved under this part, for a calendar quarter, in an amount equal to the lesser of—
(1)
80 percent of the amounts expended by the State during the quarter to carry out programs for the purposes described in section 477(a)(6); or
(2)
the amount, if any, allotted to the State under section 477(c)(3) for the fiscal year in which the quarter occurs, reduced by the total of the amounts payable to the State under this subsection for such purposes for all prior quarters in the fiscal year.
(f)
(1)
If the Secretary finds that a State has failed to submit to the Secretary data, as required by regulation, for the data collection system implemented under section 479, the Secretary shall, within 30 days after the date by which the data was due to be so submitted, notify the State of the failure and that payments to the State under this part will be reduced if the State fails to submit the data, as so required, within 6 months after the date the data was originally due to be so submitted.
(2)
If the Secretary finds that the State has failed to submit the data, as so required, by the end of the 6-month period referred to in paragraph (1) of this subsection, then, notwithstanding subsection (a) of this section and any regulations promulgated under section 1123A(b)(3), the Secretary shall reduce the amounts otherwise payable to the State under this part, for each quarter ending in the 6-month period (and each quarter ending in each subsequent consecutively occurring 6-month period until the Secretary finds that the State has submitted the data, as so required), by—
(A)
⅙ of 1 percent of the total amount expended by the State for administration of foster care activities under the State plan approved under this part in the quarter so ending, in the case of the 1st 6-month period during which the failure continues; or
(B)
¼ of 1 percent of the total amount so expended, in the case of the 2nd or any subsequent such 6-month period.
(g)
For purposes of this part, after the termination of a demonstration project relating to guardianship conducted by a State under section 1130, the expenditures of the State for the provision, to children who, as of September 30, 2008, were receiving assistance or services under the project, of the same assistance and services under the same terms and conditions that applied during the conduct of the project, are deemed to be expenditures under the State plan approved under this part.

DEFINITIONS
Sec. 475.
[42 U.S.C. 675]
As used in this part or part B of this title:
(1)
The term “case plan” means a written document which meets the requirements of section 475A and includes at least the following:
(A)
A description of the type of home or institution in which a child is to be placed, including a discussion of the safety and appropriateness of the placement and how the agency which is responsible for the child plans to carry out the voluntary placement agreement entered into or judicial determination made with respect to the child in accordance with section 472(a)(1).53
^{53}
Section 472(a) of this Act, referred to in paragraph (1)(A), was amended generally by section 7404(a) of Public Law 109–171, and, as so amended, provisions relating to a voluntary placement agreement or judicial determination made with respect to a child, which formerly appeared in subection (a)(1), are contained in subsection (a)(2)(A).
(B)
A plan for assuring that the child receives safe and proper care and that services are provided to the parents, child, and foster parents in order to improve the conditions in the parents' home, facilitate return of the child to his own safe home or the permanent placement of the child, and address the needs of the child while in foster care, including a discussion of the appropriateness of the services that have been provided to the child under the plan. With respect to a child who has attained 14 years of age, the plan developed for the child in accordance with this paragraph, and any revision or addition to the plan, shall be developed in consultation with the child and, at the option of the child, with up to 2 members of the case planning team who are chosen by the child and who are not a foster parent of, or caseworker for, the child. A State may reject an individual selected by a child to be a member of the case planning team at any time if the State has good cause to believe that the individual would not act in the best interests of the child. One individual selected by a child to be a member of the child's case planning team may be designated to be the child's advisor and, as necessary, advocate, with respect to the application of the reasonable and prudent parent standard to the child.
(C)
The health and education records of the child, including the most recent information available regarding—
(i)
the names and addresses of the child's health and educational providers;
(ii)
the child's grade level performance;
(iii)
the child's school record;
(iv)
a record of the child's immunizations;
(v)
the child's known medical problems;
(vi)
the child's medications; and
(vii)
any other relevant health and education information concerning the child determined to be appropriate by the State agency.
(D)
For a child who has attained 14 years of age or over, a written description of the programs and services which will help such child prepare for the transition from foster care to a successful adulthood.
(E)
In the case of a child with respect to whom the permanency plan is adoption or placement in another permanent home, documentation of the steps the agency is taking to find an adoptive family or other permanent living arrangement for the child, to place the child with an adoptive family, a fit and willing relative, a legal guardian, or in another planned permanent living arrangement, and to finalize the adoption or legal guardianship. At a minimum, such documentation shall include child specific recruitment efforts such as the use of State, regional, and national adoption exchanges including electronic exchange systems to facilitate orderly and timely in-State and interstate placements.
(F)
In the case of a child with respect to whom the permanency plan is placement with a relative and receipt of kinship guardianship assistance payments under section 473(d), a description of—
(i)
the steps that the agency has taken to determine that it is not appropriate for the child to be returned home or adopted;
(ii)
the reasons for any separation of siblings during placement;
(iii)
the reasons why a permanent placement with a fit and willing relative through a kinship guardianship assistance arrangement is in the child's best interests;
(iv)
the ways in which the child meets the eligibility requirements for a kinship guardianship assistance payment;
(v)
the efforts the agency has made to discuss adoption by the child's relative foster parent as a more permanent alternative to legal guardianship and, in the case of a relative foster parent who has chosen not to pursue adoption, documentation of the reasons therefor; and
(vi)
the efforts made by the State agency to discuss with the child's parent or parents the kinship guardianship assistance arrangement, or the reasons why the efforts were not made.
(G)
A plan for ensuring the educational stability of the child while in foster care, including—
(i)
assurances that each placement of the child in foster care takes into account the appropriateness of the current educational setting and the proximity to the school in which the child is enrolled at the time of placement; and
(ii)
(I)
an assurance that the State agency has coordinated with appropriate local educational agencies (as defined under section 8101 of the Elementary and Secondary Education Act of 1965) to ensure that the child remains in the school in which the child is enrolled at the time of each placement; or
(II)
if remaining in such school is not in the best interests of the child, assurances by the State agency and the local educational agencies to provide immediate and appropriate enrollment in a new school, with all of the educational records of the child provided to the school.
(2)
The term “parents” means biological or adoptive parents or legal guardians, as determined by applicable State law.
(3)
The term “adoption assistance agreement” means a written agreement, binding on the parties to the agreement, between the State agency, other relevant agencies, and the prospective adoptive parents of a minor child which at a minimum (A) specifies the nature and amount of any payments, services, and assistance to be provided under such agreement, and (B) stipulates that the agreement shall remain in effect regardless of the State of which the adoptive parents are residents at any given time. The agreement shall contain provisions for the protection (under an interstate compact approved by the Secretary or otherwise) of the interests of the child in cases where the adoptive parents and child move to another State while the agreement is effective.
(4)
(A)
The term “foster care maintenance payments” means payments to cover the cost of (and the cost of providing) food, clothing, shelter, daily supervision, school supplies, a child's personal incidentals, liability insurance with respect to a child, reasonable travel to the child's home for visitation, and reasonable travel for the child to remain in the school in which the child is enrolled at the time of placement. In the case of institutional care, such term shall include the reasonable costs of administration and operation of such institution as are necessarily required to provide the items described in the preceding sentence.
(B)
In cases where—
(i)
a child placed in a foster family home or child-care institution is the parent of a son or daughter who is in the same home or institution, and
(ii)
payments described in subparagraph (A) are being made under this part with respect to such child,
the foster care maintenance payments made with respect to such child as otherwise determined under subparagraph (A) shall also include such amounts as may be necessary to cover the cost of the items described in that subparagraph with respect to such son or daughter.
(5)
The term “case review system” means a procedure for assuring that—
(A)
each child has a case plan designed to achieve placement in a safe setting that is the least restrictive (most family like) and most appropriate setting available and in close proximity to the parents' home, consistent with the best interest and special needs of the child, which—
(i)
if the child has been placed in a foster family home or child-care institution a substantial distance from the home of the parents of the child, or in a State different from the State in which such home is located, sets forth the reasons why such placement is in the best interests of the child, and
(ii)
if the child has been placed in foster care outside the State in which the home of the parents of the child is located, requires that, periodically, but not less frequently than every 6 months, a caseworker on the staff of the State agency of the State in which the home of the parents of the child is located, of the State in which the child has been placed, or of a private agency under contract with either such State, visit such child in such home or institution and submit a report on such visit to the State 54 in which the home of the parents of the child is located,55
^{54}
So in law. The words “agency of the State” in paragraph (5)(A)(ii) probably should appear after the phrase “on such visit to the State”.
^{55}
So in law. The comma at the subparagraphs (A) and (B) probably should be a semicolon.
(B)
the status of each child is reviewed periodically but no less frequently than once every six months by either a court or by administrative review (as defined in paragraph (6)) in order to determine the safety of the child, the continuing necessity for and appropriateness of the placement, the extent of compliance with the case plan, and the extent of progress which has been made toward alleviating or mitigating the causes necessitating placement in foster care, and to project a likely date by which the child may be returned to and safely maintained in the home or placed for adoption or legal guardianship, and, for a child for whom another planned permanent living arrangement has been determined as the permanency plan, the steps the State agency is taking to ensure the child’s foster family home or child care institution is following the reasonable and prudent parent standard and to ascertain whether the child has regular, ongoing opportunities to engage in age or developmentally appropriate activities (including by consulting with the child in an age-appropriate manner about the opportunities of the child to participate in the activities);
(C)
with respect to each such child,
(i)
procedural safeguards will be applied, among other things, to assure each child in foster care under the supervision of the State of a permanency hearing to be held, in a family or juvenile court or another court (including a tribal court) of competent jurisdiction, or by an administrative body appointed or approved by the court, no later than 12 months after the date the child is considered to have entered foster care (as determined under subparagraph (F)) (and not less frequently than every 12 months thereafter during the continuation of foster care), which hearing shall determine the permanency plan for the child that includes whether, and if applicable when, the child will be returned to the parent, placed for adoption and the State will file a petition for termination of parental rights, or referred for legal guardianship, or only in the case of a child who has attained 16 years of age (in cases where the State agency has documented to the State court a compelling reason for determining, as of the date of the hearing, that it would not be in the best interests of the child to return home, be referred for termination of parental rights, or be placed for adoption, with a fit and willing relative, or with a legal guardian) placed in another planned permanent living arrangement, subject to section 475A(a), in the case of a child who will not be returned to the parent, the hearing shall consider in-State and out-of-State placement options, and, in the case of a child described in subparagraph (A)(ii), the hearing shall determine whether the out-of-State placement continues to be appropriate and in the best interests of the child, and, in the case of a child who has attained age 14, the services needed to assist the child to make the transition from foster care to a successful adulthood;
(ii)
procedural safeguards shall be applied with respect to parental rights pertaining to the removal of the child from the home of his parents, to a change in the child's placement, and to any determination affecting visitation privileges of parents;
(iii)
procedural safeguards shall be applied to assure that in any permanency hearing held with respect to the child, including any hearing regarding the transition of the child from foster care to a successful adulthood, the court or administrative body conducting the hearing consults, in an age-appropriate manner, with the child regarding the proposed permanency or transition plan for the child; and
(iv)
if a child has attained 14 years of age, the permanency plan developed for the child, and any revision or addition to the plan, shall be developed in consultation with the child and, at the option of the child, with not more than 2 members of the permanency planning team who are selected by the child and who are not a foster parent of, or caseworker for, the child, except that the State may reject an individual so selected by the child if the State has good cause to believe that the individual would not act in the best interests of the child, and 1 individual so selected by the child may be designated to be the child’s advisor and, as necessary, advocate, with respect to the application of the reasonable and prudent standard to the child;
(D)
a child's health and education record (as described in paragraph (1)(A)) is reviewed and updated, and a copy of the record is supplied to the foster parent or foster care provider with whom the child is placed, at the time of each placement of the child in foster care, and is supplied to the child at no cost at the time the child leaves foster care if the child is leaving foster care by reason of having attained the age of majority under State law;
(E)
in the case of a child who has been in foster care under the responsibility of the State for 15 of the most recent 22 months, or, if a court of competent jurisdiction has determined a child to be an abandoned infant (as defined under State law) or has made a determination that the parent has committed murder of another child of the parent, committed voluntary manslaughter of another child of the parent, aided or abetted, attempted, conspired, or solicited to commit such a murder or such a voluntary manslaughter, or committed a felony assault that has resulted in serious bodily injury to the child or to another child of the parent, the State shall file a petition to terminate the parental rights of the child's parents (or, if such a petition has been filed by another party, seek to be joined as a party to the petition), and, concurrently, to identify, recruit, process, and approve a qualified family for an adoption, unless—
(i)
at the option of the State, the child is being cared for by a relative;
(ii)
a State agency has documented in the case plan (which shall be available for court review) a compelling reason for determining that filing such a petition would not be in the best interests of the child; or
(iii)
the State has not provided to the family of the child, consistent with the time period in the State case plan, such services as the State deems necessary for the safe return of the child to the child's home, if reasonable efforts of the type described in section 471(a)(15)(B)(ii) are required to be made with respect to the child;
(F)
a child shall be considered to have entered foster care on the earlier of—
(i)
the date of the first judicial finding that the child has been subjected to child abuse or neglect; or
(ii)
the date that is 60 days after the date on which the child is removed from the home;
(G)
the foster parents (if any) of a child and any preadoptive parent or relative providing care for the child are provided with notice of, and a right to be heard in, any proceeding to be held with respect to the child, except that this subparagraph shall not be construed to require that any foster parent, preadoptive parent, or relative providing care for the child be made a party to such a proceeding solely on the basis of such notice and right to be heard;
(H)
during the 90-day period immediately prior to the date on which the child will attain 18 years of age, or such greater age as the State may elect under paragraph (8)(B)(iii), whether during that period foster care maintenance payments are being made on the child's behalf or the child is receiving benefits or services under section 477, a caseworker on the staff of the State agency, and, as appropriate, other representatives of the child provide the child with assistance and support in developing a transition plan that is personalized at the direction of the child, includes specific options on housing, health insurance, education, local opportunities for mentors and continuing support services, and work force supports and employment services, includes information about the importance of designating another individual to make health care treatment decisions on behalf of the child if the child becomes unable to participate in such decisions and the child does not have, or does not want, a relative who would otherwise be authorized under State law to make such decisions, and provides the child with the option to execute a health care power of attorney, health care proxy, or other similar document recognized under State law, and is as detailed as the child may elect; and
(I)
each child in foster care under the responsibility of the State who has attained 14 years of age receives without cost a copy of any consumer report (as defined in section 603(d) of the Fair Credit Reporting Act) pertaining to the child each year until the child is discharged from care, receives assistance (including, when feasible, from any court-appointed advocate for the child) in interpreting and resolving any inaccuracies in the report, and, if the child is leaving foster care by reason of having attained 18 years of age or such greater age as the State has elected under paragraph (8), unless the child has been in foster care for less than 6 months, is not discharged from care without being provided with (if the child is eligible to receive such document) an official or certified copy of the United States birth certificate of the child, a social security card issued by the Commissioner of Social Security, health insurance information, a copy of the child’s medical records, and a driver's license or identification card issued by a State in accordance with the requirements of section 202 of the REAL ID Act of 2005, and any official documentation necessary to prove that the child was previously in foster care.
(6)
The term “administrative review” means a review open to the participation of the parents of the child, conducted by a panel of appropriate persons at least one of whom is not responsible for the case management of, or the delivery of services to, either the child or the parents who are the subject of the review.
(7)
The term “legal guardianship” means a judicially created relationship between child and caretaker which is intended to be permanent and self-sustaining as evidenced by the transfer to the caretaker of the following parental rights with respect to the child: protection, education, care and control of the person, custody of the person, and decisionmaking. The term “legal guardian” means the caretaker in such a relationship.
(8)
(A)
Subject to subparagraph (B), the term “child” means an individual who has not attained 18 years of age.
(B)
At the option of a State, the term shall include an individual—
(i)
(I)
who is in foster care under the responsibility of the State;
(II)
with respect to whom an adoption assistance agreement is in effect under section 473 if the child had attained 16 years of age before the agreement became effective; or
(III)
with respect to whom a kinship guardianship assistance agreement is in effect under section 473(d) if the child had attained 16 years of age before the agreement became effective;
(ii)
who has attained 18 years of age;
(iii)
who has not attained 19, 20, or 21 years of age, as the State may elect; and
(iv)
who is—
(I)
completing secondary education or a program leading to an equivalent credential;
(II)
enrolled in an institution which provides post-secondary or vocational education;
(III)
participating in a program or activity designed to promote, or remove barriers to, employment;
(IV)
employed for at least 80 hours per month; or
(V)
incapable of doing any of the activities described in subclauses (I) through (IV) due to a medical condition, which incapability is supported by regularly updated information in the case plan of the child.
(9)
The term “sex trafficking victim” means a victim of—
(A)
sex trafficking (as defined in section 103(10) of the Trafficking Victims Protection Act of 2000); or
(B)
a severe form of trafficking in persons described in section 103(9)(A) of such Act.
(10)
(A)
The term “reasonable and prudent parent standard” means the standard characterized by careful and sensible parental decisions that maintain the health, safety, and best interests of a child while at the same time encouraging the emotional and developmental growth of the child, that a caregiver shall use when determining whether to allow a child in foster care under the responsibility of the State to participate in extracurricular, enrichment, cultural, and social activities.
(B)
For purposes of subparagraph (A), the term “caregiver” means a foster parent with whom a child in foster care has been placed or a designated official for a child care institution in which a child in foster care has been placed.
(11)
(A)
The term “age or developmentally-appropriate” means—
(i)
activities or items that are generally accepted as suitable for children of the same chronological age or level of maturity or that are determined to be developmentally-appropriate for a child, based on the development of cognitive, emotional, physical, and behavioral capacities that are typical for an age or age group; and
(ii)
in the case of a specific child, activities or items that are suitable for the child based on the developmental stages attained by the child with respect to the cognitive, emotional, physical, and behavioral capacities of the child.
(B)
In the event that any age-related activities have implications relative to the academic curriculum of a child, nothing in this part or part B shall be construed to authorize an officer or employee of the Federal Government to mandate, direct, or control a State or local educational agency, or the specific instructional content, academic achievement standards and assessments, curriculum, or program of instruction of a school.
(12)
The term “sibling” means an individual who satisfies at least one of the following conditions with respect to a child:
(A)
The individual is considered by State law to be a sibling of the child.
(B)
The individual would have been considered a sibling of the child under State law but for a termination or other disruption of parental rights, such as the death of a parent.
(13)
The term “child who is a candidate for foster care” means, a child who is identified in a prevention plan under section 471(e)(4)(A) as being at imminent risk of entering foster care (without regard to whether the child would be eligible for foster care maintenance payments under section 472 or is or would be eligible for adoption assistance or kinship guardianship assistance payments under section 473) but who can remain safely in the child's home or in a kinship placement as long as services or programs specified in section 471(e)(1) that are necessary to prevent the entry of the child into foster care are provided. The term includes a child whose adoption or guardianship arrangement is at risk of a disruption or dissolution that would result in a foster care placement.
SEC. 475A.
[42 U.S.C. 675a]

ADDITIONAL CASE PLAN AND CASE REVIEW SYSTEM REQUIREMENTS.
(a)

Requirements for Another Planned Permanent Living Arrangement.—
In the case of any child for whom another planned permanent living arrangement is the permanency plan determined for the child under section 475(5)(C), the following requirements shall apply for purposes of approving the case plan for the child and the case system review procedure for the child:
(1)

Documentation of intensive, ongoing, unsuccessful efforts for family placement.—
At each permanency hearing held with respect to the child, the State agency documents the intensive, ongoing, and, as of the date of the hearing, unsuccessful efforts made by the State agency to return the child home or secure a placement for the child with a fit and willing relative (including adult siblings), a legal guardian, or an adoptive parent, including through efforts that utilize search technology (including social media) to find biological family members for the children.
(2)

Redetermination of appropriateness of placement at each permanency hearing.—
The State agency shall implement procedures to ensure that, at each permanency hearing held with respect to the child, the court or administrative body appointed or approved by the court conducting the hearing on the permanency plan for the child does the following:
(A)
Ask the child about the desired permanency outcome for the child.
(B)
Make a judicial determination explaining why, as of the date of the hearing, another planned permanent living arrangement is the best permanency plan for the child and provide compelling reasons why it continues to not be in the best interests of the child to—
(i)
return home;
(ii)
be placed for adoption;
(iii)
be placed with a legal guardian; or
(iv)
be placed with a fit and willing relative.
(3)

Demonstration of support for engaging in age or developmentally-appropriate activities and social events.—
At each permanency hearing held with respect to the child, the State agency shall document the steps the State agency is taking to ensure that—
(A)
the child's foster family home or child care institution is following the reasonable and prudent parent standard; and
(B)
the child has regular, ongoing opportunities to engage in age or developmentally appropriate activities (including by consulting with the child in an age-appropriate manner about the opportunities of the child to participate in the activities).
(b)

List of Rights.—
The case plan for any child in foster care under the responsibility of the State who has attained 14 years of age shall include—
(1)
a document that describes the rights of the child with respect to education, health, visitation, and court participation, the right to be provided with the documents specified in section 475(5)(I) in accordance with that section, and the right to stay safe and avoid exploitation; and
(2)
a signed acknowledgment by the child that the child has been provided with a copy of the document and that the rights contained in the document have been explained to the child in an age-appropriate way.
(c)

Assessment, Documentation, and Judicial Determination Requirements for Placement in a Qualified Residential Treatment Program.—
In the case of any child who is placed in a qualified residential treatment program (as defined in section 472(k)(4)), the following requirements shall apply for purposes of approving the case plan for the child and the case system review procedure for the child:
(1)
(A)
Within 30 days of the start of each placement in such a setting, a qualified individual (as defined in subparagraph (D)) shall—
(i)
assess the strengths and needs of the child using an age-appropriate, evidence-based, validated, functional assessment tool approved by the Secretary;
(ii)
determine whether the needs of the child can be met with family members or through placement in a foster family home or, if not, which setting from among the settings specified in section 472(k)(2) would provide the most effective and appropriate level of care for the child in the least restrictive environment and be consistent with the short- and long-term goals for the child, as specified in the permanency plan for the child; and
(iii)
develop a list of child-specific short- and long-term mental and behavioral health goals.
(B)
(i)
The State shall assemble a family and permanency team for the child in accordance with the requirements of clauses (ii) and (iii). The qualified individual conducting the assessment required under subparagraph (A) shall work in conjunction with the family of, and permanency team for, the child while conducting and making the assessment.
(ii)
The family and permanency team shall consist of all appropriate biological family members, relative, and fictive kin of the child, as well as, as appropriate, professionals who are a resource to the family of the child, such as teachers, medical or mental health providers who have treated the child, or clergy. In the case of a child who has attained age 14, the family and permanency team shall include the members of the permanency planning team for the child that are selected by the child in accordance with section 475(5)(C)(iv).
(iii)
The State shall document in the child's case plan—
(I)
the reasonable and good faith effort of the State to identify and include all the individuals described in clause (ii) on the child's family and permanency team;
(II)
all contact information for members of the family and permanency team, as well as contact information for other family members and fictive kin who are not part of the family and permanency team;
(III)
evidence that meetings of the family and permanency team, including meetings relating to the assessment required under subparagraph (A), are held at a time and place convenient for family;
(IV)
if reunification is the goal, evidence demonstrating that the parent from whom the child was removed provided input on the members of the family and permanency team;
(V)
evidence that the assessment required under subparagraph (A) is determined in conjunction with the family and permanency team;
(VI)
the placement preferences of the family and permanency team relative to the assessment that recognizes children should be placed with their siblings unless there is a finding by the court that such placement is contrary to their best interest; and
(VII)
if the placement preferences of the family and permanency team and child are not the placement setting recommended by the qualified individual conducting the assessment under subparagraph (A), the reasons why the preferences of the team and of the child were not recommended.
(C)
In the case of a child who the qualified individual conducting the assessment under subparagraph (A) determines should not be placed in a foster family home, the qualified individual shall specify in writing the reasons why the needs of the child cannot be met by the family of the child or in a foster family home. A shortage or lack of foster family homes shall not be an acceptable reason for determining that the needs of the child cannot be met in a foster family home. The qualified individual also shall specify in writing why the recommended placement in a qualified residential treatment program is the setting that will provide the child with the most effective and appropriate level of care in the least restrictive environment and how that placement is consistent with the short- and long-term goals for the child, as specified in the permanency plan for the child.
(D)
(i)
Subject to clause (ii), in this subsection, the term “qualified individual” means a trained professional or licensed clinician who is not an employee of the State agency and who is not connected to, or affiliated with, any placement setting in which children are placed by the State.
(ii)
The Secretary may approve a request of a State to waive any requirement in clause (i) upon a submission by the State, in accordance with criteria established by the Secretary, that certifies that the trained professionals or licensed clinicians with responsibility for performing the assessments described in subparagraph (A) shall maintain objectivity with respect to determining the most effective and appropriate placement for a child.
(2)
Within 60 days of the start of each placement in a qualified residential treatment program, a family or juvenile court or another court (including a tribal court) of competent jurisdiction, or an administrative body appointed or approved by the court, independently, shall—
(A)
consider the assessment, determination, and documentation made by the qualified individual conducting the assessment under paragraph (1);
(B)
determine whether the needs of the child can be met through placement in a foster family home or, if not, whether placement of the child in a qualified residential treatment program provides the most effective and appropriate level of care for the child in the least restrictive environment and whether that placement is consistent with the short- and long-term goals for the child, as specified in the permanency plan for the child; and
(C)
approve or disapprove the placement.
(3)
The written documentation made under paragraph (1)(C) and documentation of the determination and approval or disapproval of the placement in a qualified residential treatment program by a court or administrative body under paragraph (2) shall be included in and made part of the case plan for the child.
(4)
As long as a child remains placed in a qualified residential treatment program, the State agency shall submit evidence at each status review and each permanency hearing held with respect to the child—
(A)
demonstrating that ongoing assessment of the strengths and needs of the child continues to support the determination that the needs of the child cannot be met through placement in a foster family home, that the placement in a qualified residential treatment program provides the most effective and appropriate level of care for the child in the least restrictive environment, and that the placement is consistent with the short- and long-term goals for the child, as specified in the permanency plan for the child;
(B)
documenting the specific treatment or service needs that will be met for the child in the placement and the length of time the child is expected to need the treatment or services; and
(C)
documenting the efforts made by the State agency to prepare the child to return home or to be placed with a fit and willing relative, a legal guardian, or an adoptive parent, or in a foster family home.
(5)
In the case of any child who is placed in a qualified residential treatment program for more than 12 consecutive months or 18 nonconsecutive months (or, in the case of a child who has not attained age 13, for more than 6 consecutive or nonconsecutive months), the State agency shall submit to the Secretary—
(A)
the most recent versions of the evidence and documentation specified in paragraph (4); and
(B)
the signed approval of the head of the State agency for the continued placement of the child in that setting.

TECHNICAL ASSISTANCE; DATA COLLECTION AND EVALUATION
Sec. 476.
[42 U.S.C. 676]
(a)
The Secretary may provide technical assistance to the States to assist them to develop the programs authorized under this part and shall periodically (1) evaluate the programs authorized under this part and part B of this title and (2) collect and publish data pertaining to the incidence and characteristics of foster care and adoptions in this country.
(b)
Each State shall submit statistical reports as the Secretary may require with respect to children for whom payments are made under this part containing information with respect to such children including legal status, demographic characteristics, location, and length of any stay in foster care.
(c)

Technical Assistance and Implementation Services for Tribal Programs.—
(1)

Authority.—
The Secretary shall provide technical assistance and implementation services that are dedicated to improving services and permanency outcomes for Indian children and their families through the provision of assistance described in paragraph (2).
(2)

Assistance provided.—
(A)

In general.—
The technical assistance and implementation services shall be to—
(i)
provide information, advice, educational materials, and technical assistance to Indian tribes and tribal organizations with respect to the types of services, administrative functions, data collection, program management, and reporting that are required under State plans under part B and this part;
(ii)
assist and provide technical assistance to—
(I)
Indian tribes, tribal organizations, and tribal consortia seeking to operate a program under part B or under this part through direct application to the Secretary under section 479B; and
(II)
Indian tribes, tribal organizations, tribal consortia, and States seeking to develop cooperative agreements to provide for payments under this part or satisfy the requirements of section 422(b)(9), 471(a)(32), or 477(b)(3)(G); and
(iii)
subject to subparagraph (B), make one-time grants, to tribes, tribal organizations, or tribal consortia that are seeking to develop, and intend, not later than 24 months after receiving such a grant to submit to the Secretary a plan under section 471 to implement a program under this part as authorized by section 479B, that shall—
(I)
not exceed $300,000; and
(II)
be used for the cost of developing a plan under section 471 to carry out a program under section 479B, including costs related to development of necessary data collection systems, a cost allocation plan, agency and tribal court procedures necessary to meet the case review system requirements under section 475(5), or any other costs attributable to meeting any other requirement necessary for approval of such a plan under this part.
(B)

Grant condition.—
(i)

In general.—
As a condition of being paid a grant under subparagraph (A)(iii), a tribe, tribal organization, or tribal consortium shall agree to repay the total amount of the grant awarded if the tribe, tribal organization, or tribal consortium fails to submit to the Secretary a plan under section 471 to carry out a program under section 479B by the end of the 24-month period described in that subparagraph.
(ii)

Exception.—
The Secretary shall waive the requirement to repay a grant imposed by clause (i) if the Secretary determines that a tribe's, tribal organization's, or tribal consortium's failure to submit a plan within such period was the result of circumstances beyond the control of the tribe, tribal organization, or tribal consortium.
(C)

Implementation authority.—
The Secretary may provide the technical assistance and implementation services described in subparagraph (A) either directly or through a grant or contract with public or private organizations knowledgeable and experienced in the field of Indian tribal affairs and child welfare.
(3)

Appropriation.—
There is appropriated to the Secretary, out of any money in the Treasury of the United States not otherwise appropriated, $3,000,000 for fiscal year 2009 and each fiscal year thereafter to carry out this subsection.
(d)

Technical Assistance and Best Practices, Clearinghouse, Data Collection, and Evaluations Relating to Prevention Services and Programs.—
(1)

Technical assistance and best practices.—
The Secretary shall provide to States and, as applicable, to Indian tribes, tribal organizations, and tribal consortia, technical assistance regarding the provision of services and programs described in section 471(e)(1) and shall disseminate best practices with respect to the provision of the services and programs, including how to plan and implement a well-designed and rigorous evaluation of a promising, supported, or well-supported practice.
(2)

Clearinghouse of promising, supported, and well-supported practices.—
The Secretary shall, directly or through grants, contracts, or interagency agreements, evaluate research on the practices specified in clauses (iii), (iv), and (v), respectively, of section 471(e)(4)(C), and programs that meet the requirements described in section 427(a)(1), including culturally specific, or location- or population-based adaptations of the practices, to identify and establish a public clearinghouse of the practices that satisfy each category described by such clauses. In addition, the clearinghouse shall include information on the specific outcomes associated with each practice, including whether the practice has been shown to prevent child abuse and neglect and reduce the likelihood of foster care placement by supporting birth families and kinship families and improving targeted supports for pregnant and parenting youth and their children.
(3)

Data collection and evaluations.—
The Secretary, directly or through grants, contracts, or interagency agreements, may collect data and conduct evaluations with respect to the provision of services and programs described in section 471(e)(1) for purposes of assessing the extent to which the provision of the services and programs—
(A)
reduces the likelihood of foster care placement;
(B)
increases use of kinship care arrangements; or
(C)
improves child well-being.
(4)

Reports to congress.—
(A)

In general.—
The Secretary shall submit to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives periodic reports based on the provision of services and programs described in section 471(e)(1) and the activities carried out under this subsection.
(B)

Public availability.—
The Secretary shall make the reports to Congress submitted under this paragraph publicly available.
(5)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to the Secretary $1,000,000 for fiscal year 2018 and each fiscal year thereafter to carry out this subsection.
(e)

Evaluation of State Procedures and Protocols to Prevent Inappropriate Diagnoses of Mental Illness or Other Conditions.—
The Secretary shall conduct an evaluation of the procedures and protocols established by States in accordance with the requirements of section 422(b)(15)(A)(vii). The evaluation shall analyze the extent to which States comply with and enforce the procedures and protocols and the effectiveness of various State procedures and protocols and shall identify best practices. Not later than January 1, 2020, the Secretary shall submit a report on the results of the evaluation to Congress.
SEC. 477.
[42 U.S.C. 677]

JOHN H. CHAFEE FOSTER CARE PROGRAM FOR SUCCESSFUL TRANSITION TO ADULTHOOD.
(a)

Purpose.—
The purpose of this section is to provide States with flexible funding that will enable programs to be designed and conducted—
(1)
to support all youth who have experienced foster care at age 14 or older in their transition to adulthood through transitional services such as assistance in obtaining a high school diploma and post-secondary education, career exploration, vocational training, job placement and retention, training and opportunities to practice daily living skills (such as financial literacy training and driving instruction), substance abuse prevention, and preventive health activities (including smoking avoidance, nutrition education, and pregnancy prevention);
(2)
to help children who have experienced foster care at age 14 or older achieve meaningful, permanent connections with a caring adult;
(3)
to help children who have experienced foster care at age 14 or older engage in age or developmentally appropriate activities, positive youth development, and experiential learning that reflects what their peers in intact families experience;
(4)
to provide financial, housing, counseling, employment, education, and other appropriate support and services to former foster care recipients between 18 and 21 years of age (or 23 years of age, in the case of a State with a certification under subsection (b)(3)(A)(ii) to provide assistance and services to youths who have aged out of foster care and have not attained such age, in accordance with such subsection) to complement their own efforts to achieve self-sufficiency and to assure that program participants recognize and accept their personal responsibility for preparing for and then making the transition from adolescence to adulthood;
(5)
to make available vouchers for education and training, including postsecondary training and education, to youths who have aged out of foster care;
(6)
to provide the services referred to in this subsection to children who, after attaining 16 years of age, have left foster care for kinship guardianship or adoption; and
(7)
to ensure children who are likely to remain in foster care until 18 years of age have regular, ongoing opportunities to engage in age or developmentally-appropriate activities as defined in section 475(11).
(b)

Applications.—
(1)

In general.—
A State may apply for funds from its allotment under subsection (c) for a period of five consecutive fiscal years by submitting to the Secretary, in writing, a plan that meets the requirements of paragraph (2) and the certifications required by paragraph (3) with respect to the plan.
(2)

State plan.—
A plan meets the requirements of this paragraph if the plan specifies which State agency or agencies will administer, supervise, or oversee the programs carried out under the plan, and describes how the State intends to do the following:
(A)
Design and deliver programs to achieve the purposes of this section.
(B)
Ensure that all political subdivisions in the State are served by the program, though not necessarily in a uniform manner.
(C)
Ensure that the programs serve children of various ages and at various stages of achieving independence.
(D)
Involve the public and private sectors in helping youth in foster care achieve independence.
(E)
Use objective criteria for determining eligibility for benefits and services under the programs, and for ensuring fair and equitable treatment of benefit recipients.
(F)
Cooperate in national evaluations of the effects of the programs in achieving the purposes of this section.
(3)

Certifications.—
The certifications required by this paragraph with respect to a plan are the following:
(A)
(i)
A certification by the chief executive officer of the State that the State will provide assistance and services to youths who have aged out of foster care and have not attained 21 years of age.
(ii)
If the State has elected under section 475(8)(B) to extend eligibility for foster care to all children who have not attained 21 years of age, or if the Secretary determines that the State agency responsible for administering the State plans under this part and part B uses State funds or any other funds not provided under this part to provide services and assistance for youths who have aged out of foster care that are comparable to the services and assistance the youths would receive if the State had made such an election, the certification required under clause (i) may provide that the State will provide assistance and services to youths who have aged out of foster care and have not attained 23 years of age.
(B)
A certification by the chief executive officer of the State that not more than 30 percent of the amounts paid to the State from its allotment under subsection (c) for a fiscal year will be expended for room or board for youths who have aged out of foster care and have not attained 21 years of age (or 23 years of age, in the case of a State with a certification under subparagraph (A)(i) to provide assistance and services to youths who have aged out of foster care and have not attained such age, in accordance with subparagraph (A)(ii)).
(C)
A certification by the chief executive officer of the State that none of the amounts paid to the State from its allotment under subsection (c) will be expended for room or board for any child who has not attained 18 years of age.
(D)
A certification by the chief executive officer of the State that the State will use training funds provided under the program of Federal payments for foster care and adoption assistance to provide training including training on youth development to help foster parents, adoptive parents, workers in group homes, and case managers understand and address the issues confronting youth preparing for a successful transition to adulthood and making a permanent connection with a caring adult.
(E)
A certification by the chief executive officer of the State that the State has consulted widely with public and private organizations in developing the plan and that the State has given all interested members of the public at least 30 days to submit comments on the plan.
(F)
A certification by the chief executive officer of the State that the State will make every effort to coordinate the State programs receiving funds provided from an allotment made to the State under subsection (c) with other Federal and State programs for youth (especially transitional living youth projects funded under part B of title III of the Juvenile Justice and Delinquency Prevention Act of 1974), abstinence education programs, local housing programs, programs for disabled youth (especially sheltered workshops), and school-to-work programs offered by high schools or local workforce agencies.
(G)
A certification by the chief executive officer of the State that each Indian tribe in the State has been consulted about the programs to be carried out under the plan; that there have been efforts to coordinate the programs with such tribes; that benefits and services under the programs will be made available to Indian children in the State on the same basis as to other children in the State; and that the State will negotiate in good faith with any Indian tribe, tribal organization, or tribal consortium in the State that does not receive an allotment under subsection (j)(4) for a fiscal year and that requests to develop an agreement with the State to administer, supervise, or oversee the programs to be carried out under the plan with respect to the Indian children who are eligible for such programs and who are under the authority of the tribe, organization, or consortium and to receive from the State an appropriate portion of the State allotment under subsection (c) for the cost of such administration, supervision, or oversight.
(H)
A certification by the chief executive officer of the State that the State will ensure that youth participating in the program under this section participate directly in designing their own program activities that prepare them for independent living and that the youth accept personal responsibility for living up to their part of the program.
(I)
A certification by the chief executive officer of the State that the State has established and will enforce standards and procedures to prevent fraud and abuse in the programs carried out under the plan.
(J)
A certification by the chief executive officer of the State that the State educational and training voucher program under this section is in compliance with the conditions specified in subsection (i), including a statement describing methods the State will use—
(i)
to ensure that the total amount of educational assistance to a youth under this section and under other Federal and Federally supported programs does not exceed the limitation specified in subsection (i)(5); and
(ii)
to avoid duplication of benefits under this and any other Federal or Federally assisted benefit program.
(K)
A certification by the chief executive officer of the State that the State will ensure that a youth participating in the program under this section are provided with education about the importance of designating another individual to make health care treatment decisions on behalf of the youth if the youth becomes unable to participate in such decisions and the youth does not have, or does not want, a relative who would otherwise be authorized under State law to make such decisions, whether a health care power of attorney, health care proxy, or other similar document is recognized under State law, and how to execute such a document if the youth wants to do so.
(4)

Approval.—
The Secretary shall approve an application submitted by a State pursuant to paragraph (1) for a period if—
(A)
the application is submitted on or before June 30 of the calendar year in which such period begins; and
(B)
the Secretary finds that the application contains the material required by paragraph (1).
(5)

Authority to implement certain amendments; notification.—
A State with an application approved under paragraph (4) may implement any amendment to the plan contained in the application if the application, incorporating the amendment, would be approvable under paragraph (4). Within 30 days after a State implements any such amendment, the State shall notify the Secretary of the amendment.
(6)

Availability.—
The State shall make available to the public any application submitted by the State pursuant to paragraph (1), and a brief summary of the plan contained in the application.
(c)

Allotments to States.—
(1)

General program allotment.—
From the amount specified in subsection (h)(1) that remains after applying subsection (g)(2) for a fiscal year, the Secretary shall allot to each State with an application approved under subsection (b) for the fiscal year the amount which bears the ratio to such remaining amount equal to the State foster care ratio, as adjusted in accordance with paragraph (2).
(2)

Hold harmless provision.—
(A)

In general.—
The Secretary shall allot to each State whose allotment for a fiscal year under paragraph (1) is less than the greater of $500,000 or the amount payable to the State under this section for fiscal year 1998, an additional amount equal to the difference between such allotment and such greater amount.
(B)

Ratable reduction of certain allotments.—
In the case of a State not described in subparagraph (A) of this paragraph for a fiscal year, the Secretary shall reduce the amount allotted to the State for the fiscal year under paragraph (1) by the amount that bears the same ratio to the sum of the differences determined under subparagraph (A) of this paragraph for the fiscal year as the excess of the amount so allotted over the greater of $500,000 or the amount payable to the State under this section for fiscal year 1998 bears to the sum of such excess amounts determined for all such States.
(3)

Voucher program allotment.—
From the amount, if any, appropriated pursuant to subsection (h)(2) for a fiscal year, the Secretary may allot to each State with an application approved under subsection (b) for the fiscal year an amount equal to the State foster care ratio multiplied by the amount so specified.
(4)

State foster care ratio.—
In this subsection, the term “State foster care ratio” means the ratio of the number of children in foster care under a program of the State in the most recent fiscal year for which the information is available to the total number of children in foster care in all States for the most recent fiscal year.
(d)

Use of Funds.—
(1)

In general.—
A State to which an amount is paid from its allotment under subsection (c) may use the amount in any manner that is reasonably calculated to accomplish the purposes of this section.
(2)

No supplantation of other funds available for same general purposes.—
The amounts paid to a State from its allotment under subsection (c) shall be used to supplement and not supplant any other funds which are available for the same general purposes in the State.
(3)

Two-year availability of funds.—
Payments made to a State under this section for a fiscal year shall be expended by the State in the fiscal year or in the succeeding fiscal year.
(4)

Reallocation of unused funds.—
If a State does not apply for funds under this section for a fiscal year within such time as may be provided by the Secretary or does not expend allocated funds within the period at the end of the time sentence specified under section 477(d)(3), the funds to which the State would be entitled for the fiscal year shall be reallocated to 1 or more other States on the basis of their relative need for additional payments under this section, as determined by the Secretary.
(5)

Redistribution of unexpended amounts.—
(A)

Availability of amounts.—
To the extent that amounts paid to States under this section in a fiscal year remain unexpended by the States at the end of the succeeding fiscal year, the Secretary may make the amounts available for redistribution in the second succeeding fiscal year among the States that apply for additional funds under this section for that second succeeding fiscal year.
(B)

Redistribution.—
(i)

In general.—
The Secretary shall redistribute the amounts made available under subparagraph (A) for a fiscal year among eligible applicant States. In this subparagraph, the term “eligible applicant State” means a State that has applied for additional funds for the fiscal year under subparagraph (A) if the Secretary determines that the State will use the funds for the purpose for which originally allotted under this section.
(ii)

Amount to be redistributed.—
The amount to be redistributed to each eligible applicant State shall be the amount so made available multiplied by the State foster care ratio, (as defined in subsection (c)(4), except that, in such subsection, “all eligible applicant States (as defined in subsection (d)(5)(B)(i))” shall be substituted for “all States”).
(iii)

Treatment of redistributed amount.—
Any amount made available to a State under this paragraph shall be regarded as part of the allotment of the State under this section for the fiscal year in which the redistribution is made.
(C)

Tribes.—
For purposes of this paragraph, the term “State” includes an Indian tribe, tribal organization, or tribal consortium that receives an allotment under this section.
(e)

Penalties.—
(1)

Use of grant in violation of this part.—
If the Secretary is made aware, by an audit conducted under chapter 75 of title 31, United States Code, or by any other means, that a program receiving funds from an allotment made to a State under subsection (c) has been operated in a manner that is inconsistent with, or not disclosed in the State application approved under subsection (b), the Secretary shall assess a penalty against the State in an amount equal to not less than 1 percent and not more than 5 percent of the amount of the allotment.
(2)

Failure to comply with data reporting requirement.—
The Secretary shall assess a penalty against a State that fails during a fiscal year to comply with an information collection plan implemented under subsection (f) in an amount equal to not less than 1 percent and not more than 5 percent of the amount allotted to the State for the fiscal year.
(3)

Penalties based on degree of noncompliance.—
The Secretary shall assess penalties under this subsection based on the degree of noncompliance.
(f)

Data Collection and Performance Measurement.—
(1)

In general.—
The Secretary, in consultation with State and local public officials responsible for administering independent living and other child welfare programs, child welfare advocates, Members of Congress, youth service providers, and researchers, shall—
(A)
develop outcome measures (including measures of educational attainment, high school diploma, employment, avoidance of dependency, homelessness, nonmarital childbirth, incarceration, and high-risk behaviors) that can be used to assess the performance of States in operating independent living programs;
(B)
identify data elements needed to track—
(i)
the number and characteristics of children receiving services under this section;
(ii)
the type and quantity of services being provided; and
(iii)
State performance on the outcome measures; and
(C)
develop and implement a plan to collect the needed information beginning with the second fiscal year beginning after the date of the enactment of this section.
(2)

Report to congress.—
Not later than October 1, 2019, the Secretary shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the National Youth in Transition Database and any other databases in which States report outcome measures relating to children in foster care and children who have aged out of foster care or left foster care for kinship guardianship or adoption. The report shall include the following:
(A)
A description of the reasons for entry into foster care and of the foster care experiences, such as length of stay, number of placement settings, case goal, and discharge reason of 17-year-olds who are surveyed by the National Youth in Transition Database and an analysis of the comparison of that description with the reasons for entry and foster care experiences of children of other ages who exit from foster care before attaining age 17.
(B)
A description of the characteristics of the individuals who report poor outcomes at ages 19 and 21 to the National Youth in Transition Database.
(C)
Benchmarks for determining what constitutes a poor outcome for youth who remain in or have exited from foster care and plans the executive branch will take to incorporate these benchmarks in efforts to evaluate child welfare agency performance in providing services to children transitioning from foster care.
(D)
An analysis of the association between types of placement, number of overall placements, time spent in foster care, and other factors, and outcomes at ages 19 and 21.
(E)
An analysis of the differences in outcomes for children in and formerly in foster care at age 19 and 21 among States.
(g)

Evaluations.—
(1)

In general.—
The Secretary shall conduct evaluations of such State programs funded under this section as the Secretary deems to be innovative or of potential national significance. The evaluation of any such program shall include information on the effects of the program on education, employment, and personal development. To the maximum extent practicable, the evaluations shall be based on rigorous scientific standards including random assignment to treatment and control groups. The Secretary is encouraged to work directly with State and local governments to design methods for conducting the evaluations, directly or by grant, contract, or cooperative agreement.
(2)

Funding of evaluations.—
The Secretary shall reserve 1.5 percent of the amount specified in subsection (h) for a fiscal year to carry out, during the fiscal year, evaluation, technical assistance, performance measurement, and data collection activities related to this section, directly or through grants, contracts, or cooperative agreements with appropriate entities.
(h)

Limitations on Authorization of Appropriations.—
To carry out this section and for payments to States under section 474(a)(4), there are authorized to be appropriated to the Secretary for each fiscal year—
(1)
$140,000,000 or, beginning in fiscal year 2020, $143,000,000, which shall be available for all purposes under this section; and
(2)
an additional $60,000,000, which are authorized to be available for payments to States for education and training vouchers for youths who age out of foster care, to assist the youths to develop skills necessary to lead independent and productive lives.
(i)

Educational and Training Vouchers.—
The following conditions shall apply to a State educational and training voucher program under this section:
(1)
Vouchers under the program may be available to youths otherwise eligible for services under the State program under this section who have attained 14 years of age.
(2)
For purposes of the voucher program, youths who, after attaining 16 years of age, are adopted from, or enter kinship guardianship from, foster care may be considered to be youths otherwise eligible for services under the State program under this section.
(3)
The State may allow youths participating in the voucher program to remain eligible until they attain 26 years of age, as long as they are enrolled in a postsecondary education or training program and are making satisfactory progress toward completion of that program, but in no event may a youth participate in the program for more than 5 years (whether or not consecutive).
(4)
The voucher or vouchers provided for an individual under this section—
(A)
may be available for the cost of attendance at an institution of higher education, as defined in section 102 of the Higher Education Act of 1965; and
(B)
shall not exceed the lesser of $5,000 per year or the total cost of attendance, as defined in section 472 of that Act.
(5)
The amount of a voucher under this section may be disregarded for purposes of determining the recipient's eligibility for, or the amount of, any other Federal or Federally supported assistance, except that the total amount of educational assistance to a youth under this section and under other Federal and Federally supported programs shall not exceed the total cost of attendance, as defined in section 472 of the Higher Education Act of 1965, and except that the State agency shall take appropriate steps to prevent duplication of benefits under this and other Federal or Federally supported programs.
(6)
The program is coordinated with other appropriate education and training programs.
(j)

Authority for an Indian Tribe, Tribal Organization, or Tribal Consortium to Receive an Allotment.—
(1)

In general.—
An Indian tribe, tribal organization, or tribal consortium with a plan approved under section 479B, or which is receiving funding to provide foster care under this part pursuant to a cooperative agreement or contract with a State, may apply for an allotment out of any funds authorized by paragraph (1) or (2) (or both) of subsection (h) of this section.
(2)

Application.—
A tribe, organization, or consortium desiring an allotment under paragraph (1) of this subsection shall submit an application to the Secretary to directly receive such allotment that includes a plan which—
(A)
satisfies such requirements of paragraphs (2) and (3) of subsection (b) as the Secretary determines are appropriate;
(B)
contains a description of the tribe's, organization's, or consortium's consultation process regarding the programs to be carried out under the plan with each State for which a portion of an allotment under subsection (c) would be redirected to the tribe, organization, or consortium; and
(C)
contains an explanation of the results of such consultation, particularly with respect to—
(i)
determining the eligibility for benefits and services of Indian children to be served under the programs to be carried out under the plan; and
(ii)
the process for consulting with the State in order to ensure the continuity of benefits and services for such children who will transition from receiving benefits and services under programs carried out under a State plan under subsection (b)(2) to receiving benefits and services under programs carried out under a plan under this subsection.
(3)

Payments.—
The Secretary shall pay an Indian tribe, tribal organization, or tribal consortium with an application and plan approved under this subsection from the allotment determined for the tribe, organization, or consortium under paragraph (4) of this subsection in the same manner as is provided in section 474(a)(4) (and, where requested, and if funds are appropriated, section 474(e)) with respect to a State, or in such other manner as is determined appropriate by the Secretary, except that in no case shall an Indian tribe, a tribal organization, or a tribal consortium receive a lesser proportion of such funds than a State is authorized to receive under those sections.
(4)

Allotment.—
From the amounts allotted to a State under subsection (c) of this section for a fiscal year, the Secretary shall allot to each Indian tribe, tribal organization, or tribal consortium with an application and plan approved under this subsection for that fiscal year an amount equal to the tribal foster care ratio determined under paragraph (5) of this subsection for the tribe, organization, or consortium multiplied by the allotment amount of the State within which the tribe, organization, or consortium is located. The allotment determined under this paragraph is deemed to be a part of the allotment determined under section 477(c) for the State in which the Indian tribe, tribal organization, or tribal consortium is located.
(5)

Tribal foster care ratio.—
For purposes of paragraph (4), the tribal foster care ratio means, with respect to an Indian tribe, tribal organization, or tribal consortium, the ratio of—
(A)
the number of children in foster care under the responsibility of the Indian tribe, tribal organization, or tribal consortium (either directly or under supervision of the State), in the most recent fiscal year for which the information is available; to
(B)
the sum of—
(i)
the total number of children in foster care under the responsibility of the State within which the Indian tribe, tribal organization, or tribal consortium is located; and
(ii)
the total number of children in foster care under the responsibility of all Indian tribes, tribal organizations, or tribal consortia in the State (either directly or under supervision of the State) that have a plan approved under this subsection.
SEC. 478.
[42 U.S.C. 678]

RULE OF CONSTRUCTION.
Nothing in this part shall be construed as precluding State courts from exercising their discretion to protect the health and safety of children in individual cases, including cases other than those described in section 471(a)(15)(D).

COLLECTION OF DATA RELATING TO ADOPTION AND FOSTER CARE
Sec. 479.
[42 U.S.C. 679]
(a)
(1)
Not later than 90 days after the date of the enactment of this subsection, the Secretary shall establish an Advisory Committee on Adoption and Foster Care Information (in this section referred to as the “Advisory Committee”) to study the various methods of establishing, administering, and financing a system for the collection of data with respect to adoption and foster care in the United States.
(2)
The study required by paragraph (1) shall—
(A)
identify the types of data necessary to—
(i)
assess (on a continuing basis) the incidence, characteristics, and status of adoption and foster care in the United States, and
(ii)
develop appropriate national policies with respect to adoption and foster care;
(B)
evaluate the feasibility and appropriateness of collecting data with respect to privately arranged adoptions and adoptions arranged through private agencies without assistance from public child welfare agencies;
(C)
assess the validity of various methods of collecting data with respect to adoption and foster care; and
(D)
evaluate the financial and administrative impact of implementing each such method.
(3)
Not later than October 1, 1987, the Advisory Committee shall submit to the Secretary and the Congress a report setting forth the results of the study required by paragraph (1) and evaluating and making recommendations with respect to the various methods of establishing, administering, and financing a system for the collection of data with respect to adoption and foster care in the United States.
(4)
(A)
Subject to subparagraph (B), the membership and organization of the Advisory Committee shall be determined by the Secretary.
(B)
The membership of the Advisory Committee shall include representatives of—
(i)
private, nonprofit organizations with an interest in child welfare (including organizations that provide foster care and adoption services),
(ii)
organizations representing State and local governmental agencies with responsibility for foster care and adoption services,
(iii)
organizations representing State and local governmental agencies with responsibility for the collection of health and social statistics,
(iv)
organizations representing State and local judicial bodies with jurisdiction over family law,
(v)
Federal agencies responsible for the collection of health and social statistics, and
(vi)
organizations and agencies involved with privately arranged or international adoptions.
(5)
After the date of the submission of the report required by paragraph (3), the Advisory Committee shall cease to exist.
(b)
(1)
(A)
Not later than July 1, 1988, the Secretary shall submit to the Congress a report that—
(i)
proposes a method of establishing, administering, and financing a system for the collection of data relating to adoption and foster care in the United States,
(ii)
evaluates the feasibility and appropriateness of collecting data with respect to privately arranged adoptions and adoptions arranged through private agencies without assistance from public child welfare agencies, and
(iii)
evaluates the impact of the system proposed under clause (i) on the agencies with responsibility for implementing it.
(B)
The report required by subparagraph (A) shall—
(i)
specify any changes in law that will be necessary to implement the system proposed under subparagraph (A)(i), and
(ii)
describe the type of system that will be implemented under paragraph (2) in the absence of such changes.
(2)
Not later than December 31, 1988, the Secretary shall promulgate final regulations providing for the implementation of—
(A)
the system proposed under paragraph (1)(A)(i), or
(B)
if the changes in law specified pursuant to paragraph (1)(B)(i) have not been enacted, the system described in paragraph (1)(B)(ii).
Such regulations shall provide for the full implementation of the system not later than October 1, 1991.
(c)
Any data collection system developed and implemented under this section shall—
(1)
avoid unnecessary diversion of resources from agencies responsible for adoption and foster care;
(2)
assure that any data that is collected is reliable and consistent over time and among jurisdictions through the use of uniform definitions and methodologies;
(3)
provide comprehensive national information with respect to—
(A)
the demographic characteristics of adoptive and foster children and their biological and adoptive or foster parents,
(B)
the status of the foster care population (including the number of children in foster care, length of placement, type of placement, availability for adoption, and goals for ending or continuing foster care),
(C)
the number and characteristics of—
(i)
children placed in or removed from foster care,
(ii)
children adopted or with respect to whom adoptions have been terminated, and
(iii)
children placed in foster care outside the State which has placement and care responsibility,
(D)
the extent and nature of assistance provided by Federal, State, and local adoption and foster care programs and the characteristics of the children with respect to whom such assistance is provided; and
(E)
the annual number of children in foster care who are identified as sex trafficking victims—
(i)
who were such victims before entering foster care; and
(ii)
who were such victims while in foster care; and
(4)
utilize appropriate requirements and incentives to ensure that the system functions reliably throughout the United States.
(d)
To promote improved knowledge on how best to ensure strong, permanent families for children, the Secretary shall promulgate regulations providing for the collection and analysis of information regarding children who enter into foster care under the supervision of a State after prior finalization of an adoption or legal guardianship. The regulations shall require each State with a State plan approved under this part to collect and report as part of such data collection system the number of children who enter foster care under supervision of the State after finalization of an adoption or legal guardianship and may include information concerning the length of the prior adoption or guardianship, the age of the child at the time of the prior adoption or guardianship, the age at which the child subsequently entered foster care under supervision of the State, the type of agency involved in making the prior adoptive or guardianship placement, and any other factors determined necessary to better understand factors associated with the child’s post-adoption or post-guardianship entry to foster care.
SEC. 479A.
[42 U.S.C. 679b]

ANNUAL REPORT.
(a)

In General.—
The Secretary, in consultation with Governors, State legislatures, State and local public officials responsible for administering child welfare programs, and child welfare advocates, shall—
(1)
develop a set of outcome measures (including length of stay in foster care, number of foster care placements, and number of adoptions) that can be used to assess the performance of States in operating child protection and child welfare programs pursuant to parts B and E to ensure the safety of children;
(2)
to the maximum extent possible, the outcome measures should be developed from data available from the Adoption and Foster Care Analysis and Reporting System;
(3)
develop a system for rating the performance of States with respect to the outcome measures, and provide to the States an explanation of the rating system and how scores are determined under the rating system;
(4)
prescribe such regulations as may be necessary to ensure that States provide to the Secretary the data necessary to determine State performance with respect to each outcome measure, as a condition of the State receiving funds under this part;
(5)
on May 1, 1999, and annually thereafter, prepare and submit to the Congress a report on the performance of each State on each outcome measure, which shall examine the reasons for high performance and low performance and, where possible, make recommendations as to how State performance could be improved;
(6)
include in the report submitted pursuant to paragraph (5) for fiscal year 2007 or any succeeding fiscal year, State-by-State data on—
(A)
the percentage of children in foster care under the responsibility of the State who were visited on a monthly basis by the caseworker handling the case of the child;
(B)
the total number of visits made by caseworkers on a monthly basis to children in foster care under the responsibility of the State during a fiscal year as a percentage of the total number of the visits that would occur during the fiscal year if each child were so visited once every month while in such care; and
(C)
the percentage of the visits that occurred in the residence of the child; and
(7)
include in the report submitted pursuant to paragraph (5) for fiscal year 2016 or any succeeding fiscal year, State-by-State data on—
(A)
children in foster care who have been placed in a child care institution or other setting that is not a foster family home, including—
(i)
with respect to each such placement—
(I)
the type of the placement setting, including whether the placement is shelter care, a group home and if so, the range of the child population in the home, a residential treatment facility, a hospital or institution providing medical, rehabilitative, or psychiatric care, a setting specializing in providing prenatal, post-partum, or parenting supports, or some other kind of child-care institution and if so, what kind;
(II)
the number of children in the placement setting and the age, race, ethnicity, and gender of each of the children;
(III)
for each child in the placement setting, the length of the placement of the child in the setting, whether the placement of the child in the setting is the first placement of the child and if not, the number and type of previous placements of the child, and whether the child has special needs or another diagnosed mental or physical illness or condition; and
(IV)
the extent of any specialized education, treatment, counseling, or other services provided in the setting; and
(ii)
separately, the number and ages of children in the placements who have a permanency plan of another planned permanent living arrangement; and
(B)
children in foster care who are pregnant or parenting.
(b)

Consultation on Other Issues.—
The Secretary shall consult with States and organizations with an interest in child welfare, including organizations that provide adoption and foster care services, and shall take into account requests from Members of Congress, in selecting other issues to be analyzed and reported on under this section using data available to the Secretary, including data reported by States through the Adoption and Foster Care Analysis and Reporting System and to the National Youth in Transition Database.
SEC. 479B.
[42 U.S.C. 679c]

PROGRAMS OPERATED BY INDIAN TRIBAL ORGANIZATIONS.
(a)

Definitions of Indian Tribe; Tribal Organizations.—
In this section, the terms “Indian tribe” and “tribal organization” have the meanings given those terms in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b).
(b)

Authority.—
Except as otherwise provided in this section, this part shall apply in the same manner as this part applies to a State to an Indian tribe, tribal organization, or tribal consortium that elects to operate a program under this part and has a plan approved by the Secretary under section 471 in accordance with this section.
(c)

Plan Requirements.—
(1)

In general.—
An Indian tribe, tribal organization, or tribal consortium that elects to operate a program under this part shall include with its plan submitted under section 471 the following:
(A)

Financial management.—
Evidence demonstrating that the tribe, organization, or consortium has not had any uncorrected significant or material audit exceptions under Federal grants or contracts that directly relate to the administration of social services for the 3-year period prior to the date on which the plan is submitted.
(B)

Service areas and populations.—
For purposes of complying with section 471(a)(3), a description of the service area or areas and populations to be served under the plan and an assurance that the plan shall be in effect in all service area or areas and for all populations served by the tribe, organization, or consortium.
(C)

Eligibility.—
(i)

In general.—
Subject to clause (ii) of this subparagraph, an assurance that the plan will provide—
(I)
foster care maintenance payments under section 472 only on behalf of children who satisfy the eligibility requirements of section 472(a);
(II)
adoption assistance payments under section 473 pursuant to adoption assistance agreements only on behalf of children who satisfy the eligibility requirements for such payments under that section;
(III)
at the option of the tribe, organization, or consortium, kinship guardianship assistance payments in accordance with section 473(d) only on behalf of children who meet the requirements of section 473(d)(3); and
(IV)
at the option of the tribe, organization, or consortium, services and programs specified in section 471(e)(1) to children described in section 471(e)(2) and their parents or kin caregivers, in accordance with section 471(e) and subparagraph (E).
(ii)

Satisfaction of foster care eligibility requirements.—
For purposes of determining whether a child whose placement and care are the responsibility of an Indian tribe, tribal organization, or tribal consortium with a plan approved under section 471 in accordance with this section satisfies the requirements of section 472(a), the following shall apply:
(I)

Use of affidavits, etc.—
Only with respect to the first 12 months for which such plan is in effect, the requirement in paragraph (1) of section 472(a) shall not be interpreted so as to prohibit the use of affidavits or nunc pro tunc orders as verification documents in support of the reasonable efforts and contrary to the welfare of the child judicial determinations required under that paragraph.
(II)

Afdc eligibility requirement.—
The State plan approved under section 402 (as in effect on July 16, 1996) of the State in which the child resides at the time of removal from the home shall apply to the determination of whether the child satisfies section 472(a)(3).
(D)

Option to claim in-kind expenditures from third-party sources for non-federal share of administrative and training costs during initial implementation period.—
Only for fiscal year quarters beginning after September 30, 2009, and before October 1, 2014, a list of the in-kind expenditures (which shall be fairly evaluated, and may include plants, equipment, administration, or services) and the third-party sources of such expenditures that the tribe, organization, or consortium may claim as part of the non-Federal share of administrative or training expenditures attributable to such quarters for purposes of receiving payments under section 474(a)(3). The Secretary shall permit a tribe, organization, or consortium to claim in-kind expenditures from third party sources for such purposes during such quarters subject to the following:
(i)

No effect on authority for tribes, organizations, or consortia to claim expenditures or indirect costs to the same extent as states.—
Nothing in this subparagraph shall be construed as preventing a tribe, organization, or consortium from claiming any expenditures or indirect costs for purposes of receiving payments under section 474(a) that a State with a plan approved under section 471(a) could claim for such purposes.
(ii)

Fiscal year 2010 or 2011.—
(I)

Expenditures other than for training.—
With respect to amounts expended during a fiscal year quarter beginning after September 30, 2009, and before October 1, 2011, for which the tribe, organization, or consortium is eligible for payments under subparagraph (C), (D), or (E) of section 474(a)(3), not more than 25 percent of such amounts may consist of in-kind expenditures from third-party sources specified in the list required under this subparagraph to be submitted with the plan.
(II)

Training expenditures.—
With respect to amounts expended during a fiscal year quarter beginning after September 30, 2009, and before October 1, 2011, for which the tribe, organization, or consortium is eligible for payments under subparagraph (A) or (B) of section 474(a)(3), not more than 12 percent of such amounts may consist of in-kind expenditures from third-party sources that are specified in such list and described in subclause (III).
(III)

Sources described.—
For purposes of subclause (II), the sources described in this subclause are the following:
- (aa)
A State or local government.
- (bb)
An Indian tribe, tribal organization, or tribal consortium other than the tribe, organization, or consortium submitting the plan.
- (cc)
A public institution of higher education.
- (dd)
A Tribal College or University (as defined in section 316 of the Higher Education Act of 1965 (20 U.S.C. 1059c)).
- (ee)
A private charitable organization.
(iii)

Fiscal year 2012, 2013, or 2014.—
(I)

In general.—
Except as provided in subclause (II) of this clause and clause (v) of this subparagraph, with respect to amounts expended during any fiscal year quarter beginning after September 30, 2011, and before October 1, 2014, for which the tribe, organization, or consortium is eligible for payments under any subparagraph of section 474(a)(3) of this Act, the only in-kind expenditures from third-party sources that may be claimed by the tribe, organization, or consortium for purposes of determining the non-Federal share of such expenditures (without regard to whether the expenditures are specified on the list required under this subparagraph to be submitted with the plan) are in-kind expenditures that are specified in regulations promulgated by the Secretary under section 301(e)(2) of the Fostering Connections to Success and Increasing Adoptions Act of 2008 and are from an applicable third-party source specified in such regulations, and do not exceed the applicable percentage for claiming such in-kind expenditures specified in the regulations.
(II)

Transition period for early approved tribes, organizations, or consortia.—
Subject to clause (v), if the tribe, organization, or consortium is an early approved tribe, organization, or consortium (as defined in subclause (III) of this clause), the Secretary shall not require the tribe, organization, or consortium to comply with such regulations before October 1, 2013. Until the earlier of the date such tribe, organization, or consortium comes into compliance with such regulations or October 1, 2013, the limitations on the claiming of in-kind expenditures from third-party sources under clause (ii) shall continue to apply to such tribe, organization, or consortium (without regard to fiscal limitation) for purposes of determining the non-Federal share of amounts expended by the tribe, organization, or consortium during any fiscal year quarter that begins after September 30, 2011, and before such date of compliance or October 1, 2013, whichever is earlier.
(III)

Definition of early approved tribe, organization, or consortium.—
For purposes of subclause (II) of this clause, the term “early approved tribe, organization, or consortium” means an Indian tribe, tribal organization, or tribal consortium that had a plan approved under section 471 in accordance with this section for any quarter of fiscal year 2010 or 2011.
(iv)

Fiscal year 2015 and thereafter.—
Subject to clause (v) of this subparagraph, with respect to amounts expended during any fiscal year quarter beginning after September 30, 2014, for which the tribe, organization, or consortium is eligible for payments under any subparagraph of section 474(a)(3) of this Act, in-kind expenditures from third-party sources may be claimed for purposes of determining the non-Federal share of expenditures under any subparagraph of such section 474(a)(3) only in accordance with the regulations promulgated by the Secretary under section 301(e)(2) of the Fostering Connections to Success and Increasing Adoptions Act of 2008.
(v)

Contingency rule.—
If, at the time expenditures are made for a fiscal year quarter beginning after September 30, 2011, and before October 1, 2014, for which a tribe, organization, or consortium may receive payments for under section 474(a)(3) of this Act, no regulations required to be promulgated under section 301(e)(2) of the Fostering Connections to Success and Increasing Adoptions Act of 2008 are in effect, and no legislation has been enacted specifying otherwise—
(I)
in the case of any quarter of fiscal year 2012, 2013, or 2014, the limitations on claiming in-kind expenditures from third-party sources under clause (ii) of this subparagraph shall apply (without regard to fiscal limitation) for purposes of determining the non-Federal share of such expenditures; and
(II)
in the case of any quarter of fiscal year 2015 or any fiscal year thereafter, no tribe, organization, or consortium may claim in-kind expenditures from third-party sources for purposes of determining the non-Federal share of such expenditures if a State with a plan approved under section 471(a) of this Act could not claim in-kind expenditures from third-party sources for such purposes.
(E)

Prevention services and programs for children and their parents and kin caregivers.—
(i)

In general.—
In the case of a tribe, organization, or consortium that elects to provide services and programs specified in section 471(e)(1) to children described in section 471(e)(2) and their parents or kin caregivers under the plan, the Secretary shall specify the requirements applicable to the provision of the services and programs. The requirements shall, to the greatest extent practicable, be consistent with the requirements applicable to States under section 471(e) and shall permit the provision of the services and programs in the form of services and programs that are adapted to the culture and context of the tribal communities served.
(ii)

Performance measures.—
The Secretary shall establish specific performance measures for each tribe, organization, or consortium that elects to provide services and programs specified in section 471(e)(1). The performance measures shall, to the greatest extent practicable, be consistent with the prevention services measures required for States under section 471(e)(6) but shall allow for consideration of factors unique to the provision of the services by tribes, organizations, or consortia.
(2)

Clarification of tribal authority to establish standards for tribal foster family homes and tribal child care institutions.—
For purposes of complying with section 471(a)(10), an Indian tribe, tribal organization, or tribal consortium shall establish and maintain a tribal authority or authorities which shall be responsible for establishing and maintaining tribal standards for tribal foster family homes and tribal child care institutions.
(3)

Consortium.—
The participating Indian tribes or tribal organizations of a tribal consortium may develop and submit a single plan under section 471 that meets the requirements of this section.
(4)

Inapplicability of state plan requirement to have in effect procedures providing for the use of an electronic interstate case-processing system.—
The requirement in section 471(a)(25) that a State plan provide that the State shall have in effect procedures providing for the use of an electronic interstate case-processing system shall not apply to an Indian tribe, tribal organization, or tribal consortium that elects to operate a program under this part.
(d)

Determination of Federal Medical Assistance Percentage.—
(1)

Per capita income.—
For purposes of determining the Federal medical assistance percentage applicable to an Indian tribe, a tribal organization, or a tribal consortium under paragraphs (1), (2), (5), and (6)(A) of section 474(a), the calculation of the per capita income of the Indian tribe, tribal organization, or tribal consortium shall be based upon the service population of the Indian tribe, tribal organization, or tribal consortium, except that in no case shall an Indian tribe, a tribal organization, or a tribal consortium receive less than the Federal medical assistance percentage for any State in which the tribe, organization, or consortium is located.
(2)

Consideration of other information.—
Before making a calculation under paragraph (1), the Secretary shall consider any information submitted by an Indian tribe, a tribal organization, or a tribal consortium that the Indian tribe, tribal organization, or tribal consortium considers relevant to making the calculation of the per capita income of the Indian tribe, tribal organization, or tribal consortium.
(e)

Nonapplication to Cooperative Agreements and Contracts.—
Any cooperative agreement or contract entered into between an Indian tribe, a tribal organization, or a tribal consortium and a State for the administration or payment of funds under this part that is in effect as of the date of enactment of this section shall remain in full force and effect, subject to the right of either party to the agreement or contract to revoke or modify the agreement or contract pursuant to the terms of the agreement or contract. Nothing in this section shall be construed as affecting the authority for an Indian tribe, a tribal organization, or a tribal consortium and a State to enter into a cooperative agreement or contract for the administration or payment of funds under this part.
(f)

John H. Chafee Foster Care Independence Program.—
Except as provided in section 477(j), subsection (b) of this section shall not apply with respect to the John H. Chafee Foster Care Independence Program established under section 477 (or with respect to payments made under section 474(a)(4) or grants made under section 474(e)).
(g)

Rule of Construction.—
Nothing in this section shall be construed as affecting the application of section 472(h) to a child on whose behalf payments are paid under section 472, or the application of section 473(b) to a child on whose behalf payments are made under section 473 pursuant to an adoption assistance agreement or a kinship guardianship assistance agreement, by an Indian tribe, tribal organization, or tribal consortium that elects to operate a foster care and adoption assistance program in accordance with this section.
[Part F repealed by section 108 of P.L. 104–193; 110 Stat. 2167.]
TITLE V—

MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT

TABLE OF CONTENTS OF TITLE1
^1
This table of contents does not appear in the law.
Sec. 501. Authorization of appropriations.
Sec. 502. Allotments to States and Federal set-aside
Sec. 503. Payments to States.
Sec. 504. Use of allotment funds.
Sec. 505. Application for block grant funds.
Sec. 506. Reports and audits.
Sec. 507. Criminal penalty for false statements.
Sec. 508. Nondiscrimination.
Sec. 509. Administration of title and State programs.
Sec. 510. Sexual risk avoidance education.
Sec. 511. Maternal, infant, and early childhood home visiting programs.
Sec. 511A.
Emergency assistance to families through home visiting programs.
Sec. 512. Services to individuals with a postpartum condition and their families.
Sec. 513. Personal responsibility education.

authorization of appropriations
Sec. 501.
[42 U.S.C. 701]
(a)
To improve the health of all mothers and children consistent with the applicable health status goals and national health objectives established by the Secretary under the Public Health Service Act for the year 2000, there are authorized to be appropriated $850,000,000 for fiscal year 2001 and each fiscal year thereafter—
(1)
for the purpose of enabling each State—
(A)
to provide and to assure mothers and children (in particular those with low income or with limited availability of health services) access to quality maternal and child health services;
(B)
to reduce infant mortality and the incidence of preventable diseases and handicapping conditions among children, to reduce the incidence of stillbirth, to reduce the need for inpatient and long-term care services, to increase the number of children (especially preschool children) appropriately immunized against disease and the number of low income children receiving health assessments and follow-up diagnostic and treatment services, and otherwise to promote the health of mothers and infants by providing prenatal, delivery, and postpartum care for low income, at-risk pregnant women, and to promote the health of children by providing preventive and primary care services for low income children;
(C)
to provide rehabilitation services for blind and disabled individuals under the age of 16 receiving benefits under title XVI, to the extent medical assistance for such services is not provided under title XIX; and
(D)
to provide and to promote family-centered, community-based, coordinated care (including care coordination services, as defined in subsection (b)(3)) for children with special health care needs and to facilitate the development of community-based systems of services for such children and their families;
(2)
for the purpose of enabling the Secretary (through grants, contracts, or otherwise) to provide for special projects of regional and national significance, research, and training with respect to maternal and child health and children with special health care needs (including early intervention training and services development), for genetic disease testing, counseling, and information development and dissemination programs, for grants (including funding for comprehensive hemophilia diagnostic treatment centers) relating to hemophilia without regard to age, and for the screening of newborns for sickle cell anemia, and other genetic disorders and follow-up services, and for evidence-based programs and activities and outcome research to reduce the incidence of stillbirth (including tracking and awareness of fetal movements, improvement of birth timing for pregnancies with risk factors, initiatives that encourage safe sleeping positions during pregnancy, screening and surveillance for fetal growth restriction, efforts to achieve smoking cessation during pregnancy, community-based programs that provide home visits or other types of support, and any other research or evidence-based programming to prevent stillbirths); and
(3)
subject to section 502(b) for the purpose of enabling the Secretary (through grants, contracts, or otherwise) to provide for developing and expanding the following—
(A)
maternal and infant health home visiting programs in which case management services as defined in subparagraphs (A) and (B) of subsection (b)(4), health education services, and related social support services are provided in the home to pregnant women or families with an infant up to the age one by an appropriate health professional or by a qualified nonprofessional acting under the supervision of a health care professional,
(B)
projects designed to increase the participation of obstetricians and pediatricians under the program under this title and under state plans approved under title XIX,
(C)
integrated maternal and child health service delivery systems (of the type described in section 1136 and using, once developed, the model application form developed under section 6506(a) of the Omnibus Budget Reconciliation Act of 1989),
(D)
maternal and child health centers which (i) provide prenatal, delivery, and postpartum care for pregnant women and preventive and primary care services for infants up to age one, and (ii) operate under the direction of a not-for-profit hospital,
(E)
maternal and child health projects to serve rural populations, and
(F)
outpatient and community based services programs (including day care services) for children with special health care needs whose medical services are provided primarily through inpatient institutional care.
Funds appropriated under this section may only be used in a manner consistent with the Assisted Suicide Funding Restriction Act of 1997.
(b)
For purposes of this title:
(1)
The term “consolidated health programs” means the programs administered under the provisions of—
(A)
this title (relating to maternal and child health and services for children with special health care needs),
(B)
section 1615(c) of this Act (relating to supplemental security income for disabled children),
(C)
sections 316 (relating to lead-based paint poisoning prevention programs), 1101 (relating to genetic disease programs), 1121 (relating to sudden infant death syndrome programs) and 1131 (relating to hemophilia treatment centers) of the Public Health Service Act, and
(D)
title VI of the Health Services and Centers Amendments of 1978 (Public Law 95–626; relating to adolescent pregnancy grants),
as such provisions were in effect before the date of the enactment of the Maternal and Child Health Services Block Grant Act.
(2)
The term “low income” means, with respect to an individual or family, such an individual or family with an income determined to be below the income official poverty line defined by the Office of Management and Budget and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981.
(3)
The term “care coordination services” means services to promote the effective and efficient organization and utilization of resources to assure access to necessary comprehensive services for children with special health care needs and their families.
(4)
The term “case management services” means—
(A)
with respect to pregnant women, services to assure access to quality prenatal, delivery, and postpartum care; and
(B)
with respect to infants up to age one, services to assure access to quality preventive and primary care services.
(c)
(1)
(A)
For the purpose of enabling the Secretary (through grants, contracts, or otherwise) to provide for special projects of regional and national significance for the development and support of family-to-family health information centers described in paragraph (2), there is appropriated to the Secretary, out of any money in the Treasury not otherwise appropriated—
(i)
$3,000,000 for fiscal year 2007;
(ii)
$4,000,000 for fiscal year 2008;
(iii)
$5,000,000 for each of fiscal years 2009 through 2013;
(iv)
$2,500,000 for the portion of fiscal year 2014 before April 1, 2014;
(v)
$2,500,000 for the portion of fiscal year 2014 on or after April 1, 2014;
(vi)
$5,000,000 for each of fiscal years 2015 through 2017;
(vii)
$6,000,000 for each of fiscal years 2018 through 2024;
(viii)
$6,000,000 for fiscal year 2025; and
(ix)
for the period beginning on October 1, 2025, and ending on January 30, 2026, an amount equal to the pro rata portion of the amount appropriated for fiscal year 2025.
(B)
Funds appropriated or authorized to be appropriated under subparagraph (A) shall—
(i)
be in addition to amounts appropriated under subsection (a) and retained under section 502(a)(1) for the purpose of carrying out activities described in subsection (a)(2); and
(ii)
remain available until expended.
(2)
The family-to-family health information centers described in this paragraph are centers that—
(A)
assist families of children with disabilities or special health care needs to make informed choices about health care in order to promote good treatment decisions, cost-effectiveness, and improved health outcomes for such children;
(B)
provide information regarding the health care needs of, and resources available for, such children;
(C)
identify successful health delivery models for such children;
(D)
develop with representatives of health care providers, managed care organizations, health care purchasers, and appropriate State agencies, a model for collaboration between families of such children and health professionals;
(E)
provide training and guidance regarding caring for such children;
(F)
conduct outreach activities to the families of such children, health professionals, schools, and other appropriate entities and individuals; and
(G)
are staffed—
(i)
by such families who have expertise in Federal and State public and private health care systems; and
(ii)
by health professionals.
(3)
The Secretary shall develop family-to-family health information centers described in paragraph (2) in accordance with the following:
(A)
With respect to fiscal year 2007, such centers shall be developed in not less than 25 States.
(B)
With respect to fiscal year 2008, such centers shall be developed in not less than 40 States.
(C)
With respect to fiscal year 2009 and each fiscal year thereafter, such centers shall be developed in all States, and with respect to fiscal year 2018 and each fiscal year thereafter, such centers shall also be developed in all territories and at least one such center shall be developed for Indian tribes.
(4)
The provisions of this title that are applicable to the funds made available to the Secretary under section 502(a)(1) apply in the same manner to funds made available to the Secretary under paragraph (1)(A).
(5)
For purposes of this subsection—
(A)
the term “Indian tribe” has the meaning given such term in section 4 of the Indian Health Care Improvement Act (25 U.S.C. 1603);
(B)
the term “State” means each of the 50 States and the District of Columbia; and
(C)
the term “territory” means Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Northern Mariana Islands.

allotments to states and federal set-aside
Sec. 502.
[42 U.S.C. 702]
(a)
(1)
Of the amounts appropriated under section 501(a) for a fiscal year that are not in excess of $600,000,000, the Secretary shall retain an amount equal to 15 percent for the purpose of carrying out activities described in section 501(a)(2). The authority of the Secretary to enter into any contracts under this title is effective for any fiscal year only to such extent or in such amounts as are provided in appropriations Acts.
(2)
For purposes of paragraph (1)—
(A)
amounts retained by the Secretary for training shall be used to make grants to public or nonprofit private institutions of higher learning for training personnel for health care and related services for mothers and children; and
(B)
amounts retained by the Secretary for research shall be used to make grants to, contracts with, or jointly financed cooperative agreements with, public or nonprofit institutions of higher learning and public or nonprofit private agencies and organizations engaged in research or in maternal and child health or programs for children with special health care needs for research projects relating to maternal and child health services or services for children with special health care needs which show promise of substantial contribution to the advancement thereof.
(3)
No funds may be made available by the Secretary under this subsection or subsection (b) unless an application therefor has been submitted to, and approved by, the Secretary. Such application shall be in such form, be submitted in such manner, and contain and be accompanied by such information as the Secretary may specify. No such application may be approved unless it contains assurances that the applicant will use the funds provided only for the purposes specified in the approved application and will establish such fiscal control and fund accounting procedures as may be necessary to assure proper disbursement and accounting of Federal funds paid to the applicant under this title.
(b)
(1)
(A)
Of the amounts appropriated under section 501(a) for a fiscal year in excess of $600,000,000 the Secretary shall retain an amount equal to 12¾ percent thereof for the projects described in subparagraphs (A) through (F) of section 501(a)(3).
(B)
Any amount appropriated under section 501(a) for a fiscal year in excess of $600,000,000 that remains after the Secretary has retained the applicable amount (if any) under subparagraph (A) shall be retained by the Secretary in accordance with subsection (a) and allocated to the States in accordance with subsection (c).
(2)
(A)
Of the amounts retained for the purpose of carrying out activities described in section 501(a)(3)(A), (B), (C), (D) and (E), the Secretary shall provide preference to qualified applicants which demonstrate that the activities to be carried out with such amounts shall be in areas with a high infant mortality rate (relative to the average infant mortality rate in the United States or in the State in which the area is located).
(B)
In carrying out activities described in section 501(a)(3)(D), the Secretary shall not provide for developing or expanding a maternal and child health center unless the Secretary has received satisfactory assurances that there will be applied, towards the costs of such development or expansion, non-Federal funds in an amount at least equal to the amount of funds provided under this title toward such development or expansion.
(c)
From the remaining amounts appropriated under section 501(a) for any fiscal year that are not in excess of $600,000,000, the Secretary shall allot to each State which has transmitted an application for the fiscal year under section 505(a), an amount determined as follows:
(1)
The Secretary shall determine, for each State—
(A)
(i)
the amount provided or allotted by the Secretary to the State and to entities in the State under the provisions of the consolidated health programs (as defined in section 501(b)(1)), other than for any of the projects or programs described in subsection (a), from appropriations for fiscal year 1981,
(ii)
the proportion that such amount for that State bears to the total of such amounts for all the States, and
(B)
(i)
the number of low income children in the State, and
(ii)
the proportion that such number of children for that State bears to the total of such numbers of children for all the States.
(2)
Each such State shall be allotted for each fiscal year an amount equal to the sum of—
(A)
the amount of the allotment to the State under this subsection in fiscal year 1983, and
(B)
the State's proportion (determined under paragraph (1)(B)(ii)) of the amount by which the allotment available under this subsection for all the States for that fiscal year exceeds the amount that was available under this subsection for allotment for all the States for fiscal year 1983.
(d)
(1)
To the extent that all the funds appropriated under this title for a fiscal year are not otherwise allotted to States either because all the States have not qualified for such allotments under section 505(a) for the fiscal year or because some States have indicated in their descriptions of activities under section 505(a) that they do not intend to use the full amount of such allotments, such excess shall be allotted among the remaining States in proportion to the amount otherwise allotted to such States for the fiscal year without regard to this paragraph.
(2)
To the extent that all the funds appropriated under this title for a fiscal year are not otherwise allotted to States because some State allotments are offset under section 506(b)(2), such excess shall be allotted among the remaining States in proportion to the amount otherwise allotted to such States for the fiscal year without regard to this paragraph.

payments to states
Sec. 503.
[42 U.S.C. 703]
(a)
From the sums appropriated therefor and the allotments available under section 502(c), the Secretary shall make payments as provided by section 6503(a) of title 31, United States Code to each State provided such an allotment under section 502(c), for each quarter, of an amount equal to four-sevenths of the total of the sums expended by the State during such quarter in carrying out the provisions of this title.
(b)
Any amount payable to a State under this title from allotments for a fiscal year which remains unobligated at the end of such year shall remain available to such State for obligation during the next fiscal year. No payment may be made to a State under this title from allotments for a fiscal year for expenditures made after the following fiscal year.
(c)
The Secretary, at the request of a State, may reduce the amount of payments under subsection (a) by—
(1)
the fair market value of any supplies or equipment furnished the State, and
(2)
the amount of the pay, allowances, and travel expenses of any officer or employee of the Government when detailed to the State and the amount of any other costs incurred in connection with the detail of such officer or employee,
when the furnishing of supplies or equipment or the detail of an officer or employee is for the convenience of and at the request of the State and for the purpose of conducting activities described in section 505(a) on a temporary basis. The amount by which any payment is so reduced shall be available for payment by the Secretary of the costs incurred in furnishing the supplies or equipment or in detailing the personnel, on which the reduction of the payment is based, and the amount shall be deemed to be part of the payment and shall be deemed to have been paid to the State.

use of allotment funds
Sec. 504.
[42 U.S.C. 704]
(a)
Except as otherwise provided under this section, a State may use amounts paid to it under section 503 for the provision of health services and related activities (including planning, administration, education, and evaluation and including payment of salaries and other related expenses of National Health Service Corps personnel) consistent with its application transmitted under section 505(a).
(b)
Amounts described in subsection (a) may not be used for—
(1)
inpatient services, other than inpatient services provided to children with special health care needs or to high-risk pregnant women and infants and such other inpatient services as the Secretary may approve;
(2)
cash payments to intended recipients of health services;
(3)
the purchase or improvement of land, the purchase, construction, or permanent improvement (other than minor remodeling) of any building or other facility, or the purchase of major medical equipment;
(4)
satisfying any requirement for the expenditure of non-Federal funds as a condition for the receipt of Federal funds;
(5)
providing funds for research or training to any entity other than a public or nonprofit private entity; or
(6)
payment for any item or service (other than an emergency item or service) furnished—
(A)
by an individual or entity during the period when such individual or entity is excluded under this title or title XVIII, XIX, or XX pursuant to section 1128, 1128A, 1156, or 1842(j)(2), or
(B)
at the medical direction or on the prescription of a physician during the period when the physician is excluded under this title or title XVIII, XIX, or XX pursuant to section 1128, 1128A, 1156, or 1842(j)(2) and when the person furnishing such item or service knew or had reason to know of the exclusion (after a reasonable time period after reasonable notice has been furnished to the person).
The Secretary may waive the limitation contained in paragraph (3) upon the request of a State if the Secretary finds that there are extraordinary circumstances to justify the waiver and that granting the waiver will assist in carrying out this title.
(c)
A State may use a portion of the amounts described in subsection (a) for the purpose of purchasing technical assistance from public or private entities if the State determines that such assistance is required in developing, implementing, and administering programs funded under this title.
(d)
Of the amounts paid to a State under section 503 from an allotment for a fiscal year under section 502(c), not more than 10 percent may be used for administering the funds paid under such section.

APPLICATION FOR BLOCK GRANT FUNDS
Sec. 505.
[42 U.S.C. 705]
(a)
In order to be entitled to payments for allotments under section 502 for a fiscal year, a State must prepare and transmit to the Secretary an application (in a standardized form specified by the Secretary) that—
(1)
contains a statewide needs assessment (to be conducted every 5 years) that shall identify (consistent with the health status goals and national health objectives referred to in section 501(a)) the need for—
(A)
preventive and primary care services for pregnant women, mothers, and infants up to age one;
(B)
preventive and primary care services for children; and
(C)
services for children with special health care needs (as specified in section 501(a)(1)(D));
(2)
includes for each fiscal year—
(A)
a plan for meeting the needs identified by the state-wide needs assessment under paragraph (1); and
(B)
a description of how the funds allotted to the State under section 502(c) will be used for the provision and coordination of services to carry out such plan that shall include—
(i)
subject to paragraph (3), a statement of the goals and objectives consistent with the health status goals and national health objectives referred to in section 501(a) for meeting the needs specified in the State plan described in subparagraph (A);
(ii)
an identification of the areas and localities in the State in which services are to be provided and coordinated;
(iii)
an identification of the types of services to be provided and the categories or characteristics of individuals to be served; and
(iv)
information the State will collect in order to prepare reports required under section 506(a);
(3)
except as provided under subsection (b), provides that the State will use—
(A)
at least 30 percent of such payment amounts for preventive and primary care services for children, and
(B)
at least 30 percent of such payment amounts for services for children with special health care needs (as specified in section 501(a)(1)(D));
(4)
provides that a State receiving funds for maternal and child health services under this title shall maintain the level of funds being provided solely by such State for maternal and child health programs at a level at least equal to the level that such State provided for such programs in fiscal year 1989; and
(5)
provides that—
(A)
the State will establish a fair method (as determined by the State) for allocating funds allotted to the State under this title among such individuals, areas, and localities identified under paragraph (1)(A) as needing maternal and child health services, and the State will identify and apply guidelines for the appropriate frequency and content of, and appropriate referral and followup with respect to, health care assessments and services financially assisted by the State under this title and methods for assuring quality assessments and services;
(B)
funds allotted to the State under this title will only be used, consistent with section 508, to carry out the purposes of this title or to continue activities previously conducted under the consolidated health programs (described in section 501(b)(1));
(C)
the State will use—
(i)
special consideration (where appropriate) for the continuation of the funding of special projects in the State previously funded under this title (as in effect before August 31, 1981), and
(ii)
a reasonable proportion (based upon the State's previous use of funds under this title) of such sums to carry out the purposes described in subparagraphs (A) through (D) of section 501(a)(1);
(D)
if any charges are imposed for the provision of health services assisted by the State under this title, such charges (i) will be pursuant to a public schedule of charges, (ii) will not be imposed with respect to services provided to low income mothers or children, and (iii) will be adjusted to reflect the income, resources, and family size of the individual provided the services;
(E)
the State agency (or agencies) administering the State's program under this title will provide for a toll-free telephone number (and other appropriate methods) for the use of parents to access information about health care providers and practitioners who provide health care services under this title and title XIX and about other relevant health and health-related providers and practitioners; and
(F)
the State agency (or agencies) administering the State's program under this title will—
(i)
participate in the coordination of activities between such program and the early and periodic screening, diagnostic, and treatment program under section 1905(a)(4)(B) (including the establishment of periodicity and content standards for early and periodic screening, diagnostic, and treatment services), to ensure that such programs are carried out without duplication of effort,
(ii)
participate in the arrangement and carrying out of coordination agreements described in section 1902(a)(11) (relating to coordination of care and services available under this title and title XIX),
(iii)
participate in the coordination of activities within the State with programs carried out under this title and related Federal grant programs (including supplemental food programs for mothers, infants, and children, related education programs, and other health, developmental disability, and family planning programs), and
(iv)
provide, directly and through their providers and institutional contractors, for services to identify pregnant women and infants who are eligible for medical assistance under subparagraph (A) or (B) of section 1902(l)(1) and, once identified, to assist them in applying for such assistance.
The application shall be developed by, or in consultation with, the State maternal and child health agency and shall be made public within the State in such manner as to facilitate comment from any person (including any Federal or other public agency) during its development and after its transmittal.
(b)
The Secretary may waive the requirements under subsection (a)(3) that a State's application for a fiscal year provide for the use of funds for specific activities if for that fiscal year—
(1)
the Secretary determines—
(A)
on the basis of information provided in the State's most recent annual report submitted under section 506(a)(1), that the State has demonstrated an extraordinary unmet need for one of the activities described in subsection (a)(3), and
(B)
that the granting of the waiver is justified and will assist in carrying out the purposes of this title; and
(2)
the State provides assurances to the Secretary that the State will provide for the use of some amounts paid to it under section 503 for the activities described in subparagraphs (A) and (B) of subsection (a)(3) and specifies the percentages to be substituted in each of such subparagraphs.

reports and audits
Sec. 506.
[42 U.S.C. 706]
(a)
(1)
Each State shall prepare and submit to the Secretary annual reports on its activities under this title. Each such report shall be prepared by, or in consultation with, the State maternal and child health agency. In order properly to evaluate and to compare the performance of different States assisted under this title and to assure the proper expenditure of funds under this title, such reports shall be in such standardized form and contain such information (including information described in paragraph (2)) as the Secretary determines (after consultation with the States) to be necessary (A) to secure an accurate description of those activities, (B) to secure a complete record of the purposes for which funds were spent, of the recipients of such funds,,2 (C) to describe the extent to which the State has met the goals and objectives it set forth under section 505(a)(2)(B)(i) and the national health objectives referred to in section 501(a) and (D) to determine the extent to which funds were expended consistent with the State's application transmitted under section 505(a). Copies of the report shall be provided, upon request, to any interested public agency, and each such agency may provide its views on these reports to the Congress.
^2
As in original.
(2)
Each annual report under paragraph (1) shall include the following information:
(A)
(i)
The number of individuals served by the State under this title (by class of individuals).
(ii)
The proportion of each class of such individuals which has health coverage.
(iii)
The types (as defined by the Secretary) of services provided under this title to individuals within each such class.
(iv)
The amounts spent under this title on each type of services, by class of individuals served.
(B)
Information on the status of maternal and child health in the State, including—
(i)
information (by county and by racial and ethnic group) on—
(I)
the rate of infant mortality, and
(II)
the rate of low-birth-weight births;
(ii)
information (on a State-wide basis) on—
(I)
the rate of maternal mortality,
(II)
the rate of neonatal death,
(III)
the rate of perinatal death,
(IV)
the number of children with chronic illness and the type of illness,
(V)
the proportion of infants born with fetal alcohol syndrome,
(VI)
the proportion of infants born with drug dependency,
(VII)
the proportion of women who deliver who do not receive prenatal care during the first trimester of pregnancy, and
(VIII)
the proportion of children, who at their second birthday, have been vaccinated against each of measles, mumps, rubella, polio, diphtheria, tetanus, pertussis, Hib meningitis, and hepatitis B; and
(iii)
information on such other indicators of maternal, infant, and child health care status as the Secretary may specify.
(C)
Information (by racial and ethnic group) on—
(i)
the number of deliveries in the State in the year, and
(ii)
the number of such deliveries to pregnant women who were provided prenatal, delivery, or postpartum care under this title or were entitled to benefits with respect to such deliveries under the State plan under title XIX in the year.
(D)
Information (by racial and ethnic group) on—
(i)
the number of infants under one year of age who were in the State in the year, and
(ii)
the number of such infants who were provided services under this title or were entitled to benefits under the State plan under title XIX or the State plan under title XXI at any time during the year.
(E)
Information on the number of—
(i)
obstetricians,
(ii)
family practitioners,
(iii)
certified family nurse practitioners,
(iv)
certified nurse midwives,
(v)
pediatricians, and
(vi)
certified pediatric nurse practitioners,
who were licensed in the State in the year.
For purposes of subparagraph (A), each of the following shall be considered to be a separate class of individuals: pregnant women, infants up to age one, children with special health care needs, other children under age 22, and other individuals.
(3)
The Secretary shall annually transmit to the Committee on Energy and Commerce of the House of Representatives and the Committee on Finance of the Senate a report that includes—
(A)
a description of each project receiving funding under paragraph (2) or (3) of section 502(a), including the amount of Federal funds provided, the number of individuals served or trained, as appropriate, under the project, and a summary of any formal evaluation conducted with respect to the project;
(B)
a summary of the information described in paragraph (2)(A) reported by States;
(C)
based on information described in paragraph (2)(B) supplied by the States under paragraph (1), a compilation of the following measures of maternal and child health in the United States and in each State:
(i)
Information on—
(I)
the rate of infant mortality, and
(II)
the rate of low-birth-weight births. Information under this clause shall also be compiled by racial and ethnic group.
(ii)
Information on—
(I)
the rate of maternal mortality,
(II)
the rate of neonatal death,
(III)
the rate of perinatal death,
(IV)
the proportion of infants born with fetal alcohol syndrome,
(V)
the proportion of infants born with drug dependency,
(VI)
the proportion of women who deliver who do not receive prenatal care during the first trimester of pregnancy, and
(VII)
the proportion of children, who at their second birthday, have been vaccinated against each of measles, mumps, rubella, polio, diphtheria, tetanus, pertussis, Hib meningitis, and hepatitis B.
(iii)
Information on such other indicators of maternal, infant, and child health care status as the Secretary has specified under paragraph (2)(B)(iii).
(iv)
Information (by racial and ethnic group) on—
(I)
the number of deliveries in the State in the year, and
(II)
the number of such deliveries to pregnant women who were provided prenatal, delivery, or postpartum care under this title or were entitled to benefits with respect to such deliveries under the State plan under title XIX in the year;
(D)
based on information described in subparagraphs (C), (D), and (E) of paragraph (2) supplied by the States under paragraph (1), a compilation of the following information in the United States and in each State:
(i)
Information on—
(I)
the number of deliveries in the year, and
(II)
the number of such deliveries to pregnant women who were provided prenatal, delivery, or postpartum care under this title or were entitled to benefits with respect to such deliveries under a State plan under title XIX in the year.
Information under this clause shall also be compiled by racial and ethnic group.
(ii)
Information on—
(I)
the number of infants under one year of age in the year, and
(II)
the number of such infants who were provided services under this title or were entitled to benefits under a State plan under title XIX or the State plan under title XXI at any time during the year.
Information under this clause shall also be compiled by racial and ethnic group.
(iii)
Information on the number of—
(I)
obstetricians,
(II)
family practitioners,
(III)
certified family nurse practitioners,
(IV)
certified nurse midwives,
(V)
pediatricians, and
(VI)
certified pediatric nurse practitioners,
who were licensed in a State in the year; and
(E)
an assessment of the progress being made to meet the health status goals and national health objectives referred to in section 501(a).
(b)
(1)
Each State shall, not less often than once every two years, audit its expenditures from amounts received under this title. Such State audits shall be conducted by an entity independent of the State agency administering a program funded under this title in accordance with the Comptroller General's standards for auditing governmental organizations, programs, activities, and functions and generally accepted auditing standards. Within 30 days following the completion of each audit report, the State shall submit a copy of that audit report to the Secretary. (2) Each State shall repay to the United States amounts found by the Secretary, after notice and opportunity for a hearing to the State, not to have been expended in accordance with this title and, if such repayment is not made, the Secretary may offset such amounts against the amount of any allotment to which the State is or may become entitled under this title or may otherwise recover such amounts. (3) The Secretary may, after notice and opportunity for a hearing, withhold payment of funds to any State which is not using its allotment under this title in accordance with this title. The Secretary may withhold such funds until the Secretary finds that the reason for the withholding has been removed and there is reasonable assurance that it will not recur.
(c)
The State shall make copies of the reports and audits required by this section available for public inspection within the State.
(d)
(1)
For the purpose of evaluating and reviewing the block grant established under this title, the Secretary and the Comptroller General shall have access to any books, accounts, records, correspondence, or other documents that are related to such block grant, and that are in the possession, custody, or control of States, political subdivisions thereof, or any of their grantees.
(2)
In conjunction with an evaluation or review under paragraph (1), no State or political subdivision thereof (or grantee of either) shall be required to create or prepare new records to comply with paragraph (1). (3) For other provisions relating to deposit, accounting, reports, and auditing with respect to Federal grants to States, see section 6503(b) of title 31, United States Code.

criminal penalty for false statements
Sec. 507.
[42 U.S.C. 707]
(a)
Whoever—
(1)
knowingly and willfully makes or causes to be made any false statement or representation of a material fact in connection with the furnishing of items or services for which payment may be made by a State from funds allotted to the State under this title, or
(2)
having knowledge of the occurrence of any event affecting his initial or continued right to any such payment conceals or fails to disclose such event with an intent fraudulently to secure such payment either in a greater amount than is due or when no such payment is authorized,
shall be fined not more than $25,000 or imprisoned for not more than five years, or both.
(b)
For civil monetary penalties for certain submissions of false claims, see section 1128A of this Act.

NONDISCRIMINATION
Sec. 508.
[42 U.S.C. 708]
(a)
(1)
For the purpose of applying the prohibitions against discrimination on the basis of age under the Age Discrimination Act of 1975, on the basis of handicap under section 504 of the Rehabilitation Act of 1973, on the basis of sex under title IX of the Education Amendments of 1972, or on the basis of race, color, or national origin under title VI of the Civil Rights Act of 1964 , programs and activities funded in whole or in part with funds made available under this title are considered to be programs and activities receiving Federal financial assistance.
(2)
No person shall on the ground of sex or religion be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any program or activity funded in whole or in part with funds made available under this title.
(b)
Whenever the Secretary finds that a State, or an entity that has received a payment from an allotment to a State under section 502(c), has failed to comply with a provision of law referred to in subsection (a)(1), with subsection (a)(2), or with an applicable regulation (including one prescribed to carry out subsection (a)(2)), he shall notify the chief executive officer of the State and shall request him to secure compliance. If within a reasonable period of time, not to exceed sixty days, the chief executive officer fails or refuses to secure compliance, the Secretary may—
(1)
refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted,
(2)
exercise the powers and functions provided by title VI of the Civil Rights Act of 1964, the Age Discrimination Act of 1975, or section 504 of the Rehabilitation Act of 1973, as may be applicable, or
(3)
take such other action as may be provided by law.
(c)
When a matter is referred to the Attorney General pursuant to subsection (b)(1), or whenever he has reason to believe that the entity is engaged in a pattern or practice in violation of a provision of law referred to in subsection (a)(1) or in violation of subsection (a)(2), the Attorney General may bring a civil action in any appropriate district court of the United States for such relief as may be appropriate, including injunctive relief.

ADMINISTRATION OF TITLE AND STATE PROGRAMS
Sec. 509.
[42 U.S.C. 709]
(a)
The Secretary shall designate an identifiable administrative unit with expertise in maternal and child health within the Department of Health and Human Services, which unit shall be responsible for—
(1)
the Federal program described in section 502(a);
(2)
promoting coordination at the Federal level of the activities authorized under this title and under title XIX of this Act, especially early and periodic screening, diagnosis and treatment, related activities funded by the Departments of Agriculture and Education, and under health block grants and categorical health programs, such as immunizations, administered by the Secretary;
(3)
disseminating information to the States in such areas as preventive health services and advances in the care and treatment of mothers and children;
(4)
providing technical assistance, upon request, to the States in such areas as program planning, establishment of goals and objectives, standards of care, and evaluation and in developing consistent and accurate data collection mechanisms in order to report the information required under section 506(a)(2);
(5)
in cooperation with the National Center for Health Statistics and in a manner that avoids duplication of data collection, collection, maintenance, and dissemination of information relating to the health status and health service needs of mothers and children in the United States;
(6)
assisting in the preparation of reports to the Congress on the activities funded and accomplishments achieved under this title from the information required to be reported by the States under sections 505(a) and 506; and3
^3
As in original, “and” should probably not appear.
(7)
assisting States in the development of care coordination services (as defined in section 501(b)(3)); and
(8)
developing and making available to the State agency (or agencies) administering the State's program under this title a national directory listing by State the toll-free numbers described in section 505(a)(5)(E).
(b)
The State health agency of each State shall be responsible for the administration (or supervision of the administration) of programs carried out with allotments made to the State under this title, except that, in the case of a State which on July 1, 1967, provided for administration (or supervision thereof) of the State plan under this title (as in effect on such date) by a State agency other than the State health agency, that State shall be considered to comply the requirement of this subsection if it would otherwise comply but for the fact that such other State agency administers (or supervises the administration of) any such program providing services for children with special health care needs.4
^4
As in original. Probably should be ``comply with``.
SEC. 510.
[42 U.S.C. 710]

SEXUAL RISK AVOIDANCE EDUCATION.
(a)

In General.—
(1)

Allotments to states.—
For the purpose described in subsection (b), the Secretary shall, for each of fiscal years 2018 through 2025, and for the period beginning on October 1, 2025, and ending on January 30, 2026, allot to each State which has transmitted an application for the fiscal year (or, with respect to the applicable period, for fiscal year 2026) under section 505(a) an amount equal to the product of—
(A)
the amount appropriated pursuant to subsection (f)(1) for the fiscal year or period, minus the amount reserved under subsection (f)(2) for the fiscal year or period; and
(B)
the proportion that the number of low-income children in the State bears to the total of such numbers of children for all the States.
(2)

Other allotments.—
(A)

Other entities.—
For the purpose described in subsection (b), the Secretary shall, for each of fiscal years 2018 through 2025 and with respect to fiscal year 2026, for the applicable period described in paragraph (1), for any State which has not transmitted an application for the fiscal year (or, with respect to the applicable period, for fiscal year 2026) under section 505(a), allot to one or more entities in the State the amount that would have been allotted to the State under paragraph (1) if the State had submitted such an application.
(B)

Process.—
The Secretary shall select the recipients of allotments under subparagraph (A) by means of a competitive grant process under which—
(i)
not later than 30 days after the deadline for the State involved to submit an application for the fiscal year (or, with respect to fiscal year 2026, for the applicable period described in paragraph (1)) under section 505(a), the Secretary publishes a notice soliciting grant applications; and
(ii)
not later than 120 days after such deadline, all such applications must be submitted.
(b)

Purpose.—
(1)

In general.—
Except for research under paragraph (5) and information collection and reporting under paragraph (6), the purpose of an allotment under subsection (a) to a State (or to another entity in the State pursuant to subsection (a)(2)) is to enable the State or other entity to implement education exclusively on sexual risk avoidance (meaning voluntarily refraining from sexual activity).
(2)

Required components.—
Education on sexual risk avoidance pursuant to an allotment under this section shall—
(A)
ensure that the unambiguous and primary emphasis and context for each topic described in paragraph (3) is a message to youth that normalizes the optimal health behavior of avoiding nonmarital sexual activity;
(B)
be medically accurate and complete;
(C)
be age-appropriate;
(D)
be based on adolescent learning and developmental theories for the age group receiving the education; and
(E)
be culturally appropriate, recognizing the experiences of youth from diverse communities, backgrounds, and experiences.
(3)

Topics.—
Education on sexual risk avoidance pursuant to an allotment under this section shall address each of the following topics:
(A)
The holistic individual and societal benefits associated with personal responsibility, self-regulation, goal setting, healthy decisionmaking, and a focus on the future.
(B)
The advantage of refraining from nonmarital sexual activity in order to improve the future prospects and physical and emotional health of youth.
(C)
The increased likelihood of avoiding poverty when youth attain self-sufficiency and emotional maturity before engaging in sexual activity.
(D)
The foundational components of healthy relationships and their impact on the formation of healthy marriages and safe and stable families.
(E)
How other youth risk behaviors, such as drug and alcohol usage, increase the risk for teen sex.
(F)
How to resist and avoid, and receive help regarding, sexual coercion and dating violence, recognizing that even with consent teen sex remains a youth risk behavior.
(4)

Contraception.—
Education on sexual risk avoidance pursuant to an allotment under this section shall ensure that—
(A)
any information provided on contraception is medically accurate and complete and ensures that students understand that contraception offers physical risk reduction, but not risk elimination; and
(B)
the education does not include demonstrations, simulations, or distribution of contraceptive devices.
(5)

Research.—
(A)

In general.—
A State or other entity receiving an allotment pursuant to subsection (a) may use up to 20 percent of such allotment to build the evidence base for sexual risk avoidance education by conducting or supporting research.
(B)

Requirements.—
Any research conducted or supported pursuant to subparagraph (A) shall be—
(i)
rigorous;
(ii)
evidence-based; and
(iii)
designed and conducted by independent researchers who have experience in conducting and publishing research in peer-reviewed outlets.
(6)

Information collection and reporting.—
A State or other entity receiving an allotment pursuant to subsection (a) shall, as specified by the Secretary—
(A)
collect information on the programs and activities funded through the allotment; and
(B)
submit reports to the Secretary on the data from such programs and activities.
(c)

National Evaluation.—
(1)

In general.—
The Secretary shall—
(A)
in consultation with appropriate State and local agencies, conduct one or more rigorous evaluations of the education funded through this section and associated data; and
(B)
submit a report to the Congress on the results of such evaluations, together with a summary of the information collected pursuant to subsection (b)(6).
(2)

Consultation.—
In conducting the evaluations required by paragraph (1), including the establishment of rigorous evaluation methodologies, the Secretary shall consult with relevant stakeholders and evaluation experts.
(d)

Applicability of Certain Provisions.—
(1)
Sections 503, 507, and 508 apply to allotments under subsection (a) to the same extent and in the same manner as such sections apply to allotments under section 502(c), except that section 503(a) shall be applied by substituting “the total of the sums” for “four-sevenths of the total of the sums”.
(2)
Sections 505 and 506 apply to allotments under subsection (a) to the extent determined by the Secretary to be appropriate.
(e)

Definitions.—
In this section:
(1)
The term “age-appropriate” means suitable (in terms of topics, messages, and teaching methods) to the developmental and social maturity of the particular age or age group of children or adolescents, based on developing cognitive, emotional, and behavioral capacity typical for the age or age group.
(2)
The term “medically accurate and complete” means verified or supported by the weight of research conducted in compliance with accepted scientific methods and—
(A)
published in peer-reviewed journals, where applicable; or
(B)
comprising information that leading professional organizations and agencies with relevant expertise in the field recognize as accurate, objective, and complete.
(3)
The term “rigorous”, with respect to research or evaluation, means using—
(A)
established scientific methods for measuring the impact of an intervention or program model in changing behavior (specifically sexual activity or other sexual risk behaviors), or reducing pregnancy, among youth; or
(B)
other evidence-based methodologies established by the Secretary for purposes of this section.
(4)
The term “youth” refers to one or more individuals who have attained age 10 but not age 20.
(f)

Funding.—
(1)

In general.—
To carry out this section, there is appropriated, out of any money in the Treasury not otherwise appropriated, $75,000,000 for each of fiscal years 2018 through 2025, and for the period beginning on October 1, 2025, and ending on January 30, 2026, an amount equal to the pro rata portion of the amount appropriated for the corresponding period for fiscal year 2025.
(2)

Reservation.—
The Secretary shall reserve, for each of fiscal years 2018 through 2023, and for the applicable period described in paragraph (1), not more than 20 percent of the amount appropriated pursuant to paragraph (1) for administering the program under this section, including the conducting of national evaluations and the provision of technical assistance to the recipients of allotments.
SEC. 511.
[42 U.S.C. 711]

MATERNAL, INFANT, AND EARLY CHILDHOOD HOME VISITING PROGRAMS.
(a)

Purposes.—
The purposes of this section are—
(1)
to strengthen and improve the programs and activities carried out under this title;
(2)
to improve coordination of services for at risk communities; and
(3)
to identify and provide comprehensive services to improve outcomes for families who reside in at risk communities.
(b)

Requirement for All States To Assess Statewide Needs and Identify at Risk Communities.—
(1)

In general.—
Each State shall, as a condition of receiving payments from an allotment for the State under section 502, conduct a statewide needs assessment (which may be separate from but in coordination with the statewide needs assessment required under section 505(a) and which shall be reviewed and updated by the State not later than October 1, 2020) that identifies—
(A)
communities with concentrations of—
(i)
premature birth, low-birth weight infants, and infant mortality, including infant death due to neglect, or other indicators of at-risk prenatal, maternal, newborn, or child health;
(ii)
poverty;
(iii)
crime;
(iv)
domestic violence;
(v)
high rates of high-school drop-outs;
(vi)
substance abuse;
(vii)
unemployment; or
(viii)
child maltreatment;
(B)
the quality and capacity of existing programs or initiatives for early childhood home visitation in the State including—
(i)
the number and types of individuals and families who are receiving services under such programs or initiatives;
(ii)
the gaps in early childhood home visitation in the State; and
(iii)
the extent to which such programs or initiatives are meeting the needs of eligible families described in subsection (l)(2); and
(C)
the State's capacity for providing substance abuse treatment and counseling services to individuals and families in need of such treatment or services.
(2)

Coordination with other assessments.—
In conducting the statewide needs assessment required under paragraph (1), the State shall coordinate with, and take into account, other appropriate needs assessments conducted by the State, as determined by the Secretary, including the needs assessment required under section 505(a) (both the most recently completed assessment and any such assessment in progress), the communitywide strategic planning and needs assessments conducted in accordance with section 640(g)(1)(C) of the Head Start Act, and the inventory of current unmet needs and current community-based and prevention-focused programs and activities to prevent child abuse and neglect, and other family resource services operating in the State required under section 205(3) of the Child Abuse Prevention and Treatment Act.
(3)

Submission to the secretary.—
Each State shall submit to the Secretary, in such form and manner as the Secretary shall require—
(A)
the results of the statewide needs assessment required under paragraph (1); and
(B)
a description of how the State intends to address needs identified by the assessment, particularly with respect to communities identified under paragraph (1)(A), which may include applying for a grant to conduct an early childhood home visitation program in accordance with the requirements of this section.
(c)

Grants for Early Childhood Home Visitation Programs.—
(1)

Authority to make grants.—
In addition to any other payments made under this title to a State, the Secretary shall make grants to eligible entities to enable the entities to deliver services under early childhood home visitation programs that satisfy the requirements of subsection (d) to eligible families in order to promote improvements in maternal and prenatal health, infant health, child health and development, parenting related to child development outcomes, school readiness, and the socioeconomic status of such families, and reductions in child abuse, neglect, and injuries.
(2)

Authority to use initial grant funds for planning or implementation.—
An eligible entity that receives a grant under paragraph (1) may use a portion of the funds made available to the entity during the first 6 months of the period for which the grant is made for planning or implementation activities to assist with the establishment of early childhood home visitation programs that satisfy the requirements of subsection (d).
(3)

Authority to use grant for a pay for outcomes initiative.—
An eligible entity to which a grant is made under paragraph (1) may use up to 25 percent of the grant for outcomes or success payments related to a pay for outcomes initiative that will not result in a reduction of funding for services delivered by the entity under a childhood home visitation program under this section while the eligible entity develops or operates such an initiative.
(4)

Grant amounts.—
(A)

Base grants.—
(i)

In general.—
(I)

General rule.—
With respect to each of fiscal years 2023 through 2027 for which an eligible entity not referred to in subsection (k)(2)(A) is awarded a base grant under this section, the amount of the grant payable to the eligible entity for the fiscal year is the amount described by clause (ii) of this subparagraph with respect to the eligible entity, except as provided in subclause (II) of this clause.
(II)

Substitution of successor eligible entity for predecessor.—
If the 1st fiscal year for which an eligible entity is awarded a base grant under this section for a program operated in a State is among fiscal years 2024 through 2027, the amount described by clause (ii) with respect to the eligible entity is the amount of the base grant for which a program operated in the State was eligible under this subparagraph for fiscal year 2023.
(ii)

Amount described.—
(I)

General rule.—
Subject to the succeeding provisions of this clause, the amount described by this clause with respect to an eligible entity is—
- (aa)
the amount made available under subsection (k) for base grants for fiscal year 2023 that remains after making the reservations required by subsection (k)(2) or any other reductions required by Federal law for fiscal year 2023; multiplied by
- (bb)
the percentage of children in all States who have not attained 5 years of age (as determined by the Secretary on the basis of the data most recently available before fiscal year 2023) that is represented by the number of such children in the State in which the eligible entity is operating a program pursuant to this section (as so determined).
(II)

Adjustments to ensure stable funding.—
If the amount otherwise payable to an eligible entity under subclause (I) for fiscal year 2023 is less than 90 percent, or greater than 110 percent, of the amount payable under this section to the eligible entity for the program for fiscal year 2021, the Secretary shall increase the amount otherwise so payable to 90 percent, or decrease the amount otherwise so payable to 110 percent, as the case may be, of the amount otherwise so payable.
(III)

Adjustment to ensure all base grant funds are allocated.—
If the amount described by subclause (I)(aa) is different than the total of the amounts otherwise described by subclause (I) after applying subclause (II), the Secretary shall increase or decrease the amounts otherwise so described after applying subclause (II) by such equal percentage as is necessary to reduce that difference to zero.
(IV)

Minimum base grant amount.—
Notwithstanding the preceding provisions of this clause, the amount described by this clause with respect to an eligible entity shall be not less than $1,000,000.
(B)

Matching grants.—
(i)

Amount of grant.—
(I)

General rule.—
With respect to each of fiscal years 2024 through 2027 for which an eligible entity not referred to in subsection (k)(2)(A) is awarded a grant under this section, the Secretary shall increase the amount of the grant payable to the eligible entity for the fiscal year under subparagraph (A) of this paragraph by the matching amount (if any) determined under subclause (II) of this clause with respect to the eligible entity for the fiscal year and the additional matching amount (if any) determined under clause (iii) of this subparagraph with respect to the eligible entity for the fiscal year.
(II)

Matching amount.—
- (aa)

In general.—
Subject to item (bb) of this subclause, the matching amount with respect to an eligible entity for a fiscal year is 75 percent of the sum of—
(AA)
the total amount obligated by the eligible entity for home visiting services in the State for the fiscal year, from Federal funds made available for the fiscal year under this subparagraph; and
(BB)
the total amount so obligated by the eligible entity from non-Federal funds, determined under subclause (III).
- (bb)

Limitation.—
The matching amount with respect to an eligible entity for a fiscal year shall not exceed the allotment under subclause (IV) for the State in which the eligible entity is operating a program under this section for the fiscal year.
(III)

Determination of obligations from non-federal funds.—
For purposes of this clause, the total amount obligated by an eligible entity from non-Federal funds is the total of the amounts that are obligated by the eligible entity from non-Federal sources, to the extent that—
- (aa)
the services are delivered in compliance with subsections (d)(2) and (d)(3);
- (bb)
the eligible entity has reported the obligations to the Secretary; and
- (cc)
the amount is not counted toward meeting the maintenance of effort requirement in subsection (f).
(IV)

State allotments.—
The amount allotted under this subclause for a State in which an eligible entity is operating a program under this section for a fiscal year is—
- (aa)
the minimum matching grant allocation amount for the fiscal year; plus
- (bb)
(AA)
the amount (if any) by which the amount made available under subsection (k) for matching grants for the fiscal year that remains after making the reservations required by subsection (k)(2) or any other reduction required by Federal law for the fiscal year exceeds the sum of the minimum matching grant allocation amounts for all eligible entities for the fiscal year; multiplied by
(BB)
the percentage of children in all States who have not attained 5 years of age and are members of families with income not exceeding the poverty line (as determined by the Secretary on the basis of the most recently available data) that is represented by the number of such children in the State (as so determined).
(V)

Minimum matching grant allocation amount.—
Subject to subclause (VI), for purposes of subclause (IV), the minimum matching grant allocation amount for a fiscal year is—
- (aa)
in the case of fiscal year 2024, $776,000;
- (bb)
in the case of fiscal year 2025, $1,000,000;
- (cc)
in the case of fiscal year 2026, $1,500,000; and
- (dd)
in the case of fiscal year 2027, $2,000,000.
(VI)

Special rule.—
If, after making any reductions otherwise required by law for a fiscal year, the amount made available for matching grants under this clause for the fiscal year is insufficient to provide the minimum matching grant allocation amount to each eligible entity operating a program under this section for the fiscal year, the Secretary may make a proportionate adjustment to the minimum matching grant allocation amount for the fiscal year to accommodate the reductions.
(ii)

Submission of statement expressing interest in additional matching funds if available.—
Before the beginning of a fiscal year for which an eligible entity desires a matching grant under this subparagraph for a program operated under this section, the eligible entity shall submit to the Secretary a statement as to whether the eligible entity desires additional matching grant funds that may be made available under clause (iii) for the fiscal year.
(iii)

Carryover and reallocation of unobligated funds.—
(I)

In general.—
If the Secretary determines that an amount allotted under clause (i)(IV) of this subparagraph for a fiscal year will not be awarded during the fiscal year, or that an amount made available under subsection (k)(1) for a fiscal year for matching grants will not be obligated by an eligible entity for the fiscal year, the amount shall be available for matching grants under this subparagraph for the succeeding fiscal year for eligible entities that have made submissions under clause (ii) of this subparagraph for additional matching grant funds from the amount.
(II)

State allotments.—
The Secretary shall allot to each eligible entity that has made such a submission for a fiscal year—
- (aa)
the total amount (if any) made available under subclause (I) for the fiscal year; multiplied by
- (bb)
the percentage of children who have not attained 5 years of age and are members of families with income not exceeding the poverty line (as determined by the Secretary on the basis of the most recently available data) in all of the States in which any eligible entity that has made such a submission is so operating a program, that is represented by the number of such children in the State (as so determined) in which the eligible entity is operating such a program.
(III)

Additional matching amount.—
- (aa)

In general.—
Subject to item (bb) of this subclause, the additional matching amount with respect to an eligible entity for a fiscal year is 75 percent of the sum of—
(AA)
the total amount obligated by the eligible entity for home visiting services in the State for the fiscal year, from Federal funds made available for the fiscal year under this subparagraph; and
(BB)
the total amount so obligated by the eligible entity from non-Federal funds, determined under clause (i)(III),
that are not taken into account in determining the matching amount with respect to the eligible entity under clause (i).
- (bb)

Limitation.—
The additional matching amount with respect to an eligible entity for a fiscal year shall not exceed the allotment under subclause (II) for the State in which the eligible entity is operating a program under this section for the fiscal year.
(5)

Technical assistance.—
The Secretary shall provide an eligible entity that receives a grant under paragraph (1) with technical assistance in administering programs or activities conducted in whole or in part with grant funds.
(d)

Requirements.—
The requirements of this subsection for an early childhood home visitation program conducted with a grant made under this section are as follows:
(1)

Quantifiable, measurable improvement in benchmark areas related to individual family outcomes.—
(A)

In general.—
The eligible entity establishes, subject to the approval of the Secretary, quantifiable, measurable 3- and 5-year benchmarks for demonstrating that the program results in improvements for the eligible families participating in the program in the following areas:
(i)
Improved maternal and newborn health.
(ii)
Prevention of child injuries, child abuse, neglect, or maltreatment, and reduction of emergency department visits.
(iii)
Improvement in school readiness and achievement.
(iv)
Reduction in crime or domestic violence.
(v)
Improvements in family economic self-sufficiency.
(vi)
Improvements in the coordination and referrals for other community resources and supports.
(B)

Outcomes dashboards.—
The Secretary shall, directly or by grant or contract, establish and operate a website accessible to the public that includes an annually updated dashboard that—
(i)
provides easy-to-understand information on the outcomes achieved by each eligible entity with respect to each of the benchmarks described in subparagraph (A) of this paragraph that apply to the eligible entity, which shall be based on only the data elements or types of data collected before the date of the enactment of this section unless administering agencies and the Secretary agree pursuant to subsection (h)(6) that additional data is required;
(ii)
includes a template provided by the Secretary that will enable comparison among eligible entities not referred to in subsection (k)(2)(A) of—
(I)
a profile of each eligible entity showing outcome indicators and how the outcomes compare to benchmarks described in subclause (II);
(II)
information on the outcome indicators and requisite outcome levels established for each eligible entity;
(III)
information on each model employed in the program operated by each eligible entity, and regarding each benchmark area described in subsection (d)(1)(A) in which the model used by the eligible entity is expected to affect participant outcomes;
(IV)
the most recently available information from the report required by subparagraph (E) of this paragraph;
(V)
an electronic link to the State needs assessment under subsection (b)(1); and
(VI)
information regarding any penalty imposed, or other corrective action taken, by the Secretary against a State for failing to achieve a requisite outcome level or any other requirement imposed by or under this section, and an indication as to whether the eligible entity is operating under a corrective action plan under subparagraph (E)(ii) of this paragraph, and if so, a link to the plan, an explanation of the reason for the implementation of the plan, and a report on any progress made in operating under the plan;
(iii)
includes information relating to those eligible entities for which funding is reserved under subsection (k)(2)(A), with modifications as necessary to reflect tribal sovereignty, data privacy, and participant confidentiality; and
(iv)
protects data privacy and confidentiality of participant families.
(C)

Demonstration of improvements after 3 years.—
(i)

Report to the secretary.—
Not later than 30 days after the end of the 3rd year in which the eligible entity conducts the program, the entity submits to the Secretary a report demonstrating improvement in at least 4 of the areas specified in subparagraph (A).
(ii)

Corrective action plan.—
If the report submitted by the eligible entity under clause (i) fails to demonstrate improvement in at least 4 of the areas specified in subparagraph (A), the entity shall develop and implement a plan to improve outcomes in each of the areas specified in subparagraph (A), subject to approval by the Secretary. The plan shall include provisions for the Secretary to monitor implementation of the plan and conduct continued oversight of the program, including through submission by the entity of regular reports to the Secretary.
(iii)

Technical assistance.—
(I)

In general.—
The Secretary shall provide an eligible entity required to develop and implement an improvement plan under clause (ii) with technical assistance to develop and implement the plan. The Secretary may provide the technical assistance directly or through grants, contracts, or cooperative agreements.
(II)

Advisory panel.—
The Secretary shall establish an advisory panel for purposes of obtaining recommendations regarding the technical assistance provided to entities in accordance with subclause (I).
(iv)

No improvement or failure to submit report.—
If the Secretary determines after a period of time specified by the Secretary that an eligible entity implementing an improvement plan under clause (ii) has failed to demonstrate any improvement in the areas specified in subparagraph (A), or if the Secretary determines that an eligible entity has failed to submit the report required under clause (i), the Secretary shall terminate the entity's grant and may include any unexpended grant funds in grants made to nonprofit organizations under subsection (h)(2)(B).
(D)

Final report.—
Not later than December 31, 2015, the eligible entity shall submit a report to the Secretary demonstrating improvements (if any) in each of the areas specified in subparagraph (A).
(E)

Demonstration of improvements in subsequent years.—
(i)

Continued measurement of improvement in applicable benchmark areas.—
The eligible entity, after demonstrating improvements for eligible families as specified in subparagraphs (A) and (C), shall continue to track and report, not later than 30 days after the end of fiscal year 2020 and every 3 years thereafter, information demonstrating that the program results in improvements for the eligible families participating in the program in at least 4 of the areas specified in subparagraph (A) that the service delivery model or models selected by the entity are intended to improve.
(ii)

Corrective action plan.—
If the eligible entity fails to demonstrate improvement in at least 4 of the areas specified in subparagraph (A), as compared to eligible families who do not receive services under an early childhood home visitation program, the entity shall develop and implement a plan to improve outcomes in each of the areas specified in subparagraph (A) that the service delivery model or models selected by the entity are intended to improve, subject to approval by the Secretary. The plan shall include provisions for the Secretary to monitor implementation of the plan and conduct continued oversight of the program, including through submission by the entity of regular reports to the Secretary.
(iii)

Technical assistance.—
The Secretary shall provide an eligible entity required to develop and implement an improvement plan under clause (ii) with technical assistance to develop and implement the plan. The Secretary may provide the technical assistance directly or through grants, contracts, or cooperative agreements.
(iv)

No improvement or failure to submit report.—
If the Secretary determines after a period of time specified by the Secretary that an eligible entity implementing an improvement plan under clause (ii) has failed to demonstrate any improvement in at least 4 of the areas specified in subparagraph (A), or if the Secretary determines that an eligible entity has failed to submit the report required by clause (i), the Secretary shall terminate the grant made to the entity under this section and may include any unexpended grant funds in grants made to nonprofit organizations under subsection (h)(2)(B).
(2)

Improvements in outcomes for individual families.—
(A)

In general.—
The program is designed, with respect to an eligible family participating in the program, to result in the participant outcomes described in subparagraph (B) that the eligible entity identifies on the basis of an individualized assessment of the family, are relevant for that family.
(B)

Participant outcomes.—
The participant outcomes described in this subparagraph are the following:
(i)
Improvements in prenatal, maternal, and newborn health, including improved pregnancy outcomes
(ii)
Improvements in child health and development, including the prevention of child injuries and maltreatment and improvements in cognitive, language, social-emotional, and physical developmental indicators.
(iii)
Improvements in parenting skills.
(iv)
Improvements in school readiness and child academic achievement.
(v)
Reductions in crime or domestic violence.
(vi)
Improvements in family economic self-sufficiency.
(vii)
Improvements in the coordination of referrals for, and the provision of, other community resources and supports for eligible families, consistent with State child welfare agency training.
(3)

Core components.—
The program includes the following core components:
(A)

Service delivery model or models.—
(i)

In general.—
Subject to clause (ii), the program is conducted using 1 or more of the service delivery models described in item (aa) or (bb) of subclause (I) or in subclause (II) selected by the eligible entity:
(I)
The model conforms to a clear consistent home visitation model that has been in existence for at least 3 years and is research-based, grounded in relevant empirically-based knowledge, linked to program determined outcomes, associated with a national organization or institution of higher education that has comprehensive home visitation program standards that ensure high quality service delivery and continuous program quality improvement, and has demonstrated significant, (and in the case of the service delivery model described in item (aa), sustained) positive outcomes, as described in the benchmark areas specified in paragraph (1)(A) and the participant outcomes described in paragraph (2)(B), when evaluated using well-designed and rigorous—
- (aa)
randomized controlled research designs, and the evaluation results have been published in a peer-reviewed journal; or
- (bb)
quasi-experimental research designs.
(II)
The model conforms to a promising and new approach to achieving the benchmark areas specified in paragraph (1)(A) and the participant outcomes described in paragraph (2)(B), has been developed or identified by a national organization or institution of higher education, and will be evaluated through well-designed and rigorous process.
(ii)

Majority of grant funds used for evidence-based models.—
An eligible entity shall use not more than 25 percent of the amount of the grant paid to the entity for a fiscal year for purposes of conducting a program using the service delivery model described in clause (i)(II).
(iii)

Criteria for evidence of effectiveness of models.—
The Secretary shall establish criteria for evidence of effectiveness of the service delivery models and shall ensure that the process for establishing the criteria is transparent and provides the opportunity for public comment.
(B)

Use of grant to provide or support targeted, intensive home visiting services.—
The program uses the grant to provide or support targeted, intensive home visiting services for the populations described in paragraph (5).
(C)

Additional requirements.—
(i)
The program adheres to a clear, consistent model that satisfies the requirements of being grounded in empirically-based knowledge related to home visiting and linked to the benchmark areas specified in paragraph (1)(A) and the participant outcomes described in paragraph (2)(B) related to the purposes of the program.
(ii)
The program employs well-trained and competent staff, as demonstrated by education or training, such as nurses, social workers, educators, child development specialists, or other well-trained and competent staff, and provides ongoing and specific training on the model being delivered.
(iii)
The program maintains high quality supervision to establish home visitor competencies.
(iv)
The program demonstrates strong organizational capacity to implement the activities involved.
(v)
The program establishes appropriate linkages and referral networks to other community resources and supports for eligible families.
(vi)
The program monitors the fidelity of program implementation to ensure that services are delivered pursuant to the specified model.
(vii)
If the application submitted by the eligible entity includes the assurance described in subsection (e)(10)(C) with respect to the program, the program provides in-person service consistent with the assurances.
(4)

Virtual home visits.—
(A)

In general.—
A virtual home visit conducted under the program shall be considered a home visit for purposes of this section if the application for funding of the program submitted pursuant to this section most recently after the effective date of this paragraph includes the material described in subsection (e)(10).
(B)

Standards for training applicable to virtual service delivery.—
The standards for training requirements applicable to virtual service delivery under a home visiting model shall be equivalent to those that apply to in-person service delivery under the model.
(C)

Reporting requirement.—
A grant made under this section for the program may not be used for any virtual home visit during a year, unless the eligible entity to which the grant is made submits the report described in subsection (e)(8)(A) for the year.
(D)

Virtual home visit defined.—
In this section, the term “virtual home visit” means a visit conducted solely by use of electronic information and telecommunications technologies.
(E)

Technical assistance.—
If the Secretary finds that an eligible entity has not complied with the assurance described in subsection (e)(10)(C), the Secretary shall, directly or through grants, contracts, or cooperative agreements, provide the eligible entity with such technical assistance as is necessary to assist the eligible entity in doing so.
(5)

Priority for serving high-risk populations.—
The eligible entity gives priority to providing services under the program to the following:
(A)
Eligible families who reside in communities in need of such services, as identified in the statewide needs assessment required under subsection (b)(1)(A), taking into account the staffing, community resource, and other requirements to operate at least one approved model of home visiting and demonstrate improvements for eligible families.
(B)
Low-income eligible families.
(C)
Eligible families who are pregnant women who have not attained age 21.
(D)
Eligible families that have a history of child abuse or neglect or have had interactions with child welfare services.
(E)
Eligible families that have a history of substance abuse or need substance abuse treatment.
(F)
Eligible families that have users of tobacco products in the home.
(G)
Eligible families that are or have children with low student achievement.
(H)
Eligible families with children with developmental delays or disabilities.
(I)
Eligible families who, or that include individuals who, are serving or formerly served in the Armed Forces, including such families that have members of the Armed Forces who have had multiple deployments outside of the United States.
(6)

Limitation on use of funds for administrative costs.—
(A)

In general.—
Except as provided in subparagraph (B) of this paragraph, an eligible entity to which funds are provided under subsection (c) or (h)(2)(B) shall not use more than 10 percent of the funds to cover the costs of administration.
(B)

Authority to grant exceptions.—
(i)

In general.—
The Secretary may authorize an eligible entity that meets a condition of clause (ii) of this subparagraph to exceed the percentage limitation in subparagraph (A) with respect to a program conducted under this subsection by not more than 5 percentage points, subject to such terms and conditions as the Secretary deems appropriate.
(ii)

Conditions.—
An eligible entity meets a condition of this clause if the eligible entity—
(I)
conducts the program by directly providing home visits to eligible families and without a sub-recipient;
(II)
in the fiscal year for which the grant for the program is made under this section, proposes to expand services in 1 or more communities identified in the statewide needs assessment under subsection (b) and in which home visiting services are not provided; or
(III)
has conducted the program for fewer than 3 years.
(e)

Application Requirements.—
An eligible entity desiring a grant under this section shall submit an application to the Secretary for approval, in such manner as the Secretary may require, that includes the following:
(1)
A description of the populations to be served by the entity, including specific information regarding how the entity will serve high risk populations described in subsection (d)(4).
(2)
An assurance that the entity will give priority to serving low-income eligible families and eligible families who reside in at risk communities identified in the statewide needs assessment required under subsection (b)(1)(A).
(3)
The service delivery model or models described in subsection (d)(3)(A) that the entity will use under the program and the basis for the selection of the model or models.
(4)
A statement identifying how the selection of the populations to be served and the service delivery model or models that the entity will use under the program for such populations is consistent with the results of the statewide needs assessment conducted under subsection (b).
(5)
The quantifiable, measurable benchmarks established by the State to demonstrate that the program contributes to improvements in the areas specified in subsection (d)(1)(A) that the service delivery model or models selected by the entity are intended to improve.
(6)
An assurance that the entity will obtain and submit documentation or other appropriate evidence from the organization or entity that developed the service delivery model or models used under the program to verify that the program is implemented and services are delivered according to the model specifications.
(7)
Assurances that the entity will establish procedures to ensure that—
(A)
the participation of each eligible family in the program is voluntary; and
(B)
services are provided to an eligible family in accordance with the individual assessment for that family.
(8)
Assurances that the entity will—
(A)
submit annual reports to the Secretary regarding the program and activities carried out under the program that include such information and data as the Secretary shall require, including the number of virtual home visits conducted under the program in the year covered by the report, disaggregated with respect to each home visiting model under which the virtual home visits are conducted; and
(B)
participate in, and cooperate with, data and information collection necessary for the evaluation required under subsection (g)(2) and other research and evaluation activities carried out under subsection (h)(3).
(9)
A description of other State programs that include home visitation services, including, if applicable to the State, other programs carried out under this title with funds made available from allotments under section 502(c), programs funded under title IV, title II of the Child Abuse Prevention and Treatment Act (relating to community-based grants for the prevention of child abuse and neglect), and section 645A of the Head Start Act (relating to Early Head Start programs).
(10)
At the option of the eligible entity—
(A)
a description of any limitations or constraints on virtual home visits under the program, including—
(i)
a description of the plan of the eligible entity to encourage in-person home visits; and
(ii)
a description of the considerations to be used in determining when a virtual home visit is appropriate, including client consent, client preference, geographic limitations, model fidelity, and hazardous conditions including public health emergencies, weather events, health concerns for home visitors and client families, and other local issues;
(B)
an assurance that—
(i)
the virtual home visit is implemented as a model enhancement; or
(ii)
the Secretary has identified the home visit as part of an effective model or model adaptation, based on an evidence of effectiveness review conducted using the criteria established under subsection (d)(3)(A)(iii); and
(C)
an assurance to the Secretary that at least 1 in-person home visit shall be conducted for each client family under the program during the 12-month period that begins with the entry of the client family into the program, and during each succeeding 12-month period, except that any such period in which a public health emergency declared under Federal law, or under the law of the State in which the program is conducted, is in effect shall be extended by the length of time in which the declaration is in effect.
(11)
Other information as required by the Secretary.
(f)

Maintenance of Effort.—
(1)

In general.—
Notwithstanding any other provision of this section, the Secretary may not make a grant to an eligible entity under this section for a fiscal year if the total amount of non-Federal funds obligated by the eligible entity in the State in the fiscal year for a program operated pursuant to this section is less than the total amount of non-Federal funds reported to have been expended by any eligible entity for such a program in the State in fiscal year 2019 or 2021, whichever is the lesser.
(2)

Publication of amounts.—
Not later than June 30, 2023, the Secretary shall cause to have published in the Federal Register the amount of non-Federal funds expended as described in this section that has been reported by each eligible entity not referred to in subsection (k)(2)(A) for each of fiscal years 2019 and 2021.
(3)

Grace period.—
The Secretary may, in exceptional circumstances, allow an eligible entity a period to come into compliance with this subsection. The Secretary shall provide technical assistance to any eligible entity to assist the entity in doing so.
(g)

Evaluation.—
(1)

Independent, expert advisory panel.—
The Secretary, in accordance with subsection (h)(1)(A), shall appoint an independent advisory panel consisting of experts in program evaluation and research, education, and early childhood development—
(A)
to review, and make recommendations on, the design and plan for the evaluation required under paragraph (2) within 1 year after the date of enactment of this section;
(B)
to maintain and advise the Secretary regarding the progress of the evaluation; and
(C)
to comment, if the panel so desires, on the report submitted under paragraph (3).
(2)

Authority to conduct evaluation.—
On the basis of the recommendations of the advisory panel under paragraph (1), the Secretary shall, by grant, contract, or interagency agreement, conduct an evaluation of the statewide needs assessments submitted under subsection (b) and the grants made under subsections (c) and (h)(3)(B). The evaluation shall include—
(A)
an analysis, on a State-by-State basis, of the results of such assessments, including indicators of maternal and prenatal health and infant health and mortality, and State actions in response to the assessments; and
(B)
an assessment of—
(i)
the effect of early childhood home visitation programs on child and parent outcomes, including with respect to each of the benchmark areas specified in subsection (d)(1)(A) and the participant outcomes described in subsection (d)(2)(B);
(ii)
the effectiveness of such programs on different populations, including the extent to which the ability of programs to improve participant outcomes varies across programs and populations; and
(iii)
the potential for the activities conducted under such programs, if scaled broadly, to improve health care practices, eliminate health disparities, and improve health care system quality, efficiencies, and reduce costs.
(3)

Report.—
Not later than March 31, 2015, the Secretary shall submit a report to Congress on the results of the evaluation conducted under paragraph (2) and shall make the report publicly available.
(h)

Other Provisions.—
(1)

Intra-agency collaboration.—
The Secretary shall ensure that the Maternal and Child Health Bureau and the Administration for Children and Families collaborate with respect to carrying out this section, including with respect to—
(A)
reviewing and analyzing the statewide needs assessments required under subsection (b), the awarding and oversight of grants awarded under this section, the establishment of the advisory panels required under subsections (d)(1)(B)(iii)(II) and (g)(1), and the evaluation and report required under subsection (g); and
(B)
consulting with other Federal agencies with responsibility for administering or evaluating programs that serve eligible families to coordinate and collaborate with respect to research related to such programs and families, including the Office of the Assistant Secretary for Planning and Evaluation of the Department of Health and Human Services, the Centers for Disease Control and Prevention, the National Institute of Child Health and Human Development of the National Institutes of Health, the Office of Juvenile Justice and Delinquency Prevention of the Department of Justice, and the Institute of Education Sciences of the Department of Education.
(2)

Grants to eligible entities that are not states.—
(A)

Indian tribes, tribal organizations, or urban indian organizations.—
The Secretary shall specify requirements for eligible entities that are Indian Tribes (or a consortium of Indian Tribes), Tribal Organizations, or Urban Indian Organizations to apply for and conduct an early childhood home visitation program with a grant under this section. Such requirements shall, to the greatest extent practicable, be consistent with the requirements applicable to eligible entities that are States and shall require an Indian Tribe (or consortium), Tribal Organization, or Urban Indian Organization to—
(i)
conduct a needs assessment similar to the assessment required for all States under subsection (b); and
(ii)
establish quantifiable, measurable 3- and 5-year benchmarks consistent with subsection (d)(1)(A).
(B)

Nonprofit organizations.—
If, as of the beginning of fiscal year 2012, a State has not applied or been approved for a grant under this section, the Secretary may use amounts appropriated under paragraph (1) of subsection (k) that are available for expenditure under paragraph (3) of that subsection to make a grant to an eligible entity that is a nonprofit organization described in subsection (l)(1)(B) to conduct an early childhood home visitation program in the State. The Secretary shall specify the requirements for such an organization to apply for and conduct the program which shall, to the greatest extent practicable, be consistent with the requirements applicable to eligible entities that are States and shall require the organization to—
(i)
carry out the program based on the needs assessment conducted by the State under subsection (b); and
(ii)
establish quantifiable, measurable 3- and 5-year benchmarks consistent with subsection (d)(1)(A).
(3)

Research and other evaluation activities.—
(A)

In general.—
The Secretary shall carry out a continuous program of research and evaluation activities in order to increase knowledge about the implementation and effectiveness of home visiting programs, using random assignment designs to the maximum extent feasible. The Secretary may carry out such activities directly, or through grants, cooperative agreements, or contracts.
(B)

Requirements.—
The Secretary shall ensure that—
(i)
evaluation of a specific program or project is conducted by persons or individuals not directly involved in the operation of such program or project; and
(ii)
the conduct of research and evaluation activities includes consultation with independent researchers, State officials, and developers and providers of home visiting programs on topics including research design and administrative data matching.
(4)

Report and recommendation.—
Not later than December 31, 2015, the Secretary shall submit a report to Congress regarding the programs conducted with grants under this section. The report required under this paragraph shall include—
(A)
information regarding the extent to which eligible entities receiving grants under this section demonstrated improvements in the areas specified in subsection (d)(1)(A);
(B)
information regarding any technical assistance provided under subsection (d)(1)(B)(iii)(I), including the type of any such assistance provided; and
(C)
recommendations for such legislative or administrative action as the Secretary determines appropriate.
(5)

Data exchange standards for improved interoperability.—
(A)

Designation and use of data exchange standards.—
(i)

Designation.—
The head of the department or agency responsible for administering a program funded under this section shall, in consultation with an interagency work group established by the Office of Management and Budget and considering State government perspectives, designate data exchange standards for necessary categories of information that a State agency operating the program is required to electronically exchange with another State agency under applicable Federal law.
(ii)

Data exchange standards must be nonproprietary and interoperable.—
The data exchange standards designated under clause (i) shall, to the extent practicable, be nonproprietary and interoperable.
(iii)

Other requirements.—
In designating data exchange standards under this paragraph, the Secretary shall, to the extent practicable, incorporate—
(I)
interoperable standards developed and maintained by an international voluntary consensus standards body, as defined by the Office of Management and Budget;
(II)
interoperable standards developed and maintained by intergovernmental partnerships, such as the National Information Exchange Model; and
(III)
interoperable standards developed and maintained by Federal entities with authority over contracting and financial assistance.
(B)

Data exchange standards for federal reporting.—
(i)

Designation.—
The head of the department or agency responsible for administering a program referred to in this section shall, in consultation with an interagency work group established by the Office of Management and Budget, and considering State government perspectives, designate data exchange standards to govern Federal reporting and exchange requirements under applicable Federal law.
(ii)

Requirements.—
The data exchange reporting standards required by clause (i) shall, to the extent practicable—
(I)
incorporate a widely accepted, nonproprietary, searchable, computer-readable format;
(II)
be consistent with and implement applicable accounting principles;
(III)
be implemented in a manner that is cost-effective and improves program efficiency and effectiveness; and
(IV)
be capable of being continually upgraded as necessary.
(iii)

Incorporation of nonproprietary standards.—
In designating data exchange standards under this paragraph, the Secretary shall, to the extent practicable, incorporate existing nonproprietary standards, such as the eXtensible Mark up Language.
(iv)

Rule of construction.—
Nothing in this paragraph shall be construed to require a change to existing data exchange standards for Federal reporting about a program referred to in this section, if the head of the department or agency responsible for administering the program finds the standards to be effective and efficient.
(6)

Reduction of administrative burden.—
(A)

In general.—
The Secretary shall reduce the burden, on States and public and private implementing agencies at the local level, of administering this section, by—
(i)
reviewing and revising administrative data collection instruments and forms to eliminate duplication and streamline reporting requirements for States, eligible entities referred to in subsection (k)(2)(A), and nonprofit organizations referred to in subsection (l)(1)(B), including timelines for submitting reports;
(ii)
conducting an analysis of the total number of hours reported by administering agencies on complying with paperwork requirements, and exploring, in consultation with administering agencies, ways to reduce the number of hours spent by at least 15 percent;
(iii)
conducting a review of paperwork and data collection requirements for tribal grantees, and exploring, in consultation with tribes and tribal organizations, ways to reduce administrative burden, respect sovereignty, and acknowledge the different focus points for tribal grantees;
(iv)
collecting input from relevant State fiscal officials to align fiscal requirements and oversight for States and eligible entities to ensure consistency with standards and guidelines for other Federal formula grant programs; and
(v)
consulting with administering agencies and service delivery model representatives on needed and unneeded data elements regarding the dashboards provided for in subsection (d)(1)(B), consistent with the data requirements of such subsection.
(B)

Findings on paperwork reduction.—
(i)

Inclusion in report.—
In the 1st report submitted pursuant to subsection (j) more than 18 months after the date of the enactment of this Act, the Secretary shall include the findings of the Secretary with respect to the matters described in subparagraph (A).
(ii)

Implementation.—
Within 2 years after complying with clause (i), the Secretary shall implement the findings referred to in clause (i).
(i)

Application of Other Provisions of Title.—
(1)

In general.—
Except as provided in paragraph (2), the other provisions of this title shall not apply to a grant made under this section.
(2)

Exceptions.—
The following provisions of this title shall apply to a grant made under this section to the same extent and in the same manner as such provisions apply to allotments made under section 502(c):
(A)
Section 504(b)(6) (relating to prohibition on payments to excluded individuals and entities).
(B)
Section 504(c) (relating to the use of funds for the purchase of technical assistance).
(C)
Section 506 (relating to reports and audits), but only to the extent determined by the Secretary to be appropriate for grants made under this section.
(D)
Section 507 (relating to penalties for false statements).
(E)
Section 508 (relating to nondiscrimination).
(F)
Section 509(a) (relating to the administration of the grant program).
(j)

Annual Report to Congress.—
By December 31, 2023, and annually thereafter, the Secretary shall submit to the Congress a written report on the grants made under this section for the then preceding fiscal year, which shall include—
(1)
an eligible entity-by-eligible entity summary of the outcomes measured by the entity with respect to each benchmark described in subsection (e)(5) that apply to the entity;
(2)
information regarding any technical assistance funded under subparagraph (B) or (C) of subsection (k)(2), including the type of any such assistance provided;
(3)
information on the demographic makeup of families served by each such entity to the extent possible while respecting participant confidentiality, including race, ethnicity, educational attainment at enrollment, household income, and other demographic markers as determined by the Secretary;
(4)
the information described in subsection (d)(1)(E);
(5)
the estimated share of the eligible population served using grants made under this section;
(6)
a description of each service delivery model funded under this section by the eligible entities in each State, and the share (if any) of the grants expended on each model;
(7)
a description of non-Federal expenditures by eligible entities to qualify for matching funds under subsection (c)(4);
(8)
information on the uses of funds reserved under subsection (k)(2)(C);
(9)
information relating to those eligible entities for which funding is reserved under subsection (k)(2)(A), with modifications as necessary to reflect tribal data sovereignty, data privacy, and participant confidentiality; and
(10)
a list of data elements collected from eligible entities, and the purpose of each data element in measuring performance or enforcing requirements under this section.
(k)

Appropriations.—
(1)

In general.—
Out of any funds in the Treasury not otherwise appropriated, there are appropriated to the Secretary to carry out this section—
(A)
for fiscal year 2023, $500,000,000 for base grants;
(B)
for fiscal year 2024, $550,000,000, of which $500,000,000 shall be for base grants and $50,000,000 shall be for matching grants;
(C)
for fiscal year 2025, $600,000,000, of which $500,000,000 shall be for base grants and $100,000,000 shall be for matching grants;
(D)
for fiscal year 2026, $650,000,000, of which $500,000,000 shall be for base grants and $150,000,000 shall be for matching grants; and
(E)
for fiscal year 2027, $800,000,000, of which $500,000,000 shall be for base grants and $300,000,000 shall be for matching grants.
(2)

Reservations.—
Of each amount made available for base grants and each amount made available for matching grants appropriated under this subsection for a fiscal year (or portion of a fiscal year), the Secretary shall reserve—
(A)
6 percent of such amount for purposes of making and administering grants to eligible entities that are Indian Tribes (or a consortium of Indian Tribes), Tribal Organizations, or Urban Indian Organizations;
(B)
2 percent of such amount for purposes of providing technical assistance, directly or through grants or contracts—
(i)
for purposes as otherwise described in subsections (c)(5), (d)(1)(C)(iii), (d)(1)(E)(iii), and (d)(4)(E); and
(ii)
to entities referred to in subparagraph (A) of this paragraph;
(C)
2 percent of such amount for purposes of the provision of workforce support, retention, and case management, including workforce-related technical assistance, to eligible entities, research and evaluation, and program administration, directly or through grants or contracts, of which the Secretary shall use not more than $1,500,000 to establish and operate the Jackie Walorski Center for Evidence-Based Case Management; and
(D)
3 percent of such amount for purposes of research and evaluation (directly or through grants or contracts), and for administering this section (directly, through contracts, or otherwise).
(3)

Availability.—
(A)

In general.—
Except as provided in subparagraph (B), funds made available to an eligible entity under this section for a fiscal year (or portion of a fiscal year) shall remain available for expenditure by the eligible entity through the end of the second succeeding fiscal year after award. Any funds that are not expended by the eligible entity during the period in which the funds are available under the preceding sentence may be used for grants to nonprofit organizations under subsection (h)(2)(B).
(B)

Funds for pay for outcomes initiatives.—
Funds made available to an eligible entity under this section for a fiscal year (or portion of a fiscal year) for a pay for outcomes initiative shall remain available for expenditure by the eligible entity for not more than 10 years after the funds are so made available.
(4)

Allocation of funds.—
To the extent that the grant amount awarded under this section to an eligible entity is determined on the basis of relative population or poverty considerations, the Secretary shall make the determination using the most accurate Federal data available for the eligible entity.
(5)

Disposition of excess funds reserved for research, evaluation, and administration.—
To the extent that the amounts reserved under paragraph (2)(D) for a fiscal year are not obligated in the fiscal year, the Secretary may use the funds for any purpose described in this section or to offset any reduction with respect to this section that is required by Federal law.
(l)

Definitions.—
In this section:
(1)

Eligible entity.—
(A)

In general.—
The term “eligible entity” means a State, an Indian Tribe, Tribal Organization, or Urban Indian Organization, Puerto Rico, Guam, the Virgin Islands, the Northern Mariana Islands, and American Samoa.
(B)

Nonprofit organizations.—
Only for purposes of awarding grants under subsection (h)(2)(B), such term shall include a nonprofit organization with an established record of providing early childhood home visitation programs or initiatives in a State or several States.
(2)

Eligible family.—
The term “eligible family” means—
(A)
a woman who is pregnant, and the father of the child if the father is available; or
(B)
a parent or primary caregiver of a child, including grandparents or other relatives of the child, and foster parents, who are serving as the child's primary caregiver from birth to kindergarten entry, and including a noncustodial parent who has an ongoing relationship with, and at times provides physical care for, the child.
(3)

Indian tribe; tribal organization.—
The terms “Indian Tribe” and “Tribal Organization”, and “Urban Indian Organization” have the meanings given such terms in section 4 of the Indian Health Care Improvement Act.
(4)

Pay for outcomes initiative.—
The term “pay for outcomes initiative” means a performance-based grant, contract, cooperative agreement, or other agreement awarded by a public entity in which a commitment is made to pay for improved outcomes achieved as a result of the intervention that result in social benefit and direct cost savings or cost avoidance to the public sector. Such an initiative shall include—
(A)
a feasibility study that describes how the proposed intervention is based on evidence of effectiveness;
(B)
a rigorous, third-party evaluation that uses experimental or quasi-experimental design or other research methodologies that allow for the strongest possible causal inferences to determine whether the initiative has met its proposed outcomes as a result of the intervention;
(C)
an annual, publicly available report on the progress of the initiative; and
(D)
a requirement that payments are made to the recipient of a grant, contract, or cooperative agreement only when agreed upon outcomes are achieved, except that this requirement shall not apply with respect to payments to a third party conducting the evaluation described in subparagraph (B).
SEC. 511A.
[42 U.S.C. 711a]

EMERGENCY ASSISTANCE TO FAMILIES THROUGH HOME VISITING PROGRAMS.
(a)

Supplemental Appropriation.—
In addition to amounts otherwise appropriated, out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to the Secretary $150,000,000, to remain available through September 30, 2022, to enable eligible entities to conduct programs in accordance with section 511 and subsection (c) of this section.
(b)

Eligibility for Funds.—
To be eligible to receive funds made available by subsection (a) of this section, an entity shall—
(1)
as of the date of the enactment of this section, be conducting a program under section 511;
(2)
ensure the modification of grants, contracts, and other agreements, as applicable, executed under section 511 under which the program is conducted as are necessary to provide that, during the period that begins with the date of the enactment of this section and ends with the end of the 2nd succeeding fiscal year after the funds are awarded, the entity shall—
(A)
not reduce funding for, or staffing levels of, the program on account of reduced enrollment in the program; and
(B)
when using funds to provide emergency supplies to eligible families receiving grant services under section 511, ensure coordination with local diaper banks to the extent practicable; and
(3)
reaffirm that, in conducting the program, the entity will focus on priority populations (as defined in section 511(d)(4)).
(c)

Uses of Funds.—
An entity to which funds are provided under this section shall use the funds—
(1)
to serve families with home visits or with virtual visits, that may be conducted by the use of electronic information and telecommunications technologies, in a service delivery model described in section 511(d)(3)(A);
(2)
to pay hazard pay or other additional staff costs associated with providing home visits or administration for programs funded under section 511;
(3)
to train home visitors employed by the entity in conducting a virtual home visit and in emergency preparedness and response planning for families served, and may include training on how to safely conduct intimate partner violence screenings, and training on safety and planning for families served to support the family outcome improvements listed in section 511(d)(2)(B);
(4)
for the acquisition by families served by programs under section 511 of such technological means as are needed to conduct and support a virtual home visit;
(5)
to provide emergency supplies (such as diapers and diapering supplies including diaper wipes and diaper cream, necessary to ensure that a child using a diaper is properly cleaned and protected from diaper rash, formula, food, water, hand soap and hand sanitizer) to an eligible family (as defined in section 511(l)(2));
(6)
to coordinate with and provide reimbursement for supplies to diaper banks when using such entities to provide emergency supplies specified in paragraph (5); or
(7)
to provide prepaid grocery cards to an eligible family (as defined in section 511(l)(2)) participating in the maternal, infant, and early childhood home visiting program under section 511 for the purpose of enabling the family to meet the emergency needs of the family.
SEC. 512.
[42 U.S.C. 712]

SERVICES TO INDIVIDUALS WITH A POSTPARTUM CONDITION AND THEIR FAMILIES.
(a)

In General.—
In addition to any other payments made under this title to a State, the Secretary may make grants to eligible entities for projects for the establishment, operation, and coordination of effective and cost-efficient systems for the delivery of essential services to individuals with or at risk for postpartum conditions and their families.
(b)

Certain Activities.—
To the extent practicable and appropriate, the Secretary shall ensure that projects funded under subsection (a) provide education and services with respect to the diagnosis and management of postpartum conditions for individuals with or at risk for postpartum conditions and their families. The Secretary may allow such projects to include the following:
(1)
Delivering or enhancing outpatient and home-based health and support services, including case management and comprehensive treatment services.
(2)
Delivering or enhancing inpatient care management services that ensure the well-being of the mother and family and the future development of the infant.
(3)
Improving the quality, availability, and organization of health care and support services (including transportation services, attendant care, homemaker services, day or respite care, and providing counseling on financial assistance and insurance).
(4)
Providing education about postpartum conditions to promote earlier diagnosis and treatment. Such education may include—
(A)
providing complete information on postpartum conditions, symptoms, methods of coping with the illness, and treatment resources; and
(B)
in the case of a grantee that is a State, hospital, or birthing facility—
(i)
providing education to new mothers and fathers, and other family members as appropriate, concerning postpartum conditions before new mothers leave the health facility; and
(ii)
ensuring that training programs regarding such education are carried out at the health facility.
(c)

Integration With Other Programs.—
To the extent practicable and appropriate, the Secretary may integrate the grant program under this section with other grant programs carried out by the Secretary, including the program under section 330 of the Public Health Service Act.
(d)

Requirements.—
The Secretary shall establish requirements for grants made under this section that include a limit on the amount of grants funds that may be used for administration, accounting, reporting, or program oversight functions and a requirement for each eligible entity that receives a grant to submit, for each grant period, a report to the Secretary that describes how grant funds were used during such period.
(e)

Technical Assistance.—
The Secretary may provide technical assistance to entities seeking a grant under this section in order to assist such entities in complying with the requirements of this section.
(f)

Application of Other Provisions of Title.—
(1)

In general.—
Except as provided in paragraph (2), the other provisions of this title shall not apply to a grant made under this section.
(2)

Exceptions.—
The following provisions of this title shall apply to a grant made under this section to the same extent and in the same manner as such provisions apply to allotments made under section 502(c):
(A)
Section 504(b)(6) (relating to prohibition on payments to excluded individuals and entities).
(B)
Section 504(c) (relating to the use of funds for the purchase of technical assistance).
(C)
Section 504(d) (relating to a limitation on administrative expenditures).
(D)
Section 506 (relating to reports and audits), but only to the extent determined by the Secretary to be appropriate for grants made under this section.
(E)
Section 507 (relating to penalties for false statements).
(F)
Section 508 (relating to nondiscrimination).
(G)
Section 509(a) (relating to the administration of the grant program).
(g)

Definitions.—
In this section:
(1)
The term “eligible entity”—
(A)
means a public or nonprofit private entity; and
(B)
includes a State or local government, public-private partnership, recipient of a grant under section 330H of the Public Health Service Act (relating to the Healthy Start Initiative), public or nonprofit private hospital, community-based organization, hospice, ambulatory care facility, community health center, migrant health center, public housing primary care center, or homeless health center.
(2)
The term “postpartum condition” means postpartum depression or postpartum psychosis.
SEC. 513.
[42 U.S.C. 713]

PERSONAL RESPONSIBILITY EDUCATION.
(a)

Allotments to States.—
(1)

Amount.—
(A)

In general.—
For the purpose described in subsection (b), subject to the succeeding provisions of this section, for each of fiscal years 2010 through 2025, and for the period beginning on October 1, 2025, and ending on January 30, 2026, the Secretary shall allot to each State an amount equal to the product of—
(i)
the amount appropriated under subsection (f) for the fiscal year or period and available for allotments to States after the application of subsection (c); and
(ii)
the State youth population percentage determined under paragraph (2).
(B)

Minimum allotment.—
(i)

In general.—
Each State allotment under this paragraph for a fiscal year shall be at least $250,000. The previous sentence shall not apply with respect to State allotments under this paragraph for fiscal years 2024 and 2025, and for the period beginning on October 1, 2025, and ending on January 30, 2026.
(ii)

Pro rata adjustments.—
The Secretary shall adjust on a pro rata basis the amount of the State allotments determined under this paragraph for a fiscal year to the extent necessary to comply with clause (i).
(C)

Application required to access allotments.—
(i)

In general.—
A State shall not be paid from its allotment for a fiscal year or period described in subparagraph (A) unless the State submits an application to the Secretary for the fiscal year or period and the Secretary approves the application (or requires changes to the application that the State satisfies) and meets such additional requirements as the Secretary may specify.
(ii)

Requirements.—
The State application shall contain an assurance that the State has complied with the requirements of this section in preparing and submitting the application and shall include the following as well as such additional information as the Secretary may require:
(I)
Based on data from the Centers for Disease Control and Prevention National Center for Health Statistics, the most recent pregnancy rates for the State for youth ages 10 to 14 and youth ages 15 to 19 for which data are available, the most recent birth rates for such youth populations in the State for which data are available, and trends in those rates for the most recently preceding 5-year period for which such data are available.
(II)
State-established goals for reducing the pregnancy rates and birth rates for such youth populations.
(III)
A description of the State's plan for using the State allotments provided under this section to achieve such goals, especially among youth populations that are the most high-risk or vulnerable for pregnancies or otherwise have special circumstances, including youth in foster care, homeless youth, youth with HIV/AIDS, pregnant youth who are under 21 years of age, mothers who are under 21 years of age, and youth residing in areas with high birth rates for youth.
(2)

State youth population percentage.—
(A)

In general.—
For purposes of paragraph (1)(A)(ii), the State youth population percentage is, with respect to a State, the proportion (expressed as a percentage) of—
(i)
the number of individuals who have attained age 10 but not attained age 20 in the State; to
(ii)
the number of such individuals in all States.
(B)

Determination of number of youth.—
The number of individuals described in clauses (i) and (ii) of subparagraph (A) in a State shall be determined on the basis of the most recent Bureau of the Census data.
(3)

Availability of state allotments.—
Subject to paragraph (4)(A), amounts allotted to a State pursuant to this subsection for a fiscal year or period described in paragraph (1)(A) shall remain available for expenditure by the State through the end of the second fiscal year following such fiscal year or period.
(4)

Authority to award grants from state allotments to local organizations and entities in nonparticipating states.—
(A)

Grants from unexpended allotments.—
If a State does not submit an application under this section for fiscal year 2010 or 2011, the State shall no longer be eligible to submit an application to receive funds from the amounts allotted for the State for each of fiscal years 2010 through 2023 and for each period described in paragraph (1)(A) and such amounts shall be used by the Secretary to award grants under this paragraph for each of fiscal years 2012 through 2023 and for each period so described. The Secretary also shall use any amounts from the allotments of States that submit applications under this section for a fiscal year or period so described that remain unexpended as of the end of the period in which the allotments are available for expenditure under paragraph (3) for awarding grants under this paragraph.
(B)

Competitive prep grants.—
(i)

In general.—
The Secretary shall continue through each period described in paragraph (1)(A) grants awarded for any of fiscal years 2015 through 2017 to local organizations and entities to conduct, consistent with subsection (b), programs and activities in States that do not submit an application for an allotment under this section for fiscal year 2010 or 2011.
(ii)

Faith-based organizations or consortia.—
The Secretary may solicit and award grants under this paragraph to faith-based organizations or consortia.
(C)

Evaluation.—
An organization or entity awarded a grant under this paragraph shall agree to participate in a rigorous Federal evaluation.
(5)

Maintenance of effort.—
No payment shall be made to a State from the allotment determined for the State under this subsection or to a local organization or entity awarded a grant under paragraph (4), if the expenditure of non-federal funds by the State, organization, or entity for activities, programs, or initiatives for which amounts from allotments and grants under this subsection may be expended is less than the amount expended by the State, organization, or entity for such programs or initiatives for fiscal year 2009.
(6)

Data collection and reporting.—
A State or local organization or entity receiving funds under this section shall cooperate with such requirements relating to the collection of data and information and reporting on outcomes regarding the programs and activities carried out with such funds, as the Secretary shall specify.
(b)

Purpose.—
(1)

In general.—
The purpose of an allotment under subsection (a)(1) to a State is to enable the State (or, in the case of grants made under subsection (a)(4)(B), to enable a local organization or entity) to carry out personal responsibility education programs consistent with this subsection.
(2)

Personal responsibility education programs.—
(A)

In general.—
In this section, the term “personal responsibility education program” means a program that is designed to educate adolescents on—
(i)
both abstinence and contraception for the prevention of pregnancy and sexually transmitted infections, including HIV/AIDS, consistent with the requirements of subparagraph (B); and
(ii)
at least 3 of the adulthood preparation subjects described in subparagraph (C).
(B)

Requirements.—
The requirements of this subparagraph are the following:
(i)
The program replicates evidence-based effective programs or substantially incorporates elements of effective programs that have been proven on the basis of rigorous scientific research to change behavior, which means delaying sexual activity, increasing condom or contraceptive use for sexually active youth, or reducing pregnancy among youth.
(ii)
The program is medically-accurate and complete.
(iii)
The program includes activities to educate youth who are sexually active regarding responsible sexual behavior with respect to both abstinence and the use of contraception.
(iv)
The program places substantial emphasis on both abstinence and contraception for the prevention of pregnancy among youth and sexually transmitted infections.
(v)
The program provides age-appropriate information and activities.
(vi)
The information and activities carried out under the program are provided in the cultural context that is most appropriate for individuals in the particular population group to which they are directed.
(C)

Adulthood preparation subjects.—
The adulthood preparation subjects described in this subparagraph are the following:
(i)
Healthy relationships, including marriage and family interactions.
(ii)
Adolescent development, such as the development of healthy attitudes and values about adolescent growth and development, body image, racial and ethnic diversity, and other related subjects.
(iii)
Financial literacy.
(iv)
Parent-child communication.
(v)
Educational and career success, such as developing skills for employment preparation, job seeking, independent living, financial self-sufficiency, and workplace productivity.
(vi)
Healthy life skills, such as goal-setting, decision making, negotiation, communication and interpersonal skills, and stress management.
(c)

Reservations of Funds.—
(1)

Grants to implement innovative strategies.—
Subject to paragraph (3), from the amount appropriated under subsection (f) for the fiscal year, the Secretary shall reserve $10,000,000 of such amount for purposes of awarding grants to entities to implement innovative youth pregnancy prevention strategies and target services to high-risk, vulnerable, and culturally under-represented youth populations, including youth in foster care, homeless youth, youth with HIV/AIDS, victims of human trafficking, pregnant women who are under 21 years of age and their partners, mothers who are under 21 years of age and their partners, and youth residing in areas with high birth rates for youth. An entity awarded a grant under this paragraph shall agree to participate in a rigorous Federal evaluation of the activities carried out with grant funds.
(2)

Other reservations.—
Subject to paragraph (3), from the amount appropriated under subsection (f) for the fiscal year that remains after the application of paragraph (1), the Secretary shall reserve the following amounts:
(A)

Grants for indian tribes or tribal organizations.—
The Secretary shall reserve 5 percent of such remainder for purposes of awarding grants to Indian tribes and tribal organizations in such manner, and subject to such requirements, as the Secretary, in consultation with Indian tribes and tribal organizations, determines appropriate.
(B)

Secretarial responsibilities.—
(i)

Reservation of funds.—
The Secretary shall reserve 10 percent of such remainder for expenditures by the Secretary for the activities described in clauses (ii) and (iii).
(ii)

Program support.—
The Secretary shall provide, directly or through a competitive grant process, research, training and technical assistance, including dissemination of research and information regarding effective and promising practices, providing consultation and resources on a broad array of teen pregnancy prevention strategies, including abstinence and contraception, and developing resources and materials to support the activities of recipients of grants and other State, tribal, and community organizations working to reduce teen pregnancy. In carrying out such functions, the Secretary shall collaborate with a variety of entities that have expertise in the prevention of teen pregnancy, HIV and sexually transmitted infections, healthy relationships, financial literacy, and other topics addressed through the personal responsibility education programs.
(iii)

Evaluation.—
The Secretary shall evaluate the programs and activities carried out with funds made available through allotments or grants under this section.
(3)

Exception.—
Paragraphs (1) and (2) shall not apply with respect to any amount appropriated under subsection (f) for a period described in subsection (a)(1)(A) for fiscal year 2026.
(d)

Administration.—
(1)

In general.—
The Secretary shall administer this section through the Assistant Secretary for the Administration for Children and Families within the Department of Health and Human Services.
(2)

Application of other provisions of title.—
(A)

In general.—
Except as provided in subparagraph (B), the other provisions of this title shall not apply to allotments or grants made under this section.
(B)

Exceptions.—
The following provisions of this title shall apply to allotments and grants made under this section to the same extent and in the same manner as such provisions apply to allotments made under section 502(c):
(i)
Section 504(b)(6) (relating to prohibition on payments to excluded individuals and entities).
(ii)
Section 504(c) (relating to the use of funds for the purchase of technical assistance).
(iii)
Section 504(d) (relating to a limitation on administrative expenditures).
(iv)
Section 506 (relating to reports and audits), but only to the extent determined by the Secretary to be appropriate for grants made under this section.
(v)
Section 507 (relating to penalties for false statements).
(vi)
Section 508 (relating to nondiscrimination).
(e)

Definitions.—
In this section:
(1)

Age-appropriate.—
The term “age-appropriate”, with respect to the information in pregnancy prevention, means topics, messages, and teaching methods suitable to particular ages or age groups of children and adolescents, based on developing cognitive, emotional, and behavioral capacity typical for the age or age group.
(2)

Medically accurate and complete.—
The term “medically accurate and complete” means verified or supported by the weight of research conducted in compliance with accepted scientific methods and—
(A)
published in peer-reviewed journals, where applicable; or
(B)
comprising information that leading professional organizations and agencies with relevant expertise in the field recognize as accurate, objective, and complete.
(3)

Indian tribes; tribal organizations.—
The terms “Indian tribe” and “Tribal organization” have the meanings given such terms in section 4 of the Indian Health Care Improvement Act (25 U.S.C. 1603)).
(4)

Youth.—
The term “youth” means an individual who has attained age 10 but has not attained age 20.
(f)

Appropriation.—
For the purpose of carrying out this section, there is appropriated, out of any money in the Treasury not otherwise appropriated, $75,000,000 for each of fiscal years 2010 through 2025, and for the period beginning on October 1, 2025, and ending on January 30, 2026, an amount equal to the pro rata portion of the amount appropriated for the corresponding period for fiscal year 2025. Amounts appropriated under this subsection shall remain available until expended.
TITLE VI—

CORONAVIRUS RELIEF , FISCAL RECOVERY, AND CRITICAL CAPITAL PROJECTS FUNDS

TABLE OF CONTENTS OF TITLE1
Sec. 601.
Coronavirus Relief Fund.
Sec. 602.
Coronavirus State Fiscal Recovery Fund.
Sec. 603.
Coronavirus Local Fiscal Recovery Fund.
Sec. 604.
Coronavirus Capital Projects Fund.
Sec. 605.
Local Assistance and Tribal Consistency Fund.
^1
This table of contents does not appear in the law.
SEC. 601.
[42 U.S.C. 801]

CORONAVIRUS RELIEF FUND.
(a)

Appropriation.—
(1)

In general.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for making payments to States, Tribal governments, and units of local government under this section, $150,000,000,000 for fiscal year 2020.
(2)

Reservation of funds.—
Of the amount appropriated under paragraph (1), the Secretary shall reserve—
(A)
$3,000,000,000 of such amount for making payments to the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa; and
(B)
$8,000,000,000 of such amount for making payments to Tribal governments.
(b)

Authority to Make Payments.—
(1)

In general.—
Subject to paragraph (2), not later than 30 days after the date of enactment of this section, the Secretary shall pay each State and Tribal government, and each unit of local government that meets the condition described in paragraph (2), the amount determined for the State, Tribal government, or unit of local government, for fiscal year 2020 under subsection (c).
(2)

Direct payments to units of local government.—
If a unit of local government of a State submits the certification required by subsection (e) for purposes of receiving a direct payment from the Secretary under the authority of this paragraph, the Secretary shall reduce the amount determined for that State by the relative unit of local government population proportion amount described in subsection (c)(5) and pay such amount directly to such unit of local government.
(c)

Payment Amounts.—
(1)

In general.—
Subject to paragraph (2), the amount paid under this section for fiscal year 2020 to a State that is 1 of the 50 States shall be the amount equal to the relative population proportion amount determined for the State under paragraph (3) for such fiscal year.
(2)

Minimum payment.—
(A)

In general.—
No State that is 1 of the 50 States shall receive a payment under this section for fiscal year 2020 that is less than $1,250,000,000.
(B)

Pro rata adjustments.—
The Secretary shall adjust on a pro rata basis the amount of the payments for each of the 50 States determined under this subsection without regard to this subparagraph to the extent necessary to comply with the requirements of subparagraph (A).
(3)

Relative population proportion amount.—
For purposes of paragraph (1), the relative population proportion amount determined under this paragraph for a State for fiscal year 2020 is the product of—
(A)
the amount appropriated under paragraph (1) of subsection (a) for fiscal year 2020 that remains after the application of paragraph (2) of that subsection; and
(B)
the relative State population proportion (as defined in paragraph (4)).
(4)

Relative state population proportion defined.—
For purposes of paragraph (3)(B), the term “relative State population proportion” means, with respect to a State, the quotient of—
(A)
the population of the State; and
(B)
the total population of all States (excluding the District of Columbia and territories specified in subsection (a)(2)(A)).
(5)

Relative unit of local government population proportion amount.—
For purposes of subsection (b)(2), the term “relative unit of local government population proportion amount” means, with respect to a unit of local government and a State, the amount equal to the product of—
(A)
45 percent of the amount of the payment determined for the State under this subsection (without regard to this paragraph); and
(B)
the amount equal to the quotient of—
(i)
the population of the unit of local government; and
(ii)
the total population of the State in which the unit of local government is located.
(6)

District of columbia and territories.—
The amount paid under this section for fiscal year 2020 to a State that is the District of Columbia or a territory specified in subsection (a)(2)(A) shall be the amount equal to the product of—
(A)
the amount set aside under subsection (a)(2)(A) for such fiscal year; and
(B)
each such District's and territory's share of the combined total population of the District of Columbia and all such territories, as determined by the Secretary.
(7)

Tribal governments.—
From the amount set aside under subsection (a)(2)(B) for fiscal year 2020, the amount paid under this section for fiscal year 2020 to a Tribal government shall be the amount the Secretary shall determine, in consultation with the Secretary of the Interior and Indian Tribes, that is based on increased expenditures of each such Tribal government (or a tribally-owned entity of such Tribal government) relative to aggregate expenditures in fiscal year 2019 by the Tribal government (or tribally-owned entity) and determined in such manner as the Secretary determines appropriate to ensure that all amounts available under subsection (a)(2)(B) for fiscal year 2020 are distributed to Tribal governments.
(8)

Data.—
For purposes of this subsection, the population of States and units of local governments shall be determined based on the most recent year for which data are available from the Bureau of the Census.
(d)

Use of Funds.—
A State, Tribal government, and unit of local government shall use the funds provided under a payment made under this section to cover only those costs of the State, Tribal government, or unit of local government that—
(1)
are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19);
(2)
were not accounted for in the budget most recently approved as of the date of enactment of this section for the State or government; and
(3)
were incurred during the period that begins on March 1, 2020, and ends on December 31, 2021 (or, in the case of costs incurred by a Tribal government, during the period that begins on March 1, 2020, and ends on December 31, 2022).
(e)

Certification.—
In order to receive a payment under this section, a unit of local government shall provide the Secretary with a certification signed by the Chief Executive for the unit of local government that the local government’s proposed uses of the funds are consistent with subsection (d).
(f)

Inspector General Oversight; Recoupment.—
(1)

Oversight authority.—
The Inspector General of the Department of the Treasury shall conduct monitoring and oversight of the receipt, disbursement, and use of funds made available under this section.
(2)

Recoupment.—
If the Inspector General of the Department of the Treasury determines that a State, Tribal government, or unit of local government has failed to comply with subsection (d), the amount equal to the amount of funds used in violation of such subsection shall be booked as a debt of such entity owed to the Federal Government. Amounts recovered under this subsection shall be deposited into the general fund of the Treasury.
(3)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to the Office of the Inspector General of the Department of the Treasury, $35,000,000 to carry out oversight and recoupment activities under this subsection. Amounts appropriated under the preceding sentence shall remain available until expended.
(4)

Authority of inspector general.—
Nothing in this subsection shall be construed to diminish the authority of any Inspector General, including such authority as provided in the Inspector General Act of 1978 (5 U.S.C. App.).
(g)

Definitions.—
In this section:
(1)

Indian tribe.—
The term “Indian Tribe” has the meaning given that term in section 4(e) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304(e)).
(2)

Local government.—
The term “unit of local government” means a county, municipality, town, township, village, parish, borough, or other unit of general government below the State level with a population that exceeds 500,000.
(3)

Secretary.—
The term “Secretary” means the Secretary of the Treasury.
(4)

State.—
The term “State” means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa.
(5)

Tribal government.—
The term “Tribal government” means the recognized governing body of an Indian Tribe.
SEC. 602.
[42 U.S.C. 802]

CORONAVIRUS STATE FISCAL RECOVERY FUND.
(a)

Appropriation.—
In addition to amounts otherwise available, there is appropriated for fiscal year 2021, out of any money in the Treasury not otherwise appropriated—
(1)
$219,800,000,000, to remain available through December 31, 2024 (except as provided in subsection (c)(5)), for making payments under this section to States, territories, and Tribal governments to mitigate the fiscal effects stemming from the public health emergency with respect to the Coronavirus Disease (COVID–19); and
(2)
$50,000,000, to remain available until expended, for the costs of the Secretary for administration of the funds established under this title.
(b)

Authority to Make Payments.—
(1)

Payments to territories.—
(A)

In general.—
The Secretary shall reserve $4,500,000,000 of the amount appropriated under subsection (a)(1) to make payments to the territories.
(B)

Allocation.—
Of the amount reserved under subparagraph (A)—
(i)
50 percent of such amount shall be allocated by the Secretary equally to each territory; and
(ii)
50 percent of such amount shall be allocated by the Secretary as an additional amount to each territory in an amount which bears the same proportion to ½ of the total amount reserved under subparagraph (A) as the population of the territory bears to the total population of all such territories.
(C)

Payment.—
The Secretary shall pay each territory the total of the amounts allocated for the territory under subparagraph (B) in accordance with paragraph (6).
(2)

Payments to tribal governments.—
(A)

In general.—
The Secretary shall reserve $20,000,000,000 of the amount appropriated under subsection (a)(1) to make payments to Tribal governments.
(B)

Allocation.—
Of the amount reserved under subparagraph (A)—
(i)
$1,000,000,000 shall be allocated by the Secretary equally among each of the Tribal governments; and
(ii)
$19,000,000,000 shall be allocated by the Secretary to the Tribal governments in a manner determined by the Secretary.
(C)

Payment.—
The Secretary shall pay each Tribal government the total of the amounts allocated for the Tribal government under subparagraph (B) in accordance with paragraph (6).
(3)

Payments to each of the 50 states and the district of columbia.—
(A)

In general.—
The Secretary shall reserve $195,300,000,000 of the amount appropriated under subsection (a)(1) to make payments to each of the 50 States and the District of Columbia.
(B)

Allocations.—
Of the amount reserved under subparagraph (A)—
(i)
$25,500,000,000 of such amount shall be allocated by the Secretary equally among each of the 50 States and the District of Columbia;
(ii)
an amount equal to $1,250,000,000 less the amount allocated for the District of Columbia pursuant to section 601(c)(6) shall be allocated by the Secretary as an additional amount to the District of Columbia; and
(iii)
an amount equal to the remainder of the amount reserved under subparagraph (A) after the application of clauses (i) and (ii) of this subparagraph shall be allocated by the Secretary as an additional amount to each of the 50 States and the District of Columbia in an amount which bears the same proportion to such remainder as the average estimated number of seasonally-adjusted unemployed individuals (as measured by the Bureau of Labor Statistics Local Area Unemployment Statistics program) in the State or District of Columbia over the 3-month period ending with December 2020 bears to the average estimated number of seasonally-adjusted unemployed individuals in all of the 50 States and the District of Columbia over the same period.
(C)

Payment.—
(i)

In general.—
Subject to clause (ii), the Secretary shall pay each of the 50 States and the District of Columbia, from the amount reserved under subparagraph (A), the total of the amounts allocated for the State and District of Columbia under subparagraph (B) in accordance with paragraph (6).
(ii)

Minimum payment requirement.—
(I)

In general.—
The sum of—
- (aa)
the total amounts allocated for 1 of the 50 States or the District of Columbia under subparagraph (B) (as determined without regard to this clause); and
- (bb)
the amounts allocated under section 603 to the State (for distribution by the State to nonentitlement units of local government in the State) and to metropolitan cities and counties in the State;
shall not be less than the amount allocated to the State or District of Columbia for fiscal year 2020 under section 601, including any amount paid directly to a unit of local government in the State under such section.
(II)

Pro rata adjustment.—
The Secretary shall adjust on a pro rata basis the amount of the allocations for each of the 50 States and the District of Columbia determined under subparagraph (B)(iii) (without regard to this clause) to the extent necessary to comply with the requirement of subclause (I).
(4)

Pro rata adjustment authority.—
The amounts otherwise determined for allocation and payment under paragraphs (1), (2), and (3) may be adjusted by the Secretary on a pro rata basis to the extent necessary to ensure that all available funds are allocated to States, territories, and Tribal governments in accordance with the requirements specified in each such paragraph (as applicable).
(5)

Population data.—
For purposes of determining allocations for a territory under this section, the population of the territory shall be determined based on the most recent data available from the Bureau of the Census.
(6)

Timing.—
(A)

States and territories.—
(i)

In general.—
To the extent practicable, subject to clause (ii), with respect to each State and territory allocated a payment under this subsection, the Secretary shall make the payment required for the State or territory not later than 60 days after the date on which the certification required under subsection (d)(1) is provided to the Secretary.
(ii)

Authority to split payment.—
(I)

In general.—
The Secretary shall have the authority to withhold payment of up to 50 percent of the amount allocated to each State and territory (other than payment of the amount allocated under paragraph (3)(B)(ii) to the District of Columbia) for a period of up to 12 months from the date on which the State or territory provides the certification required under subsection (d)(1). The Secretary shall exercise such authority with respect to a State or territory based on the unemployment rate in the State or territory as of such date.
(II)

Payment of withheld amount.—
Before paying to a State or territory the remainder of an amount allocated to the State or territory (subject to subclause (III)) that has been withheld by the Secretary under subclause (I), the Secretary shall require the State or territory to submit a second certification under subsection (d)(1), in addition to such other information as the Secretary may require.
(III)

Recovery of amounts subject to recoupment.—
If a State or territory is required under subsection (e) to repay funds for failing to comply with subsection (c), the Secretary may reduce the amount otherwise payable to the State or territory under subclause (II) by the amount that the State or territory would otherwise be required to repay under such subsection (e).
(B)

Tribal governments.—
To the extent practicable, with respect to each Tribal government for which an amount is allocated under this subsection, the Secretary shall make the payment required for the Tribal government not later than 60 days after the date of enactment of this section.
(C)

Initial payment to district of columbia.—
The Secretary shall pay the amount allocated under paragraph (3)(B)(ii) to the District of Columbia not later than 15 days after the date of enactment of this section.
(c)

Requirements.—
(1)

Use of funds.—
Subject to paragraph (2), and except as provided in paragraphs (3), (4), and (5), a State, territory, or Tribal government shall only use the funds provided under a payment made under this section, or transferred pursuant to section 603(c)(4), to cover costs incurred by the State, territory, or Tribal government, by December 31, 2024—
(A)
to respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19) or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
(B)
to respond to workers performing essential work during the COVID–19 public health emergency by providing premium pay to eligible workers of the State, territory, or Tribal government that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work;
(C)
for the provision of government services up to an amount equal to the greater of—
(i)
the amount of the reduction in revenue of such State, territory, or Tribal government due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year of the State, territory, or Tribal government prior to the emergency; or
(ii)
$10,000,000;
(D)
to make necessary investments in water, sewer, or broadband infrastructure; or
(E)
to provide emergency relief from natural disasters or the negative economic impacts of natural disasters, including temporary emergency housing, food assistance, financial assistance for lost wages, or other immediate needs.
(2)

Further restriction on use of funds.—
(A)

In general.—
A State or territory shall not use the funds provided under this section or transferred pursuant to section 603(c)(4) to either directly or indirectly offset a reduction in the net tax revenue of such State or territory resulting from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase.
(B)

Pension funds.—
No State or territory may use funds made available under this section for deposit into any pension fund.
(3)

Transfer authority.—
A State, territory, or Tribal government receiving a payment from funds made available under this section may transfer funds to a private nonprofit organization (as that term is defined in section 401 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11360(17))2, a Tribal organization (as that term is defined in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304)), a public benefit corporation involved in the transportation of passengers or cargo, or a special-purpose unit of State or local government.
^2
So in law. The reference to the US Code in paragraph (3) probably should read “(42 U.S.C. 11360)”. See amendment made by section 102(b) of division LL of Public Law 117–328.
(4)

Use of funds to satisfy non-federal matching requirements for authorized bureau of reclamation water projects.—
Funds provided under this section for an authorized Bureau of Reclamation project may be used for purposes of satisfying any non-Federal matching requirement required for the project.
(5)

Authority to use funds for certain infrastructure projects.—
(A)

In general.—
Subject to subparagraph (C), notwithstanding any other provision of law, a State, territory, or Tribal government receiving a payment under this section may use funds provided under such payment for projects described in subparagraph (B), including, to the extent consistent with guidance or rules issued by the Secretary or the head of a Federal agency to which the Secretary has delegated authority pursuant to subparagraph (C)(iv)—
(i)
in the case of a project eligible under section 117 of title 23, United States Code, or section 5309 or 6701 of title 49, United States Code, to satisfy a non-Federal share requirement applicable to such a project; and
(ii)
in the case of a project eligible for credit assistance under the TIFIA program under chapter 6 of title 23, United States Code—
(I)
to satisfy a non-Federal share requirement applicable to such a project; and
(II)
to repay a loan provided under such program.
(B)

Projects described.—
A project referred to in subparagraph (A) is any of the following:
(i)
A project eligible under section 117 of title 23, United States Code.
(ii)
A project eligible under section 119 of title 23, United States Code.
(iii)
A project eligible under section 124 of title 23, United States Code, as added by the Infrastructure Investment and Jobs Act.
(iv)
A project eligible under section 133 of title 23, United States Code.
(v)
An activity to carry out section 134 of title 23, United States Code.
(vi)
A project eligible under section 148 of title 23, United States Code.
(vii)
A project eligible under section 149 of title 23, United States Code.
(viii)
A project eligible under section 151(f) of title 23, United States Code, as added by the Infrastructure Investment and Jobs Act.
(ix)
A project eligible under section 165 of title 23, United States Code.
(x)
A project eligible under section 167 of title 23, United States Code.
(xi)
A project eligible under section 173 of title 23, United States Code, as added by the Infrastructure Investment and Jobs Act.
(xii)
A project eligible under section 175 of title 23, United States Code, as added by the Infrastructure Investment and Jobs Act.
(xiii)
A project eligible under section 176 of title 23, United States Code, as added by the Infrastructure Investment and Jobs Act.
(xiv)
A project eligible under section 202 of title 23, United States Code.
(xv)
A project eligible under section 203 of title 23, United States Code.
(xvi)
A project eligible under section 204 of title 23, United States Code.
(xvii)
A project eligible under the program for national infrastructure investments (commonly known as the “Rebuilding American Infrastructure with Sustainability and Equity (RAISE) grant program”).
(xviii)
A project eligible for credit assistance under the TIFIA program under chapter 6 of title 23, United States Code.
(xix)
A project that furthers the completion of a designated route of the Appalachian Development Highway System under section 14501 of title 40, United States Code.
(xx)
A project eligible under section 5307 of title 49, United States Code.
(xxi)
A project eligible under section 5309 of title 49, United States Code.
(xxii)
A project eligible under section 5311 of title 49, United States Code.
(xxiii)
A project eligible under section 5337 of title 49, United States Code.
(xxiv)
A project eligible under section 5339 of title 49, United States Code.
(xxv)
A project eligible under section 6703 of title 49, United States Code, as added by the Infrastructure Investment and Jobs Act.
(xxvi)
A project eligible under title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.).
(xxvii)
A project eligible under the bridge replacement, rehabilitation, preservation, protection, and construction program under paragraph (1) under the heading “highway infrastructure program” under the heading “Federal highway administration” under the heading “Department of Transportation” under title VIII of division J of the Infrastructure Investment and Jobs Act.
(C)

Limitations; application of requirements.—
(i)

Limitation on amounts to be used for infrastructure projects.—
(I)

In general.—
The total amount that a State, territory, or Tribal government may use from a payment made under this section for uses described in subparagraph (A) shall not exceed the greater of—
- (aa)
$10,000,000; and
- (bb)
30 percent of such payment.
(II)

Rule of application.—
The spending limitation under subclause (I) shall not apply to any use of funds permitted under paragraph (1), and any such use of funds shall be disregarded for purposes of applying such spending limitation.
(ii)

Limitation on operating expenses.—
Funds provided under a payment made under this section shall not be used for operating expenses of a project described in clauses (xx) through (xxiv) of subparagraph (B).
(iii)

Application of requirements.—
Except as otherwise determined by the Secretary or the head of a Federal agency to which the Secretary has delegated authority pursuant to clause (iv) or provided in this section—
(I)
the requirements of section 60102 of the Infrastructure Investment and Jobs Act shall apply to funds provided under a payment made under this section that are used pursuant to subparagraph (A) for a project described in clause (xxvi) of subparagraph (B) that relates to broadband infrastructure;
(II)
the requirements of titles 23, 40, and 49 of the United States Code, title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.), and the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et. seq) shall apply to funds provided under a payment made under this section that are used for projects described in subparagraph (B); and
(III)
a State government receiving a payment under this section may use funds provided under such payment for projects described in clauses (i) through (xxvii) of subparagraph (B), as applicable, that—
- (aa)
demonstrate progress in achieving a state of good repair as required by the State’s asset management plan under section 119(e) of title 23, United States Code; and
- (bb)
support the achievement of 1 or more performance targets of the State established under section 150 of title 23, United States Code.
(iv)

Oversight.—
The Secretary may delegate oversight and administration of the requirements described in clause (iii) to the appropriate Federal agency.
(v)

Supplement, not supplant.—
Amounts from a payment made under this section that are used by a State, territory, or Tribal government for uses described in subparagraph (A) shall supplement, and not supplant, other Federal, State, territorial, Tribal, and local government funds (as applicable) otherwise available for such uses.
(D)

Reports.—
The Secretary, in consultation with the Secretary of Transportation, shall provide periodic reports on the use of funds by States, territories, and Tribal governments under subparagraph (A).
(E)

Availability.—
Funds provided under a payment made under this section to a State, territory, or Tribal government shall remain available for obligation for a use described in subparagraph (A) through December 31, 2024, except that no amount of such funds may be expended after September 30, 2026.
(d)

Certifications and Reports.—
(1)

In general.—
In order for a State or territory to receive a payment under this section, or a transfer of funds under section 603(c)(4), the State or territory shall provide the Secretary with a certification, signed by an authorized officer of such State or territory, that such State or territory requires the payment or transfer to carry out the activities specified in subsection (c) of this section and will use any payment under this section, or transfer of funds under section 603(c)(4), in compliance with subsection (c) of this section.
(2)

Reporting.—
Any State, territory, or Tribal government receiving a payment under this section shall provide to the Secretary periodic reports providing a detailed accounting of—
(A)
the uses of funds by such State, territory, or Tribal government, including, in the case of a State or a territory, all modifications to the State's or territory's tax revenue sources during the covered period; and
(B)
such other information as the Secretary may require for the administration of this section.
(e)

Recoupment.—
Any State, territory, or Tribal government that has failed to comply with subsection (c) shall be required to repay to the Secretary an amount equal to the amount of funds used in violation of such subsection, provided that, in the case of a violation of subsection (c)(2)(A), the amount the State or territory shall be required to repay shall be lesser of—
(1)
the amount of the applicable reduction to net tax revenue attributable to such violation; and
(2)
the amount of funds received by such State or territory pursuant to a payment made under this section or a transfer made under section 603(c)(4).
(f)

Regulations.—
The Secretary shall have the authority to issue such regulations as may be necessary or appropriate to carry out this section.
(g)

Definitions.—
In this section:
(1)

Covered period.—
The term “covered period” means, with respect to a State, territory, or Tribal government, the period that—
(A)
begins on March 3, 2021; and
(B)
ends on the last day of the fiscal year of such State, territory, or Tribal government in which all funds received by the State, territory, or Tribal government from a payment made under this section or a transfer made under section 603(c)(4) have been expended or returned to, or recovered by, the Secretary.
(2)

Eligible workers.—
The term “eligible workers” means those workers needed to maintain continuity of operations of essential critical infrastructure sectors and additional sectors as each Governor of a State or territory, or each Tribal government, may designate as critical to protect the health and well-being of the residents of their State, territory, or Tribal government.
(3)

Premium pay.—
The term “premium pay” means an amount of up to $13 per hour that is paid to an eligible worker, in addition to wages or remuneration the eligible worker otherwise receives, for all work performed by the eligible worker during the COVID–19 public health emergency. Such amount may not exceed $25,000 with respect to any single eligible worker.
(4)

Secretary.—
The term “Secretary” means the Secretary of the Treasury.
(5)

State.—
The term “State” means each of the 50 States and the District of Columbia.
(6)

Territory.—
The term “territory” means the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa.
(7)

Tribal government.—
The term “Tribal Government” means the recognized governing body of any Indian or Alaska Native tribe, band, nation, pueblo, village, community, component band, or component reservation, individually identified (including parenthetically) in the list published most recently as of the date of enactment of this Act pursuant to section 104 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 5131).
SEC. 603.
[42 U.S.C. 803]

CORONAVIRUS LOCAL FISCAL RECOVERY FUND.
(a)

Appropriation.—
In addition to amounts otherwise available, there is appropriated for fiscal year 2021, out of any money in the Treasury not otherwise appropriated, $130,200,000,000, to remain available through December 31, 2024 (except as provided in subsection (c)(6)), for making payments under this section to metropolitan cities, nonentitlement units of local government, and counties to mitigate the fiscal effects stemming from the public health emergency with respect to the Coronavirus Disease (COVID–19).
(b)

Authority to Make Payments.—
(1)

Metropolitan cities.—
(A)

In general.—
Of the amount appropriated under subsection (a), the Secretary shall reserve $45,570,000,000 to make payments to metropolitan cities.
(B)

Allocation and payment.—
From the amount reserved under subparagraph (A), the Secretary shall allocate and, in accordance with paragraph (7), pay to each metropolitan city an amount determined for the metropolitan city consistent with the formula under section 106(b) of the Housing and Community Development Act of 1974 (42 U.S.C. 5306(b)), except that, in applying such formula, the Secretary shall substitute “all metropolitan cities” for “all metropolitan areas” each place it appears.
(2)

Nonentitlement units of local government.—
(A)

In general.—
Of the amount appropriated under subsection (a), the Secretary shall reserve $19,530,000,000 to make payments to States for distribution by the State to nonentitlement units of local government in the State.
(B)

Allocation and payment.—
From the amount reserved under subparagraph (A), the Secretary shall allocate and, in accordance with paragraph (7), pay to each State an amount which bears the same proportion to such reserved amount as the total population of all areas that are non-metropolitan cities in the State bears to the total population of all areas that are non-metropolitan cities in all such States.
(C)

Distribution to nonentitlement units of local government.—
(i)

In general.—
Not later than 30 days after a State receives a payment under subparagraph (B), the State shall distribute to each nonentitlement unit of local government in the State an amount that bears the same proportion to the amount of such payment as the population of the nonentitlement unit of local government bears to the total population of all the nonentitlement units of local government in the State, subject to clause (iii).
(ii)

Distribution of funds.—
(I)

Extension for distribution.—
If an authorized officer of a State required to make distributions under clause (i) certifies in writing to the Secretary before the end of the 30-day distribution period described in such clause that it would constitute an excessive administrative burden for the State to meet the terms of such clause with respect to 1 or more such distributions, the authorized officer may request, and the Secretary shall grant, an extension of such period of not more than 30 days to allow the State to make such distributions in accordance with clause (i).
(II)

Additional extensions.—
- (aa)

In general.—
If a State has been granted an extension to the distribution period under subclause (I) but is unable to make all the distributions required under clause (i) before the end of such period as extended, an authorized officer of the State may request an additional extension of the distribution period of not more than 30 days. The Secretary may grant a request for an additional extension of such period only if—
(AA)
the authorized officer making such request provides a written plan to the Secretary specifying, for each distribution for which an additional extension is requested, when the State expects to make such distribution and the actions the State has taken and will take in order to make all such distributions before the end of the distribution period (as extended under subclause (I) and this subclause); and
(BB)
the Secretary determines that such plan is reasonably designed to distribute all such funds to nonentitlement units of local government by the end of the distribution period (as so extended).
- (bb)

Further additional extensions.—
If a State granted an additional extension of the distribution period under item (aa) requires any further additional extensions of such period, the request only may be made and granted subject to the requirements specified in item (aa).
(iii)

Capped amount.—
The total amount distributed to a nonentitlement unit of local government under this paragraph may not exceed the amount equal to 75 percent of the most recent budget for the nonentitlement unit of local government as of January 27, 2020.
(iv)

Return of excess amounts.—
Any amounts not distributed to a nonentitlement unit of local government as a result of the application of clause (iii) shall be returned to the Secretary.
(D)

Penalty for noncompliance.—
If, by the end of the 120-day period that begins on the date a State receives a payment from the amount allocated under subparagraph (B) or, if later, the last day of the distribution period for the State (as extended with respect to the State under subparagraph (C)(ii)), such State has failed to make all the distributions from such payment in accordance with the terms of subparagraph (C) (including any extensions of the distribution period granted in accordance with such subparagraph), an amount equal to the amount of such payment that remains undistributed as of such date shall be booked as a debt of such State owed to the Federal Government, shall be paid back from the State’s allocation provided under section 602(b)(3)(B)(iii), and shall be deposited into the general fund of the Treasury.
(3)

Counties.—
(A)

Amount.—
From the amount appropriated under subsection (a), the Secretary shall reserve and allocate $65,100,000,000 of such amount to make payments directly to counties in an amount which bears the same proportion to the total amount reserved under this paragraph as the population of each such county bears to the total population of all such entities and shall pay such allocated amounts to such counties in accordance with paragraph (7).
(B)

Special rules.—
(i)

Urban counties.—
No county that is an “urban county” (as defined in section 102 of the Housing and Community Development Act of 1974 (42 U.S.C. 5302)) shall receive less than the amount the county would otherwise receive if the amount paid under this paragraph were allocated to metropolitan cities and urban counties under section 106(b) of the Housing and Community Development Act of 1974 (42 U.S.C. 5306(b)).
(ii)

Counties that are not units of general local government.—
In the case of an amount to be paid to a county that is not a unit of general local government, the amount shall instead be paid to the State in which such county is located, and such State shall distribute such amount to each unit of general local government within such county in an amount that bears the same proportion to the amount to be paid to such county as the population of such units of general local government bears to the total population of such county.
(iii)

District of columbia.—
For purposes of this paragraph, the District of Columbia shall be considered to consist of a single county that is a unit of general local government.
(4)

Consolidated governments.—
A unit of general local government that has formed a consolidated government, or that is geographically contained (in full or in part) within the boundaries of another unit of general local government may receive a distribution under each of paragraphs (1), (2), and (3), as applicable, based on the respective formulas specified in such paragraphs.
(5)

Pro rata adjustment authority.—
The amounts otherwise determined for allocation and payment under paragraphs (1), (2), and (3) may be adjusted by the Secretary on a pro rata basis to the extent necessary to ensure that all available funds are distributed to metropolitan cities, counties, and States in accordance with the requirements specified in each paragraph (as applicable) and the certification requirement specified in subsection (d).
(6)

Population.—
For purposes of determining allocations under this section, the population of an entity shall be determined based on the most recent data are available from the Bureau of the Census or, if not available, from such other data as a State determines appropriate.
(7)

Timing.—
(A)

First tranche amount.—
To the extent practicable, with respect to each metropolitan city for which an amount is allocated under paragraph (1), each State for which an amount is allocated under paragraph (2) for distribution to nonentitlement units of local government, and each county for which an amount is allocated under paragraph (3), the Secretary shall pay from such allocation the First Tranche Amount for such city, State, or county not later than 60 days after the date of enactment of this section.
(B)

Second tranche amount.—
The Secretary shall pay to each metropolitan city for which an amount is allocated under paragraph (1), each State for which an amount is allocated under paragraph (2) for distribution to nonentitlement units of local government, and each county for which an amount is allocated under paragraph (3), the Second Tranche Amount for such city, State, or county not earlier than 12 months after the date on which the First Tranche Amount is paid to the city, State, or county.
(c)

Requirements.—
(1)

Use of funds.—
Subject to paragraph (2), and except as provided in paragraphs (3), (4), (5), and (6), a metropolitan city, nonentitlement unit of local government, or county shall only use the funds provided under a payment made under this section to cover costs incurred by the metropolitan city, nonentitlement unit of local government, or county, by December 31, 2024—
(A)
to respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19) or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
(B)
to respond to workers performing essential work during the COVID–19 public health emergency by providing premium pay to eligible workers of the metropolitan city, nonentitlement unit of local government, or county that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work;
(C)
for the provision of government services up to an amount equal to the greater of—
(i)
the amount of the reduction in revenue of such metropolitan city, nonentitlement unit of local government, or county due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year of the metropolitan city, nonentitlement unit of local government, or county to the emergency; or
(ii)
$10,000,000;
(D)
to make necessary investments in water, sewer, or broadband infrastructure; or
(E)
to provide emergency relief from natural disasters or the negative economic impacts of natural disasters, including temporary emergency housing, food assistance, financial assistance for lost wages, or other immediate needs.
(2)

Pension funds.—
No metropolitan city, nonentitlement unit of local government, or county may use funds made available under this section for deposit into any pension fund.
(3)

Transfer authority.—
A metropolitan city, nonentitlement unit of local government, or county receiving a payment from funds made available under this section may transfer funds to a private nonprofit organization (as that term is defined in section 401 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11360(17))3, a public benefit corporation involved in the transportation of passengers or cargo, or a special-purpose unit of State or local government.
^3
So in law. The reference to the US Code in paragraph (3) probably should read "(42 U.S.C. 11360)". See amendment made by section 102(b) of division LL of Public Law 117–328.
(4)

Transfers to states.—
Notwithstanding paragraph (1), a metropolitan city, nonentitlement unit of local government, or county receiving a payment from funds made available under this section may transfer such funds to the State in which such entity is located.
(5)

Use of funds to satisfy non-federal matching, maintenance of effort, or other expenditure requirement.—
Funds provided under this section for an authorized Bureau of Reclamation project may be used for purposes of satisfying any non-Federal matching requirement required for the project.
(6)

Authority to use funds for certain infrastructure projects.—
(A)

In general.—
Subject to subparagraph (B), notwithstanding any other provision of law, a metropolitan city, nonentitlement unit of local government, or county receiving a payment under this section may use funds provided under such payment for projects described in subparagraph (B) of section 602(c)(5), including, to the extent consistent with guidance or rules issued by the Secretary or the head of a Federal agency to which the Secretary has delegated authority pursuant to subparagraph (B)(iv)—
(i)
in the case of a project eligible under section 117 of title 23, United States Code, or section 5309 or 6701 of title 49, United States Code, to satisfy a non-Federal share requirement applicable to such a project; and
(ii)
in the case of a project eligible for credit assistance under the TIFIA program under chapter 6 of title 23, United States Code—
(I)
to satisfy a non-Federal share requirement applicable to such a project; and
(II)
to repay a loan provided under such program.
(B)

Limitations; application of requirements.—
(i)

Limitation on amounts to be used for infrastructure projects.—
(I)

In general.—
The total amount that a metropolitan city, nonentitlement unit of local government, or county may use from a payment made under this section for uses described in subparagraph (A) shall not exceed the greater of—
- (aa)
$10,000,000; and
- (bb)
30 percent of such payment.
(II)

Rule of application.—
The spending limitation under subclause (I) shall not apply to any use of funds permitted under paragraph (1), and any such use of funds shall be disregarded for purposes of applying such spending limitation.
(ii)

Limitation on operating expenses.—
Funds provided under a payment made under this section shall not be used for operating expenses of a project described in clauses (xx) through (xxiv) of section 602(c)(5)(B).
(iii)

Application of requirements.—
Except as otherwise determined by the Secretary or the head of a Federal agency to which the Secretary has delegated authority pursuant to clause (iv) or provided in this section—
(I)
the requirements of section 60102 of the Infrastructure Investment and Jobs Act shall apply to funds provided under a payment made under this section that are used pursuant to subparagraph (A) for a project described in clause (xxvi) of section 602(c)(5)(B) that relates to broadband infrastructure; and
(II)
the requirements of titles 23, 40, and 49 of the United States Code, title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.), and the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et. seq) shall apply to funds provided under a payment made under this section that are used for projects described in section 602(c)(5)(B).
(iv)

Oversight.—
The Secretary may delegate oversight and administration of the requirements described in clause (iii) to the appropriate Federal agency.
(v)

Supplement, not supplant.—
Amounts from a payment made under this section that are used by a metropolitan city, nonentitlement unit of local government, or county for uses described in subparagraph (A) shall supplement, and not supplant, other Federal, State, territorial, Tribal, and local government funds (as applicable) otherwise available for such uses.
(C)

Reports.—
The Secretary, in consultation with the Secretary of Transportation, shall provide periodic reports on the use of funds by metropolitan cities, nonentitlement units of local government, or counties under subparagraph (A).
(D)

Availability.—
Funds provided under a payment made under this section to a metropolitan city, nonentitlement unit of local government, or county shall remain available for obligation for a use described in subparagraph (A) through December 31, 2024, except that no amount of such funds may be expended after September 30, 2026.
(d)

Reporting.—
Any metropolitan city, nonentitlement unit of local government, or county receiving funds provided under a payment made under this section shall provide to the Secretary periodic reports providing a detailed accounting of the uses of such funds by such metropolitan city, nonentitlement unit of local government, or county and including such other information as the Secretary may require for the administration of this section.
(e)

Recoupment.—
Any metropolitan city, nonentitlement unit of local government, or county that has failed to comply with subsection (c) shall be required to repay to the Secretary an amount equal to the amount of funds used in violation of such subsection.
(f)

Regulations.—
The Secretary shall have the authority to issue such regulations as may be necessary or appropriate to carry out this section.
(g)

Definitions.—
In this section:
(1)

County.—
The term “county” means a county, parish, or other equivalent county division (as defined by the Bureau of the Census).
(2)

Eligible workers.—
The term “eligible workers” means those workers needed to maintain continuity of operations of essential critical infrastructure sectors and additional sectors as each chief executive officer of a metropolitan city, nonentitlement unit of local government, or county may designate as critical to protect the health and well-being of the residents of their metropolitan city, nonentitlement unit of local government, or county.
(3)

First tranche amount.—
The term “First Tranche Amount” means, with respect to each metropolitan city for which an amount is allocated under subsection (b)(1), each State for which an amount is allocated under subsection (b)(2) for distribution to nonentitlement units of local government, and each county for which an amount is allocated under subsection (b)(3), 50 percent of the amount so allocated to such metropolitan city, State, or county (as applicable).
(4)

Metropolitan city.—
The term “metropolitan city” has the meaning given that term in section 102(a)(4) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(4)) and includes cities that relinquish or defer their status as a metropolitan city for purposes of receiving allocations under section 106 of such Act (42 U.S.C. 5306) for fiscal year 2021.
(5)

Nonentitlement unit of local government.—
The term “nonentitlement unit of local government” means a “city”, as that term is defined in section 102(a)(5) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(5))), that is not a metropolitan city.
(6)

Premium pay.—
The term “premium pay” has the meaning given such term in section 602(g).
(7)

Second tranche amount.—
The term “Second Tranche Amount” means, with respect to each metropolitan city for which an amount is allocated under subsection (b)(1), each State for which an amount is allocated under subsection (b)(2) for distribution to nonentitlement units of local government, and each county for which an amount is allocated under subsection (b)(3), an amount not to exceed 50 percent of the amount so allocated to such metropolitan city, State, or county (as applicable).
(8)

Secretary.—
The term “Secretary” means the Secretary of the Treasury.
(9)

State.—
The term “State” means each of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa.
(10)

Unit of general local government.—
The term “unit of general local government” has the meaning given that term in section 102(a)(1) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(1)).
SEC. 604.
[42 U.S.C. 804]

CORONAVIRUS CAPITAL PROJECTS FUND.
(a)

Appropriation.—
In addition to amounts otherwise available, there is appropriated for fiscal year 2021, out of any money in the Treasury not otherwise appropriated, $10,000,000,000, to remain available until expended, for making payments to States, territories, and Tribal governments to carry out critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to the public health emergency with respect to the Coronavirus Disease (COVID–19).
(b)

Payments.—
(1)

Minimum amounts.—
From the amount appropriated under subsection (a)—
(A)
the Secretary shall pay $100,000,000 to each State;
(B)
the Secretary shall pay $100,000,000 of such amount in equal shares to the United States Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau; and
(C)
the Secretary shall pay $100,000,000 of such amount in equal shares to Tribal governments and the State of Hawaii (in addition to the amount paid to the State of Hawaii under subparagraph (A)), of which—
(i)
not less than $50,000 shall be paid to each Tribal government; and
(ii)
not less than $50,000, and not more than $200,000, shall be paid to the State of Hawaii for the exclusive use of the Department of Hawaiian Home Lands and the Native Hawaiian Education Programs to assist Native Hawaiians in accordance with this section.
(2)

Remaining amounts.—
(A)

In general.—
From the amount of the appropriation under subsection (a) that remains after the application of paragraph (1), the Secretary shall make payments to States based on population such that—
(i)
50 percent of such amount shall be allocated among the States based on the proportion that the population of each State bears to the population of all States;
(ii)
25 percent of such amount shall be allocated among the States based on the proportion that the number of individuals living in rural areas in each State bears to the number of individuals living in rural areas in all States; and
(iii)
25 percent of such amount shall be allocated among the States based on the proportion that the number of individuals with a household income that is below 150 percent of the poverty line applicable to a family of the size involved in each State bears to the number of such individuals in all States.
(B)

Data.—
In determining the allocations to be made to each State under subparagraph (A), the Secretary of the Treasury shall use the most recent data available from the Bureau of the Census.
(c)

Timing.—
The Secretary shall establish a process of applying for grants to access funding made available under section (b) not later than 60 days after enactment of this section.
(d)

Definitions.—
In this section:
(1)

Secretary.—
The term “Secretary” means the Secretary of the Treasury.
(2)

State.—
The term “State” means each of the 50 States, the District of Columbia, and Puerto Rico.
(3)

Tribal government.—
The term “Tribal government” has the meaning given such term in section 602(g).
SEC. 605.
[42 U.S.C. 805]

LOCAL ASSISTANCE AND TRIBAL CONSISTENCY FUND.
(a)

Appropriation.—
In addition to amounts otherwise available, there is appropriated for fiscal year 2021, out of any money in the Treasury not otherwise appropriated, $2,000,000,000 to remain available until September 30, 2023, with amounts to be obligated, subject to subsection (g), for each of fiscal years 2022 and 2023 in accordance with subsection (b), for making payments under this section to eligible revenue sharing counties and eligible Tribal governments.
(b)

Authority to Make Payments.—
(1)

Payments to eligible revenue sharing counties.—
For each of fiscal years 2022 and 2023, the Secretary shall reserve $750,000,000 of the total amount appropriated under subsection (a) to allocate and pay to each eligible revenue sharing county in amounts that are determined by the Secretary taking into account economic conditions of each eligible revenue sharing county, using measurements of poverty rates, household income, land values, and unemployment rates as well as other economic indicators, over the 20-year period ending with September 30, 2021.
(2)

Payments to eligible tribal governments.—
For each of fiscal years 2022 and 2023, the Secretary shall reserve $250,000,000 of the total amount appropriated under subsection (a) to allocate and pay to eligible Tribal governments in amounts that are determined by the Secretary taking into account economic conditions of each eligible Tribe.
(c)

Use of Payments.—
An eligible revenue sharing county, an eligible Tribal government, or an eligible revenue sharing consolidated government may use funds provided under a payment made under this section for any governmental purpose other than a lobbying activity.
(d)

Reporting Requirement.—
Any eligible revenue sharing county or eligible revenue sharing consolidated government receiving a payment under this section shall provide to the Secretary periodic reports providing a detailed accounting of the uses of fund by such eligible revenue sharing county or eligible revenue sharing consolidated government and such other information as the Secretary may require for the administration of this section.
(e)

Recoupment.—
Any eligible revenue sharing county or eligible revenue sharing consolidated government that has failed to submit a report required under subsection (d) or failed to comply with subsection (c), shall be required to repay to the Secretary an amount equal to—
(1)
in the case of a failure to comply with subsection (c), the amount of funds used in violation of such subsection; and
(2)
in the case of a failure to submit a report required under subsection (d), such amount as the Secretary determines appropriate, but not to exceed 5 percent of the amount paid to the eligible revenue sharing county or eligible revenue sharing consolidated government under this section for all fiscal years.
(f)

Definitions.—
In this section:
(1)

Eligible revenue sharing consolidated government.—
The term “eligible revenue sharing consolidated government” means a county, parish, or borough—
(A)
that has been classified by the Bureau of the Census as an active government consolidated with another government; and
(B)
for which, as determined by the Secretary, there is a negative revenue impact due to implementation of a Federal program or changes to such program.
(2)

Eligible revenue sharing county.—
The term “eligible revenue sharing county” means—
(A)
a county, parish, or borough—
(i)
that is independent of any other unit of local government; and
(ii)
that, as determined by the Secretary, is the principal provider of government services for the area within its jurisdiction; and
(iii)
for which, as determined by the Secretary, there is a negative revenue impact due to implementation of a Federal program or changes to such program; and
(B)
the District of Columbia, the Commonwealth of Puerto Rico, Guam, and the United States Virgin Islands.
(3)

Eligible tribal government.—
The term “eligible Tribal government” means the recognized governing body of an eligible Tribe.
(4)

Eligible tribe.—
The term “eligible Tribe” means any Indian or Alaska Native tribe, band, nation, pueblo, village, community, component band, or component reservation, individually identified (including parenthetically) in the list published most recently as of the date of enactment of this section pursuant to section 104 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 5131).
(5)

Secretary.—
The term “Secretary” means the Secretary of the Treasury.
(g)

Payments to Eligible Revenue Sharing Consolidated Governments.—
(1)

Payments to eligible revenue sharing consolidated governments for fiscal years 2023 and 2024.—
The Secretary shall allocate and pay to each eligible revenue sharing consolidated government for each of fiscal years 2023 and 2024 an amount equal to the amount that the Secretary would have allocated to such eligible revenue sharing consolidated government for fiscal year 2022 if all eligible revenue sharing consolidated governments had been treated as eligible revenue sharing counties for purposes of being eligible for payments under subsection (b)(1) for such fiscal year using the allocation methodology adopted by the Department of the Treasury for such eligible revenue sharing counties as of the date of enactment of this subsection.
(2)

Funding for payments.—
(A)

In general.—
The Secretary shall make the allocations and payments described in paragraph (1) from the amounts described in subparagraph (B), which shall be available to the Secretary for such purpose notwithstanding any other provision of law.
(B)

Amounts described.—
The amounts described in this subparagraph are the following:
(i)
Any amount allocated to an eligible revenue sharing county under subsection (b)(1) for fiscal year 2022 or 2023 that, as of January 31, 2023, has not been requested by such county.
(ii)
Amounts made available to the Secretary under section 102(d)(4) of the State, Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act.
SEC. 606.
[42 U.S.C. 806]

RESCISSION OF FUNDS DECLINED BY STATES, TERRITORIES, OR OTHER GOVERNMENTAL ENTITIES.
(a)

Rescission.—
(1)

In general.—
Subject to paragraphs (2) and (3), if a State, territory, or other governmental entity provides notice to the Secretary of the Treasury in the manner provided by the Secretary of the Treasury that the State, territory, or other governmental entity intends to decline all or a portion of the amounts that are to be awarded to the State, territory, or other governmental entity from funds appropriated under this title, an amount equal to the unaccepted amounts or portion of such amounts allocated by the Secretary of the Treasury as of the date of such notice that would have been awarded to the State, territory, or other governmental entity shall be rescinded from the applicable appropriation account.
(2)

Exclusion.—
Paragraph (1) shall not apply with respect to funds that are to be paid to a State under section 603 for distribution to nonentitlement units of local government.
(3)

Rules of construction.—
Paragraph (1) shall not be construed as—
(A)
preventing a sub-State governmental entity, including a nonentitlement unit of local government, from notifying the Secretary of the Treasury that the sub-State governmental entity intends to decline all or a portion of the amounts that a State may distribute to the entity from funds appropriated under this title; or
(B)
allowing a State to prohibit or otherwise prevent a sub-State governmental entity from providing such a notice.
(b)

Use for Deficit Reduction.—
Amounts rescinded under subsection (a) shall be deposited in the general fund of the Treasury for the sole purpose of deficit reduction.
(c)

State or Other Governmental Entity Defined.—
In this section, the term “State, territory, or other governmental entity” means any entity to which a payment may be made directly to the entity under this title other than a Tribal government, as defined in sections 601(g), 602(g), and 604(d), and an eligible Tribal government, as defined in section 605(f).
TITLE VII—

ADMINISTRATION1
^1
Title VII of the Social Security Act is administered by the Office of the Commissioner of Social Security, Office of the Secretary, and Department of Health and Human Services.

TABLE OF CONTENTS OF TITLE2
^2
This table of contents does not appear in the law.
Sec. 701.
Social Security Administration.
Sec. 702.
Commissioner; Deputy Commissioner; Other Officers.
Sec. 703.
Social Security Advisory Board.
Sec. 704.
Administrative Duties of the Commissioner.
Sec. 705.
Training grants for public welfare personnel.
[Sec. 706. Repealed.]
Sec. 707.
Grants for expansion and development of undergraduate and graduate programs.
Sec. 708.
Delivery of benefit checks.
Sec. 709.
Recommendations by Board of Trustees to remedy inadequate balances in the social security trust funds.
Sec. 710.
Budgetary treatment of trust fund operations.
Sec. 711.
Office of Rural Health Policy.
Sec. 712.
Duties and authority of Secretary.
Sec. 713.
Office of women's health.

social security administration
Sec. 701.
[42 U.S.C. 901]
(a)
There is hereby established, as an independent agency in the executive branch of the Government, a Social Security Administration (in this title referred to as the “Administration”).
(b)
It shall be the duty of the Administration to administer the old-age, survivors, and disability insurance program under title II and the supplemental security income program under title XVI.

commissioner; deputy commissioner; other officers
Sec. 702.
[42 U.S.C. 902]
(a)

Commissioner of Social Security
(1)
There shall be in the Administration a Commissioner of Social Security (in this title referred to as the “Commissioner”) who shall be appointed by the President, by and with the advice and consent of the Senate.
(2)
The Commissioner shall be compensated at the rate provided for level I of the Executive Schedule.
(3)
The Commissioner shall be appointed for a term of 6 years, except that the initial term of office for Commissioner shall terminate January 19, 2001. In any case in which a successor does not take office at the end of a Commissioner's term of office, such Commissioner may continue in office until the entry upon office of such a successor. A Commissioner appointed to a term of office after the commencement of such term may serve under such appointment only for the remainder of such term. An individual serving in the office of Commissioner may be removed from office only pursuant to a finding by the President of neglect of duty or malfeasance in office.
(4)
The Commissioner shall be responsible for the exercise of all powers and the discharge of all duties of the Administration, and shall have authority and control over all personnel and activities thereof.
(5)
The Commissioner may prescribe such rules and regulations as the Commissioner determines necessary or appropriate to carry out the functions of the Administration. The regulations prescribed by the Commissioner shall be subject to the rulemaking procedures established under section 553 of title 5, United States Code.
(6)
The Commissioner may establish, alter, consolidate, or discontinue such organizational units or components within the Administration as the Commissioner considers necessary or appropriate, except that this paragraph shall not apply with respect to any unit, component, or provision provided for by this Act.
(7)
The Commissioner may assign duties, and delegate, or authorize successive redelegations of, authority to act and to render decisions, to such officers and employees of the Administration as the Commissioner may find necessary. Within the limitations of such delegations, redelegations, or assignments, all official acts and decisions of such officers and employees shall have the same force and effect as though performed or rendered by the Commissioner.
(8)
The Commissioner and the Secretary of Health and Human Services (in this title referred to as the “Secretary”) shall consult, on an ongoing basis, to ensure—
(A)
the coordination of the programs administered by the Commissioner, as described in section 701, with the programs administered by the Secretary under titles XVIII and XIX of this Act; and
(B)
that adequate information concerning benefits under such titles XVIII and XIX is available to the public.
(b)

Deputy Commissioner of Social Security
(1)
There shall be in the Administration a Deputy Commissioner of Social Security (in this title referred to as the Deputy Commissioner) who shall be appointed by the President, by and with the advice and consent of the Senate.
(2)
The Deputy Commissioner shall be appointed for a term of 6 years, except that the initial term of office for the Deputy Commissioner shall terminate January 19, 2001. In any case in which a successor does not take office at the end of a Deputy Commissioner's term of office, such Deputy Commissioner may continue in office until the entry upon office of such a successor. A Deputy Commissioner appointed to a term of office after the commencement of such term may serve under such appointment only for the remainder of such term.
(3)
The Deputy Commissioner shall be compensated at the rate provided for level II of the Executive Schedule.
(4)
The Deputy Commissioner shall perform such duties and exercise such powers as the Commissioner shall from time to time assign or delegate. The Deputy Commissioner shall be Acting Commissioner of the Administration during the absence or disability of the Commissioner and, unless the President designates another officer of the Government as Acting Commissioner, in the event of a vacancy in the office of the Commissioner.

chief actuary3
^3
So in original; probably should be set caps and lowercase.
(c)
(1)
There shall be in the Administration a Chief Actuary, who shall be appointed by, and in direct line of authority to, the Commissioner. The Chief Actuary shall be appointed from individuals who have demonstrated, by their education and experience, superior expertise in the actuarial sciences. The Chief Actuary shall serve as the chief actuarial officer of the Administration, and shall exercise such duties as are appropriate for the office of the Chief Actuary and in accordance with professional standards of actuarial independence. The Chief Actuary may be removed only for cause.
(2)
The Chief Actuary shall be compensated at the highest rate of basic pay for the Senior Executive Service under section 5382(b) of title 5, United States Code.
(d)

Chief Financial Officer
There shall be in the Administration a Chief Financial Officer appointed by the Commissioner in accordance with section 901(a)(2) of title 31, United States Code.
(e)

Inspector General
There shall be in the Administration an Inspector General appointed by the President, by and with the advice and consent of the Senate, in accordance with section 403(a) of title 5, United States Code.

social security advisory board
Sec. 703.
[42 U.S.C. 903]
(a)

Establishment of Board
There shall be established a Social Security Advisory Board (in this section referred to as the “Board”).
(b)
On and after the date the Commissioner takes office, the Board shall advise the Commissioner on policies related to the old-age, survivors, and disability insurance program under title II, the program of special benefits for certain World War II veterans under title VIII, and the supplemental security income program under title XVI. Specific functions of the Board of the Board shall include—
(1)
analyzing the Nation's retirement and disability systems and making recommendations with respect to how the old-age, survivors, and disability insurance program and the supplemental security income program, supported by other public and private systems, can most effectively assure economic security;
(2)
studying and making recommendations relating to the coordination of programs that provide health security with programs described in paragraph (1);
(3)
making recommendations to the President and to the Congress with respect to policies that will ensure the solvency of the old-age, survivors, and disability insurance program, both in the short-term and the long-term;
(4)
making recommendations with respect to the quality of service that the Administration provides to the public;
(5)
making recommendations with respect to policies and regulations regarding the old-age, survivors, and disability insurance program and the supplemental security income program;
(6)
increasing public understanding of the social security system;
(7)
making recommendations with respect to a long-range research program evaluation plan for the Administration;
(8)
reviewing and assessing any major studies of social security as may come to the attention of the Board; and
(9)
making recommendations with respect to such other matters as the Board determines to be appropriate.
(c)

Structure and Membership of the Board
(1)
The Board shall be composed of 7 members who shall be appointed as follows:
(A)
3 members shall be appointed by the President, by and with the advice and consent of the Senate. Not more than 2 of such members shall be from the same political party.
(B)
2 members (each member from a different political party) shall be appointed by the President pro tempore of the Senate with the advice of the Chairman and the Ranking Minority Member of the Senate Committee on Finance.
(C)
2 members (each member from a different political party) shall be appointed by the Speaker of the House of Representatives, with the advice of the Chairman and the Ranking Minority Member of the House Committee on Ways and Means.
(2)
The members shall be chosen on the basis of their integrity, impartiality, and good judgment, and shall be individuals who are, by reason of their education, experience, and attainments, exceptionally qualified to perform the duties of members of the Board.
(d)

Terms of Appointment
Each member of the Board shall serve for a term of 6 years, except that—
(1)
a member appointed to a term of office after the commencement of such term may serve under such appointment only for the remainder of such term; and
(2)
the terms of service of the members initially appointed under this section shall begin on October 1, 1994, and expire as follows:
(A)
The terms of service of the members initially appointed by the President shall expire as designated by the President at the time of nomination, 1 each at the end of—
(i)
2 years;
(ii)
4 years; and
(iii)
6 years.
(B)
The terms of service of members initially appointed by the President pro tempore of the Senate shall expire as designated by the President pro tempore of the Senate at the time of nomination, 1 each at the end of—
(i)
3 years; and
(ii)
6 years.
(C)
The terms of service of members initially appointed by the Speaker of the House of Representatives shall expire as designated by the Speaker of the House of Representatives at the time of nomination, 1 each at the end of—
(i)
4 years; and
(ii)
5 years.
(e)

Chairman
A member of the Board shall be designated by the President to serve as Chairman for a term of 4 years, coincident with the term of the President, or until the designation of a successor.
(f)

Compensation, Expenses, and Per Diem
A member of the Board shall, for each day (including traveltime) during which the member is attending meetings or conferences of the Board or otherwise engaged in the business of the Board, be compensated at the daily rate of basic pay for level IV of the Executive Schedule. While serving on business of the Board away from their homes or regular places of business, members may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5, United States Code, for persons in the Government employed intermittently.
(g)

Meeting
(1)
The Board shall meet at the call of the Chairman (in consultation with the other members of the Board) not less than 4 times each year to consider a specific agenda of issues, as determined by the Chairman in consultation with the other members of the Board.
(2)
Four members of the Board (not more than 3 of whom may be of the same political party) shall constitute a quorum for purposes of conducting business.
(h)

Chapter 10 of Title 5, United States Code
The Board shall be exempt from the provisions of chapter 10 of title 5, United States Code.
(i)

Personnel
The Board shall, without regard to the provisions of title 5, United States Code, relating to the competitive service, appoint a Staff Director who shall be paid at a rate equivalent to a rate established for the Senior Executive Service under section 5382 of title 5, United States Code. The Board shall appoint such additional personnel as the Board determines to be necessary to provide adequate support for the Board, and may compensate such additional personnel without regard to the provisions of title 5, United States Code, relating to the competitive service.
(j)

Authorization of Appropriations
There are authorized to be appropriated, out of the Federal Disability Insurance Trust Fund, the Federal Old-Age and Survivors Insurance Trust Fund, and the general fund of the Treasury, such sums as are necessary to carry out the purposes of this section.

administrative duties of the commissioner
Sec. 704.
[42 U.S.C. 904]
(a)

Personnel
(1)
The Commissioner shall appoint such additional officers and employees as the Commissioner considers necessary to carry out the functions of the Administration under this Act, and attorneys and experts may be appointed without regard to the civil service laws. Except as otherwise provided in the preceding sentence or in any other provision of law, such officers and employees shall be appointed, and their compensation shall be fixed, in accordance with title 5, United States Code.
(2)
The Commissioner may procure the services of experts and consultants in accordance with the provisions of section 3109 of title 5, United States Code.
(3)
Notwithstanding any requirements of section 3133 of title 5, United States Code, the Director of the Office of Personnel Management shall authorize for the Administration a total number of Senior Executive Service positions which is substantially greater than the number of such positions authorized in the Social Security Administration in the Department of Health and Human Services as of immediately before the date of the enactment of the Social Security Independence Program Improvements Act of 1994 to the extent that the greater number of such authorized positions is specified in the comprehensive work force plan as established and revised by the Commissioner under subsection (b)(2). The total number of such positions authorized for the Administration shall not at any time be less than the number of such authorized positions as of immediately before such date.
(b)

Budgetary Matters
(1)
(A)
The Commissioner shall prepare an annual budget for the Administration, which shall be submitted by the President to the Congress without revision, together with the President's annual budget for the Administration.
(B)
The Commissioner shall include in the annual budget prepared pursuant to subparagraph (A) an itemization of the amount of funds required by the Social Security Administration for the fiscal year covered by the budget to support efforts to combat fraud committed by applicants and beneficiaries.
(2)
(A)
Appropriations requests for staffing and personnel of the Administration shall be based upon a comprehensive work force plan, which shall be established and revised from time to time by the Commissioner.
(B)
Appropriations for administrative expenses of the Administration are authorized to be provided on a biennial basis.
(3)
For each fiscal year beginning with 2016 and ending with 2021, the Commissioner shall include in the annual budget prepared pursuant to subparagraph (A) a report describing the purposes for which amounts made available for purposes described in section 251(b)(2)(B) of the Balanced Budget and Emergency Deficit Control Act of 1985 for the fiscal year were expended by the Social Security Administration and the purposes for which the Commissioner plans for the Administration to expend such funds in the succeeding fiscal year, including—
(A)
the total such amount expended;
(B)
the amount expended on co-operative disability investigation units;
(C)
the number of cases of fraud prevented by co-operative disability investigation units and the amount expended on such cases (as reported to the Commissioner by the Inspector General of the Social Security Administration);
(D)
the number of felony cases prosecuted under section 208 (as reported to the Commissioner by the Inspector General) and the amount expended by the Social Security Administration in supporting the prosecution of such cases;
(E)
the amount of such felony cases successfully prosecuted (as reported to the Commissioner by the Inspector General) and the amount expended by the Social Security Administration in supporting the prosecution of such cases;
(F)
the amount expended on and the number of completed—
(i)
continuing disability reviews conducted by mail;
(ii)
redeterminations conducted by mail;
(iii)
medical continuing disability reviews conducted pursuant to section 221(i);
(iv)
medical continuing disability reviews conducted pursuant to 1614(a)(3)(H);
(v)
redeterminations conducted pursuant to section 1611(c); and
(vi)
work-related continuing disability reviews to determine whether earnings derived from services demonstrate an individual's ability to engage in substantial gainful activity;
(G)
the number of cases of fraud identified for which benefits were terminated as a result of medical continuing disability reviews (as reported to the Commissioner by the Inspector General), work-related continuing disability reviews, and redeterminations, and the amount of resulting savings for each such type of review or redetermination; and
(H)
the number of work-related continuing disability reviews in which a beneficiary improperly reported earnings derived from services for more than 3 consecutive months, and the amount of resulting savings.
(c)

Employment Restriction
The total number of positions in the Administration (other than positions established under section 702) which—
(1)
are held by noncareer appointees (within the meaning of section 3132(a)(7) of title 5, United States Code) in the Senior Executive Service, or
(2)
have been determined by the President or the Office of Personnel Management to be of a confidential, policy-determining, policy-making, or policy-advocating character and have been excepted from the competitive service thereby,
may not exceed at any time the equivalent of 20 full-time positions.
(d)

Seal of Office
The Commissioner shall cause a seal of office to be made for the Administration of such design as the Commissioner shall approve. Judicial notice shall be taken of such seal.
(e)

Data Exchanges
(1)
Notwithstanding any other provision of law (including subsection (b), (o), (p), (q), (r), and (u) of section 552a of title 5, United States Code)—
(A)
the Secretary shall disclose to the Commissioner any record or information requested in writing by the Commissioner for the purpose of administering any program administered by the Commissioner, if records or information of such type were disclosed to the Commissioner of Social Security in the Department of Health and Human Services under applicable rules, regulations, and procedures in effect before the date of the enactment of the Social Security Independence and Program Improvements Act of 1994; and
(B)
the Commissioner shall disclose to the Secretary or to any State any record or information requested in writing by the Secretary to be so disclosed for the purpose of administering any program administered by the Secretary, if records or information of such type were so disclosed under applicable rules, regulations, and procedures in effect before the date of the enactment of the Social Security Independence and Program Improvements Act of 1994.
(2)
The Commissioner and the Secretary shall enter into an agreement under which the Commissioner provides the Secretary data concerning the quality of the services and information provided to beneficiaries of the programs under titles XVIII and XIX and the administrative services provided by the Social Security Administration in support of such programs. Such agreement shall stipulate the type of data to be provided and the terms and conditions under which the data are to be provided.
(3)
The Commissioner and the Secretary shall periodically review the need for exchanges of information not referred to in paragraph (1) or (2) and shall enter into such agreements as may be necessary and appropriate to provide information to each other or to States in order to meet the programmatic needs of the requesting agencies.
(4)
(A)
Any disclosure from a system of records (as defined in section 552a(a)(5) of title 5, United States Code) pursuant to this subsection shall be made as a routine use under subsection (b)(3) of section 552a of such title (unless otherwise authorized under such section 552a).
(B)
Any computerized comparison of records, including matching programs, between the Commissioner and the Secretary shall be conducted in accordance with subsections (o), (p), (q), (r), and (u) of section 552a of title 5, United States Code.
(5)
The Commissioner and the Secretary shall each ensure that timely action is taken to establish any necessary routine uses for disclosures required under paragraph (1) or agreed to pursuant to paragraph (3).

training grants for public welfare personnel
Sec. 705.
[42 U.S.C. 906]
(a)
In order to assist in increasing the effectiveness and efficiency of administration of public assistance programs by increasing the number of adequately trained public welfare personnel available for work in public assistance programs, there are hereby authorized to be appropriated for the fiscal year ending June 30, 1963, the sum of $3,500,000, and for each fiscal year thereafter the sum of $5,000,000.
(b)
Such portion of the sums appropriated pursuant to subsection (a) for any fiscal year as the Secretary may determine, but not in excess of $1,000,000 in the case of the fiscal year ending June 30, 1963, and $2,000,000 in the case of any fiscal year thereafter, shall be available for carrying out subsection (f). From the remainder of the sums so appropriated for any fiscal year, the Secretary shall make allotments to the States on the basis of (1) population, (2) relative need for trained public welfare personnel, particularly for personnel to provide self-support and self-care services, and (3) financial need.
(c)
From each State's allotment under subsection (b), the Secretary shall from time to time pay to such State its costs of carrying out the purposes of this section through (1) grants to public or other nonprofit institutions of higher learning for training personnel employed or preparing for employment in public assistance programs, (2) special courses of study or seminars of short duration conducted for such personnel by experts hired on a temporary basis for the purpose, and (3) establishing and maintaining, directly or through grants to such institutions, fellowships or traineeships for such personnel at such institutions, with such stipends and allowances as may be permitted under regulations of the Secretary.
(d)
Payments pursuant to subsection (c) shall be made in advance on the basis of estimates by the Secretary and adjustments may be made in future payments under this section to take account of overpayments or underpayments in amounts previously paid.
(e)
The amount of any allotment to a State under subsection (b) for any fiscal year which the State certifies to the Secretary will not be required for carrying out the purposes of this section in such State shall be available for reallotment from time to time, on such dates as the Secretary may fix, to other States which the Secretary determines have need in carrying out such purposes for sums in excess of those previously allotted to them under this section and will be able to use such excess amounts during such fiscal year; such reallotments to be made on the basis provided in subsection (b) for the initial allotments to the States. Any amount so reallotted to a State shall be deemed part of its allotment under such subsection.
(f)
(1)
The portion of the sums appropriated for any fiscal year which is determined by the Secretary under the first sentence of subsection (b) to be available for carrying out this subsection shall be available to enable him to provide (A) directly or through grants to or contracts with public or nonprofit private institutions of higher learning, for training personnel who are employed or preparing for employment in the administration of public assistance programs, (B) directly or through grants to or contracts with public or nonprofit private agencies or institutions, for special courses of study or seminars of short duration (not in excess of one year) for training of such personnel, and (C) directly or through grants to or contracts with public or nonprofit private institutions of higher learning, for establishing and maintaining fellowships or traineeships for such personnel at such institutions, with such stipends and allowances as may be permitted by the Secretary.
(2)
Payments under paragraph (1) may be made in advance on the basis of estimates by the Secretary, or may be made by way of reimbursement, and adjustments may be made in future payments under this subsection to take account of overpayments or underpayments in amounts previously paid.
(3)
The Secretary may, to the extent he finds such action to be necessary, prescribe requirements to assure that any individual will repay the amount of his fellowship or traineeship received under this subsection to the extent such individual fails to serve, for the period prescribed by the Secretary, with a State or political subdivision thereof, or with the Federal Government, in connection with administration of any State or local public assistance program. The Secretary may relieve any individual of his obligation to so repay, in whole or in part, whenever and to the extent that requirement of such repayment would, in his judgment, be inequitable or would be contrary to the purposes of any of the public welfare programs established by this Act.
[Section 706 repealed by section 108(a)(2) of Public Law 103–296, 108 Stat. 1481.]

grants for expansion and development of undergraduate and graduate programs
Sec. 707.
[42 U.S.C. 908]
(a)
There is authorized to be appropriated $5,000,000 for the fiscal year ending June 30, 1969, and $5,000,000 for each of the three succeeding fiscal years, for grants by the Secretary to public or nonprofit private colleges and universities and to accredited graduate schools of social work or an association of such schools to meet part of the costs of development, expansion, or improvement of (respectively) undergraduate programs in social work and programs for the graduate training of professional social work personnel, including the costs of compensation of additional faculty and administrative personnel and minor improvements of existing facilities. Not less than one-half of the sums appropriated for any fiscal year under the authority of this subsection shall be used by the Secretary for grants with respect to undergraduate programs.
(b)
In considering applications for grants under this section, the Secretary shall take into account the relative need in the States for personnel trained in social work and the effect of the grants thereon.
(c)
Payment of grants under this section may be made (after necessary adjustments on account of previously made overpayments or underpayments) in advance or by way of reimbursement, and on such terms and conditions and in such installments, as the Secretary may determine.
(d)
For purposes of this section—
(1)
the term “graduate school of social work” means a department, school, division, or other administrative unit, in a public or nonprofit private college or university, which provides, primarily or exclusively, a program of education in social work and allied subjects leading to a graduate degree in social work;
(2)
the term “accredited” as applied to a graduate school of social work refers to a school which is accredited by a body or bodies approved for the purpose by the Commissioner of Education or with respect to which there is evidence satisfactory to the Secretary that it will be so accredited within a reasonable time; and
(3)
the term “nonprofit” as applied to any college or university refers to a college or university which is a corporation or association, or is owned and operated by one or more corporations or associations, no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.

delivery of benefit checks
Sec. 708.
[42 U.S.C. 909]
(a)
If the day regularly designated for the delivery of benefit checks under title II, title VIII, or title XVI falls on a Saturday, Sunday, or legal public holiday (as defined in section 6103 of title 5, United States Code in any month, the benefit checks which would otherwise be delivered on such day shall be mailed for delivery on the first day preceding such day which is not a Saturday, Sunday, or legal public holiday (as so defined), without regard to whether the delivery of such checks would as a result have to be made before the end of the month for which such checks are issued.
(b)
If more than the correct amount of payment under title II, title VIII, or XVI is made to any individual as a result of the receipt of a benefit check pursuant to subsection (a) before the end of the month for which such check is issued, no action shall be taken (under section 204 or 1631(b) or otherwise) to recover such payment or the incorrect portion thereof.
(c)
For purposes of computing the “OASDI trust fund ratio” under section 201(l), the “OASDI fund ratio” under section 215(i), and the “balance ratio” under section 709(b), benefit checks delivered before the end of the month for which they are issued by reason of subsection (a) of this section shall be deemed to have been delivered on the regularly designated delivery date.

recommendations by board of trustees to remedy inadequate balances in the social security trust funds
Sec. 709.
[42 U.S.C. 910]
(a)
If the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, the Federal Hospital Insurance Trust Fund, or the Federal Supplementary Medical Insurance Trust Fund determines at any time that the balance ratio of any such Trust Fund for any calendar year may become less than 20 percent, the Board shall promptly submit to each House of the Congress a report setting forth its recommendations for statutory adjustments affecting the receipts and disbursements of such Trust Fund necessary to maintain the balance ratio of such Trust Fund at not less than 20 percent, with due regard to the economic conditions which created such inadequacy in the balance ratio and the amount of time necessary to alleviate such inadequacy in a prudent manner. The report shall set forth specifically the extent to which benefits would have to be reduced, taxes under section 1401, 3101, or 3111 of the Internal Revenue Code of 1954 would have to be increased, or a combination thereof, in order to obtain the objectives referred to in the preceding sentence.
(b)
For purposes of this section, the term “balance ratio” means, with respect to any calendar year in connection with any Trust Fund referred to in subsection (a), the ratio of—
(1)
the balance in such Trust Fund as of the beginning of such year, including the taxes transferred under section 201(a) on the first day of such year and reduced by the outstanding amount of any loan (including interest thereon) theretofore made to such Trust Fund under section 201(l) or 1817(j), to
(2)
the total amount which (for amounts which will be paid from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, as estimated by the Commissioner, and for amounts which will be paid from the Federal Hospital Insurance Trust and the Federal Supplementary Medical Insurance Trust Fund, as estimated by the Secretary) will be paid from such Trust Fund during such calendar year for all purposes authorized by section 201, 1817, or 1841 (as applicable), other than payments of interest on, or repayments of, loans under section 201(l) or 1817(j), but excluding any transfer payments between such Trust Fund and any other Trust Fund referred to in subsection (a) and reducing the amount of any transfers to the Railroad Retirement Account by the amount of any transfers into such Trust Fund from that Account.

budgetary treatment of trust fund operations
Sec. 710.
[42 U.S.C. 911]
(a)
The receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund and the taxes imposed under sections 1401 and 3101 of the Internal Revenue Code of 1986 shall not be included in the totals of the budget of the United States Government as submitted by the President or of the congressional budget and shall be exempt from any general budget limitation imposed by statute on expenditures and net lending (budget outlays) of the United States Government.
(b)
No provision of law enacted after the date of enactment of the Balanced Budget and Emergency Deficit Control Act of 1985 (other than a provision of an appropriation Act that appropriated funds authorized under the Social Security Act as in effect on the date of the enactment of the Balanced Budget and Emergency Deficit control Act of 1985) may provide for payments from the general fund of the Treasury to any Trust Fund specified in subsection (a) or for payments from any such Trust Fund to the general fund of the Treasury.

office of rural health policy
Sec. 711.
[42 U.S.C. 912]
(a)
There shall be established in the Department of Health and Human Services (in this section referred to as the “Department”) an Office of Rural Health Policy (in this section referred to as the “Office”). The Office shall be headed by a Director, who shall advise the Secretary on the effects of current policies and proposed statutory, regulatory, administrative, and budgetary changes in the programs established under titles XVIII and XIX on the financial viability of small rural hospitals, the ability of rural areas (and rural hospitals in particular) to attract and retain physicians and other health professionals, and access to (and the quality of) health care in rural areas.
(b)
In addition to advising the Secretary with respect to the matters specified in subsection (a), the Director, through the Office, shall—
(1)
oversee compliance with the requirements of section 1102(b) of this Act and section 4403 of the Omnibus Budget Reconciliation Act of 1987 (as such section pertains to rural health issues),
(2)
establish and maintain a clearinghouse for collecting and disseminating information on—
(A)
rural health care issues, including rural mental health, rural infant mortality prevention, and rural occupational safety and preventive health promotion,
(B)
research findings relating to rural health care, and
(C)
innovative approaches to the delivery of health care in rural area, including programs providing community-based mental health services, pre-natal and infant care services, and rural occupational safety and preventive health education and promotion,
(3)
coordinate the activities within the Department that relate to rural health care,
(4)
provide information to the Secretary and others in the Department with respect to the activities, of other Federal departments and agencies, that relate to rural health care, including activities relating to rural mental health, rural infant mortality, and rural occupational safety and preventive health promotion, and
(5)
administer grants, cooperative agreements, and contracts to provide technical assistance and other activities as necessary to support activities related to improving health care in rural areas.

duties and authority of secretary
Sec. 712.
[42 U.S.C. 913]
The Secretary shall perform the duties imposed upon the Secretary by this Act. The Secretary is authorized to appoint and fix the compensation of such officers and employees, and to make such expenditures as may be necessary for carrying out the functions of the Secretary under this Act. The Secretary may appoint attorneys and experts without regard to the civil service laws.
SEC. 713.
[42 U.S.C. 914]

OFFICE OF WOMEN'S HEALTH.
(a)

Establishment.—
The Secretary shall establish within the Office of the Administrator of the Health Resources and Services Administration, an office to be known as the Office of Women's Health. The Office shall be headed by a director who shall be appointed by the Administrator.
(b)

Purpose.—
The Director of the Office shall—
(1)
report to the Administrator on the current Administration level of activity regarding women's health across, where appropriate, age, biological, and sociocultural contexts;
(2)
establish short-range and long-range goals and objectives within the Health Resources and Services Administration for women's health and, as relevant and appropriate, coordinate with other appropriate offices on activities within the Administration that relate to health care provider training, health service delivery, research, and demonstration projects, for issues of particular concern to women;
(3)
identify projects in women's health that should be conducted or supported by the bureaus of the Administration;
(4)
consult with health professionals, nongovernmental organizations, consumer organizations, women's health professionals, and other individuals and groups, as appropriate, on Administration policy with regard to women; and
(5)
serve as a member of the Department of Health and Human Services Coordinating Committee on Women's Health (established under section 229(b)(4) of the Public Health Service Act).
(c)

Continued Administration of Existing Programs.—
The Director of the Office shall assume the authority for the development, implementation, administration, and evaluation of any projects carried out through the Health Resources and Services Administration relating to women's health on the date of enactment of this section.
(d)

Definitions.—
For purposes of this section:
(1)

Administration.—
The term “Administration” means the Health Resources and Services Administration.
(2)

Administrator.—
The term “Administrator” means the Administrator of the Health Resources and Services Administration.
(3)

Office.—
The term “Office” means the Office of Women's Health established under this section in the Administration.
(e)

Authorization of Appropriations.—
For the purpose of carrying out this section, there are authorized to be appropriated such sums as may be necessary for each of the fiscal years 2010 through 2014.
TITLE VIII—

SPECIAL BENEFITS FOR CERTAIN WORLD WAR II VETERANS

Table of Contents
Sec. 801.
Basic entitlement to benefits.
Sec. 802.
Qualified individuals.
Sec. 803.
Residence outside the United States.
Sec. 804.
Disqualifications.
Sec. 805.
Benefit amount.
Sec. 806.
Applications and furnishing of information.
Sec. 807.
Representative payees.
Sec. 808.
Overpayments and underpayments.
Sec. 809.
Hearings and review.
Sec. 810.
Other administrative provisions.
Sec. 810A.
Optional Federal administration of State recognition payments.
Sec. 811.
Penalties for fraud.
Sec. 812.
Definitions.
Sec. 813.
Appropriations.
SEC. 801.
[42 U.S.C. 1001]

BASIC ENTITLEMENT TO BENEFITS.
Every individual who is a qualified individual under section 802 shall, in accordance with and subject to the provisions of this title, be entitled to a monthly benefit paid by the Commissioner of Social Security for each month after September 2000 (or such earlier month, if the Commissioner determines is administratively feasible) the individual resides outside the United States.
SEC. 802.
[42 U.S.C. 1002]

QUALIFIED INDIVIDUALS.
Except as otherwise provided in this title, an individual—
(1)
who has attained the age of 65 on or before the date of the enactment of this title;
(2)
who is a World War II veteran;
(3)
who is eligible for a supplemental security income benefit under title XVI for—
(A)
the month in which this title is enacted; and
(B)
the month in which the individual files an application for benefits under this title;
(4)
whose total benefit income is less than 75 percent of the Federal benefit rate under title XVI;
(5)
who has filed an application for benefits under this title; and
(6)
who is in compliance with all requirements imposed by the Commissioner of Social Security under this title,
shall be a qualified individual for purposes of this title.
SEC. 803.
[42 U.S.C. 1003]

RESIDENCE OUTSIDE THE UNITED STATES.
For purposes of section 801, with respect to any month, an individual shall be regarded as residing outside the United States if, on the first day of the month, the individual so resides outside the United States.
SEC. 804.
[42 U.S.C. 1004]

DISQUALIFICATIONS.
(a)

In General.—
Notwithstanding section 802, an individual may not be a qualified individual for any month—
(1)
that begins after the month in which the Commissioner of Social Security is notified by the Attorney General that the individual has been removed from the United States pursuant to section 237(a) or 212(a)(6)(A) of the Immigration and Nationality Act and before the month in which the individual is lawfully admitted to the United States for permanent residence;
(2)
during any part of which the individual is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the United States or the jurisdiction within the United States from which the person has fled, for a crime, or an attempt to commit a crime, that is a felony under the laws of the place from which the individual has fled, or, in jurisdictions that do not define crimes as felonies, is punishable by death or imprisonment for a term exceeding 1 year regardless of the actual sentence imposed;
(3)
during any part of which the individual violates a condition of probation or parole imposed under Federal or State law; or
(4)
during which the individual resides in a foreign country and is not a citizen or national of the United States if payments for such month to individuals residing in such country are withheld by the Treasury Department under section 3329 of title 31, United States Code.
(b)

Requirement for Attorney General.—
For the purpose of carrying out subsection (a)(1), the Attorney General shall notify the Commissioner of Social Security as soon as practicable after the removal of any individual under section 237(a) or 212(a)(6)(A) of the Immigration and Nationality Act.
SEC. 805.
[42 U.S.C. 1005]

BENEFIT AMOUNT.
The benefit under this title payable to a qualified individual for any month shall be in an amount equal to 75 percent of the Federal benefit rate under title XVI for the month, reduced by the amount of the qualified individual's benefit income for the month.
SEC. 806.
[42 U.S.C. 1006]

APPLICATIONS AND FURNISHING OF INFORMATION.
(a)

In General.—
The Commissioner of Social Security shall, subject to subsection (b), prescribe such requirements with respect to the filing of applications, the furnishing of information and other material, and the reporting of events and changes in circumstances, as may be necessary for the effective and efficient administration of this title.
(b)

Verification Requirement.—
The requirements prescribed by the Commissioner of Social Security under subsection (a) shall preclude any determination of entitlement to benefits under this title solely on the basis of declarations by the individual concerning qualifications or other material facts, and shall provide for verification of material information from independent or collateral sources, and the procurement of additional information as necessary in order to ensure that the benefits are provided only to qualified individuals (or their representative payees) in correct amounts.
SEC. 807.
[42 U.S.C. 1007]

REPRESENTATIVE PAYEES.
(a)

In General.—
If the Commissioner of Social Security determines that the interest of any qualified individual under this title would be served thereby, payment of the qualified individual's benefit under this title may be made, regardless of the legal competency or incompetency of the qualified individual, either directly to the qualified individual, or for his or her use and benefit, to another person (the meaning of which term, for purposes of this section, includes an organization) with respect to whom the requirements of subsection (b) have been met (in this section referred to as the qualified individual's “representative payee”). If the Commissioner of Social Security determines that a representative payee has misused any benefit paid to the representative payee pursuant to this section, section 205(j), or section 1631(a)(2), the Commissioner of Social Security shall promptly revoke the person's designation as the qualified individual's representative payee under this subsection, and shall make payment to an alternative representative payee or, if the interest of the qualified individual under this title would be served thereby, to the qualified individual.
(b)

Examination of Fitness of Prospective Representative Payee.—
(1)
Any determination under subsection (a) to pay the benefits of a qualified individual to a representative payee shall be made on the basis of—
(A)
an investigation by the Commissioner of Social Security of the person to serve as representative payee, which shall be conducted in advance of the determination and shall, to the extent practicable, include a face-to-face interview with the person (or, in the case of an organization, a representative of the organization); and
(B)
adequate evidence that the arrangement is in the interest of the qualified individual.
(2)
As part of the investigation referred to in paragraph (1), the Commissioner of Social Security shall—
(A)
require the person being investigated to submit documented proof of the identity of the person;
(B)
in the case of a person who has a social security account number issued for purposes of the program under title II or an employer identification number issued for purposes of the Internal Revenue Code of 1986, verify the number;
(C)
determine whether the person has been convicted of a violation of section 208, 811, or 1632;
(D)
obtain information concerning whether such person has been convicted of any other offense under Federal or State law which resulted in imprisonment for more than 1 year;
(E)
obtain information concerning whether such person is a person described in section 804(a)(2);
(F)
determine whether payment of benefits to the person in the capacity as representative payee has been revoked or terminated pursuant to this section, section 205(j), or section 1631(a)(2)(A)(iii) by reason of misuse of funds paid as benefits under this title, title II, or XVI, respectively, and
(G)
determine whether such person has been convicted (and not subsequently exonerated), under Federal or State law, of a felony provided under paragraph (4), or of an attempt or a conspiracy to commit such a felony.
(3)
Notwithstanding the provisions of section 552a of title 5, United States Code, or any other provision of Federal or State law (other than section 6103 of the Internal Revenue Code of 1986 and section 1106(c) of this Act), the Commissioner shall furnish any Federal, State, or local law enforcement officer, upon the written request of the officer, with the current address, social security account number, and photograph (if applicable) of any person investigated under this subsection, if the officer furnishes the Commissioner with the name of such person and such other identifying information as may reasonably be required by the Commissioner to establish the unique identity of such person, and notifies the Commissioner that—
(A)
such person is described in section 804(a)(2),
(B)
such person has information that is necessary for the officer to conduct the officer's official duties, and
(C)
the location or apprehension of such person is within the officer's official duties.
(4)
The felony crimes provided under this paragraph, whether an offense under State or Federal law, are the following:
(A)
Human trafficking, including as prohibited under sections 1590 and 1591 of title 18, United States Code.
(B)
False imprisonment, including as prohibited under section 1201 of title 18, United States Code.
(C)
Kidnapping, including as prohibited under section 1201 of title 18, United States Code.
(D)
Rape and sexual assault, including as prohibited under sections 2241, 2242, 2243, and 2244 of title 18, United States Code.
(E)
First-degree homicide, including as prohibited under section 1111 of title 18, United States Code.
(F)
Robbery, including as prohibited under section 2111 of title 18, United States Code.
(G)
Fraud to obtain access to government assistance, including as prohibited under sections 287, 1001, and 1343 of title 18, United States Code.
(H)
Fraud by scheme, including as prohibited under section 1343 of title 18, United States Code.
(I)
Theft of government funds or property, including as prohibited under section 641 of title 18, United States Code.
(J)
Abuse or neglect, including as prohibited under sections 111, 113, 114, 115, 116, or 117 of title 18, United States Code.
(K)
Forgery, including as prohibited under section 642 and chapter 25 (except section 512) of title 18, United States Code.
(L)
Identity theft or identity fraud, including as prohibited under sections 1028 and 1028A of title 18, United States Code.
The Commissioner of Social Security may promulgate regulations to provide for additional felony crimes under this clause.
(5)
(A)
For the purpose of carrying out the activities required under paragraph (2) as part of the investigation under paragraph (1)(A), the Commissioner may conduct a background check of any individual seeking to serve as a representative payee under this subsection and may disqualify from service as a representative payee any such individual who fails to grant permission for the Commissioner to conduct such a background check.
(B)
The Commissioner may revoke certification of payment of benefits under this subsection to any individual serving as a representative payee on or after January 1, 2019 who fails to grant permission for the Commissioner to conduct such a background check.
(c)

Requirement for Maintaining Lists of Undesirable Payees.—
The Commissioner of Social Security shall establish and maintain lists which shall be updated periodically and which shall be in a form that renders such lists available to the servicing offices of the Social Security Administration. The lists shall consist of—
(1)
the names and (if issued) social security account numbers or employer identification numbers of all persons with respect to whom, in the capacity of representative payee, the payment of benefits has been revoked or terminated under this section, section 205(j), or section 1631(a)(2)(A)(iii) by reason of misuse of funds paid as benefits under this title, title II, or XVI, respectively; and
(2)
the names and (if issued) social security account numbers or employer identification numbers of all persons who have been convicted of a violation of section 208, 811, or 1632.
(d)

Persons Ineligible To Serve as Representative Payees.—
(1)

In general.—
The benefits of a qualified individual may not be paid to any other person pursuant to this section if—
(A)
the person has been convicted of a violation of section 208, 811, or 1632;
(B)
except as provided in paragraph (2), payment of benefits to the person in the capacity of representative payee has been revoked or terminated under this section, section 205(j), or section 1631(a)(2)(A)(ii) by reason of misuse of funds paid as benefits under this title, title II, or title XVI, respectively;
(C)
except as provided in paragraph (2)(B), the person is a creditor of the qualified individual and provides the qualified individual with goods or services for consideration;
(D)
such person has previously been convicted as described in subsection (b)(2)(D), unless the Commissioner determines that such payment would be appropriate notwithstanding such conviction;
(E)
such person is a person described in section 804(a)(2),
(F)
except as provided in paragraph (2)(D), such person has previously been convicted (and not subsequently exonerated) as described in subsection (b)(2)(G), or
(G)
such person’s benefits under this title, title II, or title XVI are certified for payment to a representative payee during the period for which the individual’s benefits would be certified for payment to another person.
(2)

Exemptions.—
(A)
The Commissioner of Social Security may prescribe circumstances under which the Commissioner of Social Security may grant an exemption from paragraph (1) to any person on a case-by-case basis if the exemption is in the best interest of the qualified individual whose benefits would be paid to the person pursuant to this section.
(B)
Paragraph (1)(C) shall not apply with respect to any person who is a creditor referred to in such paragraph if the creditor is—
(i)
a relative of the qualified individual and the relative resides in the same household as the qualified individual;
(ii)
a legal guardian or legal representative of the individual;
(iii)
a facility that is licensed or certified as a care facility under the law of the political jurisdiction in which the qualified individual resides;
(iv)
a person who is an administrator, owner, or employee of a facility referred to in clause (iii), if the qualified individual resides in the facility, and the payment to the facility or the person is made only after the Commissioner of Social Security has made a good faith effort to locate an alternative representative payee to whom payment would serve the best interests of the qualified individual; or
(v)
a person who is determined by the Commissioner of Social Security, on the basis of written findings and pursuant to procedures prescribed by the Commissioner of Social Security, to be acceptable to serve as a representative payee.
(C)
The procedures referred to in subparagraph (B)(v) shall require the person who will serve as representative payee to establish, to the satisfaction of the Commissioner of Social Security, that—
(i)
the person poses no risk to the qualified individual;
(ii)
the financial relationship of the person to the qualified individual poses no substantial conflict of interest; and
(iii)
no other more suitable representative payee can be found.
(D)1
(i)
With respect to any person described in clause (II)—
(I)
subsection (b)(2)(G) shall not apply; and
(II)
the Commissioner may grant an exemption from the provisions of paragraph (1)(F) if the Commissioner determines that such exemption is in the best interest of the individual entitled to benefits.
(ii)
A person is described in this clause if the person—
(I)
is the custodial spouse of the beneficiary for whom the person applies to serve;
(II)
is the custodial court appointed guardian of the beneficiary for whom the person applies to serve; or
(III)
received a presidential or gubernatorial pardon for the relevant conviction.
^1
Margins for new subparagraph (D), including the subclauses, are so in law.
(e)

Deferral of Payment Pending Appointment of Representative Payee.—
(1)

In general.—
Subject to paragraph (2), if the Commissioner of Social Security makes a determination described in the first sentence of subsection (a) with respect to any qualified individual's benefit and determines that direct payment of the benefit to the qualified individual would cause substantial harm to the qualified individual, the Commissioner of Social Security may defer (in the case of initial entitlement) or suspend (in the case of existing entitlement) direct payment of the benefit to the qualified individual, until such time as the selection of a representative payee is made pursuant to this section.
(2)

Time limitation.—
(A)

In general.—
Except as provided in subparagraph (B), any deferral or suspension of direct payment of a benefit pursuant to paragraph (1) shall be for a period of not more than 1 month.
(B)

Exception in the case of incompetency.—
Subparagraph (A) shall not apply in any case in which the qualified individual is, as of the date of the Commissioner of Social Security's determination, legally incompetent under the laws of the jurisdiction in which the individual resides.
(3)

Payment of retroactive benefits.—
Payment of any benefits which are deferred or suspended pending the selection of a representative payee shall be made to the qualified individual or the representative payee as a single sum or over such period of time as the Commissioner of Social Security determines is in the best interest of the qualified individual.
(f)

Hearing.—
Any qualified individual who is dissatisfied with a determination by the Commissioner of Social Security to make payment of the qualified individual's benefit to a representative payee under subsection (a) of this section or with the designation of a particular person to serve as representative payee shall be entitled to a hearing by the Commissioner of Social Security to the same extent as is provided in section 809(a), and to judicial review of the Commissioner of Social Security's final decision as is provided in section 809(b).
(g)

Notice Requirements.—
(1)

In general.—
In advance, to the extent practicable, of the payment of a qualified individual's benefit to a representative payee under subsection (a), the Commissioner of Social Security shall provide written notice of the Commissioner's initial determination to so make the payment. The notice shall be provided to the qualified individual, except that, if the qualified individual is legally incompetent, then the notice shall be provided solely to the legal guardian or legal representative of the qualified individual.
(2)

Specific requirements.—
Any notice required by paragraph (1) shall be clearly written in language that is easily understandable to the reader, shall identify the person to be designated as the qualified individual's representative payee, and shall explain to the reader the right under subsection (f) of the qualified individual or of the qualified individual's legal guardian or legal representative—
(A)
to appeal a determination that a representative payee is necessary for the qualified individual;
(B)
to appeal the designation of a particular person to serve as the representative payee of the qualified individual; and
(C)
to review the evidence upon which the designation is based and to submit additional evidence.
(h)

Accountability Monitoring.—
(1)

In general.—
In any case where payment under this title is made to a person other than the qualified individual entitled to the payment, the Commissioner of Social Security shall establish a system of accountability monitoring under which the person shall report not less often than annually with respect to the use of the payments. The Commissioner of Social Security shall establish and implement statistically valid procedures for reviewing the reports in order to identify instances in which persons are not properly using the payments.
(2)

Special reports.—
Notwithstanding paragraph (1), the Commissioner of Social Security may require a report at any time from any person receiving payments on behalf of a qualified individual, if the Commissioner of Social Security has reason to believe that the person receiving the payments is misusing the payments.
(3)
(A)
Paragraph (1) shall not apply in any case where the other person to whom such payment is made is the spouse of the individual entitled to such payment.
(B)
The Commissioner of Social Security shall establish and implement procedures as necessary for the Commissioner to determine the eligibility of such parties for the exemption provided in subparagraph (A). The Commissioner shall prescribe such regulations as may be necessary to determine eligibility for such exemption.
(4)

Authority to redirect delivery of benefit payments when a representative payee fails to provide required accounting.—
In any case in which the person described in paragraph (1) or (2) receiving benefit payments on behalf of a qualified individual fails to submit a report required by the Commissioner of Social Security under paragraph (1) or (2), the Commissioner may, after furnishing notice to such person and the qualified individual, require that such person appear in person at a United States Government facility designated by the Social Security Administration as serving the area in which the qualified individual resides in order to receive such benefit payments.
(5)

Maintaining lists of payees.—
The Commissioner of Social Security shall maintain lists which shall be updated periodically of—
(A)
the name, address, and (if issued) the social security account number or employer identification number of each representative payee who is receiving benefit payments pursuant to this section, section 205(j), or section 1631(a)(2); and
(B)
the name, address, and social security account number of each individual for whom each representative payee is reported to be providing services as representative payee pursuant to this section, section 205(j), or section 1631(a)(2).
(6)

Maintaining lists of agencies.—
The Commissioner of Social Security shall maintain lists, which shall be updated periodically, of public agencies and community-based nonprofit social service agencies which are qualified to serve as representative payees pursuant to this section and which are located in the jurisdiction in which any qualified individual resides.
(i)

Restitution.—
In any case where the negligent failure of the Commissioner of Social Security to investigate or monitor a representative payee results in misuse of benefits by the representative payee, the Commissioner of Social Security shall make payment to the qualified individual or the individual's alternative representative payee of an amount equal to the misused benefits. In any case in which a representative payee that—
(A)2
is not an individual; or
^2
So in original. Paragraph is designated incorrectly as a subparagraph.
(B)2
is an individual who, for any month during a period when misuse occurs, serves 15 or more individuals who are beneficiaries under this title, title II, title XVI, or any combination of such titles;
misuses all or part of an individual's benefit paid to such representative payee, the Commissioner of Social Security shall pay to the beneficiary or the beneficiary's alternative representative payee an amount equal to the amount of such benefit so misused. The provisions of this paragraph are subject to the limitations of subsection (l)(2). The Commissioner of Social Security shall make a good faith effort to obtain restitution from the terminated representative payee.
(j)

Misuse of Benefits.—
For purposes of this title, misuse of benefits by a representative payee occurs in any case in which the representative payee receives payment under this title for the use and benefit of another person under this title and converts such payment, or any part thereof, to a use other than for the use and benefit of such person. The Commissioner of Social Security may prescribe by regulation the meaning of the term “use and benefit” for purposes of this subsection.
(k)

Periodic Onsite Review.—
(1)

In general.—
In addition to such other reviews of representative payees as the Commissioner of Social Security may otherwise conduct, the Commissioner may provide for the periodic onsite review of any person or agency that receives the benefits payable under this title (alone or in combination with benefits payable under title II or title XVI) to another individual pursuant to the appointment of such person or agency as a representative payee under this section, section 205(j), or section 1631(a)(2) in any case in which—
(A)
the representative payee is a person who serves in that capacity with respect to 15 or more such individuals; or
(B)
the representative payee is an agency that serves in that capacity with respect to 50 or more such individuals.
(2)

Report.—
Within 120 days after the end of each fiscal year, the Commissioner shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the results of periodic onsite reviews conducted during the fiscal year pursuant to paragraph (1) and of any other reviews of representative payees conducted during such fiscal year in connection with benefits under this title. Each such report shall describe in detail all problems identified in such reviews and any corrective action taken or planned to be taken to correct such problems, and shall include—
(A)
the number of such reviews;
(B)
the results of such reviews;
(C)
the number of cases in which the representative payee was changed and why;
(D)
the number of cases involving the exercise of expedited, targeted oversight of the representative payee by the Commissioner conducted upon receipt of an allegation of misuse of funds, failure to pay a vendor, or a similar irregularity;
(E)
the number of cases discovered in which there was a misuse of funds;
(F)
how any such cases of misuse of funds were dealt with by the Commissioner;
(G)
the final disposition of such cases of misuse of funds, including any criminal penalties imposed; and
(H)
such other information as the Commissioner deems appropriate.
(l)

Liability for Misused Amounts.—
(1)

In general.—
If the Commissioner of Social Security or a court of competent jurisdiction determines that a representative payee that is not a Federal, State, or local government agency has misused all or part of a qualified individual's benefit that was paid to such representative payee under this section, the representative payee shall be liable for the amount misused, and such amount (to the extent not repaid by the representative payee) shall be treated as an overpayment of benefits under this title to the representative payee for all purposes of this Act and related laws pertaining to the recovery of such overpayments. Subject to paragraph (2), upon recovering all or any part of such amount, the Commissioner shall make payment of an amount equal to the recovered amount to such qualified individual or such qualified individual's alternative representative payee.
(2)

Limitation.—
The total of the amount paid to such individual or such individual's alternative representative payee under paragraph (1) and the amount paid under subsection (i) may not exceed the total benefit amount misused by the representative payee with respect to such individual.
SEC. 808.
[42 U.S.C. 1008]

OVERPAYMENTS AND UNDERPAYMENTS.
(a)

In General.—
Whenever the Commissioner of Social Security finds that more or less than the correct amount of payment has been made to any person under this title, proper adjustment or recovery shall be made, as follows:
(1)
With respect to payment to a person of more than the correct amount, the Commissioner of Social Security shall decrease any payment under this title to which the overpaid person (if a qualified individual) is entitled, or shall require the overpaid person or his or her estate to refund the amount in excess of the correct amount, or, if recovery is not obtained under these two methods, shall seek or pursue recovery by means of reduction in tax refunds based on notice to the Secretary of the Treasury, as authorized under section 3720A of title 31, United States Code.
(2)
With respect to payment of less than the correct amount to a qualified individual who, at the time the Commissioner of Social Security is prepared to take action with respect to the underpayment—
(A)
is living, the Commissioner of Social Security shall make payment to the qualified individual (or the qualified individual's representative payee designated under section 807) of the balance of the amount due the underpaid qualified individual; or
(B)
is deceased, the balance of the amount due shall revert to the general fund of the Treasury.
(b)

Waiver of Recovery of Overpayment.—
In any case in which more than the correct amount of payment has been made, there shall be no adjustment of payments to, or recovery by the United States from, any person who is without fault if the Commissioner of Social Security determines that the adjustment or recovery would defeat the purpose of this title or would be against equity and good conscience.
(c)

Limited Immunity for Disbursing Officers.—
A disbursing officer may not be held liable for any amount paid by the officer if the adjustment or recovery of the amount is waived under subsection (b), or adjustment under subsection (a) is not completed before the death of the qualified individual against whose benefits deductions are authorized.
(d)

Authorized Collection Practices.—
(1)

In general.—
With respect to any delinquent amount, the Commissioner of Social Security may use the collection practices described in sections 3711(e), 3716, and 3718 of title 31, United States Code, as in effect on October 1, 1994.
(2)

Definition.—
For purposes of paragraph (1), the term “delinquent amount” means an amount—
(A)
in excess of the correct amount of the payment under this title; and
(B)
determined by the Commissioner of Social Security to be otherwise unrecoverable under this section from a person who is not a qualified individual under this title.
(e)

Cross-Program Recovery of Overpayments.—
For provisions relating to the cross-program recovery of overpayments made under programs administered by the Commissioner of Social Security, see section 1147.
SEC. 809.
[42 U.S.C. 1009]

HEARINGS AND REVIEW.
(a)

Hearings.—
(1)

In general.—
The Commissioner of Social Security shall make findings of fact and decisions as to the rights of any individual applying for payment under this title. The Commissioner of Social Security shall provide reasonable notice and opportunity for a hearing to any individual who is or claims to be a qualified individual and is in disagreement with any determination under this title with respect to entitlement to, or the amount of, benefits under this title, if the individual requests a hearing on the matter in disagreement within 60 days after notice of the determination is received, and, if a hearing is held, shall, on the basis of evidence adduced at the hearing affirm, modify, or reverse the Commissioner of Social Security's findings of fact and the decision. The Commissioner of Social Security may, on the Commissioner of Social Security's own motion, hold such hearings and conduct such investigations and other proceedings as the Commissioner of Social Security deems necessary or proper for the administration of this title. In the course of any hearing, investigation, or other proceeding, the Commissioner may administer oaths and affirmations, examine witnesses, and receive evidence. Evidence may be received at any hearing before the Commissioner of Social Security even though inadmissible under the rules of evidence applicable to court procedure. The Commissioner of Social Security shall specifically take into account any physical, mental, educational, or linguistic limitation of the individual (including any lack of facility with the English language) in determining, with respect to the entitlement of the individual for benefits under this title, whether the individual acted in good faith or was at fault, and in determining fraud, deception, or intent.
(2)

Effect of failure to timely request review.—
A failure to timely request review of an initial adverse determination with respect to an application for any payment under this title or an adverse determination on reconsideration of such an initial determination shall not serve as a basis for denial of a subsequent application for any payment under this title if the applicant demonstrates that the applicant failed to so request such a review acting in good faith reliance upon incorrect, incomplete, or misleading information, relating to the consequences of reapplying for payments in lieu of seeking review of an adverse determination, provided by any officer or employee of the Social Security Administration.
(3)

Notice requirements.—
In any notice of an adverse determination with respect to which a review may be requested under paragraph (1), the Commissioner of Social Security shall describe in clear and specific language the effect on possible entitlement to benefits under this title of choosing to reapply in lieu of requesting review of the determination.
(b)

Judicial Review.—
The final determination of the Commissioner of Social Security after a hearing under subsection (a)(1) shall be subject to judicial review as provided in section 205(g) to the same extent as the Commissioner of Social Security's final determinations under section 205.
SEC. 810.
[42 U.S.C. 1010]

OTHER ADMINISTRATIVE PROVISIONS.
(a)

Regulations and Administrative Arrangements.—
The Commissioner of Social Security may prescribe such regulations, and make such administrative and other arrangements, as may be necessary or appropriate to carry out this title.
(b)

Payment of Benefits.—
Benefits under this title shall be paid at such time or times and in such installments as the Commissioner of Social Security determines are in the interests of economy and efficiency.
(c)

Entitlement Redeterminations.—
An individual's entitlement to benefits under this title, and the amount of the benefits, may be redetermined at such time or times as the Commissioner of Social Security determines to be appropriate.
(d)

Suspension and Termination of Benefits.—
Regulations prescribed by the Commissioner of Social Security under subsection (a) may provide for the suspension and termination of entitlement to benefits under this title as the Commissioner determines is appropriate.
SEC. 810A.
[42 U.S.C. 1010a]

OPTIONAL FEDERAL ADMINISTRATION OF STATE RECOGNITION PAYMENTS.
(a)

In General.—
The Commissioner of Social Security may enter into an agreement with any State (or political subdivision thereof) that provides cash payments on a regular basis to individuals entitled to benefits under this title under which the Commissioner of Social Security shall make such payments on behalf of such State (or subdivision).
(b)

Agreement Terms.—
(1)

In general.—
Such agreement shall include such terms as the Commissioner of Social Security finds necessary to achieve efficient and effective administration of both this title and the State program.
(2)

Financial terms.—
Such agreement shall provide for the State to pay the Commissioner of Social Security, at such times and in such installments as the parties may specify—
(A)
an amount equal to the expenditures made by the Commissioner of Social Security pursuant to such agreement as payments to individuals on behalf of such State; and
(B)
an administration fee to reimburse the administrative expenses incurred by the Commissioner of Social Security in making payments to individuals on behalf of the State.
(c)

Special Disposition of Administration Fees.—
Administration fees, upon collection, shall be credited to a special fund established in the Treasury of the United States for State recognition payments for certain World War II veterans. The amounts so credited, to the extent and in the amounts provided in advance in appropriations Acts, shall be available to defray expenses incurred in carrying out this title.
SEC. 811.
[42 U.S.C. 1011]

PENALTIES FOR FRAUD.
(a)

In General.—
Whoever—
(1)
knowingly and willfully makes or causes to be made any false statement or representation of a material fact in an application for benefits under this title;
(2)
at any time knowingly and willfully makes or causes to be made any false statement or representation of a material fact for use in determining any right to the benefits;
(3)
having knowledge of the occurrence of any event affecting—
(A)
his or her initial or continued right to the benefits; or
(B)
the initial or continued right to the benefits of any other individual in whose behalf he or she has applied for or is receiving the benefit,
conceals or fails to disclose the event with an intent fraudulently to secure the benefit either in a greater amount or quantity than is due or when no such benefit is authorized;
(4)
having made application to receive any such benefit for the use and benefit of another and having received it, knowingly and willfully converts the benefit or any part thereof to a use other than for the use and benefit of the other individual; or
(5)
conspires to commit any offense described in any of paragraphs (1) through (3),
shall be fined under title 18, United States Code, imprisoned not more than 5 years, or both, except that in the case of a person who receives a fee or other income for services performed in connection with any determination with respect to benefits under this title (including a claimant representative, translator, or current or former employee of the Social Security Administration), or who is a physician or other health care provider who submits, or causes the submission of, medical or other evidence in connection with any such determination, such person shall be guilty of a felony and upon conviction thereof shall be fined under title 18, United States Code, or imprisoned for not more than ten years, or both.
(b)

Court Order for Restitution.—
(1)

In general.—
Any Federal court, when sentencing a defendant convicted of an offense under subsection (a), may order, in addition to or in lieu of any other penalty authorized by law, that the defendant make restitution to the Commissioner of Social Security, in any case in which such offense results in—
(A)
the Commissioner of Social Security making a benefit payment that should not have been made, or
(B)
an individual suffering a financial loss due to the defendant's violation of subsection (a) in his or her capacity as the individual's representative payee appointed pursuant to section 807(i).
(2)

Related provisions.—
Sections 3612, 3663, and 3664 of title 18, United States Code, shall apply with respect to the issuance and enforcement of orders of restitution under this subsection. In so applying such sections, the Commissioner of Social Security shall be considered the victim.
(3)

Stated reasons for not ordering restitution.—
If the court does not order restitution, or orders only partial restitution, under this subsection, the court shall state on the record the reasons therefor.
(4)

Receipt of restitution payments.—
(A)

In general.—
Except as provided in subparagraph (B), funds paid to the Commissioner of Social Security as restitution pursuant to a court order shall be deposited as miscellaneous receipts in the general fund of the Treasury.
(B)

Payment to the individual.—
In the case of funds paid to the Commissioner of Social Security pursuant to paragraph (1)(B), the Commissioner of Social Security shall certify for payment to the individual described in such paragraph an amount equal to the lesser of the amount of the funds so paid or the individual's outstanding financial loss as described in such paragraph, except that such amount may be reduced by any overpayment of benefits owed under this title, title II, or title XVI by the individual.
SEC. 812.
[42 U.S.C. 1012]

DEFINITIONS.
In this title:
(1)

World war ii veteran.—
The term “World War II veteran” means a person who—
(A)
served during World War II—
(i)
in the active military, naval, or air service of the United States during World War II; or
(ii)
in the organized military forces of the Government of the Commonwealth of the Philippines, while the forces were in the service of the Armed Forces of the United States pursuant to the military order of the President dated July 26, 1941, including among the military forces organized guerrilla forces under commanders appointed, designated, or subsequently recognized by the Commander in Chief, Southwest Pacific Area, or other competent authority in the Army of the United States, in any case in which the service was rendered before December 31, 1946; and
(B)
was discharged or released therefrom under conditions other than dishonorable—
(i)
after service of 90 days or more; or
(ii)
because of a disability or injury incurred or aggravated in the line of active duty.
(2)

World war ii.—
The term “World War II” means the period beginning on September 16, 1940, and ending on July 24, 1947.
(3)

Supplemental security income benefit under title xvi.—
The term “supplemental security income benefit under title XVI”, except as otherwise provided, includes State supplementary payments which are paid by the Commissioner of Social Security pursuant to an agreement under section 1616(a) of this Act or section 212(b) of Public Law 93–66.
(4)

Federal benefit rate under title xvi.—
The term “Federal benefit rate under title XVI” means, with respect to any month, the amount of the supplemental security income cash benefit (not including any State supplementary payment which is paid by the Commissioner of Social Security pursuant to an agreement under section 1616(a) of this Act or section 212(b) of Public Law 93–66) payable under title XVI for the month to an eligible individual with no income.
(5)

United states.—
The term “United States” means, notwithstanding section 1101(a)(1), only the 50 States, the District of Columbia, and the Commonwealth of the Northern Mariana Islands.
(6)

Benefit income.—
The term “benefit income” means any recurring payment received by a qualified individual as an annuity, pension, retirement, or disability benefit (including any veterans' compensation or pension, workmen's compensation payment, old-age, survivors, or disability insurance benefit, railroad retirement annuity or pension, and unemployment insurance benefit), but only if a similar payment was received by the individual from the same (or a related) source during the 12-month period preceding the month in which the individual files an application for benefits under this title.
SEC. 813.
[42 U.S.C. 1013]

APPROPRIATIONS.
There are hereby appropriated for fiscal year 2000 and subsequent fiscal years, out of any funds in the Treasury not otherwise appropriated, such sums as may be necessary to carry out this title.
TITLE IX—

MISCELLANEOUS PROVISIONS RELATING TO EMPLOYMENT SECURITY1
^1
Title IX of the Social Security Act is administered by the Department of Labor.

TABLE OF CONTENTS OF TITLE2
^2
This table of contents does not appear in the law.
Sec. 901.
Employment security administration account.
Sec. 902.
Transfers to Federal unemployment account and report to Congress.
Sec. 903.
Amounts transferred to State accounts.
Sec. 904.
Unemployment Trust Fund.
Sec. 905.
Extended unemployment compensation account.
Sec. 906.
Unemployment compensation research program.
Sec. 907.
Personnel training.
Sec. 908.
Advisory Council on Unemployment Compensation.
Sec. 909.
Federal Employees Compensation Account.
Sec. 910.
Borrowing between Federal accounts.
Sec. 911.
Data exchange standardization for improved interoperability.

employment security administration account
Sec. 901.
[42 U.S.C. 1101]
(a)

Establishment of Account
There is hereby established in the Unemployment Trust Fund an employment security administration account.
(b)

Appropriations to Account
(1)
There is hereby appropriated to the Unemployment Trust Fund for credit to the employment security administration account, out of any moneys in the Treasury not otherwise appropriated, for the fiscal year ending June 30, 1961, and for each fiscal year thereafter, an amount equal to 100 per centum of the tax (including interest, penalties, and additions to the tax) received during the fiscal year under the Federal Unemployment Tax Act and covered into the Treasury.
(2)
The amount appropriated by paragraph (1) shall be transferred at least monthly from the general fund of the Treasury to the Unemployment Trust Fund and credited to the employment security administration account. Each such transfer shall be based on estimates made by the Secretary of the Treasury of the amounts received in the Treasury. Proper adjustments shall be made in the amounts subsequently transferred, to the extent prior estimates (including estimates for the fiscal year ending June 30, 1960) were in excess of or were less than the amounts required to be transferred.
(3)
The Secretary of the Treasury is directed to pay from time to time from the employment security administration account into the Treasury, as repayments to the account for refunding internal revenue collections, amounts equal to all refunds made after June 30, 1960, of amounts received as tax under the Federal Unemployment Tax Act (including interest on such refunds).
(c)

Administrative Expenditures
(1)
There are hereby authorized to be made available for expenditure out of the employment security administration account for the fiscal year ending June 30, 1971, and for each fiscal year thereafter—
(A)
such amounts (not in excess of the applicable limit provided by paragraph (3) and, with respect to clause (ii), not in excess of the limit provided by paragraph (4)) as the Congress may deem appropriate for the purpose of—
(i)
assisting the States in the administration of their unemployment compensation laws as provided in title III (including administration pursuant to agreements under any Federal unemployment compensation law),
(ii)
the establishment and maintenance of systems of public employment offices in accordance with the Act of June 6, 1933, as amended (29 U.S.C., secs. 49–49n), and
(iii)
carrying into effect section 4103 of title 38 of the United States Code;
(B)
such amounts (not in excess of the limit provided by paragraph (4) with respect to clause (iii)) as the Congress may deem appropriate for the necessary expenses of the Department of Labor for the performance of its functions under—
(i)
this title and titles III and XII of this Act,
(ii)
the Federal Unemployment Tax Act,
(iii)
the provisions of the Act of June 6, 1933, as amended,
(iv)
chapter 41 (except section 4103) of title 38 of the United States Code, and
(v)
any Federal unemployment compensation law.
The term “necessary expenses” as used in this subparagraph (B) shall include the expense of reimbursing a State for salaries and other expenses of employees of such State temporarily assigned or detailed to duty with the Department of Labor and of paying such employees for travel expenses, transportation of household goods, and per diem in lieu of subsistence while away from their regular duty stations in the State, at rates authorized by law for civilian employees of the Federal Government.
(2)
The Secretary of the Treasury is directed to pay from the employment security administration account into the Treasury as miscellaneous receipts the amount estimated by him which will be expended during a three-month period by the Treasury Department for the performance of its functions under—
(A)
this title and titles III and XII of this Act, including the expenses of banks for servicing unemployment benefit payment and clearing accounts which are offset by the maintenance of balances of Treasury funds with such banks,
(B)
the Federal Unemployment Tax Act, and
(C)
any Federal unemployment compensation law with respect to which responsibility for administration is vested in the Secretary of Labor.
If it subsequently appears that the estimates under this paragraph in any particular period were too high or too low, appropriate adjustments shall be made by the Secretary of the Treasury in future payments.
(3)
(A)
For purposes of paragraph (1)(A), the limitation on the amount authorized to be made available for any fiscal year after June 30, 1970, is, except as provided in subparagraph (B) and in the second sentence of section 901(f)(3)(A), an amount equal to 95 percent of the amount estimated and set forth in the budget of the United States Government for such fiscal year as the amount by which the net receipts during such year under the Federal Unemployment Tax Act will exceed the amount transferred under section 905(b) during such year to the extended unemployment compensation account.
(B)
The limitation established by subparagraph (A) is increased by any unexpended amount retained in the employment security administration account in accordance with section 901(f)(2)(B).
(C)
Each estimate of net receipts under this paragraph shall be based upon a tax rate of 0.6 percent.
(4)
For purposes of paragraphs (1)(A)(ii) and (1)(B)(iii) the amount authorized to be made available out of the employment security administration account for any fiscal year after June 30, 1972, shall reflect the proportion of the total cost of administering the system of public employment offices in accordance with the Act of June 6, 1933, as amended, and of the necessary expenses of the Department of Labor for the performance of its functions under the provisions of such Act, as the President determines is an appropriate charge to the employment security administration account, and reflects in his annual budget for such year. The President's determination, after consultation with the Secretary, shall take into account such factors as the relationship between employment subject to State laws and the total labor force in the United States, the number of claimants and the number of job applicants, and such other factors as he finds relevant.
(5)
(A)
There are authorized to be appropriated out of the employment security administration account to carry out program integrity activities, in addition to any amounts available under paragraph (1)(A)(i)—
(i)
$89,000,000 for fiscal year 1998;
(ii)
$91,000,000 for fiscal year 1999;
(iii)
$93,000,0003 fiscal year 2000;
^3
So in original. The word “for” should be inserted.
(iv)
$96,000,000 for fiscal year 2001; and
(v)
$98,000,000 for fiscal year 2002.
(B)
In any fiscal year in which a State receives funds appropriated pursuant to this paragraph, the State shall expend a proportion of the funds appropriated pursuant to paragraph (1)(A)(i) to carry out program integrity activities that is not less than the proportion of the funds appropriated under such paragraph that was expended by the State to carry out program integrity activities in fiscal year 1997.
(C)
For purposes of this paragraph, the term “program integrity activities” means initial claims review activities, eligibility review activities, benefit payments control activities, and employer liability auditing activities.
(d)

Additional Tax Attributable to Reduced Credits
(1)
The Secretary of the Treasury is directed to transfer from the employment security administration account—
(A)
To the Federal unemployment account, an amount equal to the amount by which—
(i)
100 per centum of the additional tax received under the Federal Unemployment Tax Act with respect to any State by reason of the reduced credits provisions of section 3302(c)(3) of such Act and covered into the Treasury for the repayment of advances made to the State under section 1201, exceeds
(ii)
the amount transferred to the account of such State pursuant to subparagraph (B) of this paragraph.
Any amount transferred pursuant to this subparagraph shall be credited against, and shall operate to reduce, that balance of advances, made under section 1201 to the State, with respect to which employers paid such additional tax.
(B)
To the account (in the Unemployment Trust Fund) of the State with respect to which employers paid such additional tax, an amount equal to the amount by which such additional tax received and covered into the Treasury exceeds that balance of advances, made under section 1201 to the State, with respect to which employers paid such additional tax.
(2)
Transfers under this subsection shall be as of the beginning of the month succeeding the month in which the moneys were credited to the employment security administration account pursuant to subsection (b)(2).
(e)

Revolving Fund
(1)
There is hereby established in the Treasury a revolving fund which shall be available to make the advances authorized by this subsection. There are hereby authorized to be appropriated, without fiscal year limitation, to such revolving fund such amounts as may be necessary for the purposes of this section.
(2)
The Secretary of the Treasury is directed to advance from time to time from the revolving fund to the employment security administration account such amounts as may be necessary for the purposes of this section. If the net balance in the employment security administration account as of the beginning of any fiscal year equals 40 percent of the amount of the total appropriation by the Congress out of the employment security administration account for the preceding fiscal year, no advance may be made under this subsection during such fiscal year.
(3)
Advances to the employment security administration account made under this subsection shall bear interest until repaid at a rate equal to the average rate of interest (computed as of the end of the calendar month next preceding the date of such advance) borne by all interest-bearing obligations of the United States then forming a part of the public debt; except that where such average rate is not a multiple of one-eighth of 1 per centum, the rate of interest shall be the multiple of one-eighth of 1 per centum next lower than such average rate.
(4)
Advances to the employment security administration account made under this subsection, plus interest accrued thereon, shall be repaid by the transfer from time to time, from the employment security administration account to the revolving fund, of such amounts as the Secretary of the Treasury, in consultation with the Secretary of Labor, determines to be available in the employment security administration account for such repayment. Any amount transferred as a repayment under this paragraph shall be credited against, and shall operate to reduce, any balance of advances (plus accrued interest) repayable under this subsection.
(f)

Determination of Excess and Amount To Be Retained in Employment Security Administration Account
(1)
The Secretary of the Treasury shall determine as of the close of each fiscal year (beginning with the fiscal year ending June 30, 1961) the excess in the employment security administration account.
(2)
The excess in the employment security administration account as of the close of any fiscal year is the amount by which the net balance in such account as of such time (after the application of section 902(b) and section 901(f)(3)(C)) exceeds the net balance in the employment security administration account as of the beginning of that fiscal year (including the fiscal year for which the excess is being computed) for which the net balance was higher than as of the beginning of any other such fiscal year.
(3)
(A)
The excess determined as provided in paragraph (2) as of the close of any fiscal year after June 30, 1972, shall be retained (as of the beginning of the succeeding fiscal year) in the employment security administration account until the amount in such account is equal to 40 percent of the amount of the total appropriation by the Congress out of the employment security administration account for the fiscal year for which the excess is determined. Three-eighths of the amount in the employment security administration account as of the beginning of any fiscal year after June 30, 1972, or $150 million, whichever is the lesser, is authorized to be made available for such fiscal year pursuant to subsection (c)(1) for additional costs of administration due to an increase in the rate of insured unemployment for a calendar quarter of at least 15 percent over the rate of insured unemployment for the corresponding calendar quarter in the immediately preceding year.
(B)
If the entire amount of the excess determined as provided in paragraph (2) as of the close of any fiscal year after June 30, 1972, is not retained in the employment security administration account, there shall be transferred (as of the beginning of the succeeding fiscal year) to the extended unemployment compensation account the balance of such excess or so much thereof as is required to increase the amount in the extended unemployment compensation account to the limit provided in section 905(b)(2).
(C)
If as of the close of any fiscal year after June 30, 1972, the amount in the extended unemployment compensation account exceeds the limit provided in section 905(b)(2), such excess shall be transferred to the employment security administration account as of the close of such fiscal year.
(4)
For the purposes of this section, the net balance in the employment security administration account as of any time is the amount in such account as of such time reduced by the sum of—
(A)
the amounts then subject to transfer pursuant to subsection (d), and
(B)
the balance of advances (plus interest accrued thereon) then repayable to the revolving fund established by subsection (e).
The net balance in the employment security administration account as of the beginning of any fiscal year shall be determined after the disposition of the excess in such account as of the close of the preceding fiscal year.

Transfers to Federal Unemployment Account and Report to Congress4
^4
Heading style so in original.

transfers to federal unemployment account5
Sec. 902.
[42 U.S.C. 1102]
(a)
Whenever the Secretary of the Treasury determines pursuant to section 901(f) that there is an excess in the employment security administration account as of the close of any fiscal year and the entire amount of such excess is not retained in the employment security administration account or transferred to the extended unemployment compensation account as provided in section 901(f)(3), there shall be transferred (as of the beginning of the succeeding fiscal year) to the Federal unemployment account the balance of such excess or so much thereof as is required to increase the amount in the Federal unemployment account to whichever of the following is the greater:
^5
The heading for subsection (a) of section 902 appears in the original law in all small caps centered casing and does not conform with the style of existing subsection headings in this Act.
(1)
$550 million, or
(2)
the amount (determined by the Secretary of Labor and certified by him to the Secretary of the Treasury) equal to 0.5 percent of the total wages subject (determined without any limitation on amount) to contributions under all State unemployment compensation laws for the calendar year ending during the fiscal year for which the excess is determined.
(b)

Transfers to Employment Security Administration Account
The amount, if any, by which the amount in the Federal unemployment account as of the close of any fiscal year exceeds the greater of the amounts specified in paragraphs (1) and (2) of subsection (a) shall be transferred to the employment security administration account as of the close of such fiscal year.
(c)

report to the congress7
Whenever the Secretary of Labor has reason to believe that in the next fiscal year the employment security administration account will reach the limit provided for such account in section 901(f)(3)(A), and the Federal unemployment account will reach the limit provided for such account in section 902(a), and the extended unemployment compensation account will reach the limit provided for such account in section 905(b)(2), he shall, after consultation with the Secretary of the Treasury, so report to the Congress with a recommendation for appropriate action by the Congress.
^7
Section 209(c) of the Job Creation and Worker Assistance Act of 2002 (P.L. 107–147; 116 Stat. 32) provides:
``(c) Limitations on Transfers.—Section 903(b) of the Social Security Act shall apply to transfers under section 903(d) of such Act (as amended by this section). For purposes of the preceding sentence, such section 903(b) shall be deemed to be amended as follows:''.
Subsection (b)(1), as amended by subsection (c), reads:
(b)(1) If the Secretary of Labor finds that on the transfer date described in subsection (d)(5)—
(A) a State is not eligible for certification under section 303, or
(B) the law of a State is not approvable under section 3304 of the Federal Unemployment Tax Act,
then the amount available for transfer to such State's account shall, in lieu of being so transferred, remain in the Federal unemployment account. If, during fiscal year 2002 (after the transfer date described in subsection (d)(5)), the Secretary of Labor finds and certifies to the Secretary of the Treasury that such State is eligible for certification under section 303, that the law of such State is approvable under such section 3304, or both, the Secretary of the Treasury shall transfer such amount from the Federal unemployment account to the account of such State. If the Secretary of Labor does not so find and certify to the Secretary of the Treasury before the close of such fiscal year then the amount which was available for transfer to such State's account under subsection (d) shall (as of the close of fiscal year 2002) become unrestricted as to use as part of the Federal unemployment account.

amounts transferred to state accounts
Sec. 903.
[42 U.S.C. 1103]
(a)

In General
(1)
If as of the close of any fiscal year after the fiscal year ending June 30, 1972, the amount in the extended unemployment compensation account has reached the limit provided in section 905(b)(2) and the amount in the Federal unemployment account has reached the limit provided in section 902(a) and all advances and interest pursuant to section 905(d) and section 1203 have been repaid, and there remains in the employment security administration account any amount over the amount provided in section 901(f)(3)(A), such excess amount, except as provided in subsection (b), shall be transferred (as of the beginning of the succeeding fiscal year) to the accounts of the States in the Unemployment Trust Fund.
(2)
Each State's share of the funds to be transferred under this subsection as of any October 1—
(A)
shall be determined by the Secretary of Labor and certified by such Secretary to the Secretary of the Treasury before such date, and
(B)
shall bear the same ratio to the total amount to be so transferred as—
(i)
the amount of wages subject to tax under section 3301 of the Internal Revenue Code of 1986 during the preceding calendar year which are determined by the Secretary of Labor to be attributable to the State, bears to
(ii)
the total amount of wages subject to such tax during such year.
[(3)
Repealed by section 209(a)(1)(A) of the Job Creation and Worker Assistance Act of 2002 (P.L. 107–147, 116 Stat. 31).]
(b)8

Limitations on Transfers
(1)
If the Secretary of Labor finds that on October 1 of any fiscal year—
^8
See footnote for section 902(c).
(A)
a State is not eligible for certification under section 303, or
(B)
the law of a State is not approvable under section 3304 of the Federal Unemployment Tax Act,
then the amount available for transfer to such State's account shall, in lieu of being so transferred, be transferred to the Federal unemployment account as of the beginning of such October 1. If, during the fiscal year beginning on such October 1, the Secretary of Labor finds and certifies to the Secretary of the Treasury that such State is eligible for certification under section 303, that the law of such State is approvable under such section 3304, or both, the Secretary of the Treasury shall transfer such amount from the Federal unemployment account to the account of such State. If the Secretary of Labor does not so find and certify to the Secretary of the Treasury before the close of such fiscal year then the amount which was available for transfer to such State's account as of October 1 of such fiscal year shall (as of the close of such fiscal year) become unrestricted as to use as part of the Federal unemployment account.
(2)
The amount which, but for this paragraph, would be transferred to the account of a State under subsection (a) or paragraph (1) of this subsection shall be reduced (but not below zero) by the balance of advances made to the State under section 1201. The sum by which such amount is reduced shall—
(A)
be transferred to or retained in (as the case may be) the Federal unemployment account, and
(B)
be credited against, and operate to reduce—
(i)
first, any balance of advances made before the date of the enactment of the Employment Security Act of 1960 to the State under section 1201, and
(ii)
second, any balance of advances made on or after such date to the State under section 1201.
(c)

Use of Transferred Amounts
(1)
Except as provided in paragraph (2), amounts transferred to the account of a State pursuant to subsections (a) and (b) shall be used only in the payment of cash benefits to individuals with respect to their unemployment, exclusive of expenses of administration.
(2)
A State may, pursuant to a specific appropriation made by the legislative body of the State, use money withdrawn from its account in the payment of expenses incurred by it for the administration of its unemployment compensation law and public employment offices if and only if—
(A)
the purposes and amounts were specified in the law making the appropriation,
(B)
the appropriation law did not authorize the obligation of such money after the close of the two-year period which began on the date of enactment of the appropriation law,
(C)
the money is withdrawn and the expenses are incurred after such date of enactment,
(D)
(i)
the appropriation law limits the total amount which may be obligated under such appropriation at any time to an amount which does not exceed, at any such time, the amount by which—
(I)
the aggregate of the amounts transferred to the account of such State pursuant to subsections (a) and (b), exceeds
(II)
the aggregate of the amounts used by the State pursuant to this subsection and charged against the amounts transferred to the account of such State, and
(ii)
for purposes of clause (i), amounts used by a State for administration shall be chargeable against transferred amounts at the exact time the obligation is entered into, and
(E)
the use of the money is accounted for in accordance with standards established by the Secretary of Labor.
(3)
(A)
If—
(i)
amounts transferred to the account of a State pursuant to subsections (a) and (b) of this section were used in payment of unemployment benefits to individuals; and
(ii)
the Governor of such State submits a request to the Secretary of Labor that such amounts be restored under this paragraph,
then the amounts described in clause (i) shall be restored to the status of funds transferred under subsections (a) and (b) of this section which have not been used by eliminating any charge against amounts so transferred for the use of such amounts in the payment of unemployment benefits.
(B)
Subparagraph (A) shall apply only to the extent that the amounts described in clause (i) of such subparagraph do not exceed the amount then in the State's account.
(C)
Subparagraph (A) shall not apply if the State has a balance of advances made to its account under title XII of this Act.
(D)
If the Secretary of Labor determines that the requirements of this paragraph are met with respect to any request, the Secretary shall notify the Governor of the State that such requirements are met with respect to such request and the amount restored under this paragraph. Such restoration shall be as of the first day of the first month following the month in which the notification is made.
(d)

Special Transfer in Fiscal Year 2002
(1)
The Secretary of the Treasury shall transfer (as of the date determined under paragraph (5)) from the Federal unemployment account to the account of each State in the Unemployment Trust Fund the amount determined with respect to such State under paragraph (2).
(2)
(A)
The amount to be transferred under this subsection to a State account shall (as determined by the Secretary of Labor and certified by such Secretary to the Secretary of the Treasury) be equal to—
(i)
the amount which would have been required to have been transferred under this section to such account at the beginning of fiscal year 2002 if—
(I)
section 209(a)(1) of the Temporary Extended Unemployment Compensation Act of 2002 had been enacted before the close of fiscal year 2001, and
(II)
section 5402 of Public Law 105–33 (relating to increase in Federal unemployment account ceiling) had not been enacted,
minus
(ii)
the amount which was in fact transferred under this section to such account at the beginning of fiscal year 2002.
(B)
Notwithstanding the provisions of subparagraph (A)—
(i)
the aggregate amount transferred to the States under this subsection may not exceed a total of $8,000,000,000; and
(ii)
all amounts determined under subparagraph (A) shall be reduced ratably, if and to the extent necessary in order to comply with the limitation under clause (i).
(3)
(A)
Except as provided in paragraph (4), amounts transferred to a State account pursuant to this subsection may be used only in the payment of cash benefits—
(i)
to individuals with respect to their unemployment, and
(ii)
which are allowable under subparagraph (B) or (C).
(B)
(i)
At the option of the State, cash benefits under this paragraph may include amounts which shall be payable as—
(I)
regular compensation, or
(II)
additional compensation, upon the exhaustion of any temporary extended unemployment compensation (if such State has entered into an agreement under the Temporary Extended Unemployment Compensation Act of 2002), for individuals eligible for regular compensation under the unemployment compensation law of such State.
(ii)
Any additional compensation under clause (i) may not be taken into account for purposes of any determination relating to the amount of any extended compensation for which an individual might be eligible.
(C)
(i)
At the option of the State, cash benefits under this paragraph may include amounts which shall be payable to 1 or more categories of individuals not otherwise eligible for regular compensation under the unemployment compensation law of such State, including those described in clause (iii).
(ii)
The benefits paid under this subparagraph to any individual may not, for any period of unemployment, exceed the maximum amount of regular compensation authorized under the unemployment compensation law of such State for that same period, plus any additional compensation (described in subparagraph (B)(i)) which could have been paid with respect to that amount.
(iii)
The categories of individuals described in this clause include the following:
(I)
Individuals who are seeking, or available for, only part-time (and not full-time) work.
(II)
Individuals who would be eligible for regular compensation under the unemployment compensation law of such State under an alternative base period.
(D)
Amounts transferred to a State account under this subsection may be used in the payment of cash benefits to individuals only for weeks of unemployment beginning after the date of enactment of this subsection.
(4)
Amounts transferred to a State account under this subsection may be used for the administration of its unemployment compensation law and public employment offices (including in connection with benefits described in paragraph (3) and any recipients thereof), subject to the same conditions as set forth in subsection (c)(2) (excluding subparagraph (B) thereof, and deeming the reference to “subsections (a) and (b)” in subparagraph (D) thereof to include this subsection).
(5)
Transfers under this subsection shall be made within 10 days after the date of enactment of this paragraph.
(e)

Special Transfer in Fiscal Year 2006.—
Not later than 10 days after the date of the enactment of this subsection, the Secretary of the Treasury shall transfer from the Federal unemployment account—
(1)
$15,000,000 to the account of Alabama in the Unemployment Trust Fund;
(2)
$400,000,000 to the account of Louisiana in the Unemployment Trust Fund; and
(3)
$85,000,000 to the account of Mississippi in the Unemployment Trust Fund.
(f)

Special Transfers in Fiscal Years 2009, 2010, and 2011 for Modernization
(1)
(A)
In addition to any other amounts, the Secretary of Labor shall provide for the making of unemployment compensation modernization incentive payments (hereinafter “incentive payments”) to the accounts of the States in the Unemployment Trust Fund, by transfer from amounts reserved for that purpose in the Federal unemployment account, in accordance with succeeding provisions of this subsection.
(B)
The maximum incentive payment allowable under this subsection with respect to any State shall, as determined by the Secretary of Labor, be equal to the amount obtained by multiplying $7,000,000,000 by the same ratio as would apply under subsection (a)(2)(B) for purposes of determining such State's share of any excess amount (as described in subsection (a)(1)) that would have been subject to transfer to State accounts, as of October 1, 2008, under the provisions of subsection (a).
(C)
Of the maximum incentive payment determined under subparagraph (B) with respect to a State—
(i)
one-third shall be transferred to the account of such State upon a certification under paragraph (4)(B) that the State law of such State meets the requirements of paragraph (2); and
(ii)
the remainder shall be transferred to the account of such State upon a certification under paragraph (4)(B) that the State law of such State meets the requirements of paragraph (3).
(2)
The State law of a State meets the requirements of this paragraph if such State law—
(A)
uses a base period that includes the most recently completed calendar quarter before the start of the benefit year for purposes of determining eligibility for unemployment compensation; or
(B)
provides that, in the case of an individual who would not otherwise be eligible for unemployment compensation under the State law because of the use of a base period that does not include the most recently completed calendar quarter before the start of the benefit year, eligibility shall be determined using a base period that includes such calendar quarter.
(3)
The State law of a State meets the requirements of this paragraph if such State law includes provisions to carry out at least 2 of the following subparagraphs:
(A)
An individual shall not be denied regular unemployment compensation under any State law provisions relating to availability for work, active search for work, or refusal to accept work, solely because such individual is seeking only part-time work (as defined by the Secretary of Labor), except that the State law provisions carrying out this subparagraph may exclude an individual if a majority of the weeks of work in such individual's base period do not include part-time work (as so defined).
(B)
An individual shall not be disqualified from regular unemployment compensation for separating from employment if that separation is for any compelling family reason. For purposes of this subparagraph, the term “compelling family reason” means the following:
(i)9
One or both of the following offenses as selected by the State, but in making such selection, the resulting change in the State law shall not supercede any other provision of law relating to unemployment insurance to the extent that such other provision provides broader access to unemployment benefits for victims of such selected offense or offenses:
^9
The margin for clause (i) of section 903(f)(3)(B)(i) is so in law.
(I)
Domestic violence, verified by such reasonable and confidential documentation as the State law may require, which causes the individual reasonably to believe that such individual's continued employment would jeopardize the safety of the individual or of any member of the individual's immediate family (as defined by the Secretary of Labor); and
(II)
Sexual assault, verified by such reasonable and confidential documentation as the State law may require, which causes the individual reasonably to believe that such individual's continued employment would jeopardize the safety of the individual or of any member of the individual's immediate family (as defined by the Secretary of Labor).
(C)
(i)
Weekly unemployment compensation is payable under this subparagraph to any individual who is unemployed (as determined under the State unemployment compensation law), has exhausted all rights to regular unemployment compensation under the State law, and is enrolled and making satisfactory progress in a State-approved training program or in a job training program authorized under the Workforce Investment Act of 1998, except that such compensation is not required to be paid to an individual who is receiving similar stipends or other training allowances for non-training costs.
(ii)
Each State-approved training program or job training program referred to in clause (i) shall prepare individuals who have been separated from a declining occupation, or who have been involuntarily and indefinitely separated from employment as a result of a permanent reduction of operations at the individual's place of employment, for entry into a high-demand occupation.
(iii)
The amount of unemployment compensation payable under this subparagraph to an individual for a week of unemployment shall be equal to—
(I)
the individual's average weekly benefit amount (including dependents' allowances) for the most recent benefit year, less
(II)
any deductible income, as determined under State law.
The total amount of unemployment compensation payable under this subparagraph to any individual shall be equal to at least 26 times the individual's average weekly benefit amount (including dependents' allowances) for the most recent benefit year.
(D)
Dependents' allowances are provided, in the case of any individual who is entitled to receive regular unemployment compensation and who has any dependents (as defined by State law), in an amount equal to at least $15 per dependent per week, subject to any aggregate limitation on such allowances which the State law may establish (but which aggregate limitation on the total allowance for dependents paid to an individual may not be less than $50 for each week of unemployment or 50 percent of the individual's weekly benefit amount for the benefit year, whichever is less), except that a State law may provide for a reasonable reduction in the amount of any such allowance for a week of less than total unemployment.
(4)
(A)
Any State seeking an incentive payment under this subsection shall submit an application therefor at such time, in such manner, and complete with such information as the Secretary of Labor may within 60 days after the date of the enactment of this subsection prescribe (whether by regulation or otherwise), including information relating to compliance with the requirements of paragraph (2) or (3), as well as how the State intends to use the incentive payment to improve or strengthen the State's unemployment compensation program. The Secretary of Labor shall, within 30 days after receiving a complete application, notify the State agency of the State of the Secretary's findings with respect to the requirements of paragraph (2) or (3) (or both).
(B)
(i)
If the Secretary of Labor finds that the State law provisions (disregarding any State law provisions which are not then currently in effect as permanent law or which are subject to discontinuation) meet the requirements of paragraph (2) or (3), as the case may be, the Secretary of Labor shall thereupon make a certification to that effect to the Secretary of the Treasury, together with a certification as to the amount of the incentive payment to be transferred to the State account pursuant to that finding. The Secretary of the Treasury shall make the appropriate transfer within 7 days after receiving such certification.
(ii)
For purposes of clause (i), State law provisions which are to take effect within 12 months after the date of their certification under this subparagraph shall be considered to be in effect as of the date of such certification.
(C)
(i)
No certification of compliance with the requirements of paragraph (2) or (3) may be made with respect to any State whose State law is not otherwise eligible for certification under section 303 or approvable under section 3304 of the Federal Unemployment Tax Act.
(ii)
No certification of compliance with the requirements of paragraph (3) may be made with respect to any State whose State law is not in compliance with the requirements of paragraph (2).
(iii)
No application under subparagraph (A) may be considered if submitted before the date of the enactment of this subsection or after the latest date necessary (as specified by the Secretary of Labor) to ensure that all incentive payments under this subsection are made before October 1, 2011.
(5)
(A)
Except as provided in subparagraph (B), any amount transferred to the account of a State under this subsection may be used by such State only in the payment of cash benefits to individuals with respect to their unemployment (including for dependents' allowances and for unemployment compensation under paragraph (3)(C)), exclusive of expenses of administration.
(B)
A State may, subject to the same conditions as set forth in subsection (c)(2) (excluding subparagraph (B) thereof, and deeming the reference to “subsections (a) and (b)” in subparagraph (D) thereof to include this subsection), use any amount transferred to the account of such State under this subsection for the administration of its unemployment compensation law and public employment offices.
(6)
Out of any money in the Federal unemployment account not otherwise appropriated, the Secretary of the Treasury shall reserve $7,000,000,000 for incentive payments under this subsection. Any amount so reserved shall not be taken into account for purposes of any determination under section 902, 910, or 1203 of the amount in the Federal unemployment account as of any given time. Any amount so reserved for which the Secretary of the Treasury has not received a certification under paragraph (4)(B) by the deadline described in paragraph (4)(C)(iii) shall, upon the close of fiscal year 2011, become unrestricted as to use as part of the Federal unemployment account.
(7)
For purposes of this subsection, the terms “benefit year”, “base period”, and “week” have the respective meanings given such terms under section 205 of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note).
(g)

Special Transfer in Fiscal Year 2009 for Administration
(1)
In addition to any other amounts, the Secretary of the Treasury shall transfer from the employment security administration account to the account of each State in the Unemployment Trust Fund, within 30 days after the date of the enactment of this subsection, the amount determined with respect to such State under paragraph (2).
(2)
The amount to be transferred under this subsection to a State account shall (as determined by the Secretary of Labor and certified by such Secretary to the Secretary of the Treasury) be equal to the amount obtained by multiplying $500,000,000 by the same ratio as determined under subsection (f)(1)(B) with respect to such State.
(3)
Any amount transferred to the account of a State as a result of the enactment of this subsection may be used by the State agency of such State only in the payment of expenses incurred by it for—
(A)
the administration of the provisions of its State law carrying out the purposes of subsection (f)(2) or any subparagraph of subsection (f)(3);
(B)
improved outreach to individuals who might be eligible for regular unemployment compensation by virtue of any provisions of the State law which are described in subparagraph (A);
(C)
the improvement of unemployment benefit and unemployment tax operations, including responding to increased demand for unemployment compensation; and
(D)
staff-assisted reemployment services for unemployment compensation claimants.
(h)

Emergency Transfers in Fiscal Year 2020 for Administration
(1)
(A)
In addition to any other amounts, the Secretary of Labor shall provide for the making of emergency administration grants in fiscal year 2020 to the accounts of the States in the Unemployment Trust Fund, in accordance with succeeding provisions of this subsection.
(B)
The amount of an emergency administration grant with respect to a State shall, as determined by the Secretary of Labor, be equal to the amount obtained by multiplying $1,000,000,000 by the same ratio as would apply under subsection (a)(2)(B) for purposes of determining such State’s share of any excess amount (as described in subsection (a)(1)) that would have been subject to transfer to State accounts, as of October 1, 2019, under the provisions of subsection (a).
(C)
Of the emergency administration grant determined under subparagraph (B) with respect to a State—
(i)
not later than 60 days after the date of enactment of this subsection, 50 percent shall be transferred to the account of such State upon a certification by the Secretary of Labor to the Secretary of the Treasury that the State meets the requirements of paragraph (2); and
(ii)
only with respect to a State in which the number of unemployment compensation claims has increased by at least 10 percent over the same quarter in the previous calendar year, the remainder shall be transferred to the account of such State upon a certification by the Secretary of Labor to the Secretary of the Treasury that the State meets the requirements of paragraph (3).
(2)
The requirements of this paragraph with respect to a State are the following:
(A)
The State requires employers to provide notification of the availability of unemployment compensation to employees at the time of separation from employment. Such notification may be based on model notification language issued by the Secretary of Labor.
(B)10
The State ensures that applications for unemployment compensation, and assistance with the application process, are accessible, to the extent practicable in at least two of the following: in person, by phone, or online.
^{10}
The margin for subparagraph (B) is so in law.
(C)
The State notifies applicants when an application is received and is being processed, and in any case in which an application is unable to be processed, provides information about steps the applicant can take to ensure the successful processing of the application.
(3)
The requirements of this paragraph with respect to a State are the following:
(A)
The State has expressed its commitment to maintain and strengthen access to the unemployment compensation system, including through initial and continued claims.
(B)
The State has demonstrated steps it has taken or will take to ease eligibility requirements and access to unemployment compensation for claimants, including waiving work search requirements and the waiting week, and non-charging employers directly impacted by COVID–19 due to an illness in the workplace or direction from a public health official to isolate or quarantine workers.
(4)
Any amount transferred to the account of a State under this subsection may be used by such State only for the administration of its unemployment compensation law, including by taking such steps as may be necessary to ensure adequate resources in periods of high demand.
(5)
Not later than 1 year after the date of enactment of the Emergency Unemployment Insurance Stabilization and Access Act of 2020, each State receiving emergency administration grant funding under paragraph (1)(C)(i) shall submit to the Secretary of Labor, the Committee on Ways and Means of the House of Representatives, and the Committee on Finance of the Senate, a report that includes—
(A)
an analysis of the recipiency rate for unemployment compensation in the State as such rate has changed over time;
(B)
a description of steps the State intends to take to increase such recipiency rate.
(6)
(A)
Notwithstanding any other provision of law, the Secretary of the Treasury shall transfer from the general fund of the Treasury (from funds not otherwise appropriated) to the employment security administration account (as established by section 901 of the Social Security Act) such sums as the Secretary of Labor estimates to be necessary for purposes of making the transfers described in paragraph (1)(C).
(B)
There are appropriated from the general fund of the Treasury, without fiscal year limitation, the sums referred to in the preceding sentence and such sums shall not be required to be repaid.
(i)

Transfers for Federal Reimbursement of State Unemployment Funds
(1)
(A)
In addition to any other amounts, the Secretary of Labor shall provide for the transfer of funds with respect to the applicable period to the accounts of the States in the Unemployment Trust Fund, by transfer from amounts reserved for that purpose in the Federal unemployment account, in accordance with the succeeding provisions of this subsection.
(B)
The amount of funds transferred to the account of a State under subparagraph (A) during the applicable period shall, as determined by the Secretary of Labor and except as otherwise provided in this subparagraph, be equal to one-half of the amounts of compensation (as defined in section 3306(h) of the Internal Revenue Code of 1986) attributable under the State law to service to which section 3309(a) of such Code applies and to service provided by employees of an entity created by Public Law 85–874 (20 U.S.C. 76h et seq.) that were paid by the State for weeks of unemployment beginning and ending during such period. With respect to the amounts of such compensation paid for weeks of unemployment beginning after March 31, 2021, and ending on or before September 6, 2021, the preceding sentence shall be applied by substituting “75 percent” for “one-half”. Such transfers shall be made at such times as the Secretary of Labor considers appropriate.
(C)
Notwithstanding any other provision of law, funds transferred to the account of a State under subparagraph (A) shall be used exclusively to reduce the amounts required to be paid in lieu of contributions into the State unemployment fund pursuant to such section by governmental entities and other organizations described in section 3309(a) of such Code or an entity created by Public Law 85–874 (20 U.S.C. 76h et seq.).
(D)
For purposes of this paragraph, the term “applicable period” means the period beginning on March 13, 2020, and ending on September 6, 2021.
(2)
(A)
Notwithstanding any other provision of law, the Secretary of the Treasury shall transfer from the general fund of the Treasury (from funds not otherwise appropriated) to the Federal unemployment account such sums as the Secretary of Labor estimates to be necessary for purposes of making the transfers described in paragraph (1).
(B)
There are appropriated from the general fund of the Treasury, without fiscal year limitation, the sums referred to in subparagraph (A) and such sums shall not be required to be repaid.

UNEMPLOYMENT TRUST FUND
Sec. 904.
[42 U.S.C. 1104]
(a)

Establishment, etc.
There is hereby established in the Treasury of the United States a trust fund to be known as the “Unemployment Trust Fund”, hereinafter in this title called the “Fund”. The Secretary of the Treasury is authorized and directed to receive and hold in the Fund all moneys deposited therein by a State agency from a State unemployment fund, or by the Railroad Retirement Board to the credit of the railroad unemployment insurance account or the railroad unemployment insurance administration fund, or otherwise deposited in or credited to the Fund or any account therein. Such deposit may be made directly with the Secretary of the Treasury, with any depositary 11 designated by him for such purpose, or with any Federal Reserve Bank.
^{11}
As in original. Possibly should be “depository”.
(b)

Investments
It shall be the duty of the Secretary of the Treasury to invest such portion of the Fund as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at the issue price, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under chapter 31 of title 31, United States Code, are hereby extended to authorize the issuance at par of special obligations exclusively to the Fund. Such special obligations shall bear interest at a rate equal to the average rate of interest, computed as of the end of the calendar month next preceding the date of such issue, borne by all interest-bearing obligations of the United States then forming part of the public debt; except that where such average rate is not a multiple of one-eighth of 1 per centum, the rate of interest of such special obligations shall be the multiple of one-eighth of 1 per centum next lower than such average rate. Obligations other than such special obligations may be acquired for the Fund only on such terms as to provide an investment yield not less than the yield which would be required in the case of special obligations if issued to the Fund upon the date of such acquisition. Advances made to the Federal unemployment account pursuant to section 1203 shall not be invested.
(c)

Sale or Redemption of Obligations
Any obligations acquired by the Fund (except special obligations issued exclusively to the Fund) may be sold at the market price, and such special obligations may be redeemed at par plus accrued interest.
(d)

Treatment of Interest and Proceeds
The interest on, and the proceeds from the sale or redemption of, any obligations held in the Fund shall be credited to and form a part of the Fund.
(e)

Separate Book Accounts
The Fund shall be invested as a single fund, but the Secretary of the Treasury shall maintain a separate book account for each State agency, the employment security administration account, the Federal unemployment account, the railroad unemployment insurance account, and the railroad unemployment insurance administration fund and shall credit quarterly (on March 31, June 30, September 30, and December 31, of each year) to each account, on the basis of the average daily balance of such account, a proportionate part of the earnings of the Fund for the quarter ending on such date. For the purpose of this subsection, the average daily balance shall be computed—
(1)
in the case of any State account, by reducing (but not below zero) the amount in the account by the balance of advances made to the State under section 1201, and
(2)
in the case of the Federal unemployment account—
(A)
by adding to the amount in the account the aggregate of the reductions under paragraph (1), and
(B)
by subtracting from the sum so obtained the balance of advances made under section 1203 to the account.
(f)

Payments to State Agencies and Railroad Retirement Board
The Secretary of the Treasury is authorized and directed to pay out of the Fund to any State agency such amount as it may duly requisition, not exceeding the amount standing to the account of such State agency at the time of such payment. The Secretary of the Treasury is authorized and directed to make such payments out of the railroad unemployment insurance account for the payment of benefits, and out of the railroad unemployment insurance administration fund for the payment of administrative expenses, as the Railroad Retirement Board may duly certify, not exceeding the amount standing to the credit of such account or such fund, as the case may be, at the time of such payment.
(g)

Federal Unemployment Account
There is hereby established in the Unemployment Trust Fund a Federal unemployment account.

Transfers to Federal Unemployment Account and Report to Congress 12
^{12}
The style of headings for section 905 and subsection (a) are so in original. The styles for each do not conform with the style of section and subsection headings throughout the Act.

Establishment of Account 12
Sec. 905.
[42 U.S.C. 1105]
(a)
There is hereby established in the Unemployment Trust Fund an extended unemployment compensation account. For the purposes provided for in section 904(e), such account shall be maintained as a separate book account.
(b)

Transfers to Account
(1)
Except as provided in paragraph (3), the Secretary of the Treasury shall transfer (as of the close of each month) from the employment security administration account to the extended unemployment compensation account established by subsection (a), an amount (determined by such Secretary) equal to 20 percent of the amount by which—
(A)
the transfers to the employment security administration account pursuant to section 901(b)(2) during such month, exceed
(B)
the payments during such month from the employment security administration account pursuant to section 901 (b)(3) and (d).
If for any such month the payments referred to in subparagraph (B) exceed the transfers referred to in subparagraph (A), proper adjustments shall be made in the amounts subsequently transferred.
(2)
Whenever the Secretary of the Treasury determines pursuant to section 901(f) that there is an excess in the employment security administration account as of the close of any fiscal year beginning after June 30, 1972, there shall be transferred (as of the beginning of the succeeding fiscal year) to the extended unemployment compensation account the total amount of such excess or so much thereof as is required to increase the amount in the extended unemployment compensation account to whichever of the following is the greater:
(A)
$750,000,000, or
(B)
the amount (determined by the Secretary of Labor and certified by him to the Secretary of the Treasury) equal to 0.5 percent of the total wages subject (determined without any limitation on amount) to contributions under all State unemployment compensation laws for the calendar year ending during the fiscal year for which the excess is determined.
(3)
The Secretary of the Treasury shall make no transfer pursuant to paragraph (1) as of the close of any month if he determines that the amount in the extended unemployment compensation account is equal to (or in excess of) the limitation provided in paragraph (2).
(c)

TRANSFERS TO STATE ACCOUNTS 13
Amounts in the extended unemployment compensation account shall be available for transfer to the accounts of the States in the Unemployment Trust Fund as provided in section 204(e) of the Federal-State Extended Unemployment Compensation Act of 1970.
^{13}
Heading style in original law appears in all small caps centered and do not conform with the style for subsection headings throughout this Act.
(d)

ADVANCES TO EXTENDED UNEMPLOYMENT COMPENSATION ACCOUNT AND REPAYMENT 13
There are hereby authorized to be appropriated, without fiscal year limitation, to the extended unemployment compensation account, as repayable advances, such sums as may be necessary to carry out the purposes of the Federal-State Extended Unemployment Compensation Act of 1970. Amounts appropriated as repayable advances shall be repaid by transfers from the extended unemployment compensation account to the general fund of the Treasury, at such times as the amount in the extended unemployment compensation account is determined by the Secretary of the Treasury, in consultation with the Secretary of Labor, to be adequate for such purpose. Repayments under the preceding sentence shall be made whenever the Secretary of the Treasury (after consultation with the Secretary of Labor) determines that the amount then in the account exceeds the amount necessary to meet the anticipated payments from the account during the next 3 months. Any amount transferred as a repayment under this subsection shall be credited against, and shall operate to reduce, any balance of advances repayable under this subsection. Amounts appropriated as repayable advances for purposes of this subsection shall bear interest at a rate equal to the average rate of interest, computed as of the end of the calendar month next preceding the date of such advance, borne by all interest bearing obligations of the United States then forming part of the public debt; except that in cases in which such average rate is not a multiple of one-eighth of 1 percent, the rate of interest shall be the multiple of one-eighth of 1 percent next lower than such average rate.

unemployment compensation research program
Sec. 906.
[42 U.S.C. 1106]
(a)
The Secretary of Labor shall—
(1)
establish a continuing and comprehensive program of research to evaluate the unemployment compensation system. Such research shall include, but not be limited to, a program of factual studies covering the role of unemployment compensation under varying patterns of unemployment including those in seasonal industries, the relationship between the unemployment compensation and other social insurance programs, the effect of State eligibility and disqualification provisions, the personal characteristics, family situations, employment background and experience of claimants, with the results of such studies to be made public; and
(2)
establish a program of research to develop information (which shall be made public) as to the effect and impact of extending coverage to excluded groups with first attention to agricultural labor.
(b)
To assist in the establishment and provide for the continuation of the comprehensive research program relating to the unemployment compensation system, there are hereby authorized to be appropriated for the fiscal year ending June 30, 1971, and for each fiscal year thereafter, such sums, not to exceed $8,000,000, as may be necessary to carry out the purposes of this section. From the sums authorized to be appropriated by this subsection the Secretary may provide for the conduct of such research through grants or contracts.

PERSONNEL TRAINING
Sec. 907.
[42 U.S.C. 1107]
(a)
In order to assist in increasing the effectiveness and efficiency of administration of the unemployment compensation program by increasing the number of adequately trained personnel, the Secretary of Labor shall—
(1)
provide directly, through State agencies, or through contracts with institutions of higher education or other qualified agencies, organizations, or institutions, programs and courses designed to train individuals to prepare them, or improve their qualifications, for service in the administration of the unemployment compensation program, including claims determinations and adjudication, with such stipends and allowances as may be permitted under regulations of the Secretary;
(2)
develop training materials for and provide technical assistance to the State agencies in the operation of their training programs;
(3)
under such regulations as he may prescribe, award fellowships and traineeships to persons in the Federal-State employment security agencies, in order to prepare them or improve their qualifications for service in the administration of the unemployment compensation program.
(b)
The Secretary may, to the extent that he finds such action to be necessary, prescribe requirements to assure that any person receiving a fellowship, traineeship, stipend or allowance shall repay the costs thereof to the extent that such person fails to serve in the Federal-State employment security program for the period prescribed by the Secretary. The Secretary may relieve any individual of his obligation to so repay, in whole or in part, whenever and to the extent that such repayment would, in his judgment, be inequitable or would be contrary to the purposes of any of the programs established by this section.
(c)
The Secretary, with the concurrence of the State, may detail Federal employees to State unemployment compensation administration and the Secretary may concur in the detailing of State employees to the United States Department of Labor for temporary periods for training or for purposes of unemployment compensation administration, and the provisions of section 507 of the Elementary and Secondary Education Act of 1965 (79 Stat. 27) or any more general program of interchange enacted by a law amending, supplementing, or replacing section 507 shall apply to any such assignment.
(d)
There are hereby authorized to be appropriated for the fiscal year ending June 30, 1971, and for each fiscal year thereafter such sums, not to exceed $5,000,000, as may be necessary to carry out the purposes of this section.

advisory council on unemployment compensation
Sec. 908.
[42 U.S.C. 1108]
(a)

Establishment.—
Not later than February 1, 1992, and every 4th year thereafter, the Secretary of Labor shall establish an advisory council to be known as the Advisory Council on Unemployment Compensation (referred to in this section as the “Council”).
(b)

Function.—
It shall be the function of each Council to evaluate the unemployment compensation program, including the purpose, goals, countercyclical effectiveness, coverage, benefit adequacy, trust fund solvency, funding of State administrative costs, administrative efficiency, and any other aspects of the program and to make recommendations for improvement.
(c)

Members.—
(1)

In general.—
Each Council shall consist of 11 members as follows:
(A)
5 members appointed by the President, to include representatives of business, labor, State government, and the public.
(B)
3 members appointed by the President pro tempore of the Senate, in consultation with the Chairman and ranking member of the Committee on Finance of the Senate.
(C)
3 members appointed by the Speaker of the House of Representative, in consultation with the Chairman and ranking member of the Committee on Ways and Means of the House of Representatives.
(2)

Qualifications.—
In appointing members under subparagraphs (B) and (C) of paragraph (1), the President pro tempore of the Senate and the Speaker of the House of Representatives shall each appoint—
(A)
1 representative of the interests of business,
(B)
1 representative of the interests of labor, and
(C)
1 representative of the interests of State governments.
(3)

Vacancies.—
A vacancy in any Council shall be filled in the manner in which the original appointment was made.
(4)

Chairman.—
The President shall appoint the Chairman of the Council from among its members.
(d)

Staff and Other Assistance.
(1)

In general.—
Each council may engage any technical assistance (including actuarial services) required by the Council to carry out its functions under this section.
(2)

Assistance from secretary of labor.—
The Secretary of Labor shall provide each Council with any staff, office facilities, and other assistance, and any data prepared by the Department of Labor, required by the Council to carry out its functions under this section.
(e)

Compensation.—
Each member of any Council—
(1)
shall be entitled to receive compensation at the rate of pay for level V of the Executive Schedule under section 5316 of title 5, United States Code, for each day (including travel time) during which such member is engaged in the actual performance of duties vested in the Council, and
(2)
while engaged in the performance of such duties away from such member's home or regular place of business, shall be allowed travel expenses (including per diem in lieu of subsistence) as authorized by section 5703 of title 5, United States Code, for persons in the Government employed intermittently.
(f)

Report.—
(1)

In general.—
Not later than February 1 of the third year following the year in which any Council is required to be established under subsection (a), the Council shall submit to the President and the Congress a report setting forth the findings and recommendations of the Council as a result of its evaluation of the unemployment compensation program under this section.
(2)

Report of first council.—
The Council shall include in its report required to be submitted by February 1, 1995, the Council's findings and recommendations with respect to determining eligibility for extended unemployment benefits on the basis of unemployment statistics for regions, States, or subdivisions of States.

federal employees compensation account
Sec. 909.
[42 U.S.C. 1109]
There is hereby established in the Unemployment Trust Fund a Federal Employees Compensation Account which shall be used for the purposes specified in section 8509 of title 5, United States Code. For the purposes provided for in section 904(e), such account shall be maintained as a separate book account.

borrowing between federal accounts
Sec. 910.
[42 U.S.C. 1110]

In General.—
Whenever the Secretary of the Treasury (after consultation with the Secretary of Labor) determines that—
(1)
the amount in the employment security administration account, Federal unemployment account, or extended unemployment compensation account, is insufficient to meet the anticipated payments from the account,
(2)
such insufficiency may cause such account to borrow from the general fund of the Treasury, and
(3)
the amount in any other such account exceeds the amount necessary to meet the anticipated payments from such other account,
the Secretary shall transfer to the account referred to in paragraph (1) from the account referred to paragraph (3)14 an amount equal to the insufficiency determined under paragraph (1) (or, if less, the excess determined under paragraph (3)).
^{14}
As in original. Probably should read “in paragraph (3)”.
(b)

Treatment of Advance.—
Any amount transferred under subsection (a)—
(1)
shall be treated as a noninterest-bearing repayable advance, and
(2)
shall not be considered in computing the amount in any account for purposes of the application of sections 901(f)(2), 902(b), and 905(b).
(c)

Repayment.—
Whenever the Secretary of the Treasury (after consultation with the Secretary of Labor) determines that the amount in the account to which an advance is made under subsection (a) exceeds the amount necessary to meet the anticipated payments from the account, the Secretary shall transfer from the account to the account from which the advance was made an amount equal to the lesser of the amount so advanced or such excess.

DATA EXCHANGE STANDARDIZATION FOR IMPROVED INTEROPERABILITY
Sec. 911.
[42 U.S.C. 1111]
(a)

Data Exchange Standards
(1)
The Secretary of Labor, in consultation with an interagency work group which shall be established by the Office of Management and Budget, and considering State and employer perspectives, shall, by rule, designate a data exchange standard for any category of information required under title III, title XII, or this title.
(2)
Data exchange standards designated under paragraph (1) shall, to the extent practicable, be nonproprietary and interoperable.
(3)
In designating data exchange standards under this subsection, the Secretary of Labor shall, to the extent practicable, incorporate—
(A)
interoperable standards developed and maintained by an international voluntary consensus standards body, as defined by the Office of Management and Budget, such as the International Organization for Standardization;
(B)
interoperable standards developed and maintained by intergovernmental partnerships, such as the National Information Exchange Model; and
(C)
interoperable standards developed and maintained by Federal entities with authority over contracting and financial assistance, such as the Federal Acquisition Regulations Council.
(b)

Data Exchange Standards for Reporting
(1)
The Secretary of Labor, in consultation with an interagency work group established by the Office of Management and Budget, and considering State and employer perspectives, shall, by rule, designate data exchange standards to govern the reporting required under title III, title XII, or this title.
(2)
The data exchange standards required by paragraph (1) shall, to the extent practicable—
(A)
incorporate a widely accepted, nonproprietary, searchable, computer-readable format;
(B)
be consistent with and implement applicable accounting principles; and
(C)
be capable of being continually upgraded as necessary.
(3)
In designating reporting standards under this subsection, the Secretary of Labor shall, to the extent practicable, incorporate existing nonproprietary standards, such as the eXtensible Markup Language.
TITLE XI—

GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE SIMPLIFICATION

TABLE OF CONTENTS OF TITLE1
^1
This table of contents does not appear in the law.
Part A—
General Provisions
Sec. 1101.
Definitions
Sec. 1102.
Rules and regulations.
Sec. 1103.
Separability.
Sec. 1104.
Reservation of power.
Sec. 1105.
Short title.
Sec. 1106.
Disclosure of information in possession of agency.
Sec. 1107.
Penalty for fraud.
Sec. 1108.
Additional grants to Puerto Rico, the Virgin Islands, Guam, and American Samoa; Limitation on total payments.
Sec. 1109.
Amounts disregarded not to be taken into account in determining eligibility of other individuals.
Sec. 1110.
Cooperative research or demonstration projects.
Sec. 1111.
Public assistance payments to legal representatives.
Sec. 1112.
Medical care guides and reports for public assistance and medical assistance.
Sec. 1113.
Assistance for United States citizens returned from foreign countries.
Sec. 1114.
Appointment of Advisory Council and other advisory groups.
Sec. 1115.
Demonstration projects.
Sec. 1115A.
Center for medicare and medicaid innovation.
Sec. 1116.
Administrative and judicial review of certain administrative determinations.
Sec. 1117.
Appointment of the administrator and chief actuary of the centers for medicare & medicaid services.
Sec. 1118.
Alternative Federal payment with respect to public assistance expenditures.
Sec. 1119.
Federal participation in payments for repairs to home owned by recipient of aid or assistance.
Sec. 1120.
Approval of certain projects.
Sec. 1121.
Uniform reporting systems for health services facilities and organizations.
Sec. 1122.
Limitation on Federal participation for capital expenditures.
Sec. 1123.
Effect of failure to carry out State plan.
Sec. 1123A.
Reviews of child and family services programs, and of foster care and adoption assistance programs, for conformity with State plan requirements.
Sec. 1124.
Disclosure of ownership and related information.
Sec. 1124A.
Disclosure requirements for other providers under part B of Medicare.
Sec. 1125.
Issuance of subpenas by Comptroller General.
Sec. 1126.
Disclosure by institutions, organizations, and agencies of owners and certain other individuals who have been convicted of certain offenses.
Sec. 1127.
Adjustments in SSI benefits on account of retroactive benefits under title II.
Sec. 1128.
Exclusion of certain individuals and entities from participation in medicare and State health care programs.
Sec. 1128A.
Civil monetary penalties.
Sec. 1128B.
Criminal penalties for acts involving federal health care programs.
Sec. 1128C.
Fraud and abuse control program.
Sec. 1128D.
Guidance regarding application of health care fraud and abuse sanctions.
Sec. 1128E.
Health care fraud and abuse data collection program.
Sec. 1128F.
Coordination of medicare and medicaid surety bond provisions.
Sec. 1128G.
Transparency reports and reporting of physician ownership or investment interests.
Sec. 1128H.
Reporting of information relating to drug samples.
Sec. 1128I.
Accountability requirements for facilities.
Sec. 1129.
Civil monetary penalties and assessments for titles II, VIII and XVI.
Sec. 1129A.
Administrative procedure for imposing penalties for false or misleading statements.
Sec. 1130.
Demonstration Projects.
Sec. 1130A.
Effect of failure to carry out State Plan.
Sec. 1131.
Notification of social security claimant with respect to deferred vested benefits.
Sec. 1132.
Period within which certain claims must be filed.
Sec. 1133.
Applicants or recipients under public assistance programs not to be required to make election respecting certain veterans' benefits.
Sec. 1134.
Nonprofit hospital philanthropy.
Sec. 1135.
Authority to waive requirements during national emergencies.
Sec. 1136.
Exclusion of representatives and health care providers convicted of violations from participation in social security programs.
Sec. 1137.
Income and eligibility verification system.
Sec. 1138.
Hospital protocols for organ procurement and standards for organ procurement agencies.
Sec. 1139.
National Commission on Children.
Sec. 1139A.
Child Health Quality Measures.
Sec. 1139B.
Adult health quality measures.
Sec. 1140.
Prohibition of misuse of symbols, emblems, or names in reference to social security or medicare.
Sec. 1141.
Blood Donor Locator Service.
Sec. 1142.
Research on outcomes of health care services and procedures.
Sec. 1143.
Social security account statements.
Sec. 1144.
Outreach efforts to increase awareness of the availability of medicare cost-sharing and subsidies for low-income individuals under title XVIII.
Sec. 1145.
Protection of social security and medicare trust funds.
Sec. 1146.
Public disclosure of certain information on hospital financial interest and referral patterns.
Sec. 1147.
Recovery of SSI overpayments from social security benefits.
Sec. 1147A.
Recovery of social security benefit overpayments from title VIII benefits.
Sec. 1148.
The ticket to work and self-sufficiency program.
Sec. 1149.
Work incentives outreach program.
Sec. 1150.
State grants for work incentives assistance to disabled beneficiaries.
Sec. 1150A.
Pharmacy benefit managers transparency requirements.
Sec. 1150B.
Reporting to law enforcement of crimes occurring in federally funded long-term care facilities.
Sec. 1150C.
Funding for providers relating to COVID–19.
Part B—
Peer Review of the Utilization and Quality of Health Care Services
Sec. 1151.
Purpose.
Sec. 1152.
Definition of utilization and quality control peer review organization.
Sec. 1153.
Contracts with utilization and quality control peer review organizations.
Sec. 1154.
Functions of peer review organizations.
Sec. 1155.
Right to hearing and judicial review.
Sec. 1156.
Obligations of health care practitioners and providers of health care services; sanctions and penalties; hearings and review.
Sec. 1157.
Limitation on liability.
Sec. 1158.
Application of this part to certain State programs receiving Federal financial assistance.
Sec. 1159.
Authorization for use of certain funds to administer the provisions of this part.
Sec. 1160.
Prohibition against disclosure of information.
Sec. 1161.
Annual reports.
Sec. 1162.
Exemptions for religious nonmedical health care institutions.
Sec. 1163.
Medical officers in American Samoa, the Northern Mariana Islands, and the Trust Territory of the Pacific Islands to be included in the utilization and quality control peer review program.
[ Sec. 1164. Repealed. ]
Part C—
Administrative Simplification.
Sec. 1171.
Definitions.
Sec. 1172.
General requirements for adoption of standards.
Sec. 1173.
Standards for information transactions and data elements.
Sec. 1174.
Timetables for adoption of standards.
Sec. 1175.
Requirements.
Sec. 1176.
General penalty for failure to comply with requirements and standards.
Sec. 1177.
Wrongful disclosure of individually identifiable health information.
Sec. 1178.
Effect on State law.
Sec. 1179.
Processing payment transactions by financial institutions.
Part D—
Comparative Clinical Effectiveness Research
Sec. 1181.
Comparative clinical effectiveness research.
Sec. 1182.
Limitations on certain uses of comparative clinical effectiveness research.
Sec. 1183.
Trust fund transfers to patient-centered outcomes research trust fund.
Part E—
Price Negotiation Program to Lower Prices for Certain High-Priced Single Source Drugs
Sec. 1191.
Establishment of program.
Sec. 1192.
Selection of negotiation-eligible drugs as selected drugs.
Sec. 1193.
Manufacturer agreements.
Sec. 1194.
Negotiation and renegotiation process.
Sec. 1195.
Publication of maximum fair prices.
Sec. 1196.
Administrative duties and compliance monitoring.
Sec. 1197.
Civil monetary penalties.
Sec. 1198.
Limitation on administrative and judicial review.
Part A—

General Provisions

definitions
Sec. 1101.
[42 U.S.C. 1301]
(a)
When used in this Act—
(1)
The term “State”, except where otherwise provided, includes the District of Columbia and the Commonwealth of Puerto Rico, and when used in titles IV, V, VII, XI, XIX, and XXI includes the Virgin Islands and Guam. Such term when used in titles III, IX, and XII also includes the Virgin Islands. Such term when used in title V and in part B of this title also includes American Samoa, the Northern Mariana Islands, and the Trust Territory of the Pacific Islands. Such term when used in titles XIX and XXI also includes the Northern Mariana Islands and American Samoa. In the case of Puerto Rico, the Virgin Islands, and Guam, titles I, X, and XIV, and title XVI (as in effect without regard to the amendment made by section 301 of the Social Security Amendments of 1972) shall continue to apply, and the term “State” when used in such titles (but not in title XVI as in effect pursuant to such amendment after December 31, 1973) includes Puerto Rico, the Virgin Islands, and Guam. Such term when used in title XX also includes the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands. Such term when used in title IV also includes American Samoa.
(2)
The term “United States” when used in a geographical sense means, except where otherwise provided, the States.
(3)
The term “person” means an individual, a trust or estate, a partnership, or a corporation.
(4)
The term “corporation” includes associations, joint-stock companies, and insurance companies.
(5)
The term “shareholder” includes a member in an association, joint-stock company, or insurance company.
(6)
The term “Secretary”, except when the context otherwise requires, means the Secretary of Health and Human Services.
(7)
The terms “physician” and “medical care” and “hospitalization” include osteopathic practitioners or the services of osteopathic practitioners and hospitals within the scope of their practice as defined by State law.
(8)
(A)
The “Federal percentage” for any State (other than Puerto Rico, the Virgin Islands, and Guam) shall be 100 per centum less the State percentage; and the State percentage shall be that percentage which bears the same ratio to 50 per centum as the square of the per capita income of such State bears to the square of the per capita income of the United States; except that the Federal percentage shall in no case be less than 50 per centum or more than 65 per centum.
(B)
The Federal percentage for each State (other than Puerto Rico, the Virgin Islands, and Guam) shall be promulgated by the Secretary between October 1 and November 30 of each year, on the basis of the average per capita income of each State and of the United States for the three most recent calendar years for which satisfactory data are available from the Department of Commerce. Such promulgation shall be conclusive for each of the four quarters in the period beginning October 1 next succeeding such promulgation: Provided, That the Secretary shall promulgate such percentages as soon as possible after the enactment of the Social Security Amendments of 1958, which promulgation shall be conclusive for each of the eleven quarters in the period beginning October 1, 1958, and ending with the close of June 30, 1961.
(C)
The term “United States” means (but only for purposes of subparagraphs (A) and (B) of this paragraph) the fifty States and the District of Columbia.
(D)
Promulgations made before satisfactory data are available from the Department of Commerce for a full year on the per capita income of Alaska shall prescribe a Federal percentage for Alaska of 50 per centum and, for purposes of such promulgations, Alaska shall not be included as part of the “United States”. Promulgations made thereafter but before per capita income data for Alaska for a full three-year period are available from the Department of Commerce shall be based on satisfactory data available therefrom for Alaska for such one full year or, when such data are available for a two-year period, for such two years.
(9)
The term “shared health facility” means any arrangement whereby—
(A)
two or more health care practitioners practice their professions at a common physical location;
(B)
such practitioners share (i) common waiting areas, examining rooms, treatment rooms, or other space, (ii) the services of supporting staff, or (iii) equipment;
(C)
such practitioners have a person (who may himself be a practitioner)—
(i)
who is in charge of, controls, manages, or supervises substantial aspects of the arrangement or operation for the delivery of health or medical services at such common physical location, other than the direct furnishing of professional health care services by the practitioners to their patients; or
(ii)
who makes available to such practitioners the services of supporting staff who are not employees of such practitioners;
and who is compensated in whole or in part, for the use of such common physical location or support services pertaining thereto, on a basis related to amounts charged or collected for the services rendered or ordered at such location or on any basis clearly unrelated to the value of the services provided by the person; and
(D)
at least one of such practitioners received payments on a fee-for-service basis under titles XVIII and XIX in an amount exceeding $5,000 for any one month during the preceding 12 months or in an aggregate amount exceeding $40,000 during the preceding 12 months;
except that such term does not include a provider of services (as defined in section 1861(u) of this Act), a health maintenance organization (as defined in section 1301(a) of the Public Health Service Act), a hospital cooperative shared services organization meeting the requirements of section 501(e) of the Internal Revenue Code of 1954, or any public entity.
(10)
The term “Administration” means the Social Security Administration, except where the context requires otherwise.
(b)
The terms “includes” and “including” when used in a definition contained in this Act shall not be deemed to exclude other things otherwise within the meaning of the term defined.
(c)
Whenever under this Act or any Act of Congress, or under the law of any State, an employer is required or permitted to deduct any amount from the remuneration of an employee and to pay the amount deducted to the United States, a State, or any political subdivision thereof, then for the purposes of this Act the amount so deducted shall be considered to have been paid to the employee at the time of such deduction.
(d)
Nothing in this Act shall be construed as authorizing any Federal official, agent, or representative, in carrying out any of the provisions of this Act, to take charge of any child over the objection of either of the parents of such child, or of the person standing in loco parentis to such child.

rules and regulations
Sec. 1102.
[42 U.S.C. 1302]
(a)
The Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services, respectively, shall make and publish such rules and regulations, not inconsistent with this Act, as may be necessary to the efficient administration of the functions with which each is charged under this Act.
(b)
(1)
Whenever the Secretary publishes a general notice of proposed rulemaking for any rule or regulation proposed under title XVIII, title XIX, or part B of this title that may have a significant impact on the operations of a substantial number of small rural hospitals, the Secretary shall prepare and make available for public comment an initial regulatory impact analysis. Such analysis shall describe the impact of the proposed rule or regulation on such hospitals and shall set forth, with respect to small rural hospitals, the matters required under section 603 of title 5, United States Code, to be set forth with respect to small entities. The initial regulatory impact analysis (or a summary) shall be published in the Federal Register at the time of the publication of general notice of proposed rulemaking for the rule or regulation.
(2)
Whenever the Secretary promulgates a final version of a rule or regulation with respect to which an initial regulatory impact analysis is required by paragraph (1), the Secretary shall prepare a final regulatory impact analysis with respect to the final version of such rule or regulation. Such analysis shall set forth, with respect to small rural hospitals, the matters required under section 604 of title 5, United States Code, to be set forth with respect to small entities. The Secretary shall make copies of the final regulatory impact analysis available to the public and shall publish, in the Federal Register at the time of publication of the final version of the rule or regulation, a statement describing how a member of the public may obtain a copy of such analysis.
(3)
If a regulatory flexibility analysis is required by chapter 6 of title 5, United States Code, for a rule or regulation to which this subsection applies, such analysis shall specifically address the impact of the rule or regulation on small rural hospitals.

separability
Sec. 1103.
[42 U.S.C. 1303]
If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the remainder of the Act and the application of such provision to other persons or circumstances shall not be affected thereby.

reservation of power
Sec. 1104.
[42 U.S.C. 1304]
The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress.

short title
Sec. 1105.
[42 U.S.C. 1305]
This Act may be cited as the “Social Security Act”.

disclosure of information in possession of agency
Sec. 1106.
[42 U.S.C. 1306]
(a)
(1)
No disclosure of any return or portion of a return (including information returns and other written statements) filed with the Commissioner of Internal Revenue under title VIII of the Social Security Act or under subchapter E of chapter 1 or subchapter A of chapter 9 of the Internal Revenue Code, or under regulations made under authority thereof, which has been transmitted to the head of the applicable agency by the Commissioner of Internal Revenue, or of any file, record, report, or other paper, or any information, obtained at any time by the head of the applicable agency or by any officer or employee of the applicable agency in the course of discharging the duties of the head of the applicable agency under this Act, and no disclosure of any such file, record, report, or other paper, or information, obtained at any time by any person from the head of the applicable agency or from any officer or employee of the applicable agency, shall be made except as the head of the applicable agency may by regulations prescribe and except as otherwise provided by Federal law. Any person who shall violate any provision of this section shall be deemed guilty of a felony and, upon conviction thereof, shall be punished by a fine not exceeding $10,000 for each occurrence of a violation, or by imprisonment not exceeding 5 years, or both.
(2)
For purposes of this subsection and subsection (b), the term “applicable agency” means—
(A)
the Social Security Administration, with respect to matter transmitted to or obtained by such Administration or matter disclosed by such Administration, or
(B)
the applicable agency, with respect to matter transmitted to or obtained by such Department or matter disclosed by such Department.
(b)
Requests for information, disclosure of which is authorized by regulations prescribed pursuant to subsection (a) of this section, and requests for services, may, subject to such limitations as may be prescribed by the head of the applicable agency to avoid undue interference with his functions under this Act, be complied with if the agency, person, or organization making the request agrees to pay for the information or services requested in such amount, if any (not exceeding the cost of furnishing the information or services), as may be determined by the head of the applicable agency. Payments for information or services furnished pursuant to this section shall be made in advance or by way of reimbursement, as may be requested by the head of the applicable agency, and shall be deposited in the Treasury as a special deposit to be used to reimburse the appropriations (including authorizations to make expenditures from the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, the Federal Hospital Insurance Trust Fund, and the Federal Supplementary Medical Insurance Trust Fund) for the unit or units of the applicable agency which furnished the information or services. Notwithstanding the preceding provisions of this subsection, requests for information made pursuant to the provisions of part D of title IV of this Act for the purpose of using Federal records for locating parents shall be complied with and the cost incurred in providing such information shall be paid for as provided in such part D of title IV.
(c)
Notwithstanding sections 552 and 552a of title 5, United States Code, or any other provision of law, whenever the Commissioner of Social Security or the Secretary determines that a request for information is made in order to assist a party in interest (as defined in section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002)) with respect to the administration of an employee benefit plan (as so defined), or is made for any other purpose not directly related to the administration of the program or programs under this Act to which such information relates, such Commissioner or Secretary may require the requester to pay the full cost, as determined by the such Commissioner or Secretary, of providing such information.
(d)
Notwithstanding any other provision of this section, in any case in which—
(1)
information regarding whether an individual is shown on the records of the Commissioner of Social Security as being alive or deceased is requested from the Commissioner for purposes of epidemiological or similar research which the Commissioner in consultation with the Secretary of Health and Human Services finds may reasonably be expected to contribute to a national health interest, and
(2)
the requester agrees to reimburse the Commissioner for providing such information and to comply with limitations on safeguarding and rerelease or redisclosure of such information as may be specified by the Commissioner,
the Commissioner shall comply with such request, except to the extent that compliance with such request would constitute a violation of the terms of any contract entered into under section 205(r).
(e)
Notwithstanding any other provision of this section the Secretary shall make available to each State agency operating a program under title XIX and shall, subject to the limitations contained in subsection (e)2, make available for public inspection in readily accessible form and fashion, the following official reports (not including, however, references to any internal tolerance rules and practices that may be contained therein, internal working papers or other informal memoranda) dealing with the operation of the health programs established by titles XVIII and XIX—
^2
As in original. Probably should be “subsection (f)”.
(1)
individual contractor performance reviews and other formal evaluations of the performance of carriers, intermediaries, and State agencies, including the reports of follow-up reviews;
(2)
comparative evaluations of the performance of such contractors, including comparisons of either overall performance or of any particular aspect of contractor operation; and
(3)
program validation survey reports and other formal evaluations of the performance of providers of services, including the reports of follow-up reviews, except that such reports shall not identify individual patients, individual health care practitioners, or other individuals.
(f)
No report described in subsection (e) shall be made public by the Secretary or the State title XIX agency until the contractor or provider of services whose performance is being evaluated has had a reasonable opportunity (not exceeding 60 days) to review such report and to offer comments pertinent parts of which may be incorporated in the public report; nor shall the Secretary be required to include in any such report information with respect to any deficiency (or improper practice or procedures) which is known by the Secretary to have been fully corrected, within 60 days of the date such deficiency was first brought to the attention of such contractor or provider of services, as the case may be.
(g)3
Notwithstanding any other provision of this section, the Commissioner of Social Security shall enter into an agreement with the Secretary of the Treasury under which—
(1)
if the Secretary provides the Commissioner with the information described in section 6103(k)(15) of the Internal Revenue Code of 1986 with respect to any individual, the Commissioner shall indicate to the Secretary as to whether such individual receives disability insurance benefits under section 223 or supplemental security income benefits under title XVI (including State supplementary payments of the type referred to in section 1616(a) or payments of the type described in section 212(a) of Public Law 93-66);
(2)
appropriate safeguards are included to assure that the indication described in paragraph (1) will be used solely for the purpose of determining if tax receivables involving such individual are not eligible for collection pursuant to a qualified tax collection contract by reason of section 6306(d)(3)(E) of the Internal Revenue Code of 1986; and
(3)
the Secretary shall pay the Commissioner of Social Security the full costs (including systems and administrative costs) of providing the indication described in paragraph (1).
^3
Section 283(a) of division N and section 102(a) of division FF of Public Law 116–260 both add an identical subsection (g) to the end of section 1106; however, these amendments were carried out one time.

penalty for fraud
Sec. 1107.
[42 U.S.C. 1307]
(a)
Whoever, with the intent to defraud any person, shall make or cause to be made any false representation concerning the requirements of this Act, of chapter 2, 21, or 23 of the Internal Revenue Code of 1954, or of any provision of subtitle F of such Code which corresponds (within the meaning of section 7852(b) of such Code) to a provision contained in subchapter E of chapter 9 of the Internal Revenue Code of 1939, or of any rules or regulations issued thereunder, knowing such representations to be false, shall be deemed guilty of a misdemeanor, and, upon conviction thereof, shall be punished by a fine not exceeding $1,000, or by imprisonment not exceeding one year, or both.
(b)
Whoever, with the intent to elicit information as to the social security account number, date of birth, employment, wages, or benefits of any individual (1) falsely represents to the Commissioner of Social Security or the Secretary that he is such individual, or the wife, husband, widow, widower, divorced wife, divorced husband, surviving divorced wife, surviving divorced husband, surviving divorced mother, surviving divorced father, child, or parent of such individual, or the duly authorized agent of such individual, or of the wife, husband, widow, widower, divorced wife, divorced husband, surviving divorced wife, surviving divorced husband, surviving divorced mother, surviving divorced father, child, or parent of such individual, or (2) falsely represents to any person that he is an employee or agent of the United States, shall be deemed guilty of a felony and, upon conviction thereof, shall be punished by a fine not exceeding $10,000 for each recurrence of a violation or by imprisonment not exceeding 5 years or both.
SEC. 1108.
[42 U.S.C. 1308]

ADDITIONAL GRANTS TO PUERTO RICO, THE VIRGIN ISLANDS, GUAM, AND AMERICAN SAMOA; LIMITATION ON TOTAL PAYMENTS.
(a)

Limitation on Total Payments to Each Territory.—
(1)

In general.—
Notwithstanding any other provision of this Act (except for paragraph (2) of this subsection), the total amount certified by the Secretary of Health and Human Services under titles I, X, XIV, and XVI, under parts A and E of title IV, and under subsection (b) of this section, for payment to any territory for a fiscal year shall not exceed the ceiling amount for the territory for the fiscal year.
(2)

Certain payments disregarded.—
Paragraph (1) of this subsection shall be applied without regard to any payment made under section 403(a)(2), 403(a)(4), 403(a)(5), 406, 413(f), or 474(a)(6).
(b)

Entitlement to Matching Grant.—
(1)

In general.—
Each territory shall be entitled to receive from the Secretary for each fiscal year a grant in an amount equal to 75 percent of the amount (if any) by which—
(A)
the total expenditures of the territory during the fiscal year under the territory programs funded under parts A and E of title IV, including any amount paid to the State under part A of title IV that is transferred in accordance with section 404(d) and expended under the program to which transferred; exceeds
(B)
the sum of—
(i)
the amount of the family assistance grant payable to the territory without regard to section 409; and
(ii)
the total amount expended by the territory during fiscal year 1995 pursuant to parts A and F of title IV (as so in effect), other than for child care.
(2)

Appropriation.—
Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for each of fiscal years 2017 and 2018, such sums as are necessary for grants under this paragraph.
(c)

Definitions.—
As used in this section:
(1)

Territory.—
The term “territory” means Puerto Rico, the Virgin Islands, Guam, and American Samoa.
(2)

Ceiling amount.—
The term “ceiling amount” means, with respect to a territory and a fiscal year, the mandatory ceiling amount with respect to the territory, reduced for the fiscal year in accordance with subsection (e), and reduced by the amount of any penalty imposed on the territory under any provision of law specified in subsection (a) during the fiscal year.
(3)

Family assistance grant.—
The term “family assistance grant” has the meaning given such term by section 403(a)(1)(B).
(4)

Mandatory ceiling amount.—
The term “mandatory ceiling amount” means—
(A)
$107,255,000 with respect to Puerto Rico;
(B)
$4,686,000 with respect to Guam;
(C)
$3,554,000 with respect to the Virgin
Islands; and
(D)
$1,000,000 with respect to American Samoa.
(5)

Total amount expended by the territory.—
The term “total amount expended by the territory”—
(A)
does not include expenditures during the fiscal year from amounts made available by the Federal Government; and
(B)
when used with respect to fiscal year 1995, also does not include—
(i)
expenditures during fiscal year 1995 under subsection (g) or (i) of section 402 (as in effect on September 30, 1995); or
(ii)
any expenditures during fiscal year 1995 for which the territory (but for section 1108, as in effect on September 30, 1995) would have received reimbursement from the Federal Government.
(d)

Authority To Transfer Funds to Certain Programs.—
A territory to which an amount is paid under subsection (b) of this section may use the amount in accordance with section 404(d).
[(e)
Repealed by section 5512(c) of Public Law 105–33 (111 Stat. 619)]
(f)
Subject to subsections (g) and (h) and section 1935(e)(1)(B), the total amount certified by the Secretary under title XIX with respect to a fiscal year for payment to—
(1)
Puerto Rico shall not exceed (A) $116,500,000 for fiscal year 1994 and (B) for each succeeding fiscal year the amount provided in this paragraph for the preceding fiscal year increased by the percentage increase in the medical care component of the consumer price index for all urban consumers (as published by the Bureau of Labor Statistics) for the twelve-month period ending in March preceding the beginning of the fiscal year, rounded to the nearest $100,000;
(2)
the Virgin Islands shall not exceed (A) $3,837,500 for fiscal year 1994, and (B) for each succeeding fiscal year the amount provided in this paragraph for the preceding fiscal year increased by the percentage increase referred to in paragraph (1)(B), rounded to the nearest $10,000;
(3)
Guam shall not exceed (A) $3,685,000 for fiscal year 1994, and (B) for each succeeding fiscal year the amount provided in this paragraph for the preceding fiscal year increased by the percentage increase referred to in paragraph (1)(B), rounded to the nearest $10,000;
(4)
Northern Mariana Islands shall not exceed (A) $1,110,000 for fiscal year 1994, and (B) for each succeeding fiscal year the amount provided in this paragraph for the preceding fiscal year increased by the percentage increase referred to in paragraph (1)(B), rounded to the nearest $10,000; and
(5)
American Samoa shall not exceed (A) $2,140,000 for fiscal year 1994, and (B) for each succeeding fiscal year the amount provided in this paragraph for the preceding fiscal year increased by the percentage increase referred to in paragraph (1)(B), rounded to the nearest $10,000.
(g)

Medicaid Payments to Territories for Fiscal Year 1998 and Thereafter.—
(1)

Fiscal year 1998.—
With respect to fiscal year 1998, the amounts otherwise determined for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa under subsection (f) for such fiscal year shall be increased by the following amounts:
(A)
For Puerto Rico, $30,000,000.
(B)
For the Virgin Islands, $750,000.
(C)
For Guam, $750,000.
(D)
For the Northern Mariana Islands, $500,000.
(E)
For American Samoa, $500,000.
(2)

Fiscal year 1999 and thereafter.—
Notwithstanding subsection (f) and subject to section 1323(a)(2) of the Patient Protection and Affordable Care Act and paragraphs (3), (5), and (14), with respect to fiscal year 1999 and any fiscal year thereafter, the total amount certified by the Secretary under title XIX for payment to—
(A)
Puerto Rico shall not exceed—
(i)
except as provided in clause (ii) or (iii), the sum of the amount provided in this subsection for the preceding fiscal year increased by the percentage increase in the medical care component of the Consumer Price Index for all urban consumers (as published by the Bureau of Labor Statistics) for the 12-month period ending in March preceding the beginning of the fiscal year, rounded to the nearest $100,000;
(ii)
for each of fiscal years 2020 through 2021, the amount specified in paragraph (6) for each such fiscal year; and
(iii)
for fiscal year 2023 and each subsequent fiscal year, the amount specified in paragraph (11) for such fiscal year;
(B)
the Virgin Islands shall not exceed—
(i)
except as provided in clause (ii), the sum of the amount provided in this subsection for the preceding fiscal year increased by the percentage increase referred to in subparagraph (A), rounded to the nearest $10,000;
(ii)
for fiscal year 2020, $128,712,500; and
(iii)
for fiscal year 2021, $127,937,500;
(C)
Guam shall not exceed—
(i)
except as provided in clause (ii), the sum of the amount provided in this subsection for the preceding fiscal year increased by the percentage increase referred to in subparagraph (A), rounded to the nearest $10,000;
(ii)
for fiscal year 2020, $130,875,000; and
(iii)
for fiscal year 2021, $129,712,500;
(D)
the Northern Mariana Islands shall not exceed—
(i)
except as provided in clause (ii), the sum of the amount provided in this subsection for the preceding fiscal year increased by the percentage increase referred to in subparagraph (A), rounded to the nearest $10,000;
(ii)
for fiscal year 2020, $63,100,000; and
(iii)
for fiscal year 2021, $62,325,000; and
(E)
American Samoa shall not exceed—
(i)
except as provided in clause (ii), the sum of the amount provided in this subsection for the preceding fiscal year increased by the percentage increase referred to in subparagraph (A), rounded to the nearest $10,000;
(ii)
for fiscal year 2020, $86,325,000; and
(iii)
for fiscal year 2021, $85,550,000.
For fiscal year 2022 (and, in the case of a territory other than Puerto Rico, for each subsequent fiscal year), the total amount certified for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa under subsection (f) and this subsection for the fiscal year shall be determined as if the preceding subparagraphs were applied to each of fiscal years 2020 through 2021 without regard to clause (ii) of each such subparagraph.
(3)

Fiscal years 2006 and 2007 for certain insular areas.—
The amounts otherwise determined under this subsection for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa for fiscal year 2006 and fiscal year 2007 shall be increased by the following amounts:
(A)
For Puerto Rico, $12,000,000 for fiscal year 2006 and $12,000,000 for fiscal year 2007.
(B)
For the Virgin Islands, $2,500,000 for fiscal year 2006 and $5,000,000 for fiscal year 2007.
(C)
For Guam, $2,500,000 for fiscal year 2006 and $5,000,000 for fiscal year 2007.
(D)
For the Northern Mariana Islands, $1,000,000 for fiscal year 2006 and $2,000,000 for fiscal year 2007.
(E)
For American Samoa, $2,000,000 for fiscal year 2006 and $4,000,000 for fiscal year 2007.
Such amounts shall not be taken into account in applying paragraph (2) for fiscal year 2007 but shall be taken into account in applying such paragraph for fiscal year 2008 and subsequent fiscal years.
(4)

Exclusion of certain expenditures from payment limits.—
(A)

In general.—
With respect to fiscal years beginning with fiscal year 2009, if Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, or American Samoa qualify for a payment under subparagraph (A)(i), (B), or (F) of section 1903(a)(3) for a calendar quarter of such fiscal year, and with respect to fiscal years beginning with fiscal year 2017, if Puerto Rico qualifies for a payment under section 1903(a)(6) for a calendar quarter (beginning on or after July 1, 2017) of such fiscal year, and with respect to fiscal years beginning with fiscal year 2018, if the Virgin Islands qualifies for a payment under section 1903(a)(6) for a calendar quarter (beginning on or after January 1, 2018) of such fiscal year, the payment shall not be taken into account in applying subsection (f) (as increased in accordance with paragraphs (1), (2), (3), and (4) of this subsection) to such commonwealth or territory for such fiscal year.
(B)

Additional exemption.—
Payments under section 1903 for medical assistance consisting of routine patient costs (as defined in section 1905(gg)(1)) shall not be taken into account in applying subsection (f).
(5)

Additional increase.—
(A)
Subject to subparagraphs (B), (C), (D), (E), and (F), the Secretary shall increase the amounts otherwise determined under this subsection for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa (after the application of subsection (f) and the preceding paragraphs of this subsection) for the period beginning July 1, 2011, and ending on September 30, 2019, by such amounts that the total additional payments under title XIX to such territories equals $6,300,000,000 for such period. The Secretary shall increase such amounts in proportion to the amounts applicable to such territories under this subsection and subsection (f) on the date of enactment of this paragraph.
(B)
The amount of the increase otherwise provided under subparagraph (A) for Puerto Rico shall be further increased by $295,900,000.
(C)
Subject to subparagraphs (D) and (F), for the period beginning January 1, 2018, and ending September 30, 2019—
(i)
the amount of the increase otherwise provided under subparagraphs (A) and (B) for Puerto Rico shall be further increased by $3,600,000,000; and
(ii)
the amount of the increase otherwise provided under subparagraph (A) for the Virgin Islands shall be further increased by $106,931,000.
(D)
For the period described in subparagraph (C), the amount of the increase otherwise provided under subparagraph (A)—
(i)
for Puerto Rico shall be further increased by $1,200,000,000 if the Secretary certifies that Puerto Rico has taken reasonable and appropriate steps during such period, in accordance with a timeline established by the Secretary, to—
(I)
implement methods, satisfactory to the Secretary, for the collection and reporting of reliable data to the Transformed Medicaid Statistical Information System (T–MSIS) (or a successor system); and
(II)
demonstrate progress in establishing a State medicaid fraud control unit described in section 1903(q); and
(ii)
for the Virgin Islands shall be further increased by $35,644,000 if the Secretary certifies that the Virgin Islands has taken reasonable and appropriate steps during such period, in accordance with a timeline established by the Secretary, to meet the conditions for certification specified in subclauses (I) and (II) of clause (i).
(E)4
Subject to subparagraph (F), for the period beginning January 1, 2019, and ending September 30, 2019, the amount of the increase otherwise provided under subparagraph (A) for the Northern Mariana Islands shall be further increased by $36,000,000.
^4
Margins are so in law.
(F)
Notwithstanding any other provision of title XIX—
(i)4
during the period in which the additional funds provided under subparagraphs (C) , (D), and (E) are available for Puerto Rico , the Virgin Islands, and the Northern Mariana Islands, respectively, with respect to payments from such additional funds for amounts expended by Puerto Rico , the Virgin Islands, and the Northern Mariana Islands under such title, the Secretary shall increase the Federal medical assistance percentage or other rate that would otherwise apply to such payments to 100 percent; and
(ii)4
for the period beginning January 1, 2019, and ending September 30, 2019, with respect to payments to Guam and American Samoa from the additional funds provided under subparagraph (A), the Secretary shall increase the Federal medical assistance percentage or other rate that would otherwise apply to such payments to 100 percent.
(G)4
Not later than September 30, 2019, Guam and American Samoa shall each submit a plan to the Secretary outlining the steps each such territory shall take to collect and report reliable data to the Transformed Medicaid Statistical Information System (T–MSIS) (or a successor system).
(6)

Application to puerto rico for fiscal years 2020 through 2021.—
(A)

In general.—
Subject to subparagraph (B), the amount specified in this paragraph is—
(i)
for fiscal year 2020, $2,716,188,000; and
(ii)
for fiscal year 2021, $2,809,063,000.
(B)

Additional increase for puerto rico.—
(i)

In general.—
For each of fiscal years 2020 through 2021, the amount specified in this paragraph for the fiscal year shall be equal to the amount specified for such fiscal year under subparagraph (A) increased by $200,000,000 if the Secretary certifies that, with respect to such fiscal year, Puerto Rico's State plan under title XIX (or a waiver of such plan) establishes a reimbursement floor, implemented through a directed payment arrangement plan, for physician services that are covered under the Medicare part B fee schedule in the Puerto Rico locality established under section 1848(b) that is not less than 70 percent of the payment that would apply to such services if they were furnished under part B of title XVIII during such fiscal year.
(ii)

Application to managed care.—
In certifying whether Puerto Rico has established a reimbursement floor under a directed payment arrangement plan that satisfies the requirements of clause (i)—
(I)
for fiscal year 2020, the Secretary shall apply such requirements to payments for physician services under a managed care contract entered into or renewed after the date of enactment of this paragraph and disregard payments for physician services under any managed care contract that was entered into prior to such date; and
(II)
for each of fiscal years 2020 through 2021—
- (aa)
the Secretary shall disregard payments made under sub-capitated arrangements for services such as primary care case management; and
- (bb)
if the reimbursement floor for physician services applicable under a managed care contract satisfies the requirements of clause (i) for the fiscal year in which the contract is entered into or renewed, such reimbursement floor shall be deemed to satisfy such requirements for the subsequent fiscal year.
(7)

Puerto rico program integrity requirements.—
(A)

In general.—
(i)

Program integrity lead.—
Not later than 6 months after the date of enactment of this paragraph, the agency responsible for the administration of Puerto Rico's Medicaid program under title XIX shall designate an officer (other than the director of such agency) to serve as the Program Integrity Lead for such program.
(ii)

PERM requirement.—
Not later than 18 months after the date of enactment of this paragraph, Puerto Rico shall publish a plan, developed by Puerto Rico in coordination with the Administrator of the Centers for Medicare & Medicaid Services and approved by the Administrator, for how Puerto Rico will develop measures to satisfy the payment error rate measurement (PERM) requirements under subpart Q of part 431 of title 42, Code of Federal Regulations (or any successor regulation).
(iii)

Contracting reform reporting.—
Not later than 12 months after the date of enactment of this paragraph, Puerto Rico shall publish a contracting reform plan to combat fraudulent, wasteful, or abusive contracts under Puerto Rico's Medicaid program under title XIX that includes—
(I)
metrics for evaluating the success of the plan; and
(II)
a schedule for publicly releasing status reports on the plan.
(iv)

MEQC.—
Not later than 18 months after the date of enactment of this paragraph, Puerto Rico shall publish a plan, developed by Puerto Rico in coordination with the Administrator of the Centers for Medicare & Medicaid Services and approved by the Administrator, for how Puerto Rico will comply with the Medicaid eligibility quality control (MEQC) requirements of subpart P of part 431 of title 42, Code of Federal Regulations (or any successor regulation).
(v)

Contracting and procurement oversight lead requirement.—
(I)

In general.—
Not later than 6 months after the date of the enactment of this clause, the agency responsible for the administration of Puerto Rico’s Medicaid program under title XIX shall designate an officer (other than the director of such agency) to serve as the Contracting and Procurement Oversight Lead to carry out the duties specified in subclause (II).
(II)

Duties.—
Not later than 60 days after the end of each fiscal quarter (beginning with the first fiscal quarter beginning on or after the date that is 1 year after the date of the enactment of this clause), the officer designated pursuant to subclause (I) shall, with respect to each contract described in clause (iii) with an annual value exceeding $150,000 entered into during such quarter, certify to the Secretary either—
- (aa)
that such contract has met the procurement standards identified under any of sections 75.327, 75.328, and 75.329 of title 45, Code of Federal Regulations (or successor regulations); or
- (bb)
that extenuating circumstances (including a lack of multiple entities competing for such contract) prevented the compliance of such contract with such standards.
(III)

Publication.—
The officer designated pursuant to subclause (I) shall make public each certification containing extenuating circumstances described in subclause (II)(bb) not later than 30 days after such certification is made, including a description of, and justification of, such extenuating circumstances.
(IV)

Review of compliance.—
Not later than 2 years after the date of the enactment of this clause, the Inspector General of the Department of Health and Human Services shall submit to Congress a report on the compliance of Puerto Rico with the provisions of this clause.
(B)

FMAP reduction for failure to meet additional requirements.—
(i)

In general.—
For each fiscal quarter during the period beginning on January 1, 2020, and ending on September 30, 2021:
(I)
For every clause under subparagraph (A) with respect to which Puerto Rico does not fully satisfy the requirements described in the clause (including requirements imposed under the terms of a plan described in the clause) in the fiscal quarter, the Federal medical assistance percentage applicable to Puerto Rico under section 1905(ff) shall be reduced by the number of percentage points determined for the clause and fiscal quarter under subclause (II).
(II)
The number of percentage points determined under this subclause with respect to a clause under subparagraph (A) and a fiscal quarter shall be the number of percentage points (not to exceed 2.5 percentage points) equal to—
- (aa)
0.25 percentage points; multiplied by
- (bb)
the total number of consecutive fiscal quarters for which Puerto Rico has not fully satisfied the requirements described in such clause.
(ii)

Exception for extenuating circumstances or reasonable progress.—
For purposes of clause (i), Puerto Rico shall be deemed to have fully satisfied the requirements of a clause under subparagraph (A) (including requirements imposed under the terms of a plan described in the clause) for a fiscal quarter if—
(I)
the Secretary approves an application from Puerto Rico describing extenuating circumstances that prevented Puerto Rico from fully satisfying the requirements of the clause; or
(II)
in the case of a requirement imposed under the terms of a plan described in a clause under subparagraph (A), Puerto Rico has made objectively reasonable progress towards satisfying such terms and has submitted a timely request for an exception to the imposition of a penalty to the Secretary.
(8)

Program integrity lead requirement for the virgin islands, guam, the northern mariana islands, and american samoa.—
(A)

Program integrity lead requirement.—
Not later than October 1, 2020, the agency responsible for the administration of the Medicaid program under title XIX of each territory specified in subparagraph (C) shall designate an officer (other than the director of such agency) to serve as the Program Integrity Lead for such program.
(B)

FMAP reduction.—
For each fiscal quarter during fiscal year 2021, if the territory fails to satisfy the requirement of subparagraph (A) for the fiscal quarter, the Federal medical assistance percentage applicable to the territory under section 1905(ff) for such fiscal quarter shall be reduced by the number of percentage points (not to exceed 5 percentage points) equal to—
(i)
0.25 percentage points; multiplied by
(ii)
the total number of fiscal quarters during the fiscal year in which the territory failed to satisfy such requirement.
(C)

Scope.—
This paragraph shall apply to the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa.
(9)

Annual report.—
(A)

In general.—
Not later than the date that is 30 days after the end of each fiscal year (beginning with fiscal year 2020 and ending with fiscal year 2021) and for fiscal year 2023 and each subsequent fiscal year (or, in the case of Puerto Rico, and for fiscal year 2023 and each subsequent fiscal year before fiscal year 2028), in the case that a specified territory receives a Medicaid cap increase, or an increase in the Federal medical assistance percentage for such territory under section 1905(ff), for such fiscal year, such territory shall submit to the Chair and Ranking Member of the Committee on Energy and Commerce of the House of Representatives and the Chair and Ranking Member of the Committee on Finance of the Senate a report, employing the most up-to-date information available, that describes how such territory has used such Medicaid cap increase, or such increase in the Federal medical assistance percentage, as applicable, to increase access to health care under the State Medicaid plan of such territory under title XIX (or a waiver of such plan). Such report may include—
(i)
the extent to which such territory has, with respect to such plan (or waiver)—
(I)
increased payments to health care providers;
(II)
increased covered benefits;
(III)
expanded health care provider networks; or
(IV)
improved in any other manner the carrying out of such plan (or waiver); and
(ii)
any other information as determined necessary by such territory.
(B)

Definitions.—
In this paragraph:
(i)

Medicaid cap increase.—
The term “Medicaid cap increase” means, with respect to a specified territory and fiscal year, any increase in the amounts otherwise determined under this subsection for such territory for such fiscal year by reason of the amendments made by section 202 of division N of the Further Consolidated Appropriations Act, 2020 or by reason of the amendments made by section 5101 of the Health Extenders, Improving Access to Medicare, Medicaid, and CHIP, and Strengthening Public Health Act of 2022.
(ii)

Specified territory.—
The term “specified territory” means Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa.
(10)

Additional increase for puerto rico for fiscal year 2022.—
(A)

In general.—
Notwithstanding the preceding provisions of this subsection, the total amount certified for Puerto Rico for fiscal year 2022 under this subsection shall be increased by $200,000,000 if the Secretary certifies that, with respect to such fiscal year, Puerto Rico’s State plan under title XIX (or a waiver of such plan) establishes a reimbursement floor, implemented through a directed payment arrangement plan, for physician services that are covered under the Medicare part B fee schedule in the Puerto Rico locality established under section 1848(b) that is not less than 70 percent of the payment that would apply to such services if they were furnished under part B of title XVIII during such fiscal year.
(B)

Application to managed care.—
In certifying whether Puerto Rico has established a reimbursement floor under a directed payment arrangement plan that satisfies the requirements of subparagraph (A) for fiscal year 2022, the Secretary shall—
(i)
disregard payments made under sub-capitated arrangements for services such as primary care case management; and
(ii)
if the reimbursement floor for physician services applicable under a managed care contract satisfies the requirements of subparagraph (A) for the fiscal year in which the contract is entered into or renewed, such reimbursement floor shall be deemed to satisfy such requirements for the subsequent fiscal year.
(11)

Allotment amounts for puerto rico for fiscal year 2023 and subsequent fiscal years.—
For purposes of paragraph (2)(A)(iii), subject to paragraphs (12) and (13), the amounts specified in this paragraph are the following:
(A)
For fiscal year 2023, $3,275,000,000.
(B)
For fiscal year 2024, $3,325,000,000.
(C)
For fiscal year 2025, $3,475,000,000.
(D)
For fiscal year 2026, $3,645,000,000.
(E)
For fiscal year 2027, $3,825,000,000.
(F)
For fiscal year 2028, the sum of the amount that would have been provided under this subsection for Puerto Rico for such fiscal year in accordance with clause (i) of paragraph (2)(A) (without regard to clause (iii) of such paragraph) had the amount provided under this subsection for Puerto Rico for each of fiscal years 2020 through 2027 been equal to the following:
(i)
For fiscal year 2020, the sum of the amount provided under this subsection for Puerto Rico for fiscal year 2019, increased by the percentage increase in the medical care component of the Consumer Price Index for all urban consumers (as published by the Bureau of Labor Statistics) for the 12-month period ending in March preceding the beginning of the fiscal year, rounded to the nearest $100,000.
(ii)
For each of fiscal years 2021 through 2027, the sum of the amount provided under this subparagraph for the preceding fiscal year, increased in accordance with the percentage increase described in clause (i), rounded to the nearest $100,000.
(G)
For fiscal year 2029 and each subsequent fiscal year, the sum of the amount specified in this paragraph for the preceding fiscal year, increased by the percentage increase in the medical care component of the Consumer Price Index for all urban consumers (as published by the Bureau of Labor Statistics) for the 12-month period ending in March preceding the beginning of the fiscal year, rounded to the nearest $100,000.
In determining the amount specified under subparagraph (F) for fiscal year 2028 or under subparagraph (G) for fiscal year 2029 or a subsequent fiscal year, the Secretary may in no way take into account the amount that was provided under this subsection for Puerto Rico for fiscal year 2022 that was based on the Centers for Medicare & Medicaid Services’ interpretation of the flush language following paragraph (2)(E) (as described in the letters sent by the Centers for Medicare & Medicaid Services to the Director of the Medicaid Program for Puerto Rico dated September 24, 2021, and November 18, 2021, respectively).
(12)

Additional increase for puerto rico.—
(A)

In general.—
For fiscal year 2023 and each subsequent fiscal year through fiscal year 2027, the amount specified in paragraph (11) for the fiscal year shall be equal to the amount specified for such fiscal year under such paragraph increased by $300,000,000 if the Secretary certifies that, with respect to such fiscal year, Puerto Rico’s State plan under title XIX (or waiver of such plan) establishes a reimbursement floor, implemented through a directed payment arrangement plan, for physician services that are covered under the Medicare part B fee schedule in the Puerto Rico locality established under section 1848(b) that is not less than 75 percent of the payment that would apply to such services if they were furnished under part B of title XVIII during such fiscal year.
(B)

Application to managed care.—
In certifying whether Puerto Rico has established a reimbursement floor under a directed payment arrangement plan that satisfies the requirements of subparagraph (A)—
(i)
for fiscal year 2023, the Secretary shall apply such requirements to payments for physician services under a managed care contract entered into or renewed after the date of enactment of this paragraph and disregard payments for physician services under any managed care contract that was entered into prior to such date; and
(ii)
for each subsequent fiscal year through fiscal year 2027—
(I)
the Secretary shall disregard payments made under subcapitated arrangements for services such as primary care case management; and
(II)
if the reimbursement floor for physician services applicable under a managed care contract satisfies the requirements of subparagraph (A) for the fiscal year in which the contract is entered into or renewed, such reimbursement floor shall be deemed to satisfy such requirements for the subsequent fiscal year.
(C)

Nonapplication of increase in determining allotments for subsequent fiscal years.—
An increase under this paragraph for a fiscal year may not be taken into account in calculating the amount specified under paragraph (11) for the succeeding fiscal year.
(13)

Further increase for puerto rico.—
(A)

In general.—
For each of fiscal years 2023 through 2027, the amount specified in paragraph (11) for the fiscal year shall be equal to the amount specified for such fiscal year under such paragraph (increased, if applicable, in accordance with paragraph (12)) and further increased—
(i)
in the case of each of fiscal years 2023 through 2025, by $75,000,000 if the Secretary determines that Puerto Rico fully satisfies the requirements described in paragraph (7)(A)(i) for such fiscal year; and
(ii)
in the case of each of fiscal years 2026 and 2027, by $75,000,000 if the Secretary determines that Puerto Rico fully satisfies the requirements described in—
(I)
paragraph (7)(A)(i) for such fiscal year; and
(II)
paragraph (7)(A)(v) for such fiscal year.
(B)

Nonapplication of increase in determining allotments for subsequent fiscal years.—
An increase under this paragraph for a fiscal year may not be taken into account in calculating the amount specified under paragraph (11) for the succeeding fiscal year.
(14)

Additional increase for the northern mariana islands.—
(A)

In general.—
The Secretary shall increase the total amount otherwise determined under this subsection for the Northern Mariana Islands for the period beginning on October 1, 2022, and ending on September 30, 2024, by $27,100,000.
(B)

Special rules.—
The increase described in subparagraph (A)—
(i)
shall apply to the total amount certified by the Secretary under title XIX for payment to the Northern Mariana Islands for services attributable to fiscal year 2023 or 2024, notwithstanding that payments for any such services are made by the Northern Mariana Islands in fiscal year 2025; and
(ii)
shall be in addition to the amount calculated under paragraph (2) for the Northern Mariana Islands for fiscal years 2023 and 2024 and shall not be taken into account in calculating an amount under paragraph (2) for the Northern Mariana Islands for fiscal year 2025 or a subsequent fiscal year.
(h)

Exclusion of Medical Assistance Expenditures for Citizens of Freely Associated States.—
Expenditures for medical assistance provided to an individual described in section 431(b)(8) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 1641(b)(8)) shall not be taken into account for purposes of applying payment limits under subsections (f) and (g).
(i)

Data Systems Improvement Payments.—
(1)

In general.—
Subject to paragraphs (2) and (3), the Secretary shall pay to each eligible territory an amount equal to 100 percent of the qualifying data system improvement expenditures incurred by such territory on or after October 1, 2023.
(2)

Treatment as medicaid payments.—
(A)

In general.—
Payments to eligible territories made under this paragraph shall be considered to have been made under, and are subject to the requirements of, section 1903.
(B)

Nonduplication.—
No payment shall be made under title XIX (other than as provided under paragraph (1)), title XXI, or any other provision of law with respect to an expenditure for which payment is made under such paragraph.
(3)

Allotments.—
The Secretary shall specify an allotment for each eligible territory for payments made under paragraph (1) in a manner such that—
(A)
the total amount of payments made under such paragraph for all eligible territories does not exceed $20,000,000; and
(B)
each eligible territory receives an equitable allotment of such payments.
(4)

No effect on territorial caps.—
A payment to an eligible territory under this subsection shall not be taken into account for purposes of applying the payment limits under subsections (f) and (g).
(5)

Definitions.—
In this subsection:
(A)

Eligible territory.—
The term “eligible territory” means American Samoa, Guam, the Northern Mariana Islands, and the Virgin Islands.
(B)

Qualifying data system improvement expenditure.—
The term “qualifying data system improvement expenditure” means an expenditure by an eligible territory to improve, update, or enhance a data system that is used by the territory to carry out an administrative activity for which Federal financial participation is available under section 1903(a).

amounts disregarded not to be taken into account in determining eligibility of other individuals
Sec. 1109.
[42 U.S.C. 1309]
Any amount which is disregarded (or set aside for future needs) in determining the eligibility of and amount of the aid or assistance for any individual under a State plan approved under title I, X, XIV, XVI, or XIX, shall not be taken into consideration in determining the eligibility of and amount of aid or assistance for any other individual under a State plan approved under any other of such titles.

cooperative research or demonstration projects
Sec. 1110.
[42 U.S.C. 1310]
(a)
(1)
There are hereby authorized to be appropriated for the fiscal year ending June 30, 1957, $5,000,000 and for each fiscal year thereafter such sums as the Congress may determine for (A) making grants to States and public and other organizations and agencies for paying part of the cost of research or demonstration projects such as those relating to the prevention and reduction of dependency, or which will aid in effecting coordination of planning between private and public welfare agencies or which will help improve the administration and effectiveness of programs carried on or assisted under the Social Security Act and programs related thereto, and (B) making contracts or jointly financed cooperative arrangements with States and public and other organizations and agencies for the conduct of research or demonstration projects relating to such matters.
(2)
No contract or jointly financed cooperative arrangement shall be entered into, and no grant shall be made, under paragraph (1), until the Secretary (or the Commissioner, with respect to any jointly financed cooperative agreement or grant concerning titles II or XVI) obtains the advice and recommendations of specialists who are competent to evaluate the proposed projects as to soundness of their design, the possibilities of securing productive results, the adequacy of resources to conduct the proposed research or demonstrations, and their relationship to other similar research or demonstrations already completed or in process.
(3)
Grants and payments under contracts or cooperative arrangements under paragraph (1) may be made either in advance or by way of reimbursement, as may be determined by the Secretary (or the Commissioner, with respect to any jointly financed cooperative agreement or grant concerning title II or XVI); and shall be made in such installments and on such conditions as the Secretary (or the Commissioner, as applicable) finds necessary to carry out the purposes of this subsection.
(b)
(1)
The Commissioner is authorized to waive any of the requirements, conditions, or limitations of title XVI (or to waive them only for specified purposes, or to impose additional requirements, conditions, or limitations) to such extent and for such period as the Commissioner finds necessary to carry out one or more experimental, pilot, or demonstration projects which, in the Commissioner's judgment, are likely to assist in promoting the objectives or facilitate the administration of such title. Any costs for benefits under or administration of any such project (including planning for the project and the review and evaluation of the project and its results), in excess of those that would have been incurred without regard to the project, shall be met by the Commissioner from amounts available to the Commissioner for this purpose from appropriations made to carry out such title. The costs of any such project which is carried out in coordination with one or more related projects under other titles of this Act shall be allocated among the appropriations available for such projects and any Trust Funds involved, in a manner determined by the Commissioner with respect to the old-age, survivors, and disability insurance programs under title II and the supplemental security income program under title XVI, and by the Secretary with respect to other titles of this Act, taking into consideration the programs (or types of benefit) to which the project (or part of a project) is most closely related or which the project (or part of a project) is intended to benefit. If, in order to carry out a project under this subsection, the Commissioner requests a State to make supplementary payments (or the Commissioner makes them pursuant to an agreement under section 1616) to individuals who are not eligible therefor, or in amounts or under circumstances in which the State does not make such payments, the Commissioner shall reimburse such State for the non-Federal share of such payments from amounts appropriated to carry out title XVI. If, in order to carry out a project under this subsection, the Secretary requests a State to provide medical assistance under its plan approved under title XIX to individuals who are not eligible therefor, or in amounts or under circumstances in which the State does not provide such medical assistance, the Secretary shall reimburse such State for the non-Federal share of such assistance from amounts appropriated to carry out title XVI, which shall be provided by the Commissioner to the Secretary for this purpose.
(2)
With respect to the participation of recipients of supplemental security income benefits in experimental, pilot, or demonstration projects under this subsection—
(A)
the Commissioner is not authorized to carry out any project that would result in a substantial reduction in any individual's total income and resources as a result of his or her participation in the project;
(B)
the Commissioner may not require any individual to participate in a project; and the Commissioner shall assure (i) that the voluntary participation of individuals in any project is obtained through informed written consent which satisfies the requirements for informed consent established by the Commissioner for use in any experimental, pilot, or demonstration project in which human subjects are at risk, and (ii) that any individual's voluntary agreement to participate in any project may be revoked by such individual at any time;
(C)
the Commissioner shall, to the extent feasible and appropriate, include recipients who are under age 18 as well as adult recipients; and
(D)
the Commissioner shall include in the projects carried out under this section such experimental, pilot, or demonstration projects as may be necessary to ascertain the feasibility of treating alcoholics and drug addicts to prevent the onset of irreversible medical conditions which may result in permanent disability, including programs in residential care treatment centers.
(c)
(1)
In addition to the amount otherwise appropriated in any other law to carry out subsection (a) for fiscal year 2004, up to $8,500,000 is authorized and appropriated and shall be used by the Commissioner of Social Security under this subsection for purposes of conducting a statistically valid survey to determine how payments made to individuals, organizations, and State or local government agencies that are representative payees for benefits paid under title II or XVI are being managed and used on behalf of the beneficiaries for whom such benefits are paid.
(2)
Not later than 18 months after the date of enactment of this subsection, the Commissioner of Social Security shall submit a report on the survey conducted in accordance with paragraph (1) to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.

public assistance payments to legal representatives
Sec. 1111.
[42 U.S.C. 1311]
For purposes of titles I, X, XIV, and XVI, and part A of title IV, payments on behalf of an individual, made to another person who has been judicially appointed, under the law of the State in which such individual resides, as legal representative of such individual for the purpose of receiving and managing such payments (whether or not he is such individual's legal representative for other purposes), shall be regarded as money payments to such individual.

medical care guides and reports for public assistance and medical assistance
Sec. 1112.
[42 U.S.C. 1312]
In order to assist the States to extend the scope and content, and improve the quality, of medical care and medical services for which payments are made to or on behalf of needy and low-income individuals under this Act and in order to promote better public understanding about medical care and medical assistance for needy and low-income individuals, the Secretary shall develop and revise from time to time guides or recommended standards as to the level, content, and quality of medical care and medical services for the use of the States in evaluating and improving their public assistance medical care programs and their programs of medical assistance; shall secure periodic reports from the States on items included in, and the quantity of, medical care and medical services for which expenditures under such programs are made; and shall from time to time publish data secured from these reports and other information necessary to carry out the purposes of this section.

assistance for united states citizens returned from foreign countries
Sec. 1113.
[42 U.S.C. 1313]
(a)
(1)
The Secretary is authorized to provide temporary assistance to citizens of the United States and to dependents of citizens of the United States, if they (A) are identified by the Department of State as having returned, or been brought, from a foreign country to the United States because of the destitution of the citizen of the United States or the illness of such citizen or any of his dependents or because of war, threat of war, invasion, or similar crisis, and (B) are without available resources.
(2)
Except in such cases or classes of cases as are set forth in regulations of the Secretary, provision shall be made for reimbursement to the United States by the recipients of the temporary assistance to cover the cost thereof.
(3)
The Secretary may provide assistance under paragraph (1) directly or through utilization of the services and facilities of appropriate public or private agencies and organizations, in accordance with agreements providing for payment, in advance or by way of reimbursement, as may be determined by the Secretary, of the cost thereof. Such cost shall be determined by such statistical, sampling, or other method as may be provided in the agreement.
(b)
The Secretary is authorized to develop plans and make arrangements for provision of temporary assistance within the United States to individuals specified in subsection (a)(1). Such plans shall be developed and such arrangements shall be made after consultation with the Secretary of State, the Attorney General, and the Secretary of Defense. To the extent feasible, assistance provided under subsection (a) shall be provided in accordance with the plans developed pursuant to this subsection, as modified from time to time by the Secretary.
(c)
For purposes of this section, the term “temporary assistance” means money payments, medical care, temporary billeting, transportation, and other goods and services necessary for the health or welfare of individuals (including guidance, counseling, and other welfare services) furnished to them within the United States upon their arrival in the United States and for such period after their arrival, not exceeding ninety days, as may be provided in regulations of the Secretary; except that assistance under this section may be furnished beyond such ninety-day period in the case of any citizen or dependent upon a finding by the Secretary that the circumstances involved necessitate or justify the furnishing of assistance beyond such period in that particular case.
(d)
The total amount of temporary assistance provided under this section shall not exceed $1,000,000 during any fiscal year beginning after September 30, 2009, except that, in the case of fiscal years 2021 and 2022, the total amount of such assistance provided during each such fiscal year shall not exceed $10,000,000.
(e)
(1)
The Secretary may accept on behalf of the United States gifts, in cash or in kind, for use in carrying out the program established under this section. Gifts in the form of cash shall be credited to the appropriation account from which this program is funded, in addition to amounts otherwise appropriated, and shall remain available until expended.
(2)
Gifts accepted under paragraph (1) shall be available for obligation or other use by the United States only to the extent and in the amounts provided in appropriation Acts.

appointment of advisory council and other advisory groups
Sec. 1114.
[42 U.S.C. 1314]
(a)
The Secretary shall, during 1964, appoint an Advisory Council on Public Welfare for the purpose of reviewing the administration of the public assistance and child welfare services programs for which funds are appropriated pursuant to this Act and making recommendations for improvement of such administration, and reviewing the status of and making recommendations with respect to the public assistance programs for which funds are so appropriated, especially in relation to the old-age, survivors, and disability insurance program, with respect to the fiscal capacities of the States and the Federal Government, and with respect to any other matters bearing on the amount and proportion of the Federal and State shares in the public assistance and child welfare services programs.
(b)
The Council shall be appointed by the Secretary without regard to the provisions of title 5, United States Code, governing appointments in the competitive service and shall consist of twelve persons who shall, to the extent possible, be representatives of employers and employees in equal numbers, representatives of State or Federal agencies concerned with the administration or financing of the public assistance and child welfare services programs, representatives of nonprofit private organizations concerned with social welfare programs, other persons with special knowledge, experience, or qualifications with respect to such programs, and members of the public.
(c)
The Council is authorized to engage such technical assistance as may be required to carry out its functions, and the Secretary shall, in addition, make available to the Council such secretarial, clerical, and other assistance and such pertinent data prepared by the Department of Health and Human Services as it may require to carry out such functions.
(d)
The Council shall make a report of its findings and recommendations (including recommendations for changes in the provisions of the Social Security Act) to the Secretary, such report to be submitted not later than July 1, 1966, after which date such Council shall cease to exist.
(e)
The Secretary shall also from time to time thereafter appoint an Advisory Council on Public Welfare, with the same functions and constituted in the same manner as prescribed for the Advisory Council in the preceding subsections of this section. Each Council so appointed shall report its findings and recommendations, as prescribed in subsection (d), not later than July 1 of the second year after the year in which it is appointed, after which date such Council shall cease to exist.
(f)
The Secretary may also appoint, without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, such advisory committees as he may deem advisable to advise and consult with him in carrying out any of his functions under this Act. The Secretary shall report to the Congress annually on the number of such committees and on the membership and activities of each such committee.
(g)
Members of the Council or of any advisory committee appointed under this section who are not regular full-time employees of the United States shall, while serving on business of the Council or any such committee, be entitled to receive compensation at rates fixed by the Secretary, but not exceeding $75 per day, including travel time; and while so serving away from their homes or regular places of business, they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5, United States Code, for persons in Government service employed intermittently.
(h)
(1)
Any member of the Council or any advisory committee appointed under this Act, who is not a regular full-time employee of the United States, is hereby exempted, with respect to such appointment, from the operation of sections 203, 205, and 209 of title 18, United States Code, except as otherwise specified in paragraph (2) of this subsection.
(2)
The exemption granted by paragraph (1) shall not extend—
(A)
to the receipt or payment of salary in connection with the appointee's Government service from any source other than the employer of the appointee at the time of his appointment, or
(B)
during the period of such appointment, to the prosecution or participation in the prosecution, by any person so appointed, of any claim against the Government involving any matter with which such person, during such period, is or was directly connected by reason of such appointment.

NATIONAL ADVISORY COMMITTEE ON THE SEX TRAFFICKING OF CHIILDREN AND YOUTH IN THE UNITED STATES
Sec. 1114A.
[42 U.S.C. 1314b]
(a)

Official Designation.—
This section relates to the National Advisory Committee on the Sex Trafficking of Children and Youth in the United States (in this section referred to as the “Committee”).
(b)

Authority.—
Not later than 2 years after the date of enactment of this section, the Secretary shall establish and appoint all members of the Committee.
(c)

Membership.—
(1)

Composition.—
The Committee shall be composed of not more than 21 members whose diverse experience and background enable them to provide balanced points of view with regard to carrying out the duties of the Committee.
(2)

Selection.—
The Secretary, in consultation with the Attorney General and National Governors Association, shall appoint the members to the Committee. At least 1 Committee member shall be a former sex trafficking victim. 2 Committee members shall be a Governor of a State, 1 of whom shall be a member of the Democratic Party and 1 of whom shall be a member of the Republican Party.
(3)

Period of appointment; vacancies.—
Members shall be appointed for the life of the Committee. A vacancy in the Committee shall be filled in the manner in which the original appointment was made and shall not affect the powers or duties of the Committee.
(4)

Compensation.—
Committee members shall serve without compensation or per diem in lieu of subsistence.
(d)

Duties.—
(1)

National response.—
The Committee shall advise the Secretary and the Attorney General on practical and general policies concerning improvements to the Nation's response to the sex trafficking of children and youth in the United States.
(2)

Policies for cooperation.—
The Committee shall advise the Secretary and the Attorney General on practical and general policies concerning the cooperation of Federal, State, local, and tribal governments, child welfare agencies, social service providers, physical health and mental health providers, victim service providers, State or local courts with responsibility for conducting or supervising proceedings relating to child welfare or social services for children and their families, Federal, State, and local police, juvenile detention centers, and runaway and homeless youth programs, schools, the gaming and entertainment industry, and businesses and organizations that provide services to youth, on responding to sex trafficking, including the development and implementation of—
(A)
successful interventions with children and youth who are exposed to conditions that make them vulnerable to, or victims of, sex trafficking; and
(B)
recommendations for administrative or legislative changes necessary to use programs, properties, or other resources owned, operated, or funded by the Federal Government to provide safe housing for children and youth who are sex trafficking victims and provide support to entities that provide housing or other assistance to the victims.
(3)

Best practices and recommendations for states.—
(A)

In general.—
Within 2 years after the establishment of the Committee, the Committee shall develop 2 tiers (referred to in this subparagraph as “Tier I” and “Tier II”) of recommended best practices for States to follow in combating the sex trafficking of children and youth. Tier I shall provide States that have not yet substantively addressed the sex trafficking of children and youth with an idea of where to begin and what steps to take. Tier II shall provide States that are already working to address the sex trafficking of children and youth with examples of policies that are already being used effectively by other States to address sex trafficking.
(B)

Development.—
The best practices shall be based on multidisciplinary research and promising, evidence-based models and programs as reflected in State efforts to meet the requirements of sections 101 and 102 of the Preventing Sex Trafficking and Strengthening Families Act.
(C)

Content.—
The best practices shall be user-friendly, incorporate the most up-to-date technology, and include the following:
(i)
Sample training materials, protocols, and screening tools that, to the extent possible, accommodate for regional differences among the States, to prepare individuals who administer social services to identify and serve children and youth who are sex trafficking victims or at-risk of sex trafficking.
(ii)
Multidisciplinary strategies to identify victims, manage cases, and improve services for all children and youth who are at risk of sex trafficking, or are sex trafficking victims, in the United States.
(iii)
Sample protocols and recommendations based on current States’ efforts, accounting for regional differences between States that provide for effective, cross-system collaboration between Federal, State, local, and tribal governments, child welfare agencies, social service providers, physical health and mental health providers, victim service providers, State or local courts with responsibility for conducting or supervising proceedings relating to child welfare or social services for children and their families, the gaming and entertainment industry, Federal, State, and local police, juvenile detention centers and runaway and homeless youth programs, housing resources that are appropriate for housing child and youth victims of trafficking, schools, and businesses and organizations that provide services to children and youth. These protocols and recommendations should include strategies to identify victims and collect, document, and share data across systems and agencies, and should be designed to help agencies better understand the type of sex trafficking involved, the scope of the problem, the needs of the population to be served, ways to address the demand for trafficked children and youth and increase prosecutions of traffickers and purchasers of children and youth, and the degree of victim interaction with multiple systems.
(iv)
Developing the criteria and guidelines necessary for establishing safe residential placements for foster children who have been sex trafficked as well as victims of trafficking identified through interaction with law enforcement.
(v)
Developing training guidelines for caregivers that serve children and youth being cared for outside the home.
(D)

Informing states of best practices.—
The Committee, in coordination with the National Governors Association, Secretary and Attorney General, shall ensure that State Governors and child welfare agencies are notified and informed on a quarterly basis of the best practices and recommendations for States, and notified 6 months in advance that the Committee will be evaluating the extent to which States adopt the Committee’s recommendations.
(E)

Report on state implementation.—
Within 3 years after the establishment of the Committee, the Committee shall submit to the Secretary and the Attorney General, as part of its final report as well as for online and publicly available publication, a description of what each State has done to implement the recommendations of the Committee.
(e)

Reports.—
(1)

In general.—
The Committee shall submit an interim and a final report on the work of the Committee to—
(A)
the Secretary;
(B)
the Attorney General;
(C)
the Committee on Finance of the Senate; and
(D)
the Committee on Ways and Means of the House of Representatives.
(2)

Reporting dates.—
The interim report shall be submitted not later than 3 years after the establishment of the Committee. The final report shall be submitted not later than 4 years after the establishment of the Committee.
(f)

Administration.—
(1)

Agency support.—
The Secretary shall direct the head of the Administration for Children and Families of the Department of Health and Human Services to provide all necessary support for the Committee.
(2)

Meetings.—
(A)

In general.—
The Committee will meet at the call of the Secretary at least twice each year to carry out this section, and more often as otherwise required.
(B)

Accommodation for committee members unable to attend in person.—
The Secretary shall create a process through which Committee members who are unable to travel to a Committee meeting in person may participate remotely through the use of video conference, teleconference, online, or other means.
(3)

Subcommittees.—
The Committee may establish subcommittees or working groups, as necessary and consistent with the mission of the Committee. The subcommittees or working groups shall have no authority to make decisions on behalf of the Committee, nor shall they report directly to any official or entity listed in subsection (d).
(4)

Recordkeeping.—
The records of the Committee and any subcommittees and working groups shall be maintained in accordance with appropriate Department of Health and Human Services policies and procedures and shall be available for public inspection and copying, subject to the Freedom of Information Act (5 U.S.C. 552).
(g)

Termination.—
The Committee shall terminate 5 years after the date of its establishment, but the Secretary shall continue to operate and update, as necessary, an Internet website displaying the State best practices, recommendations, and evaluation of State-by-State implementation of the Secretary’s recommendations.
(h)

Definition.—
For the purpose of this section, the term “sex trafficking” includes the definition set forth in section 103(10) of the Trafficking Victims Protection Act of 2000 (22 U.S.C. 7102(10)) and “severe form of trafficking in persons” described in section 103(9)(A) of such Act.

demonstration projects
Sec. 1115.
[42 U.S.C. 1315]
(a)
In the case of any experimental, pilot, or demonstration project which, in the judgment of the Secretary, is likely to assist in promoting the objectives of title I, X, XIV, XVI, or XIX, or part A or D of title IV, in a State or States—
(1)
the Secretary may waive compliance with any of the requirements of section 2, 402, 454, 1002, 1402, 1602, or 1902, as the case may be, to the extent and for the period he finds necessary to enable such State or States to carry out such project, and
(2)
(A)
costs of such project which would not otherwise be included as expenditures under section 3, 455, 1003, 1403, 1603, or 1903, as the case may be, and which are not included as part of the costs of projects under section 1110, shall, to the extent and for the period prescribed by the Secretary, be regarded as expenditures under the State plan or plans approved under such title, or for administration of such State plan or plans, as may be appropriate, or
(B)
costs of such project which would not otherwise be a permissible use of funds under part A of title IV and which are not included as part of the costs of projects under section 1110, shall to the extent and for the period prescribed by the Secretary, be regarded as a permissible use of funds under such part.
In addition, not to exceed $4,000,000 of the aggregate amount appropriated for payments to States under such titles for any fiscal year beginning after June 30, 1967, shall be available, under such terms and conditions as the Secretary may establish, for payments to States to cover so much of the cost of such projects as is not covered by payments under such titles and is not included as part of the cost of projects for purposes of section 1110.
(b)
(1)
In the case of any experimental, pilot, or demonstration project undertaken under subsection (a) to assist in promoting the objectives of part D of title IV, the project—
(A)
must be designed to improve the financial well-being of children or otherwise improve the operation of the child support program;
(B)
may not permit modifications in the child support program which would have the effect of disadvantaging children in need of support; and
(C)
must not result in increased cost to the Federal Government under part A of such title.
(2)
An Indian tribe or tribal organization operating a program under section 455(f) shall be considered a State for purposes of authority to conduct an experimental, pilot, or demonstration project under subsection (a) to assist in promoting the objectives of part D of title IV and receiving payments under the second sentence of that subsection. The Secretary may waive compliance with any requirements of section 455(f) or regulations promulgated under that section to the extent and for the period the Secretary finds necessary for an Indian tribe or tribal organization to carry out such project. Costs of the project which would not otherwise be included as expenditures of a program operating under section 455(f) and which are not included as part of the costs of projects under section 1110, shall, to the extent and for the period prescribed by the Secretary, be regarded as expenditures under a tribal plan or plans approved under such section, or for the administration of such tribal plan or plans, as may be appropriate. An Indian tribe or tribal organization applying for or receiving start-up program development funding pursuant to section 309.16 of title 45, Code of Federal Regulations, shall not be considered to be an Indian tribe or tribal organization operating a program under section 455(f) for purposes of this paragraph.
(c)
(1)
(A)
The Secretary shall enter into agreements with up to 8 States submitting applications under this subsection for the purpose of conducting demonstration projects in such States to test and evaluate the use, with respect to individuals who received aid under part A of title IV in the preceding month (on the basis of the unemployment of the parent who is the principal earner), of a number greater than 100 for the number of hours per month that such individuals may work and still be considered to be unemployed for purposes of section 407. If any State submits an application under this subsection for the purpose of conducting a demonstration project to test and evaluate the total elimination of the 100-hour rule, the Secretary shall approve at least one such application.
(B)
If any State with an agreement under this subsection so requests, the demonstration project conducted pursuant to such agreement may test and evaluate the complete elimination of the 100-hour rule and of any other durational standard that might be applied in defining unemployment for purposes of determining eligibility under section 407.
(2)
Notwithstanding section 402(a)(1), a demonstration project conducted under this subsection may be conducted in one or more political subdivisions of the State.
(3)
An agreement under this subsection shall be entered into between the Secretary and the State agency designated under section 402(a)(3). Such agreement shall provide for the payment of aid under the applicable State plan under part A of title IV as though section 407 had been modified to reflect the definition of unemployment used in the demonstration project but shall also provide that such project shall otherwise be carried out in accordance with all of the requirements and conditions of section 407 (and, except as provided in paragraph (2), any related requirements and conditions under part A of title IV).
(4)
A demonstration project under this subsection may be commenced any time after September 30, 1990, and shall be conducted for such period of time as the agreement with the Secretary may provide; except that, in no event may a demonstration project under this section be conducted after September 30, 1995.
(5)
(A)
Any State with an agreement under this subsection shall evaluate the comparative cost and employment effects of the use of the definition of unemployment in its demonstration project under this section by use of experimental and control groups comprised of a random sample of individuals receiving aid under section 407 and shall furnish the Secretary with such information as the Secretary determines to be necessary to evaluate the results of the project conducted by the State.
(B)
The Secretary shall report the results of the demonstration projects conducted under this subsection to the Congress not later than 6 months after all such projects are completed.
(d)
(1)
An application or renewal of any experimental, pilot, or demonstration project undertaken under subsection (a) to promote the objectives of title XIX or XXI in a State that would result in an impact on eligibility, enrollment, benefits, cost-sharing, or financing with respect to a State program under title XIX or XXI (in this subsection referred to as a “demonstration project”) shall be considered by the Secretary in accordance with the regulations required to be promulgated under paragraph (2).
(2)
Not later than 180 days after the date of enactment of this subsection, the Secretary shall promulgate regulations relating to applications for, and renewals of, a demonstration project that provide for—
(A)
a process for public notice and comment at the State level, including public hearings, sufficient to ensure a meaningful level of public input;
(B)
requirements relating to—
(i)
the goals of the program to be implemented or renewed under the demonstration project;
(ii)
the expected State and Federal costs and coverage projections of the demonstration project; and
(iii)
the specific plans of the State to ensure that the demonstration project will be in compliance with title XIX or XXI;
(C)
a process for providing public notice and comment after the application is received by the Secretary, that is sufficient to ensure a meaningful level of public input;
(D)
a process for the submission to the Secretary of periodic reports by the State concerning the implementation of the demonstration project; and
(E)
a process for the periodic evaluation by the Secretary of the demonstration project.
(3)
The Secretary shall annually report to Congress concerning actions taken by the Secretary with respect to applications for demonstration projects under this section.
(e)
(1)
The provisions of this subsection shall apply to the extension of any State-wide comprehensive demonstration project (in this subsection referred to as “waiver project”) for which a waiver of compliance with requirements of title XIX is granted under subsection (a).
(2)
During the 6-month period ending 1 year before the date the waiver under subsection (a) with respect to a waiver project would otherwise expire, the chief executive officer of the State which is operating the project may submit to the Secretary a written request for an extension, of up to 3 years (5 years, in the case of a waiver described in section 1915(h)(2)), of the project.
(3)
If the Secretary fails to respond to the request within 6 months after the date it is submitted, the request is deemed to have been granted.
(4)
If such a request is granted, the deadline for submittal of a final report under the waiver project is deemed to have been extended until the date that is 1 year after the date the waiver project would otherwise have expired.
(5)
The Secretary shall release an evaluation of each such project not later than 1 year after the date of receipt of the final report.
(6)
Subject to paragraphs (4) and (7), the extension of a waiver project under this subsection shall be on the same terms and conditions (including applicable terms and conditions relating to quality and access of services, budget neutrality, data and reporting requirements, and special population protections) that applied to the project before its extension under this subsection.
(7)
If an original condition of approval of a waiver project was that Federal expenditures under the project not exceed the Federal expenditures that would otherwise have been made, the Secretary shall take such steps as may be necessary to ensure that, in the extension of the project under this subsection, such condition continues to be met. In applying the previous sentence, the Secretary shall take into account the Secretary's best estimate of rates of change in expenditures at the time of the extension.
(f)
An application by the chief executive officer of a State for an extension of a waiver project the State is operating under an extension under subsection (e) (in this subsection referred to as the “waiver project”) shall be submitted and approved or disapproved in accordance with the following:
(1)
The application for an extension of the waiver project shall be submitted to the Secretary at least 120 days prior to the expiration of the current period of the waiver project.
(2)
Not later than 45 days after the date such application is received by the Secretary, the Secretary shall notify the State if the Secretary intends to review the terms and conditions of the waiver project. A failure to provide such notification shall be deemed to be an approval of the application.
(3)
Not later than 45 days after the date a notification is made in accordance with paragraph (2), the Secretary shall inform the State of proposed changes in the terms and conditions of the waiver project. A failure to provide such information shall be deemed to be an approval of the application.
(4)
During the 30-day period that begins on the date information described in paragraph (3) is provided to a State, the Secretary shall negotiate revised terms and conditions of the waiver project with the State.
(5)
(A)
Not later than 120 days after the date an application for an extension of the waiver project is submitted to the Secretary (or such later date agreed to by the chief executive officer of the State), the Secretary shall—
(i)
approve the application subject to such modifications in the terms and conditions—
(I)
as have been agreed to by the Secretary and the State; or
(II)
in the absence of such agreement, as are determined by the Secretary to be reasonable, consistent with the overall objectives of the waiver project, and not in violation of applicable law; or
(ii)
disapprove the application.
(B)
A failure by the Secretary to approve or disapprove an application submitted under this subsection in accordance with the requirements of subparagraph (A) shall be deemed to be an approval of the application subject to such modifications in the terms and conditions as have been agreed to (if any) by the Secretary and the State.
(6)
An approval of an application for an extension of a waiver project under this subsection shall be for a period not to exceed 3 years (5 years, in the case of a waiver described in section 1915(h)(2)).
(7)
An extension of a waiver project under this subsection shall be subject to the final reporting and evaluation requirements of paragraphs (4) and (5) of subsection (e) (taking into account the extension under this subsection with respect to any timing requirements imposed under those paragraphs).
(g)

Requirement of Budget Neutrality for Medicaid Demonstration Projects.—
(1)

In general.—
Beginning January 1 2027, the Secretary may not approve an application for (or renewal or amendment of) an experimental, pilot, or demonstration project undertaken under subsection (a) to promote the objectives of title XIX in a State (in this subsection referred to as a “Medicaid demonstration project”) unless the Chief Actuary for the Centers for Medicare & Medicaid Services certifies that such project, or, in the case of a renewal, the duration of the preceding waiver, is not expected to result in an increase in the amount of Federal expenditures compared to the amount that such expenditures would otherwise be in the absence of such project. For purposes of this subsection, expenditures for the coverage of populations and services that the State could have otherwise provided through its Medicaid State plan or other authority under title XIX, including expenditures that could be made under such authority but for the provision of such services at a different site of service than authorized under such State plan or other authority, shall be considered expenditures in the absence of such a project.
(2)

Treatment of savings.—
In the event that expenditures with respect to a State under a Medicaid demonstration project are, during an approval period for such project, less than the amount of such expenditures that would have otherwise been made in the absence of such project, the Secretary shall specify the methodology to be used with respect to the subsequent approval period for such project for purposes of taking the difference between such expenditures into account.

center for medicare and medicaid innovation
Sec. 1115A.
[42 U.S.C. 1315a]
(a)

Center for Medicare and Medicaid Innovation Established.—
(1)

In general.—
There is created within the Centers for Medicare & Medicaid Services a Center for Medicare and Medicaid Innovation (in this section referred to as the “CMI”) to carry out the duties described in this section. The purpose of the CMI is to test innovative payment and service delivery models to reduce program expenditures under the applicable titles while preserving or enhancing the quality of care furnished to individuals under such titles. In selecting such models, the Secretary shall give preference to models that also improve the coordination, quality, and efficiency of health care services furnished to applicable individuals defined in paragraph (4)(A).
(2)

Deadline.—
The Secretary shall ensure that the CMI is carrying out the duties described in this section by not later than January 1, 2011.
(3)

Consultation.—
In carrying out the duties under this section, the CMI shall consult representatives of relevant Federal agencies, and clinical and analytical experts with expertise in medicine and health care management. The CMI shall use open door forums or other mechanisms to seek input from interested parties.
(4)

Definitions.—
In this section:
(A)

Applicable individual.—
The term “applicable individual” means—
(i)
an individual who is entitled to, or enrolled for, benefits under part A of title XVIII or enrolled for benefits under part B of such title;
(ii)
an individual who is eligible for medical assistance under title XIX, under a State plan or waiver; or
(iii)
an individual who meets the criteria of both clauses (i) and (ii).
(B)

Applicable title.—
The term “applicable title” means title XVIII, title XIX, or both.
(5)

Testing within certain geographic areas.—
For purposes of testing payment and service delivery models under this section, the Secretary may elect to limit testing of a model to certain geographic areas.
(b)

Testing of Models (Phase I).—
(1)

In general.—
The CMI shall test payment and service delivery models in accordance with selection criteria under paragraph (2) to determine the effect of applying such models under the applicable title (as defined in subsection (a)(4)(B)) on program expenditures under such titles and the quality of care received by individuals receiving benefits under such title.
(2)

Selection of models to be tested.—
(A)

In general.—
The Secretary shall select models to be tested from models where the Secretary determines that there is evidence that the model addresses a defined population for which there are deficits in care leading to poor clinical outcomes or potentially avoidable expenditures. The Secretary shall focus on models expected to reduce program costs under the applicable title while preserving or enhancing the quality of care received by individuals receiving benefits under such title. The models selected under this subparagraph may include, but are not limited to, the models described in subparagraph (B).
(B)

Opportunities.—
The models described in this subparagraph are the following models:
(i)
Promoting broad payment and practice reform in primary care, including patient-centered medical home models for high-need applicable individuals, medical homes that address women's unique health care needs, and models that transition primary care practices away from fee-for-service based reimbursement and toward comprehensive payment or salary-based payment.
(ii)
Contracting directly with groups of providers of services and suppliers to promote innovative care delivery models, such as through risk-based comprehensive payment or salary-based payment.
(iii)
Utilizing geriatric assessments and comprehensive care plans to coordinate the care (including through interdisciplinary teams) of applicable individuals with multiple chronic conditions and at least one of the following:
(I)
An inability to perform 2 or more activities of daily living.
(II)
Cognitive impairment, including dementia.
(iv)
Promote care coordination between providers of services and suppliers that transition health care providers away from fee-for-service based reimbursement and toward salary-based payment.
(v)
Supporting care coordination for chronically-ill applicable individuals at high risk of hospitalization through a health information technology-enabled provider network that includes care coordinators, a chronic disease registry, and home tele-health technology.
(vi)
Varying payment to physicians who order advanced diagnostic imaging services (as defined in section 1834(e)(1)(B)) according to the physician's adherence to appropriateness criteria for the ordering of such services, as determined in consultation with physician specialty groups and other relevant stakeholders.
(vii)
Utilizing medication therapy management services, such as those described in section 935 of the Public Health Service Act.
(viii)
Establishing community-based health teams to support small-practice medical homes by assisting the primary care practitioner in chronic care management, including patient self-management, activities.
(ix)
Assisting applicable individuals in making informed health care choices by paying providers of services and suppliers for using patient decision-support tools, including tools that meet the standards developed and identified under section 936(c)(2)(A) of the Public Health Service Act, that improve applicable individual and caregiver understanding of medical treatment options.
(x)
Allowing States to test and evaluate fully integrating care for dual eligible individuals in the State, including the management and oversight of all funds under the applicable titles with respect to such individuals.
(xi)
Allowing States to test and evaluate systems of all-payer payment reform for the medical care of residents of the State, including dual eligible individuals.
(xii)
Aligning nationally recognized, evidence-based guidelines of cancer care with payment incentives under title XVIII in the areas of treatment planning and follow-up care planning for applicable individuals described in clause (i) or (iii) of subsection (a)(4)(A) with cancer, including the identification of gaps in applicable quality measures.
(xiii)
Improving post-acute care through continuing care hospitals that offer inpatient rehabilitation, long-term care hospitals, and home health or skilled nursing care during an inpatient stay and the 30 days immediately following discharge.
(xiv)
Funding home health providers who offer chronic care management services to applicable individuals in cooperation with interdisciplinary teams.
(xv)
Promoting improved quality and reduced cost by developing a collaborative of high-quality, low-cost health care institutions that is responsible for—
(I)
developing, documenting, and disseminating best practices and proven care methods;
(II)
implementing such best practices and proven care methods within such institutions to demonstrate further improvements in quality and efficiency; and
(III)
providing assistance to other health care institutions on how best to employ such best practices and proven care methods to improve health care quality and lower costs.
(xvi)
Facilitate inpatient care, including intensive care, of hospitalized applicable individuals at their local hospital through the use of electronic monitoring by specialists, including intensivists and critical care specialists, based at integrated health systems.
(xvii)
Promoting greater efficiencies and timely access to outpatient services (such as outpatient physical therapy services) through models that do not require a physician or other health professional to refer the service or be involved in establishing the plan of care for the service, when such service is furnished by a health professional who has the authority to furnish the service under existing State law.
(xviii)
Establishing comprehensive payments to Healthcare Innovation Zones, consisting of groups of providers that include a teaching hospital, physicians, and other clinical entities, that, through their structure, operations, and joint-activity deliver a full spectrum of integrated and comprehensive health care services to applicable individuals while also incorporating innovative methods for the clinical training of future health care professionals.
(xix)
Utilizing, in particular in entities located in medically underserved areas and facilities of the Indian Health Service (whether operated by such Service or by an Indian tribe or tribal organization (as those terms are defined in section 4 of the Indian Health Care Improvement Act)), telehealth services—
(I)
in treating behavioral health issues (such as post-traumatic stress disorder) and stroke; and
(II)
to improve the capacity of non-medical providers and non-specialized medical providers to provide health services for patients with chronic complex conditions.
(xx)
Utilizing a diverse network of providers of services and suppliers to improve care coordination for applicable individuals described in subsection (a)(4)(A)(i) with 2 or more chronic conditions and a history of prior-year hospitalization through interventions developed under the Medicare Coordinated Care Demonstration Project under section 4016 of the Balanced Budget Act of 1997 (42 U.S.C. 1395b–1 note).
(xxi)
Focusing primarily on physicians’ services (as defined in section 1848(j)(3)) furnished by physicians who are not primary care practitioners.
(xxii)
Focusing on practices of 15 or fewer professionals.
(xxiii)
Focusing on risk-based models for small physician practices which may involve two-sided risk and prospective patient assignment, and which examine risk-adjusted decreases in mortality rates, hospital readmissions rates, and other relevant and appropriate clinical measures.
(xxiv)
Focusing primarily on title XIX, working in conjunction with the Center for Medicaid and CHIP Services.
(xxv)
Providing, for the adoption and use of certified EHR technology (as defined in section 1848(o)(4)) to improve the quality and coordination of care through the electronic documentation and exchange of health information, incentive payments to behavioral health providers (such as psychiatric hospitals (as defined in section 1861(f)), community mental health centers (as defined in section 1861(ff)(3)(B)), hospitals that participate in a State plan under title XIX or a waiver of such plan, treatment facilities that participate in such a State plan or such a waiver, mental health or substance use disorder providers that participate in such a State plan or such a waiver, clinical psychologists (as defined in section 1861(ii)), nurse practitioners (as defined in section 1861(aa)(5)) with respect to the provision of psychiatric services, and clinical social workers (as defined in section 1861(hh)(1))).
(xxvi)
Supporting ways to familiarize individuals with the availability of coverage under part B of title XVIII for qualified psychologist services (as defined in section 1861(ii)).
(xxvii)
Exploring ways to avoid unnecessary hospitalizations or emergency department visits for mental and behavioral health services (such as for treating depression) through use of a 24-hour, 7-day a week help line that may inform individuals about the availability of treatment options, including the availability of qualified psychologist services (as defined in section 1861(ii)).
(C)

Additional factors for consideration.—
In selecting models for testing under subparagraph (A), the CMI may consider the following additional factors:
(i)
Whether the model includes a regular process for monitoring and updating patient care plans in a manner that is consistent with the needs and preferences of applicable individuals.
(ii)
Whether the model places the applicable individual, including family members and other informal caregivers of the applicable individual, at the center of the care team of the applicable individual.
(iii)
Whether the model provides for in-person contact with applicable individuals.
(iv)
Whether the model utilizes technology, such as electronic health records and patient-based remote monitoring systems, to coordinate care over time and across settings.
(v)
Whether the model provides for the maintenance of a close relationship between care coordinators, primary care practitioners, specialist physicians, community-based organizations, and other providers of services and suppliers.
(vi)
Whether the model relies on a team-based approach to interventions, such as comprehensive care assessments, care planning, and self-management coaching.
(vii)
Whether, under the model, providers of services and suppliers are able to share information with patients, caregivers, and other providers of services and suppliers on a real time basis.
(viii)
Whether the model demonstrates effective linkage with other public sector payers, private sector payers, or statewide payment models.
(3)

Budget neutrality.—
(A)

Initial period.—
The Secretary shall not require, as a condition for testing a model under paragraph (1), that the design of such model ensure that such model is budget neutral initially with respect to expenditures under the applicable title.
(B)

Termination or modification.—
The Secretary shall terminate or modify the design and implementation of a model unless the Secretary determines (and the Chief Actuary of the Centers for Medicare & Medicaid Services, with respect to program spending under the applicable title, certifies), after testing has begun, that the model is expected to—
(i)
improve the quality of care (as determined by the Administrator of the Centers for Medicare & Medicaid Services) without increasing spending under the applicable title;
(ii)
reduce spending under the applicable title without reducing the quality of care; or
(iii)
improve the quality of care and reduce spending.
Such termination may occur at any time after such testing has begun and before completion of the testing.
(4)

Evaluation.—
(A)

In general.—
The Secretary shall conduct an evaluation of each model tested under this subsection. Such evaluation shall include an analysis of—
(i)
the quality of care furnished under the model, including the measurement of patient-level outcomes and patient-centeredness criteria determined appropriate by the Secretary; and
(ii)
the changes in spending under the applicable titles by reason of the model.
(B)

Information.—
The Secretary shall make the results of each evaluation under this paragraph available to the public in a timely fashion and may establish requirements for States and other entities participating in the testing of models under this section to collect and report information that the Secretary determines is necessary to monitor and evaluate such models.
(C)

Measure selection.—
To the extent feasible, the Secretary shall select measures under this paragraph that reflect national priorities for quality improvement and patient-centered care consistent with the measures described in 1890(b)(7)(B).
(c)

Expansion of Models (Phase II).—
Taking into account the evaluation under subsection (b)(4), the Secretary may, through rulemaking, expand (including implementation on a nationwide basis) the duration and the scope of a model that is being tested under subsection (b) or a demonstration project under section 1866C, to the extent determined appropriate by the Secretary, if—
(1)
the Secretary determines that such expansion is expected to—
(A)
reduce spending under applicable title without reducing the quality of care; or
(B)
improve the quality of patient care without increasing spending;
(2)
the Chief Actuary of the Centers for Medicare & Medicaid Services certifies that such expansion would reduce (or would not result in any increase in) net program spending under applicable titles; and
(3)
the Secretary determines that such expansion would not deny or limit the coverage or provision of benefits under the applicable title for applicable individuals.
In determining which models or demonstration projects to expand under the preceding sentence, the Secretary shall focus on models and demonstration projects that improve the quality of patient care and reduce spending.
(d)

Implementation.—
(1)

Waiver authority.—
The Secretary may waive such requirements of titles XI and XVIII and of sections 1902(a)(1), 1902(a)(13), 1903(m)(2)(A)(iii), and 1934 (other than subsections (b)(1)(A) and (c)(5) of such section) as may be necessary solely for purposes of carrying out this section with respect to testing models described in subsection (b).
(2)

Limitations on review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of—
(A)
the selection of models for testing or expansion under this section;
(B)
the selection of organizations, sites, or participants to test those models selected;
(C)
the elements, parameters, scope, and duration of such models for testing or dissemination;
(D)
determinations regarding budget neutrality under subsection (b)(3);
(E)
the termination or modification of the design and implementation of a model under subsection (b)(3)(B); and
(F)
determinations about expansion of the duration and scope of a model under subsection (c), including the determination that a model is not expected to meet criteria described in paragraph (1) or (2) of such subsection.
(3)

Administration.—
Chapter 35 of title 44, United States Code, shall not apply to the testing and evaluation of models or expansion of such models under this section.
(e)

Application to CHIP.—
The Center may carry out activities under this section with respect to title XXI in the same manner as provided under this section with respect to the program under the applicable titles.
(f)

Funding.—
(1)

In general.—
There are appropriated, from amounts in the Treasury not otherwise appropriated—
(A)
$5,000,000 for the design, implementation, and evaluation of models under subsection (b) for fiscal year 2010;
(B)
$10,000,000,000 for the activities initiated under this section for the period of fiscal years 2011 through 2019; and
(C)
the amount described in subparagraph (B) for the activities initiated under this section for each subsequent 10-year fiscal period (beginning with the 10-year fiscal period beginning with fiscal year 2020).
Amounts appropriated under the preceding sentence shall remain available until expended.
(2)

Use of certain funds.—
Out of amounts appropriated under subparagraphs (B) and (C) of paragraph (1), not less than $25,000,000 shall be made available each such fiscal year to design, implement, and evaluate models under subsection (b).
(g)

Report to Congress.—
Beginning in 2012, and not less than once every other year thereafter, the Secretary shall submit to Congress a report on activities under this section. Each such report shall describe the models tested under subsection (b), including the number of individuals described in subsection (a)(4)(A)(i) and of individuals described in subsection (a)(4)(A)(ii) participating in such models and payments made under applicable titles for services on behalf of such individuals, any models chosen for expansion under subsection (c), and the results from evaluations under subsection (b)(4). In addition, each such report shall provide such recommendations as the Secretary determines are appropriate for legislative action to facilitate the development and expansion of successful payment models.

administrative and judicial review of certain administrative determinations
Sec. 1116.
[42 U.S.C. 1316]
(a)
(1)
Whenever a State plan is submitted to the Secretary by a State for approval under title I, X, XIV, XVI, or XIX, he shall, not later than 90 days after the date the plan is submitted to him, make a determination as to whether it conforms to the requirements for approval under such title. The 90- day period provided herein may be extended by written agreement of the Secretary and the affected State.
(2)
Any State dissatisfied with a determination of the Secretary under paragraph (1) with respect to any plan may, within 60 days after it has been notified of such determination, file a petition with the Secretary for reconsideration of the issue of whether such plan conforms to the requirements for approval under such title. Within 30 days after receipt of such a petition, the Secretary shall notify the State of the time and place at which a hearing will be held for the purpose of reconsidering such issue. Such hearing shall be held not less than 20 days nor more than 60 days after the date notice of such hearing is furnished to such State, unless the Secretary and such State agree in writing to holding the hearing at another time. The Secretary shall affirm, modify, or reverse his original determination within 60 days of the conclusion of the hearing.
(3)
Any State which is dissatisfied with a final determination made by the Secretary on such a reconsideration or a final determination of the Secretary under section 4, 1004, 1404, 1604, or 1904 may, within 60 days after it has been notified of such determination, file with the United States court of appeals for the circuit in which such State is located a petition for review of such determination. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Secretary. The Secretary thereupon shall file in the court the record of the proceedings on which he based his determination as provided in section 2112 of title 28, United States Code.
(4)
The findings of fact by the Secretary, if supported by substantial evidence, shall be conclusive; but the court, for good cause shown, may remand the case to the Secretary to take further evidence, and the Secretary may thereupon make new or modified findings of fact and may modify his previous action, and shall certify to the court the transcript and record of the further proceedings. Such new or modified findings of fact shall likewise be conclusive if supported by substantial evidence.
(5)
The court shall have jurisdiction to affirm the action of the Secretary or to set it aside, in whole or in part. The judgment of the court shall be subject to review by the Supreme Court of the United States upon certiorari or certification as provided in section 1254 of title 28, United States Code.
(b)
For the purposes of subsection (a), any amendment of a State plan approved under title I, X, XIV, XVI, or XIX, may, at the option of the State, be treated as the submission of a new State plan.
(c)
Action pursuant to an initial determination of the Secretary described in subsection (a) shall not be stayed pending reconsideration, but in the event that the Secretary subsequently determines that his initial determination was incorrect he shall certify restitution forthwith in a lump sum of any funds incorrectly withheld or otherwise denied.
(d)
Whenever the Secretary determines that any item or class of items on account of which Federal financial participation is claimed under title I, X, XIV, XVI, or part A of title IV, shall be disallowed for such participation, the State shall be entitled to and upon request shall receive a reconsideration of the disallowance.
(e)
(1)
Whenever the Secretary determines that any item or class of items on account of which Federal financial participation is claimed under title XIX shall be disallowed for such participation, the State shall be entitled to and upon request shall receive a reconsideration of the disallowance, provided that such request is made during the 60-day period that begins on the date the State receives notice of the disallowance.
(2)
(A)
A State may appeal a disallowance of a claim for federal financial participation under title XIX by the Secretary, or an unfavorable reconsideration of a disallowance, during the 60-day period that begins on the date the State receives notice of the disallowance or of the unfavorable reconsideration, in whole or in part, to the Departmental Appeals Board, established in the Department of Health and Human Services (in this paragraph referred to as the “Board”), by filing a notice of appeal with the Board.
(B)
The Board shall consider a State's appeal of a disallowance of such a claim (or of an unfavorable reconsideration of a disallowance) on the basis of such documentation as the State may submit and as the Board may require to support the final decision of the Board. In deciding whether to uphold a disallowance of such a claim or any portion thereof, the Board shall be bound by all applicable laws and regulations and shall conduct a thorough review of the issues, taking into account all relevant evidence. The Board's decision of an appeal under subparagraph (A) shall be the final decision of the Secretary and shall be subject to reconsideration by the Board only upon motion of either party filed during the 60-day period that begins on the date of the Board's decision or to judicial review in accordance with subparagraph (C).
(C)
A State may obtain judicial review of a decision of the Board by filing an action in any United States District Court located within the appealing State (or, if several States jointly appeal the disallowance of claims for Federal financial participation under section 1903, in any United States District Court that is located within any State that is a party to the appeal) or the United States District Court for the District of Columbia. Such an action may only be filed—
(i)
if no motion for reconsideration was filed within the 60-day period specified in subparagraph (B), during such 60-day period; or
(ii)
if such a motion was filed within such period, during the 60-day period that begins on the date of the Board's decision on such motion.

appointment of the administrator and chief actuary of the centers for medicare & medicaid services
Sec. 1117.
[42 U.S.C. 1317]
(a)
The Administrator of the Centers for Medicare & Medicaid Services shall be appointed by the President by and with the advice and consent of the Senate.
(b)
(1)
There is established in the Centers for Medicare & Medicaid Services the position of Chief Actuary. The Chief Actuary shall be appointed by, and in direct line of authority to, the Administrator of such Centers. The Chief Actuary shall be appointed from among individuals who have demonstrated, by their education and experience, superior expertise in the actuarial sciences. The Chief Actuary shall exercise such duties as are appropriate for the office of the Chief Actuary and in accordance with professional standards of actuarial independence. The Chief Actuary may be removed only for cause.
(2)
The Chief Actuary shall be compensated at the highest rate of basic pay for the Senior Executive Service under section 5382(b) of title 5, United States Code.
(3)
In the office of the Chief Actuary there shall be an actuary whose duties relate exclusively to the programs under parts C and D of title XVIII and related provisions of such title.

alternative federal payment with respect to public assistance expenditures
Sec. 1118.
[42 U.S.C. 1318]
In the case of any State which has in effect a plan approved under title XIX for any calendar quarter, the total of the payments to which such State is entitled for such quarter, and for each succeeding quarter in the same fiscal year (which for purposes of this section means the 4 calendar quarters ending with September 30), under paragraphs (1) and (2) of sections 3(a), 1003(a), 1403(a), and 1603(a) shall, at the option of the State, be determined by application of the Federal medical assistance percentage (as defined in section 1905), instead of the percentages provided under each such section, to the expenditures under its State plans approved under titles I, X, XIV, and XVI, which would be included in determining the amounts of the Federal payments to which such State is entitled under such sections, but without regard to any maximum on the dollar amounts per recipient which may be counted under such sections. For purposes of the preceding sentence, the term “Federal medical assistance percentage” shall, in the case of Puerto Rico, the Virgin Islands, and Guam, mean 75 per centum.

federal participation in payments for repairs to home owned by recipient of aid or assistance
Sec. 1119.
[42 U.S.C. 1319]
In the case of an expenditure for repairing the home owned by an individual who is receiving aid or assistance, other than medical assistance to the aged, under a State plan approved under title I, X, XIV, or XVI, if—
(1)
the State agency or local agency administering the plan approved under such title has made a finding (prior to making such expenditure) that (A) such home is so defective that continued occupancy is unwarranted, (B) unless repairs are made to such home, rental quarters will be necessary for such individual, and (C) the cost of rental quarters to take care of the needs of such individual (including his spouse living with him in such home and any other individual whose needs were taken into account in determining the need of such individual) would exceed (over such time as the Secretary may specify) the cost of repairs needed to make such home habitable together with other costs attributable to continued occupancy of such home, and
(2)
no such expenditures were made for repairing such home pursuant to any prior finding under this section, the amount paid to any such State for any quarter under section 3(a), 1003(a), 1403(a), or 1603(a) shall be increased by 50 per centum of such expenditures, except that the excess above $500 expended with respect to any one home shall not be included in determining such expenditures.

approval of certain projects
Sec. 1120.
[42 U.S.C. 1320]
No payment shall be made under this Act with respect to any experimental, pilot, demonstration, or other project all or any part of which is wholly financed with Federal funds made available under this Act (without any State, local, or other non-Federal financial participation) unless such project shall have been personally approved by the Secretary or Under Secretary of Health and Human Services.

uniform reporting systems for health services facilities and organizations
Sec. 1121.
[42 U.S.C. 1320a]
(a)
For the purposes of reporting the cost of services provided by, of planning, and of measuring and comparing the efficiency of and effective use of services in, hospitals, skilled nursing facilities, intermediate care facilities, home health agencies, health maintenance organizations, and other types of health services facilities and organizations to which payment may be made under this Act, the Secretary shall establish by regulation, for each such type of health services facility or organization, a uniform system for the reporting by a facility or organization of that type of the following information:
(1)
The aggregate cost of operation and the aggregate volume of services.
(2)
The costs and volume of services for various functional accounts and subaccounts.
(3)
Rates, by category of patient and class of purchaser.
(4)
Capital assets, as defined by the Secretary, including (as appropriate) capital funds, debt service, lease agreements used in lieu of capital funds, and the value of land, facilities, and equipment.
(5)
Discharge and bill data.
The uniform reporting system for a type of health services facility or organization shall provide for appropriate variation in the application of the system to different classes of facilities or organizations within that type and shall be established, to the extent practicable, consistent with the cooperative system for producing comparable and uniform health information and statistics described in section 306(e)(1) of the Public Health Service Act. In reporting under such a system, hospitals shall employ such chart of accounts, definitions, principles, and statistics as the Secretary may prescribe in order to reach a uniform reconciliation of financial and statistical data for specified uniform reports to be provided to the Secretary.
(b)
The Secretary shall—
(1)
monitor the operation of the systems established under subsection (a);
(2)
assist with and support demonstrations and evaluations of the effectiveness and cost of the operation of such systems and encourage State adoption of such systems; and
(3)
periodically revise such systems to improve their effectiveness and diminish their cost.
(c)
The Secretary shall provide information obtained through use of the uniform reporting systems described in subsection (a) in a useful manner and format to appropriate agencies and organizations, including health systems agencies (designated under section 1515 of the Public Health Service Act) and State health planning and development agencies (designated under section 1521 of such Act), as may be necessary to carry out such agencies' and organizations' functions.

limitation on federal participation for capital expenditures
Sec. 1122.
[42 U.S.C. 1320a–1]
(a)
The purpose of this section is to assure that Federal funds appropriated under titles XVIII and XIX are not used to support unnecessary capital expenditures made by or on behalf of health care facilities which are reimbursed under any of such titles and that, to the extent possible, reimbursement under such titles shall support planning activities with respect to health services and facilities in the various States.
(b)
The Secretary, after consultation with the Governor (or other chief executive officer) and with appropriate local public officials, shall make an agreement with any State which is able and willing to do so under which a designated planning agency (which shall be an agency described in clause (ii) of subsection (d)(1)(B) that has a governing body or advisory board at least half of whose members represent consumer interests) will—
(1)
make, and submit to the Secretary together with such supporting materials as he may find necessary, findings and recommendations with respect to capital expenditures proposed by or on behalf of any health care facility in such State within the field of its responsibilities,
(2)
receive from other agencies described in clause (ii) of subsection (d)(1)(B), and submit to the Secretary together with such supporting material as he may find necessary, the findings and recommendations of such other agencies with respect to capital expenditures proposed by or on behalf of health care facilities in such State within the fields of their respective responsibilities, and
(3)
establish and maintain procedures pursuant to which a person proposing any such capital expenditure may appeal a recommendation by the designated agency and will be granted an opportunity for a fair hearing by such agency or person other than the designated agency as the Governor (or other chief executive officer) may designate to hold such hearings,
whenever and to the extent that the findings of such designated agency or any such other agency indicate that any such expenditure is not consistent with the standards, criteria, or plans developed pursuant to the Public Health Service Act to meet the need for adequate health care facilities in the area covered by the plan or plans so developed.
(c)
The Secretary shall pay any such State from the general fund in the Treasury, in advance or by way of reimbursement as may be provided in the agreement with it (and may make adjustments in such payments on account of overpayments or underpayments previously made), for the reasonable cost of performing the functions specified in subsection (b).
(d)
(1)
Except as provided in paragraph (2), if the Secretary determines that—
(A)
neither the planning agency designated in the agreement described in subsection (b) nor an agency described in clause (ii) of subparagraph (B) of this paragraph had been given notice of any proposed capital expenditure (in accordance with such procedure or in such detail as may be required by such agency) at least 60 days prior to obligation for such expenditure; or
(B)
(i)
the planning agency so designated or an agency so described had received such timely notice of the intention to make such capital expenditure and had, within a reasonable period after receiving such notice and prior to obligation for such expenditure, notified the person proposing such expenditure that the expenditure would not be in conformity with the standards, criteria, or plans developed by such agency or any other agency described in clause (ii) for adequate health care facilities in such State or in the area for which such other agency has responsibility, and
(ii)
the planning agency so designated had, prior to submitting to the Secretary the findings referred to in subsection (b)—
(I)
consulted with, and taken into consideration the findings and recommendations of, the State planning agencies established pursuant to sections 314(a) and 604(a) of the Public Health Service Act (to the extent that either such agency is not the agency so designated) as well as the public or nonprofit private agency or organization responsible for the comprehensive regional, metropolitan area, or other local area plan or plans referred to in section 314(b) of the Public Health Service Act and covering the area in which the health care facility proposing such capital expenditure is located (where such agency is not the agency designated in the agreement), or, if there is no such agency, such other public or nonprofit private agency or organization (if any) as performs, as determined in accordance with criteria included in regulations, similar functions, and
(II)
granted to the person proposing such capital expenditure an opportunity for a fair hearing with respect to such findings;
then, for such period as he finds necessary in any case to effectuate the purpose of this section, he shall, in determining the Federal payments to be made under titles XVIII and XIX with respect to services furnished in the health care facility for which such capital expenditure is made, not include any amount which is attributable to depreciation, interest on borrowed funds, a return on equity capital (in the case of proprietary facilities), or other expenses related to such capital expenditure. With respect to any organization which is reimbursed on a per capita or a fixed fee or negotiated rate basis, in determining the Federal payments to be made under titles XVIII and XIX, the Secretary shall exclude an amount which in his judgment is a reasonable equivalent to the amount which would otherwise be excluded under this subsection if payment were to be made on other than a per capita or a fixed fee or negotiated rate basis.
(2)
If the Secretary, after submitting the matters involved to the advisory council established or designated under subsection (i), determines that an exclusion of expenses related to any capital expenditure of any health care facility would discourage the operation or expansion of such facility which has demonstrated to his satisfaction proof of capability to provide comprehensive health care services (including institutional services) efficiently, effectively, and economically, or would otherwise be inconsistent with the effective organization and delivery of health services or the effective administration of title XVIII or XIX, he shall not exclude such expenses pursuant to paragraph (1).
(e)
Where a person obtains under lease or comparable arrangement any facility or part thereof, or equipment for a facility, which would have been subject to an exclusion under subsection (d) if the person had acquired it by purchase, the Secretary shall (1) in computing such person's rental expense in determining the Federal payments to be made under titles XVIII and XIX with respect to services furnished in such facility, deduct the amount which in his judgment is a reasonable equivalent of the amount that would have been excluded if the person had acquired such facility or such equipment by purchase, and (2) in computing such person's return on equity capital deduct any amount deposited under the terms of the lease or comparable arrangement.
(f)
Any person dissatisfied with a determination by the Secretary under this section may within six months following notification of such determination request the Secretary to reconsider such determination. A determination by the Secretary under this section shall not be subject to administrative or judicial review.
(g)
For the purposes of this section, a “capital expenditure” is an expenditure which, under generally accepted accounting principles, is not properly chargeable as an expense of operation and maintenance and which (1) exceeds $600,000 (or such lesser amount as the State may establish), (2) changes the bed capacity of the facility with respect to which such expenditure is made, or (3) substantially changes the services of the facility with respect to which such expenditure is made. For purposes of clause (1) of the preceding sentence, the cost of the studies, surveys, designs, plans, working drawings, specifications, and other activities essential to the acquisition, improvement, expansion, or replacement of the plant and equipment with respect to which such expenditure is made shall be included in determining whether such expenditure exceeds the dollar amount specified in clause (1).
(h)
The provisions of this section shall not apply to a religious nonmedical health care institution (as defined in section 1861(ss)(1)).
(i)
(1)
The Secretary shall establish a national advisory council, or designate an appropriate existing national advisory council, to advise and assist him in the preparation of general regulations to carry out the purposes of this section and on policy matters arising in the administration of this section, including the coordination of activities under this section with those under other parts of this Act or under other Federal or federally assisted health programs.
(2)
The Secretary shall make appropriate provision for consultation between and coordination of the work of the advisory council established or designated under paragraph (1) and the Federal Hospital Council, the National Advisory Health Council, the Health Insurance Benefits Advisory Council, and other appropriate national advisory councils with respect to matters bearing on the purposes and administration of this section and the coordination of activities under this section with related Federal health programs.
(3)
If an advisory council is established by the Secretary under paragraph (1), it shall be composed of members who are not otherwise in the regular full-time employ of the United States, and who shall be appointed by the Secretary without regard to the civil service laws from among leaders in the fields of the fundamental sciences, the medical sciences, and the organization, delivery, and financing of health care, and persons who are State or local officials or are active in community affairs or public or civic affairs or who are representative of minority groups. Members of such advisory council, while attending meetings of the council or otherwise serving on business of the council, shall be entitled to receive compensation at rates fixed by the Secretary, but not exceeding the maximum rate specified at the time of such service for grade GS-18 in section 5332 of title 5, United States Code, including traveltime, and while away from their homes or regular places of business they may also be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of such title 5 for persons in the Government service employed intermittently.
(j)
A capital expenditure made by or on behalf of a health care facility shall not be subject to review pursuant to this section if 75 percent of the patients who can reasonably be expected to use the service with respect to which the capital expenditure is made will be individuals enrolled in an eligible organization as defined in section 1876(b), and if the Secretary determines that such capital expenditure is for services and facilities which are needed by such organization in order to operate efficiently and economically and which are not otherwise readily accessible to such organization because—
(1)
the facilities do not provide common services at the same site (as usually provided by the organization),
(2)
the facilities are not available under a contract of reasonable duration,
(3)
full and equal medical staff privileges in the facilities are not available,
(4)
arrangements with such facilities are not administratively feasible, or
(5)
the purchase of such services is more costly than if the organization provided the services directly.
SEC. 1123.
[42 U.S.C. 1320a–2]

EFFECT OF FAILURE TO CARRY OUT STATE PLAN.
In an action brought to enforce a provision of the Social Security Act, such provision is not to be deemed unenforceable because of its inclusion in a section of the Act requiring a State plan or specifying the required contents of a State plan. This section is not intended to limit or expand the grounds for determining the availability of private actions to enforce State plan requirements other than by overturning any such grounds applied in Suter v. Artist M., 112 S. Ct. 1360 (1992), but not applied in prior Supreme Court decisions respecting such enforceability; provided, however, that this section is not intended to alter the holding in Suter v. Artist M., that section 471(a)(15) of the Act is not enforceable in a private right of action.

reviews of child and family services programs, and of foster care and adoption assistance programs, for conformity with state plan requirements
Sec. 1123A.
[42 U.S.C. 1320a–2a]
(a)

In General.—
The Secretary, in consultation with the State agencies administering the State programs under parts B and E of title IV, shall promulgate regulations for the review of such programs to determine whether such programs are in substantial conformity with—
(1)
State plan requirements under such parts B and E,
(2)
implementing regulations promulgated by the Secretary, and
(3)
the relevant approved State plans.
(b)

Elements of Review System.—
The regulations referred to in subsection (a) shall—
(1)
specify the timetable for conformity reviews of State programs, including—
(A)
an initial review of each State program;
(B)
a timely review of a State program following a review in which such program was found not to be in substantial conformity; and
(C)
less frequent reviews of State programs which have been found to be in substantial conformity, but such regulations shall permit the Secretary to reinstate more frequent reviews based on information which indicates that a State program may not be in conformity;
(2)
specify the requirements subject to review (which shall include determining whether the State program is in conformity with the requirement of section 471(a)(27)), and the criteria to be used to measure conformity with such requirements and to determine whether there is a substantial failure to so conform;
(3)
specify the method to be used to determine the amount of any Federal matching funds to be withheld (subject to paragraph (4)) due to the State program's failure to so conform, which ensures that—
(A)
such funds will not be withheld with respect to a program, unless it is determined that the program fails substantially to so conform;
(B)
such funds will not be withheld for a failure to so conform resulting from the State's reliance upon and correct use of formal written statements of Federal law or policy provided to the State by the Secretary; and
(C)
the amount of such funds withheld is related to the extent of the failure to so conform; and
(4)
require the Secretary, with respect to any State program found to have failed substantially to so conform—
(A)
to afford the State an opportunity to adopt and implement a corrective action plan, approved by the Secretary, designed to end the failure to so conform;
(B)
to make technical assistance available to the State to the extent feasible to enable the State to develop and implement such a corrective action plan;
(C)
to suspend the withholding of any Federal matching funds under this section while such a corrective action plan is in effect; and
(D)
to rescind any such withholding if the failure to so conform is ended by successful completion of such a corrective action plan.
(c)

Provisions for Administrative and Judicial Review.—
The regulations referred to in subsection (a) shall—
(1)
require the Secretary, not later than 10 days after a final determination that a program of the State is not in conformity, to notify the State of—
(A)
the basis for the determination; and
(B)
the amount of the Federal matching funds (if any) to be withheld from the State;
(2)
afford the State an opportunity to appeal the determination to the Departmental Appeals Board within 60 days after receipt of the notice described in paragraph (1), (or, if later after failure to continue or to complete a corrective action plan); and
(3)
afford the State an opportunity to obtain judicial review of an adverse decision of the Board, within 60 days after the State receives notice of the decision of the Board, by appeal to the district court of the United States for the judicial district in which the principal or headquarters office of the agency responsible for administering the program is located.

disclosure of ownership and related information
Sec. 1124.
[42 U.S.C. 1320a–3]
(a)
(1)
The Secretary shall by regulation or by contract provision provide that each disclosing entity (as defined in paragraph (2)) shall—
(A)
as a condition of the disclosing entity's participation in, or certification or recertification under, any of the programs established by titles V, XVIII, and XIX, or
(B)
as a condition for the approval or renewal of a contract or agreement between the disclosing entity and the Secretary or the appropriate State agency under any of the programs established under titles V, XVIII, and XIX,
supply the Secretary or the appropriate State agency with full and complete information as to the identity of each person with an ownership or control interest (as defined in paragraph (3)) in the entity or in any subcontractor (as defined by the Secretary in regulations) in which the entity directly or indirectly has a 5 per centum or more ownership interest and supply the Secretary with the5 both the employer identification number (assigned pursuant to section 6109 of the Internal Revenue Code of 1986) and social security account number (assigned under section 205(c)(2)(B)) of the disclosing entity, each person with an ownership or control interest (as defined in subsection (a)(3)), and any subcontractor in which the entity directly or indirectly has a 5 percent or more ownership interest..6
^5
So in original. The word “the” probably should be deleted.
^6
So in original. The amendment made by section 4313(a) of P.L. 105–33 (111 Stat. 388) inserted before the period at the end of subsection (a)(1) “and supply” through “ownership interest.” There probably should have been closing quotes before the period at the end.
(2)
As used in this section, the term “disclosing entity” means an entity which is—
(A)
a provider of services (as defined in section 1861(u), other than a fund), an independent clinical laboratory, a renal disease facility, a managed care entity, as defined in section 1932(a)(1)(B), or a health maintenance organization (as defined in section 1301(a) of the Public Health Service Act;
(B)
an entity (other than an individual practitioner or group of practitioners) that furnishes, or arranges for the furnishing of, items or services with respect to which payment may be claimed by the entity under any plan or program established pursuant to title V or under a State plan approved under title XIX; or
(C)
a carrier or other agency or organization that is acting as a fiscal intermediary or agent with respect to one or more providers of services (for purposes of part A or part B of title XVIII, or both, or for purposes of a State plan approved under title XIX) pursuant to (i) an agreement under section 1816, (ii) a contract under section 1842, or (iii) an agreement with a single State agency administering or supervising the administration of a State plan approved under title XIX.
(3)
As used in this section, the term “person with an ownership or control interest” means, with respect to an entity, a person who—
(A)
(i)
has directly or indirectly (as determined by the Secretary in regulations) an ownership interest of 5 per centum or more in the entity; or
(ii)
is the owner of a whole or part interest in any mortgage, deed of trust, note, or other obligation secured (in whole or in part) by the entity or any of the property or assets thereof, which whole or part interest is equal to or exceeds 5 per centum of the total property and assets of the entity; or
(B)
is an officer or director of the entity, if the entity is organized as a corporation; or
(C)
is a partner in the entity, if the entity is organized as a partnership.
(b)
To the extent determined to be feasible under regulations of the Secretary, a disclosing entity shall also include in the information supplied under subsection (a)(1), with respect to each person with an ownership or control interest in the entity, the name of any other disclosing entity with respect to which the person is a person with an ownership or control interest.
(c)

Required Disclosure of Ownership and Additional Disclosable Parties Information.—
(1)

Disclosure.—
A facility shall have the information described in paragraph (2) available—
(A)
during the period beginning on the date of the enactment of this subsection and ending on the date such information is made available to the public under section 6101(b) of the Patient Protection and Affordable Care Act for submission to the Secretary, the Inspector General of the Department of Health and Human Services, the State in which the facility is located, and the State long-term care ombudsman in the case where the Secretary, the Inspector General, the State, or the State long-term care ombudsman requests such information; and
(B)
beginning on the effective date of the final regulations promulgated under paragraph (3)(A), for reporting such information in accordance with such final regulations.
Nothing in subparagraph (A) shall be construed as authorizing a facility to dispose of or delete information described in such subparagraph after the effective date of the final regulations promulgated under paragraph (3)(A).
(2)

Information described.—
(A)

In general.—
The following information is described in this paragraph:
(i)
The information described in subsections (a) and (b), subject to subparagraph (C).
(ii)
The identity of and information on—
(I)
each member of the governing body of the facility, including the name, title, and period of service of each such member;
(II)
each person or entity who is an officer, director, member, partner, trustee, or managing employee of the facility, including the name, title, and period of service of each such person or entity; and
(III)
each person or entity who is an additional disclosable party of the facility.
(iii)
The organizational structure of each additional disclosable party of the facility and a description of the relationship of each such additional disclosable party to the facility and to one another.
(B)

Special rule where information is already reported or submitted.—
To the extent that information reported by a facility to the Internal Revenue Service on Form 990, information submitted by a facility to the Securities and Exchange Commission, or information otherwise submitted to the Secretary or any other Federal agency contains the information described in clauses (i), (ii), or (iii) of subparagraph (A), the facility may provide such Form or such information submitted to meet the requirements of paragraph (1).
(C)

Special rule.—
In applying subparagraph (A)(i)—
(i)
with respect to subsections (a) and (b), “ownership or control interest” shall include direct or indirect interests, including such interests in intermediate entities; and
(ii)
subsection (a)(3)(A)(ii) shall include the owner of a whole or part interest in any mortgage, deed of trust, note, or other obligation secured, in whole or in part, by the entity or any of the property or assets thereof, if the interest is equal to or exceeds 5 percent of the total property or assets of the entirety.
(3)

Reporting.—
(A)

In general.—
Not later than the date that is 2 years after the date of the enactment of this subsection, the Secretary shall promulgate final regulations requiring, effective on the date that is 90 days after the date on which such final regulations are published in the Federal Register, a facility to report the information described in paragraph (2) to the Secretary in a standardized format, and such other regulations as are necessary to carry out this subsection. Such final regulations shall ensure that the facility certifies, as a condition of participation and payment under the program under title XVIII or XIX, that the information reported by the facility in accordance with such final regulations is, to the best of the facility's knowledge, accurate and current.
(B)

Guidance.—
The Secretary shall provide guidance and technical assistance to States on how to adopt the standardized format under subparagraph (A).
(4)

No effect on existing reporting requirements.—
Nothing in this subsection shall reduce, diminish, or alter any reporting requirement for a facility that is in effect as of the date of the enactment of this subsection.
(5)

Definitions.—
In this subsection:
(A)

Additional disclosable party.—
The term “additional disclosable party” means, with respect to a facility, any person or entity who—
(i)
exercises operational, financial, or managerial control over the facility or a part thereof, or provides policies or procedures for any of the operations of the facility, or provides financial or cash management services to the facility;
(ii)
leases or subleases real property to the facility, or owns a whole or part interest equal to or exceeding 5 percent of the total value of such real property; or
(iii)
provides management or administrative services, management or clinical consulting services, or accounting or financial services to the facility.
(B)

Facility.—
The term “facility” means a disclosing entity which is—
(i)
a skilled nursing facility (as defined in section 1819(a)); or
(ii)
a nursing facility (as defined in section 1919(a)).
(C)

Managing employee.—
The term “managing employee” means, with respect to a facility, an individual (including a general manager, business manager, administrator, director, or consultant) who directly or indirectly manages, advises, or supervises any element of the practices, finances, or operations of the facility.
(D)

Organizational structure.—
The term “organizational structure” means, in the case of—
(i)
a corporation, the officers, directors, and shareholders of the corporation who have an ownership interest in the corporation which is equal to or exceeds 5 percent;
(ii)
a limited liability company, the members and managers of the limited liability company (including, as applicable, what percentage each member and manager has of the ownership interest in the limited liability company);
(iii)
a general partnership, the partners of the general partnership;
(iv)
a limited partnership, the general partners and any limited partners of the limited partnership who have an ownership interest in the limited partnership which is equal to or exceeds 10 percent;
(v)
a trust, the trustees of the trust;
(vi)
an individual, contact information for the individual; and
(vii)
any other person or entity, such information as the Secretary determines appropriate.

disclosure requirements for other providers under part b of medicare
Sec. 1124A.
[42 U.S.C. 1320a–3a]
(a)

Disclosure Required to Receive Payment.—
No payment may be made under part B of title XVIII for items or services furnished by any disclosing part B provider unless such provider has provided the Secretary with full and complete information—
(1)
on the identity of each person with an ownership or control interest in the provider or in any subcontractor (as defined by the Secretary in regulations) in which the provider directly or indirectly has a 5 percent or more ownership interest;
(2)
with respect to any person identified under paragraph (1) or any managing employee of the provider—
(A)
on the identity of any other entities providing items or services for which payment may be made under title XVIII with respect to which such person or managing employee is a person with an ownership or control interest at the time such information is supplied or at any time during the 3-year period ending on the date such information is supplied, and
(B)
as to whether any penalties, assessments, or exclusions have been assessed against such person or managing employee under section 1128, 1128A, or 1128B; and
(3)
including the employer identification number (assigned pursuant to section 6109 of the Internal Revenue Code of 1986) and social security account number (assigned under section 205(c)(2)(B)) of the disclosing part B provider and any person, managing employee, or other entity identified or described under paragraph (1) or (2).
(b)

Updates to Information Supplied.—
A disclosing part B provider shall notify the Secretary of any changes or updates to the information supplied under subsection (a) not later than 180 days after such changes or updates take effect.
(c)

Verification.—
(1)

Transmittal by hhs.—
The Secretary shall transmit—
(A)
to the Commissioner of Social Security information concerning each social security account number (assigned under section 205(c)(2)(B)), and
(B)
to the Secretary of the Treasury information concerning each employer identification number (assigned pursuant to section 6109 of the Internal Revenue Code of 1986),
supplied to the Secretary pursuant to subsection (a)(3) or section 1124(c)7 to the extent necessary for verification of such information in accordance with paragraph (2).
^7
So in original. Probably should be “1124A(c)”.
(2)

Verification.—
The Commissioner of Social Security and the Secretary of the Treasury shall verify the accuracy of, or correct, the information supplied by the Secretary to such official pursuant to paragraph (1), and shall report such verifications or corrections to the Secretary.
(3)

Fees for verification.—
The Secretary shall reimburse the Commissioner and Secretary of the Treasury, at a rate negotiated between the Secretary and such official, for the costs incurred by such official in performing the verification and correction services described in this subsection.
(d)

Definitions.—
For purposes of this section—
(1)
the term “disclosing part B provider” means any entity receiving payment on an assignment-related basis (or, for purposes of subsection (a)(3), any entity receiving payment) for furnishing items or services for which payment may be made under part B of title XVIII, except that such term does not include an entity described in section 1124(a)(2);
(2)
the term “managing employee” means, with respect to a provider, a person described in section 1126(b); and
(3)
the term “person with an ownership or control interest” means, with respect to a provider—
(A)
a person described in section 1124(a)(3), or
(B)
a person who has one of the 5 largest direct or indirect ownership or control interests in the provider.

issuance of subpenas by comptroller general
Sec. 1125.
[42 U.S.C. 1320a–4]
(a)
For the purpose of any audit, investigation, examination, analysis, review, evaluation, or other function authorized by law with respect to any program authorized under this Act, the Comptroller General of the United States shall have power to sign and issue subpenas to any person requiring the production of any pertinent books, records, documents, or other information. Subpenas so issued by the Comptroller General shall be served by anyone authorized by him (1) by delivering a copy thereof to the person named therein, or (2) by registered mail or by certified mail addressed to such person at his last dwelling place or principal place of business. A verified return by the person so serving the subpena setting forth the manner of service, or, in the case of service by registered mail or by certified mail, the return post office receipt therefor signed by the person so served, shall be proof of service.
(b)
In case of contumacy by, or refusal to obey a subpena issued pursuant to subsection (a) of this section and duly served upon, any person, any district court of the United States for the judicial district in which such person charged with contumacy or refusal to obey is found or resides or transacts business, upon application by the Comptroller General, shall have jurisdiction to issue an order requiring such person to produce the books, records, documents, or other information sought by the subpena; and any failure to obey such order of the court may be punished by the court as a contempt thereof. In proceedings brought under this subsection, the Comptroller General shall be represented by attorneys employed in the General Accounting Office or by counsel whom he may employ without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, and the provisions of chapter 51 and subchapters III and VI of chapter 53 of such title, relating to classification and General Schedule pay rates.
(c)
No personal medical record in the possession of the General Accounting Office shall be subject to subpena or discovery proceedings in a civil action.

disclosure by institutions, organizations, and agencies of owners and certain other individuals who have been convicted of certain offenses
Sec. 1126.
[42 U.S.C. 1320a–5]
(a)
As a condition of participation in or certification or recertification under the programs established by titles XVIII, and XIX, any hospital, nursing facility, or other entity (other than an individual practitioner or group of practitioners) shall be required to disclose to the Secretary or to the appropriate State agency the name of any person that is a person described in subparagraphs (A) and (B) of section 1128(b)(8). The Secretary or the appropriate State agency shall promptly notify the Inspector General in the Department of Health and Human Services of the receipt from any entity of any application or request for such participation, certification, or recertification which discloses the name of any such person, and shall notify the Inspector General of the action taken with respect to such application or request.
(b)
For the purposes of this section, the term “managing employee” means, with respect to an entity, an individual, including a general manager, business manager, administrator, and director, who exercises operational or managerial control over the entity, or who directly or indirectly conducts the day-to-day operations of the entity.

adjustments in ssi benefits on account of retroactive benefits under title ii
Sec. 1127.
[42 U.S.C. 1320a6]
(a)
Notwithstanding any other provision of this Act, in any case where an individual—
(1)
is entitled to benefits under title II that were not paid in the months in which they were regularly due; and
(2)
is an individual or eligible spouse eligible for supplemental security income benefits for one or more months in which the benefits referred to in clause (1) were regularly due,
then any benefits under title II that were regularly due in such month or months, or supplemental security income benefits for such month or months, which are due but have not been paid to such individual or eligible spouse shall be reduced by an amount equal to so much of the supplemental security income benefits, whether or not paid retroactively, as would not have been paid or would not be paid with respect to such individual or spouse if he had received such benefits under title II in the month or months in which they were regularly due. A benefit under title II shall not be reduced pursuant to the preceding sentence to the extent that any amount of such benefit would not otherwise be available for payment in full of the maximum fee which may be recovered from such benefit by an attorney pursuant to subsection (a)(4) or (b) of section 206.
(b)
For purposes of this section, the term “supplemental security income benefits” means benefits paid or payable by the Commissioner of Social Security under title XVI, including State supplementary payments under an agreement pursuant to section 1616(a) or an administration agreement under section 212(b) of Public Law 93–66.
(c)
From the amount of the reduction made under subsection (a), the Commissioner of Social Security shall reimburse the State on behalf of which supplementary payments were made for the amount (if any) by which such State's expenditures on account of such supplementary payments for the month or months involved exceeded the expenditures which the State would have made (for such month or months) if the individual had received the benefits under title II at the times they were regularly due. An amount equal to the portion of such reduction remaining after reimbursement of the State under the preceding sentence shall be covered into the general fund of the Treasury.

Interagency coordination to improve program administration
Sec. 1127A.
[42 U.S.C. 1320a–6a]
(a)

Coordination Agreement.—
Notwithstanding any other provision of law, including section 207 of this Act, the Commissioner of Social Security (referred to in this section as ‘the Commissioner’) and the Director of the Office of Personnel Management (referred to in this section as ‘the Director’) shall enter into an agreement under which a system is established to carry out the following procedure:
(1)
The Director shall notify the Commissioner when any individual is determined to be entitled to a monthly disability annuity payment pursuant to subchapter V of chapter 84 of subpart G of part III of title 5, United States Code, and shall certify that such individual has provided the authorization described in subsection (f).
(2)
If the Commissioner determines that an individual described in paragraph (1) is also entitled to past-due benefits under section 223, the Commissioner shall notify the Director of such fact.
(3)
Not later than 30 days after receiving a notification described in paragraph (2) with respect to an individual, the Director shall provide the Commissioner with the total amount of any disability annuity overpayments made to such individual, as well as any other information (in such form and manner as the Commissioner shall require) that the Commissioner determines is necessary to carry out this section.
(4)
If the Director provides the Commissioner with the information described in paragraph (3) in a timely manner, the Commissioner may withhold past-due benefits under section 223 to which such individual is entitled and may pay the amount described in paragraph (3) to the Office of Personnel Management for any disability annuity overpayments made to such individual.
(5)
The Director shall credit any amount received under paragraph (4) with respect to an individual toward any disability annuity overpayment owed by such individual.
(b)

Limitations.—
(1)8

Priority of other reductions.—
Benefits shall only be withheld under this section after any other reduction applicable under this Act, including sections 206(a)(4), 224, and 1127(a).
^8
Margins for paragraphs (1) and (2) of subsection (b) are so in law.
(2)

Timely notification required.—
The Commissioner may not withhold benefits under this section if the Director does not provide the notice described in subsection (a)(3) within the time period described in such subsection.
(c)

Delayed Payment of Past-due Benefits.—
If the Commissioner is required to make a notification described in subsection (a)(2) with respect to an individual, the Commissioner shall not make any payment of past-due benefits under section 223 to such individual until after the period described in subsection (a)(3).
(d)

Review.—
Notwithstanding section 205 or any other provision of law, any determination regarding the withholding of past-due benefits under this section shall only be subject to adjudication and review by the Director under section 8461 of title 5, United States Code.
(e)

Disability Annuity Overpayment Defined.—
For purposes of this section, the term “disability annuity overpayment” means the amount of the reduction under section 8452(a)(2) of title 5, United States Code, applicable to a monthly annuity payment made to an individual pursuant to subchapter V of chapter 84 of subpart G of part III of such title due to the individual’s concurrent entitlement to a disability insurance benefit under section 223 during such month.
(f)

Authorization to Withhold Benefits.—
The authorization described in this subsection, with respect to an individual, is written authorization provided by the individual to the Director which authorizes the Commissioner to withhold past-due benefits under section 223 to which such individual is entitled in order to pay the amount withheld to the Office of Personnel Management for any disability overpayments made to such individual.
(g)

Expenses.—
The Director shall pay to the Social Security Administration an amount equal to the amount estimated by the Commissioner as the total cost incurred by the Social Security Administration in carrying out this section for each calendar quarter.

exclusion of certain individuals and entities from participation in medicare and state health care programs
Sec. 1128.
[42 U.S.C. 1320a–7]
(a)

Mandatory Exclusion.—
The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):
(1)

Conviction of program-related crimes.—
Any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under title XVIII or under any State health care program.
(2)

Conviction relating to patient abuse.—
Any individual or entity that has been convicted, under Federal or State law, of a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service.
(3)

Felony conviction relating to health care fraud.—
Any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program (other than those specifically described in paragraph (1)) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.
(4)

Felony conviction relating to controlled substance.—
Any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.
(b)

Permissive Exclusion.—
The Secretary may exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)):
(1)

Conviction relating to fraud.—
Any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under Federal or State law—
(A)
of a criminal offense consisting of a misdemeanor relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct—
(i)
in connection with the delivery of a health care item or service, or
(ii)
with respect to any act or omission in a health care program (other than those specifically described in subsection (a)(1)) operated by or financed in whole or in part by any Federal, State, or local government agency; or
(B)
of a criminal offense relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct with respect to any act or omission in a program (other than a health care program) operated by or financed in whole or in part by any Federal, State, or local government agency.
(2)

Conviction relating to obstruction of an investigation or audit.—
Any individual or entity that has been convicted, under Federal or State law, in connection with the interference with or obstruction of any investigation or audit related to—
(i)
any offense described in paragraph (1) or in subsection (a); or
(ii)
the use of funds received, directly or indirectly, from any Federal health care program (as defined in section 1128B(f)).
(3)

Misdemeanor conviction relating to controlled substance.—
Any individual or entity that has been convicted, under Federal or State law, of a criminal offense consisting of a misdemeanor relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.
(4)

License revocation or suspension.—
Any individual or entity—
(A)
whose license to provide health care has been revoked or suspended by any State licensing authority, or who otherwise lost such a license or the right to apply for or renew such a license, for reasons bearing on the individual's or entity's professional competence, professional performance, or financial integrity, or
(B)
who surrendered such a license while a formal disciplinary proceeding was pending before such an authority and the proceeding concerned the individual's or entity's professional competence, professional performance, or financial integrity.
(5)

Exclusion or suspension under federal or state health care program.—
Any individual or entity which has been suspended or excluded from participation, or otherwise sanctioned, under—
(A)
any Federal program, including programs of the Department of Defense or the Department of Veterans Affairs, involving the provision of health care, or
(B)
a State health care program,
for reasons bearing on the individual's or entity's professional competence, professional performance, or financial integrity.
(6)

Claims for excessive charges or unnecessary services and failure of certain organizations to furnish medically necessary services.—
Any individual or entity that the Secretary determines—
(A)
has submitted or caused to be submitted bills or requests for payment (where such bills or requests are based on charges or cost) under title XVIII or a State health care program containing charges (or, in applicable cases, requests for payment of costs) for items or services furnished substantially in excess of such individual's or entity's usual charges (or, in applicable cases, substantially in excess of such individual's or entity's costs) for such items or services, unless the Secretary finds there is good cause for such bills or requests containing such charges or costs;
(B)
has furnished or caused to be furnished items or services to patients (whether or not eligible for benefits under title XVIII or under a State health care program) substantially in excess of the needs of such patients or of a quality which fails to meet professionally recognized standards of health care;
(C)
is—
(i)
a health maintenance organization (as defined in section 1903(m)) providing items and services under a State plan approved under title XIX, or
(ii)
an entity furnishing services under a waiver approved under section 1915(b)(1),
and has failed substantially to provide medically necessary items and services that are required (under law or the contract with the State under title XIX) to be provided to individuals covered under that plan or waiver, if the failure has adversely affected (or has a substantial likelihood of adversely affecting) these individuals; or
(D)
is an entity providing items and services as an eligible organization under a risk-sharing contract under section 1876 and has failed substantially to provide medically necessary items and services that are required (under law or such contract) to be provided to individuals covered under the risk-sharing contract, if the failure has adversely affected (or has a substantial likelihood of adversely affecting) these individuals.
(7)

Fraud, kickbacks, and other prohibited activities.—
Any individual or entity that the Secretary determines has committed an act which is described in section 1128A, 1128B, or 1129.
(8)

Entities controlled by a sanctioned individual.—
Any entity with respect to which the Secretary determines that a person—
(A)
(i)
who has a direct or indirect ownership or control interest of 5 percent or more in the entity or with an ownership or control interest (as defined in section 1124(a)(3)) in that entity,9
^9
So in original.
(ii)
who is an officer, director, agent, or managing employee (as defined in section 1126(b)) of that entity; or
(iii)
who was described in clause (i) but is no longer so described because of a transfer of ownership or control interest, in anticipation of (or following) a conviction, assessment, or exclusion described in subparagraph (B) against the person, to an immediate family member (as defined in subsection (j)(1)) or a member of the household of the person (as defined in subsection (j)(2)) who continues to maintain an interest described in such clause—
is a person—
(B)
(i)
who has been convicted of any offense described in subsection (a) or in paragraph (1), (2), or (3) of this subsection;
(ii)
against whom a civil monetary penalty has been assessed under section 1128A or 1129; or
(iii)
who has been excluded from participation under a program under title XVIII or under a State health care program.
(9)

Failure to disclose required information.—
Any entity that did not fully and accurately make any disclosure required by section 1124, section 1124A, or section 1126.
(10)

Failure to supply requested information on subcontractors and suppliers.—
Any disclosing entity (as defined in section 1124(a)(2)) that fails to supply (within such period as may be specified by the Secretary in regulations) upon request specifically addressed to the entity by the Secretary or by the State agency administering or supervising the administration of a State health care program—
(A)
full and complete information as to the ownership of a subcontractor (as defined by the Secretary in regulations) with whom the entity has had, during the previous 12 months, business transactions in an aggregate amount in excess of $25,000, or
(B)
full and complete information as to any significant business transactions (as defined by the Secretary in regulations), occurring during the five-year period ending on the date of such request, between the entity and any wholly owned supplier or between the entity and any subcontractor.
(11)

Failure to supply payment information.—
Any individual or entity furnishing, ordering, referring for furnishing, or certifying the need for items or services for which payment may be made under title XVIII or a State health care program that fails to provide such information as the Secretary or the appropriate State agency finds necessary to determine whether such payments are or were due and the amounts thereof, or has refused to permit such examination of its records by or on behalf of the Secretary or that agency as may be necessary to verify such information.
(12)

Failure to grant immediate access.—
Any individual or entity that fails to grant immediate access, upon reasonable request (as defined by the Secretary in regulations) to any of the following:
(A)
To the Secretary, or to the agency used by the Secretary, for the purpose specified in the first sentence of section 1864(a) (relating to compliance with conditions of participation or payment).
(B)
To the Secretary or the State agency, to perform the reviews and surveys required under State plans under paragraphs (26), (31), and (33) of section 1902(a) and under section 1903(g).
(C)
To the Inspector General of the Department of Health and Human Services, for the purpose of reviewing records, documents, and other data necessary to the performance of the statutory functions of the Inspector General.
(D)
To a State medicaid fraud control unit (as defined in section 1903(q)), for the purpose of conducting activities described in that section.
(13)

Failure to take corrective action.—
Any hospital that fails to comply substantially with a corrective action required under section 1886(f)(2)(B).
(14)

Default on health education loan or scholarship obligations.—
Any individual who the Secretary determines is in default on repayments of scholarship obligations or loans in connection with health professions education made or secured, in whole or in part, by the Secretary and with respect to whom the Secretary has taken all reasonable steps available to the Secretary to secure repayment of such obligations or loans, except that (A) the Secretary shall not exclude pursuant to this paragraph a physician who is the sole community physician or sole source of essential specialized services in a community if a State requests that the physician not be excluded, and (B) the Secretary shall take into account, in determining whether to exclude any other physician pursuant to this paragraph, access of beneficiaries to physician services for which payment may be made under title XVIII or XIX.
(15)

Individuals controlling a sanctioned entity.—
(A)
Any individual—
(i)
who has a direct or indirect ownership or control interest in a sanctioned entity and who knows or should know (as defined in section 1128A(i)(6))10 of the action constituting the basis for the conviction or exclusion described in subparagraph (B); or
^{10}
So in original. Probably should be “1128A(i)(7))”.
(ii)
who is an officer or managing employee (as defined in section 1126(b)) of such an entity.
(B)
For purposes of subparagraph (A), the term “sanctioned entity” means an entity—
(i)
that has been convicted of any offense described in subsection (a) or in paragraph (1), (2), or (3) of this subsection; or
(ii)
that has been excluded from participation under a program under title XVIII or under a State health care program.
(16)

Making false statements or misrepresentation of material facts.—
Any individual or entity that knowingly makes or causes to be made any false statement, omission, or misrepresentation of a material fact in any application, agreement, bid, or contract to participate or enroll as a provider of services or supplier under a Federal health care program (as defined in section 1128B(f)), including Medicare Advantage organizations under part C of title XVIII, prescription drug plan sponsors under part D of title XVIII, medicaid managed care organizations under title XIX, and entities that apply to participate as providers of services or suppliers in such managed care organizations and such plans.
(17)

Knowingly misclassifying covered outpatient drugs.—
Any manufacturer or officer, director, agent, or managing employee of such manufacturer that knowingly misclassifies a covered outpatient drug under an agreement under section 1927, knowingly fails to correct such misclassification, or knowingly provides false information related to drug pricing, drug product information, or data related to drug pricing or drug product information.
(c)

Notice, Effective Date, and Period of Exclusion.—
(1)
An exclusion under this section or under section 1128A shall be effective at such time and upon such reasonable notice to the public and to the individual or entity excluded as may be specified in regulations consistent with paragraph (2).
(2)
(A)
Except as provided in subparagraph (B), such an exclusion shall be effective with respect to services furnished to an individual on or after the effective date of the exclusion.
(B)
Unless the Secretary determines that the health and safety of individuals receiving services warrants the exclusion taking effect earlier, an exclusion shall not apply to payments made under title XVIII or under a State health care program for—
(i)
inpatient institutional services furnished to an individual who was admitted to such institution before the date of the exclusion, or
(ii)
home health services and hospice care furnished to an individual under a plan of care established before the date of the exclusion,
until the passage of 30 days after the effective date of the exclusion.
(3)
(A)
The Secretary shall specify, in the notice of exclusion under paragraph (1) and the written notice under section 1128A, the minimum period (or, in the case of an exclusion of an individual under subsection (b)(12) or in the case described in subparagraph (G), the period) of the exclusion.
(B)
Subject to subparagraph (G), in the case of an exclusion under subsection (a), the minimum period of exclusion shall be not less than five years, except that, upon the request of the administrator of a Federal health care program (as defined in section 1128B(f)) who determines that the exclusion would impose a hardship on beneficiaries (as defined in section 1128A(i)(5)) of that program, the Secretary may, after consulting with the Inspector General of the Department of Health and Human Services, waive the exclusion under subsection (a)(1), (a)(3), or (a)(4) with respect to that program in the case of an individual or entity that is the sole community physician or sole source of essential specialized services in a community. The Secretary's decision whether to waive the exclusion shall not be reviewable.
(C)
In the case of an exclusion of an individual under subsection (b)(12), the period of the exclusion shall be equal to the sum of—
(i)
the length of the period in which the individual failed to grant the immediate access described in that subsection, and
(ii)
an additional period, not to exceed 90 days, set by the Secretary.
(D)
Subject to subparagraph (G), 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 shorter period is appropriate because of mitigating circumstances or 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's 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.
(G)
In the case of an exclusion of an individual under subsection (a) based on a conviction occurring on or after the date of the enactment of this subparagraph, if the individual has (before, on, or after such date) been convicted—
(i)
on one previous occasion of one or more offenses for which an exclusion may be effected under such subsection, the period of the exclusion shall be not less than 10 years, or
(ii)
on 2 or more previous occasions of one or more offenses for which an exclusion may be effected under such subsection, the period of the exclusion shall be permanent.
(d)

Notice to State Agencies and Exclusion Under State Health Care Programs.—
(1)
Subject to paragraph (3), the Secretary shall exercise the authority under this section and section 1128A in a manner that results in an individual's or entity's exclusion from all the programs under title XVIII and all the State health care programs in which the individual or entity may otherwise participate.
(2)
The Secretary shall promptly notify each appropriate State agency administering or supervising the administration of each State health care program (and, in the case of an exclusion effected pursuant to subsection (a) and to which section 304(a)(5) of the Controlled Substances Act may apply, the Attorney General)—
(A)
of the fact and circumstances of each exclusion effected against an individual or entity under this section or section 1128A, and
(B)
of the period (described in paragraph (3)) for which the State agency is directed to exclude the individual or entity from participation in the State health care program.
(3)
(A)
Except as provided in subparagraph (B), the period of the exclusion under a State health care program under paragraph (2) shall be the same as any period of exclusion under title XVIII.
(B)
(i)
The Secretary may waive an individual's or entity's exclusion under a State health care program under paragraph (2) if the Secretary receives and approves a request for the waiver with respect to the individual or entity from the State agency administering or supervising the administration of the program.
(ii)
A State health care program may provide for a period of exclusion which is longer than the period of exclusion under title XVIII.
(e)

Notice to State Licensing Agencies.—
The Secretary shall—
(1)
promptly notify the appropriate State or local agency or authority having responsibility for the licensing or certification of an individual or entity excluded (or directed to be excluded) from participation under this section or section 1128A, of the fact and circumstances of the exclusion,
(2)
request that appropriate investigations be made and sanctions invoked in accordance with applicable State law and policy, and
(3)
request that the State or local agency or authority keep the Secretary and the Inspector General of the Department of Health and Human Services fully and currently informed with respect to any actions taken in response to the request.
(f)

Notice, Hearing, and Judicial Review.—
(1)
Subject to paragraph (2), any individual or entity that is excluded (or directed to be excluded) from participation under this section is entitled to reasonable notice and opportunity for a hearing thereon by the Secretary to the same extent as is provided in section 205(b), and to judicial review of the Secretary's final decision after such hearing as is provided in section 205(g), except that, in so applying such sections and section 205(l), 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.
(2)
Unless the Secretary determines that the health or safety of individuals receiving services warrants the exclusion taking effect earlier, any individual or entity that is the subject of an adverse determination under subsection (b)(7) shall be entitled to a hearing by an administrative law judge (as provided under section 205(b)) on the determination under subsection (b)(7) before any exclusion based upon the determination takes effect.
(3)
The provisions of section 205(h) shall apply with respect to this section and sections 1128A, 1129, and 1156 to the same extent as it is applicable with respect to title II, except that, in so applying such section and section 205(l), any reference therein to the Commissioner of Social Security shall be considered a reference to the Secretary.
(4)11
The provisions of subsections (d) and (e) of section 205 shall apply with respect to this section to the same extent as they are applicable with respect to title II. The Secretary may delegate the authority granted by section 205(d) (as made applicable to this section) to the Inspector General of the Department of Health and Human Services for purposes of any investigation under this section.
^{11}
Margin so in law.
(g)

Application for Termination of Exclusion.—
(1)
An individual or entity excluded (or directed to be excluded) from participation under this section or section 1128A may apply to the Secretary, in the manner specified by the Secretary in regulations and at the end of the minimum period of exclusion provided under subsection (c)(3) and at such other times as the Secretary may provide, for termination of the exclusion effected under this section or section 1128A.
(2)
The Secretary may terminate the exclusion if the Secretary determines, on the basis of the conduct of the applicant which occurred after the date of the notice of exclusion or which was unknown to the Secretary at the time of the exclusion, that—
(A)
there is no basis under subsection (a) or (b) or section 1128A(a) for a continuation of the exclusion, and
(B)
there are reasonable assurances that the types of actions which formed the basis for the original exclusion have not recurred and will not recur.
(3)
The Secretary shall promptly notify each appropriate State agency administering or supervising the administration of each State health care program (and, in the case of an exclusion effected pursuant to subsection (a) and to which section 304(a)(5) of the Controlled Substances Act may apply, the Attorney General) of the fact and circumstances of each termination of exclusion made under this subsection.
(h)

Definition of State Health Care Program.—
For purposes of this section and sections 1128A and 1128B, the term “State health care program” means—
(1)
a State plan approved under title XIX,
(2)
any program receiving funds under title V or from an allotment to a State under such title,
(3)
any program receiving funds under subtitle 1 of title XX or from an allotment to a State under such subtitle, or
(4)
a State child health plan approved under title XXI.
(i)

Convicted Defined.—
For purposes of subsections (a) and (b), an individual or entity is considered to have been “convicted” of a criminal offense—
(1)
when a judgment of conviction has been entered against the individual or entity by a Federal, State, or local court, regardless of whether there is an appeal pending or whether the judgment of conviction or other record relating to criminal conduct has been expunged;
(2)
when there has been a finding of guilt against the individual or entity by a Federal, State, or local court;
(3)
when a plea of guilty or nolo contendere by the individual or entity has been accepted by a Federal, State, or local court; or
(4)
when the individual or entity has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.
(j)

Definition of Immediate Family Member and Member of Household.—
For purposes of subsection (b)(8)(A)(iii):
(1)
The term “immediate family member” means, with respect to a person—
(A)
the husband or wife of the person;
(B)
the natural or adoptive parent, child, or sibling of the person;
(C)
the stepparent, stepchild, stepbrother, or stepsister of the person;
(D)
the father-, mother-, daughter-, son-, brother-, or sister-in-law of the person;
(E)
the grandparent or grandchild of the person; and
(F)
the spouse of a grandparent or grandchild of the person.
(2)
The term “member of the household” means, with respect to any person, any individual sharing a common abode as part of a single family unit with the person, including domestic employees and others who live together as a family unit, but not including a roomer or boarder.

civil monetary penalties
Sec. 1128A.
[42 U.S.C. 1320a–7a]
(a)
Any person (including an organization, agency, or other entity, but excluding a beneficiary, as defined in subsection (i)(5)) that—
(1)
knowingly presents or causes to be presented to an officer, employee, or agent of the United States, or of any department or agency thereof, or of any State agency (as defined in subsection (i)(1)), a claim (as defined in subsection (i)(2)) that the Secretary determines—
(A)
is for a medical or other item or service that the person knows or should know was not provided as 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 than the code the person knows or should know is applicable to the item or service actually provided,
(B)
is for a medical or other item or service and the person knows or should know the claim is false or fraudulent,
(C)
is presented for a physician's service (or an item or service incident to a physician's service) by a person who knows or should know that the individual who furnished (or supervised the furnishing of) the service—
(i)
was not licensed as a physician,
(ii)
was licensed as a physician, but such license had been obtained through a misrepresentation of material fact (including cheating on an examination required for licensing), or
(iii)
represented to the patient at the time the service was furnished that the physician was certified in a medical specialty by a medical specialty board when the individual was not so certified,
(D)
is for a medical or other item or service furnished during a period in which the person was excluded from the program under which the claim was made pursuant to a determination by the Secretary under this section or under section 1128, 1156, 1160(b) (as in effect on September 2, 1982), 1862(d) (as in effect on the date of the enactment of the Medicare and Medicaid Patient and Program Protection Act of 1987), or 1866(b) or as a result of the application of the provisions of section 1842(j)(2), or
(E)
is for a pattern of medical or other items or services that a person knows or should know are not medically necessary;
(2)
knowingly presents or causes to be presented to any person a request for payment which is in violation of the terms of (A) an assignment under section 1842(b)(3)(B)(ii), or (B) an agreement with a State agency (or other requirement of a State plan under title XIX) not to charge a person for an item or service in excess of the amount permitted to be charged, or (C) an agreement to be a participating physician or supplier under section 1842(h)(1), or (D) an agreement pursuant to section 1866(a)(1)(G);
(3)
knowingly gives or causes to be given to any person, with respect to coverage under title XVIII of inpatient hospital services subject to the provisions of section 1886, information that he knows or should know is false or misleading, and that could reasonably be expected to influence the decision when to discharge such person or another individual from the hospital;
(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—
(A)
retains a direct or indirect ownership or control interest in an entity that is participating in a program under title XVIII or a State health care program, and who knows or should know of the action constituting the basis for the exclusion; or
(B)
is an officer or managing employee (as defined in section 1126(b)) of such an entity;
(5)
offers to or transfers remuneration to any individual eligible for benefits under title XVIII of this Act, or under a State health care program (as defined in section 1128(h)) 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 title XVIII, or a State health care program (as so defined);
(6)
arranges or contracts (by employment or otherwise) with an individual or entity that the person knows or should know is excluded from participation in a Federal health care program (as defined in section 1128B(f)), for the provision of items or services for which payment may be made under such a program;
(7)
commits an act described in paragraph (1) or (2) of section 1128B(b);
(8)
knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim for payment for items and services furnished under a Federal health care program; or
(9)
fails to grant timely access, upon reasonable request (as defined by the Secretary in regulations), to the Inspector General of the Department of Health and Human Services, for the purpose of audits, investigations, evaluations, or other statutory functions of the Inspector General of the Department of Health and Human Services;
(8)12
orders or prescribes a medical or other item or service during a period in which the person was excluded from a Federal health care program (as so defined), in the case where the person knows or should know that a claim for such medical or other item or service will be made under such a program;
^{12}
So in law. See amendments made by sections 6402(d) and 6408(a) of Public Law 111–148.
(9)12
knowingly makes or causes to be made any false statement, omission, or misrepresentation of a material fact in any application, bid, or contract to participate or enroll as a provider of services or a supplier under a Federal health care program (as so defined), including Medicare Advantage organizations under part C of title XVIII, prescription drug plan sponsors under part D of title XVIII, medicaid managed care organizations under title XIX, and entities that apply to participate as providers of services or suppliers in such managed care organizations and such plans;
(10)
knows of an overpayment (as defined in paragraph (4) of section 1128J(d)) and does not report and return the overpayment in accordance with such section;
shall be subject, in addition to any other penalties that may be prescribed by law, to a civil money penalty of not more than $20,000 for each item or service (or, in cases under paragraph (3), $30,000 for each individual with respect to whom false or misleading information was given; in cases under paragraph (4), $20,000 for each day the prohibited relationship occurs; in cases under paragraph (7), $100,000 for each such act; or in cases under paragraph (9), $100,000 for each false statement or misrepresentation of a material fact). In addition, such a person shall be subject to an assessment of not more than 3 times the amount claimed for each such item or service in lieu of damages sustained by the United States or a State agency because of such claim (or, in cases under paragraph (7), damages of not more than 3 times the total amount of remuneration offered, paid, solicited, or received, without regard to whether a portion of such remuneration was offered, paid, solicited, or received for a lawful purpose; or in cases under paragraph (9), an assessment of not more than 3 times the total amount claimed for each item or service for which payment was made based upon the application containing the false statement or misrepresentation of a material fact). In addition the Secretary may make a determination in the same proceeding to exclude the person from participation in the Federal health care programs (as defined in section 1128B(f)(1)) and to direct the appropriate State agency to exclude the person from participation in any State health care program.
(b)
(1)
If a hospital or a critical access hospital knowingly makes a payment, directly or indirectly, to a physician as an inducement to reduce or limit medically necessary services provided with respect to individuals who—
(A)
are entitled to benefits under part A or part B of title XVIII or to medical assistance under a State plan approved under title XIX, and
(B)
are under the direct care of the physician,
the hospital or a critical access hospital shall be subject, in addition to any other penalties that may be prescribed by law, to a civil money penalty of not more than $5,000 for each such individual with respect to whom the payment is made.
(2)
Any physician who knowingly accepts receipt of a payment described in paragraph (1) shall be subject, in addition to any other penalties that may be prescribed by law, to a civil money penalty of not more than $5,000 for each individual described in such paragraph with respect to whom the payment is made.
(3)
(A)
Any physician who executes a document described in subparagraph (B) with respect to an individual knowing that all of the requirements referred to in such subparagraph are not met with respect to the individual shall be subject to a civil monetary penalty of not more than the greater of—
(i)
$10,000, or
(ii)
three times the amount of the payments under title XVIII for home health services which are made pursuant to such certification.
(B)
A document described in this subparagraph is any document that certifies, for purposes of title XVIII, that an individual meets the requirements of section 1814(a)(2)(C) or 1835(a)(2)(A) in the case of home health services furnished to the individual.
(c)
(1)
The Secretary may initiate a proceeding to determine whether to impose a civil money penalty, assessment, or exclusion under subsection (a) or (b) only as authorized by the Attorney General pursuant to procedures agreed upon by them. The Secretary may not initiate an action under this section with respect to any claim, request for payment, or other occurrence described in this section later than six years after the date the claim was presented, the request for payment was made, or the occurrence took place. The Secretary may initiate an action under this section by serving notice of the action in any manner authorized by Rule 4 of the Federal Rules of Civil Procedure.
(2)
The Secretary shall not make a determination adverse to any person under subsection (a) or (b) until the person has been given written notice and an opportunity for the determination to be made on the record after a hearing at which the person is entitled to be represented by counsel, to present witnesses, and to cross-examine witnesses against the person.
(3)
In a proceeding under subsection (a) or (b) which—
(A)
is against a person who has been convicted (whether upon a verdict after trial or upon a plea of guilty or nolo contendere) of a Federal crime charging fraud or false statements, and
(B)
involves the same transaction as in the criminal action, the person is estopped from denying the essential elements of the criminal offense.
(4)
The official conducting a hearing under this section may sanction a person, including any party or attorney, for failing to comply with an order or procedure, failing to defend an action, or other misconduct as would interfere with the speedy, orderly, or fair conduct of the hearing. Such sanction shall reasonably relate to the severity and nature of the failure or misconduct. Such sanction may include—
(A)
in the case of refusal to provide or permit discovery, drawing negative factual inferences or treating such refusal as an admission by deeming the matter, or certain facts, to be established,
(B)
prohibiting a party from introducing certain evidence or otherwise supporting a particular claim or defense,
(C)
striking pleadings, in whole or in part,
(D)
staying the proceedings,
(E)
dismissal of the action,
(F)
entering a default judgment,
(G)
ordering the party or attorney to pay attorneys' fees and other costs caused by the failure or misconduct, and
(H)
refusing to consider any motion or other action which is not filed in a timely manner.
(d)
In determining the amount or scope of any penalty, assessment, or exclusion imposed pursuant to subsection (a) or (b), the Secretary shall take into account—
(1)
the nature of claims and the circumstances under which they were presented,
(2)
the degree of culpability, history of prior offenses, and financial condition of the person presenting the claims, and
(3)
such other matters as justice may require.
(e)
Any person adversely affected by a determination of the Secretary under this section may obtain a review of such determination in the United States Court of Appeals for the circuit in which the person resides, or in which the claim or specified claim was presented, by filing in such court (within sixty days following the date the person is notified of the Secretary's determination) a written petition requesting that the determination be modified or set aside. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Secretary, and thereupon the Secretary shall file in the Court the record in the proceeding as provided in section 2112 of title 28, United States Code. Upon such filing, the court shall have jurisdiction of the proceeding and of the question determined therein, and shall have the power to make and enter upon the pleadings, testimony, and proceedings set forth in such record a decree affirming, modifying, remanding for further consideration, or setting aside, in whole or in part, the determination of the Secretary and enforcing the same to the extent that such order is affirmed or modified. No objection that has not been urged before the Secretary shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances. The findings of the Secretary with respect to questions of fact, if supported by substantial evidence on the record considered as a whole, shall be conclusive. If any party shall apply to the court for leave to adduce additional evidence and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the hearing before the Secretary, the court may order such additional evidence to be taken before the Secretary and to be made a part of the record. The Secretary may modify his findings as to the facts, or make new findings, by reason of additional evidence so taken and filed, and he shall file with the court such modified or new findings, which findings with respect to questions of fact, if supported by substantial evidence on the record considered as a whole, shall be conclusive, and his recommendations, if any, for the modification or setting aside of his original order. Upon the filing of the record with it, the jurisdiction of the court shall be exclusive and its judgment and decree shall be final, except that the same shall be subject to review by the Supreme Court of the United States, as provided in section 1254 of title 28, United States Code.
(f)
Civil money penalties and assessments imposed under this section may be compromised by the Secretary and may be recovered in a civil action in the name of the United States brought in United States district court for the district where the claim or specified claim (as defined in subsection (r)) was presented, or where the claimant (or, with respect to a person described in subsection (o), the person) resides, as determined by the Secretary. Amounts recovered under this section shall be paid to the Secretary and disposed of as follows:
(1)
(A)
In the case of amounts recovered arising out of a claim under title XIX, there shall be paid to the State agency an amount bearing the same proportion to the total amount recovered as the State's share of the amount paid by the State agency for such claim bears to the total amount paid for such claim.
(B)
In the case of amounts recovered arising out of a claim under an allotment to a State under title V, there shall be paid to the State agency an amount equal to three-sevenths of the amount recovered.
(2)
Such portion of the amounts recovered as is determined to have been paid out of the trust funds under sections 1817 and 1841 shall be repaid to such trust funds.
(3)
With respect to amounts recovered arising out of a claim under a Federal health care program (as defined in section 1128B(f)), 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 amounts attributable to the amounts recovered under this section by reason of the amendments made by the Health Insurance Portability and Accountability Act of 1996 (as estimated by the Secretary) shall be deposited into the Federal Hospital Insurance Trust Fund pursuant to section 1817(k)(2)(C).
(4)
The remainder of the amounts recovered shall be deposited as miscellaneous receipts of the Treasury of the United States.
The amount of such penalty or assessment, when finally determined, or the amount agreed upon in compromise, may be deducted from any sum then or later owing by the United States or a State agency (or, in the case of a penalty or assessment under subsection (o), by a specified State agency (as defined in subsection (q)(6)), to the person against whom the penalty or assessment has been assessed.
(g)
A determination by the Secretary to impose a penalty, assessment, or exclusion under subsection (a) or (b) shall be final upon the expiration of the sixty-day period referred to in subsection (e). Matters that were raised or that could have been raised in a hearing before the Secretary or in an appeal pursuant to subsection (e) may not be raised as a defense to a civil action by the United States to collect a penalty, assessment, or exclusion assessed under this section.
(h)
Whenever the Secretary's determination to impose a penalty, assessment, or exclusion under subsection (a) or (b) becomes final, he shall notify the appropriate State or local medical or professional organization, the appropriate State agency or agencies administering or supervising the administration of State health care programs (as defined in section 1128(h)), and the appropriate utilization and quality control peer review organization, and the appropriate State or local licensing agency or organization (including the agency specified in section 1864(a) and 1902(a)(33)) that such a penalty, assessment, or exclusion has become final and the reasons therefor.
(i)
For the purposes of this section:
(1)
The term “State agency” means the agency established or designated to administer or supervise the administration of the State plan under title XIX of this Act or designated to administer the State's program under title V or subtitle 1 of title XX of this Act.
(2)
The term “claim” means an application for payments for items and services under a Federal health care program (as defined in section 1128B(f)).
(3)
The term “item or service” includes (A) any particular item, device, medical supply, or service claimed to have been provided to a patient and listed in an itemized claim for payment, and (B) in the case of a claim based on costs, any entry in the cost report, books of account or other documents sup- porting such claim.
(4)
The term “agency of the United States” includes any contractor acting as a fiscal intermediary, carrier, or fiscal agent or any other claims processing agent for a Federal health care program (as so defined).
(5)
The term “beneficiary” means an individual who is eligible to receive items or services for which payment may be made under a Federal health care program (as so defined) but does not include a provider, supplier, or practitioner.
(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 amounts after determining in good faith that the individual is in financial need; or
(II)
fails to collect coinsurance or deductible amounts after making reasonable collection efforts;
(B)
subject to subsection (n), any permissible practice described in any subparagraph of section 1128B(b)(3) or in regulations issued by the Secretary;
(C)
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 payers, 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 the Health Insurance Portability and Accountability Act of 1996;
(D)
incentives given to individuals to promote the delivery of preventive care as determined by the Secretary in regulations so promulgated;
(E)
a reduction in the copayment amount for covered OPD services under section 1833(t)(5)(B);
(F)
any other remuneration which promotes access to care and poses a low risk of harm to patients and Federal health care programs (as defined in section 1128B(f) and designated by the Secretary under regulations);
(G)
the offer or transfer of items or services for free or less than fair market value by a person, if—
(i)
the items or services consist of coupons, rebates, or other rewards from a retailer;
(ii)
the items or services are offered or transferred on equal terms available to the general public, regardless of health insurance status; and
(iii)
the offer or transfer of the items or services is not tied to the provision of other items or services reimbursed in whole or in part by the program under title XVIII or a State health care program (as defined in section 1128(h));
(H)
the offer or transfer of items or services for free or less than fair market value by a person, if—
(i)
the items or services are not offered as part of any advertisement or solicitation;
(ii)
the items or services are not tied to the provision of other services reimbursed in whole or in part by the program under title XVIII or a State health care program (as so defined);
(iii)
there is a reasonable connection between the items or services and the medical care of the individual; and
(iv)
the person provides the items or services after determining in good faith that the individual is in financial need;
(I)
effective on a date specified by the Secretary (but not earlier than January 1, 2011), the waiver by a PDP sponsor of a prescription drug plan under part D of title XVIII or an MA organization offering an MA–PD plan under part C of such title of any copayment for the first fill of a covered part D drug (as defined in section 1860D–2(e)) that is a generic drug for individuals enrolled in the prescription drug plan or MA–PD plan, respectively; or
(J)
the provision of telehealth technologies (as defined by the Secretary) on or after January 1, 2019, by a provider of services or a renal dialysis facility (as such terms are defined for purposes of title XVIII) to an individual with end stage renal disease who is receiving home dialysis for which payment is being made under part B of such title, if—
(i)
the telehealth technologies are not offered as part of any advertisement or solicitation;
(ii)
the telehealth technologies are provided for the purpose of furnishing telehealth services related to the individual’s end stage renal disease; and
(iii)
the provision of the telehealth technologies meets any other requirements set forth in regulations promulgated by the Secretary.
(7)
The term “should know” means that a person, with respect to information—
(A)
acts in deliberate ignorance of the truth or falsity of the information; or
(B)
acts in reckless disregard of the truth or falsity of the information,
and no proof of specific intent to defraud is required.
(j)
(1)
The provisions of subsections (d) and (e) of section 205 shall apply with respect to this section to the same extent as they are applicable with respect to title II. The Secretary may delegate the authority granted by section 205(d) (as made applicable to this section) to the Inspector General of the Department of Health and Human Services for purposes of any investigation under this section.
(2)
The Secretary may delegate authority granted under this section and under section 1128 to the Inspector General of the Department of Health and Human Services.
(k)
Whenever the Secretary has reason to believe that any person has engaged, is engaging, or is about to engage in any activity which makes the person subject to a civil monetary penalty under this section, the Secretary may bring an action in an appropriate district court of the United States (or, if applicable, a United States court of any territory) to enjoin such activity, or to enjoin the person from concealing, removing, encumbering, or disposing of assets which may be required in order to pay a civil monetary penalty if any such penalty were to be imposed or to seek other appropriate relief.
(l)
A principal is liable for penalties, assessments, and an exclusion under this section for the actions of the principal's agent acting within the scope of the agency.
(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 or 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 of the applicable department or agency.
(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 or Administrator of the department or agency initiating the action gives notice and an opportunity to participate in the investigation to the Inspector General of the department or agency with primary jurisdiction over the Federal health care programs to which the claims were submitted.
(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 chapter 4 of title 5, United States Code, 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.
(n)
(1)
Subparagraph (B) of subsection (i)(6) shall not apply to a practice described in paragraph (2) unless—
(A)
the Secretary, through the Inspector General of the Department of Health and Human Services, promulgates a rule authorizing such a practice as an exception to remuneration; and
(B)
the remuneration is offered or transferred by a person under such rule during the 2-year period beginning on the date the rule is first promulgated.
(2)
A practice described in this paragraph is a practice under which a health care provider or facility pays, in whole or in part, premiums for medicare supplemental policies for individuals entitled to benefits under part A of title XVIII pursuant to section 226A.
(o)
Any person (including an organization, agency, or other entity, but excluding a program beneficiary, as defined in subsection (q)(4)) that, with respect to a grant, contract, or other agreement for which the Secretary provides funding—
(1)
knowingly presents or causes to be presented a specified claim (as defined in subsection (r)) under such grant, contract, or other agreement that the person knows or should know is false or fraudulent;
(2)
knowingly makes, uses, or causes to be made or used any false statement, omission, or misrepresentation of a material fact in any application, proposal, bid, progress report, or other document that is required to be submitted in order to directly or indirectly receive or retain funds provided in whole or in part by such Secretary pursuant to such grant, contract, or other agreement;
(3)
knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent specified claim under such grant, contract, or other agreement;
(4)
knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation (as defined in subsection (s)) to pay or transmit funds or property to such Secretary with respect to such grant, contract, or other agreement, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit funds or property to such Secretary with respect to such grant, contract, or other agreement; or
(5)
fails to grant timely access, upon reasonable request (as defined by such Secretary in regulations), to the Inspector General of the Department, for the purpose of audits, investigations, evaluations, or other statutory functions of such Inspector General in matters involving such grants, contracts, or other agreements;
shall be subject, in addition to any other penalties that may be prescribed by law, to a civil money penalty in cases under paragraph (1), of not more than $10,000 for each specified claim; in cases under paragraph (2), not more than $50,000 for each false statement, omission, or misrepresentation of a material fact; in cases under paragraph (3), not more than $50,000 for each false record or statement; in cases under paragraph (4), not more than $50,000 for each false record or statement or $10,000 for each day that the person knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay; or in cases under paragraph (5), not more than $15,000 for each day of the failure described in such paragraph. In addition, in cases under paragraphs (1) and (3), such a person shall be subject to an assessment of not more than 3 times the amount claimed in the specified claim described in such paragraph in lieu of damages sustained by the United States or a specified State agency because of such specified claim, and in cases under paragraphs (2) and (4), such a person shall be subject to an assessment of not more than 3 times the total amount of the funds described in paragraph (2) or (4), respectively (or, in the case of an obligation to transmit property to the Secretary described in paragraph (4), of the value of the property described in such paragraph) in lieu of damages sustained by the United States or a specified State agency because of such case. In addition, the Secretary may make a determination in the same proceeding to exclude the person from participation in the Federal health care programs (as defined in section 1128B(f)(1)) and to direct the appropriate State agency to exclude the person from participation in any State health care program.
(p)
The provisions of subsections (c), (d), (g), and (h) shall apply to a civil money penalty or assessment under subsection (o) in the same manner as such provisions apply to a penalty, assessment, or proceeding under subsection (a). In applying subsection (d), each reference to a claim under such subsection shall be treated as including a reference to a specified claim (as defined in subsection (r)).
(q)
For purposes of this subsection and subsections (o) and (p):
(1)
The term “Department” means the Department of Health and Human Services.
(2)
The term “material” means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.
(3)
The term “other agreement” includes a cooperative agreement, scholarship, fellowship, loan, subsidy, payment for a specified use, donation agreement, award, or subaward (regardless of whether one or more of the persons entering into the agreement is a contractor or subcontractor).
(4)
The term “program beneficiary” means, in the case of a grant, contract, or other agreement designed to accomplish the objective of awarding or otherwise furnishing benefits or assistance to individuals and for which the Secretary provides funding, an individual who applies for, or who receives, such benefits or assistance from such grant, contract, or other agreement. Such term does not include, with respect to such grant, contract, or other agreement, an officer, employee, or agent of a person or entity that receives such grant or that enters into such contract or other agreement.
(5)
The term “recipient” includes a subrecipient or subcontractor.
(6)
The term “specified State agency” means an agency of a State government established or designated to administer or supervise the administration of a grant, contract, or other agreement funded in whole or in part by the Secretary.
(r)
For purposes of this section, the term “specified claim” means any application, request, or demand under a grant, contract, or other agreement for money or property, whether or not the United States or a specified State agency has title to the money or property, that is not a claim (as defined in subsection (i)(2)) and that—
(1)
is presented or caused to be presented to an officer, employee, or agent of the Department or agency thereof, or of any specified State agency; or
(2)
is made to a contractor, grantee, or any other recipient if the money or property is to be spent or used on the Department’s behalf or to advance a Department program or interest, and if the Department—
(A)
provides or has provided any portion of the money or property requested or demanded; or
(B)
will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded.
(s)
For purposes of subsection (o), the term “obligation” means an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, for a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment.

criminal penalties for acts involving federal health care programs
Sec. 1128B.
[42 U.S.C. 1320a–7b]
(a)
Whoever—
(1)
knowingly and willfully makes or causes to be made any false statement or representation of a material fact in any application for any benefit or payment under a Federal health care program (as defined in subsection (f)),
(2)
at any time knowingly and willfully makes or causes to be made any false statement or representation of a material fact for use in determining rights to such benefit or payment,
(3)
having knowledge of the occurrence of any event affecting (A) his initial or continued right to any such benefit or payment, or (B) the initial or continued right to any such benefit or payment of any other individual in whose behalf he has applied for or is receiving such benefit or payment, conceals or fails to disclose such event with an intent fraudulently to secure such benefit or payment either in a greater amount or quantity than is due or when no such benefit or payment is authorized,
(4)
having made application to receive any such benefit or payment for the use and benefit of another and having received it, knowingly and willfully converts such benefit or payment or any part thereof to a use other than for the use and benefit of such other person,
(5)
presents or causes to be presented a claim for a physician's service for which payment may be made under a Federal health care program and knows that the individual who furnished the service was not licensed as a physician, or
(6)
for a fee knowingly and willfully counsels or assists an individual to dispose of assets (including by any transfer in trust) in order for the individual to become eligible for medical assistance under a State plan under title XIX, if disposing of the assets results in the imposition of a period of ineligibility for such assistance under section 1917(c),
shall (i) in the case of such a statement, representation, concealment, failure, conversion, or provision of counsel or assistance by any other person in connection with the furnishing (by that person) of items or services for which payment is or may be made under the program, be guilty of a felony and upon conviction thereof fined not more than $100,000 or imprisoned for not more than 10 years or both, or (ii) in the case of such a statement, representation, concealment, failure, conversion, or provision of counsel or assistance by any other person, be guilty of a misdemeanor and upon conviction thereof fined not more than $20,000 or imprisoned for not more than one year, or both. In addition, in any case where an individual who is otherwise eligible for assistance under a Federal health care program is convicted of an offense under the preceding provisions of this subsection, the administrator of such program may at its option (notwithstanding any other provision of such program) limit, restrict, or suspend the eligibility of that individual for such period (not exceeding one year) as it deems appropriate; but the imposition of a limitation, restriction, or suspension with respect to the eligibility of any individual under this sentence shall not affect the eligibility of any other person for assistance under the plan, regardless of the relationship between that individual and such other person.
(b)
(1)
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—
(A)
in return for referring 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 under a Federal health care program, or
(B)
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 under a Federal health care program,
shall be guilty of a felony and upon conviction thereof, shall be fined not more than $100,000 or imprisoned for not more than 10 years, or both.
(2)
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—
(A)
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 under a Federal health care program, or
(B)
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 under a Federal health care program,
shall be guilty of a felony and upon conviction thereof, shall be fined not more than $100,000 or imprisoned for not more than 10 years, or both.
(3)
Paragraphs (1) and (2) shall not apply to—
(A)
a discount or other reduction in price obtained by a provider of services or other entity under a Federal health care 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 Federal health care program;
(B)
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;
(C)
any amount paid by a vendor of goods or services to a person authorized to act as a purchasing agent for a group of individuals or entities who are furnishing services reimbursed under a Federal health care program if—
(i)
the person has a written contract, with each such individual or entity, which specifies the amount to be paid the person, which amount may be a fixed amount or a fixed percentage of the value of the purchases made by each such individual or entity under the contract, and
(ii)
in the case of an entity that is a provider of services (as defined in section 1861(u)), the person discloses (in such form and manner as the Secretary requires) to the entity and, upon request, to the Secretary the amount received from each such vendor with respect to purchases made by or on behalf of the entity;
(D)
a waiver of any coinsurance under part B of title XVIII 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;
(E)
any payment practice specified by the Secretary in regulations promulgated pursuant to section 14(a) of the Medicare and Medicaid Patient and Program Protection Act of 1987 or in regulations under section 1860D–3(e)(6)13;
^{13}
The amendment to insert “or in regulations under section 1860D–3(e)(6)” after “1987” in section 1128B(b)(3)(C) made by section 101(e)(8)(A) of P.L. 108–173 (117 Stat. 2152) was executed to suparagraph (E) in order to reflect the probable intent of the Congress. The reference in the matter added by such public law probably should be “section 1860D–4(e)(6)”.
(F)
any remuneration between an organization and an individual or entity providing items or services, or a combination thereof, pursuant to a written agreement between the organization and the individual or entity if the organization is an eligible organization under section 1876 or if the written agreement, through a risk-sharing arrangement, places the individual or entity at substantial financial risk for the cost or utilization of the items or services, or a combination thereof, which the individual or entity is obligated to provide;
(G)
the waiver or reduction by pharmacies (including pharmacies of the Indian Health Service, Indian tribes, tribal organizations, and urban Indian organizations) of any cost-sharing imposed under part D of title XVIII, if the conditions described in clauses (i) through (iii) of section 1128A(i)(6)(A) are met with respect to the waiver or reduction (except that, in the case of such a waiver or reduction on behalf of a subsidy eligible individual (as defined in section 1860D–14(a)(3)), section 1128A(i)(6)(A) shall be applied without regard to clauses (ii) and (iii) of that section);
(H)
any remuneration between a federally qualified health center (or an entity controlled by such a health center) and an MA organization pursuant to a written agreement described in section 1853(a)(4);
(I)
any remuneration between a health center entity described under clause (i) or (ii) of section 1905(l)(2)(B) and any individual or entity providing goods, items, services, donations, loans, or a combination thereof, to such health center entity pursuant to a contract, lease, grant, loan, or other agreement, if such agreement contributes to the ability of the health center entity to maintain or increase the availability, or enhance the quality, of services provided to a medically underserved population served by the health center entity;
(J)14
a discount in the price of an applicable drug (as defined in paragraph (2) of section 1860D–14A(g)) of a manufacturer that is furnished to an applicable beneficiary (as defined in paragraph (1) of such section) under the Medicare coverage gap discount program under section 1860D–14A;
^{14}
Margin so in law.
(K)14
an incentive payment made to a Medicare fee-for-service beneficiary by an ACO under an ACO Beneficiary Incentive Program established under subsection (m) of section 1899, if the payment is made in accordance with the requirements of such subsection and meets such other conditions as the Secretary may establish; and
(L)
a bona fide mental health or behavioral health improvement or maintenance program, if—
(i)
such program—
(I)
consists of counseling, mental health services, a suicide prevention program, or a substance use disorder prevention and treatment program;
(II)
is made available to a physician or other clinician for the primary purpose of preventing suicide, improving mental health and resiliency, or providing training in appropriate strategies to promote the mental health and resiliency of such physician or other clinician;
(III)
is set out in a written policy, approved in advance of the operation of the program by the governing body of the entity providing such program (and which shall be updated accordingly in advance to substantial changes to the operation of such program), that includes—
- (aa)
a description of the content and duration of the program;
- (bb)
a description of the evidence-based support for the design of the program;
- (cc)
the estimated cost of the program;
- (dd)
the personnel (including the qualifications of such personnel) implementing the program; and
- (ee)
the method by which such entity will evaluate the use and success of the program;
(IV)
is offered by an entity described in clause (ii) with a formal medical staff to all physicians and other clinicians who practice in the geographic area served by such entity, including physicians who hold bona fide appointments to the medical staff of such entity or otherwise have clinical privileges at such entity;
(V)
is offered to all such physicians and clinicians on the same terms and conditions and without regard to the volume or value of referrals or other business generated by a physician or clinician for such entity;
(VI)
is evidence-based and conducted by a qualified health professional; and
(VII)
meets such other requirements the Secretary may impose by regulation as needed to protect against program or patient abuse;
(ii)
such entity is—
(I)
a hospital;
(II)
an ambulatory surgical center;
(III)
a community health center;
(IV)
a rural emergency hospital;
(V)
a skilled nursing facility; or
(VI)
any similar entity, as determined by the Secretary; and
(iii)
neither the provision of such program, nor the value of such program, are contingent upon the number or value of referrals made by a physician or other clinician to such entity or the amount or value of other business generated by such physician for the entity.
(4)14
Whoever without lawful authority knowingly and willfully purchases, sells or distributes, or arranges for the purchase, sale, or distribution of a beneficiary identification number or unique health identifier for a health care provider under title XVIII, title XIX, or title XXI shall be imprisoned for not more than 10 years or fined not more than $500,000 ($1,000,000 in the case of a corporation), or both.
(c)
Whoever knowingly and willfully makes or causes to be made, or induces or seeks to induce the making of, any false statement or representation of a material fact with respect to the conditions or operation of any institution, facility, or entity in order that such institution, facility, or entity may qualify (either upon initial certification or upon recertification) as a hospital, critical access hospital, skilled nursing facility, nursing facility, intermediate care facility for the mentally retarded, or other entity (including an eligible organization under section 1876(b)) for which certification is required under title XVIII or a State health care program (as defined in section 1128(h)), or with respect to information required to be provided under section 1124A, shall be guilty of a felony and upon conviction thereof shall be fined not more than $100,000 or imprisoned for not more than 10 years, or both.
(d)
Whoever knowingly and willfully—
(1)
charges, for any service provided to a patient under a State plan approved under title XIX, money or other consideration at a rate in excess of the rates established by the State (or, in the case of services provided to an individual enrolled with a medicaid managed care organization under title XIX under a contract under section 1903(m) or under a contractual, referral, or other arrangement under such contract, at a rate in excess of the rate permitted under such contract), or
(2)
charges, solicits, accepts, or receives, in addition to any amount otherwise required to be paid under a State plan approved under title XIX, any gift, money, donation, or other consideration (other than a charitable, religious, or philanthropic contribution from an organization or from a person unrelated to the patient)—
(A)
as a precondition of admitting a patient to a hospital, nursing facility, or intermediate care facility for the mentally retarded, or
(B)
as a requirement for the patient's continued stay in such a facility,
when the cost of the services provided therein to the patient is paid for (in whole or in part) under the State plan,
shall be guilty of a felony and upon conviction thereof shall be fined not more than $100,000 or imprisoned for not more than 10 years, or both.
(e)
Whoever accepts assignments described in section 1842(b)(3)(B)(ii) or agrees to be a participating physician or supplier under section 1842(h)(1) and knowingly, willfully, and repeatedly violates the term of such assignments or agreement, shall be guilty of a misdemeanor and upon conviction thereof shall be fined not more than $4,000 or imprisoned for not more than six months, or both.
(f)
For purposes of this section, the term “Federal health care program” means—
(1)
any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government (other than the health insurance program under chapter 89 of title 5, United States Code); or
(2)
any State health care program, as defined in section 1128(h).
(g)
In addition to the penalties provided for in this section or section 1128A, a claim that includes items or services resulting from a violation of this section constitutes a false or fraudulent claim for purposes of subchapter III of chapter 37 of title 31, United States Code.
(h)
With respect to violations of this section, a person need not have actual knowledge of this section or specific intent to commit a violation of this section.

fraud and abuse control program
Sec. 1128C.
[42 U.S.C. 1320a–7c]
(a)

Establishment of Program.—
(1)

In general.—
Not later than January 1, 1997, the Secretary, acting through the Office of the Inspector General of the Department of Health and Human Services, and the Attorney General shall establish a program—
(A)
to coordinate Federal, State, and local law enforcement programs to control fraud and abuse with respect to health plans,
(B)
to conduct investigations, audits, evaluations, and inspections relating to the delivery of and payment for health care in the United States,
(C)
to facilitate the enforcement of the provisions of sections 1128, 1128A, and 1128B and other statutes applicable to health care fraud and abuse, and
(D)
to provide for the modification and establishment of safe harbors and to issue advisory opinions and special fraud alerts pursuant to section 1128D.
(2)

Coordination with health plans.—
In carrying out the program established under paragraph (1), the Secretary and the Attorney General shall consult with, and arrange for the sharing of data with representatives of health plans.
(3)

Guidelines.—
(A)

In general.—
The Secretary and the Attorney General shall issue guidelines to carry out the program under paragraph (1). The provisions of sections 553, 556, and 557 of title 5, United States Code, shall not apply in the issuance of such guidelines.
(B)

Information guidelines.—
(i)

In general.—
Such guidelines shall include guidelines relating to the furnishing of information by health plans, providers, and others to enable the Secretary and the Attorney General to carry out the program (including coordination with health plans under paragraph (2)).
(ii)

Confidentiality.—
Such guidelines shall include procedures to assure that such information is provided and utilized in a manner that appropriately protects the confidentiality of the information and the privacy of individuals receiving health care services and items.
(iii)

Qualified immunity for providing information.—
The provisions of section 1157(a) (relating to limitation on liability) shall apply to a person providing information to the Secretary or the Attorney General in conjunction with their performance of duties under this section.
(4)

Ensuring access to documentation.—
The Inspector General of the Department of Health and Human Services is authorized to exercise such authority described in paragraphs (3) through (9) of section 406(a) of title 5, United States Code, as necessary with respect to the activities under the fraud and abuse control program established under this subsection.
(5)

Authority of inspector general.—
Nothing in this Act shall be construed to diminish the authority of any Inspector General, including such authority as provided in chapter 4 of title 5, United States Code.
(6)

Public-private partnership for waste, fraud, and abuse detection.—
(A)

In general.—
Under the program described in paragraph (1), there is established a public-private partnership (in this paragraph referred to as the “partnership”) of health plans, Federal and State agencies, law enforcement agencies, health care anti-fraud organizations, and any other entity determined appropriate by the Secretary (in this paragraph referred to as “partners”) for purposes of detecting and preventing health care waste, fraud, and abuse.
(B)

Contract with trusted third party.—
In carrying out the partnership, the Secretary shall enter into a contract with a trusted third party for purposes of carrying out the duties of the partnership described in subparagraph (C).
(C)

Duties of partnership.—
The partnership shall—
(i)
provide technical and operational support to facilitate data sharing between partners in the partnership;
(ii)
analyze data so shared to identify fraudulent and aberrant billing patterns;
(iii)
conduct aggregate analyses of health care data so shared across Federal, State, and private health plans for purposes of detecting fraud, waste, and abuse schemes;
(iv)
identify outlier trends and potential vulnerabilities of partners in the partnership with respect to such schemes;
(v)
refer specific cases of potential unlawful conduct to appropriate governmental entities;
(vi)
convene, not less than annually, meetings with partners in the partnership for purposes of providing updates on the partnership’s work and facilitating information sharing between the partners;
(vii)
enter into data sharing and data use agreements with partners in the partnership in such a manner so as to ensure the partnership has access to data necessary to identify waste, fraud, and abuse while maintaining the confidentiality and integrity of such data;
(viii)
provide partners in the partnership with plan-specific, confidential feedback on any aberrant billing patterns or potential fraud identified by the partnership with respect to such partner;
(ix)
establish a process by which entities described in subparagraph (A) may enter the partnership and requirements such entities must meet to enter the partnership;
(x)
provide appropriate training, outreach, and education to partners based on the results of data analyses described in clauses (ii) and (iii); and
(xi)
perform such other duties as the Secretary determines appropriate.
(D)

Substance use disorder treatment analysis.—
Not later than 2 years after the date of the enactment of the Consolidated Appropriations Act, 2021, the trusted third party with a contract in effect under subparagraph (B) shall perform an analysis of aberrant or fraudulent billing patterns and trends with respect to providers and suppliers of substance use disorder treatments from data shared with the partnership.
(E)

Executive board.—
(i)

Executive board composition.—
(I)

In general.—
There shall be an executive board of the partnership comprised of representatives of the Federal Government and representatives of the private sector selected by the Secretary.
(II)

Chairs.—
The executive board shall be co-chaired by one Federal Government official and one representative from the private sector.
(ii)

Meetings.—
The executive board of the partnership shall meet at least once per year.
(iii)

Executive board duties.—
The duties of the executive board shall include the following:
(I)
Providing strategic direction for the partnership, including membership criteria and a mission statement.
(II)
Communicating with the leadership of the Department of Health and Human Services and the Department of Justice and the various private health sector associations.
(F)

Reports.—
Not later than January 1, 2023, and every 2 years thereafter, the Secretary shall submit to Congress and make available on the public website of the Centers for Medicare & Medicaid Services a report containing—
(i)
a review of activities conducted by the partnership over the 2-year period ending on the date of the submission of such report, including any progress to any objectives established by the partnership;
(ii)
any savings voluntarily reported by health plans participating in the partnership attributable to the partnership during such period;
(iii)
any savings to the Federal Government attributable to the partnership during such period;
(iv)
any other outcomes attributable to the partnership, as determined by the Secretary, during such period; and
(v)
a strategic plan for the 2-year period beginning on the day after the date of the submission of such report, including a description of any emerging fraud and abuse schemes, trends, or practices that the partnership intends to study during such period.
(G)

Funding.—
The partnership shall be funded by amounts otherwise made available to the Secretary for carrying out the program described in paragraph (1).
(H)

Transitional provisions.—
To the extent consistent with this subsection, all functions, personnel, assets, liabilities, and administrative actions applicable on the date before the date of the enactment of this paragraph to the National Fraud Prevention Partnership established on September 17, 2012, by charter of the Secretary shall be transferred to the partnership established under subparagraph (A) as of the date of the enactment of this paragraph.
(I)

Nonapplicability of faca.—
The provisions of the Federal Advisory Committee Act shall not apply to the partnership established by subparagraph (A).
(J)

Implementation.—
Notwithstanding any other provision of law, the Secretary may implement the partnership established by subparagraph (A) by program instruction or otherwise.
(K)

Definition.—
For purposes of this paragraph, the term “trusted third party” means an entity that—
(i)
demonstrates the capability to carry out the duties of the partnership described in subparagraph (C);
(ii)
complies with such conflict of interest standards determined appropriate by the Secretary; and
(iii)
meets such other requirements as the Secretary may prescribe.
(b)

Additional Use of Funds by Inspector General.—
(1)

Reimbursements for investigations.—
The Inspector General of the Department of Health and Human Services is authorized to receive and retain for current use reimbursement for the costs of conducting investigations and audits and for monitoring compliance plans when such costs are ordered by a court, voluntarily agreed to by the payor, or otherwise.
(2)

Crediting.—
Funds received by the Inspector General under paragraph (1) as reimbursement for costs of conducting investigations shall be deposited to the credit of the appropriation from which initially paid, or to appropriations for similar purposes currently available at the time of deposit, and shall remain available for obligation for 1 year from the date of the deposit of such funds.
(c)

Health Plan Defined.—
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; and
(3)
a membership agreement with a health maintenance organization or other prepaid health plan.

guidance regarding application of health care fraud and abuse sanctions
Sec. 1128D.
[42 U.S.C. 1320a–7d]
(a)

Solicitation and Publication of Modifications to Existing Safe Harbors and New Safe Harbors.—
(1)

In general.—
(A)

Solicitation of proposals for safe harbors.—
Not later than January 1, 1997, and not less than annually thereafter, the Secretary shall publish a notice in the Federal Register soliciting proposals, which will be accepted during a 60-day period, for—
(i)
modifications to existing safe harbors issued pursuant to section 14(a) of the Medicare and Medicaid Patient and Program Protection Act of 1987 (42 U.S.C. 1320a–7b note);
(ii)
additional safe harbors specifying payment practices that shall not be treated as a criminal offense under section 1128B(b) and shall not serve as the basis for an exclusion under section 1128(b)(7);
(iii)
advisory opinions to be issued pursuant to subsection (b); and
(iv)
special fraud alerts to be issued pursuant to subsection (c).
(B)

Publication of proposed modifications and proposed additional safe harbors.—
After considering the proposals described in clauses (i) and (ii) of subparagraph (A), the Secretary, in consultation with the Attorney General, shall publish in the Federal Register proposed modifications to existing safe harbors and proposed additional safe harbors, if appropriate, with a 60-day comment period. After considering any public comments received during this period, the Secretary shall issue final rules modifying the existing safe harbors and establishing new safe harbors, as appropriate.
(C)

Report.—
The Inspector General of the Department of Health and Human Services (in this section referred to as the “Inspector General”) shall, in an annual report to Congress or as part of the year-end semiannual report required by section 405 of title 5, United States Code, describe the proposals received under clauses (i) and (ii) of subparagraph (A) and explain which proposals were included in the publication described in subparagraph (B), which proposals were not included in that publication, and the reasons for the rejection of the proposals that were not included.
(2)

Criteria for modifying and establishing safe harbors.—
In modifying and establishing safe harbors under paragraph (1)(B), the Secretary may consider the extent to which providing a safe harbor for the specified payment practice may result in any of the following:
(A)
An increase or decrease in access to health care services.
(B)
An increase or decrease in the quality of health care services.
(C)
An increase or decrease in patient freedom of choice among health care providers.
(D)
An increase or decrease in competition among health care providers.
(E)
An increase or decrease in the ability of health care facilities to provide services in medically underserved areas or to medically underserved populations.
(F)
An increase or decrease in the cost to Federal health care programs (as defined in section 1128B(f)).
(G)
An increase or decrease in the potential overutilization of health care services.
(H)
The existence or nonexistence of any potential financial benefit to a health care professional or provider which may vary based on their decisions of—
(i)
whether to order a health care item or
service; or
(ii)
whether to arrange for a referral of health care items or services to a particular practitioner or provider.
(I)
Any other factors the Secretary deems appropriate in the interest of preventing fraud and abuse in Federal health care programs (as so defined).
(3)

Consideration of safe harbor for certain contingency management interventions.—
(A)

In general.—
Not later than one year after the date of the enactment of this paragraph, the Inspector General shall conduct a review on whether to establish a safe harbor described in paragraph (1)(A)(ii) for evidence-based contingency management incentives and the parameters for such a safe harbor. In conducting the review under the previous sentence, the Inspector General shall consider the extent to which providing such a safe harbor for evidence-based contingency management incentives may result in any of the factors described in paragraph (2).
(B)

Report.—
Not later than two years after the date of the enactment of this paragraph, the Secretary and the Inspector General shall submit to Congress recommendations, including based on the review conducted under subparagraph (A), for improving access to evidence-based contingency management interventions while ensuring quality of care, ensuring fidelity to evidence-based practices, and including strong program integrity safeguards that prevent increased waste, fraud, and abuse and prevent medically unnecessary or inappropriate items or services reimbursed in whole or in part by a Federal health care program.
(b)

Advisory Opinions.—
(1)

Issuance of advisory opinions.—
The Secretary, in consultation with the Attorney General, shall issue written advisory opinions as provided in this subsection.
(2)

Matters subject to advisory opinions.—
The Secretary shall issue advisory opinions as to the following matters:
(A)
What constitutes prohibited remuneration within the meaning of section 1128B(b) or section 1128A(i)(6).
(B)
Whether an arrangement or proposed arrangement satisfies the criteria set forth in section 1128B(b)(3) for activities which do not result in prohibited remuneration.
(C)
Whether an arrangement or proposed arrangement satisfies the criteria which the Secretary has established, or shall establish by regulation for activities which do not result in prohibited remuneration.
(D)
What constitutes an inducement to reduce or limit services to individuals entitled to benefits under title XVIII or title XIX within the meaning of section 1128A(b).
(E)
Whether any activity or proposed activity constitutes grounds for the imposition of a sanction under section 1128, 1128A, or 1128B.
(3)

Matters not subject to advisory opinions.—
Such advisory opinions shall not address the following matters:
(A)
Whether the fair market value shall be, or was paid or received for any goods, services or property.
(B)
Whether an individual is a bona fide employee within the requirements of section 3121(d)(2) of the Internal Revenue Code of 1986.
(4)

Effect of advisory opinions.—
(A)

Binding as to secretary and parties involved.—
Each advisory opinion issued by the Secretary shall be binding as to the Secretary and the party or parties requesting the opinion.
(B)

Failure to seek opinion.—
The failure of a party to seek an advisory opinion may not be introduced into evidence to prove that the party intended to violate the provisions of sections 15 1128, 1128A, or 1128B.
^{15}
So in original. Probably should be “section”.
(5)

Regulations.—
(A)

In general.—
Not later than 180 days after the date of the enactment of this section, the Secretary shall issue regulations to carry out this section. Such regulations shall provide for—
(i)
the procedure to be followed by a party applying for an advisory opinion;
(ii)
the procedure to be followed by the Secretary in responding to a request for an advisory opinion;
(iii)
the interval in which the Secretary shall respond;
(iv)
the reasonable fee to be charged to the party requesting an advisory opinion; and
(v)
the manner in which advisory opinions will be made available to the public.
(B)

Specific contents.—
Under the regulations promulgated pursuant to subparagraph (A)—
(i)
the Secretary shall be required to issue to a party requesting an advisory opinion by not later than 60 days after the request is received; and
(ii)
the fee charged to the party requesting an advisory opinion shall be equal to the costs incurred by the Secretary in responding to the request.
(6)

Application of subsection.—
This subsection shall apply to requests for advisory opinions made on or after the date which is 6 months after the date of enactment of this section.
(c)

Special Fraud Alerts.—
(1)

In general.—
(A)

Request for special fraud alerts.—
Any person may present, at any time, a request to the Inspector General for a notice which informs the public of practices which the Inspector General considers to be suspect or of particular concern under the Medicare program under title XVIII or a State health care program, as defined in section 1128(h) (in this subsection referred to as a “special fraud alert”).
(B)

Issuance and publication of special fraud alerts.—
Upon receipt of a request described in subparagraph (A), the Inspector General shall investigate the subject matter of the request to determine whether a special fraud alert should be issued. If appropriate, the Inspector General shall issue a special fraud alert in response to the request. All special fraud alerts issued pursuant to this subparagraph shall be published in the Federal Register.
(2)

Criteria for special fraud alerts.—
In determining whether to issue a special fraud alert upon a request described in paragraph (1), the Inspector General may consider—
(A)
whether and to what extent the practices that would be identified in the special fraud alert may result in any of the consequences described in subsection (a)(2); and
(B)
the volume and frequency of the conduct that would be identified in the special fraud alert.

health care fraud and abuse data collection program
Sec. 1128E.
[42 U.S.C. 1320a–7e]
(a)

In General.—
The Secretary shall maintain a national health care fraud and abuse data collection program under this section for the reporting of certain final adverse actions (not including settlements in which no findings of liability have been made) against health care providers, suppliers, or practitioners as required by subsection (b), with access as set forth in subsection (d), and shall furnish the information collected under this section to the National Practitioner Data Bank established pursuant to the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11101 et seq.).
(b)

Reporting of Information.—
(1)

In general.—
Each Government agency and health plan shall report any final adverse action (not including settlements in which no findings of liability have been made) 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 any health care provider, supplier, or practitioner who is the subject of a final adverse action.
(B)
The name (if known) of any health care entity with which a health care provider, supplier, or practitioner, who is the subject of a final adverse action, 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 or 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 assure 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 not 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.
(5)

To whom reported.—
The information required to be reported under this subsection shall be reported to the Secretary.
(6)

Sanctions for failure to report.—
(A)

Health plans.—
Any health plan that fails to report information on an adverse action required to be reported under this subsection shall be subject to a civil money penalty of not more than $25,000 for each such adverse action not reported. Such penalty shall be imposed and collected in the same manner as civil money penalties under subsection (a) of section 1128A are imposed and collected under that section.
(B)

Governmental agencies.—
The Secretary shall provide for a publication of a public report that identifies those Government agencies that have failed to report information on adverse actions as required to be reported under this subsection.
(c)

Disclosure and Correction of Information.—
(1)

Disclosure.—
With respect to the information about final adverse actions (not including settlements in which no findings of liability have been made) reported to the Secretary under this section with respect to 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 collected under this section shall be available from the National Practitioner Data Bank to the agencies, authorities, and officials which are provided under section 1921(b) information reported under section 1921(a).
(2)

Fees for disclosure.—
The Secretary may establish or approve reasonable fees for the disclosure of information under this section. The amount of such a fee may not exceed the costs of processing the requests for disclosure and of providing such information. Such fees shall be available to the Secretary 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)

Appropriate Coordination.—
In implementing this section, the Secretary shall provide for the maximum appropriate coordination with part B of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11131 et seq.) and section 1921.
(g)

Definitions and Special Rules.—
For purposes of this section:
(1)

Final adverse action.—
(A)

In general.—
The term “final adverse action” includes:
(i)
Civil judgments against a health care provider, supplier, 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 agencies responsible for the licensing and certification 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 dismissal or closure of the proceedings by reason of the provider, supplier, or practitioner surrendering their license or leaving the State or jurisdiction 16
^{16}
So in law. There is no punctuation.
(III)
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-renewability, or otherwise, or
(IV)
any other negative action or finding by such Federal agency that is publicly available information.
(iv)
Exclusion from participation in a Federal health care program (as defined in section 1128B(f)).
(v)
Any other adjudicated actions or decisions that the Secretary shall establish by regulation.
(B)

Exception.—
The term does not include any action with respect to a malpractice claim.
(2)

Practitioner.—
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)

Government agency.—
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 Department of Veterans Affairs.
(D)
Federal agencies responsible for the licensing and certification of health care providers and licensed health care practitioners.
(4)

Health plan.—
The term “health plan” has the meaning given such term by section 1128C(c).
(5)

Determination of conviction.—
For purposes of paragraph (1), the existence of a conviction shall be determined under paragraphs (1) through (4) of section 1128(i).

coordination of medicare and medicaid surety bond provisions
Sec. 1128F.
[42 U.S.C. 1320a–7f]
In the case of a home health agency that is subject to a surety bond requirement under title XVIII and title XIX, the surety bond provided to satisfy the requirement under one such title shall satisfy the requirement under the other such title so long as the bond applies to guarantee return of overpayments under both such titles.
SEC. 1128G.
[42 U.S.C. 1320a–7h]

TRANSPARENCY REPORTS AND REPORTING OF PHYSICIAN OWNERSHIP OR INVESTMENT INTERESTS.
(a)

Transparency Reports.—
(1)

Payments or other transfers of value.—
(A)

In general.—
On March 31, 2013, and on the 90th day of each calendar year beginning thereafter, any applicable manufacturer that provides a payment or other transfer of value to a covered recipient (or to an entity or individual at the request of or designated on behalf of a covered recipient), shall submit to the Secretary, in such electronic form as the Secretary shall require, the following information with respect to the preceding calendar year:
(i)
The name of the covered recipient.
(ii)
The business address of the covered recipient and, in the case of a covered recipient who is a physician, the specialty and National Provider Identifier of the covered recipient.
(iii)
The amount of the payment or other transfer of value.
(iv)
The dates on which the payment or other transfer of value was provided to the covered recipient.
(v)
A description of the form of the payment or other transfer of value, indicated (as appropriate for all that apply) as—
(I)
cash or a cash equivalent;
(II)
in-kind items or services;
(III)
stock, a stock option, or any other ownership interest, dividend, profit, or other return on investment; or
(IV)
any other form of payment or other transfer of value (as defined by the Secretary).
(vi)
A description of the nature of the payment or other transfer of value, indicated (as appropriate for all that apply) as—
(I)
consulting fees;
(II)
compensation for services other than consulting;
(III)
honoraria;
(IV)
gift;
(V)
entertainment;
(VI)
food;
(VII)
travel (including the specified destinations);
(VIII)
education;
(IX)
research;
(X)
charitable contribution;
(XI)
royalty or license;
(XII)
current or prospective ownership or investment interest;
(XIII)
direct compensation for serving as faculty or as a speaker for a medical education program;
(XIV)
grant; or
(XV)
any other nature of the payment or other transfer of value (as defined by the Secretary).
(vii)
If the payment or other transfer of value is related to marketing, education, or research specific to a covered drug, device, biological, or medical supply, the name of that covered drug, device, biological, or medical supply.
(viii)
Any other categories of information regarding the payment or other transfer of value the Secretary determines appropriate.
(B)

Special rule for certain payments or other transfers of value.—
In the case where an applicable manufacturer provides a payment or other transfer of value to an entity or individual at the request of or designated on behalf of a covered recipient, the applicable manufacturer shall disclose that payment or other transfer of value under the name of the covered recipient.
(2)

Physician ownership.—
In addition to the requirement under paragraph (1)(A), on March 31, 2013, and on the 90th day of each calendar year beginning thereafter, any applicable manufacturer or applicable group purchasing organization shall submit to the Secretary, in such electronic form as the Secretary shall require, the following information regarding any ownership or investment interest (other than an ownership or investment interest in a publicly traded security and mutual fund, as described in section 1877(c)) held by a physician (or an immediate family member of such physician (as defined for purposes of section 1877(a))) in the applicable manufacturer or applicable group purchasing organization during the preceding year:
(A)
The dollar amount invested by each physician holding such an ownership or investment interest.
(B)
The value and terms of each such ownership or investment interest.
(C)
Any payment or other transfer of value provided to a physician holding such an ownership or investment interest (or to an entity or individual at the request of or designated on behalf of a physician holding such an ownership or investment interest), including the information described in clauses (i) through (viii) of paragraph (1)(A), except that in applying such clauses, “physician” shall be substituted for “covered recipient” each place it appears.
(D)
Any other information regarding the ownership or investment interest the Secretary determines appropriate.
(b)

Penalties for Noncompliance.—
(1)

Failure to report.—
(A)

In general.—
Subject to subparagraph (B) except as provided in paragraph (2), any applicable manufacturer or applicable group purchasing organization that fails to submit information required under subsection (a) in a timely manner in accordance with rules or regulations promulgated to carry out such subsection, shall be subject to a civil money penalty of not less than $1,000, but not more than $10,000, for each payment or other transfer of value or ownership or investment interest not reported as required under such subsection. Such penalty shall be imposed and collected in the same manner as civil money penalties under subsection (a) of section 1128A are imposed and collected under that section.
(B)

Limitation.—
The total amount of civil money penalties imposed under subparagraph (A) with respect to each annual submission of information under subsection (a) by an applicable manufacturer or applicable group purchasing organization shall not exceed $150,000.
(2)

Knowing failure to report.—
(A)

In general.—
Subject to subparagraph (B), any applicable manufacturer or applicable group purchasing organization that knowingly fails to submit information required under subsection (a) in a timely manner in accordance with rules or regulations promulgated to carry out such subsection, shall be subject to a civil money penalty of not less than $10,000, but not more than $100,000, for each payment or other transfer of value or ownership or investment interest not reported as required under such subsection. Such penalty shall be imposed and collected in the same manner as civil money penalties under subsection (a) of section 1128A are imposed and collected under that section.
(B)

Limitation.—
The total amount of civil money penalties imposed under subparagraph (A) with respect to each annual submission of information under subsection (a) by an applicable manufacturer or applicable group purchasing organization shall not exceed $1,000,000.
(3)

Use of funds.—
Funds collected by the Secretary as a result of the imposition of a civil money penalty under this subsection shall be used to carry out this section.
(c)

Procedures for Submission of Information and Public Availability.—
(1)

In general.—
(A)

Establishment.—
Not later than October 1, 2011, the Secretary shall establish procedures—
(i)
for applicable manufacturers and applicable group purchasing organizations to submit information to the Secretary under subsection (a); and
(ii)
for the Secretary to make such information submitted available to the public.
(B)

Definition of terms.—
The procedures established under subparagraph (A) shall provide for the definition of terms (other than those terms defined in subsection (e)), as appropriate, for purposes of this section.
(C)

Public availability.—
Except as provided in subparagraph (E), the procedures established under subparagraph (A)(ii) shall ensure that, not later than September 30, 2013, and on June 30 of each calendar year beginning thereafter, the information submitted under subsection (a) with respect to the preceding calendar year is made available through an Internet website that—
(i)
is searchable and is in a format that is clear and understandable;
(ii)
contains information that is presented by the name of the applicable manufacturer or applicable group purchasing organization, the name of the covered recipient, the business address of the covered recipient, the specialty of the covered recipient, the value of the payment or other transfer of value, the date on which the payment or other transfer of value was provided to the covered recipient, the form of the payment or other transfer of value, indicated (as appropriate) under subsection (a)(1)(A)(v), the nature of the payment or other transfer of value, indicated (as appropriate) under subsection (a)(1)(A)(vi), and the name of the covered drug, device, biological, or medical supply, as applicable;
(iii)
contains information that is able to be easily aggregated and downloaded;
(iv)
contains a description of any enforcement actions taken to carry out this section, including any penalties imposed under subsection (b), during the preceding year;
(v)
contains background information on industry-physician relationships;
(vi)
in the case of information submitted with respect to a payment or other transfer of value described in subparagraph (E)(i), lists such information separately from the other information submitted under subsection (a) and designates such separately listed information as funding for clinical research;
(vii)
contains any other information the Secretary determines would be helpful to the average consumer;
(viii)
in the case of information made available under this subparagraph prior to January 1, 2022, does not contain the National Provider Identifier of the covered recipient, and
(ix)
subject to subparagraph (D), provides the applicable manufacturer, applicable group purchasing organization, or covered recipient an opportunity to review and submit corrections to the information submitted with respect to the applicable manufacturer, applicable group purchasing organization, or covered recipient, respectively, for a period of not less than 45 days prior to such information being made available to the public.
(D)

Clarification of time period for review and corrections.—
In no case may the 45-day period for review and submission of corrections to information under subparagraph (C)(ix) prevent such information from being made available to the public in accordance with the dates described in the matter preceding clause (i) in subparagraph (C).
(E)

Delayed publication for payments made pursuant to product research or development agreements and clinical investigations.—
(i)

In general.—
In the case of information submitted under subsection (a) with respect to a payment or other transfer of value made to a covered recipient by an applicable manufacturer pursuant to a product research or development agreement for services furnished in connection with research on a potential new medical technology or a new application of an existing medical technology or the development of a new drug, device, biological, or medical supply, or by an applicable manufacturer in connection with a clinical investigation regarding a new drug, device, biological, or medical supply, the procedures established under subparagraph (A)(ii) shall provide that such information is made available to the public on the first date described in the matter preceding clause (i) in subparagraph (C) after the earlier of the following:
(I)
The date of the approval or clearance of the covered drug, device, biological, or medical supply by the Food and Drug Administration.
(II)
Four calendar years after the date such payment or other transfer of value was made.
(ii)

Confidentiality of information prior to publication.—
Information described in clause (i) shall be considered confidential and shall not be subject to disclosure under section 552 of title 5, United States Code, or any other similar Federal, State, or local law, until on or after the date on which the information is made available to the public under such clause.
(2)

Consultation.—
In establishing the procedures under paragraph (1), the Secretary shall consult with the Inspector General of the Department of Health and Human Services, affected industry, consumers, consumer advocates, and other interested parties in order to ensure that the information made available to the public under such paragraph is presented in the appropriate overall context.
(d)

Annual Reports and Relation to State Laws.—
(1)

Annual report to congress.—
Not later than April 1 of each year beginning with 2013, the Secretary shall submit to Congress a report that includes the following:
(A)
The information submitted under subsection (a) during the preceding year, aggregated for each applicable manufacturer and applicable group purchasing organization that submitted such information during such year (except, in the case of information submitted with respect to a payment or other transfer of value described in subsection (c)(1)(E)(i), such information shall be included in the first report submitted to Congress after the date on which such information is made available to the public under such subsection).
(B)
A description of any enforcement actions taken to carry out this section, including any penalties imposed under subsection (b), during the preceding year.
(2)

Annual reports to states.—
Not later than September 30, 2013 and on June 30 of each calendar year thereafter, the Secretary shall submit to States a report that includes a summary of the information submitted under subsection (a) during the preceding year with respect to covered recipients in the State (except, in the case of information submitted with respect to a payment or other transfer of value described in subsection (c)(1)(E)(i), such information shall be included in the first report submitted to States after the date on which such information is made available to the public under such subsection).
(3)

Relation to state laws.—
(A)

In general.—
In the case of a payment or other transfer of value provided by an applicable manufacturer that is received by a covered recipient (as defined in subsection (e)) on or after January 1, 2012, subject to subparagraph (B), the provisions of this section shall preempt any statute or regulation of a State or of a political subdivision of a State that requires an applicable manufacturer (as so defined) to disclose or report, in any format, the type of information (as described in subsection (a)) regarding such payment or other transfer of value.
(B)

No preemption of additional requirements.—
Subparagraph (A) shall not preempt any statute or regulation of a State or of a political subdivision of a State that requires the disclosure or reporting of information—
(i)
not of the type required to be disclosed or reported under this section;
(ii)
described in subsection (e)(10)(B), except in the case of information described in clause (i) of such subsection;
(iii)
by any person or entity other than an applicable manufacturer (as so defined) or a covered recipient (as defined in subsection (e)); or
(iv)
to a Federal, State, or local governmental agency for public health surveillance, investigation, or other public health purposes or health oversight purposes.
(C)
Nothing in subparagraph (A) shall be construed to limit the discovery or admissibility of information described in such subparagraph in a criminal, civil, or administrative proceeding.
(4)

Consultation.—
The Secretary shall consult with the Inspector General of the Department of Health and Human Services on the implementation of this section.
(e)

Definitions.—
In this section:
(1)

Applicable group purchasing organization.—
The term “applicable group purchasing organization” means a group purchasing organization (as defined by the Secretary) that purchases, arranges for, or negotiates the purchase of a covered drug, device, biological, or medical supply which is operating in the United States, or in a territory, possession, or commonwealth of the United States.
(2)

Applicable manufacturer.—
The term “applicable manufacturer” means a manufacturer of a covered drug, device, biological, or medical supply which is operating in the United States, or in a territory, possession, or commonwealth of the United States.
(3)

Clinical investigation.—
The term “clinical investigation” means any experiment involving 1 or more human subjects, or materials derived from human subjects, in which a drug or device is administered, dispensed, or used.
(4)

Covered device.—
The term “covered device” means any device for which payment is available under title XVIII or a State plan under title XIX or XXI (or a waiver of such a plan).
(5)

Covered drug, device, biological, or medical supply.—
The term “covered drug, device, biological, or medical supply” means any drug, biological product, device, or medical supply for which payment is available under title XVIII or a State plan under title XIX or XXI (or a waiver of such a plan).
(6)

Covered recipient.—
(A)

In general.—
Except as provided in subparagraph (B), the term “covered recipient” means the following:
(i)
A physician.
(ii)
A teaching hospital.
(iii)
A physician assistant, nurse practitioner, or clinical nurse specialist (as such terms are defined in section 1861(aa)(5)).
(iv)
A certified registered nurse anesthetist (as defined in section 1861(bb)(2)).
(v)
A certified nurse-midwife (as defined in section 1861(gg)(2)).
(B)

Exclusion.—
Such term does not include a physician, physician assistant, nurse practitioner, clinical nurse specialist, certified nurse anesthetist, or certified nurse-midwife who is an employee of the applicable manufacturer that is required to submit information under subsection (a).
(7)

Employee.—
The term “employee” has the meaning given such term in section 1877(h)(2).
(8)

Knowingly.—
The term “knowingly” has the meaning given such term in section 3729(b) of title 31, United States Code.
(9)

Manufacturer of a covered drug, device, biological, or medical supply.—
The term “manufacturer of a covered drug, device, biological, or medical supply” means any entity which is engaged in the production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply (or any entity under common ownership with such entity which provides assistance or support to such entity with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered drug, device, biological, or medical supply).
(10)

Payment or other transfer of value.—
(A)

In general.—
The term “payment or other transfer of value” means a transfer of anything of value. Such term does not include a transfer of anything of value that is made indirectly to a covered recipient through a third party in connection with an activity or service in the case where the applicable manufacturer is unaware of the identity of the covered recipient.
(B)

Exclusions.—
An applicable manufacturer shall not be required to submit information under subsection (a) with respect to the following:
(i)
A transfer of anything the value of which is less than $10, unless the aggregate amount transferred to, requested by, or designated on behalf of the covered recipient by the applicable manufacturer during the calendar year exceeds $100. For calendar years after 2012, the dollar amounts specified in the preceding sentence shall be increased by the same percentage as the percentage increase in the consumer price index for all urban consumers (all items; U.S. city average) for the 12-month period ending with June of the previous year.
(ii)
Product samples that are not intended to be sold and are intended for patient use.
(iii)
Educational materials that directly benefit patients or are intended for patient use.
(iv)
The loan of a covered device for a short-term trial period, not to exceed 90 days, to permit evaluation of the covered device by the covered recipient.
(v)
Items or services provided under a contractual warranty, including the replacement of a covered device, where the terms of the warranty are set forth in the purchase or lease agreement for the covered device.
(vi)
A transfer of anything of value to a covered recipient when the covered recipient is a patient and not acting in the professional capacity of a covered recipient.
(vii)
Discounts (including rebates).
(viii)
In-kind items used for the provision of charity care.
(ix)
A dividend or other profit distribution from, or ownership or investment interest in, a publicly traded security and mutual fund (as described in section 1877(c)).
(x)
In the case of an applicable manufacturer who offers a self-insured plan, payments for the provision of health care to employees under the plan.
(xi)
In the case of a covered recipient who is a licensed non-medical professional, a transfer of anything of value to the covered recipient if the transfer is payment solely for the non-medical professional services of such licensed non-medical professional.
(xii)
In the case of a covered recipient who is a physician, a transfer of anything of value to the covered recipient if the transfer is payment solely for the services of the covered recipient with respect to a civil or criminal action or an administrative proceeding.
(11)

Physician.—
The term “physician” has the meaning given that term in section 1861(r).
SEC. 1128H.
[42 U.S.C. 1320a–7i]

REPORTING OF INFORMATION RELATING TO DRUG SAMPLES.
(a)

In General.—
Not later than April 1 of each year (beginning with 2012), each manufacturer and authorized distributor of record of an applicable drug shall submit to the Secretary (in a form and manner specified by the Secretary) the following information with respect to the preceding year:
(1)
In the case of a manufacturer or authorized distributor of record which makes distributions by mail or common carrier under subsection (d)(2) of section 503 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 353), the identity and quantity of drug samples requested and the identity and quantity of drug samples distributed under such subsection during that year, aggregated by—
(A)
the name, address, professional designation, and signature of the practitioner making the request under subparagraph (A)(i) of such subsection, or of any individual who makes or signs for the request on behalf of the practitioner; and
(B)
any other category of information determined appropriate by the Secretary.
(2)
In the case of a manufacturer or authorized distributor of record which makes distributions by means other than mail or common carrier under subsection (d)(3) of such section 503, the identity and quantity of drug samples requested and the identity and quantity of drug samples distributed under such subsection during that year, aggregated by—
(A)
the name, address, professional designation, and signature of the practitioner making the request under subparagraph (A)(i) of such subsection, or of any individual who makes or signs for the request on behalf of the practitioner; and
(B)
any other category of information determined appropriate by the Secretary.
(b)

Definitions.—
In this section:
(1)

Applicable drug.—
The term “applicable drug” means a drug—
(A)
which is subject to subsection (b) of such section 503; and
(B)
for which payment is available under title XVIII or a State plan under title XIX or XXI (or a waiver of such a plan).
(2)

Authorized distributor of record.—
The term “authorized distributor of record” has the meaning given that term in subsection (e)(3)(A) of such section.
(3)

Manufacturer.—
The term “manufacturer” has the meaning given that term for purposes of subsection (d) of such section.
SEC. 1128I.
[42 U.S.C. 1320a–7j]

ACCOUNTABILITY REQUIREMENTS FOR FACILITIES.
(a)

Definition of Facility.—
In this section, the term “facility” means—
(1)
a skilled nursing facility (as defined in section 1819(a)); or
(2)
a nursing facility (as defined in section 1919(a)).
(b)

Effective Compliance and Ethics Programs.—
(1)

Requirement.—
On or after the date that is 36 months after the date of the enactment of this section, a facility shall, with respect to the entity that operates the facility (in this subparagraph referred to as the “operating organization” or “organization”), have in operation a compliance and ethics program that is effective in preventing and detecting criminal, civil, and administrative violations under this Act and in promoting quality of care consistent with regulations developed under paragraph (2).
(2)

Development of regulations.—
(A)

In general.—
Not later than the date that is 2 years after such date of the enactment, the Secretary, working jointly with the Inspector General of the Department of Health and Human Services, shall promulgate regulations for an effective compliance and ethics program for operating organizations, which may include a model compliance program.
(B)

Design of regulations.—
Such regulations with respect to specific elements or formality of a program shall, in the case of an organization that operates 5 or more facilities, vary with the size of the organization, such that larger organizations should have a more formal program and include established written policies defining the standards and procedures to be followed by its employees. Such requirements may specifically apply to the corporate level management of multi unit nursing home chains.
(C)

Evaluation.—
Not later than 3 years after the date of the promulgation of regulations under this paragraph, the Secretary shall complete an evaluation of the compliance and ethics programs required to be established under this subsection. Such evaluation shall determine if such programs led to changes in deficiency citations, changes in quality performance, or changes in other metrics of patient quality of care. The Secretary shall submit to Congress a report on such evaluation and shall include in such report such recommendations regarding changes in the requirements for such programs as the Secretary determines appropriate.
(3)

Requirements for compliance and ethics programs.—
In this subsection, the term “compliance and ethics program” means, with respect to a facility, a program of the operating organization that—
(A)
has been reasonably designed, implemented, and enforced so that it generally will be effective in preventing and detecting criminal, civil, and administrative violations under this Act and in promoting quality of care; and
(B)
includes at least the required components specified in paragraph (4).
(4)

Required components of program.—
The required components of a compliance and ethics program of an operating organization are the following:
(A)
The organization must have established compliance standards and procedures to be followed by its employees and other agents that are reasonably capable of reducing the prospect of criminal, civil, and administrative violations under this Act.
(B)
Specific individuals within high-level personnel of the organization must have been assigned overall responsibility to oversee compliance with such standards and procedures and have sufficient resources and authority to assure such compliance.
(C)
The organization must have used due care not to delegate substantial discretionary authority to individuals whom the organization knew, or should have known through the exercise of due diligence, had a propensity to engage in criminal, civil, and administrative violations under this Act.
(D)
The organization must have taken steps to communicate effectively its standards and procedures to all employees and other agents, such as by requiring participation in training programs or by disseminating publications that explain in a practical manner what is required.
(E)
The organization must have taken reasonable steps to achieve compliance with its standards, such as by utilizing monitoring and auditing systems reasonably designed to detect criminal, civil, and administrative violations under this Act by its employees and other agents and by having in place and publicizing a reporting system whereby employees and other agents could report violations by others within the organization without fear of retribution.
(F)
The standards must have been consistently enforced through appropriate disciplinary mechanisms, including, as appropriate, discipline of individuals responsible for the failure to detect an offense.
(G)
After an offense has been detected, the organization must have taken all reasonable steps to respond appropriately to the offense and to prevent further similar offenses, including any necessary modification to its program to prevent and detect criminal, civil, and administrative violations under this Act.
(H)
The organization must periodically undertake reassessment of its compliance program to identify changes necessary to reflect changes within the organization and its facilities.
(c)

Quality Assurance and Performance Improvement Program.—
(1)

In general.—
Not later than December 31, 2011, the Secretary shall establish and implement a quality assurance and performance improvement program (in this subparagraph referred to as the “QAPI program”) for facilities, including multi unit chains of facilities. Under the QAPI program, the Secretary shall establish standards relating to quality assurance and performance improvement with respect to facilities and provide technical assistance to facilities on the development of best practices in order to meet such standards. Not later than 1 year after the date on which the regulations are promulgated under paragraph (2), a facility must submit to the Secretary a plan for the facility to meet such standards and implement such best practices, including how to coordinate the implementation of such plan with quality assessment and assurance activities conducted under sections 1819(b)(1)(B) and 1919(b)(1)(B), as applicable.
(2)

Regulations.—
The Secretary shall promulgate regulations to carry out this subsection.
(f)

Standardized Complaint Form.—
(1)

Development by the secretary.—
The Secretary shall develop a standardized complaint form for use by a resident (or a person acting on the resident's behalf) in filing a complaint with a State survey and certification agency and a State long-term care ombudsman program with respect to a facility.
(2)

Complaint forms and resolution processes.—
(A)

Complaint forms.—
The State must make the standardized complaint form developed under paragraph (1) available upon request to—
(i)
a resident of a facility; and
(ii)
any person acting on the resident's behalf.
(B)

Complaint resolution process.—
The State must establish a complaint resolution process in order to ensure that the legal representative of a resident of a facility or other responsible party is not denied access to such resident or otherwise retaliated against if they have complained about the quality of care provided by the facility or other issues relating to the facility. Such complaint resolution process shall include—
(i)
procedures to assure accurate tracking of complaints received, including notification to the complainant that a complaint has been received;
(ii)
procedures to determine the likely severity of a complaint and for the investigation of the complaint; and
(iii)
deadlines for responding to a complaint and for notifying the complainant of the outcome of the investigation.
(3)

Rule of construction.—
Nothing in this subsection shall be construed as preventing a resident of a facility (or a person acting on the resident's behalf) from submitting a complaint in a manner or format other than by using the standardized complaint form developed under paragraph (1) (including submitting a complaint orally).
(g)

Submission of Staffing Information Based on Payroll Data in a Uniform Format.—
Beginning not later than 2 years after the date of the enactment of this subsection, and after consulting with State long-term care ombudsman programs, consumer advocacy groups, provider stakeholder groups, employees and their representatives, and other parties the Secretary deems appropriate, the Secretary shall require a facility to electronically submit to the Secretary direct care staffing information (including information with respect to agency and contract staff) based on payroll and other verifiable and auditable data in a uniform format (according to specifications established by the Secretary in consultation with such programs, groups, and parties). Such specifications shall require that the information submitted under the preceding sentence—
(1)
specify the category of work a certified employee performs (such as whether the employee is a registered nurse, licensed practical nurse, licensed vocational nurse, certified nursing assistant, therapist, or other medical personnel);
(2)
include resident census data and information on resident case mix;
(3)
include a regular reporting schedule; and
(4)
include information on employee turnover and tenure and on the hours of care provided by each category of certified employees referenced in paragraph (1) per resident per day.
Nothing in this subsection shall be construed as preventing the Secretary from requiring submission of such information with respect to specific categories, such as nursing staff, before other categories of certified employees. Information under this subsection with respect to agency and contract staff shall be kept separate from information on employee staffing.
(h)

Notification of Facility Closure.—
(1)

In general.—
Any individual who is the administrator of a facility must—
(A)
submit to the Secretary, the State long-term care ombudsman, residents of the facility, and the legal representatives of such residents or other responsible parties, written notification of an impending closure—
(i)
subject to clause (ii), not later than the date that is 60 days prior to the date of such closure; and
(ii)
in the case of a facility where the Secretary terminates the facility's participation under this title, not later than the date that the Secretary determines appropriate;
(B)
ensure that the facility does not admit any new residents on or after the date on which such written notification is submitted; and
(C)
include in the notice a plan for the transfer and adequate relocation of the residents of the facility by a specified date prior to closure that has been approved by the State, including assurances that the residents will be transferred to the most appropriate facility or other setting in terms of quality, services, and location, taking into consideration the needs, choice, and best interests of each resident.
(2)

Relocation.—
(A)

In general.—
The State shall ensure that, before a facility closes, all residents of the facility have been successfully relocated to another facility or an alternative home and community-based setting.
(B)

Continuation of payments until residents relocated.—
The Secretary may, as the Secretary determines appropriate, continue to make payments under this title with respect to residents of a facility that has submitted a notification under paragraph (1) during the period beginning on the date such notification is submitted and ending on the date on which the resident is successfully relocated.
(3)

Sanctions.—
Any individual who is the administrator of a facility that fails to comply with the requirements of paragraph (1)—
(A)
shall be subject to a civil monetary penalty of up to $100,000;
(B)
may be subject to exclusion from participation in any Federal health care program (as defined in section 1128B(f)); and
(C)
shall be subject to any other penalties that may be prescribed by law.
(4)

Procedure.—
The provisions of section 1128A (other than subsections (a) and (b) and the second sentence of subsection (f)) shall apply to a civil money penalty or exclusion under paragraph (3) in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
SEC. 1128J.
[42 U.S.C. 1320a–7k]

MEDICARE AND MEDICAID PROGRAM INTEGRITY PROVISIONS.
(a)

Data Matching.—
(1)

Integrated data repository.—
(A)

Inclusion of certain data.—
(i)

In general.—
The Integrated Data Repository of the Centers for Medicare & Medicaid Services shall include, at a minimum, claims and payment data from the following:
(I)
The programs under titles XVIII and XIX (including parts A, B, C, and D of title XVIII).
(II)
The program under title XXI.
(III)
Health-related programs administered by the Secretary of Veterans Affairs.
(IV)
Health-related programs administered by the Secretary of Defense.
(V)
The program of old-age, survivors, and disability insurance benefits established under title II.
(VI)
The Indian Health Service and the Contract Health Service program.
(ii)

Priority for inclusion of certain data.—
Inclusion of the data described in subclause (I) of such clause in the Integrated Data Repository shall be a priority. Data described in subclauses (II) through (VI) of such clause shall be included in the Integrated Data Repository as appropriate.
(B)

Data sharing and matching.—
(i)

In general.—
The Secretary shall enter into agreements with the individuals described in clause (ii) under which such individuals share and match data in the system of records of the respective agencies of such individuals with data in the system of records of the Department of Health and Human Services for the purpose of identifying potential fraud, waste, and abuse under the programs under titles XVIII and XIX.
(ii)

Individuals described.—
The following individuals are described in this clause:
(I)
The Commissioner of Social Security.
(II)
The Secretary of Veterans Affairs.
(III)
The Secretary of Defense.
(IV)
The Director of the Indian Health Service.
(iii)

Definition of system of records.—
For purposes of this paragraph, the term “system of records” has the meaning given such term in section 552a(a)(5) of title 5, United States Code.
(2)

Access to claims and payment databases.—
For purposes of conducting law enforcement and oversight activities and to the extent consistent with applicable information, privacy, security, and disclosure laws, including the regulations promulgated under the Health Insurance Portability and Accountability Act of 1996 and section 552a of title 5, United States Code, and subject to any information systems security requirements under such laws or otherwise required by the Secretary, the Inspector General of the Department of Health and Human Services and the Attorney General shall have access to claims and payment data of the Department of Health and Human Services and its contractors related to titles XVIII, XIX, and XXI.
(b)

OIG Authority To Obtain Information.—
(1)

In general.—
Notwithstanding and in addition to any other provision of law, the Inspector General of the Department of Health and Human Services may, for purposes of protecting the integrity of the programs under titles XVIII and XIX, obtain information from any individual (including a beneficiary provided all applicable privacy protections are followed) or entity that—
(A)
is a provider of medical or other items or services, supplier, grant recipient, contractor, or subcontractor; or
(B)
directly or indirectly provides, orders, manufactures, distributes, arranges for, prescribes, supplies, or receives medical or other items or services payable by any Federal health care program (as defined in section 1128B(f)) regardless of how the item or service is paid for, or to whom such payment is made.
(2)

Inclusion of certain information.—
Information which the Inspector General may obtain under paragraph (1) includes any supporting documentation necessary to validate claims for payment or payments under title XVIII or XIX, including a prescribing physician's medical records for an individual who is prescribed an item or service which is covered under part B of title XVIII, a covered part D drug (as defined in section 1860D–2(e)) for which payment is made under an MA–PD plan under part C of such title, or a prescription drug plan under part D of such title, and any records necessary for evaluation of the economy, efficiency, and effectiveness of the programs under titles XVIII and XIX.
(c)

Administrative Remedy for Knowing Participation by Beneficiary in Health Care Fraud Scheme.—
(1)

In general.—
In addition to any other applicable remedies, if an applicable individual has knowingly participated in a Federal health care fraud offense or a conspiracy to commit a Federal health care fraud offense, the Secretary shall impose an appropriate administrative penalty commensurate with the offense or conspiracy.
(2)

Applicable individual.—
For purposes of paragraph (1), the term “applicable individual” means an individual—
(A)
entitled to, or enrolled for, benefits under part A of title XVIII or enrolled under part B of such title;
(B)
eligible for medical assistance under a State plan under title XIX or under a waiver of such plan; or
(C)
eligible for child health assistance under a child health plan under title XXI.
(d)

Reporting and Returning of Overpayments.—
(1)

In general.—
If a person has received an overpayment, the person shall—
(A)
report and return the overpayment to the Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, at the correct address; and
(B)
notify the Secretary, State, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment.
(2)

Deadline for reporting and returning overpayments.—
An overpayment must be reported and returned under paragraph (1) by the later of—
(A)
the date which is 60 days after the date on which the overpayment was identified; or
(B)
the date any corresponding cost report is due, if applicable.
(3)

Enforcement.—
Any overpayment retained by a person after the deadline for reporting and returning the overpayment under paragraph (2) is an obligation (as defined in section 3729(b)(3) of title 31, United States Code) for purposes of section 3729 of such title.
(4)

Definitions.—
In this subsection:
(A)

Knowing and knowingly.—
The terms “knowing” and “knowingly” have the meaning given those terms in section 3729(b) of title 31, United States Code.
(B)

Overpayment.—
The term ```overpayment'''17 means any funds that a person receives or retains under title XVIII or XIX to which the person, after applicable reconciliation, is not entitled under such title.
^{17}
So in law.
(C)

Person.—
(i)

In general.—
The term “person” means a provider of services, supplier, medicaid managed care organization (as defined in section 1903(m)(1)(A)), Medicare Advantage organization (as defined in section 1859(a)(1)), or PDP sponsor (as defined in section 1860D–41(a)(13)).
(ii)

Exclusion.—
Such term does not include a beneficiary.
(e)

Inclusion of National Provider Identifier on All Applications and Claims.—
The Secretary shall promulgate a regulation that requires, not later than January 1, 2011, all providers of medical or other items or services and suppliers under the programs under titles XVIII and XIX that qualify for a national provider identifier to include their national provider identifier on all applications to enroll in such programs and on all claims for payment submitted under such programs.
SEC. 1128K.
[42 U.S.C. 1320a–7n]

DISCLOSURE OF PREDICTIVE MODELING AND OTHER ANALYTICS TECHNOLOGIES TO IDENTIFY AND PREVENT WASTE, FRAUD, AND ABUSE.
(a)

Reference to Predictive Modeling Technologies Requirements.—
For provisions relating to the use of predictive modeling and other analytics technologies to identify and prevent waste, fraud, and abuse with respect to the Medicare program under title XVIII, the Medicaid program under title XIX, and the Children’s Health Insurance Program under title XXI, see section 4241 of the Small Business Jobs Act of 2010 (42 U.S.C. 1320a–7m).
(b)

Limiting Disclosure of Predictive Modeling Technologies.—
In implementing such provisions under such section 4241 with respect to covered algorithms (as defined in subsection (c)), the following shall apply:
(1)

Nonapplication of foia.—
The covered algorithms used or developed for purposes of such section 4241 (including by the Secretary or a State (or an entity operating under a contract with a State)) shall be exempt from disclosure under section 552(b)(3) of title 5, United States Code.
(2)

Limitation with respect to use and disclosure of information by state agencies.—
(A)

In general.—
A State agency may not use or disclose covered algorithms used or developed for purposes of such section 4241 except for purposes of administering the State plan (or a waiver of the plan) under the Medicaid program under title XIX or the State child health plan (or a waiver of the plan) under the Children’s Health Insurance Program under title XXI, including by enabling an entity operating under a contract with a State to assist the State to identify or prevent waste, fraud, and abuse with respect to such programs.
(B)

Information security.—
A State agency shall have in effect data security and control policies that the Secretary finds adequate to ensure the security of covered algorithms used or developed for purposes of such section 4241 and to ensure that access to such information is restricted to authorized persons for purposes of authorized uses and disclosures described in subparagraph (A).
(C)

Procedural requirements.—
State agencies to which information is disclosed pursuant to such section 4241 shall adhere to uniform procedures established by the Secretary.
(c)

Covered Algorithm Defined.—
In this section, the term “covered algorithm”—
(1)
means a predictive modeling or other analytics technology, as used for purposes of section 4241(a) of the Small Business Jobs Act of 2010 (42 U.S.C. 1320a–7m(a)) to identify and prevent waste, fraud, and abuse with respect to the Medicare program under title XVIII, the Medicaid program under title XIX, and the Children’s Health Insurance Program under title XXI; and
(2)
includes the mathematical expressions utilized in the application of such technology and the means by which such technology is developed.
SEC. 1129.
[42 U.S.C. 1320a–8]

CIVIL MONETARY PENALTIES AND ASSESSMENTS FOR TITLES II, VIII AND XVI.
(a)
(1)
Any person (including an organization, agency, or other entity) who—
(A)
makes, or causes to be made, a statement or representation of a material fact, for use in determining any initial or continuing right to or the amount of monthly insurance benefits under title II or benefits or payments under title VIII or XVI, that the person knows or should know is false or misleading,
(B)
makes such a statement or representation for such use with knowing disregard for the truth, or
(C)
omits from a statement or representation for such use, or otherwise withholds disclosure of, a fact which the person knows or should know is material to the determination of any initial or continuing right to or the amount of monthly insurance benefits under title II or benefits or payments under title VIII or XVI, if the person knows, or should know, that the statement or representation with such omission is false or misleading or that the withholding of such disclosure is misleading,
shall be subject to, in addition to any other penalties that may be prescribed by law, a civil money penalty of not more than $5,000 for each such statement or representation or each receipt of such benefits or payments while withholding disclosure of such fact, except that in the case of such a person who receives a fee or other income for services performed in connection with any such determination (including a claimant representative, translator, or current or former employee of the Social Security Administration) or who is a physician or other health care provider who submits, or causes the submission of, medical or other evidence in connection with any such determination, the amount of such penalty shall be not more than $7,500. Such person also shall be subject to an assessment, in lieu of damages sustained by the United States because of such statement or representation or because of such withholding of disclosure of a material fact, of not more than twice the amount of benefits or payments paid as a result of such a statement or representation or such a withholding of disclosure. In addition, the Commissioner of Social Security may make a determination in the same proceeding to recommend that the Secretary exclude, as provided in section 1128, such a person who is a medical provider or physician from participation in the programs under title XVIII.
(2)
For purposes of this section, a material fact is one which the Commissioner of Social Security may consider in evaluating whether an applicant is entitled to benefits under title II or title VIII, or eligible for benefits or payments under title XVI.
(3)
Any person (including an organization, agency, or other entity) who, having received, while acting in the capacity of a representative payee pursuant to section 205(j), 807, or 1631(a)(2), a payment under title II, VIII, or XVI for the use and benefit of another individual, converts such payment, or any part thereof, to a use that such person knows or should know is other than for the use and benefit of such other individual shall be subject to, in addition to any other penalties that may be prescribed by law, a civil money penalty of not more than $5,000 for each such conversion. Such person shall also be subject to an assessment, in lieu of damages sustained by the United States resulting from the conversion, of not more than twice the amount of any payments so converted.
(b)
(1)
The Commissioner of Social Security may initiate a proceeding to determine whether to impose a civil money penalty or assessment, or whether to recommend exclusion under subsection (a) only as authorized by the Attorney General pursuant to procedures agreed upon by the Commissioner of Social Security and the Attorney General. The Commissioner of Social Security may not initiate an action under this section with respect to any violation described in subsection (a) later than 6 years after the date the violation was committed. The Commissioner of Social Security may initiate an action under this section by serving notice of the action in any manner authorized by Rule 4 of the Federal Rules of Civil Procedure.
(2)
The Commissioner of Social Security shall not make a determination adverse to any person under this section until the person has been given written notice and an opportunity for the determination to be made on the record after a hearing at which the person is entitled to be represented by counsel, to present witnesses, and to cross-examine witnesses against the person.
(3)
In a proceeding under this section which—
(A)
is against a person who has been convicted (whether upon a verdict after trial or upon a plea of guilty or nolo contendere) of a Federal or State crime; and
(B)
involves the same transaction as in the criminal action; the person is estopped from denying the essential elements of the criminal offense.
(4)
The official conducting a hearing under this section may sanction a person, including any party or attorney, for failing to comply with an order or procedure, for failing to defend an action, or for such other misconduct as would interfere with the speedy, orderly, or fair conduct of the hearing. Such sanction shall reasonably relate to the severity and nature of the failure or misconduct. Such sanction may include—
(A)
in the case of refusal to provide or permit discovery, drawing negative factual inference or treating such refusal as an admission by deeming the matter, or certain facts, to be established;
(B)
prohibiting a party from introducing certain evidence or otherwise supporting a particular claim or defense;
(C)
striking pleadings, in whole or in part;
(D)
staying the proceedings;
(E)
dismissal of the action;
(F)
entering a default judgment;
(G)
ordering the party or attorney to pay attorney's fees and other costs caused by the failure or misconduct; and
(H)
refusing to consider any motion or other action which is not filed in a timely manner.
(c)
In determining pursuant to subsection (a) the amount or scope of any penalty or assessment, or whether to recommend and exclusion, the Commissioner of Social Security shall take into account—
(1)
the nature of the statements, representations, or actions referred to in subsection (a) and the circumstances under which they occurred;
(2)
the degree of culpability, history of prior offenses, and financial condition of the person committing the offense; and
(3)
such other matters as justice may require.
(d)
(1)
Any person adversely affected by a determination of the Commissioner of Social Security under this section may obtain a review of such determination in the United States Court of Appeals for the circuit in which the person resides, or in which the statement or representation referred to in subsection (a) was made, by filing in such court (within 60 days following the date the person is notified of the Secretary's determination) a written petition requesting that the determination be modified or set aside. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Commissioner of Social Security, and thereupon the Commissioner of Social Security shall file in the court the record in the proceeding as provided in section 2112 of title 28, United States Code. Upon such filing, the court shall have jurisdiction of the proceeding and of the question determined therein, and shall have the power to make and enter upon the pleadings, testimony, and proceedings set forth in such record a decree affirming, modifying, remanding for further consideration, or setting aside, in whole or in part, the determination of the Commissioner of Social Security and enforcing the same to the extent that such order is affirmed or modified. No objection that has not been urged before the Commissioner of Social Security shall be considered by the court, unless the failure to neglect to urge such objection shall be excused because of extraordinary circumstances.
(2)
The findings of the Commissioner of Social Security with respect to questions of fact, if supported by substantial evidence on the record considered as a whole, shall be conclusive in the review described in paragraph (1). If any party shall apply to the court for leave to adduce additional evidence and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the hearing before the Commissioner of Social Security, the court may order such additional evidence to be taken before the Commissioner of Social Security and to be made a part of the record. The Commissioner of Social Security may modify such findings as to the facts, or make new findings, by reason of additional evidence so taken and filed, and the Secretary shall file with the court such modified or new findings, which findings with respect to questions of fact, if supported by substantial evidence on the record considered as a whole shall be conclusive, and the Secretary's recommendations, if any, for the modification or setting aside of the Secretary's original order.
(3)
Upon the filing of the record and the Secretary's original or modified order with the court, the jurisdiction of the court shall be exclusive and its judgment and decree shall be final, except that the same shall be subject to review by the Supreme Court of the United States, as provided in section 1254 of title 28, United States Code.
(e)
(1)
Civil money penalties and assessments imposed under this section may be compromised by the Commissioner of Social Security and may be recovered—
(A)
in a civil action in the name of the United States brought in United States district court for the district where the violation occurred, or where the person resides, as determined by the Commissioner of Social Security;
(B)
by means of reduction in tax refunds to which the person is entitled, based on notice to the Secretary of the Treasury as permitted under section 3720A of title 31, United States Code;
(C)
(i)
by decrease of any payment of monthly insurance benefits under title II, notwithstanding section 207,
(ii)18
by decrease of any payment under title VIII to which the person is entitled, or
^{18}
Margin so in law.
(iii)
by decrease of any payment under title XVI for which the person is eligible, notwithstanding section 207, as made applicable to title XVI by reason of section 1631(d)(1);
(D)
by authorities provided under the Debt Collection Act of 1982, as amended, to the extent applicable to debts arising under the Social Security Act;
(E)
by deduction of the amount of such penalty or assessment, when finally determined, or the amount agreed upon in comprise, from any sum then or later owing by the United States to the person against whom the penalty or assessment has been assessed; or
(F)
by any combination of the foregoing.
(2)
Amounts recovered under this section shall be recovered by the Commissioner of Social Security and shall be disposed of as follows:
(A)
In the case of amounts recovered arising out of a determination relating to title II, the amounts shall be transferred to the Managing Trustee of the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund, as determined appropriate by the Secretary, and such amounts shall be deposited by the Managing Trustee into such Trust Fund.
(B)
In the case of any other amounts recovered under this section, the amounts shall be deposited by the Commissioner of Social Security into the general fund of the Treasury as miscellaneous receipts.
(f)
A determination pursuant to subsection (a) by the Commissioner of Social Security to impose a penalty or assessment, or to recommend an exclusion shall be final upon the expiration of the 60-day period referred to in subsection (d). Matters that were raised or that could have been raised in a hearing before the Commissioner of Social Security or in an appeal pursuant to subsection (d) may not be raised as a defense to a civil action by the United States to collect a penalty or assessment imposed under this section.
(g)
Whenever the Commissioner's determination to impose a penalty or assessment under this section with respect to a medical provider or physician becomes final, the Commissioner shall notify the Secretary of the final determination and the reasons therefor, and the Secretary shall then notify the entities described in section 1128A(h) of such final determination.
(h)
Whenever the Commissioner of Social Security has reason to believe that any person has engaged, is engaging, or is about to engage in any activity which makes the person subject to a civil monetary penalty under this section, the Commissioner of Social Security may bring action in an appropriate district court of the United States (or, if applicable, a United States court of any territory) to enjoin such activity, or to enjoin the person from concealing, removing, encumbering, or disposing of assets which may be required in order to pay a civil monetary penalty and assessment if any such penalty were to be imposed or to seek other appropriate relief.
(i)
(1)
The provisions of subsections (d) and (e) of section 205 shall apply with respect to this section to the same extent as they are applicable with respect to title II. The Commissioner of Social Security may delegate the authority granted by section 205(d) (as made applicable to this section) to the Inspector General for purposes of any investigation under this section.
(2)
The Commissioner of Social Security may delegate authority granted under this section to the Inspector General.
(j)
For purposes of this section, the term “State agency”, shall have the same meaning as in section 1128A(i)(1).
(k)
A principal is liable for penalties and assessments under subsection(a), and for an exclusion under section 1128 based on a recommendation under subsection (a), for the actions of the principal's agent acting within the scope of the agency.
(l)
As soon as the Inspector General, Social Security Administration, has reason to believe that fraud was involved in the application of an individual for monthly insurance benefits under title II or for benefits under title VIII or XVI, the Inspector General shall make available to the Commissioner of Social Security information identifying the individual, unless a United States attorney, or equivalent State prosecutor, with jurisdiction over potential or actual related criminal cases, certifies, in writing, that there is a substantial risk that making the information so available in a particular investigation or redetermining the eligibility of the individual for such benefits would jeopardize the criminal prosecution of any person who is a subject of the investigation from which the information is derived.
SEC. 1129A.
[42 U.S.C. 1320a–8a]

ADMINISTRATIVE PROCEDURE FOR IMPOSING PENALTIES FOR FALSE OR MISLEADING STATEMENTS.
(a)

In General.—
Any person who—
(1)
makes, or causes to be made, a statement or representation of a material fact, for use in determining any initial or continuing right to or the amount of monthly insurance benefits under title II or benefits or payments under title XVI that the person knows or should know is false or misleading,
(2)
makes such a statement or representation for such use with knowing disregard for the truth, or
(3)
omits from a statement or representation for such use, or otherwise withholds disclosure of, a fact which the person knows or should know is material to the determination of any initial or continuing right to or the amount of monthly insurance benefits under title II or benefits or payments under title XVI, if the person knows, or should know, that the statement or representation with such omission is false or misleading or that the withholding of such disclosure is misleading,
shall be subject to, in addition to any other penalties that may be prescribed by law, a penalty described in subsection (b) to be imposed by the Commissioner of Social Security.
(b)

Penalty.—
The penalty described in this subsection is—
(1)
nonpayment of benefits under title II that would otherwise be payable to the person; and
(2)
ineligibility for cash benefits under title XVI,
for each month that begins during the applicable period described in subsection (c).
(c)

Duration of Penalty.—
The duration of the applicable period, with respect to a determination by the Commissioner under subsection (a) that a person has engaged in conduct described in subsection (a), shall be—
(1)
six consecutive months, in the case of the first such determination with respect to the person;
(2)
twelve consecutive months, in the case of the second such determination with respect to the person; and
(3)
twenty-four consecutive months, in the case of the third or subsequent such determination with respect to the person.
(d)

Effect on Other Assistance.—
A person subject to a period of nonpayment of benefits under title II or ineligibility for title XVI benefits by reason of this section nevertheless shall be considered to be eligible for and receiving such benefits, to the extent that the person would be receiving or eligible for such benefits but for the imposition of the penalty, for purposes of—
(1)
determination of the eligibility of the person for benefits under titles XVIII and XIX; and
(2)
determination of the eligibility or amount of benefits payable under title II or XVI to another person.
(e)19

Definition.—
In this section, the term “benefits under VIII or title XVI” includes State supplementary payments made by the Commissioner pursuant to an agreement under section 810A or 1616(a) of this Act or section 212(b) of Public Law 93–66, as the case may be.
^{19}
The amendment by section 518(b)(2)(C) of the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2001 (114 Stat. 2763A–74), as enacted into law by section 1(a)(1) of Public Law 106–554, to insert “1010A or” before “1382(e)(a)” could not be executed because the text indicating where to make the insertion does not appear.
(f)

Consultations.—
The Commissioner of Social Security shall consult with the Inspector General of the Social Security Administration regarding initiating actions under this section.

ATTEMPTS TO INTERFERE WITH ADMINISTRATION OF SOCIAL SECURITY ACT
Sec. 1129B.
[42 U.S.C. 1320a–8b]
Whoever corruptly or by force or threats of force (including any threatening letter or communication) attempts to intimidate or impede any officer, employee, or contractor of the Social Security Administration (including any State employee of a disability determination service or any other individual designated by the Commissioner of Social Security) acting in an official capacity to carry out a duty under this Act, or in any other way corruptly or by force or threats of force (including any threatening letter or communication) obstructs or impedes, or attempts to obstruct or impede, the due administration of this Act, shall be fined not more than $5,000, imprisoned not more than 3 years, or both, except that if the offense is committed only by threats of force, the person shall be fined not more than $3,000, imprisoned not more than 1 year, or both. In this subsection, the term “threats of force” means threats of harm to the officer or employee of the United States or to a contractor of the Social Security Administration, or to a member of the family of such an officer or employee or contractor.

demonstration projects
Sec. 1130.
[42 U.S.C. 1320a–9]
(a)

Authority To Approve Demonstration Projects.—
(1)

In general.—
The Secretary may authorize States to conduct demonstration projects pursuant to this section which the Secretary finds are likely to promote the objectives of part B or E of title IV.
(2)

Limitation.—
During fiscal years 2012 through 2014, the Secretary may authorize demonstration projects described in paragraph (1), with not more than 10 demonstration projects to be authorized in each fiscal year.
(3)

Conditions for state eligibility.—
For purposes of a new demonstration project under this section that is initially approved in any of fiscal years 2012 through 2014, a State shall be authorized to conduct such demonstration project only if the State satisfies the following conditions:
(A)

Identify 1 or more goals.—
(i)

In general.—
The State shall demonstrate that the demonstration project is designed to accomplish 1 or more of the following goals:
(I)
Increase permanency for all infants, children, and youth by reducing the time in foster placements when possible and promoting a successful transition to adulthood for older youth.
(II)
Increase positive outcomes for infants, children, youth, and families in their homes and communities, including tribal communities, and improve the safety and well-being of infants, children, and youth.
(III)
Prevent child abuse and neglect and the re-entry of infants, children, and youth into foster care.
(ii)

Long-term therapeutic family treatment centers; addressing domestic violence.—
With respect to a demonstration project that is designed to accomplish 1 or more of the goals described in clause (i), the State may elect to establish a program—
(I)
to permit foster care maintenance payments to be made under part E of title IV to a long-term therapeutic family treatment center (as described in paragraph (8)(B)) on behalf of a child residing in the center; or
(II)
to identify and address domestic violence that endangers children and results in the placement of children in foster care.
(B)

Demonstrate readiness.—
The State shall demonstrate through a narrative description the State's capacity to effectively use the authority to conduct a demonstration project under this section by identifying changes the State has made or plans to make in policies, procedures, or other elements of the State's child welfare program that will enable the State to successfully achieve the goal or goals of the project.
(C)

Demonstrate implemented or planned child welfare program improvement policies.—
(i)

In general.—
The State shall demonstrate that the State has implemented, or plans to implement within 3 years of the date on which the State submits its application to conduct the demonstration project or 2 years after the date on which the Secretary approves such demonstration project (whichever is later), at least 2 of the child welfare program improvement policies described in paragraph (7).
(ii)

Previous implementation.—
For purposes of the requirement described in clause (i), at least 1 of the child welfare program improvement policies to be implemented by the State shall be a policy that the State has not previously implemented as of the date on which the State submits an application to conduct the demonstration project.
(iii)

Implementation review.—
The Secretary may terminate the authority of a State to conduct a demonstration project under this section if, after the 3-year period following approval of the demonstration project, the State has not made significant progress in implementing the child welfare program improvement policies proposed by the State under clause (i).
(4)

Limitation on eligibility.—
The Secretary may not authorize a State to conduct a demonstration project under this section if the State fails to provide health insurance coverage to any child with special needs (as determined under section 473(c)) for whom there is in effect an adoption assistance agreement between a State and an adoptive parent or parents.
(5)

Requirement to consider effect of project on terms and conditions of certain court orders.—
In considering an application to conduct a demonstration project under this section that has been submitted by a State in which there is in effect a court order determining that the State's child welfare program has failed to comply with the provisions of part B or E of title IV, or with the Constitution of the United States, the Secretary shall take into consideration the effect of approving the proposed project on the terms and conditions of the court order related to the failure to comply and the ability of the State to implement a corrective action plan approved under section 1123A.
(6)

Inapplicability of random assignment for control groups as a factor for approval of demonstration projects.—
For purposes of evaluating an application to conduct a demonstration project under this section, the Secretary shall not take into consideration whether such project requires random assignment of children and families to groups served under the project and to control groups.
(7)

Child welfare program improvement policies.—
For purposes of paragraph (3)(C), the child welfare program improvement policies described in this paragraph are the following:
(A)
The establishment of a bill of rights for infants, children, and youth in foster care that is widely shared and clearly outlines protections for infants, children, and youth, such as assuring frequent visits with parents, siblings, and caseworkers, access to attorneys, and participation in age-appropriate extracurricular activities, and procedures for ensuring the protections are provided.
(B)
The development and implementation of a plan for meeting the health and mental health needs of infants, children, and youth in foster care that includes ensuring that the provision of health and mental health care is child-specific, comprehensive, appropriate, and consistent (through means such as ensuring the infant, child, or youth has a medical home, regular wellness medical visits, and addressing the issue of trauma, when appropriate).
(C)
The inclusion in the State plan under section 471 of an amendment implementing the option under subsection (a)(28) of that section to enter into kinship guardianship assistance agreements.
(D)
The election under the State plan under section 471 to define a “child” for purposes of the provision of foster care maintenance payments, adoption assistance payments, and kinship guardianship assistance payments, so as to include individuals described in each of subclauses (I), (II), and (III) of section 475(8)(B)(i) who have not attained age 21.
(E)
The development and implementation of a plan that ensures congregate care is used appropriately and reduces the placement of children and youth in such care.
(F)
Of those infants, children, and youth in out-of-home placements, substantially increasing the number of cases of siblings who are in the same foster care, kinship guardianship, or adoptive placement, above the number of such cases in fiscal year 2008.
(G)
The development and implementation of a plan to improve the recruitment and retention of high quality foster family homes trained to help assist infants, children, and youth swiftly secure permanent families. Supports for foster families under such a plan may include increasing maintenance payments to more adequately meet the needs of infants, children, and youth in foster care and expanding training, respite care, and other support services for foster parents.
(H)
The establishment of procedures designed to assist youth as they prepare for their transition out of foster care, such as arranging for participation in age-appropriate extra-curricular activities, providing appropriate access to cell phones, computers, and opportunities to obtain a driver's license, providing notification of all sibling placements if siblings are in care and sibling location if siblings are out of care, and providing counseling and financial support for post-secondary education.
(I)
The inclusion in the State plan under section 471 of a description of State procedures for—
(i)
ensuring that youth in foster care who have attained age 16 are engaged in discussions, including during the development of the transition plans required under paragraphs (1)(D) and (5)(H) of section 475, that explore whether the youth wishes to reconnect with the youth's biological family, including parents, grandparents, and siblings, and, if so, what skills and strategies the youth will need to successfully and safely reconnect with those family members;
(ii)
providing appropriate guidance and services to youth whom affirm an intent to reconnect with biological family members on how to successfully and safely manage such reconnections; and
(iii)
making, when appropriate, efforts to include biological family members in such reconnection efforts.
(J)
The establishment of one or more of the following programs designed to prevent infants, children, and youth from entering foster care or to provide permanency for infants, children, and youth in foster care:
(i)
An intensive family finding program.
(ii)
A kinship navigator program.
(iii)
A family counseling program, such as a family group decision-making program, and which may include in-home peer support for families.
(iv)
A comprehensive family-based substance abuse treatment program.
(v)
A program under which special efforts are made to identify and address domestic violence that endangers infants, children, and youth and puts them at risk of entering foster care.
(vi)
A mentoring program.
(8)

Definitions.—
In this subsection—
(A)
the term “youth” means, with respect to a State, an individual who has attained age 12 but has not attained the age at which an individual is no longer considered to be a child under the State plans under parts B and E of title IV, and
(B)
the term “long-term therapeutic family treatment center” means a State licensed or certified program that enables parents and their children to live together in a safe environment for a period of not less than 6 months and provides, on-site or by referral, substance abuse treatment services, children's early intervention services, family counseling, legal services, medical care, mental health services, nursery and preschool, parenting skills training, pediatric care, prenatal care, sexual abuse therapy, relapse prevention, transportation, and job or vocational training or classes leading to a secondary school diploma or a certificate of general equivalence.
(b)

Waiver Authority.—
The Secretary may waive compliance with any requirement of part B or E of title IV which (if applied) would prevent a State from carrying out a demonstration project under this section or prevent the State from effectively achieving the purpose of such a project, except that the Secretary may not waive—
(1)
any provision of section 422(b)(8), or section 479; or
(2)
any provision of such part E, to the extent that the waiver would impair the entitlement of any qualified child or family to benefits under a State plan approved under such part E.
(c)

Treatment as Program Expenditures.—
For purposes of parts B and E of title IV, the Secretary shall consider the expenditures of any State to conduct a demonstration project under this section to be expenditures under subpart 1 or 2 of such part B, or under such part E, as the State may elect.
(d)

Duration of Demonstration.—
(1)

In general.—
Subject to paragraph (2), a demonstration project under this section may be conducted for not more than 5 years, unless in the judgment of the Secretary, the demonstration project should be allowed to continue.
(2)

Termination of authority.—
In no event shall a demonstration project under this section be conducted after September 30, 2019.
(e)

Application.—
Any State seeking to conduct a demonstration project under this section shall submit to the Secretary an application, in such form as the Secretary may require, which includes—
(1)
a description of the proposed project, the geographic area in which the proposed project would be conducted, the children or families who would be served by the proposed project, and the services which would be provided by the proposed project;
(2)
a statement of the period during which the proposed project would be conducted;
(3)
a discussion of the benefits that are expected from the proposed project (compared to a continuation of activities under the approved plan or plans of the State);
(4)
an estimate of the costs or savings of the proposed project;
(5)
a statement of program requirements for which waivers would be needed to permit the proposed project to be conducted;
(6)
a description of the proposed evaluation design;
(7)
an accounting of any additional Federal, State, and local investments made, as well as any private investments made in coordination with the State, during the 2 fiscal years preceding the application to provide the services described in paragraph (1), and an assurance that the State will provide an accounting of that same spending for each year of an approved demonstration project; and
(8)
such additional information as the Secretary may require.
(f)

Evaluations.—
Each State authorized to conduct a demonstration project under this section shall obtain an evaluation by an independent contractor of the effectiveness of the project, using an evaluation design approved by the Secretary which provides for—
(1)
comparison of methods of service delivery under the project, and such methods under a State plan or plans, with respect to efficiency, economy, and any other appropriate measures of program management;
(2)
comparison of outcomes for children and families (and groups of children and families) under the project, and such outcomes under a State plan or plans, for purposes of assessing the effectiveness of the project in achieving program goals; and
(3)
any other information that the Secretary may require.
(g)

Reports.—
(1)

State reports; public availability.—
Each State authorized to conduct a demonstration project under this section shall—
(A)
submit periodic reports to the Secretary on the specific programs, activities, and strategies used to improve outcomes for infants, children, youth, and families and the results achieved for infants, children, and youth during the conduct of the demonstration project, including with respect to those infants, children, and youth who are prevented from entering foster care, infants, children, and youth in foster care, and infants, children, and youth who move from foster care to permanent families; and
(B)
post a copy of each such report on the website for the State child welfare program concurrent with the submission of the report to the Secretary.
(2)

Reports to congress.—
The Secretary shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate—
(A)
periodic reports based on the State reports submitted under paragraph (1); and
(B)
a report based on the results of the State evaluations required under subsection (f) that includes an analysis of the results of such evaluations and such recommendations for administrative or legislative changes as the Secretary determines appropriate.
(h)

Cost Neutrality.—
The Secretary may not authorize a State to conduct a demonstration project under this section unless the Secretary determines that the total amount of Federal funds that will be expended under (or by reason of) the project over its approved term (or such portion thereof or other period as the Secretary may find appropriate) will not exceed the amount of such funds that would be expended by the State under the State plans approved under parts B and E of title IV if the project were not conducted.
(i)

Indian Tribes Operating IV–E Programs Considered States.—
An Indian tribe, tribal organization, or tribal consortium that has elected to operate a program under part E of title IV in accordance with section 479B shall be considered a State for purposes of this section.

effect of failure to carry out state plan
Sec. 1130A.
[42 U.S.C. 1320a–10]
In an action brought to enforce a provision of the Social Security Act, such provision is not to be deemed unenforceable because of its inclusion in a section of the Act requiring a State plan or specifying the required contents of a State plan. This section is not intended to limit or expand the grounds for determining the availability of private actions to enforce State plan requirements other than by overturning any such grounds applied in Suter v. Artist M., 112 S. Ct. 1360 (1992), but not applied in prior Supreme Court decisions respecting such enforceability: Provided, however, That this section is not intended to alter the holding in Suter v. Artist M. that section 471(a)(15) of the Act is not enforceable in a private right of action.

notification of social security claimant with respect to deferred vested benefits
Sec. 1131.
[42 U.S.C. 1320b–1]
(a)
Whenever—
(1)
the Commissioner of Social Security makes a finding of fact and a decision as to—
(A)
the entitlement of any individual to monthly benefits under section 202, 223, or 228, or
(B)
the entitlement of any individual to a lump-sum death payment payable under section 202(i) on account of the death of any person to whom such individual is related by blood, marriage, or adoption, or
(2)
the Commissioner of Social Security makes a finding of fact and a decision as to the entitlement under section 226 of any individual to hospital insurance benefits under part A of title XVIII, or
(3)
the Commissioner of Social Security is requested to do so—
(A)
by any individual with respect to whom the Commissioner of Social Security holds information obtained under section 6057 of the Internal Revenue Code of 1954, or
(B)
in the case of the death of the individual referred to in subparagraph (A), by the individual who would be entitled to payment under section 204(d) of this Act,
the Commissioner of Social Security shall transmit to the individual referred to in paragraph (1) or (2) or the individual making the request under paragraph (3) any information, as reported by the employer, regarding any deferred vested benefit transmitted to the Commissioner of Social Security pursuant to such section 6057 with respect to the individual referred to in paragraph (1), (2), or (3)(A) or the person on whose wages and self-employment income entitlement (or claim of entitlement) is based.
(b)
(1)
For purposes of section 201(g)(1), expenses incurred in the administration of subsection (a) shall be deemed to be expenses incurred for the administration of title II.
(2)
There are hereby authorized to be appropriated to the Federal Old-Age and Survivors Insurance Trust Fund for each fiscal year (commencing with the fiscal year ending June 30, 1974) such sums as the Commissioner of Social Security deems necessary on account of additional administrative expenses resulting from the enactment of the provisions of subsection (a).

period within which certain claims must be filed
Sec. 1132.
[42 U.S.C. 1320b–2]
(a)
Notwithstanding any other provision of this Act (but subject to subsection (b)), any claim by a State for payment with respect to an expenditure made during any calendar quarter by the State—
(1)
in carrying out a State plan approved under title I, IV, X, XIV, XVI, XIX, or XX of this Act, or
(2)
under any other provision of this Act which provides (on an entitlement basis) for Federal financial participation in expenditures made under State plans or programs,
shall be filed (in such form and manner as the Secretary shall by regulations prescribe) within the two-year period which begins on the first day of the calendar quarter immediately following such calendar quarter; and payment shall not be made under this Act on account of any such expenditure if claim therefor is not made within such two-year period; except that this subsection shall not be applied so as to deny payment with respect to any expenditure involving court-ordered retroactive payments or audit exceptions, or adjustments to prior year costs.
(b)
The Secretary shall waive the requirement imposed under subsection (a) with respect to the filing of any claim if he determines (in accordance with regulations) that there was good cause for the failure by the State to file such claim within the period prescribed under subsection (a). Any such waiver shall be only for such additional period of time as may be necessary to provide the State with a reasonable opportunity to file such claim. A failure to file a claim within such time period which is attributable to neglect or administrative inadequacies shall be deemed not to be for good cause.

applicants or recipients under public assistance programs not to be required to make election respecting certain veterans' benefits
Sec. 1133.
[42 U.S.C. 1320b–3]
(a)
Notwithstanding any other provision of law (but subject to subsection (b)), no individual who is an applicant for or recipient of aid or assistance under a State plan approved under title I, X, XIV, or XVI, or of benefits under the Supplemental Security Income program established by title XVI shall—
(1)
be required, as a condition of eligibility for (or of continuing to receive) such aid, assistance, or benefits, to make an election under section 306 of the Veterans' and Survivors' Pension Improvement Act of 1978 with respect to pension paid by the Secretary of Veterans Affairs, or
(2)
by reason of failure or refusal to make such an election, be denied (or suffer a reduction in the amount of) such aid, assistance, or benefits.
(b)
The provisions of subsection (a) shall be applicable only with respect to an individual, who is an applicant for or recipient of aid, assistance, or benefits described in subsection (a), during a period with respect to which there is in effect—
(1)
in case such individual is an applicant for or recipient of aid or assistance under a State plan referred to in subsection (a), in the State having such plan, or
(2)
in case such individual is an applicant for or recipient of benefits under the Supplemental Security Income program established by title XVI, in the State in which the individual applies for or receives such benefits,
a State plan for medical assistance, approved under title XIX, under which medical assistance is available to such individual only for periods for which such individual is a recipient of aid, assistance, or benefits described in subsection (a).

nonprofit hospital philanthropy
Sec. 1134.
[42 U.S.C. 1320b–4]
For purposes of determining, under titles XVIII and XIX of this Act, the reasonable costs of services provided by nonprofit hospitals or critical access hospitals, the following items shall not be deducted from the operating costs of such hospitals or critical access hospitals:
(1)
A grant, gift, or endowment, or income therefrom, which is to or for such a hospital and which has not been designated by the donor for paying any specific operating costs.
(2)
A grant or similar payment which is to such a hospital, which was made by a governmental entity, and which is not available under the terms of the grant or payment for use as operating funds.
(3)
Those types of donor designated 20 grants and gifts (including grants and similar payments which are made by a governmental entity), and income therefrom, which the Secretary determines, in the best interests of needed health care, should be encouraged.
^{20}
As in original. Probably should be “donor-designated”.
(4)
The proceeds from the sale or mortgage of any real estate or other capital asset of such a hospital, which real estate or asset the hospital acquired through gift or grant, if such proceeds are not available for use as operating funds under the terms of the gift or grant.
Paragraph (4) shall not apply to the recovery of the appropriate share of depreciation when gains or losses are realized from the disposal of depreciable assets.

authority to waive requirements during national emergencies
Sec. 1135.
[42 U.S.C. 1320b–5]
(a)

Purpose.—
The purpose of this section is to enable the Secretary to ensure to the maximum extent feasible, in any emergency area and during an emergency period (as defined in subsection (g)(1))—
(1)
that sufficient health care items and services are available to meet the needs of individuals in such area enrolled in the programs under titles XVIII, XIX, and XXI; and
(2)
that health care providers (as defined in subsection (g)(2)) that furnish such items and services in good faith, but that are unable to comply with one or more requirements described in subsection (b), may be reimbursed for such items and services and exempted from sanctions for such noncompliance, absent any determination of fraud or abuse.
(b)

Secretarial Authority.—
To the extent necessary to accomplish the purpose specified in subsection (a), the Secretary is authorized, subject to the provisions of this section, to temporarily waive or modify the application of, with respect to health care items and services furnished by a health care provider (or classes of health care providers) in any emergency area (or portion of such an area) during any portion of an emergency period, the requirements of titles XVIII, XIX, or XXI, or any regulation thereunder (and the requirements of this title other than this section, and regulations thereunder, insofar as they relate to such titles), pertaining to—
(1)
(A)
conditions of participation or other certification requirements for an individual health care provider or types of providers,
(B)
program participation and similar requirements for an individual health care provider or types of providers, and
(C)
pre-approval requirements;
(2)
requirements that physicians and other health care professionals be licensed in the State in which they provide such services, if they have equivalent licensing in another State and are not affirmatively excluded from practice in that State or in any State a part of which is included in the emergency area;
(3)
actions under section 1867 (relating to examination and treatment for emergency medical conditions and women in labor) for—
(A)
a transfer of an individual who has not been stabilized in violation of subsection (c) of such section if the transfer is necessitated by the circumstances of the declared emergency in the emergency area during the emergency period; or
(B)
the direction or relocation of an individual to receive medical screening in an alternative location—
(i)
pursuant to an appropriate State emergency preparedness plan; or
(ii)
in the case of a public health emergency described in subsection (g)(1)(B) that involves a pandemic infectious disease, pursuant to a State pandemic preparedness plan or a plan referred to in clause (i), whichever is applicable in the State;
(4)
sanctions under section 1877(g) (relating to limitations on physician referral);
(5)
deadlines and timetables for performance of required activities, except that such deadlines and timetables may only be modified, not waived;
(6)
limitations on payments under section 1851(i) for health care items and services furnished to individuals enrolled in a Medicare+Choice plan by health care professionals or facilities not included under such plan;
(7)
sanctions and penalties that arise from noncompliance with the following requirements (as promulgated under the authority of section 264(c) of the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. 1320d–2 note)—
(A)
section 164.510 of title 45, Code of Federal Regulations, relating to—
(i)
requirements to obtain a patient's agreement to speak with family members or friends; and
(ii)
the requirement to honor a request to opt out of the facility directory;
(B)
section 164.520 of such title, relating to the requirement to distribute a notice; or
(C)
section 164.522 of such title, relating to—
(i)
the patient's right to request privacy restrictions; and
(ii)
the patient's right to request confidential communications;
(8)
in the case of a telehealth service (as defined in paragraph (4)(F) of section 1834(m)) furnished in any emergency area (or portion of such an area) during any portion of any emergency period, the requirements of section 1834(m); and
(9)
any requirement under section 1861(s)(7) or section 1834(l) that an ambulance service include the transport of an individual to the extent necessary to allow payment for ground ambulance services furnished in response to a 911 call (or the equivalent in areas without a 911 call system) in cases in which an individual would have been transported to a destination permitted under Medicare regulations (as described in section 410.40 to title 42, Code of Federal Regulations (or successor regulations)) but such transport did not occur as a result of community-wide emergency medical service (EMS) protocols due to the public health emergency described in subsection (g)(1)(B).
Insofar as the Secretary exercises authority under paragraph (6) with respect to individuals enrolled in a Medicare+Choice plan, to the extent possible given the circumstances, the Secretary shall reconcile payments made on behalf of such enrollees to ensure that the enrollees do not pay more than would be required had they received services from providers within the network of the plan and may reconcile payments to the organization offering the plan to ensure that such organization pays for services for which payment is included in the capitation payment it receives under part C of title XVIII. A waiver or modification provided for under paragraph (3) or (7) shall only be in effect if such actions are taken in a manner that does not discriminate among individuals on the basis of their source of payment or of their ability to pay, and, except in the case of a waiver or modification to which the fifth sentence of this subsection applies, shall be limited to a 72-hour period beginning upon implementation of a hospital disaster protocol. A waiver or modification under such paragraph (7) shall be withdrawn after such period and the provider shall comply with the requirements under such paragraph for any patient still under the care of the provider. If a public health emergency described in subsection (g)(1)(B) involves a pandemic infectious disease (such as pandemic influenza), the duration of a waiver or modification under paragraph (3) shall be determined in accordance with subsection (e) as such subsection applies to public health emergencies. Ground ambulance services for which payment is made pursuant to paragraph (9) shall be paid at the base rate that would have been paid under the fee schedule established under 1834(l) (excluding any mileage payment) if the individual had been so transported and, with respect to ambulance services furnished by a critical access hospital or an entity described in paragraph (8) of such section, at the amount that otherwise would be paid under such paragraph.
(c)

Authority for Retroactive Waiver.—
A waiver or modification of requirements pursuant to this section may, at the Secretary's discretion, be made retroactive to the beginning of the emergency period or any subsequent date in such period specified by the Secretary.
(d)

Certification to Congress.—
The Secretary shall provide a certification and advance written notice to the Congress at least two days before exercising the authority under this section with respect to an emergency area. Such a certification and notice shall include—
(1)
a description of—
(A)
the specific provisions that will be waived or modified;
(B)
the health care providers to whom the waiver or modification will apply;
(C)
the geographic area in which the waiver or modification will apply; and
(D)
the period of time for which the waiver or modification will be in effect; and
(2)
a certification that the waiver or modification is necessary to carry out the purpose specified in subsection (a).
(e)

Duration of Waiver.—
(1)

In general.—
A waiver or modification of requirements pursuant to this section terminates upon—
(A)
the termination of the applicable declaration of emergency or disaster described in subsection (g)(1)(A);
(B)
the termination of the applicable declaration of public health emergency described in subsection (g)(1)(B); or
(C)
subject to paragraph (2), the termination of a period of 60 days from the date the waiver or modification is first published (or, if applicable, the date of extension of the waiver or modification under paragraph (2)).
(2)

Extension of 60-day periods.—
The Secretary may, by notice, provide for an extension of a 60-day period described in paragraph (1)(C) (or an additional period provided under this paragraph) for additional period or periods (not to exceed, except as subsequently provided under this paragraph, 60 days each), but any such extension shall not affect or prevent the termination of a waiver or modification under subparagraph (A) or (B) of paragraph (1).
(f)

Report to Congress.—
Within one year after the end of the emergency period in an emergency area in which the Secretary exercised the authority provided under this section, the Secretary shall report to the Congress regarding the approaches used to accomplish the purposes described in subsection (a), including an evaluation of such approaches and recommendations for improved approaches should the need for such emergency authority arise in the future.
(g)

Definitions.—
For purposes of this section:
(1)

Emergency area; emergency period.—
(A)

In general.—
Subject to subparagraph (B), an “emergency area” is a geographical area in which, and an “emergency period” is the period during which, there exists—
(i)
an emergency or disaster declared by the President pursuant to the National Emergencies Act or the Robert T. Stafford Disaster Relief and Emergency Assistance Act; and
(ii)
a public health emergency declared by the Secretary pursuant to section 319 of the Public Health Service Act.
(B)

Exception.—
For purposes of paragraphs (8) and (9) of subsection (b), an “emergency area” is a geographical area in which, and an “emergency period” is the period during which, there exists—
(i)
the public health emergency declared by the Secretary pursuant to section 319 of the Public Health Service Act on January 31, 2020, entitled “Determination that a Public Health Emergency Exists Nationwide as the Result of the 2019 Novel Coronavirus”; and
(ii)
any renewal of such declaration pursuant to such section 319.
(2)

Health care provider.—
The term “health care provider” means any entity that furnishes health care items or services, and includes a hospital or other provider of services, a physician or other health care practitioner or professional, a health care facility, or a supplier of health care items or services.

exclusion of representatives and health care providers convicted of violations from participation in social security programs
Sec. 1136.
[42 U.S.C. 1320b–6]
(a)

In General.—
The Commissioner of Social Security shall exclude from participation in the social security programs any representative or health care provider—
(1)
who is convicted of a violation of section 208 or 1632 of this Act;
(2)
who is convicted of any violation under title 18, United States Code, relating to an initial application for or continuing entitlement to, or amount of, benefits under title II of this Act, or an initial application for or continuing eligibility for, or amount of, benefits under title XVI of this Act; or
(3)
who the Commissioner determines has committed an offense described in section 1129(a)(1) of this Act.
(b)

Notice, Effective Date, and Period of Exclusion.—
(1)
An exclusion under this section shall be effective at such time, for such period, and upon such reasonable notice to the public and to the individual excluded as may be specified in regulations consistent with paragraph (2).
(2)
Such an exclusion shall be effective with respect to services furnished to any individual on or after the effective date of the exclusion. Nothing in this section may be construed to preclude, in determining disability under title II or title XVI, consideration of any medical evidence derived from services provided by a health care provider before the effective date of the exclusion of the health care provider under this section.
(3)
(A)
The Commissioner shall specify, in the notice of exclusion under paragraph (1), the period of the exclusion.
(B)
Subject to subparagraph (C), in the case of an exclusion under subsection (a), the minimum period of exclusion shall be 5 years, except that the Commissioner may waive the exclusion in the case of an individual who is the sole source of essential services in a community. The Commissioner's decision whether to waive the exclusion shall not be reviewable.
(C)
In the case of an exclusion of an individual under subsection (a) based on a conviction or a determination described in subsection (a)(3) occurring on or after the date of the enactment of this section, if the individual has (before, on, or after such date of the enactment) been convicted, or if such a determination has been made with respect to the individual—
(i)
on one previous occasion of one or more offenses for which an exclusion may be effected under such subsection, the period of the exclusion shall be not less than 10 years; or
(ii)
on two or more previous occasions of one or more offenses for which an exclusion may be effected under such subsection, the period of the exclusion shall be permanent.
(c)

Notice to State Agencies.—
The Commissioner shall promptly notify each appropriate State agency employed for the purpose of making disability determinations under section 221 or 1633(a)—
(1)
of the fact and circumstances of each exclusion effected against an individual under this section; and
(2)
of the period (described in subsection (b)(3)) for which the State agency is directed to exclude the individual from participation in the activities of the State agency in the course of its employment.
(d)

Notice to State Licensing Agencies.—
The Commissioner shall—
(1)
promptly notify the appropriate State or local agency or authority having responsibility for the licensing or certification of an individual excluded from participation under this section of the fact and circumstances of the exclusion;
(2)
request that appropriate investigations be made and sanctions invoked in accordance with applicable State law and policy; and
(3)
request that the State or local agency or authority keep the Commissioner and the Inspector General of the Social Security Administration fully and currently informed with respect to any actions taken in response to the request.
(e)

Notice, Hearing, and Judicial Review.—
(1)
Any individual who is excluded (or directed to be excluded) from participation under this section is entitled to reasonable notice and opportunity for a hearing thereon by the Commissioner to the same extent as is provided in section 205(b), and to judicial review of the Commissioner's final decision after such hearing as is provided in section 205(g).
(2)
The provisions of section 205(h) shall apply with respect to this section to the same extent as it is applicable with respect to title II.
(f)

Application for Termination of Exclusion.—
(1)
An individual excluded from participation under this section may apply to the Commissioner, in the manner specified by the Commissioner in regulations and at the end of the minimum period of exclusion provided under subsection (b)(3) and at such other times as the Commissioner may provide, for termination of the exclusion effected under this section.
(2)
The Commissioner may terminate the exclusion if the Commissioner determines, on the basis of the conduct of the applicant which occurred after the date of the notice of exclusion or which was unknown to the Commissioner at the time of the exclusion, that—
(A)
there is no basis under subsection (a) for a continuation of the exclusion; and
(B)
there are reasonable assurances that the types of actions which formed the basis for the original exclusion have not recurred and will not recur.
(3)
The Commissioner shall promptly notify each State agency employed for the purpose of making disability determinations under section 221 or 1633(a) of the fact and circumstances of each termination of exclusion made under this subsection.
(g)

Availability of Records of Excluded Representatives and health care providers.—
Nothing in this section shall be construed to have the effect of limiting access by any applicant or beneficiary under title II or XVI, any State agency acting under section 221 or 1633(a), or the Commissioner to records maintained by any representative or health care provider in connection with services provided to the applicant or beneficiary prior to the exclusion of such representative or health care provider under this section.
(h)

Reporting Requirement.—
Any representative or health care provider participating in, or seeking to participate in, a social security program shall inform the Commissioner, in such form and manner as the Commissioner shall prescribe by regulation, whether such representative or health care provider has been convicted of a violation described in subsection (a).
(i)

Delegation of Authority.—
The Commissioner may delegate authority granted by this section to the Inspector General.
(j)

Definitions.—
For purposes of this section:
(1)

Exclude.—
The term “exclude” from participation means—
(A)
in connection with a representative, to prohibit from engaging in representation of an applicant for, or recipient of, benefits, as a representative payee under section 205(j) or section 1631(a)(2)(A)(ii), or otherwise as a representative, in any hearing or other proceeding relating to entitlement to benefits; and
(B)
in connection with a health care provider, to prohibit from providing items or services to an applicant for, or recipient of, benefits for the purpose of assisting such applicant or recipient in demonstrating disability.
(2)

Social security program.—
The term “social security programs” means the program providing for monthly insurance benefits under title II, and the program providing for monthly supplemental security income benefits to individuals under title XVI (including State supplementary payments made by the Commissioner pursuant to an agreement under section 1616(a) of this Act or section 212(b) of Public Law 93–66).
(3)

Convicted.—
An individual is considered to have been “convicted” of a violation—
(A)
when a judgment of conviction has been entered against the individual by a Federal, State, or local court, except if the judgment of conviction has been set aside or expunged;
(B)
when there has been a finding of guilt against the individual by a Federal, State, or local court;
(C)
when a plea of guilty or nolo contendere by the individual has been accepted by a Federal, State, or local court; or
(D)
when the individual has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.

income and eligibility verification system
Sec. 1137.
[42 U.S.C. 1320b–7]
(a)
In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which—
(1)
the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number;
(2)
wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1954, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services (or, in the case of the unemployment compensation program, by the Secretary of Labor, or, in the case of the supplemental nutrition assistance program, by the Secretary of Agriculture);
(3)
employers (as defined in section 453A(a)(2)(B)) (including State and local governmental entities and labor organizations (as defined in section 453A(a)(2)(B)(ii)))21 in such State are required, effective September 30, 1988, to make quarterly wage reports to a State agency (which may be the agency administering the State's unemployment compensation law) except that the Secretary of Labor (in consultation with the Secretary of Health and Human Services and the Secretary of Agriculture) may waive the provisions of this paragraph if he determines that the State has in effect an alternative system which is as effective and timely for purposes of providing employment related income and eligibility data for the purposes described in paragraph (2), and except that no report shall be filed with respect to an employee of a State or local agency performing intelligence or counterintelligence functions, if the head of such agency has determined that filing such a report could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission, and except that in the case of wage reports with respect to domestic service employment, a State may permit employers (as so defined) that make returns with respect to such employment on a calendar year basis pursuant to section 3510 of the Internal Revenue Code of 1986 to make such reports on an annual basis;
^{21}
Section 401(p) of the Foster Care Independence Act of 1999 (P.L. 106–169) amended this paragraph ``by striking `453A(a)(2)(B)(iii))' and inserting `453A(a)(2)(B)(ii)))'''. Section 405(b)(1) of the Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106–170) attempted to amend this paragraph ``by striking `(as defined in section 453A(a)(2)(B)(iii))'''.
(4)
the State agencies administering the programs listed in subsection (b) adhere to standardized formats and procedures established by the Secretary of Health and Human Services (in consultation with the Secretary of Agriculture) under which—
(A)
the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program;
(B)
such information shall be made available to assist in the child support program under part D of title IV of this Act, and to assist the Secretary of Health and Human Services in establishing or verifying eligibility or benefit amounts under titles II and XVI of this Act, but subject to the safeguards and restrictions established by the Secretary of the Treasury with respect to information released pursuant to section 6103(l) of the Internal Revenue Code of 1954; and
(C)
the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments, and no State shall be required to use such information to verify the eligibility of all recipients;
(5)
adequate safeguards are in effect so as to assure that—
(A)
the information exchanged by the State agencies is made available only to the extent necessary to assist in the valid administrative needs of the program receiving such information, and the information released pursuant to section 6103(l) of the Internal Revenue Code of 1954 is only exchanged with agencies authorized to receive such information under such section 6103(l); and
(B)
the information is adequately protected against unauthorized disclosure for other purposes, as provided in regulations established by the Secretary of Health and Human Services, or, in the case of the unemployment compensation program, the Secretary of Labor, or, in the case of the supplemental nutrition assistance program, the Secretary of Agriculture, or in the case of information released pursuant to section 6103(l) of the Internal Revenue Code of 1954, the Secretary of the Treasury;
(6)
all applicants for and recipients of benefits under any such program shall be notified at the time of application, and periodically thereafter, that information available through the system will be requested and utilized; and
(7)
accounting systems are utilized which assure that programs providing data receive appropriate reimbursement from the programs utilizing the data for the costs incurred in providing the data.
(b)
The programs which must participate in the income and eligibility verification system are—
(1)
any State program funded under part A of title IV of this Act;
(2)
the medicaid program under title XIX of this Act;
(3)
the unemployment compensation program under section 3304 of the Internal Revenue Code of 1954;
(4)
the supplemental nutrition assistance program established under the Food and Nutrition Act of 2008 (7 U.S.C. 2011 et seq.); and
(5)
any State program under a plan approved under title I, X, XIV, or XVI of this Act.
(c)
(1)
In order to protect applicants for and recipients of benefits under the programs identified in subsection (b), or under the supplemental security income program under title XVI, from the improper use of information obtained from the Secretary of the Treasury under section 6103(l)(7)(B) of the Internal Revenue Code of 1954, no Federal, State, or local agency receiving such information may terminate, deny, suspend, or reduce any benefits of an individual until such agency has taken appropriate steps to independently verify information relating to—
(A)
the amount of the asset or income involved,
(B)
whether such individual actually has (or had) access to such asset or income for his own use, and
(C)
the period or periods when the individual actually had such asset or income.
(2)
Such individual shall be informed by the agency of the findings made by the agency on the basis of such verified information, and shall be given an opportunity to contest such findings, in the same manner as applies to other information and findings relating to eligibility factors under the program.
(d)
The requirements of this subsection, with respect to an income and eligibility verification system of a State, are as follows:
(1)
(A)
The State shall require, as a condition of an individual's eligibility for benefits under a program listed in subsection (b), a declaration in writing, under penalty of perjury—
(i)
by the individual,
(ii)
in the case in which eligibility for program benefits is determined on a family or household basis, by any adult member of such individual's family or household (as applicable), or
(iii)
in the case of an individual born into a family or household receiving benefits under such program, by any adult member or such family or household no later than the next redetermination of eligibility of such family or household following the birth of such individual,
stating whether the individual is a citizen or national of the United States, and, if that individual is not a citizen or national of the United States, that the individual is in a satisfactory immigration status.
(B)
In this subsection, in the case of the program described in subsection (b)(4)—
(i)
any reference to the State shall be considered a reference to the State agency, and
(ii)
any reference to an individual's eligibility for benefits under the program shall be considered a reference to the individual's eligibility to participate in the program as a member of a household, and
(iii)
the term “satisfactory immigration status” means an immigration status which does not make the individual ineligible for benefits under the applicable program.
(2)
If such an individual is not a citizen or national of the United States, there must be presented either—
(A)
alien registration documentation or other proof of immigration registration from the Immigration and Naturalization Service that contains the individual's alien admission number or alien file number (or numbers if the individual has more than one number), or
(B)
such other documents as the State determines constitutes reasonable evidence indicating a satisfactory immigration status.
(3)
If the documentation described in paragraph (2)(A) is presented, the State shall utilize the individual's alien file or alien admission number to verify with the Immigration and Naturalization Service the individual's immigration status through an automated or other system (designated by the Service for use with States) that—
(A)
utilizes the individual's name, file number, admission number, or other means permitting efficient verification, and
(B)
protects the individual's privacy to the maximum degree possible.
(4)
In the case of such an individual who is not a citizen or national of the United States, if, at the time of application for benefits, the statement described in paragraph (1) is submitted but the documentation required under paragraph (2) is not presented or if the documentation required under paragraph (2)(A) is presented but such documentation is not verified under paragraph (3)—
(A)
the State—
(i)
shall provide a reasonable opportunity to submit to the State evidence indicating a satisfactory immigration status, and
(ii)
may not delay, deny, reduce, or terminate the individual's eligibility for benefits under the program on the basis of the individual's immigration status until such a reasonable opportunity has been provided; and
(B)
if there are submitted documents which the State determines constitutes reasonable evidence indicating such status—
(i)
the State shall transmit to the Immigration and Naturalization Service either photostatic or other similar copies of such documents, or information from such documents, as specified by the Immigration and Naturalization Service, for official verification,
(ii)
pending such verification, the State may not delay, deny, reduce, or terminate the individual's eligibility for benefits under the program on the basis of the individual's immigration status, and
(iii)
the State shall not be liable for the consequences of any action, delay, or failure of the Service to conduct such verification.
(5)
If the State determines, after complying with the requirements of paragraph (4), that such an individual is not in a satisfactory immigration status under the applicable program—
(A)
the State shall deny or terminate the individual's eligibility for benefits under the program, and
(B)
the applicable fair hearing process shall be made available with respect to the individual.
(e)
Each Federal agency responsible for administration of a program described in subsection (b) shall not take any compliance, disallowance, penalty, or other regulatory action against a State with respect to any error in the State's determination to make an individual eligible for benefits based on citizenship or immigration status—
(1)
if the State has provided such eligibility based on a verification of satisfactory immigration status by the Immigration and Naturalization Service,
(2)
because the State, under subsection (d)(4)(A)(ii), was required to provide a reasonable opportunity to submit documentation,
(3)
because the State, under subsection (d)(4)(B)(ii), was required to wait for the response of the Immigration and Naturalization Service to the State's request for official verification of the immigration status of the individual, or
(4)
because of a fair hearing process described in subsection (d)(5)(B).
(f)
Subsections (a)(1) and (d) shall not apply with respect to aliens seeking medical assistance for the treatment of an emergency medical condition under section 1903(v)(2).

hospital protocols for organ procurement and standards for organ procurement agencies
Sec. 1138.
[42 U.S.C. 1320b–8]
(a)
(1)
The Secretary shall provide that a hospital or critical access hospital meeting the requirements of title XVIII or XIX may participate in the program established under such title only if—
(A)
the hospital or critical access hospital establishes written protocols for the identification of potential organ donors that—
(i)
assure that families of potential organ donors are made aware of the option of organ or tissue donation and their option to decline,
(ii)
encourage discretion and sensitivity with respect to the circumstances, views, and beliefs of such families, and
(iii)
require that such hospital's designated organ procurement agency (as defined in paragraph (3)(B)) is notified of potential organ donors;
(B)
in the case of a hospital in which organ transplants are performed, the hospital is a member of, and abides by the rules and requirements of, the Organ Procurement and Transplantation Network established pursuant to section 372 of the Public Health Service Act (in this section referred to as the “Network”); and
(C)
the hospital or critical access hospital has an agreement (as defined in paragraph (3)(A)) only with such hospital's designated organ procurement agency.
(2)
(A)
The Secretary shall grant a waiver of the requirements under subparagraphs (A)(iii) and (C) of paragraph (1) to a hospital or critical access hospital desiring to enter into an agreement with an organ procurement agency other than such hospital's designated organ procurement agency if the Secretary determines that—
(i)
the waiver is expected to increase organ donation; and
(ii)
the waiver will assure equitable treatment of patients referred for transplants within the service area served by such hospital's designated organ procurement agency and within the service area served by the organ procurement agency with which the hospital seeks to enter into an agreement under the waiver.
(B)
In making a determination under subparagraph (A), the Secretary may consider factors that would include, but not be limited to—
(i)
cost effectiveness;
(ii)
improvements in quality;
(iii)
whether there has been any change in a hospital's designated organ procurement agency due to a change made on or after December 28, 1992, in the definitions for metropolitan statistical areas (as established by the Office of Management and Budget); and
(iv)
the length and continuity of a hospital's relationship with an organ procurement agency other than the hospital's designated organ procurement agency;
except that nothing in this subparagraph shall be construed to permit the Secretary to grant a waiver that does not meet the requirements of subparagraph (A).
(C)
Any hospital or critical access hospital seeking a waiver under subparagraph (A) shall submit an application to the Secretary containing such information as the Secretary determines appropriate.
(D)
The Secretary shall—
(i)
publish a public notice of any waiver application received from a hospital or critical access hospital under this paragraph within 30 days of receiving such application; and
(ii)
prior to making a final determination on such application under subparagraph (A), offer interested parties the opportunity to submit written comments to the Secretary during the 60-day period beginning on the date such notice is published.
(3)
For purposes of this subsection—
(A)
the term “agreement” means an agreement described in seciton 371(b)(3)(A) of the Public Health Service Act;
(B)
the term “designated organ procurement agency” means, with respect to a hospital or critical access hospital, the organ procurement agency designated pursuant to subsection (b) for the service area in which such hospital is located; and
(C)
the term “organ” means a human kidney, liver, heart, lung, pancreas, and any other human organ or tissue specified by the Secretary for purposes of this subsection.
(b)
(1)
The Secretary shall provide that payment may be made under title XVIII or XIX with respect to organ procurement costs attributable to payments made to an organ procurement agency only if the agency—
(A)
(i)
is a qualified organ procurement organization (as described in section 371(b) of the Public Health Service Act) that is operating under a grant made under section 371(a) of such Act, or (ii) has been certified or recertified by the Secretary within the previous 2 years (4 years if the Secretary determines appropriate for an organization on the basis of its past practices) as meeting the standards to be a qualified organ procurement organization (as so described);
(B)
meets the requirements that are applicable under such title for organ procurement agencies;
(C)
meets performance-related standards prescribed by the Secretary;
(D)
is a member of, and abides by the rules and requirements of, the Network;
(E)
allocates organs, within its service area and nationally, in accordance with medical criteria and the policies of the Network; and
(F)
is designated by the Secretary as an organ procurement organization payments to which may be treated as organ procurement costs for purposes of reimbursement under such title.
(2)
The Secretary may not designate more than one organ procurement organization for each service area (described in section 371(b)(1)(E) of the Public Health Service Act) under paragraph (1)(F).
SEC. 1139.
[42 U.S.C. 1320b–9]

IMPROVED ACCESS TO, AND DELIVERY OF, HEALTH CARE FOR INDIANS UNDER TITLES XIX AND XXI.
(a)

Agreements With States for Medicaid and CHIP Outreach On or Near Reservations To Increase the Enrollment of Indians in Those Programs.—
(1)

In general.—
In order to improve the access of Indians residing on or near a reservation to obtain benefits under the Medicaid and State children's health insurance programs established under titles XIX and XXI, the Secretary shall encourage the State to take steps to provide for enrollment on or near the reservation. Such steps may include outreach efforts such as the outstationing of eligibility workers, entering into agreements with the Indian Health Service, Indian Tribes, Tribal Organizations, and Urban Indian Organizations to provide outreach, education regarding eligibility and benefits, enrollment, and translation services when such services are appropriate.
(2)

Construction.—
Nothing in paragraph (1) shall be construed as affecting arrangements entered into between States and the Indian Health Service, Indian Tribes, Tribal Organizations, or Urban Indian Organizations for such Service, Tribes, or Organizations to conduct administrative activities under such titles.
(b)

Requirement To Facilitate Cooperation.—
The Secretary, acting through the Centers for Medicare & Medicaid Services, shall take such steps as are necessary to facilitate cooperation with, and agreements between, States and the Indian Health Service, Indian Tribes, Tribal Organizations, or Urban Indian Organizations with respect to the provision of health care items and services to Indians under the programs established under title XIX or XXI.
(c)

Definition of Indian; Indian Tribe; Indian Health Program; Tribal Organization; Urban Indian Organization.—
For purposes of this section, title XIX, and title XXI, the terms “Indian”, “Indian Tribe”, “Indian Health Program”, “Tribal Organization”, and “Urban Indian Organization” have the meanings given those terms in section 4 of the Indian Health Care Improvement Act.
SEC. 1139A.
[42 U.S.C. 1320b–9a]

CHILD HEALTH QUALITY MEASURES.
(a)

Development of an Initial Core Set of Health Care Quality Measures for Children Enrolled in Medicaid or Chip.—
(1)

In general.—
Not later than January 1, 2010, the Secretary shall identify and publish for general comment an initial, recommended core set of child health quality measures for use by State programs administered under titles XIX and XXI, health insurance issuers and managed care entities that enter into contracts with such programs, and providers of items and services under such programs.
(2)

Identification of initial core measures.—
In consultation with the individuals and entities described in subsection (b)(3), the Secretary shall identify existing quality of care measures for children that are in use under public and privately sponsored health care coverage arrangements, or that are part of reporting systems that measure both the presence and duration of health insurance coverage over time.
(3)

Recommendations and dissemination.—
Based on such existing and identified measures, the Secretary shall publish an initial core set of child health quality measures that includes (but is not limited to) the following:
(A)
The duration of children's health insurance coverage over a 12-month time period.
(B)
The availability and effectiveness of a full range of—
(i)
preventive services, treatments, and services for acute conditions, including services to promote healthy birth, prevent and treat premature birth, and detect the presence or risk of physical or mental conditions that could adversely affect growth and development; and
(ii)
treatments to correct or ameliorate the effects of physical and mental conditions, including chronic conditions and, with respect to dental care, conditions requiring the restoration of teeth, relief of pain and infection, and maintenance of dental health, in infants, young children, school-age children, and adolescents.
(C)
The availability of care in a range of ambulatory and inpatient health care settings in which such care is furnished.
(D)
The types of measures that, taken together, can be used to estimate the overall national quality of health care for children, including children with special needs, and to perform comparative analyses of pediatric health care quality and racial, ethnic, and socioeconomic disparities in child health and health care for children.
(4)

Encourage voluntary and standardized reporting and mandatory reporting.—
(A)

Voluntary reporting.—
Not later than 2 years after the date of enactment of the Children's Health Insurance Program Reauthorization Act of 2009, the Secretary, in consultation with States, shall develop a standardized format for reporting information and procedures and approaches that encourage States to use the initial core measurement set to voluntarily report information regarding the quality of pediatric health care under titles XIX and XXI.
(B)

Mandatory reporting.—
Beginning with the annual State report on fiscal year 2024 required under subsection (c)(1), the Secretary shall require States to use the initial core measurement set and any updates or changes to that set to report information regarding the quality of pediatric health care under titles XIX and XXI using the standardized format for reporting information and procedures developed under subparagraph (A).
(5)

Adoption of best practices in implementing quality programs.—
The Secretary shall disseminate information to States regarding best practices among States with respect to measuring and reporting on the quality of health care for children, and shall facilitate the adoption of such best practices. In developing best practices approaches, the Secretary shall give particular attention to State measurement techniques that ensure the timeliness and accuracy of provider reporting, encourage provider reporting compliance, encourage successful quality improvement strategies, and improve efficiency in data collection using health information technology.
(6)

Reports to congress.—
Not later than January 1, 2011, and every 3 years thereafter, the Secretary shall report to Congress on—
(A)
the status of the Secretary's efforts to improve—
(i)
quality related to the duration and stability of health insurance coverage for children under titles XIX and XXI;
(ii)
the quality of children's health care under such titles, including preventive health services, dental care, health care for acute conditions, chronic health care, and health services to ameliorate the effects of physical and mental conditions and to aid in growth and development of infants, young children, school-age children, and adolescents with special health care needs; and
(iii)
the quality of children's health care under such titles across the domains of quality, including clinical quality, health care safety, family experience with health care, health care in the most integrated setting, and elimination of racial, ethnic, and socioeconomic disparities in health and health care;
(B)
the status of voluntary reporting by States under titles XIX and XXI, utilizing the initial core quality measurement set and, beginning with the report required on January 1, 2025, and for each annual report thereafter, the status of mandatory reporting by States under titles XIX and XXI, utilizing the initial core quality measurement set and any updates or changes to that set; and
(C)
any recommendations for legislative changes needed to improve the quality of care provided to children under titles XIX and XXI, including recommendations for quality reporting by States.
(7)

Technical assistance.—
The Secretary shall provide technical assistance to States to assist them in adopting and utilizing core child health quality measures in administering the State plans under titles XIX and XXI.
(8)

Definition of core set.—
In this section, the term “core set” means a group of valid, reliable, and evidence-based quality measures that, taken together—
(A)
provide information regarding the quality of health coverage and health care for children;
(B)
address the needs of children throughout the developmental age span; and
(C)
allow purchasers, families, and health care providers to understand the quality of care in relation to the preventive needs of children, treatments aimed at managing and resolving acute conditions, and diagnostic and treatment services whose purpose is to correct or ameliorate physical, mental, or developmental conditions that could, if untreated or poorly treated, become chronic.
(b)

Advancing and Improving Pediatric Quality Measures.—
(1)

Establishment of pediatric quality measures program.—
Not later than January 1, 2011, the Secretary shall establish a pediatric quality measures program to—
(A)
improve and strengthen the initial core child health care quality measures established by the Secretary under subsection (a);
(B)
expand on existing pediatric quality measures used by public and private health care purchasers and advance the development of such new and emerging quality measures; and
(C)
increase the portfolio of evidence-based, consensus pediatric quality measures available to public and private purchasers of children's health care services, providers, and consumers.
(2)

Evidence-based measures.—
The measures developed under the pediatric quality measures program shall, at a minimum, be—
(A)
evidence-based and, where appropriate, risk adjusted;
(B)
designed to identify and eliminate racial and ethnic disparities in child health and the provision of health care;
(C)
designed to ensure that the data required for such measures is collected and reported in a standard format that permits comparison of quality and data at a State, plan, and provider level;
(D)
periodically updated; and
(E)
responsive to the child health needs, services, and domains of health care quality described in clauses (i), (ii), and (iii) of subsection (a)(6)(A).
(3)

Process for pediatric quality measures program.—
In identifying gaps in existing pediatric quality measures and establishing priorities for development and advancement of such measures, the Secretary shall consult with—
(A)
States;
(B)
pediatricians, children's hospitals, and other primary and specialized pediatric health care professionals (including members of the allied health professions) who specialize in the care and treatment of children, particularly children with special physical, mental, and developmental health care needs;
(C)
dental professionals, including pediatric dental professionals;
(D)
health care providers that furnish primary health care to children and families who live in urban and rural medically underserved communities or who are members of distinct population sub-groups at heightened risk for poor health outcomes;
(E)
national organizations representing children, including children with disabilities and children with chronic conditions;
(F)
national organizations representing consumers and purchasers of children's health care;
(G)
national organizations and individuals with expertise in pediatric health quality measurement; and
(H)
voluntary consensus standards setting organizations and other organizations involved in the advancement of evidence-based measures of health care.
(4)

Developing, validating, and testing a portfolio of pediatric quality measures.—
As part of the program to advance pediatric quality measures, the Secretary shall—
(A)
award grants and contracts for the development, testing, and validation of new, emerging, and innovative evidence-based measures for children's health care services across the domains of quality described in clauses (i), (ii), and (iii) of subsection (a)(6)(A); and
(B)
award grants and contracts for—
(i)
the development of consensus on evidence-based measures for children's health care services;
(ii)
the dissemination of such measures to public and private purchasers of health care for children; and
(iii)
the updating of such measures as necessary.
(5)

Revising, strengthening, and improving initial core measures.—
Beginning no later than January 1, 2013, and annually thereafter, the Secretary shall publish recommended changes to the core measures described in subsection (a) that shall reflect the testing, validation, and consensus process for the development of pediatric quality measures described in subsection paragraphs (1) through (4).
(6)

Definition of pediatric quality measure.—
In this subsection, the term “pediatric quality measure” means a measurement of clinical care that is capable of being examined through the collection and analysis of relevant information, that is developed in order to assess 1 or more aspects of pediatric health care quality in various institutional and ambulatory health care settings, including the structure of the clinical care system, the process of care, the outcome of care, or patient experiences in care.
(7)

Construction.—
Nothing in this section shall be construed as supporting the restriction of coverage, under title XIX or XXI or otherwise, to only those services that are evidence-based.
(c)

Annual State Reports Regarding State-Specific Quality of Care Measures Applied Under Medicaid or Chip.—
(1)

Annual state reports.—
Each State with a State plan approved under title XIX or a State child health plan approved under title XXI shall annually report to the Secretary on the—
(A)
State-specific child health quality measures applied by the States under such plans, including measures described in subparagraphs (A) and (B) of subsection (a)(6) and, beginning with the annual report on fiscal year 2024, all of the core measures described in subsection (a) and any updates or changes to those measures; and
(B)
State-specific information on the quality of health care furnished to children under such plans, including information collected through external quality reviews of managed care organizations under section 1932 of the Social Security Act (42 U.S.C. 1396u–4) and benchmark plans under sections 1937 and 2103 of such Act (42 U.S.C. 1396u–7, 1397cc).
(2)

Publication.—
Not later than September 30, 2010, and annually thereafter, the Secretary shall collect, analyze, and make publicly available the information reported by States under paragraph (1).
(d)

Demonstration Projects for Improving the Quality of Children's Health Care and the Use of Health Information Technology.—
(1)

In general.—
During the period of fiscal years 2009 through 2013, the Secretary shall award not more than 10 grants to States and child health providers to conduct demonstration projects to evaluate promising ideas for improving the quality of children's health care provided under title XIX or XXI, including projects to—
(A)
experiment with, and evaluate the use of, new measures of the quality of children's health care under such titles (including testing the validity and suitability for reporting of such measures);
(B)
promote the use of health information technology in care delivery for children under such titles;
(C)
evaluate provider-based models which improve the delivery of children's health care services under such titles, including care management for children with chronic conditions and the use of evidence-based approaches to improve the effectiveness, safety, and efficiency of health care services for children; or
(D)
demonstrate the impact of the model electronic health record format for children developed and disseminated under subsection (f) on improving pediatric health, including the effects of chronic childhood health conditions, and pediatric health care quality as well as reducing health care costs.
(2)

Requirements.—
In awarding grants under this subsection, the Secretary shall ensure that—
(A)
only 1 demonstration project funded under a grant awarded under this subsection shall be conducted in a State; and
(B)
demonstration projects funded under grants awarded under this subsection shall be conducted evenly between States with large urban areas and States with large rural areas.
(3)

Authority for multistate projects.—
A demonstration project conducted with a grant awarded under this subsection may be conducted on a multistate basis, as needed.
(4)

Funding.—
$20,000,000 of the amount appropriated under subsection (i) for a fiscal year shall be used to carry out this subsection.
(e)

Childhood Obesity Demonstration Project.—
(1)

Authority to conduct demonstration.—
The Secretary, in consultation with the Administrator of the Centers for Medicare & Medicaid Services, shall conduct a demonstration project to develop a comprehensive and systematic model for reducing childhood obesity by awarding grants to eligible entities to carry out such project. Such model shall—
(A)
identify, through self-assessment, behavioral risk factors for obesity among children;
(B)
identify, through self-assessment, needed clinical preventive and screening benefits among those children identified as target individuals on the basis of such risk factors;
(C)
provide ongoing support to such target individuals and their families to reduce risk factors and promote the appropriate use of preventive and screening benefits; and
(D)
be designed to improve health outcomes, satisfaction, quality of life, and appropriate use of items and services for which medical assistance is available under title XIX or child health assistance is available under title XXI among such target individuals.
(2)

Eligibility entities.—
For purposes of this subsection, an eligible entity is any of the following:
(A)
A city, county, or Indian tribe.
(B)
A local or tribal educational agency.
(C)
An accredited university, college, or community college.
(D)
A Federally-qualified health center.
(E)
A local health department.
(F)
A health care provider.
(G)
A community-based organization.
(H)
Any other entity determined appropriate by the Secretary, including a consortia or partnership of entities described in any of subparagraphs (A) through (G).
(3)

Use of funds.—
An eligible entity awarded a grant under this subsection shall use the funds made available under the grant to—
(A)
carry out community-based activities related to reducing childhood obesity, including by—
(i)
forming partnerships with entities, including schools and other facilities providing recreational services, to establish programs for after school and weekend community activities that are designed to reduce childhood obesity;
(ii)
forming partnerships with daycare facilities to establish programs that promote healthy eating behaviors and physical activity; and
(iii)
developing and evaluating community educational activities targeting good nutrition and promoting healthy eating behaviors;
(B)
carry out age-appropriate school-based activities that are designed to reduce childhood obesity, including by—
(i)
developing and testing educational curricula and intervention programs designed to promote healthy eating behaviors and habits in youth, which may include—
(I)
after hours physical activity programs; and
(II)
science-based interventions with multiple components to prevent eating disorders including nutritional content, understanding and responding to hunger and satiety, positive body image development, positive self-esteem development, and learning life skills (such as stress management, communication skills, problemsolving and decisionmaking skills), as well as consideration of cultural and developmental issues, and the role of family, school, and community;
(ii)
providing education and training to educational professionals regarding how to promote a healthy lifestyle and a healthy school environment for children;
(iii)
planning and implementing a healthy lifestyle curriculum or program with an emphasis on healthy eating behaviors and physical activity; and
(iv)
planning and implementing healthy lifestyle classes or programs for parents or guardians, with an emphasis on healthy eating behaviors and physical activity for children;
(C)
carry out educational, counseling, promotional, and training activities through the local health care delivery systems including by—
(i)
promoting healthy eating behaviors and physical activity services to treat or prevent eating disorders, being overweight, and obesity;
(ii)
providing patient education and counseling to increase physical activity and promote healthy eating behaviors;
(iii)
training health professionals on how to identify and treat obese and overweight individuals which may include nutrition and physical activity counseling; and
(iv)
providing community education by a health professional on good nutrition and physical activity to develop a better understanding of the relationship between diet, physical activity, and eating disorders, obesity, or being overweight; and
(D)
provide, through qualified health professionals, training and supervision for community health workers to—
(i)
educate families regarding the relationship between nutrition, eating habits, physical activity, and obesity;
(ii)
educate families about effective strategies to improve nutrition, establish healthy eating patterns, and establish appropriate levels of physical activity; and
(iii)
educate and guide parents regarding the ability to model and communicate positive health behaviors.
(4)

Priority.—
In awarding grants under paragraph (1), the Secretary shall give priority to awarding grants to eligible entities—
(A)
that demonstrate that they have previously applied successfully for funds to carry out activities that seek to promote individual and community health and to prevent the incidence of chronic disease and that can cite published and peer-reviewed research demonstrating that the activities that the entities propose to carry out with funds made available under the grant are effective;
(B)
that will carry out programs or activities that seek to accomplish a goal or goals set by the State in the Healthy People 2010 plan of the State;
(C)
that provide non-Federal contributions, either in cash or in-kind, to the costs of funding activities under the grants;
(D)
that develop comprehensive plans that include a strategy for extending program activities developed under grants in the years following the fiscal years for which they receive grants under this subsection;
(E)
located in communities that are medically underserved, as determined by the Secretary;
(F)
located in areas in which the average poverty rate is at least 150 percent or higher of the average poverty rate in the State involved, as determined by the Secretary; and
(G)
that submit plans that exhibit multisectoral, cooperative conduct that includes the involvement of a broad range of stakeholders, including—
(i)
community-based organizations;
(ii)
local governments;
(iii)
local educational agencies;
(iv)
the private sector;
(v)
State or local departments of health;
(vi)
accredited colleges, universities, and community colleges;
(vii)
health care providers;
(viii)
State and local departments of transportation and city planning; and
(ix)
other entities determined appropriate by the Secretary.
(5)

Program design.—
(A)

Initial design.—
Not later than 1 year after the date of enactment of the Children's Health Insurance Program Reauthorization Act of 2009, the Secretary shall design the demonstration project. The demonstration should draw upon promising, innovative models and incentives to reduce behavioral risk factors. The Administrator of the Centers for Medicare & Medicaid Services shall consult with the Director of the Centers for Disease Control and Prevention, the Director of the Office of Minority Health, the heads of other agencies in the Department of Health and Human Services, and such professional organizations, as the Secretary determines to be appropriate, on the design, conduct, and evaluation of the demonstration.
(B)

Number and project areas.—
Not later than 2 years after the date of enactment of the Children's Health Insurance Program Reauthorization Act of 2009, the Secretary shall award 1 grant that is specifically designed to determine whether programs similar to programs to be conducted by other grantees under this subsection should be implemented with respect to the general population of children who are eligible for child health assistance under State child health plans under title XXI in order to reduce the incidence of childhood obesity among such population.
(6)

Report to congress.—
Not later than 3 years after the date the Secretary implements the demonstration project under this subsection, the Secretary shall submit to Congress a report that describes the project, evaluates the effectiveness and cost effectiveness of the project, evaluates the beneficiary satisfaction under the project, and includes any such other information as the Secretary determines to be appropriate.
(7)

Definitions.—
In this subsection:
(A)

Federally-qualified health center.—
The term “Federally-qualified health center” has the meaning given that term in section 1905(l)(2)(B).
(B)

Indian tribe.—
The term “Indian tribe” has the meaning given that term in section 4 of the Indian Health Care Improvement Act (25 U.S.C. 1603).
(C)

Self-assessment.—
The term “self-assessment” means a form that—
(i)
includes questions regarding—
(I)
behavioral risk factors;
(II)
needed preventive and screening services; and
(III)
target individuals' preferences for receiving follow-up information;
(ii)
is assessed using such computer generated assessment programs; and
(iii)
allows for the provision of such ongoing support to the individual as the Secretary determines appropriate.
(D)

Ongoing support.—
The term “ongoing support” means—
(i)
to provide any target individual with information, feedback, health coaching, and recommendations regarding—
(I)
the results of a self-assessment given to the individual;
(II)
behavior modification based on the self-assessment; and
(III)
any need for clinical preventive and screening services or treatment including medical nutrition therapy;
(ii)
to provide any target individual with referrals to community resources and programs available to assist the target individual in reducing health risks; and
(iii)
to provide the information described in clause (i) to a health care provider, if designated by the target individual to receive such information.
(8)

Appropriation.—
Out of any funds in the Treasury not otherwise appropriated, there is appropriated to carry out this subsection, $25,000,000 for the period of fiscal years 2010 through 2014, , $10,000,000 for the period of fiscal years 2016 and 2017, and $30,000,000 for the period of fiscal years 2018 through 2023.
(f)

Development of Model Electronic Health Record Format for Children Enrolled in Medicaid or CHIP.—
(1)

In general.—
Not later than January 1, 2010, the Secretary shall establish a program to encourage the development and dissemination of a model electronic health record format for children enrolled in the State plan under title XIX or the State child health plan under title XXI that is—
(A)
subject to State laws, accessible to parents, caregivers, and other consumers for the sole purpose of demonstrating compliance with school or leisure activity requirements, such as appropriate immunizations or physicals;
(B)
designed to allow interoperable exchanges that conform with Federal and State privacy and security requirements;
(C)
structured in a manner that permits parents and caregivers to view and understand the extent to which the care their children receive is clinically appropriate and of high quality; and
(D)
capable of being incorporated into, and otherwise compatible with, other standards developed for electronic health records.
(2)

Funding.—
$5,000,000 of the amount appropriated under subsection (i) for a fiscal year shall be used to carry out this subsection.
(g)

Study of Pediatric Health and Health Care Quality Measures.—
(1)

In general.—
Not later than July 1, 2010, the Institute of Medicine shall study and report to Congress on the extent and quality of efforts to measure child health status and the quality of health care for children across the age span and in relation to preventive care, treatments for acute conditions, and treatments aimed at ameliorating or correcting physical, mental, and developmental conditions in children. In conducting such study and preparing such report, the Institute of Medicine shall—
(A)
consider all of the major national population-based reporting systems sponsored by the Federal Government that are currently in place, including reporting requirements under Federal grant programs and national population surveys and estimates conducted directly by the Federal Government;
(B)
identify the information regarding child health and health care quality that each system is designed to capture and generate, the study and reporting periods covered by each system, and the extent to which the information so generated is made widely available through publication;
(C)
identify gaps in knowledge related to children's health status, health disparities among subgroups of children, the effects of social conditions on children's health status and use and effectiveness of health care, and the relationship between child health status and family income, family stability and preservation, and children's school readiness and educational achievement and attainment; and
(D)
make recommendations regarding improving and strengthening the timeliness, quality, and public transparency and accessibility of information about child health and health care quality.
(2)

Funding.—
Up to $1,000,000 of the amount appropriated under subsection (i) for a fiscal year shall be used to carry out this subsection.
(h)

Rule of Construction.—
Notwithstanding any other provision in this section, no evidence based quality measure developed, published, or used as a basis of measurement or reporting under this section may be used to establish an irrebuttable presumption regarding either the medical necessity of care or the maximum permissible coverage for any individual child who is eligible for and receiving medical assistance under title XIX or child health assistance under title XXI.
(i)

Appropriation.—
(1)

In general.—
Out of any funds in the Treasury not otherwise appropriated, there is appropriated—
(A)
for each of fiscal years 2009 through 2013, $45,000,000 for the purpose of carrying out this section (other than subsection (e));
(B)
for the period of fiscal years 2016 and 2017, $20,000,000 for the purpose of carrying out this section (other than subsections (e), (f), and (g));
(C)
for the period of fiscal years 2018 through 2023, $90,000,000 for the purpose of carrying out this section (other than subsections (e), (f), and (g));
(D)
for the period of fiscal years 2024 through 2027, $60,000,000 for the purpose of carrying out this section (other than subsections (e), (f), and (g)); and
(E)
for each of fiscal years 2028 and 2029, $15,000,000 for the purpose of carrying out this section (other than subsections (e), (f), and (g)).
(2)

Availability.—
Funds appropriated under this subsection shall remain available until expended.
SEC. 1139B.
[42 U.S.C. 1320b–9b]

ADULT HEALTH QUALITY MEASURES.
(a)

Development of Core Set of Health Care Quality Measures for Adults Eligible for Benefits Under Medicaid.—
The Secretary shall identify and publish a recommended core set of adult health quality measures for Medicaid eligible adults in the same manner as the Secretary identifies and publishes a core set of child health quality measures under section 1139A, including with respect to identifying and publishing existing adult health quality measures that are in use under public and privately sponsored health care coverage arrangements, or that are part of reporting systems that measure both the presence and duration of health insurance coverage over time, that may be applicable to Medicaid eligible adults.
(b)

Deadlines.—
(1)

Recommended measures.—
Not later than January 1, 2011, the Secretary shall identify and publish for comment a recommended core set of adult health quality measures for Medicaid eligible adults.
(2)

Dissemination.—
Not later than January 1, 2012, the Secretary shall publish an initial core set of adult health quality measures that are applicable to Medicaid eligible adults.
(3)

Standardized reporting.—
(A)

Voluntary reporting.—
Not later than January 1, 2013, the Secretary, in consultation with States, shall develop a standardized format for reporting information based on the initial core set of adult health quality measures and create procedures to encourage States to use such measures to voluntarily report information regarding the quality of health care for Medicaid eligible adults.
(B)

Mandatory reporting with respect to behavioral health measures.—
Beginning with the State report required under subsection (d)(1) for 2024, the Secretary shall require States to use all behavioral health measures included in the core set of adult health quality measures and any updates or changes to such measures to report information, using the standardized format for reporting information and procedures developed under subparagraph (A), regarding the quality of behavioral health care for Medicaid eligible adults.
(4)

Reports to congress.—
Not later than January 1, 2014, and every 3 years thereafter, the Secretary shall include in the report to Congress required under section 1139A(a)(6) information similar to the information required under that section with respect to the measures established under this section.
(5)

Establishment of medicaid quality measurement program.—
(A)

In general.—
Not later than 12 months after the release of the recommended core set of adult health quality measures under paragraph (1)), the Secretary shall establish a Medicaid Quality Measurement Program in the same manner as the Secretary establishes the pediatric quality measures program under section 1139A(b).
(B)

Revising, strengthening, and improving initial core measures.—
Beginning not later than 24 months after the establishment of the Medicaid Quality Measurement Program, and annually thereafter, the Secretary shall publish recommended changes to the initial core set of adult health quality measures that shall reflect the results of the testing, validation, and consensus process for the development of adult health quality measures.
(C)

Behavioral health measures.—
Beginning with respect to State reports required under subsection (d)(1) for 2024, the core set of adult health quality measures maintained under this paragraph (and any updates or changes to such measures) shall include behavioral health measures.
(c)

Construction.—
Nothing in this section shall be construed as supporting the restriction of coverage, under title XIX or XXI or otherwise, to only those services that are evidence-based, or in anyway limiting available services.
(d)

Annual State Reports Regarding State-Specific Quality of Care Measures Applied Under Medicaid.—
(1)

Annual state reports.—
Each State with a State plan or waiver approved under title XIX shall annually report (separately or as part of the annual report required under section 1139A(c)), to the Secretary on the—
(A)
State-specific adult health quality measures applied by the State under such plan, including measures described in subsection (b)(5) and, beginning with the report for 2024, all behavioral health measures included in the core set of adult health quality measures maintained under such subsection (b)(5) and any updates or changes to such measures (as required under subsection (b)(3)); and
(B)
State-specific information on the quality of health care furnished to Medicaid eligible adults under such plan, including information collected through external quality reviews of managed care organizations under section 1932 and benchmark plans under section 1937.
(2)

Publication.—
Not later than September 30, 2014, and annually thereafter, the Secretary shall collect, analyze, and make publicly available the information reported by States under paragraph (1).
(e)

Appropriation.—
Out of any funds in the Treasury not otherwise appropriated, there is appropriated for each of fiscal years 2010 through 2014, $60,000,000 for the purpose of carrying out this section. Funds appropriated under this subsection shall remain available until expended. Of the funds appropriated under this subsection, not less than $15,000,000 shall be used to carry out section 1139A(b).

prohibitions relating to references to social security or medicare
Sec. 1140.
[42 U.S.C. 1320b–10]
(a)
(1)
No person may use, in connection with any item constituting an advertisement, solicitation, circular, book, pamphlet, or other communication (including any Internet or other electronic communication), or a play, motion picture, broadcast, telecast, or other production, alone or with other words, letters, symbols, or emblems—
(A)
the words “Social Security”, “Social Security Account”, “Social Security System”, “Social Security Administration”, “Medicare”, “Centers for Medicare & Medicaid Services 22”, “Department of Health and Human Services”, “Health and Human Services”, “Supplemental Security Income Program”, “Medicaid”, “Death Benefits Update”, “Federal Benefit Information”, “Funeral Expenses”, or “Final Supplemental Plan”, the letters “SSA”, “CMS”, “DHHS”, “HHS”, or “SSI”, or any other combination or variation of such words or letters, or
^{22}
Section 207(a) of public Law 108–203 in several places purported to amend section 1140(a)(1) to add references to the “Centers for Medicare & Medicaid Services” and “CMS”. These amendments were not executable by reason of the ealier enactment of Public Law 108–173.
(B)
a symbol or emblem of the Social Security Administration, Centers for Medicare & Medicaid Services 22, or Department of Health and Human Services (including the design of, or a reasonable facsimile of the design of, the social security card issued pursuant to section 205(c)(2)(F), or the Medicare card the check used for payment of benefits under title II, or envelopes or other stationery used by the Social Security Administration, Centers for Medicare & Medicaid Services 22, or Department of Health and Human Services) or any other combination or variation of such symbols or emblems,
in a manner which such person knows or should know would convey, or in a manner which reasonably could be interpreted or construed as conveying, the false impression that such item is approved, endorsed, or authorized by the Social Security Administration, the Centers for Medicare & Medicaid Services 22, or the Department of Health and Human Services or that such person has some connection with, or authorization from, the Social Security Administration, the Centers for Medicare & Medicaid Services 22, or the Department of Health and Human Services. The preceding provisions of this subsection shall not apply with respect to the use by any agency or instrumentality of a State or political subdivision of a State of any words or letters which identify an agency or instrumentality of such State or of a political subdivision of such State or the use by any such agency or instrumentality of any symbol or emblem of an agency or instrumentality of such State or a political subdivision of such State.
(2)
(A)
No person may, for a fee, reproduce, reprint, or distribute any item consisting of a form, application, or other publication of the Social Security Administration unless such person has obtained specific, written authorization for such activity in accordance with regulations which the Commissioner of Social Security shall prescribe.
(B)
No person may, for a fee, reproduce, reprint, or distribute any item consisting of a form, application, or other publication of the Department of Health and Human Services unless such person has obtained specific, written authorization for such activity in accordance with regulations which the Secretary shall prescribe.
(3)
Any determination of whether the use of one or more words, letters, symbols, or emblems (or any combination or variation thereof) in connection with an item described in paragraph (1) or the reproduction, reprinting, or distribution of an item described in paragraph (2) is a violation of this subsection shall be made without regard to any inclusion in such item (or any so reproduced, reprinted, or distributed copy thereof) of a disclaimer of affiliation with the United States Government or any particular agency or instrumentality thereof.
(4)
(A)
No person shall offer, for a fee, to assist an individual to obtain a product or service that the person knows or should know is provided free of charge by the Social Security Administration unless, at the time the offer is made, the person provides to the individual to whom the offer is tendered a notice that—
(i)
explains that the product or service is available free of charge from the Social Security Administration, and
(ii)
complies with standards prescribed by the Commissioner of Social Security respecting the content of such notice and its placement, visibility, and legibility.
(B)
Subparagraph (A) shall not apply to any offer—
(i)
to serve as a claimant representative in connection with a claim arising under title II, title VIII, or title XVI; or
(ii)
to prepare, or assist in the preparation of, an individual's plan for achieving self-support under title XVI.
(b)
The Commissioner or the Secretary (as applicable) may, pursuant to regulations, impose a civil money penalty not to exceed—
(1)
except as provided in paragraph (2), $5,000, or
(2)
in the case of a violation consisting of a broadcast or telecast, $25,000,
against any person for each violation by such person of subsection (a). In the case of any items referred to in subsection (a)(1) consisting of pieces of mail, each such piece of mail which contains one or more words, letters, symbols, or emblems in violation of subsection (a) shall represent a separate violation. In the case of any items referred to in subsection (a)(1) consisting of Internet or other electronic communications, each dissemination, viewing, or accessing of such a communication which contains one or more words, letters, symbols, or emblems in violation of subsection (a) shall represent a separate violation 23 In the case of any item referred to in subsection (a)(2), the reproduction, reprinting, or distribution of such item shall be treated as a separate violation with respect to each copy thereof so reproduced, reprinted, or distributed.
^{23}
There is no period at the end of the third sentence. See amendment made to insert such sentence after the second sentence by section 814(b) of Public Law 114–74.
(c)
(1)
The provisions of section 1128A (other than subsections (a), (b), (f), (h), and (i) and the first sentence of subsection (c)) shall apply to civil money penalties under subsection (b) in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(2)
Penalties imposed against a person under subsection (b) may be compromised by the Commissioner or the Secretary (as applicable) and may be recovered in a civil action in the name of the United States brought in the district court of the United States for the district in which the violation occurred or where the person resides, has its principal office, or may be found, as determined by the Commissioner or the Secretary (as applicable). Amounts recovered under this section shall be paid to the Secretary and shall be deposited as miscellaneous receipts of the Treasury of the United States, except that (A) to the extent that such amounts are recovered under this section as penalties imposed for misuse of words, letters, symbols, or emblems relating to the Social Security Administration, such amounts shall be deposited into the Federal Old-Age and Survivors Insurance Trust Fund, and (B) to the extent that such amounts are recovered under this section as penalties imposed for misuse of words, letters, symbols, or emblems relating to the Department of Health and Human Services, such amounts shall be deposited into the Federal Hospital Insurance Trust Fund or the Federal Supplementary Medical Insurance Trust Fund, as appropriate. The amount of such penalty when finally determined, or the amount agreed upon in compromise, may be deducted from any sum then or later owing by the United States to the person against whom the penalty has been imposed.
(d)
The preceding provisions of this section may be enforced through the Office of the Inspector General of the Social Security Administration or the Office of the Inspector General of the Department of Health and Human Services (as appropriate).

blood donor locator service
Sec. 1141.
[42 U.S.C. 1320b–11]
(a)

In General.—
The Secretary shall establish and conduct a Blood Donor Locator Service, under the direction of the Commissioner of Social Security, which shall be used to obtain and transmit to any authorized person (as defined in subsection (h)(1)) the most recent mailing address of any blood donor who, as indicated by the donated blood or products derived therefrom or by the history of the subsequent use of such blood or blood products, has or may have the virus for acquired immune deficiency syndrome, in order to inform such donor of the possible need for medical care and treatment.
(b)

Provision of Address Information.—
Whenever the Secretary receives a request, filed by an authorized person (as defined in subsection (h)(1)), for the mailing address of a donor described in subsection (a) and the Secretary is reasonably satisfied that the requirements of this section have been met with respect to such request, the Secretary shall promptly undertake to provide the requested address information from—
(1)
the files and records maintained by the Social Security Administration, and
(2)
such files and records obtained pursuant to section 6103(m)(6) of the Internal Revenue Code of 1986 as the Secretary considers necessary to comply with such request.
(c)

Manner and Form of Requests.—
A request for address information under this section shall be filed in such manner and form as the Secretary shall by regulation prescribe, shall include the blood donor's social security account number, and shall be accompanied or supported by such documents as the Secretary may determine to be necessary.
(d)

Procedures and Safeguards.—
Any authorized person shall, as a condition for receiving address information from the Blood Donor Locator Service—
(1)
establish and maintain, to the satisfaction of the Secretary, a system for standardizing records with respect to any request, the reason for such request, and the date of such request made by or of it and any disclosure of address information made by or to it,
(2)
establish and maintain, to the satisfaction of the Secretary, a secure area or place in which such address information and all related blood donor records shall be stored,
(3)
restrict, to the satisfaction of the Secretary, access to the address information and related blood donor records only to persons whose duties or responsibilities require access and to whom disclosure may be made under the provisions of this section,
(4)
provide such other safeguards which the Secretary determines (and which the Secretary prescribes in regulations) to be necessary or appropriate to protect the confidentiality of the address information and related blood donor records,
(5)
furnish a report to the Secretary, at such time and containing such information as the Secretary may prescribe, which describes the procedures established and utilized by the authorized person for ensuring the confidentiality of address information and related blood donor records required under this subsection, and
(6)
destroy such address information and related blood donor records, upon completion of their use in providing the notification for which the information was obtained, so as to make such information and records undisclosable.
If the Secretary determines that any authorized person has failed to, or does not, meet the requirements of this subsection, the Secretary may, after any proceedings for review established under subsection (f), take such actions as are necessary to ensure such requirements are met, including refusing to disclose address information to such authorized person until the Secretary determines that such requirements have been or will be met. In the case of any authorized person who discloses any address information received pursuant to this section or any related blood donor records to any agent, this subsection shall apply to such authorized person and each such agent (except that, in the case of an agent, any report to the Secretary or other action with respect to the Secretary shall be made or taken through such authorized person). The Secretary shall destroy all related blood donor records in the possession of the Department of Health and Human Services upon completion of their use in transmitting mailing addresses as required under subsection (a), so as to make such records undisclosable.
(e)

Arrangements With State Agencies and Authorized Persons.—
The Secretary, in carrying out the Secretary's duties and functions under this section, shall enter into arrangements—
(1)
with State agencies to accept and to transmit to the Secretary requests for address information under this section and to accept and to transmit such information to authorized persons, and
(2)
with State agencies and authorized persons otherwise to cooperate with the Secretary in carrying out the purposes of this section.
(f)

Procedures for Administrative Review.—
The Secretary shall by regulation prescribe procedures which provide for administrative review of any determination that any authorized person has failed to meet the requirements of this section.
(g)

Unauthorized Disclosure of Information.—
Paragraphs (1), (2), and (3) of section 7213(a) of the Internal Revenue Code of 1986 shall apply with respect to the unauthorized willful disclosure to any person of address information or related blood donor records acquired or maintained by or under the Secretary, or pursuant to this section by any authorized person, or of information derived from any such address information or related blood donor records, in the same manner and to the same extent as such paragraphs apply with respect to unauthorized disclosures of return and return information described in such paragraphs. Paragraph (4) of section 7213(a) of such Code shall apply with respect to the willful offer of any item of material value in exchange for any such address information or related blood donor record in the same manner and to the same extent as such paragraph applies with respect to offers (in exchange for any return or return information) described in such paragraph.
(h)

Definitions.—
For purposes of this section—
(1)

Authorized person.—
The term “authorized person” means—
(A)
any agency of a State (or of a political subdivision of a State) which has duties or authority under State law relating to the public health or otherwise has the duty or authority under State law to regulate blood donations, and
(B)
any entity engaged in the acceptance of blood donations which is licensed or registered by the Food and Drug Administration in connection with the acceptance of such blood donations, and which, in accordance with such regulations as may be prescribed by the Secretary, provides for—
(i)
the confidentiality of any address information received pursuant to this section and related blood donor records,
(ii)
blood donor notification procedures for individuals with respect to whom such information is requested and a finding has been made that they have or may have the virus for acquired immune deficiency syndrome, and
(iii)
counseling services for such individuals who have been found to have such virus.
(2)

Related blood donor record.—
The term “related blood donor record” means any record, list, or compilation which indicates, directly or indirectly, the identity of any individual with respect to whom a request for address information has been made pursuant to this section.
(3)

State.—
The term “State” includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Commonwealth of the Northern Marianas, and the Trust Territory of the Pacific Islands.

research on outcomes of health care services and procedures
Sec. 1142.
[42 U.S.C. 1320b–12]
(a)

Establishment of Program.—
(1)

In general.—
The Secretary, acting through the Administrator for Health Care Policy and Research 24, shall—
^{24}
Pursuant to section 2(b)(2) of Public Law 106–129 (113 Stat. 1670), the reference shall be considered to be a reference to the Director of the Agency for Healthcare Research and Quality.
(A)
conduct and support research with respect to the outcomes, effectiveness, and appropriateness of health care services and procedures in order to identify the manner in which diseases, disorders, and other health conditions can most effectively and appropriately be prevented, diagnosed, treated, and managed clinically; and
(B)
assure that the needs and priorities of the program under title XVIII are appropriately reflected in the development and periodic review and updating (through the process set forth in section 913 of the Public Health Service Act) of treatment-specific or condition-specific practice guidelines for clinical treatments and conditions in forms appropriate for use in clinical practice, for use in educational programs, and for use in reviewing quality and appropriateness of medical care.
(2)

Evaluations of alternative services and procedures.—
In carrying out paragraph (1), the Secretary shall conduct or support evaluations of the comparative effects, on health and functional capacity, of alternative services and procedures utilized in preventing, diagnosing, treating, and clinically managing diseases, disorders, and other health conditions.
(3)

Initial guidelines.—
(A)
In carrying out paragraph (1)(B) of this subsection, and section 912(d) of the Public Health Service Act, the Secretary shall, by not later than January 1, 1991, assure the development of an initial set of the guidelines specified in paragraph (1)(B) that shall include not less than 3 clinical treatments or conditions that—
(i)
(I)
account for a significant portion of expenditures under title XVIII; and
(II)
have a significant variation in the frequency or the type of treatment provided; or
(ii)
otherwise meet the needs and priorities of the program under title XVIII, as set forth under subsection (b)(3).
(B)
(i)
The Secretary shall provide for the use of guidelines developed under subparagrah 25 (A) to improve the quality, effectiveness, and appropriateness of care provided under title XVIII. The Secretary shall determine the impact of such use on the quality, appropriateness, effectiveness, and cost of medical care provided under such title and shall report to the Congress on such determination by not later than January 1, 1993.
^{25}
As in original; should be “subparagraph”.
(ii)
For the purpose of carrying out clause (i), the Secretary shall expend, from the amounts specified in clause (iii), $1,000,000 for fiscal year 1990 and $1,500,000 for each of the fiscal years 1991 and 1992.
(iii)
For each fiscal year, for purposes of expenditures required in clause (ii)—
(I)
60 percent of an amount equal to the expenditure involved is appropriated from the Federal Hospital Insurance Trust Fund (established under section 1817); and
(II)
40 percent of an amount equal to the expenditure involved is appropriated from the Federal Supplementary Medical Insurance Trust Fund (established under section 1841).
(b)

Priorities.—
(1)

In general.—
The Secretary shall establish priorities with respect to the diseases, disorders, and other health conditions for which research and evaluations are to be conducted or supported under subsection (a). In establishing such priorities, the Secretary shall, with respect to a disease, disorder, or other health condition, consider the extent to which—
(A)
improved methods of prevention, diagnosis, treatment, and clinical management can benefit a significant number of individuals;
(B)
there is significant variation among physicians in the particular services and procedures utilized in making diagnoses and providing treatments or there is significant variation in the outcomes of health care services or procedures due to different patterns of diagnosis or treatment;
(C)
the services and procedures utilized for diagnosis and treatment result in relatively substantial expenditures; and
(D)
the data necessary for such evaluations are readily available or can readily be developed.
(2)

Preliminary assessments.—
For the purpose of establishing priorities under paragraph (1), the Secretary may, with respect to services and procedures utilized in preventing, diagnosing, treating, and clinically managing diseases, disorders, and other health conditions, conduct or support assessments of the extent to which—
(A)
rates of utilization vary among similar populations for particular diseases, disorders, and other health conditions;
(B)
uncertainties exist on the effect of utilizing a particular service or procedure; or
(C)
inappropriate services and procedures are provided.
(3)

Relationship with medicare program.—
In establishing priorities under paragraph (1) for research and evaluation, and under section 914(a) of the Public Health Service Act for the agenda under such section, the Secretary shall assure that such priorities appropriately reflect the needs and priorities of the program under title XVIII, as set forth by the Administrator of the Centers for Medicare & Medicaid Services.
(c)

Methodologies and Criteria for Evaluations.—
For the purpose of facilitating research under subsection (a), the Secretary shall—
(1)
conduct and support research with respect to the improvement of methodologies and criteria utilized in conducting research with respect to outcomes of health care services and procedures;
(2)
conduct and support reviews and evaluations of existing research findings with respect to such treatment or conditions;
(3)
conduct and support reviews and evaluations of the existing methodologies that use large data bases in conducting such research and shall develop new research methodologies, including data-based methods of advancing knowledge and methodologies that measure clinical and functional status of patients, with respect to such research;
(4)
provide grants and contracts to research centers, and contracts to other entities, to conduct such research on such treatment or conditions, including research on the appropriate use of prescription drugs;
(5)
conduct and support research and demonstrations on the use of claims data and data on clinical and functional status of patients in determining the outcomes, effectiveness, and appropriateness of such treatment; and
(6)
conduct and support supplementation of existing data bases, including the collection of new information, to enhance data bases for research purposes, and the design and development of new data bases that would be used in outcomes and effectiveness research.
(d)

Standards for Data Bases.—
In carrying out this section, the Secretary shall develop—
(1)
uniform definitions of data to be collected and used in describing a patient's clinical and functional status;
(2)
common reporting formats and linkages for such data; and
(3)
standards to assure the security, confidentiality, accuracy, and appropriate maintenance of such data.
(e)

Dissemination of Research Findings and Guidelines.—
(1)

In general.—
The Secretary shall provide for the dissemination of the findings of research and the guidelines described in subsection (a), and for the education of providers and others in the application of such research findings and guidelines.
(2)

Cooperative educational activities.—
In disseminating findings and guidelines under paragraph (1), and in providing for education under such paragraph, the Secretary shall work with professional associations, medical specialty and subspecialty organizations, and other relevant groups to identify and implement effective means to educate physicians, other providers, consumers, and others in using such findings and guidelines, including training for physician managers within provider organizations.
(f)

Evaluations.—
The Secretary shall conduct and support evaluations of the activities carried out under this section to determine the extent to which such activities have had an effect on the practices of physicians in providing medical treatment, the delivery of health care, and the outcomes of health care services and procedures.
(g)

Research With Respect to Dissemination.—
The Secretary may conduct or support research with respect to improving methods of disseminating information on the effectiveness and appropriateness of health care services and procedures.
(h)

Report to Congress.—
Not later than February 1 of each of the years 1991 and 1992, and of each second year thereafter, the Secretary shall report to the Congress on the progress of the activities under this section during the preceding fiscal year (or preceding 2 fiscal years, as appropriate), including the impact of such activities on medical care (particularly medical care for individuals receiving benefits under title XVIII).
(i)

Authorization of Appropriations.—
(1)

In general.—
There are authorized to be appropriated to carry out this section—
(A)
$50,000,000 for fiscal year 1990;
(B)
$75,000,000 for fiscal year 1991;
(C)
$110,000,000 for fiscal year 1992;
(D)
$148,000,000 for fiscal year 1993; and
(E)
$185,000,000 for fiscal year 1994.
(2)

Specifications.—
For the purpose of carrying out this section, for each of the fiscal years 1990 through 1992 an amount equal to two-thirds of the amounts authorized to be appropriated under paragraph (1), and for each of the fiscal years 1993 and 1994 an amount equal to 70 percent of such amounts, are to be appropriated in the following proportions from the following trust funds:
(A)
60 percent from the Federal Hospital Insurance Trust Fund (established under section 1817).
(B)
40 percent from the Federal Supplementary Medical Insurance Trust Fund (established under section 1841).
(3)

Allocations.—
(A)
For each fiscal year, of the amounts transferred or otherwise appropriated to carry out this section, the Secretary shall reserve appropriate amounts for each of the purposes specified in clauses (i) through (iv) of subparagraph (B).
(B)
The purposes referred to in subparagraph (A) are—
(i)
the development of guidelines, standards, performance measures, and review criteria;
(ii)
research and evaluation;
(iii)
data-base standards and development; and
(iv)
education and information dissemination.

social security account statements
Sec. 1143.
[42 U.S.C. 1320b–13]
(a)

Provision Upon Request
(1)
Beginning not later than October 1, 1990, the Commissioner of Social Security shall provide upon the request of an eligible individual a social security account statement (hereinafter referred to as the “statement”).
(2)
Each statement shall contain—
(A)
the amount of wages paid to and self-employment income derived by the eligible individual as shown by the records of the Commissioner at the date of the request;
(B)
an estimate of the aggregate of the employer, employee, and self-employment contributions of the eligible individual for old-age, survivors, and disability insurance as shown by the records of the Commissioner on the date of the request;
(C)
a separate estimate of the aggregate of the employer, employee, and self-employment contributions of the eligible individual for hospital insurance as shown by the records of the Commissioner on the date of the request;
(D)
an estimate of the potential monthly retirement, disability, survivor, and auxiliary benefits payable on the eligible individual's account together with a description of the benefits payable under the medicare program of title XVIII; and
(E)
in the case of an eligible individual described in paragraph (3)(C)(ii), an explanation, in language calculated to be understood by the average eligible individual, of the operation of the provisions under sections 202(k)(5) and 215(a)(7) and an explanation of the maximum potential effects of such provisions on the eligible individual's monthly retirement, survivor, and auxiliary benefits.
(3)
For purposes of this section, the term “eligible individual” means an individual—
(A)
who has a social security account number,
(B)
who has attained age 25 or over, and
(C)
(i)
has wages or net earnings from self-employment, or (ii) with respect to whom the Commissioner has information that the pattern of wages or self-employment income indicate a likelihood of noncovered employment.
(b)

Notice to Eligible Individuals
The Commissioner shall, to the maximum extent practicable, take such steps as are necessary to assure that eligible individuals are informed of the availability of the statement described in subsection (a).
(c)

Mandatory Provision of Statements
(1)
By not later than September 30, 1995, the Commissioner shall provide a statement to each eligible individual who has attained age 60 by October 1, 1994, and who is not receiving benefits under title II and for whom a current mailing address can be determined through such methods as the Commissioner determines to be appropriate. In fiscal years 1995 through 1999 the Commissioner shall provide a statement to each eligible individual who attains age 60 in such fiscal years and who is not receiving benefits under title II and for whom a current mailing address can be determined through such methods as the Commissioner determines to be appropriate. The Commissioner shall provide with each statement to an eligible individual notice that such statement is updated annually and is available upon request.
(2)
Beginning not later than October 1, 1999, the Commissioner shall provide a statement on an annual basis to each eligible individual who is not receiving benefits under title II and for whom a mailing address can be determined through such methods as the Commissioner determines to be appropriate. With respect to statements provided to eligible individuals who have not attained age 50, such statements need not include estimates of monthly retirement benefits. However, if such statements provided to eligible individuals who have not attained age 50 do not include estimates of retirement benefit amounts, such statements shall include a description of the benefits (including auxiliary benefits) that are available upon retirement.
(d)

Disclosure to Governmental Employees of Effect of Noncovered Employment
(1)
In the case of any individual commencing employment on or after January 1, 2005, in any agency or instrumentality of any State (or political subdivision thereof, as defined in section 218(b)(2)) in a position in which service performed by the individual does not constitute “employment” as defined in section 210, the head of the agency or instrumentality shall ensure that, prior to the date of the commencement of the individual's employment in the position, the individual is provided a written notice setting forth an explanation, in language calculated to be understood by the average individual, of the maximum effect on computations of primary insurance amounts (under section 215(a)(7)) and the effect on benefit amounts (under section 202(k)(5)) of monthly periodic payments or benefits payable based on earnings derived in such service. Such notice shall be in a form which shall be prescribed by the Commissioner of Social Security.
(2)
The written notice provided to an individual pursuant to paragraph (1) shall include a form which, upon completion and signature by the individual, would constitute certification by the individual of receipt of the notice. The agency or instrumentality providing the notice to the individual shall require that the form be completed and signed by the individual and submitted to the agency or instrumentality and to the pension, annuity, retirement, or similar fund or system established by the governmental entity involved responsible for paying the monthly periodic payments or benefits, before commencement of service with the agency or instrumentality.

outreach efforts to increase awareness of the availability of medicare cost-sharing and subsidies for low-income individuals under title xviii
Sec. 1144.
[42 U.S.C. 1320b–14]
(a)

Outreach.—
(1)

In general.—
The Commissioner of Social Security (in this section referred to as the “Commissioner”) shall conduct outreach efforts to—
(A)
identify individuals entitled to benefits under the medicare program under title XVIII who may be eligible for medical assistance for payment of the cost of medicare cost-sharing under the medicaid program pursuant to sections 1902(a)(10)(E) and 1933 for the transitional assistance under section 1860D–31(f), or for premium and cost-sharing subsidies under section 1860D–14; and
(B)
notify such individuals of the availability of such medical assistance, program, and subsidies under such sections.
(2)

Content of notice.—
Any notice furnished under paragraph (1) shall state that eligibility for medicare cost-sharing assistance, the transitional assistance under section 1860D–31(f), or premium and cost-sharing subsidies under section 1860D–14 under such sections is conditioned upon—
(A)
the individual providing to the State information about income and resources (in the case of an individual residing in a State that imposes an assets test for eligibility for medicare cost-sharing under the medicaid program); and
(B)
meeting the applicable eligibility criteria.
(b)

Coordination With States.—
(1)

In general.—
In conducting the outreach efforts under this section, the Commissioner shall—
(A)
furnish the agency of each State responsible for the administration of the medicaid program and any other appropriate State agency with information consisting of the name and address of individuals residing in the State that the Commissioner determines may be eligible for medical assistance for payment of the cost of medicare cost-sharing under the medicaid program pursuant to sections 1902(a)(10)(E) and 1933, for transitional assistance under section 1860D–31(f), or for premium and cost-sharing subsidies for low-income individuals under section 1860D–14; and
(B)
update any such information not less frequently than once per year.
(2)

Information in periodic updates.—
The periodic updates described in paragraph (1)(B) shall include information on individuals who are or may be eligible for the medical assistance, program, and subsidies described in paragraph (1)(A) because such individuals have experienced reductions in benefits under title II.
(c)26

Assistance with Medicare Savings Program and Low-Income Subsidy Program Applications.—
^{26}
Subsection (c), as added by section 113(a) of Public Law 110–275, takes effect on January 1, 2010.
(1)

Distribution of applications and information to individuals who are potentially eligible for low-income subsidy program.—
For each individual who submits an application for low-income subsidies under section 1860D–14, requests an application for such subsidies, or is otherwise identified as an individual who is potentially eligible for such subsidies, the Commissioner shall do the following:
(A)
Provide information describing the low-income subsidy program under section 1860D–14 and the Medicare Savings Program (as defined in paragraph (7)).
(B)
Provide an application for enrollment under such low-income subsidy program (if not already received by the Commissioner).
(C)
In accordance with paragraph (3), transmit data from such an application for purposes of initiating an application for benefits under the Medicare Savings Program.
(D)
Provide information on how the individual may obtain assistance in completing such application and an application under the Medicare Savings Program, including information on how the individual may contact the State health insurance assistance program (SHIP).
(E)
Make the application described in subparagraph (B) and the information described in subparagraphs (A) and (D) available at local offices of the Social Security Administration.
(2)

Training personnel in explaining benefit programs and assisting in completing lis application.—
The Commissioner shall provide training to those employees of the Social Security Administration who are involved in receiving applications for benefits described in paragraph (1)(B) in order that they may promote beneficiary understanding of the low-income subsidy program and the Medicare Savings Program in order to increase participation in these programs. Such employees shall provide assistance in completing an application described in paragraph (1)(B) upon request.
(3)

Transmittal of data to states.—
Beginning on January 1, 2010, with the consent of an individual completing an application for benefits described in paragraph (1)(B), the Commissioner shall electronically transmit to the appropriate State Medicaid agency data from such application, as determined by the Commissioner, which transmittal shall initiate an application of the individual for benefits under the Medicare Savings Program with the State Medicaid agency. In order to ensure that such data transmittal provides effective assistance for purposes of State adjudication of applications for benefits under the Medicare Savings Program, the Commissioner shall consult with the Secretary, after the Secretary has consulted with the States, regarding the content, form, frequency, and manner in which data (on a uniform basis for all States) shall be transmitted under this subparagraph.
(4)

Coordination with outreach.—
The Commissioner shall coordinate outreach activities under this subsection in connection with the low-income subsidy program and the Medicare Savings Program.
(5)

Reimbursement of social security administration administrative costs.—
(A)

Initial medicare savings program costs; additional low-income subsidy costs.—
(i)

Initial medicare savings program costs.—
There are hereby appropriated to the Commissioner to carry out this subsection, out of any funds in the Treasury not otherwise appropriated, $24,100,000. The amount appropriated under ths clause shall be available on October 1, 2008, and shall remain available until expended.
(ii)

Additional amount for low-income subsidy activities.—
There are hereby appropriated to the Commissioner, out of any funds in the Treasury not otherwise appropriated, $24,800,000 for fiscal year 2009 to carry out low-income subsidy activities under section 1860D–14 and the Medicare Savings Program (in accordance with this subsection), to remain available until expended. Such funds shall be in addition to the Social Security Administration's Limitation on Administrative Expenditure appropriations for such fiscal year.
(B)

Subsequent funding under agreements.—
(i)

In general.—
Effective for fiscal years beginning on or after October 1, 2010, the Commissioner and the Secretary shall enter into an agreement which shall provide funding (subject to the amount appropriated under clause (ii)) to cover the administrative costs of the Commissioner's activities under this subsection. Such agreement shall—
(I)
provide funds to the Commissioner for the full cost of the Social Security Administration's work related to the Medicare Savings Program required under this section;
(II)
provide such funding quarterly in advance of the applicable quarter based on estimating methodology agreed to by the Commissioner and the Secretary; and
(III)
require an annual accounting and reconciliation of the actual costs incurred and funds provided under this subsection.
(ii)

Appropriation.—
There are hereby appropriated to the Secretary solely for the purpose of providing payments to the Commissioner pursuant to an agreement specified in clause (i) that is in effect, out of any funds in the Treasury not otherwise appropriated, not more than $3,000,000 for fiscal year 2011 and each fiscal year thereafter.
(C)

Limitation.—
In no case shall funds from the Social Security Administration's Limitation on Administrative Expenses be used to carry out activities related to the Medicare Savings Program. For fiscal years beginning on or after October 1, 2010, no such activities shall be undertaken by the Social Security Administration unless the agreement specified in subparagraph (B) is in effect and full funding has been provided to the Commissioner as specified in such subparagraph.
(6)

GAO analysis and report.—
(A)

Analysis.—
The Comptroller General of the United States shall prepare an analysis of the impact of this subsection—
(i)
in increasing participation in the Medicare Savings Program, and
(ii)
on States and the Social Security Administration.
(B)

Report.—
Not later than January 1, 2012, the Comptroller General shall submit to Congress, the Commissioner, and the Secretary a report on the analysis conducted under subparagraph (A).
(7)

Medicare savings program defined.—
For purposes of this subsection, the term “Medicare Savings Program” means the program of medical assistance for payment of the cost of medicare cost-sharing under the Medicaid program pursuant to sections 1902(a)(10)(E) and 1933.

protection of social security and medicare trust funds
Sec. 1145.
[42 U.S.C. 1320b–15]
(a)

In General.—
No officer or employee of the United States shall—
(1)
delay the deposit of any amount into (or delay the credit of any amount to) any Federal fund or otherwise vary from the normal terms, procedures, or timing for making such deposits or credits,
(2)
refrain from the investment in public debt obligations of amounts in any Federal fund, or
(3)
redeem prior to maturity amounts in any Federal fund which are invested in public debt obligations for any purpose other than the payment of benefits or administrative expenses from such Federal fund.
(b)

Public Debt Obligation.—
For purposes of this section, the term “public debt obligation” means any obligation subject to the public debt limit established under section 3101 of title 31, United States Code.
(c)

Federal Fund.—
For purposes of this section, the term “Federal fund” means—
(1)
the Federal Old-Age and Survivors Insurance Trust Fund;
(2)
the Federal Disability Insurance Trust Fund;
(3)
the Federal Hospital Insurance Trust Fund; and
(4)
the Federal Supplementary Medical Insurance Trust Fund.

public disclosure of certain information on hospital financial interest and referral patterns
Sec. 1146.
[42 U.S.C. 1320b–16]
The Secretary shall make available to the public, in a form and manner specified by the Secretary, information disclosed to the Secretary pursuant to section 1866(a)(1)(S).

cross-program recovery of overpayments from benefits
[42 U.S.C. 1320b–17]
(a)27

In General.—
Subject to subsection (b), whenever the Commissioner of Social Security determines that more than the correct amount of any payment has been made to a person under a program described in subsection (e), the Commissioner of Social Security may recover the amount incorrectly paid by decreasing any amount which is payable to such person under any other program specified in that subsection.
^{27}
So in original. The section designator and enumerator “Sec. 1147.” are missing.
(b)

Limitation Applicable to Current Benefits.—
(1)

In general.—
In carrying out subsection (a), the Commissioner of Social Security may not decrease the monthly amount payable to an individual under a program described in subsection (e) that is paid when regularly due—
(A)
in the case of benefits under title II or VIII, by more than 10 percent of the amount of the benefit payable to the person for that month under such title; and
(B)
in the case of benefits under title XVI, by an amount greater than the lesser of—
(i)
the amount of the benefit payable to the person for that month; or
(ii)
an amount equal to 10 percent of the person's income for that month (including such monthly benefit but excluding payments under title II when recovery is also made from title II payments and excluding income excluded pursuant to section 1612(b)).
(2)

Exception.—
Paragraph (1) shall not apply if—
(A)
the person or the spouse of the person was involved in willful misrepresentation or concealment of material information in connection with the amount incorrectly paid; or
(B)
the person so requests.
(c)

No Effect on Eligibility or Benefit Amount Under Title VIII or XVI.—
In any case in which the Commissioner of Social Security takes action in accordance with subsection (a) to recover an amount incorrectly paid to any person, neither that person, nor (with respect to the program described in subsection (e)(3)) any individual whose eligibility for benefits under such program or whose amount of such benefits, is determined by considering any part of that person's income, shall, as a result of such action—
(1)
become eligible for benefits under the program described in paragraph (2) or (3) of subsection (e); or
(2)
if such person or individual is otherwise so eligible, become eligible for increased benefits under such program.
(d)

Inapplicability of Prohibition Against Assessment and Legal Process.—
Section 207 shall not apply to actions taken under the provisions of this section to decrease amounts payable under titles II and XVI.
(e)

Programs Described.—
The programs described in this subsection are the following:
(1)
The old-age, survivors, and disability insurance benefits program under title II.
(2)
The special benefits for certain World War II veterans program under title VIII.
(3)
The supplemental security income benefits program under title XVI (including, for purposes of this section, State supplementary payments paid by the Commissioner pursuant to an agreement under section 1616(a) of this Act or section 212(b) of Public Law 93–66).

the ticket to work and self-sufficiency program
Sec. 1148.
[42 U.S.C. 1320b–19]
(a)

In General.—
The Commissioner shall establish a Ticket to Work and Self-Sufficiency Program, under which a disabled beneficiary may use a ticket to work and self-sufficiency issued by the Commissioner in accordance with this section to obtain employment services, vocational rehabilitation services, or other support services from an employment network which is of the beneficiary's choice and which is willing to provide such services to such beneficiary.
(b)

Ticket System.—
(1)

Distribution of tickets.—
The Commissioner may issue a ticket to work and self-sufficiency to disabled beneficiaries for participation in the Program.
(2)

Assignment of tickets.—
A disabled beneficiary holding a ticket to work and self-sufficiency may assign the ticket to any employment network of the beneficiary's choice which is serving under the Program and is willing to accept the assignment.
(3)

Ticket terms.—
A ticket issued under paragraph (1) shall consist of a document which evidences the Commissioner's agreement to pay (as provided in paragraph (4)) an employment network, which is serving under the Program and to which such ticket is assigned by the beneficiary, for such employment services, vocational rehabilitation services, and other support services as the employment network may provide to the beneficiary.
(4)

Payments to employment networks.—
The Commissioner shall pay an employment network under the Program in accordance with the outcome payment system under subsection (h)(2) or under the outcome-milestone payment system under subsection (h)(3) (whichever is elected pursuant to subsection (h)(1)). An employment network may not request or receive compensation for such services from the beneficiary.
(c)

State Participation.—
(1)

In general.—
Each State agency administering or supervising the administration of the State plan approved under title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.) may elect to participate in the Program as an employment network with respect to a disabled beneficiary. If the State agency does elect to participate in the Program, the State agency also shall elect to be paid under the outcome payment system or the outcome-milestone payment system in accordance with subsection (h)(1). With respect to a disabled beneficiary that the State agency does not elect to have participate in the Program, the State agency shall be paid for services provided to that beneficiary under the system for payment applicable under section 222(d) and subsections (d) and (e) of section 1615. The Commissioner shall provide for periodic opportunities for exercising such elections.
(2)

Effect of participation by state agency.—
(A)

State agencies participating.—
In any case in which a State agency described in paragraph (1) elects under that paragraph to participate in the Program, the employment services, vocational rehabilitation services, and other support services which, upon assignment of tickets to work and self-sufficiency, are provided to disabled beneficiaries by the State agency acting as an employment network shall be governed by plans for vocational rehabilitation services approved under title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.).
(B)

State agencies administering maternal and child health services programs.—
Subparagraph (A) shall not apply with respect to any State agency administering a program under title V of this Act.
(3)

Agreements between state agencies and employment networks.—
State agencies and employment networks shall enter into agreements regarding the conditions under which services will be provided when an individual is referred by an employment network to a State agency for services. The Commissioner shall establish by regulations the timeframe within which such agreements must be entered into and the mechanisms for dispute resolution between State agencies and employment networks with respect to such agreements.
(d)

Responsibilities of the Commissioner.—
(1)

Selection and qualifications of program managers.—
The Commissioner shall enter into agreements with 1 or more organizations in the private or public sector for service as a program manager to assist the Commissioner in administering the Program. Any such program manager shall be selected by means of a competitive bidding process, from among organizations in the private or public sector with available expertise and experience in the field of vocational rehabilitation or employment services.
(2)

Tenure, renewal, and early termination.—
Each agreement entered into under paragraph (1) shall provide for early termination upon failure to meet performance standards which shall be specified in the agreement and which shall be weighted to take into account any performance in prior terms. Such performance standards shall include—
(A)
measures for ease of access by beneficiaries to services; and
(B)
measures for determining the extent to which failures in obtaining services for beneficiaries fall within acceptable parameters, as determined by the Commissioner.
(3)

Preclusion from direct participation in delivery of services in own service area.—
Agreements under paragraph (1) shall preclude—
(A)
direct participation by a program manager in the delivery of employment services, vocational rehabilitation services, or other support services to beneficiaries in the service area covered by the program manager's agreement; and
(B)
the holding by a program manager of a financial interest in an employment network or service provider which provides services in a geographic area covered under the program manager's agreement.
(4)

Selection of employment networks.—
(A)

In general.—
The Commissioner shall select and enter into agreements with employment networks for service under the Program. Such employment networks shall be in addition to State agencies serving as employment networks pursuant to elections under subsection (c).
(B)

Alternate participants.—
In any State where the Program is being implemented, the Commissioner shall enter into an agreement with any alternate participant that is operating under the authority of section 222(d)(2) in the State as of the date of the enactment of this section and chooses to serve as an employment network under the Program.
(5)

Termination of agreements with employment networks.—
The Commissioner shall terminate agreements with employment networks for inadequate performance, as determined by the Commissioner.
(6)

Quality assurance.—
The Commissioner shall provide for such periodic reviews as are necessary to provide for effective quality assurance in the provision of services by employment networks. The Commissioner shall solicit and consider the views of consumers and the program manager under which the employment networks serve and shall consult with providers of services to develop performance measurements. The Commissioner shall ensure that the results of the periodic reviews are made available to beneficiaries who are prospective service recipients as they select employment networks. The Commissioner shall ensure that the periodic surveys of beneficiaries receiving services under the Program are designed to measure customer service satisfaction.
(7)

Dispute resolution.—
The Commissioner shall provide for a mechanism for resolving disputes between beneficiaries and employment networks, between program managers and employment networks, and between program managers and providers of services. The Commissioner shall afford a party to such a dispute a reasonable opportunity for a full and fair review of the matter in dispute.
(e)

Program Managers.—
(1)

In general.—
A program manager shall conduct tasks appropriate to assist the Commissioner in carrying out the Commissioner's duties in administering the Program.
(2)

Recruitment of employment networks.—
A program manager shall recruit, and recommend for selection by the Commissioner, employment networks for service under the Program. The program manager shall carry out such recruitment and provide such recommendations, and shall monitor all employment networks serving in the Program in the geographic area covered under the program manager's agreement, to the extent necessary and appropriate to ensure that adequate choices of services are made available to beneficiaries. Employment networks may serve under the Program only pursuant to an agreement entered into with the Commissioner under the Program incorporating the applicable provisions of this section and regulations thereunder, and the program manager shall provide and maintain assurances to the Commissioner that payment by the Commissioner to employment networks pursuant to this section is warranted based on compliance by such employment networks with the terms of such agreement and this section. The program manager shall not impose numerical limits on the number of employment networks to be recommended pursuant to this paragraph.
(3)

Facilitation of access by beneficiaries to employment networks.—
A program manager shall facilitate access by beneficiaries to employment networks. The program manager shall ensure that each beneficiary is allowed changes in employment networks without being deemed to have rejected services under the Program. When such a change occurs, the program manager shall reassign the ticket based on the choice of the beneficiary. Upon the request of the employment network, the program manager shall make a determination of the allocation of the outcome or milestone-outcome payments based on the services provided by each employment network. The program manager shall establish and maintain lists of employment networks available to beneficiaries and shall make such lists generally available to the public. The program manager shall ensure that all information provided to disabled beneficiaries pursuant to this paragraph is provided in accessible formats.
(4)

Ensuring availability of adequate services.—
The program manager shall ensure that employment services, vocational rehabilitation services, and other support services are provided to beneficiaries throughout the geographic area covered under the program manager's agreement, including rural areas.
(5)

Reasonable access to services.—
The program manager shall take such measures as are necessary to ensure that sufficient employment networks are available and that each beneficiary receiving services under the Program has reasonable access to employment services, vocational rehabilitation services, and other support services. Services provided under the Program may include case management, work incentives planning, supported employment, career planning, career plan development, vocational assessment, job training, placement, follow-up services, and such other services as may be specified by the Commissioner under the Program. The program manager shall ensure that such services are available in each service area.
(f)

Employment Networks.—
(1)

Qualifications for employment networks.—
(A)

In general.—
Each employment network serving under the Program shall consist of an agency or instrumentality of a State (or a political subdivision thereof) or a private entity, that assumes responsibility for the coordination and delivery of services under the Program to individuals assigning to the employment network tickets to work and self-sufficiency issued under subsection (b).
(B)

One-stop delivery systems.—
An employment network serving under the Program may consist of a one-stop delivery system established under section 121(e) of the Workforce Innovation and Opportunity Act.
(C)

Compliance with selection criteria.—
No employment network may serve under the Program unless it meets and maintains compliance with both general selection criteria (such as professional and educational qualifications, where applicable) and specific selection criteria (such as substantial expertise and experience in providing relevant employment services and supports).
(D)

Single or associated providers allowed.—
An employment network shall consist of either a single provider of such services or of an association of such providers organized so as to combine their resources into a single entity. An employment network may meet the requirements of subsection (e)(4) by providing services directly, or by entering into agreements with other individuals or entities providing appropriate employment services, vocational rehabilitation services, or other support services.
(2)

Requirements relating to provision of services.—
Each employment network serving under the Program shall be required under the terms of its agreement with the Commissioner to—
(A)
serve prescribed service areas; and
(B)
take such measures as are necessary to ensure that employment services, vocational rehabilitation services, and other support services provided under the Program by, or under agreements entered into with, the employment network are provided under appropriate individual work plans that meet the requirements of subsection (g).
(3)

Annual financial reporting.—
Each employment network shall meet financial reporting requirements as prescribed by the Commissioner.
(4)

Periodic outcomes reporting.—
Each employment network shall prepare periodic reports, on at least an annual basis, itemizing for the covered period specific outcomes achieved with respect to specific services provided by the employment network. Such reports shall conform to a national model prescribed under this section. Each employment network shall provide a copy of the latest report issued by the employment network pursuant to this paragraph to each beneficiary upon enrollment under the Program for services to be received through such employment network. Upon issuance of each report to each beneficiary, a copy of the report shall be maintained in the files of the employment network. The program manager shall ensure that copies of all such reports issued under this paragraph are made available to the public under reasonable terms.
(g)

Individual Work Plans.—
(1)

Requirements.—
Each employment network shall—
(A)
take such measures as are necessary to ensure that employment services, vocational rehabilitation services, and other support services provided under the Program by, or under agreements entered into with, the employment network are provided under appropriate individual work plans that meet the requirements of subparagraph (C);
(B)
develop and implement each such individual work plan, in partnership with each beneficiary receiving such services, in a manner that affords such beneficiary the opportunity to exercise informed choice in selecting an employment goal and specific services needed to achieve that employment goal;
(C)
ensure that each individual work plan includes at least—
(i)
a statement of the vocational goal developed with the beneficiary, including, as appropriate, goals for earnings and job advancement;
(ii)
a statement of the services and supports that have been deemed necessary for the beneficiary to accomplish that goal;
(iii)
a statement of any terms and conditions related to the provision of such services and supports; and
(iv)
a statement of understanding regarding the beneficiary's rights under the Program (such as the right to retrieve the ticket to work and self-sufficiency if the beneficiary is dissatisfied with the services being provided by the employment network) and remedies available to the individual, including information on the availability of advocacy services and assistance in resolving disputes through the State grant program authorized under section 1150;
(D)
provide a beneficiary the opportunity to amend the individual work plan if a change in circumstances necessitates a change in the plan; and
(E)
make each beneficiary's individual work plan available to the beneficiary in, as appropriate, an accessible format chosen by the beneficiary.
An individual work plan established pursuant to this subsection shall be treated, for purposes of section 51(d)(6)(B)(i) of the Internal Revenue Code of 1986, as an individualized written plan for employment under a State plan for vocational rehabilitation services approved under the Rehabilitation Act of 1973.
(2)

Effective upon written approval.—
A beneficiary's individual work plan shall take effect upon written approval by the beneficiary or a representative of the beneficiary and a representative of the employment network that, in providing such written approval, acknowledges assignment of the beneficiary's ticket to work and self-sufficiency.
(h)

Employment Network Payment Systems.—
(1)

Election of payment system by employment networks.—
(A)

In general.—
The Program shall provide for payment authorized by the Commissioner to employment networks under either an outcome payment system or an outcome-milestone payment system. Each employment network shall elect which payment system will be utilized by the employment network, and, for such period of time as such election remains in effect, the payment system so elected shall be utilized exclusively in connection with such employment network (except as provided in subparagraph (B)).
(B)

No change in method of payment for beneficiaries with tickets already assigned to the employment networks.—
Any election of a payment system by an employment network that would result in a change in the method of payment to the employment network for services provided to a beneficiary who is receiving services from the employment network at the time of the election shall not be effective with respect to payment for services provided to that beneficiary and the method of payment previously selected shall continue to apply with respect to such services.
(2)

Outcome payment system.—
(A)

In general.—
The outcome payment system shall consist of a payment structure governing employment networks electing such system under paragraph (1)(A) which meets the requirements of this paragraph.
(B)

Payments made during outcome payment period.—
The outcome payment system shall provide for a schedule of payments to an employment network, in connection with each individual who is a beneficiary, for each month, during the individual's outcome payment period, for which benefits (described in paragraphs (3) and (4) of subsection (k)) are not payable to such individual because of work or earnings.
(C)

Computation of payments to employment network.—
The payment schedule of the outcome payment system shall be designed so that—
(i)
the payment for each month during the outcome payment period for which benefits (described in paragraphs (3) and (4) of subsection (k)) are not payable is equal to a fixed percentage of the payment calculation base for the calendar year in which such month occurs; and
(ii)
such fixed percentage is set at a percentage which does not exceed 40 percent.
(3)

Outcome-milestone payment system.—
(A)

In general.—
The outcome-milestone payment system shall consist of a payment structure governing employment networks electing such system under paragraph (1)(A) which meets the requirements of this paragraph.
(B)

Early payments upon attainment of milestones in advance of outcome payment periods.—
The outcome-milestone payment system shall provide for 1 or more milestones, with respect to beneficiaries receiving services from an employment network under the Program, that are directed toward the goal of permanent employment. Such milestones shall form a part of a payment structure that provides, in addition to payments made during outcome payment periods, payments made prior to outcome payment periods in amounts based on the attainment of such milestones.
(C)

Limitation on total payments to employment network.—
The payment schedule of the outcome milestone payment system shall be designed so that the total of the payments to the employment network with respect to each beneficiary is less than, on a net present value basis (using an interest rate determined by the Commissioner that appropriately reflects the cost of funds faced by providers), the total amount to which payments to the employment network with respect to the beneficiary would be limited if the employment network were paid under the outcome payment system.
(4)

Definitions.—
In this subsection:
(A)

Payment calculation base.—
The term “payment calculation base” means, for any calendar year—
(i)
in connection with a title II disability beneficiary, the average disability insurance benefit payable under section 223 for all beneficiaries for months during the preceding calendar year; and
(ii)
in connection with a title XVI disability beneficiary (who is not concurrently a title II disability beneficiary), the average payment of supplemental security income benefits based on disability payable under title XVI (excluding State supplementation) for months during the preceding calendar year to all beneficiaries who have attained 18 years of age but have not attained 65 years of age.
(B)

Outcome payment period.—
The term “outcome payment period” means, in connection with any individual who had assigned a ticket to work and self-sufficiency to an employment network under the Program, a period—
(i)
beginning with the first month, ending after the date on which such ticket was assigned to the employment network, for which benefits (described in paragraphs (3) and (4) of subsection (k)) are not payable to such individual by reason of engagement in substantial gainful activity or by reason of earnings from work activity; and
(ii)
ending with the 60th month (consecutive or otherwise), ending after such date, for which such benefits are not payable to such individual by reason of engagement in substantial gainful activity or by reason of earnings from work activity.
(5)

Periodic review and alterations of prescribed schedules.—
(A)

Percentages and periods.—
The Commissioner shall periodically review the percentage specified in paragraph (2)(C), the total payments permissible under paragraph (3)(C), and the period of time specified in paragraph (4)(B) to determine whether such percentages, such permissible payments, and such period provide an adequate incentive for employment networks to assist beneficiaries to enter the workforce, while providing for appropriate economies. The Commissioner may alter such percentage, such total permissible payments, or such period of time to the extent that the Commissioner determines, on the basis of the Commissioner's review under this paragraph, that such an alteration would better provide the incentive and economies described in the preceding sentence.
(B)

Number and amounts of milestone payments.—
The Commissioner shall periodically review the number and amounts of milestone payments established by the Commissioner pursuant to this section to determine whether they provide an adequate incentive for employment networks to assist beneficiaries to enter the workforce, taking into account information provided to the Commissioner by program managers, the Ticket to Work and Work Incentives Advisory Panel established by section 101(f) of the Ticket to Work and Work Incentives Improvement Act of 1999, and other reliable sources. The Commissioner may from time to time alter the number and amounts of milestone payments initially established by the Commissioner pursuant to this section to the extent that the Commissioner determines that such an alteration would allow an adequate incentive for employment networks to assist beneficiaries to enter the workforce. Such alteration shall be based on information provided to the Commissioner by program managers, the Ticket to Work and Work Incentives Advisory Panel established by section 101(f) of the Ticket to Work and Work Incentives Improvement Act of 1999, or other reliable sources.
(C)

Report on the adequacy of incentives.—
The Commissioner shall submit to the Congress not later than 36 months after the date of the enactment of the Ticket to Work and Work Incentives Improvement Act of 1999 a report with recommendations for a method or methods to adjust payment rates under subparagraphs (A) and (B), that would ensure adequate incentives for the provision of services by employment networks of—
(i)
individuals with a need for ongoing support and services;
(ii)
individuals with a need for high-cost accommodations;
(iii)
individuals who earn a subminimum wage; and
(iv)
individuals who work and receive partial cash benefits.
The Commissioner shall consult with the Ticket to Work and Work Incentives Advisory Panel established under section 101(f) of the Ticket to Work and Work Incentives Improvement Act of 1999 during the development and evaluation of the study. The Commissioner shall implement the necessary adjusted payment rates prior to full implementation of the Ticket to Work and Self-Sufficiency Program.
(i)

Suspension of Disability Reviews.—
During any period for which an individual is using, as defined by the Commissioner, a ticket to work and self-sufficiency issued under this section, the Commissioner (and any applicable State agency) may not initiate a continuing disability review or other review under section 221 of whether the individual is or is not under a disability or a review under title XVI similar to any such review under section 221.
(j)

Authorizations.—
(1)

Payments to employment networks.—
(A)

Title ii disability beneficiaries.—
There are authorized to be transferred from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund each fiscal year such sums as may be necessary to make payments to employment networks under this section. Money paid from the Trust Funds under this section with respect to title II disability beneficiaries who are entitled to benefits under section 223 or who are entitled to benefits under section 202(d) on the basis of the wages and self-employment income of such beneficiaries, shall be charged to the Federal Disability Insurance Trust Fund, and all other money paid from the Trust Funds under this section shall be charged to the Federal Old-Age and Survivors Insurance Trust Fund.
(B)

Title xvi disability beneficiaries.—
Amounts authorized to be appropriated to the Social Security Administration under section 1601 (as in effect pursuant to the amendments made by section 301 of the Social Security Amendments of 1972) shall include amounts necessary to carry out the provisions of this section with respect to title XVI disability beneficiaries.
(2)

Administrative expenses.—
The costs of administering this section (other than payments to employment networks) shall be paid from amounts made available for the administration of title II and amounts made available for the administration of title XVI, and shall be allocated among such amounts as appropriate.
(k)

Definitions.—
In this section:
(1)

Commissioner.—
The term “Commissioner” means the Commissioner of Social Security.
(2)

Disabled beneficiary.—
The term “disabled beneficiary” means a title II disability beneficiary or a title XVI disability beneficiary.
(3)

Title ii disability beneficiary.—
The term “title II disability beneficiary” means an individual entitled to disability insurance benefits under section 223 or to monthly insurance benefits under section 202 based on such individual's disability (as defined in section 223(d)). An individual is a title II disability beneficiary for each month for which such individual is entitled to such benefits.
(4)

Title xvi disability beneficiary.—
The term “title XVI disability beneficiary” means an individual eligible for supplemental security income benefits under title XVI on the basis of blindness (within the meaning of section 1614(a)(2)) or disability (within the meaning of section 1614(a)(3)). An individual is a title XVI disability beneficiary for each month for which such individual is eligible for such benefits.
(5)

Supplemental security income benefit.—
The term “supplemental security income benefit under title XVI” means a cash benefit under section 1611 or 1619(a), and does not include a State supplementary payment, administered federally or otherwise.
(l)

Regulations.—
Not later than 1 year after the date of the enactment of the Ticket to Work and Work Incentives Improvement Act of 1999, the Commissioner shall prescribe such regulations as are necessary to carry out the provisions of this section.

work incentives outreach program
Sec. 1149.
[42 U.S.C. 1320b–20]
(a)

Establishment.—
(1)

In general.—
The Commissioner, in consultation with the Ticket to Work and Work Incentives Advisory Panel established under section 101(f) of the Ticket to Work and Work Incentives Improvement Act of 1999, shall establish a community-based work incentives planning and assistance program for the purpose of disseminating accurate information to disabled beneficiaries on work incentives programs and issues related to such programs.
(2)

Grants, cooperative agreements, contracts, and outreach.—
Under the program established under this section, the Commissioner shall—
(A)
establish a competitive program of grants, cooperative agreements, or contracts to provide benefits planning and assistance, including information on the availability of protection and advocacy services, to disabled beneficiaries, including individuals participating in the Ticket to Work and Self-Sufficiency Program established under section 1148, the program established under section 1619, and other programs that are designed to encourage disabled beneficiaries to work;
(B)
conduct directly, or through grants, cooperative agreements, or contracts, ongoing outreach efforts to disabled beneficiaries (and to the families of such beneficiaries) who are potentially eligible to participate in Federal or State work incentive programs that are designed to assist disabled beneficiaries to work, including—
(i)
preparing and disseminating information explaining such programs; and
(ii)
working in cooperation with other Federal, State, and private agencies and nonprofit organizations that serve disabled beneficiaries, and with agencies and organizations that focus on vocational rehabilitation and work-related training and counseling;
(C)
establish a corps of trained, accessible, and responsive work incentives specialists within the Social Security Administration who will specialize in disability work incentives under titles II and XVI for the purpose of disseminating accurate information with respect to inquiries and issues relating to work incentives to—
(i)
disabled beneficiaries;
(ii)
benefit applicants under titles II and XVI; and
(iii)
individuals or entities awarded grants under subparagraphs (A) or (B); and
(D)
provide—
(i)
training for work incentives specialists and individuals providing planning assistance described in subparagraph (C); and
(ii)
technical assistance to organizations and entities that are designed to encourage disabled beneficiaries to return to work.
(3)

Coordination with other programs.—
The responsibilities of the Commissioner established under this section shall be coordinated with other public and private programs that provide information and assistance regarding rehabilitation services and independent living supports and benefits planning for disabled beneficiaries including the program under section 1619, the plans for achieving self-support program (PASS), and any other Federal or State work incentives programs that are designed to assist disabled beneficiaries, including educational agencies that provide information and assistance regarding rehabilitation, school-to-work programs, transition services (as defined in, and provided in accordance with, the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.)), a one-stop delivery system established under section 121(e) of the Workforce Innovation and Opportunity Act, and other services.
(b)

Conditions.—
(1)

Selection of entities.—
(A)

Application.—
An entity shall submit an application for a grant, cooperative agreement, or contract to provide benefits planning and assistance to the Commissioner at such time, in such manner, and containing such information as the Commissioner may determine is necessary to meet the requirements of this section.
(B)

Statewideness.—
The Commissioner shall ensure that the planning, assistance, and information described in paragraph (2) shall be available on a statewide basis.
(C)

Eligibility of states and private organizations.—
(i)

In general.—
The Commissioner may award a grant, cooperative agreement, or contract under this section to a State or a private agency or organization (other than Social Security Administration Field Offices and the State agency administering the State medicaid program under title XIX, including any agency or entity described in clause (ii), that the Commissioner determines is qualified to provide the planning, assistance, and information described in paragraph (2)).
(ii)

Agencies and entities described.—
The agencies and entities described in this clause are the following:
(I)
Any public or private agency or organization (including Centers for Independent Living established under title VII of the Rehabilitation Act of 1973 (29 U.S.C. 796 et seq.), protection and advocacy organizations, client assistance programs established in accordance with section 112 of the Rehabilitation Act of 1973 (29 U.S.C. 732), and State Developmental Disabilities Councils established in accordance with section 124 of the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 6024)) that the Commissioner determines satisfies the requirements of this section.
(II)
The State agency administering the State program funded under part A of title IV.
(D)

Exclusion for conflict of interest.—
The Commissioner may not award a grant, cooperative agreement, or contract under this section to any entity that the Commissioner determines would have a conflict of interest if the entity were to receive a grant, cooperative agreement, or contract under this section.
(2)

Services provided.—
A recipient of a grant, cooperative agreement, or contract to provide benefits planning and assistance shall select individuals who will act as planners and provide information, guidance, and planning to disabled beneficiaries on the—
(A)
availability and interrelation of any Federal or State work incentives programs designed to assist disabled beneficiaries that the individual may be eligible to participate in;
(B)
adequacy of any health benefits coverage that may be offered by an employer of the individual and the extent to which other health benefits coverage may be available to the individual; and
(C)
availability of protection and advocacy services for disabled beneficiaries and how to access such services.
(3)

Amount of grants, cooperative agreements, or contracts.—
(A)

Based on population of disabled beneficiaries.—
Subject to subparagraph (B), the Commissioner shall award a grant, cooperative agreement, or contract under this section to an entity based on the percentage of the population of the State where the entity is located who are disabled beneficiaries.
(B)

Limitations.—
(i)

Per grant.—
No entity shall receive a grant, cooperative agreement, or contract under this section for a fiscal year that is less than $50,000 or more than $300,000.
(ii)

Total amount for all grants, cooperative agreements, and contracts.—
The total amount of all grants, cooperative agreements, and contracts awarded under this section for a fiscal year may not exceed $23,000,000.
(4)

Funding.—
(A)

Allocation of costs.—
The costs of carrying out this section shall be paid from amounts made available for the administration of title II and amounts made available for the administration of title XVI, and shall be allocated among those amounts as appropriate.
(B)

Carryover.—
An amount not in excess of 10 percent of the total amount obligated through a grant, cooperative agreement, or contract awarded under this section for a fiscal year to a State or a private agency or organization shall remain available for obligation to such State or private agency or organization until the end of the succeeding fiscal year. Any such amount remaining available for obligation during such succeeding fiscal year shall be available for providing benefits planning and assistance only for individuals who are within the caseload of the recipient of the grant, agreement, or contract as of immediately before the beginning of such fiscal year.
(c)

Annual Report.—
Each entity awarded a grant, cooperative agreement, or contract under this section shall submit an annual report to the Commissioner on the benefits planning and assistance provided to individuals under such grant, agreement, or contract.
(d)

Definitions.—
In this section:
(1)

Commissioner.—
The term “Commissioner” means the Commissioner of Social Security.
(2)

Disabled beneficiary.—
The term “disabled beneficiary” means an individual—
(A)
who is a disabled beneficiary as defined in section 1148(k)(2) of this Act;
(B)
who is receiving a cash payment described in section 1616(a) of this Act or a supplementary payment described in section 212(a)(3) of Public Law 93–66 (without regard to whether such payment is paid by the Commissioner pursuant to an agreement under section 1616(a) of this Act or under section 212(b) of Public Law 93–66);
(C)
who, pursuant to section 1619(b) of this Act, is considered to be receiving benefits under title XVI of this Act; or
(D)
who is entitled to benefits under part A of title XVIII of this Act by reason of the penultimate sentence of section 226(b) of this Act.
(e)

Authorization of Appropriations.—
There are authorized to be appropriated to carry out this section $23,000,000 for each of the fiscal years 2000 through 2011.

state grants for work incentives assistance to disabled beneficiaries
Sec. 1150.
[42 U.S.C. 1320b–21]
(a)

In General.—
Subject to subsection (c), the Commissioner may make payments in each State to the protection and advocacy system established pursuant to part C of title I of the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 6041 et seq.) for the purpose of providing services to disabled beneficiaries.
(b)

Services Provided.—
Services provided to disabled beneficiaries pursuant to a payment made under this section may include—
(1)
information and advice about obtaining vocational rehabilitation and employment services; and
(2)
advocacy or other services that a disabled beneficiary may need to secure, maintain, or regain gainful employment.
(c)

Application.—
In order to receive payments under this section, a protection and advocacy system shall submit an application to the Commissioner, at such time, in such form and manner, and accompanied by such information and assurances as the Commissioner may require.
(d)

Amount of Payments.—
(1)

In general.—
Subject to the amount appropriated for a fiscal year for making payments under this section, a protection and advocacy system shall not be paid an amount that is less than—
(A)
in the case of a protection and advocacy system located in a State (including the District of Columbia and Puerto Rico) other than Guam, American Samoa, the United States Virgin Islands, and the Commonwealth of the Northern Mariana Islands, the greater of—
(i)
$100,000; or
(ii)
⅓ of 1 percent of the amount available for payments under this section; and
(B)
in the case of a protection and advocacy system located in Guam, American Samoa, the United States Virgin Islands, and the Commonwealth of the Northern Mariana Islands, $50,000.
(2)

Inflation adjustment.—
For each fiscal year in which the total amount appropriated to carry out this section exceeds the total amount appropriated to carry out this section in the preceding fiscal year, the Commissioner shall increase each minimum payment under subparagraphs (A) and (B) of paragraph (1) by a percentage equal to the percentage increase in the total amount so appropriated to carry out this section.
(e)

Annual Report.—
Each protection and advocacy system that receives a payment under this section shall submit an annual report to the Commissioner and the Ticket to Work and Work Incentives Advisory Panel established under section 101(f) of the Ticket to Work and Work Incentives Improvement Act of 1999 on the services provided to individuals by the system.
(f)

Funding.—
(1)

Allocation of payments.—
Payments under this section shall be made from amounts made available for the administration of title II and amounts made available for the administration of title XVI, and shall be allocated among those amounts as appropriate.
(2)

Carryover.—
Any amounts allotted for payment to a protection and advocacy system under this section for a fiscal year shall remain available for payment to or on behalf of the protection and advocacy system until the end of the succeeding fiscal year.
(g)

Definitions.—
In this section:
(1)

Commissioner.—
The term “Commissioner” means the Commissioner of Social Security.
(2)

Disabled beneficiary.—
The term “disabled beneficiary” means an individual—
(A)
who is a disabled beneficiary as defined in section 1148(k)(2) of this Act;
(B)
who is receiving a cash payment described in section 1616(a) of this Act or a supplementary payment described in section 212(a)(3) of Public Law 93–66 (without regard to whether such payment is paid by the Commissioner pursuant to an agreement under section 1616(a) of this Act or under section 212(b) of Public Law 93–66);
(C)
who, pursuant to section 1619(b) of this Act, is considered to be receiving benefits under title XVI of this Act; or
(D)
who is entitled to benefits under part A of title XVIII of this Act by reason of the penultimate sentence of section 226(b) of this Act.
(3)

Protection and advocacy system.—
The term “protection and advocacy system” means a protection and advocacy system established pursuant to part C of title I of the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 6041 et seq.).
(h)

Authorization of Appropriations.—
There are authorized to be appropriated to carry out this section $7,000,000 for each of the fiscal years 2000 through 2011.
SEC. 1150A.
[42 U.S.C. 1320b–23]

PHARMACY BENEFIT MANAGERS TRANSPARENCY REQUIREMENTS.
(a)

Provision of Information.—
A health benefits plan or any entity that provides pharmacy benefits management services on behalf of a health benefits plan (in this section referred to as a “PBM”) that manages prescription drug coverage under a contract with—
(1)
a PDP sponsor of a prescription drug plan or an MA organization offering an MA–PD plan under part D of title XVIII; or
(2)
a qualified health benefits plan offered through an exchange established by a State under section 1311 of the Patient Protection and Affordable Care Act,
shall provide the information described in subsection (b) to the Secretary and, in the case of a PBM, to the plan with which the PBM is under contract with, at such times, and in such form and manner, as the Secretary shall specify.
(b)

Information Described.—
The information described in this subsection is the following with respect to services provided by a health benefits plan or PBM for a contract year:
(1)
The percentage of all prescriptions that were provided through retail pharmacies compared to mail order pharmacies, and the percentage of prescriptions for which a generic drug was available and dispensed (generic dispensing rate), by pharmacy type (which includes an independent pharmacy, chain pharmacy, supermarket pharmacy, or mass merchandiser pharmacy that is licensed as a pharmacy by the State and that dispenses medication to the general public), that is paid by the health benefits plan or PBM under the contract.
(2)
The aggregate amount, and the type of rebates, discounts, or price concessions (excluding bona fide service fees, which include but are not limited to distribution service fees, inventory management fees, product stocking allowances, and fees associated with administrative services agreements and patient care programs (such as medication compliance programs and patient education programs)) that the PBM negotiates that are attributable to patient utilization under the plan, and the aggregate amount of the rebates, discounts, or price concessions that are passed through to the plan sponsor, and the total number of prescriptions that were dispensed.
(3)
The aggregate amount of the difference between the amount the health benefits plan pays the PBM and the amount that the PBM pays retail pharmacies, and mail order pharmacies, and the total number of prescriptions that were dispensed.
(c)

Confidentiality.—
Information disclosed by a health benefits plan or PBM under this section is confidential and shall not be disclosed by the Secretary or by a plan receiving the information, except that the Secretary may disclose the information in a form which does not disclose the identity of a specific PBM, plan, or prices charged for drugs, for the following purposes:
(1)
As the Secretary determines to be necessary to carry out this section or part D of title XVIII.
(2)
To permit the Comptroller General to review the information provided.
(3)
To permit the Director of the Congressional Budget Office to review the information provided.
(4)
To States to carry out section 1311 of the Patient Protection and Affordable Care Act.
(d)

Penalties.—
The provisions of subsection (b)(3)(C) of section 1927 shall apply to a health benefits plan or PBM that fails to provide information required under subsection (a) on a timely basis or that knowingly provides false information in the same manner as such provisions apply to a manufacturer with an agreement under that section.

reporting to law enforcement of crimes occurring in federally funded long-term care facilities
Sec. 1150B.
[42 U.S.C. 1320b–25]
(a)

Determination and Notification.—
(1)

Determination.—
The owner or operator of each long-term care facility that receives Federal funds under this Act shall annually determine whether the facility received at least $10,000 in such Federal funds during the preceding year.
(2)

Notification.—
If the owner or operator determines under paragraph (1) that the facility received at least $10,000 in such Federal funds during the preceding year, such owner or operator shall annually notify each covered individual (as defined in paragraph (3)) of that individual's obligation to comply with the reporting requirements described in subsection (b).
(3)

Covered individual defined.—
In this section, the term “covered individual” means each individual who is an owner, operator, employee, manager, agent, or contractor of a long-term care facility that is the subject of a determination described in paragraph (1).
(b)

Reporting Requirements.—
(1)

In general.—
Each covered individual shall report to the Secretary and 1 or more law enforcement entities for the political subdivision in which the facility is located any reasonable suspicion of a crime (as defined by the law of the applicable political subdivision) against any individual who is a resident of, or is receiving care from, the facility.
(2)

Timing.—
If the events that cause the suspicion—
(A)
result in serious bodily injury, the individual shall report the suspicion immediately, but not later than 2 hours after forming the suspicion; and
(B)
do not result in serious bodily injury, the individual shall report the suspicion not later than 24 hours after forming the suspicion.
(c)

Penalties.—
(1)

In general.—
If a covered individual violates subsection (b)—
(A)
the covered individual shall be subject to a civil money penalty of not more than $200,000; and
(B)
the Secretary may make a determination in the same proceeding to exclude the covered individual from participation in any Federal health care program (as defined in section 1128B(f)).
(2)

Increased harm.—
If a covered individual violates subsection (b) and the violation exacerbates the harm to the victim of the crime or results in harm to another individual—
(A)
the covered individual shall be subject to a civil money penalty of not more than $300,000; and
(B)
the Secretary may make a determination in the same proceeding to exclude the covered individual from participation in any Federal health care program (as defined in section 1128B(f)).
(3)

Excluded individual.—
During any period for which a covered individual is classified as an excluded individual under paragraph (1)(B) or (2)(B), a long-term care facility that employs such individual shall be ineligible to receive Federal funds under this Act.
(4)

Extenuating circumstances.—
(A)

In general.—
The Secretary may take into account the financial burden on providers with underserved populations in determining any penalty to be imposed under this subsection.
(B)

Underserved population defined.—
In this paragraph, the term “underserved population” means the population of an area designated by the Secretary as an area with a shortage of elder justice programs or a population group designated by the Secretary as having a shortage of such programs. Such areas or groups designated by the Secretary may include—
(i)
areas or groups that are geographically isolated (such as isolated in a rural area);
(ii)
racial and ethnic minority populations; and
(iii)
populations underserved because of special needs (such as language barriers, disabilities, alien status, or age).
(d)

Additional Penalties for Retaliation.—
(1)

In general.—
A long-term care facility may not—
(A)
discharge, demote, suspend, threaten, harass, or deny a promotion or other employment-related benefit to an employee, or in any other manner discriminate against an employee in the terms and conditions of employment because of lawful acts done by the employee; or
(B)
file a complaint or a report against a nurse or other employee with the appropriate State professional disciplinary agency because of lawful acts done by the nurse or employee,
for making a report, causing a report to be made, or for taking steps in furtherance of making a report pursuant to subsection (b)(1).
(2)

Penalties for retaliation.—
If a long-term care facility violates subparagraph (A) or (B) of paragraph (1) the facility shall be subject to a civil money penalty of not more than $200,000 or the Secretary may classify the entity as an excluded entity for a period of 2 years pursuant to section 1128(b), or both.
(3)

Requirement to post notice.—
Each long-term care facility shall post conspicuously in an appropriate location a sign (in a form specified by the Secretary) specifying the rights of employees under this section. Such sign shall include a statement that an employee may file a complaint with the Secretary against a long-term care facility that violates the provisions of this subsection and information with respect to the manner of filing such a complaint.
(e)

Procedure.—
The provisions of section 1128A (other than subsections (a) and (b) and the second sentence of subsection (f)) shall apply to a civil money penalty or exclusion under this section in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(f)

Definitions.—
In this section, the terms “elder justice”, “long-term care facility”, and “law enforcement” have the meanings given those terms in section 2011.
SEC. 1150C.
[42 U.S.C. 1320b-26]

FUNDING FOR PROVIDERS RELATING TO COVID–19.
(a)

Funding.—
In addition to amounts otherwise available, there is appropriated to the Secretary, for fiscal year 2021, out of any monies in the Treasury not otherwise appropriated, $8,500,000,000 for purposes of making payments to eligible health care providers for health care related expenses and lost revenues that are attributable to COVID–19. Amounts appropriated under the preceding sentence shall remain available until expended.
(b)

Application Requirement.—
To be eligible for a payment under this section, an eligible health care provider shall submit to the Secretary an application in such form and manner as the Secretary shall prescribe. Such application shall contain the following:
(1)
A statement justifying the need of the provider for the payment, including documentation of the health care related expenses attributable to COVID–19 and lost revenues attributable to COVID–19.
(2)
The tax identification number of the provider.
(3)
Such assurances as the Secretary determines appropriate that the eligible health care provider will maintain and make available such documentation and submit such reports (at such time, in such form, and containing such information as the Secretary shall prescribe) as the Secretary determines is necessary to ensure compliance with any conditions imposed by the Secretary under this section.
(4)
Any other information determined appropriate by the Secretary.
(c)

Limitation.—
Payments made to an eligible health care provider under this section may not be used to reimburse any expense or loss that—
(1)
has been reimbursed from another source; or
(2)
another source is obligated to reimburse.
(d)

Application of Requirements, Rules, and Procedures.—
The Secretary shall apply any requirements, rules, or procedures as the Secretary deems appropriate for the efficient execution of this section.
(e)

Definitions.—
In this section:
(1)

Eligible health care provider.—
The term “eligible health care provider” means—
(A)
a provider of services (as defined in section 1861(u)) or a supplier (as defined in section 1861(d)) that—
(i)
is enrolled in the Medicare program under title XVIII under section 1866(j) (including temporarily enrolled during the emergency period described in section 1135(g)(1)(B) for such period);
(ii)
provides diagnoses, testing, or care for individuals with possible or actual cases of COVID–19; and
(iii)
is a rural provider or supplier; or
(B)
a provider or supplier that—
(i)
is enrolled with a State Medicaid plan under title XIX (or a waiver of such plan) in accordance with subsections (a)(77) and (kk) of section 1902 (including enrolled pursuant to section 1902(a)(78) or section 1932(d)(6)) or enrolled with a State child health plan under title XXI (or a waiver of such plan) in accordance with subparagraph (G) of section 2107(e)(1) (including enrolled pursuant to subparagraph (D) or (Q) of such section);
(ii)
provides diagnoses, testing, or care for individuals with possible or actual cases of COVID–19; and
(iii)
is a rural provider or supplier.
(2)

Health care related expenses attributable to covid–19.—
The term “health care related expenses attributable to COVID–19” means health care related expenses to prevent, prepare for, and respond to COVID–19, including the building or construction of a temporary structure, the leasing of a property, the purchase of medical supplies and equipment, including personal protective equipment and testing supplies, providing for increased workforce and training (including maintaining staff, obtaining additional staff, or both), the operation of an emergency operation center, retrofitting a facility, providing for surge capacity, and other expenses determined appropriate by the Secretary.
(3)

Lost revenue attributable to covid–19.—
The term “lost revenue attributable to COVID–19” has the meaning given that term in the Frequently Asked Questions guidance released by the Department of Health and Human Services in June 2020, including the difference between such provider's budgeted and actual revenue if such budget had been established and approved prior to March 27, 2020.
(4)

Payment.—
The term “payment” includes, as determined appropriate by the Secretary, a pre-payment, a prospective payment, a retrospective payment, or a payment through a grant or other mechanism.
(5)

Rural provider or supplier.—
The term “rural provider or supplier” means—
(A)
a—
(i)
provider or supplier located in a rural area (as defined in section 1886(d)(2)(D)); or
(ii)
provider treated as located in a rural area pursuant to section 1886(d)(8)(E);
(B)
a provider or supplier located in any other area that serves rural patients (as defined by the Secretary), which may include, but is not required to include, a metropolitan statistical area with a population of less than 500,000 (determined based on the most recently available data);
(C)
a rural health clinic (as defined in section 1861(aa)(2));
(D)
a provider or supplier that furnishes home health, hospice, or long-term services and supports in an individual’s home located in a rural area (as defined in section 1886(d)(2)(D)); or
(E)
any other rural provider or supplier (as defined by the Secretary).
Part B—

Peer Review of the Utilization and Quality of Health Care Services

purpose
Sec. 1151.
[42 U.S.C. 1320c]
The purpose of this part is to establish the contracting process which the Secretary must follow pursuant to the requirements of section 1862(g) of this Act, including the definition of the quality improvement organizations with which the Secretary shall contract, the functions such quality improvement organizations are to perform, the confidentiality of medical records, and related administrative matters to facilitate the carrying out of the purposes of this part.

definition of quality improvement organization
Sec. 1152.
[42 U.S.C. 1320c–1]
The term “quality improvement organization” means an entity which—
(1)
is able, as determined by the Secretary, to perform its functions under this part in a manner consistent with the efficient and effective administration of this part and title XVIII;
(2)
has at least one individual who is a representative of health care providers on its governing body; and
(3)
has at least one individual who is a representative of consumers on its governing body.

contracts with quality improvement organizations
Sec. 1153.
[42 U.S.C. 1320c–2]
(a)
The Secretary shall establish throughout the United States such local, State, regional, national, or other geographic areas as the Secretary determines appropriate with respect to which contracts under this part will be made.
(b)
(1)
The Secretary shall enter into contracts with one or more quality improvement organizations for each area established under subsection (a) if a qualified organization is available in such area and such organization and the Secretary have negotiated a proposed contract which the Secretary determines will be carried out by such organization in a manner consistent with the efficient and effective administration of this part. In entering into contracts with such qualified organizations, the Secretary shall, to the extent appropriate, seek to ensure that each of the functions described in section 1154(a) are carried out within an area established under subsection (a). If more than one such qualified organization will be operating in an area, the Secretary shall ensure that there is no duplication of the functions carried out by such organizations within the area.
(2)
(A)
Prior to November 15, 1984, the Secretary shall not enter into a contract under this part with any entity which is, or is affiliated with (through management, ownership, or common control), an entity (other than a self-insured employer) which directly or indirectly makes payments to any practitioner or provider whose health care services are reviewed by such entity or would be reviewed by such entity if it entered into a contract with the Secretary under this part. For purposes of this paragraph, an entity shall not be considered to be affiliated with another entity which makes payments (directly or indirectly) to any practitioner or provider, by reason of management, ownership, or common control, if the management, ownership, or common control consists only of members of the governing board being affiliated (through management, ownership, or common control) with a health maintenance organization or competitive medical plan which is an “eligible organization” as defined in section 1876(b).
(B)
If, after November 14, 1984, the Secretary determines that there is no other entity available for an area with which the Secretary can enter into a contract under this part or the Secretary determines that there is a more qualified entity to perform one or more of the functions in section 1154(a), the Secretary may then enter into a contract under this part with an entity described in subparagraph (A) for such area if such entity otherwise meets the requirements of this part.
(3)
(A)
The Secretary shall not enter into a contract under this part with any entity which is, or is affiliated with (through management, ownership, or common control), a health care facility within the area served by such entity or which would be served by such entity if it entered into a contract with the Secretary under this part.
(B)
For purposes of subparagraph (A), an entity shall not be considered to be affiliated with a health care facility by reason of management, ownership, or common control if the management, ownership, or common control consists only of not more than 20 percent of the members of the governing board of the entity being affiliated (through management, ownership, or common control) with one or more of such facilities.
(4)
The Secretary may consider a variety of factors in selecting the contractors that the Secretary determines would provide for the most efficient and effective administration of this part, such as geographic location, size, and prior experience in health care quality improvement. Quality improvement organizations operating as of January 1, 2012, shall be allowed to compete for new contracts (as determined appropriate by the Secretary) along with other qualified organizations and are eligible for renewal of contracts for terms five years thereafter (as determined appropriate by the Secretary).
(c)
Each contract with an organization under this section shall provide that—
(1)
the organization shall perform a function or functions under section 1154 directly or may subcontract for the performance of all or some of such function or functions (and for purposes of paragraphs (2) and (3) of subsection (b), a subcontract under this paragraph shall not constitute an affiliation with the subcontractor);
(2)
the Secretary shall have the right to evaluate the quality and effectiveness of the organization in carrying out the functions specified in the contract;
(3)
the contract shall be for an initial term of five years and shall be renewable for terms of five years thereafter;
(4)
the Secretary shall include in the contract negotiated objectives against which the organization's performance will be judged, and negotiated specifications for use of regional norms, or modifications thereof based on national norms, for performing review functions under the contract; and
(5)
reimbursement shall be made to the organization on a monthly basis, with payments for any month being made consistent with the Federal Acquisition Regulation.
In evaluating the performance of quality improvement organizations under contracts under this part, the Secretary shall place emphasis on the performance of such organizations in educating providers and practitioners (particularly those in rural areas) concerning the review process and criteria being applied by the organization.
[Subsection (d) was repealed by section 261(b)(3)(C) of PL 112–40]
(e)
(1)
Except as provided in paragraph (2), contracting authority of the Secretary under this section may be carried out without regard to any provision of law relating to the making, performance, amendment, or modification of contracts of the United States as the Secretary may determine to be inconsistent with the purposes of this part. The Secretary may use different contracting methods with respect to different geographical areas.
(2)
If a quality improvement organization with a contract under this section is required to carry out a review function in addition to any function required to be carried out at the time the Secretary entered into or renewed the contract with the organization, the Secretary shall, before requiring such organization to carry out such additional function, negotiate the necessary contractual modifications, including modifications that provide for an appropriate adjustment (in light of the cost of such additional function) to the amount of reimbursement made to the organization.
(f)
Any determination by the Secretary to terminate or not to renew a contract under this section shall not be subject to judicial review.
(g)
The Secretary shall provide that fiscal intermediaries furnish to quality improvement organizations, each month on a timely basis, data necessary to initiate the review process under section 1154(a) on a timely basis. If the Secretary determines that a fiscal intermediary is unable to furnish such data on a timely basis, the Secretary shall require the hospital to do so.
(h)
(1)
The Secretary shall publish in the Federal Register any new policy or procedure adopted by the Secretary that affects substantially the performance of contract obligations under this section not less than 30 days before the date on which such policy or procedure is to take effect. This paragraph shall not apply to the extent it is inconsistent with a statutory deadline.
(2)
The Secretary shall publish in the Federal Register the general criteria and standards used for evaluating the efficient and effective performance of contract obligations under this section and shall provide opportunity for public comment with respect to such criteria and standards.
(3)
The Secretary shall regularly furnish each quality improvement organization with a contract under this section with a report that documents the performance of the organization in relation to the performance of other such organizations.

functions of quality improvement organizations
Sec. 1154.
[42 U.S.C. 1320c–3]
(a)
Subject to subsection (b), any quality improvement organization entering into a contract with the Secretary under this part must perform one or more of the following functions:
(1)
The organization shall review some or all of the professional activities in the area, subject to the terms of the contract and subject to the requirements of subsection (d), of physicians and other health care practitioners and institutional and noninstitutional providers of health care services in the provision of health care services and items for which payment may be made (in whole or in part) under title XVIII (including where payment is made for such services to eligible organizations pursuant to contracts under section 1876, to Medicare Advantage organizations pursuant to contracts under part C, and to prescription drug sponsors pursuant to contracts under part D) for the purpose of determining whether—
(A)
such services and items are or were reasonable and medically necessary and whether such services and items are not allowable under subsection (a)(1) or (a)(9) of section 1862;
(B)
the quality of such services meets professionally recognized standards of health care; and
(C)
in case such services and items are proposed to be provided in a hospital or other health care facility on an inpatient basis, such services and items could, consistent with the provision of appropriate medical care, be effectively provided more economically on an outpatient basis or in an inpatient health care facility of a different type.
If the organization performs such reviews with respect to a type of health care practitioner other than medical doctors, the organization shall establish procedures for the involvement of health care practitioners of that type in such reviews.
(2)
The organization shall determine, on the basis of the review carried out under subparagraphs (A), (B), and (C) of paragraph (1), whether payment shall be made for services under title XVIII. Such determination shall constitute the conclusive determination on those issues for purposes of payment under title XVIII, except that payment may be made if—
(A)
such payment is allowed by reason of section 1879;
(B)
in the case of inpatient hospital services or extended care services, the quality improvement organization determines that additional time is required in order to arrange for postdischarge care, but payment may be continued under this subparagraph for not more than two days, but only in the case where the provider of such services did not know and could not reasonably have been expected to know (as determined under section 1879) that payment would not otherwise be made for such services under title XVIII prior to notification by the organization under paragraph (3);
(C)
such determination is changed as the result of any hearing or review of the determination under section 1155; or
(D)
such payment is authorized under section 1861(v)(1)(G).
The organization shall identify cases for which payment should not be made by reason of paragraph (1)(B) only through the use of criteria developed pursuant to guidelines established by the Secretary.
(3)
(A)
Subject to subparagraphs (B) and (D), whenever the organization makes a determination that any health care services or items furnished or to be furnished to a patient by any practitioner or provider are disapproved, the organization shall promptly notify such patient and the agency or organization responsible for the payment of claims under title XVIII of this Act of such determination.
(B)
The notification under subparagraph (A) with respect to services or items disapproved by reason of subparagraph (A) or (C) of paragraph (1) shall not occur until 20 days after the date that the organization has—
(i)
made a preliminary notification to such practitioner or provider of such proposed determination, and
(ii)
provided such practitioner or provider an opportunity for discussion and review of the proposed determination.
(C)
The discussion and review conducted under subparagraph (B)(ii) shall not affect the rights of a practitioner or provider to a formal reconsideration of a determination under this part (as provided under section 1155).
(D)
The notification under subparagraph (A) with respect to services or items disapproved by reason of paragraph (1)(B) shall not occur until after—
(i)
the organization has notified the practitioner or provider involved of the determination and of the practitioner's or provider's right to a formal reconsideration of the determination under section 1155, and
(ii)
if the provider or practitioner requests such a reconsideration, the organization has made such a reconsideration.
If a provider or practitioner is provided a reconsideration, such reconsideration shall be in lieu of any subsequent reconsideration to which the provider or practitioner may be otherwise entitled under section 1155, but shall not affect the right of a beneficiary from seeking reconsideration under such section of the organization's determination (after any reconsideration requested by the provider or physician under clause (ii)).
(E)
(i)
In the case of services and items provided by a physician that were disapproved by reason of paragraph (1)(B), the notice to the patient shall state the following: ``In the judgment of the quality improvement organization, the medical care received was not acceptable under the medicare program. The reasons for the denial have been discussed with your physician.
(ii)
In the case of services or items provided by an entity or practitioner other than a physician, the Secretary may substitute the entity or practitioner which provided the services or items for the term “physician” in the notice described in clause (i).
(4)
(A)
The organization shall, after consultation with the Secretary, determine the types and kinds of cases (whether by type of health care or diagnosis involved, or whether in terms of other relevant criteria relating to the provision of health care services) with respect to which such organization will, in order to most effectively carry out the purposes of this part, exercise review authority under the contract. The organization shall notify the Secretary periodically with respect to such determinations.Each quality improvement organization shall provide that a reasonable proportion of its activities are involved with reviewing, under paragraph (1)(B), the quality of services and that a reasonable allocation of such activities is made among the different cases and settings (including post-acute-care settings, ambulatory settings, and health maintenance organizations). In establishing such allocation, the organization shall consider (i) whether there is reason to believe that there is a particular need for reviews of particular cases or settings because of previous problems regarding quality of care, (ii) the cost of such reviews and the likely yield of such reviews in terms of number and seriousness of quality of care problems likely to be discovered as a result of such reviews, and (iii) the availability and adequacy of alternative quality review and assurance mechanisms.
(B)
The contract of each organization shall provide for the review of services (including both inpatient and outpatient services) provided by eligible organizations pursuant to a risk-sharing contract under section 1876 (or that is subject to review under section 1882(t)(3)) for the purpose of determining whether the quality of such services meets professionally recognized standards of health care, including whether appropriate health care services have not been provided or have been provided in inappropriate settings and whether individuals enrolled with an eligible organization have adequate access to health care services provided by or through such organization (as determined, in part, by a survey of individuals enrolled with the organization who have not yet used the organization to receive such services). The contract of each organization shall also provide that with respect to health care provided by a health maintenance organization or competitive medical plan under section 1876, the organization shall maintain a beneficiary outreach program designed to apprise individuals receiving care under such section of the role of the peer review system, of the rights of the individual under such system, and of the method and purposes for contacting the organization. The previous two sentences shall not apply with respect to a contract year if another entity has been awarded a contract under subparagraph (C)28. Under the contract the level of effort expended by the organization on reviews under this subparagraph shall be equivalent, on a per enrollee basis, to the level of effort expended by the organization on utilization and quality reviews performed with respect to individuals not enrolled with an eligible organization.
^{28}
Subparagraph (C) was repealed by section 261(c)(2)(A)(ii) of Public Law 112–40.
(5)
The organization shall consult with nurses and other professional health care practitioners (other than physicians described in section 1861(r)(1)) and with representatives of institutional and noninstitutional providers of health care services, with respect to the organization's responsibility for the review under paragraph (1) of the professional activities of such practitioners and providers.
(6)
(A)
The organization shall, consistent with the provisions of its contract under this part, apply professionally developed norms of care, diagnosis, and treatment based upon typical patterns of practice within the geographic area served by the organization as principal points of evaluation and review, taking into consideration national norms where appropriate. Such norms with respect to treatment for particular illnesses or health conditions shall include—
(i)
the types and extent of the health care services which, taking into account differing, but acceptable, modes of treatment and methods of organizing and delivering care, are considered within the range of appropriate diagnosis and treatment of such illness or health condition, consistent with professionally recognized and accepted patterns of care; and
(ii)
the type of health care facility which is considered, consistent with such standards, to be the type in which health care services which are medically appropriate for such illness or condition can most economically be provided.
As a component of the norms described in clause (i) or (ii), the organization shall take into account the special problems associated with delivering care in remote rural areas, the availability of service alternatives to inpatient hospitalization, and other appropriate factors (such as the distance from a patient's residence to the site of care, family support, availability of proximate alternative sites of care, and the patient's ability to carry out necessary or prescribed self-care regimens) that could adversely affect the safety or effectiveness of treatment provided on an outpatient basis.
(B)
The organization shall—
(i)
offer to provide, several times each year, for a physician representing the organization to meet (at a hospital or at a regional meeting) with medical and administrative staff of each hospital (the services of which are reviewed by the organization) respecting the organization's review of the hospital's services for which payment may be made under title XVIII, and
(ii)
publish (not less often than annually) and distribute to providers and practitioners whose services are subject to review a report that describes the organization's findings with respect to the types of cases in which the organization has frequently determined that (I) inappropriate or unnecessary care has been provided, (II) services were rendered in an inappropriate setting, or (III) services did not meet professionally recognized standards of health care.
(7)
The organization, to the extent necessary and appropriate to the performance of the contract, shall—
(A)
(i)
make arrangements to utilize the services of persons who are practitioners of, or specialists in, the various areas of medicine (including dentistry, optometry, and podiatry, or other types of health care, which persons shall, to the maximum extent practicable, be individuals engaged in the practice of their profession within the area served by such organization; and
(ii)
in the case of psychiatric and physical rehabilitation services, make arrangements to ensure that (to the extent possible) initial review of such services be made by a physician who is trained in psychiatry or physical rehabilitation (as appropriate).29
^{29}
Punctuation as in original.
(B)
undertake such professional inquiries either before or after, or both before and after, the provision of services with respect to which such organization has a responsibility for review which in the judgment of such organization will facilitate its activities;
(C)
examine the pertinent records of any practitioner or provider of health care services providing services with respect to which such organization has a responsibility for review under paragraph (1); and
(D)
inspect the facilities in which care is rendered or services are provided (which are located in such area) of any practitioner or provider of health care services providing services with respect to which such organization has a responsibility for review under paragraph (1).
(8)
The organization shall perform such duties and functions and assume such responsibilities and comply with such other requirements as may be required by this part or under regulations of the Secretary promulgated to carry out the provisions of this part or as may be required to carry out section 1862(a)(15).
(9)
(A)
The organization shall collect such information relevant to its functions, and keep and maintain such records, in such form as the Secretary may require to carry out the purposes of this part, and shall permit access to and use of any such information and records as the Secretary may require for such purposes, subject to the provisions of section 1160.
(B)
If the organization finds, after reasonable notice to and opportunity for discussion with the physician or practitioner concerned, that the physician or practitioner has furnished services in violation of section 1156(a) and the organization determines that the physician or practitioner should enter into a corrective action plan under section 1156(b)(1), the organization shall notify the State board or boards responsible for the licensing or disciplining of the physician or practitioner of its finding and of any action taken as a result of the finding.
(10)
The organization shall coordinate activities, including information exchanges, which are consistent with economical and efficient operation of programs among appropriate public and private agencies or organizations including—
(A)
agencies under contract pursuant to sections 1816 and 1842 of this Act;
(B)
other quality improvement organizations having contracts under this part; and
(C)
other public or private review organizations as may be appropriate.
(11)
The organization shall make available its facilities and resources for contracting with private and public entities paying for health care in its area for review, as feasible and appropriate, of services reimbursed by such entities.
(12)
As part of the organization's review responsibility under paragraph (1), the organization shall review all ambulatory surgical procedures specified pursuant to section 1833(i)(1)(A) which are performed in the area, or, at the discretion of the Secretary, a sample of such procedures.
(13)
Notwithstanding paragraph (4), the organization shall perform the review described in paragraph (1) with respect to early readmission cases to determine if the previous inpatient hospital services and the post-hospital services met professionally recognized standards of health care. Such reviews may be performed on a sample basis if the organization and the Secretary determine it to be appropriate. In this paragraph, an “early readmission case” is a case in which an individual, after discharge from a hospital, is readmitted to a hospital less than 31 days after the date of the most recent previous discharge.
(14)
The organization shall conduct an appropriate review of all written complaints about the quality of services (for which payment may otherwise be made under title XVIII) not meeting professionally recognized standards of health care, if the complaint is filed with the organization by an individual entitled to benefits for such services under such title (or a person acting on the individual's behalf). The organization shall inform the individual (or representative) of the organization's final disposition of the complaint. Before the organization concludes that the quality of services does not meet professionally recognized standards of health care, the organization must provide the practitioner or person concerned with reasonable notice and opportunity for discussion.
(15)
During each year of the contract entered into under section 1153(b), the organization shall perform on-site review activities as the Secretary determines appropriate.
(16)
The organization shall provide for a review and report to the Secretary when requested by the Secretary under section 1867(d)(3). The organization shall provide reasonable notice of the review to the physician and hospital involved. Within the time period permitted by the Secretary, the organization shall provide a reasonable opportunity for discussion with the physician and hospital involved, and an opportunity for the physician and hospital to submit additional information, before issuing its report to the Secretary under such section.
(17)
The organization shall execute its responsibilities under subparagraphs (A) and (B) of paragraph (1) by offering to providers, practitioners, Medicare Advantage organizations offering Medicare Advantage plans under part C, and prescription drug sponsors offering prescription drug plans under part D quality improvement assistance pertaining to prescription drug therapy. For purposes of this part and title XVIII, the functions described in this paragraph shall be treated as a review function.
(18)
The organization shall perform, subject to the terms of the contract, such other activities as the Secretary determines may be necessary for the purposes of improving the quality of care furnished to individuals with respect to items and services for which payment may be made under title XVIII.
(b)
A quality improvement organization entering into a contract with the Secretary to perform a function described in a paragraph under subsection (a) must perform all of the activities described in such paragraph, except to the extent otherwise negotiated with the Secretary pursuant to the contract or except for a function for which the Secretary determines it is not appropriate for the organization to perform, such as a function that could cause a conflict of interest with another function.
(c)
(1)
No physician shall be permitted to review—
(A)
health care services provided to a patient if he was directly responsible for providing such services; or
(B)
health care services provided in or by an institution, organization, or agency, if he or any member of his family has, directly or indirectly, a significant financial interest in such institution, organization, or agency.
(2)
For purposes of this subsection, a physician's family includes only his spouse (other than a spouse who is legally separated from him under a decree of divorce or separate maintenance), children (including legally adopted children), grandchildren, parents, and grandparents.
(d)
No quality improvement organization shall utilize the services of any individual who is not a duly licensed doctor of medicine, osteopathy, dentistry, optometry, or podiatry to make final determinations of denial decisions in accordance with its duties and functions under this part with respect to the professional conduct of any other duly licensed doctor of medicine, osteopathy, dentistry, optometry, or podiatry, or any act performed by any duly licensed doctor of medicine, osteopathy, dentistry, optometry, or podiatry in the exercise of his profession.
(e)
(1)
If—
(A)
a hospital has determined that a patient no longer requires inpatient hospital care, and
(B)
the attending physician has agreed with the hospital's determination,
the hospital may provide the patient (or the patient's representative) with a notice (meeting conditions prescribed by the Secretary under section 1879) of the determination.
[(2)–(5) Repealed]
(f)
The Secretary, in consultation with appropriate experts, shall identify methods that would be available to assist quality improvement organizations (under subsection (a)(4)) in identifying those cases which are more likely than others to be associated with a quality of services which does not meet professionally recognized standards of health care.

right to hearing and judicial review
Sec. 1155.
[42 U.S.C. 1320c–4]
Any beneficiary who is entitled to benefits under title XVIII, and, subject to section 1154(a)(3)(D), any practitioner or provider, who is dissatisfied with a determination made by a contracting quality improvement organization in conducting its review responsibilities under this part, shall be entitled to a reconsideration of such determination by the reviewing organization. Where the reconsideration is adverse to the beneficiary and where the matter in controversy is $200 or more, such beneficiary shall be entitled to a hearing by the Secretary (to the same extent as beneficiaries under title II are entitled to a hearing by the Commissioner of Social Security under section 205(b)). For purposes of the preceding sentence, subsection (l) of section 205 shall apply, except that any reference in such subsection to the Commissioner of Social Security or the Social Security Administration shall be deemed a reference to the Secretary or the Department of Health and Human Services, respectively. Where the amount in controversy is $2,000 or more, such beneficiary shall be entitled to judicial review of any final decision relating to a reconsideration described in this subsection.

obligations of health care practitioners and providers of health care services; sanctions and penalties; hearings and review
Sec. 1156.
[42 U.S.C. 1320c–5]
(a)
It shall be the obligation of any health care practitioner and any other person (including a hospital or other health care facility, organization, or agency) who provides health care services for which payment may be made (in whole or in part) under this Act, to assure, to the extent of his authority that services or items ordered or provided by such practitioner or person to beneficiaries and recipients under this Act—
(1)
will be provided economically and only when, and to the extent, medically necessary;
(2)
will be of a quality which meets professionally recognized standards of health care; and
(3)
will be supported by evidence of medical necessity and quality in such form and fashion and at such time as may reasonably be required by a reviewing quality improvement organization in the exercise of its duties and responsibilities.
(b)
(1)
If after reasonable notice and opportunity for discussion with the practitioner or person concerned, and, if appropriate, after the practitioner or person has been given a reasonable opportunity to enter into and complete a corrective action plan (which may include remedial education) agreed to by the organization, and has failed successfully to complete such plan, any organization having a contract with the Secretary under this part determines that such practitioner or person has—
(A)
failed in a substantial number of cases substantially to comply with any obligation imposed on him under subsection (a), or
(B)
grossly and flagrantly violated any such obligation in one or more instances,
such organization shall submit a report and recommendations to the Secretary. If the Secretary agrees with such determination, the Secretary (in addition to any other sanction provided under law) may exclude (permanently or for such period as the Secretary may prescribe, except that such period may not be less than 1 year) such practitioner or person from eligibility to provide services under this Act on a reimbursable basis. If the Secretary fails to act upon the recommendations submitted to him by such organization within 120 days after such submission, such practitioner or person shall be excluded from eligibility to provide services on a reimbursable basis until such time as the Secretary determines otherwise.
(2)
A determination made by the Secretary under this subsection to exclude a practitioner or person shall be effective on the same date and in the same manner as an exclusion from participation under the programs under this Act becomes effective under section 1128(c), and shall (subject to the minimum period specified in the second sentence of paragraph (1)) remain in effect until the Secretary finds and gives reasonable notice to the public that the basis for such determination has been removed and that there is reasonable assurance that it will not recur.
(3)
In lieu of the sanction authorized by paragraph (1), the Secretary may require that (as a condition to the continued eligibility of such practitioner or person to provide such health care services on a reimbursable basis) such practitioner or person pays to the United States, in case such acts or conduct involved the provision or ordering by such practitioner or person of health care services which were medically improper or unnecessary, an amount not in excess of up to $10,000 for each instance of the medically improper or unnecessary services so provided. Such amount may be deducted from any sums owing by the United States (or any instrumentality thereof) to the practitioner or person from whom such amount is claimed.
(4)
Any practitioner or person furnishing services described in paragraph (1) who is dissatisfied with a determination made by the Secretary under this subsection shall be entitled to reasonable notice and opportunity for a hearing thereon by the Secretary to the same extent as is provided in section 205(b), and to judicial review of the Secretary's final decision after such hearing as is provided in section 205(g).
(5)
Before the Secretary may effect an exclusion under paragraph (2) in the case of a provider or practitioner located in a rural health professional shortage area or in a county with a population of less than 70,000, the provider or practitioner adversely affected by the determination is entitled to a hearing before an administrative law judge (described in section 205(b)) respecting whether the provider or practitioner should be able to continue furnishing services to individuals entitled to benefits under this Act, pending completion of the administrative review procedure under paragraph (4). If the judge does not determine, by a preponderance of the evidence, that the provider or practitioner will pose a serious risk to such individuals if permitted to continue furnishing such services, the Secretary shall not effect the exclusion under paragraph (2) until the provider or practitioner has been provided reasonable notice and opportunity for an administrative hearing thereon under paragraph (4).
(6)
When the Secretary effects an exclusion of a physician under paragraph (2), the Secretary shall notify the State board responsible for the licensing of the physician of the exclusion.
(c)
It shall be the duty of each quality improvement organization to use such authority or influence it may possess as a professional organization, and to enlist the support of any other professional or governmental organization having influence or authority over health care practitioners and any other person (including a hospital or other health care facility, organization, or agency) providing health care services in the area served by such review organization, in assuring that each practitioner or person (referred to in subsection (a)) providing health care services in such area shall comply with all obligations imposed on him under subsection (a).

limitation on liability
Sec. 1157.
[42 U.S.C. 1320c–6]
(a)
Notwithstanding any other provision of law, no person providing information to any organization having a contract with the Secretary under this part shall be held, by reason of having provided such information, to have violated any criminal law, or to be civilly liable under any law of the United States or of any State (or political subdivision thereof) unless—
(1)
such information is unrelated to the performance of the contract of such organization; or
(2)
such information is false and the person providing it knew, or had reason to believe, that such information was false.
(b)
No organization having a contract with the Secretary under this part and no person who is employed by, or who has a fiduciary relationship with, any such organization or who furnishes professional services to such organization, shall be held by reason of the performance of any duty, function, or activity required or authorized pursuant to this part or to a valid contract entered into under this part, to have violated any criminal law, or to be civilly liable under any law of the United States or of any State (or political subdivision thereof) provided due care was exercised in the performance of such duty, function, or activity.
(c)
No doctor of medicine or osteopathy and no provider (including directors, trustees, employees, or officials thereof) of health care services shall be civilly liable to any person under any law of the United States or of any State (or political subdivision thereof) on account of any action taken by him in compliance with or reliance upon professionally developed norms of care and treatment applied by an organization under contract pursuant to section 1153 operating in the area where such doctor of medicine or osteopathy or provider took such action; but only if—
(1)
he takes such action in the exercise of his profession as a doctor of medicine or osteopathy or in the exercise of his functions as a provider of health care services; and
(2)
he exercised due care in all professional conduct taken or directed by him and reasonably related to, and resulting from, the actions taken in compliance with or reliance upon such professionally accepted norms of care and treatment.
(d)
The Secretary shall make payment to an organization under contract with him pursuant to this part, or to any member or employee thereof, or to any person who furnishes legal counsel or services to such organization, in an amount equal to the reasonable amount of the expenses incurred, as determined by the Secretary, in connection with the defense of any suit, action, or proceeding brought against such organization, member, or employee related to the performance of any duty or function under such contract by such organization, member, or employee.

application of this part to certain state programs receiving federal financial assistance
Sec. 1158.
[42 U.S.C. 1320c–7]
(a)
A State plan approved under title XIX of this Act may provide that the functions specified in section 1154 may be performed in an area by contract with a quality improvement organization that has entered into a contract with the Secretary in accordance with the provisions of section 1862(g).
(b)
In the event a State enters into a contract in accordance with subsection (a), the Federal share of the expenditures made to the contracting organization for its costs in the performance of its functions under the State plan shall be 75 percent (as provided in section 1903(a)(3)(C)).

authorization for use of certain funds to administer the provisions of this part
Sec. 1159.
[42 U.S.C. 1320c–8]
Expenses incurred in the administration of the contracts described in section 1862(g) shall be payable from—
(1)
funds in the Federal Hospital Insurance Trust Fund; and
(2)
funds in the Federal Supplementary Medical Insurance Trust Fund,
in such amounts from each of such Trust Funds as the Secretary shall deem to be fair and equitable after taking into consideration the expenses attributable to the administration of this part with respect to each of such programs. The Secretary shall make such transfers of moneys between such Trust Funds as may be appropriate to settle accounts between them in cases where expenses properly payable from one such Trust Fund have been paid from the other such Trust Fund.

prohibition against disclosure of information
Sec. 1160.
[42 U.S.C. 1320c–9]
(a)
An organization, in carrying out its functions under a contract entered into under this part, shall not be a Federal agency for purposes of the provisions of section 552 of title 5, United States Code (commonly referred to as the Freedom of Information Act). Any data or information acquired by any such organization in the exercise of its duties and functions shall be held in confidence and shall not be disclosed to any person except—
(1)
to the extent that may be necessary to carry out the purposes of this part,
(2)
in such cases and under such circumstances as the Secretary shall by regulations provide to assure adequate protection of the rights and interests of patients, health care practitioners, or providers of health care, or
(3)
in accordance with subsection (b).
(b)
An organization having a contract with the Secretary under this part shall provide in accordance with procedures and safeguards established by the Secretary, data and information—
(1)
which may identify specific providers or practitioners as may be necessary—
(A)
to assist Federal and State agencies recognized by the Secretary as having responsibility for identifying and investigating cases or patterns of fraud or abuse, which data and information shall be provided by the quality improvement organization to any such agency at the request of such agency relating to a specific case or pattern;
(B)
to assist appropriate Federal and State agencies recognized by the Secretary as having responsibility for identifying cases or patterns involving risks to the public health, which data and information shall be provided by the quality improvement organization to any such agency—
(i)
at the discretion of the quality improvement organization, at the request of such agency relating to a specific case or pattern with respect to which such agency has made a finding, or has a reasonable belief, that there may be a substantial risk to the public health, or
(ii)
upon a finding by, or the reasonable belief of, the quality improvement organization that there may be a substantial risk to the public health;
(C)
to assist appropriate State agencies recognized by the Secretary as having responsibility for licensing or certification of providers or practitioners or to assist national accreditation bodies acting pursuant to section 1865 in accrediting providers for purposes of meeting the conditions described in title XVIII, which data and information shall be provided by the quality improvement organization to any such agency or body at the request of such agency or body relating to a specific case or to a possible pattern of substandard care, but only to the extent that such data and information are required by the agency or body to carry out its respective function which is within the jurisdiction of the agency or body under State law or under section 1865; and
(D)
to provide notice in accordance with section 1154(a)(9)(B);
(2)
to assist the Secretary, and such Federal and State agencies recognized by the Secretary as having health planning or related responsibilities under Federal or State law (including health systems agencies and State health planning and development agencies), in carrying out appropriate health care planning and related activities, which data and information shall be provided in such format and manner as may be prescribed by the Secretary or agreed upon by the responsible Federal and State agencies and such organization, and shall be in the form of aggregate statistical data (without explicitly identifying any individual) on a geographic, institutional, or other basis reflecting the volume and frequency of services furnished, as well as the demographic characteristics of the population subject to review by such organization.
The penalty provided in subsection (c) shall not apply to the disclosure of any information received under this subsection, except that such penalty shall apply to the disclosure (by the agency receiving such information) of any such information described in paragraph (1) unless such disclosure is made in a judicial, administrative, or other formal legal proceeding resulting from an investigation conducted by the agency receiving the information. An organization may require payment of a reasonable fee for providing information under this subsection in response to a request for such information.
(c)
It shall be unlawful for any person to disclose any such information described in subsection (a) other than for the purposes provided in subsections (a) and (b), and any person violating the provisions of this section shall, upon conviction, be fined not more than $1,000, and imprisoned for not more than 6 months, or both, and shall be required to pay the costs of prosecution.
(d)
No patient record in the possession of an organization having a contract with the Secretary under this part shall be subject to subpoena or discovery proceedings in a civil action. No document or other information produced by such an organization in connection with its deliberations in making determinations under section 1154(a)(1)(B) or 1156(a)(2) shall be subject to subpoena or discovery in any administrative or civil proceeding; except that such an organization shall provide, upon request of a practitioner or other person adversely affected by such a determination, a summary of the organization's findings and conclusions in making the determination.
(e)
For purposes of this section and section 1157, the term “organization with a contract with the Secretary under this part” includes an entity with a contract with the Secretary under section 1154(a)(4)(C).

annual reports
Sec. 1161.
[42 U.S.C. 1320c–10]
The Secretary shall submit to the Congress not later than April 1 of each year, a full and complete report on the administration, impact, and cost of the program under this part during the preceding fiscal year, including data and information on—
(1)
the number, status, and service areas of all quality improvement organizations participating in the program;
(2)
the number of health care institutions and practitioners whose services are subject to review by such organizations, and the number of beneficiaries and recipients who received services subject to such review during such year;
(3)
the various methods of reimbursement utilized in contracts under this part, and the relative efficiency of each such method of reimbursement;
(4)
the imposition of penalties and sanctions under this title for violations of law and for failure to comply with the obligations imposed by this part;
(5)
the total costs incurred under titles XVIII and XIX of this Act in the implementation and operation of all procedures required by such titles for the review of services to determine their medical necessity, appropriateness of use, and quality; and
(6)
descriptions of the criteria upon which decisions are made, and the selection and relative weights of such criteria.

exemptions for religious nonmedical health care institutions
Sec. 1162.
[42 U.S.C. 1320c–11]
The provisions of this part shall not apply with respect to a religious nonmedical health care institution (as defined in section 1861(ss)(1)).

medical officers in american samoa, the northern mariana islands, and the trust territory of the pacific islands to be included in the utilization and quality control peer review program
Sec. 1163.
[42 U.S.C 1320c–12]
For purposes of applying this part to American Samoa, the Northern Mariana Islands, and the Trust Territory of the Pacific Islands, individuals licensed to practice medicine in those places shall be considered to be physicians and doctors of medicine.
Sec. 1164.
Repealed.
Part C—

Administrative Simplification

definitions
Sec. 1171.
[42 U.S.C. 1320d]
For purposes of this part:
(1)

Code set.—
The term “code set” means any set of codes used for encoding data elements, such as tables of terms, medical concepts, medical diagnostic codes, or medical procedure codes.
(2)

Health care clearinghouse.—
The term “health care clearinghouse” means a public or private entity that processes or facilitates the processing of nonstandard data elements of health information into standard data elements.
(3)

Health care provider.—
The term “health care provider” includes a provider of services (as defined in section 1861(u)), a provider of medical or other health services (as defined in section 1861(s)), and any other person furnishing health care services or supplies.
(4)

Health information.—
The term “health information” means any information, whether oral or recorded in any form or medium, that—
(A)
is created or received by a health care provider, health plan, public health authority, employer, life insurer, school or university, or health care clearinghouse; and
(B)
relates to the past, present, or future physical or mental health or condition of an individual, the provision of health care to an individual, or the past, present, or future payment for the provision of health care to an individual.
(5)

Health plan.—
The term “health plan” means an individual or group plan that provides, or pays the cost of, medical care (as such term is defined in section 2791 of the Public Health Service Act). Such term includes the following, and any combination thereof:
(A)
A group health plan (as defined in section 2791(a) of the Public Health Service Act), but only if the plan—
(i)
has 50 or more participants (as defined in section 3(7) of the Employee Retirement Income Security Act of 1974); or
(ii)
is administered by an entity other than the employer who established and maintains the plan.
(B)
A health insurance issuer (as defined in section 2791(b) of the Public Health Service Act).
(C)
A health maintenance organization (as defined in section 2791(b) of the Public Health Service Act).
(D)
Parts A, B, C, or D of the Medicare program under title XVIII.
(E)
The medicaid program under title XIX.
(F)
A Medicare supplemental policy (as defined in section 1882(g)(1)).
(G)
A long-term care policy, including a nursing home fixed indemnity policy (unless the Secretary determines that such a policy does not provide sufficiently comprehensive coverage of a benefit so that the policy should be treated as a health plan).
(H)
An employee welfare benefit plan or any other arrangement which is established or maintained for the purpose of offering or providing health benefits to the employees of 2 or more employers.
(I)
The health care program for active military personnel under title 10, United States Code.
(J)
The veterans health care program under chapter 17 of title 38, United States Code.
(K)
The Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), as defined in section 1072(4) of title 10, United States Code.
(L)
The Indian health service program under the Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.).
(M)
The Federal Employees Health Benefit Plan under chapter 89 of title 5, United States Code.
(6)

Individually identifiable health information.—
The term “individually identifiable health information” means any information, including demographic information collected from an individual, that—
(A)
is created or received by a health care provider, health plan, employer, or health care clearinghouse; and
(B)
relates to the past, present, or future physical or mental health or condition of an individual, the provision of health care to an individual, or the past, present, or future payment for the provision of health care to an individual, and—
(i)
identifies the individual; or
(ii)
with respect to which there is a reasonable basis to believe that the information can be used to identify the individual.
(7)

Standard.—
The term “standard”, when used with reference to a data element of health information or a transaction referred to in section 1173(a)(1), means any such data element or transaction that meets each of the standards and implementation specifications adopted or established by the Secretary with respect to the data element or transaction under sections 1172 through 1174.
(8)

Standard setting organization.—
The term “standard setting organization” means a standard setting organization accredited by the American National Standards Institute, including the National Council for Prescription Drug Programs, that develops standards for information transactions, data elements, or any other standard that is necessary to, or will facilitate, the implementation of this part.
(9)

Operating rules.—
The term “operating rules” means the necessary business rules and guidelines for the electronic exchange of information that are not defined by a standard or its implementation specifications as adopted for purposes of this part.

general requirements for adoption of standards
Sec. 1172.
[42 U.S.C. 1320d–1]
(a)

Applicability.—
Any standard adopted under this part shall apply, in whole or in part, to the following persons:
(1)
A health plan.
(2)
A health care clearinghouse.
(3)
A health care provider who transmits any health information in electronic form in connection with a transaction referred to in section 1173(a)(1).
(b)

Reduction of Costs.—
Any standard adopted under this part shall be consistent with the objective of reducing the administrative costs of providing and paying for health care.
(c)

Role of Standard Setting Organizations.—
(1)

In general.—
Except as provided in paragraph (2), any standard adopted under this part shall be a standard that has been developed, adopted, or modified by a standard setting organization.
(2)

Special rules.—
(A)

Different standards.—
The Secretary may adopt a standard that is different from any standard developed, adopted, or modified by a standard setting organization, if—
(i)
the different standard will substantially reduce administrative costs to health care providers and health plans compared to the alternatives; and
(ii)
the standard is promulgated in accordance with the rulemaking procedures of subchapter III of chapter 5 of title 5, United States Code.
(B)

No standard by standard setting organization.—
If no standard setting organization has developed, adopted, or modified any standard relating to a standard that the Secretary is authorized or required to adopt under this part—
(i)
paragraph (1) shall not apply; and
(ii)
subsection (f) shall apply.
(3)

Consultation requirement.—
(A)

In general.—
A standard may not be adopted under this part unless—
(i)
in the case of a standard that has been developed, adopted, or modified by a standard setting organization, the organization consulted with each of the organizations described in subparagraph (B) in the course of such development, adoption, or modification; and
(ii)
in the case of any other standard, the Secretary, in complying with the requirements of subsection (f), consulted with each of the organizations described in subparagraph (B) before adopting the standard.
(B)

Organizations described.—
The organizations referred to in subparagraph (A) are the following:
(i)
The National Uniform Billing Committee.
(ii)
The National Uniform Claim Committee.
(iii)
The Workgroup for Electronic Data Interchange.
(iv)
The American Dental Association.
(d)

Implementation Specifications.—
The Secretary shall establish specifications for implementing each of the standards adopted under this part.
(e)

Protection of Trade Secrets.—
Except as otherwise required by law, a standard adopted under this part shall not require disclosure of trade secrets or confidential commercial information by a person required to comply with this part.
(f)

Assistance to the Secretary.—
In complying with the requirements of this part, the Secretary shall rely on the recommendations of the National Committee on Vital and Health Statistics established under section 306(k) of the Public Health Service Act (42 U.S.C. 242k(k)), and shall consult with appropriate Federal and State agencies and private organizations. The Secretary shall publish in the Federal Register any recommendation of the National Committee on Vital and Health Statistics regarding the adoption of a standard under this part.
(g)

Application to Modifications of Standards.—
This section shall apply to a modification to a standard (including an addition to a standard) adopted under section 1174(b) in the same manner as it applies to an initial standard adopted under section 1174(a).

standards for information transactions and data elements
Sec. 1173.
[42 U.S.C. 1320d–2]
(a)

Standards To Enable Electronic Exchange.—
(1)

In general.—
The Secretary shall adopt standards for transactions, and data elements for such transactions, to enable health information to be exchanged electronically, that are appropriate for—
(A)
the financial and administrative transactions described in paragraph (2); and
(B)
other financial and administrative transactions determined appropriate by the Secretary, consistent with the goals of improving the operation of the health care system and reducing administrative costs, and subject to the requirements under paragraph (5).
(2)

Transactions.—
The transactions referred to in paragraph (1)(A) are transactions with respect to the following:
(A)
Health claims or equivalent encounter information.
(B)
Health claims attachments.
(C)
Enrollment and disenrollment in a health plan.
(D)
Eligibility for a health plan.
(E)
Health care payment and remittance advice.
(F)
Health plan premium payments.
(G)
First report of injury.
(H)
Health claim status.
(I)
Referral certification and authorization.
(J)
Electronic funds transfers.
(3)

Accommodation of specific providers.—
The
standards adopted by the Secretary under paragraph (1) shall accommodate the needs of different types of health care providers.
(4)

Requirements for financial and administrative transactions.—
(A)

In general.—
The standards and associated operating rules adopted by the Secretary shall—
(i)
to the extent feasible and appropriate, enable determination of an individual's eligibility and financial responsibility for specific services prior to or at the point of care;
(ii)
be comprehensive, requiring minimal augmentation by paper or other communications;
(iii)
provide for timely acknowledgment, response, and status reporting that supports a transparent claims and denial management process (including adjudication and appeals); and
(iv)
describe all data elements (including reason and remark codes) in unambiguous terms, require that such data elements be required or conditioned upon set values in other fields, and prohibit additional conditions (except where necessary to implement State or Federal law, or to protect against fraud and abuse).
(B)

Reduction of clerical burden.—
In adopting standards and operating rules for the transactions referred to under paragraph (1), the Secretary shall seek to reduce the number and complexity of forms (including paper and electronic forms) and data entry required by patients and providers.
(5)

Consideration of standardization of activities and items.—
(A)

In general.—
For purposes of carrying out paragraph (1)(B), the Secretary shall solicit, not later than January 1, 2012, and not less than every 3 years thereafter, input from entities described in subparagraph (B) on—
(i)
whether there could be greater uniformity in financial and administrative activities and items, as determined appropriate by the Secretary; and
(ii)
whether such activities should be considered financial and administrative transactions (as described in paragraph (1)(B)) for which the adoption of standards and operating rules would improve the operation of the health care system and reduce administrative costs.
(B)

Solicitation of input.—
For purposes of subparagraph (A), the Secretary shall seek input from—
(i)
the National Committee on Vital and Health Statistics, the Health Information Technology Policy Committee, and the Health Information Technology Standards Committee; and
(ii)
standard setting organizations and stakeholders, as determined appropriate by the Secretary.
(b)

Unique Health Identifiers.—
(1)

In general.—
The Secretary shall adopt standards providing for a standard unique health identifier for each individual, employer, health plan, and health care provider for use in the health care system. In carrying out the preceding sentence for each health plan and health care provider, the Secretary shall take into account multiple uses for identifiers and multiple locations and specialty classifications for health care providers.
(2)

Use of identifiers.—
The standards adopted under paragraph (1) shall specify the purposes for which a unique health identifier may be used.
(c)

Code Sets.—
(1)

In general.—
The Secretary shall adopt standards that—
(A)
select code sets for appropriate data elements for the transactions referred to in subsection (a)(1) from among the code sets that have been developed by private and public entities; or
(B)
establish code sets for such data elements if no code sets for the data elements have been developed.
(2)

Distribution.—
The Secretary shall establish efficient and low-cost procedures for distribution (including electronic distribution) of code sets and modifications made to such code sets under section 1174(b).
(d)

Security Standards for Health Information.—
(1)

Security standards.—
The Secretary shall adopt security standards that—
(A)
take into account—
(i)
the technical capabilities of record systems used to maintain health information;
(ii)
the costs of security measures;
(iii)
the need for training persons who have access to health information;
(iv)
the value of audit trails in computerized record systems; and
(v)
the needs and capabilities of small health care providers and rural health care providers (as such providers are defined by the Secretary); and
(B)
ensure that a health care clearinghouse, if it is part of a larger organization, has policies and security procedures which isolate the activities of the health care clearinghouse with respect to processing information in a manner that prevents unauthorized access to such information by such larger organization.
(2)

Safeguards.—
Each person described in section 1172(a) who maintains or transmits health information shall maintain reasonable and appropriate administrative, technical, and physical safeguards—
(A)
to ensure the integrity and confidentiality of the information;
(B)
to protect against any reasonably anticipated—
(i)
threats or hazards to the security or integrity of the information; and
(ii)
unauthorized uses or disclosures of the information; and
(C)
otherwise to ensure compliance with this part by the officers and employees of such person.
(e)

Electronic Signature.—
(1)

Standards.—
The Secretary, in coordination with the Secretary of Commerce, shall adopt standards specifying procedures for the electronic transmission and authentication of signatures with respect to the transactions referred to in subsection (a)(1).
(2)

Effect of compliance.—
Compliance with the standards adopted under paragraph (1) shall be deemed to satisfy Federal and State statutory requirements for written signatures with respect to the transactions referred to in subsection (a)(1).
(f)

Transfer of Information Among Health Plans.—
The Secretary shall adopt standards for transferring among health plans appropriate standard data elements needed for the coordination of benefits, the sequential processing of claims, and other data elements for individuals who have more than one health plan.
(g)

Operating Rules.—
(1)

In general.—
The Secretary shall adopt a single set of operating rules for each transaction referred to under subsection (a)(1) with the goal of creating as much uniformity in the implementation of the electronic standards as possible. Such operating rules shall be consensus-based and reflect the necessary business rules affecting health plans and health care providers and the manner in which they operate pursuant to standards issued under Health Insurance Portability and Accountability Act of 1996.
(2)

Operating rules development.—
In adopting operating rules under this subsection, the Secretary shall consider recommendations for operating rules developed by a qualified nonprofit entity that meets the following requirements:
(A)
The entity focuses its mission on administrative simplification.
(B)
The entity demonstrates a multi-stakeholder and consensus-based process for development of operating rules, including representation by or participation from health plans, health care providers, vendors, relevant Federal agencies, and other standard development organizations.
(C)
The entity has a public set of guiding principles that ensure the operating rules and process are open and transparent, and supports nondiscrimination and conflict of interest policies that demonstrate a commitment to open, fair, and nondiscriminatory practices.
(D)
The entity builds on the transaction standards issued under Health Insurance Portability and Accountability Act of 1996.
(E)
The entity allows for public review and updates of the operating rules.
(3)

Review and recommendations.—
The National Committee on Vital and Health Statistics shall—
(A)
advise the Secretary as to whether a nonprofit entity meets the requirements under paragraph (2);
(B)
review the operating rules developed and recommended by such nonprofit entity;
(C)
determine whether such operating rules represent a consensus view of the health care stakeholders and are consistent with and do not conflict with other existing standards;
(D)
evaluate whether such operating rules are consistent with electronic standards adopted for health information technology; and
(E)
submit to the Secretary a recommendation as to whether the Secretary should adopt such operating rules.
(4)

Implementation.—
(A)

In general.—
The Secretary shall adopt operating rules under this subsection, by regulation in accordance with subparagraph (C), following consideration of the operating rules developed by the non-profit entity described in paragraph (2) and the recommendation submitted by the National Committee on Vital and Health Statistics under paragraph (3)(E) and having ensured consultation with providers.
(B)

Adoption requirements; effective dates.—
(i)

Eligibility for a health plan and health claim status.—
The set of operating rules for eligibility for a health plan and health claim status transactions shall be adopted not later than July 1, 2011, in a manner ensuring that such operating rules are effective not later than January 1, 2013, and may allow for the use of a machine readable identification card.
(ii)

Electronic funds transfers and health care payment and remittance advice.—
The set of operating rules for electronic funds transfers and health care payment and remittance advice transactions shall—
(I)
allow for automated reconciliation of the electronic payment with the remittance advice; and
(II)
be adopted not later than July 1, 2012, in a manner ensuring that such operating rules are effective not later than January 1, 2014.
(iii)

Health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, referral certification and authorization.—
The set of operating rules for health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, and referral certification and authorization transactions shall be adopted not later than July 1, 2014, in a manner ensuring that such operating rules are effective not later than January 1, 2016.
(C)

Expedited rulemaking.—
The Secretary shall promulgate an interim final rule applying any standard or operating rule recommended by the National Committee on Vital and Health Statistics pursuant to paragraph (3). The Secretary shall accept and consider public comments on any interim final rule published under this subparagraph for 60 days after the date of such publication.
(h)

Compliance.—
(1)

Health plan certification.—
(A)

Eligibility for a health plan, health claim status, electronic funds transfers, health care payment and remittance advice.—
Not later than December 31, 2013, a health plan shall file a statement with the Secretary, in such form as the Secretary may require, certifying that the data and information systems for such plan are in compliance with any applicable standards (as described under paragraph (7) of section 1171) and associated operating rules (as described under paragraph (9) of such section) for electronic funds transfers, eligibility for a health plan, health claim status, and health care payment and remittance advice, respectively.
(B)

Health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, health claims attachments, referral certification and authorization.—
Not later than December 31, 2015, a health plan shall file a statement with the Secretary, in such form as the Secretary may require, certifying that the data and information systems for such plan are in compliance with any applicable standards and associated operating rules for health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, health claims attachments, and referral certification and authorization, respectively. A health plan shall provide the same level of documentation to certify compliance with such transactions as is required to certify compliance with the transactions specified in subparagraph (A).
(2)

Documentation of compliance.—
A health plan shall provide the Secretary, in such form as the Secretary may require, with adequate documentation of compliance with the standards and operating rules described under paragraph (1). A health plan shall not be considered to have provided adequate documentation and shall not be certified as being in compliance with such standards, unless the health plan—
(A)
demonstrates to the Secretary that the plan conducts the electronic transactions specified in paragraph (1) in a manner that fully complies with the regulations of the Secretary; and
(B)
provides documentation showing that the plan has completed end-to-end testing for such transactions with their partners, such as hospitals and physicians.
(3)

Service contracts.—
A health plan shall be required to ensure that any entities that provide services pursuant to a contract with such health plan shall comply with any applicable certification and compliance requirements (and provide the Secretary with adequate documentation of such compliance) under this subsection.
(4)

Certification by outside entity.—
The Secretary may designate independent, outside entities to certify that a health plan has complied with the requirements under this subsection, provided that the certification standards employed by such entities are in accordance with any standards or operating rules issued by the Secretary.
(5)

Compliance with revised standards and operating rules.—
(A)

In general.—
A health plan (including entities described under paragraph (3)) shall file a statement with the Secretary, in such form as the Secretary may require, certifying that the data and information systems for such plan are in compliance with any applicable revised standards and associated operating rules under this subsection for any interim final rule promulgated by the Secretary under subsection (i) that—
(i)
amends any standard or operating rule described under paragraph (1) of this subsection; or
(ii)
establishes a standard (as described under subsection (a)(1)(B)) or associated operating rules (as described under subsection (i)(5)) for any other financial and administrative transactions.
(B)

Date of compliance.—
A health plan shall comply with such requirements not later than the effective date of the applicable standard or operating rule.
(6)

Audits of health plans.—
The Secretary shall conduct periodic audits to ensure that health plans (including entities described under paragraph (3)) are in compliance with any standards and operating rules that are described under paragraph (1) or subsection (i)(5).
(i)

Review and Amendment of Standards and Operating Rules.—
(1)

Establishment.—
Not later than January 1, 2014, the Secretary shall establish a review committee (as described under paragraph (4)).
(2)

Evaluations and reports.—
(A)

Hearings.—
Not later than April 1, 2014, and not less than biennially thereafter, the Secretary, acting through the review committee, shall conduct hearings to evaluate and review the adopted standards and operating rules established under this section.
(B)

Report.—
Not later than July 1, 2014, and not less than biennially thereafter, the review committee shall provide recommendations for updating and improving such standards and operating rules. The review committee shall recommend a single set of operating rules per transaction standard and maintain the goal of creating as much uniformity as possible in the implementation of the electronic standards.
(3)

Interim final rulemaking.—
(A)

In general.—
Any recommendations to amend adopted standards and operating rules that have been approved by the review committee and reported to the Secretary under paragraph (2)(B) shall be adopted by the Secretary through promulgation of an interim final rule not later than 90 days after receipt of the committee's report.
(B)

Public comment.—
(i)

Public comment period.—
The Secretary shall accept and consider public comments on any interim final rule published under this paragraph for 60 days after the date of such publication.
(ii)

Effective date.—
The effective date of any amendment to existing standards or operating rules that is adopted through an interim final rule published under this paragraph shall be 25 months following the close of such public comment period.
(4)

Review committee.—
(A)

Definition.—
For the purposes of this subsection, the term “review committee” means a committee chartered by or within the Department of Health and Human services that has been designated by the Secretary to carry out this subsection, including—
(i)
the National Committee on Vital and Health Statistics; or
(ii)
any appropriate committee as determined by the Secretary.
(B)

Coordination of hit standards.—
In developing recommendations under this subsection, the review committee shall ensure coordination, as appropriate, with the standards that support the certified electronic health record technology approved by the Office of the National Coordinator for Health Information Technology.
(5)

Operating rules for other standards adopted by the secretary.—
The Secretary shall adopt a single set of operating rules (pursuant to the process described under subsection (g)) for any transaction for which a standard had been adopted pursuant to subsection (a)(1)(B).
(j)

Penalties.—
(1)

Penalty fee.—
(A)

In general.—
Not later than April 1, 2014, and annually thereafter, the Secretary shall assess a penalty fee (as determined under subparagraph (B)) against a health plan that has failed to meet the requirements under subsection (h) with respect to certification and documentation of compliance with—
(i)
the standards and associated operating rules described under paragraph (1) of such subsection; and
(ii)
a standard (as described under subsection (a)(1)(B)) and associated operating rules (as described under subsection (i)(5)) for any other financial and administrative transactions.
(B)

Fee amount.—
Subject to subparagraphs (C), (D), and (E), the Secretary shall assess a penalty fee against a health plan in the amount of $1 per covered life until certification is complete. The penalty shall be assessed per person covered by the plan for which its data systems for major medical policies are not in compliance and shall be imposed against the health plan for each day that the plan is not in compliance with the requirements under subsection (h).
(C)

Additional penalty for misrepresentation.—
A health plan that knowingly provides inaccurate or incomplete information in a statement of certification or documentation of compliance under subsection (h) shall be subject to a penalty fee that is double the amount that would otherwise be imposed under this subsection.
(D)

Annual fee increase.—
The amount of the penalty fee imposed under this subsection shall be increased on an annual basis by the annual percentage increase in total national health care expenditures, as determined by the Secretary.
(E)

Penalty limit.—
A penalty fee assessed against a health plan under this subsection shall not exceed, on an annual basis—
(i)
an amount equal to $20 per covered life under such plan; or
(ii)
an amount equal to $40 per covered life under the plan if such plan has knowingly provided inaccurate or incomplete information (as described under subparagraph (C)).
(F)

Determination of covered individuals.—
The Secretary shall determine the number of covered lives under a health plan based upon the most recent statements and filings that have been submitted by such plan to the Securities and Exchange Commission.
(2)

Notice and dispute procedure.—
The Secretary shall establish a procedure for assessment of penalty fees under this subsection that provides a health plan with reasonable notice and a dispute resolution procedure prior to provision of a notice of assessment by the Secretary of the Treasury (as described under paragraph (4)(B)).
(3)

Penalty fee report.—
Not later than May 1, 2014, and annually thereafter, the Secretary shall provide the Secretary of the Treasury with a report identifying those health plans that have been assessed a penalty fee under this subsection.
(4)

Collection of penalty fee.—
(A)

In general.—
The Secretary of the Treasury, acting through the Financial Management Service, shall administer the collection of penalty fees from health plans that have been identified by the Secretary in the penalty fee report provided under paragraph (3).
(B)

Notice.—
Not later than August 1, 2014, and annually thereafter, the Secretary of the Treasury shall provide notice to each health plan that has been assessed a penalty fee by the Secretary under this subsection. Such notice shall include the amount of the penalty fee assessed by the Secretary and the due date for payment of such fee to the Secretary of the Treasury (as described in subparagraph (C)).
(C)

Payment due date.—
Payment by a health plan for a penalty fee assessed under this subsection shall be made to the Secretary of the Treasury not later than November 1, 2014, and annually thereafter.
(D)

Unpaid penalty fees.—
Any amount of a penalty fee assessed against a health plan under this subsection for which payment has not been made by the due date provided under subparagraph (C) shall be—
(i)
increased by the interest accrued on such amount, as determined pursuant to the underpayment rate established under section 6621 of the Internal Revenue Code of 1986; and
(ii)
treated as a past-due, legally enforceable debt owed to a Federal agency for purposes of section 6402(d) of the Internal Revenue Code of 1986.
(E)

Administrative fees.—
Any fee charged or allocated for collection activities conducted by the Financial Management Service will be passed on to a health plan on a pro-rata basis and added to any penalty fee collected from the plan.

timetables for adoption of standards
Sec. 1174.
[42 U.S.C. 1320d–3]
(a)

Initial Standards.—
The Secretary shall carry out section 1173 not later than 18 months after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, except that standards relating to claims attachments shall be adopted not later than 30 months after such date.
(b)

Additions and Modifications to Standards.—
(1)

In general.—
Except as provided in paragraph (2), the Secretary shall review the standards adopted under section 1173, and shall adopt modifications to the standards (including additions to the standards), as determined appropriate, but not more frequently than once every 12 months. Any addition or modification to a standard shall be completed in a manner which minimizes the disruption and cost of compliance.
(2)

Special rules.—
(A)

First 12-month period.—
Except with respect to additions and modifications to code sets under subparagraph (B), the Secretary may not adopt any modification to a standard adopted under this part during the 12-month period beginning on the date the standard is initially adopted, unless the Secretary determines that the modification is necessary in order to permit compliance with the standard.
(B)

Additions and modifications to code sets.—
(i)

In general.—
The Secretary shall ensure that procedures exist for the routine maintenance, testing, enhancement, and expansion of code sets.
(ii)

Additional rules.—
If a code set is modified under this subsection, the modified code set shall include instructions on how data elements of health information that were encoded prior to the modification may be converted or translated so as to preserve the informational value of the data elements that existed before the modification. Any modification to a code set under this subsection shall be implemented in a manner that minimizes the disruption and cost of complying with such modification.

requirements
Sec. 1175.
[42 U.S.C. 1320d–4]
(a)

Conduct of Transactions by Plans.—
(1)

In general.—
If a person desires to conduct a transaction referred to in section 1173(a)(1) with a health plan as a standard transaction—
(A)
the health plan may not refuse to conduct such transaction as a standard transaction;
(B)
the insurance plan may not delay such transaction, or otherwise adversely affect, or attempt to adversely affect, the person or the transaction on the ground that the transaction is a standard transaction; and
(C)
the information transmitted and received in connection with the transaction shall be in the form of standard data elements of health information.
(2)

Satisfaction of requirements.—
A health plan may satisfy the requirements under paragraph (1) by—
(A)
directly transmitting and receiving standard data elements of health information; or
(B)
submitting nonstandard data elements to a health care clearinghouse for processing into standard data elements and transmission by the health care clearinghouse, and receiving standard data elements through the health care clearinghouse.
(3)

Timetable for compliance.—
Paragraph (1) shall not be construed to require a health plan to comply with any standard, implementation specification, or modification to a standard or specification adopted or established by the Secretary under sections 1172 through 1174 at any time prior to the date on which the plan is required to comply with the standard or specification under subsection (b).
(b)

Compliance With Standards.—
(1)

Initial compliance.—
(A)

In general.—
Not later than 24 months after the date on which an initial standard or implementation specification is adopted or established under sections 1172 and 1173, each person to whom the standard or implementation specification applies shall comply with the standard or specification.
(B)

Special rule for small health plans.—
In the case of a small health plan, paragraph (1) shall be applied by substituting “36 months” for “24 months”. For purposes of this subsection, the Secretary shall determine the plans that qualify as small health plans.
(2)

Compliance with modified standards.—
If the Secretary adopts a modification to a standard or implementation specification under this part, each person to whom the standard or implementation specification applies shall comply with the modified standard or implementation specification at such time as the Secretary determines appropriate, taking into account the time needed to comply due to the nature and extent of the modification. The time determined appropriate under the preceding sentence may not be earlier than the last day of the 180-day period beginning on the date such modification is adopted. The Secretary may extend the time for compliance for small health plans, if the Secretary determines that such extension is appropriate.
(3)

Construction.—
Nothing in this subsection shall be construed to prohibit any person from complying with a standard or specification by—
(A)
submitting nonstandard data elements to a health care clearinghouse for processing into standard data elements and transmission by the health care clearing-
house; or
(B)
receiving standard data elements through a health care clearinghouse.

general penalty for failure to comply with requirements and standards
Sec. 1176.
[42 U.S.C. 1320d–5]
(a)

General Penalty.—
(1)

In general.—
Except as provided in subsection (b), the Secretary shall impose on any person who violates a provision of this part—
(A)
in the case of a violation of such provision in which it is established that the person did not know (and by exercising reasonable diligence would not have known) that such person violated such provision, a penalty for each such violation of an amount that is at least the amount described in paragraph (3)(A) but not to exceed the amount described in paragraph (3)(D);
(B)
in the case of a violation of such provision in which it is established that the violation was due to reasonable cause and not to willful neglect, a penalty for each such violation of an amount that is at least the amount described in paragraph (3)(B) but not to exceed the amount described in paragraph (3)(D); and
(C)
in the case of a violation of such provision in which it is established that the violation was due to willful neglect—
(i)
if the violation is corrected as described in subsection (b)(3)(A), a penalty in an amount that is at least the amount described in paragraph (3)(C) but not to exceed the amount described in paragraph (3)(D); and
(ii)
if the violation is not corrected as described in such subsection, a penalty in an amount that is at least the amount described in paragraph (3)(D).
In determining the amount of a penalty under this section for a violation, the Secretary shall base such determination on the nature and extent of the violation and the nature and extent of the harm resulting from such violation.
(2)

Procedures.—
The provisions of section 1128A (other than subsections (a) and (b) and the second sentence of subsection (f)) shall apply to the imposition of a civil money penalty under this subsection in the same manner as such provisions apply to the imposition of a penalty under such section 1128A.
(3)

Tiers of penalties described.—
For purposes of paragraph (1), with respect to a violation by a person of a provision of this part—
(A)
the amount described in this subparagraph is $100 for each such violation, except that the total amount imposed on the person for all such violations of an identical requirement or prohibition during a calendar year may not exceed $25,000;
(B)
the amount described in this subparagraph is $1,000 for each such violation, except that the total amount imposed on the person for all such violations of an identical requirement or prohibition during a calendar year may not exceed $100,000;
(C)
the amount described in this subparagraph is $10,000 for each such violation, except that the total amount imposed on the person for all such violations of an identical requirement or prohibition during a calendar year may not exceed $250,000; and
(D)
the amount described in this subparagraph is $50,000 for each such violation, except that the total amount imposed on the person for all such violations of an identical requirement or prohibition during a calendar year may not exceed $1,500,000.
(b)

Limitations.—
(1)

Offenses otherwise punishable.—
No penalty may be imposed under subsection (a) and no damages obtained under subsection (d) with respect to an act if the act constitutes an offense punishable under section 117730.
^{30}
Section 13410(a)(1)(A) of division A of Public Law 111–5 provides as follows:
(1) Noncompliance due to willful neglect.—Section 1176 of the Social Security Act (42 U.S.C. 1320d–5) is amended—
(A) in subsection (b)(1), by striking “the act constitutes an offense punishable under section 1177” and inserting “a penalty has been imposed under section 1177 with respect to such act”; and
Subsection (b) of such section provides as follows:
(b) Effective Date; Regulations.—
(1) The amendments made by subsection (a) shall apply to penalties imposed on or after the date that is 24 months after the date of the enactment of this title.
(2) Not later than 18 months after the date of the enactment of this title, the Secretary of Health and Human Services shall promulgate regulations to implement such amendments.
(2)

Failures due to reasonable cause.—
(A)

In general.—
Except as provided in subparagraph (B) or subsection (a)(1)(C), no penalty may be imposed under subsection (a) and no damages obtained under subsection (d) if the failure to comply is corrected during the 30-day period beginning on the first date the person liable for the penalty or damages knew, or by exercising reasonable diligence would have known, that the failure to comply occurred.
(B)

Extension of period.—
(i)

No penalty.—
With respect to the imposition of a penalty by the Secretary under subsection (a), the period referred to in subparagraph (A) may be extended as determined appropriate by the Secretary based on the nature and extent of the failure to comply.
(ii)

Assistance.—
If the Secretary determines that a person failed to comply because the person was unable to comply, the Secretary may provide technical assistance to the person during the period described in subparagraph (A). Such assistance shall be provided in any manner determined appropriate by the Secretary.
(3)

Reduction.—
In the case of a failure to comply which is due to reasonable cause and not to willful neglect, any penalty under subsection (a) and any damages under subsection (d) that is not entirely waived under paragraph (3) may be waived to the extent that the payment of such penalty would be excessive relative to the compliance failure involved.
[Note: Subsection (c) shown here in italic type face was added by section 13410(a)(1)(B) of division A of Public Law 111–5. For the effective date of this amendment, see subsection (b) of section 13410 of such Public Law set out in a footnote to subsection (b)(1).]
(c)

Noncompliance Due to Willful Neglect.—
(1)

In general.—
A violation of a provision of this part due to willful neglect is a violation for which the Secretary is required to impose a penalty under subsection (a)(1).
(2)

Required investigation.—
For purposes of paragraph (1), the Secretary shall formally investigate any complaint of a violation of a provision of this part if a preliminary investigation of the facts of the complaint indicate such a possible violation due to willful neglect.
(d)

Enforcement by State Attorneys General.—
(1)

Civil action.—
Except as provided in subsection (b), in any case in which the attorney general of a State has reason to believe that an interest of one or more of the residents of that State has been or is threatened or adversely affected by any person who violates a provision of this part, the attorney general of the State, as parens patriae, may bring a civil action on behalf of such residents of the State in a district court of the United States of appropriate jurisdiction—
(A)
to enjoin further such violation by the defendant; or
(B)
to obtain damages on behalf of such residents of the State, in an amount equal to the amount determined under paragraph (2).
(2)

Statutory damages.—
(A)

In general.—
For purposes of paragraph (1)(B), the amount determined under this paragraph is the amount calculated by multiplying the number of violations by up to $100. For purposes of the preceding sentence, in the case of a continuing violation, the number of violations shall be determined consistent with the HIPAA privacy regulations (as defined in section 1180(b)(3)) for violations of subsection (a).
(B)

Limitation.—
The total amount of damages imposed on the person for all violations of an identical requirement or prohibition during a calendar year may not exceed $25,000.
(C)

Reduction of damages.—
In assessing damages under subparagraph (A), the court may consider the factors the Secretary may consider in determining the amount of a civil money penalty under subsection (a) under the HIPAA privacy regulations.
(3)

Attorney fees.—
In the case of any successful action under paragraph (1), the court, in its discretion, may award the costs of the action and reasonable attorney fees to the State.
(4)

Notice to secretary.—
The State shall serve prior written notice of any action under paragraph (1) upon the Secretary and provide the Secretary with a copy of its complaint, except in any case in which such prior notice is not feasible, in which case the State shall serve such notice immediately upon instituting such action. The Secretary shall have the right—
(A)
to intervene in the action;
(B)
upon so intervening, to be heard on all matters arising therein; and
(C)
to file petitions for appeal.
(5)

Construction.—
For purposes of bringing any civil action under paragraph (1), nothing in this section shall be construed to prevent an attorney general of a State from exercising the powers conferred on the attorney general by the laws of that State.
(6)

Venue; service of process.—
(A)

Venue.—
Any action brought under paragraph (1) may be brought in the district court of the United States that meets applicable requirements relating to venue under section 1391 of title 28, United States Code.
(B)

Service of process.—
In an action brought under paragraph (1), process may be served in any district in which the defendant—
(i)
is an inhabitant; or
(ii)
maintains a physical place of business.
(7)

Limitation on state action while federal action is pending.—
If the Secretary has instituted an action against a person under subsection (a) with respect to a specific violation of this part, no State attorney general may bring an action under this subsection against the person with respect to such violation during the pendency of that action.
(8)

Application of cmp statute of limitation.—
A civil action may not be instituted with respect to a violation of this part unless an action to impose a civil money penalty may be instituted under subsection (a) with respect to such violation consistent with the second sentence of section 1128A(c)(1).
[Note: Subsection (e) shown here in italic type face was added by section 13410(f) of division A of Public Law 111–5. Section 13423 of division A of such Public Law provides that this amendment “shall take effect on the date that is 12 months after the date of the enactment of this title” (enactment date is February 17, 2009).]
(e)

Allowing Continued Use of Corrective Action.—
Nothing in this section shall be construed as preventing the Office for Civil Rights of the Department of Health and Human Services from continuing, in its discretion, to use corrective action without a penalty in cases where the person did not know (and by exercising reasonable diligence would not have known) of the violation involved.

wrongful disclosure of individually identifiable health information
Sec. 1177.
[42 U.S.C. 1320d–6]
(a)

Offense.—
A person who knowingly and in violation of this part—
(1)
uses or causes to be used a unique health identifier;
(2)
obtains individually identifiable health information relating to an individual; or
(3)
discloses individually identifiable health information to another person,
shall be punished as provided in subsection (b).31
^{31}
Section 13409 of division A of Public Law 111–5 provides for an amendment to section 1177(a) as follows:
SEC. 13409. CLARIFICATION OF APPLICATION OF WRONGFUL DISCLOSURES CRIMINAL PENALTIES.
Section 1177(a) of the Social Security Act (42 U.S.C. 1320d–6(a)) is amended by adding at the end the following new sentence: “For purposes of the previous sentence, a person (including an employee or other individual) shall be considered to have obtained or disclosed individually identifiable health information in violation of this part if the information is maintained by a covered entity (as defined in the HIPAA privacy regulation described in section 1180(b)(3)) and the individual obtained or disclosed such information without authorization.”.
Section 13423 of division A of such Public Law provides that this amendment “shall take effect on the date that is 12 months after the date of the enactment of this title” .
(b)

Penalties.—
A person described in subsection (a) shall—
(1)
be fined not more than $50,000, imprisoned not more than 1 year, or both;
(2)
if the offense is committed under false pretenses, be fined not more than $100,000, imprisoned not more than 5 years, or both; and
(3)
if the offense is committed with intent to sell, transfer, or use individually identifiable health information for commercial advantage, personal gain, or malicious harm, be fined not more than $250,000, imprisoned not more than 10 years, or both.

effect on state law
Sec. 1178.
[42 U.S.C. 1320d–7]
(a)

General Effect.—
(1)

General rule.—
Except as provided in paragraph (2), a provision or requirement under this part, or a standard or implementation specification adopted or established under sections 1172 through 1174, shall supersede any contrary provision of State law, including a provision of State law that requires medical or health plan records (including billing information) to be maintained or transmitted in written rather than electronic form.
(2)

Exceptions.—
A provision or requirement under this part, or a standard or implementation specification adopted or established under sections 1172 through 1174, shall not supersede a contrary provision of State law, if the provision of State law—
(A)
is a provision the Secretary determines—
(i)
is necessary—
(I)
to prevent fraud and abuse;
(II)
to ensure appropriate State regulation of insurance and health plans;
(III)
for State reporting on health care delivery or costs; or
(IV)
for other purposes; or
(ii)
addresses controlled substances; or
(B)
subject to section 264(c)(2) of the Health Insurance Portability and Accountability Act of 1996, relates to the privacy of individually identifiable health information.
(b)

Public Health.—
Nothing in this part shall be construed to invalidate or limit the authority, power, or procedures established under any law providing for the reporting of disease or injury, child abuse, birth, or death, public health surveillance, or public health investigation or intervention.
(c)

State Regulatory Reporting.—
Nothing in this part shall limit the ability of a State to require a health plan to report, or to provide access to, information for management audits, financial audits, program monitoring and evaluation, facility licensure or certification, or individual licensure or certification.

processing payment transactions by financial institutions
Sec. 1179.
[42 U.S.C. 1320d–8]
To the extent that an entity is engaged in activities of a financial institution (as defined in section 1101 of the Right to Financial Privacy Act of 1978), or is engaged in authorizing, processing, clearing, settling, billing, transferring, reconciling, or collecting payments, for a financial institution, this part, and any standard adopted under this part, shall not apply to the entity with respect to such activities, including the following:
(1)
The use or disclosure of information by the entity for authorizing, processing, clearing, settling, billing, transferring, reconciling or collecting, a payment for, or related to, health plan premiums or health care, where such payment is made by any means, including a credit, debit, or other payment card, an account, check, or electronic funds transfer.
(2)
The request for, or the use or disclosure of, information by the entity with respect to a payment described in para-
graph (1)—
(A)
for transferring receivables;
(B)
for auditing;
(C)
in connection with—
(i)
a customer dispute; or
(ii)
an inquiry from, or to, a customer;
(D)
in a communication to a customer of the entity regarding the customer's transactions, payment card, account, check, or electronic funds transfer;
(E)
for reporting to consumer reporting agencies; or
(F)
for complying with—
(i)
a civil or criminal subpoena; or
(ii)
a Federal or State law regulating the entity.

application of hipaa regulations to genetic information 32
Sec. 1180.
[42 U.S.C. 1320d–9]
(a)

In General.—
The Secretary shall revise the HIPAA privacy regulation (as defined in subsection (b)) so it is consistent with the following:
^{32}
Section 105(a) of Public Law 110–233 (enacted May 21, 2008) adds section 1180 at the end of part C of title XI. Subsection (b)(2) of such section 105 provides that “[t]he amendment made by subsection (a) shall take effect on the date that is 1 year after the date of the enactment of this Act”.
(1)
Genetic information shall be treated as health information described in section 1171(4)(B).
(2)
The use or disclosure by a covered entity that is a group health plan, health insurance issuer that issues health insurance coverage, or issuer of a medicare supplemental policy of protected health information that is genetic information about an individual for underwriting purposes under the group health plan, health insurance coverage, or medicare supplemental policy shall not be a permitted use or disclosure.
(b)

Definitions.—
For purposes of this section:
(1)

Genetic information; genetic test; family member.—
The terms “genetic information”, “genetic test”, and “family member” have the meanings given such terms in section 2791 of the Public Health Service Act (42 U.S.C. 300gg–91), as amended by the Genetic Information Nondiscrimination Act of 2007.
(2)

Group health plan; health insurance coverage; medicare supplemental policy.—
The terms “group health plan” and “health insurance coverage” have the meanings given such terms under section 2791 of the Public Health Service Act (42 U.S.C. 300gg–91), and the term “medicare supplemental policy” has the meaning given such term in section 1882(g).
(3)

HIPAA privacy regulation.—
The term “HIPAA privacy regulation” means the regulations promulgated by the Secretary under this part and section 264 of the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. 1320d–2 note).
(4)

Underwriting purposes.—
The term “underwriting purposes” means, with respect to a group health plan, health insurance coverage, or a medicare supplemental policy—
(A)
rules for, or determination of, eligibility (including enrollment and continued eligibility) for, or determination of, benefits under the plan, coverage, or policy;
(B)
the computation of premium or contribution amounts under the plan, coverage, or policy;
(C)
the application of any pre-existing condition exclusion under the plan, coverage, or policy; and
(D)
other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits.
(c)

Procedure.—
The revisions under subsection (a) shall be made by notice in the Federal Register published not later than 60 days after the date of the enactment of this section and shall be effective upon publication, without opportunity for any prior public comment, but may be revised, consistent with this section, after opportunity for public comment.
(d)

Enforcement.—
In addition to any other sanctions or remedies that may be available under law, a covered entity that is a group health plan, health insurance issuer, or issuer of a medicare supplemental policy and that violates the HIPAA privacy regulation (as revised under subsection (a) or otherwise) with respect to the use or disclosure of genetic information shall be subject to the penalties described in sections 1176 and 1177 in the same manner and to the same extent that such penalties apply to violations of this part.
Part D—

Comparative Clinical Effectiveness Research

comparative clinical effectiveness research
Sec. 1181.
[42 U.S.C. 1320e]
(a)

Definitions.—
In this section:
(1)

Board.—
The term “Board” means the Board of Governors established under subsection (f).
(2)

Comparative clinical effectiveness research; research.—
(A)

In general.—
The terms “comparative clinical effectiveness research” and “research” mean research evaluating and comparing health outcomes and the clinical effectiveness, risks, and benefits of 2 or more medical treatments, services, and items described in subparagraph (B).
(B)

Medical treatments, services, and items described.—
The medical treatments, services, and items described in this subparagraph are health care interventions, protocols for treatment, care management, and delivery, procedures, medical devices, diagnostic tools, pharmaceuticals (including drugs and biologicals), integrative health practices, and any other strategies or items being used in the treatment, management, and diagnosis of, or prevention of illness or injury in, individuals.
(3)

Conflict of interest.—
The term “conflict of interest” means an association, including a financial or personal association, that have the potential to bias or have the appearance of biasing an individual's decisions in matters related to the Institute or the conduct of activities under this section.
(4)

Real conflict of interest.—
The term “real conflict of interest” means any instance where a member of the Board, the methodology committee established under subsection (d)(6), or an advisory panel appointed under subsection (d)(4), or a close relative of such member, has received or could receive either of the following:
(A)
A direct financial benefit of any amount deriving from the result or findings of a study conducted under this section.
(B)
A financial benefit from individuals or companies that own or manufacture medical treatments, services, or items to be studied under this section that in the aggregate exceeds $10,000 per year. For purposes of the preceding sentence, a financial benefit includes honoraria, fees, stock, or other financial benefit and the current value of the member or close relative's already existing stock holdings, in addition to any direct financial benefit deriving from the results or findings of a study conducted under this section.
(b)

Patient-Centered Outcomes Research Institute.—
(1)

Establishment.—
There is authorized to be established a nonprofit corporation, to be known as the “Patient-Centered Outcomes Research Institute” (referred to in this section as the “Institute”) which is neither an agency nor establishment of the United States Government.
(2)

Application of provisions.—
The Institute shall be subject to the provisions of this section, and, to the extent consistent with this section, to the District of Columbia Nonprofit Corporation Act.
(3)

Funding of comparative clinical effectiveness research.—
For fiscal year 2010 and each subsequent fiscal year, amounts in the Patient-Centered Outcomes Research Trust Fund (referred to in this section as the “PCORTF”) under section 9511 of the Internal Revenue Code of 1986 shall be available, without further appropriation, to the Institute to carry out this section.
(c)

Purpose.—
The purpose of the Institute is to assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis that considers variations in patient subpopulations, and the dissemination of research findings with respect to the relative health outcomes, clinical effectiveness, and appropriateness of the medical treatments, services, and items described in subsection (a)(2)(B).
(d)

Duties.—
(1)

Identifying research priorities and establishing research project agenda.—
(A)

Identifying research priorities.—
The Institute shall identify national priorities for research, taking into account factors of disease incidence, prevalence, and burden in the United States (with emphasis on chronic conditions), gaps in evidence in terms of clinical outcomes, practice variations and health disparities in terms of delivery and outcomes of care, the potential for new evidence to improve patient health, well-being, and the quality of care, the effect on national expenditures associated with a health care treatment, strategy, or health conditions, as well as patient needs, outcomes, and preferences, the relevance to patients and clinicians in making informed health decisions, and priorities in the National Strategy for quality care established under section 399H of the Public Health Service Act that are consistent with this section. Such national priorities shall include research with respect to intellectual and developmental disabilities and maternal mortality. Such priorities should reflect a balance between long-term priorities and short-term priorities, and be responsive to changes in medical evidence and in health care treatments.
(B)

Establishing research project agenda.—
The Institute shall establish and update a research project agenda for research to address the priorities identified under subparagraph (A), taking into consideration the types of research that might address each priority and the relative value (determined based on the cost of conducting research compared to the potential usefulness of the information produced by research) associated with the different types of research, and such other factors as the Institute determines appropriate.
(2)

Carrying out research project agenda.—
(A)

Research.—
The Institute shall carry out the research project agenda established under paragraph (1)(B) in accordance with the methodological standards adopted under paragraph (9) using methods, including the following:
(i)
Systematic reviews and assessments of existing and future research and evidence including original research conducted subsequent to the date of the enactment of this section.
(ii)
Primary research, such as randomized clinical trials, molecularly informed trials, and observational studies.
(iii)
Any other methodologies recommended by the methodology committee established under paragraph (6) that are adopted by the Board under paragraph (9).
(B)

Contracts for the management of funding and conduct of research.—
(i)

Contracts.—
(I)

In general.—
In accordance with the research project agenda established under paragraph (1)(B), the Institute shall enter into contracts for the management of funding and conduct of research in accordance with the following:
- (aa)
Appropriate agencies and instrumentalities of the Federal Government.
- (bb)
Appropriate academic research, private sector research, or study-conducting entities.
(II)

Preference.—
In entering into contracts under subclause (I), the Institute shall give preference to the Agency for Healthcare Research and Quality and the National Institutes of Health, but only if the research to be conducted or managed under such contract is authorized by the governing statutes of such Agency or Institutes.
(ii)

Conditions for contracts.—
A contract entered into under this subparagraph shall require that the agency, instrumentality, or other entity—
(I)
abide by the transparency and conflicts of interest requirements under subsection (h) that apply to the Institute with respect to the research managed or conducted under such contract;
(II)
comply with the methodological standards adopted under paragraph (9) with respect to such research;
(III)
consult with the expert advisory panels for clinical trials and rare disease appointed under clauses (ii) and (iii), respectively, of paragraph (4)(A);
(IV)
subject to clause (iv), permit a researcher who conducts original research, as described in subparagraph (A)(ii), under the contract for the agency, instrumentality, or other entity to have such research published in a peer-reviewed journal or other publication, as long as the researcher enters into a data use agreement with the Institute for use of the data from the original research, as appropriate;
(V)
have appropriate processes in place to manage data privacy and meet ethical standards for the research;
(VI)
comply with the requirements of the Institute for making the information available to the public under paragraph (8); and
(VII)
comply with other terms and conditions determined necessary by the Institute to carry out the research agenda adopted under paragraph (2).
(iii)

Coverage of copayments or coinsurance.—
A contract entered into under this subparagraph may allow for the coverage of copayments or coinsurance, or allow for other appropriate measures, to the extent that such coverage or other measures are necessary to preserve the validity of a research project, such as in the case where the research project must be blinded.
(iv)

Subsequent use of the data.—
The Institute shall not allow the subsequent use of data from original research in work-for-hire contracts with individuals, entities, or instrumentalities that have a financial interest in the results, unless approved under a data use agreement with the Institute.
(C)

Review and update of evidence.—
The Institute shall review and update evidence on a periodic basis as appropriate.
(D)

Taking into account potential differences.—
Research shall be designed, as appropriate, to take into account the potential for differences in the effectiveness of health care treatments, services, and items as used with various subpopulations, such as racial and ethnic minorities, women, age, and groups of individuals with different comorbidities, genetic and molecular sub-types, or quality of life preferences and include members of such subpopulations as subjects in the research as feasible and appropriate.
(E)

Differences in treatment modalities.—
Research shall be designed, as appropriate, to take into account different characteristics of treatment modalities that may affect research outcomes, such as the phase of the treatment modality in the innovation cycle and the impact of the skill of the operator of the treatment modality.
(F)

Consideration of full range of outcomes data.—
Research shall be designed, as appropriate, to take into account and capture the full range of clinical and patient-centered outcomes relevant to, and that meet the needs of, patients, clinicians, purchasers, and policy-makers in making informed health decisions. In addition to the relative health outcomes and clinical effectiveness, clinical and patient-centered outcomes shall include the potential burdens and economic impacts of the utilization of medical treatments, items, and services on different stakeholders and decision-makers respectively. These potential burdens and economic impacts include medical out-of-pocket costs, including health plan benefit and formulary design, non-medical costs to the patient and family, including caregiving, effects on future costs of care, workplace productivity and absenteeism, and healthcare utilization.
(3)

Data collection.—
(A)

In general.—
The Secretary shall, with appropriate safeguards for privacy, make available to the Institute such data collected by the Centers for Medicare & Medicaid Services under the programs under titles XVIII, XIX, and XXI, as well as provide access to the data networks developed under section 937(f) of the Public Health Service Act, as the Institute and its contractors may require to carry out this section. The Institute may also request and obtain data from Federal, State, or private entities, including data from clinical databases and registries.
(B)

Use of data.—
The Institute shall only use data provided to the Institute under subparagraph (A) in accordance with laws and regulations governing the release and use of such data, including applicable confidentiality and privacy standards.
(4)

Appointing expert advisory panels.—
(A)

Appointment.—
(i)

In general.—
The Institute may appoint permanent or ad hoc expert advisory panels as determined appropriate to assist in identifying research priorities and establishing the research project agenda under paragraph (1) and for other purposes.
(ii)

Expert advisory panels for clinical trials.—
The Institute shall appoint expert advisory panels in carrying out randomized clinical trials under the research project agenda under paragraph (2)(A)(ii). Such expert advisory panels shall advise the Institute and the agency, instrumentality, or entity conducting the research on the research question involved and the research design or protocol, including important patient subgroups and other parameters of the research. Such panels shall be available as a resource for technical questions that may arise during the conduct of such research.
(iii)

Expert advisory panel for rare disease.—
In the case of a research study for rare disease, the Institute shall appoint an expert advisory panel for purposes of assisting in the design of the research study and determining the relative value and feasibility of conducting the research study.
(B)

Composition.—
An expert advisory panel appointed under subparagraph (A) shall include representatives of practicing and research clinicians, patients, and experts in scientific and health services research, health services delivery, and evidence-based medicine who have experience in the relevant topic, and as appropriate, experts in integrative health and primary prevention strategies. The Institute may include a technical expert of each manufacturer or each medical technology that is included under the relevant topic, project, or category for which the panel is established.
(5)

Supporting patient and consumer representatives.—
The Institute shall provide support and resources to help patient and consumer representatives effectively participate on the Board and expert advisory panels appointed by the Institute under paragraph (4).
(6)

Establishing methodology committee.—
(A)

In general.—
The Institute shall establish a standing methodology committee to carry out the functions described in subparagraph (C).
(B)

Appointment and composition.—
The methodology committee established under subparagraph (A) shall be composed of not more than 15 members appointed by the Board. Members appointed to the methodology committee shall be experts in their scientific field, such as health services research, clinical research, comparative clinical effectiveness research, biostatistics, genomics, and research methodologies. Stakeholders with such expertise may be appointed to the methodology committee. In addition to the members appointed under the first sentence, the Directors of the National Institutes of Health and the Agency for Healthcare Research and Quality (or their designees) shall each be included as members of the methodology committee.
(C)

Functions.—
Subject to subparagraph (D), the methodology committee shall work to develop and improve the science and methods of comparative clinical effectiveness research by, not later than 18 months after the establishment of the Institute, directly or through subcontract, developing and periodically updating the following:
(i)
Methodological standards for research. Such methodological standards shall provide specific criteria for internal validity, generalizability, feasibility, and timeliness of research and for health outcomes measures, risk adjustment, and other relevant aspects of research and assessment with respect to the design of research. Any methodological standards developed and updated under this subclause shall be scientifically based and include methods by which new information, data, or advances in technology are considered and incorporated into ongoing research projects by the Institute, as appropriate. The process for developing and updating such standards shall include input from relevant experts, stakeholders, and decisionmakers, and shall provide opportunities for public comment. Such standards shall also include methods by which patient subpopulations can be accounted for and evaluated in different types of research. As appropriate, such standards shall build on existing work on methodological standards for defined categories of health interventions and for each of the major categories of comparative clinical effectiveness research methods (determined as of the date of enactment of the Patient Protection and Affordable Care Act).
(ii)
A translation table that is designed to provide guidance and act as a reference for the Board to determine research methods that are most likely to address each specific research question.
(D)

Consultation and conduct of examinations.—
The methodology committee may consult and contract with the Institute of Medicine of the National Academies and academic, nonprofit, or other private and governmental entities with relevant expertise to carry out activities described in subparagraph (C) and may consult with relevant stakeholders to carry out such activities.
(E)

Reports.—
The methodology committee shall submit reports to the Board on the committee's performance of the functions described in subparagraph (C). Reports shall contain recommendations for the Institute to adopt methodological standards developed and updated by the methodology committee as well as other actions deemed necessary to comply with such methodological standards.
(7)

Providing for a peer-review process for primary research.—
(A)

In general.—
The Institute shall ensure that there is a process for peer review of primary research described in subparagraph (A)(ii) of paragraph (2) that is conducted under such paragraph. Under such process—
(i)
evidence from such primary research shall be reviewed to assess scientific integrity and adherence to methodological standards adopted under paragraph (9); and
(ii)
a list of the names of individuals contributing to any peer-review process during the preceding year or years shall be made public and included in annual reports in accordance with paragraph (10)(D).
(B)

Composition.—
Such peer-review process shall be designed in a manner so as to avoid bias and conflicts of interest on the part of the reviewers and shall be composed of experts in the scientific field relevant to the research under review.
(C)

Use of existing processes.—
(i)

Processes of another entity.—
In the case where the Institute enters into a contract or other agreement with another entity for the conduct or management of research under this section, the Institute may utilize the peer-review process of such entity if such process meets the requirements under subparagraphs (A) and (B).
(ii)

Processes of appropriate medical journals.—
The Institute may utilize the peer-review process of appropriate medical journals if such process meets the requirements under subparagraphs (A) and (B).
(8)

Release of research findings.—
(A)

In general.—
The Institute shall, not later than 90 days after the conduct or receipt of research findings under this part, make such research findings available to clinicians, patients, and the general public. The Institute shall ensure that the research findings—
(i)
convey the findings of research in a manner that is comprehensible and useful to patients and providers in making health care decisions;
(ii)
fully convey findings and discuss considerations specific to certain subpopulations, risk factors, and comorbidities, as appropriate;
(iii)
include limitations of the research and what further research may be needed as appropriate;
(iv)
do not include practice guidelines, coverage recommendations, payment, or policy recommendations; and
(v)
not include any data which would violate the privacy of research participants or any confidentiality agreements made with respect to the use of data under this section.
(B)

Definition of research findings.—
In this paragraph, the term “research findings” means the results of a study or assessment.
(9)

Adoption.—
Subject to subsection (h)(1), the Institute shall adopt the national priorities identified under paragraph (1)(A), the research project agenda established under paragraph (1)(B), the methodological standards developed and updated by the methodology committee under paragraph (6)(C)(i), and any peer-review process provided under paragraph (7) by majority vote. In the case where the Institute does not adopt such processes in accordance with the preceding sentence, the processes shall be referred to the appropriate staff or entity within the Institute (or, in the case of the methodological standards, the methodology committee) for further review.
(10)

Annual reports.—
The Institute shall submit an annual report to Congress and the President, and shall make the annual report available to the public. Such report shall contain—
(A)
a description of the activities conducted under this section, research priorities identified under paragraph (1)(A) and methodological standards developed and updated by the methodology committee under paragraph (6)(C)(i) that are adopted under paragraph (9) during the preceding year;
(B)
the research project agenda and budget of the Institute for the following year;
(C)
any administrative activities conducted by the Institute during the preceding year;
(D)
the names of individuals contributing to any peer-review process under paragraph (7), without identifying them with a particular research project; and
(E)
any other relevant information (including information on the membership of the Board, expert advisory panels, methodology committee, and the executive staff of the Institute, any conflicts of interest with respect to these individuals, and any bylaws adopted by the Board during the preceding year).
(e)

Administration.—
(1)

In general.—
Subject to paragraph (2), the Board shall carry out the duties of the Institute.
(2)

Nondelegable duties.—
The activities described in subsections (d)(1) and (d)(9) are nondelegable.
(f)

Board of Governors.—
(1)

In general.—
The Institute shall have a Board of Governors, which shall consist of the following members:
(A)
The Director of Agency for Healthcare Research and Quality (or the Director's designee).
(B)
The Director of the National Institutes of Health (or the Director's designee).
(C)
At least nineteen, but no more than twenty-one members appointed by the Comptroller General of the United States as follows:
(i)
3 members representing patients and health care consumers.
(ii)
7 members representing physicians and providers, including 4 members representing physicians (at least 1 of whom is a surgeon), 1 nurse, 1 State-licensed integrative health care practitioner, and 1 representative of a hospital.
(iii)
at least 3, but no more than 5 members representing private payers, of whom at least 1 member shall represent health insurance issuers and at least 1 member shall represent employers who self-insure employee benefits.
(iv)
3 members representing pharmaceutical, device, and diagnostic manufacturers or developers.
(v)
1 member representing quality improvement or independent health service researchers.
(vi)
2 members representing the Federal Government or the States, including at least 1 member representing a Federal health program or agency.
(2)

Qualifications.—
The Board shall represent a broad range of perspectives and collectively have scientific expertise in clinical health sciences research, including epidemiology, decisions sciences, health economics, and statistics. In appointing the Board, the Comptroller General of the United States shall consider and disclose any conflicts of interest in accordance with subsection (h)(4)(B). Members of the Board shall be recused from relevant Institute activities in the case where the member (or an immediate family member of such member) has a real conflict of interest directly related to the research project or the matter that could affect or be affected by such participation.
(3)

Terms; vacancies.—
A member of the Board shall be appointed for a term of 6 years, except with respect to members first appointed, whose terms of appointment shall be staggered evenly over 2-year increments to the extent necessary to preserve the evenly staggered terms of the Board..33.Any member appointed to fill a vacancy occurring before the expiration of the term for which the member’s predecessor was appointed shall be appointed for the remainder of that term and thereafter may be eligible for reappointment to a full term. A member may serve after the expiration of that member’s term until a successor has been appointed. No individual shall be appointed to the Board for more than 2 terms. Vacancies shall be filled in the same manner as the original appointment was made.
^{33}
Double period so in law. See amendment made by section 104(f)(2)(A)(ii) of division N of Public Law 116-94.
(4)

Chairperson and vice-chairperson.—
The Comptroller General of the United States shall designate a Chairperson and Vice Chairperson of the Board from among the members of the Board. Such members shall serve as Chairperson or Vice Chairperson for a period of 3 years.
(5)

Compensation.—
Each member of the Board who is not an officer or employee of the Federal Government shall be entitled to compensation (equivalent to the rate provided for level IV of the Executive Schedule under section 5315 of title 5, United States Code) and expenses incurred while performing the duties of the Board. An officer or employee of the Federal government who is a member of the Board shall be exempt from compensation.
(6)

Director and staff; experts and consultants.—
The Board may employ and fix the compensation of an Executive Director and such other personnel as may be necessary to carry out the duties of the Institute and may seek such assistance and support of, or contract with, experts and consultants that may be necessary for the performance of the duties of the Institute.
(7)

Meetings and hearings.—
The Board shall meet and hold hearings at the call of the Chairperson or a majority of its members. Meetings not solely concerning matters of personnel shall be advertised at least 7 days in advance and open to the public. A majority of the Board members shall constitute a quorum, but a lesser number of members may meet and hold hearings.
(g)

Financial and Governmental Oversight.—
(1)

Contract for audit.—
The Institute shall provide for the conduct of financial audits of the Institute on an annual basis by a private entity with expertise in conducting financial audits.
(2)

Review and annual reports.—
(A)

Review.—
The Comptroller General of the United States shall review the following:
(i)
Not less frequently than on an annual basis, the financial audits conducted under paragraph (1).
(ii)
Not less frequently than every 5 years, the processes established by the Institute, including the research priorities and the conduct of research projects, in order to determine whether information produced by such research projects is objective and credible, is produced in a manner consistent with the requirements under this section, and is developed through a transparent process.
(iii)
Not less frequently than every 5 years, the dissemination and training activities and data networks established under section 937 of the Public Health Service Act, including the methods and products used to disseminate research, the types of training conducted and supported, and the types and functions of the data networks established, in order to determine whether the activities and data are produced in a manner consistent with the requirements under such section.
(iv)
Not less frequently than every 5 years, the overall effectiveness of activities conducted under this section and the dissemination, training, and capacity building activities conducted under section 937 of the Public Health Service Act. Such review shall include the following:
(I)
A description of those activities and the financial commitments related to research, training, data capacity building, and dissemination and uptake of research findings.
(II)
The extent to which the Institute and the Agency for Healthcare Research and Quality have collaborated with stakeholders, including provider and payer organizations, to facilitate the dissemination and uptake of research findings.
(III)
An analysis of available data and performance metrics, such as the estimated public availability and dissemination of research findings and uptake and utilization of research findings in clinical guidelines and decision support tools, on the extent to which such research findings are used by health care decision-makers, the effect of the dissemination of such findings on changes in medical practice and reducing practice variation and disparities in health care, and the effect of the research conducted and disseminated on innovation and the health care economy of the United States.
(v)
Not later than 8 years after the date of enactment of this section, the adequacy and use of the funding for the Institute and the activities conducted under section 937 of the Public Health Service Act, including a determination as to whether, based on the utilization of research findings by public and private payers, funding sources for the Patient-Centered Outcomes Research Trust Fund under section 9511 of the Internal Revenue Code of 1986 are appropriate and whether such sources of funding should be continued or adjusted.
(vi)
Not less frequently than every 5 years, any barriers that researchers funded by the Institute have encountered in conducting studies or clinical trials, including challenges covering the cost of any medical treatments, services, and items described in subsection (a)(2)(B) for purposes of the research study.
(B)

Annual reports.—
Not later than April 1 of each year, the Comptroller General of the United States shall submit to Congress a report containing the results of the review conducted under subparagraph (A) with respect to the preceding year (or years, if applicable), together with recommendations for such legislation and administrative action as the Comptroller General determines appropriate.
(h)

Ensuring Transparency, Credibility, and Access.—
The Institute shall establish procedures to ensure that the following requirements for ensuring transparency, credibility, and access are met:
(1)

Public comment periods.—
The Institute shall provide for a public comment period of not less than 45 days and not more than 60 days prior to the adoption under subsection (d)(9) of the national priorities identified under subsection (d)(1)(A), the research project agenda established under subsection (d)(1)(B), the methodological standards developed and updated by the methodology committee under subsection (d)(6)(C)(i), and the peer-review process provided under paragraph (7), and after the release of draft findings with respect to systematic reviews of existing research and evidence.
(2)

Additional forums.—
The Institute shall support forums to increase public awareness and obtain and incorporate public input and feedback through media (such as an Internet website) on research priorities, research findings, and other duties, activities, or processes the Institute determines appropriate.
(3)

Public availability.—
The Institute shall make available to the public and disclose through the official public Internet website of the Institute the following:
(A)
Information contained in research findings as specified in subsection (d)(9).
(B)
The process and methods for the conduct of research, including the identity of the entity and the investigators conducing such research and any conflicts of interests of such parties, any direct or indirect links the entity has to industry, and research protocols, including measures taken, methods of research and analysis, research results, and such other information the Institute determines appropriate) concurrent with the release of research findings.
(C)
Notice of public comment periods under paragraph (1), including deadlines for public comments.
(D)
Subsequent comments received during each of the public comment periods.
(E)
In accordance with applicable laws and processes and as the Institute determines appropriate, proceedings of the Institute.
(4)

Disclosure of conflicts of interest.—
(A)

In general.—
A conflict of interest shall be disclosed in the following manner:
(i)
By the Institute in appointing members to an expert advisory panel under subsection (d)(4), in selecting individuals to contribute to any peer-review process under subsection (d)(7), and for employment as executive staff of the Institute.
(ii)
By the Board in appointing members of the methodology committee under subsection (d)(6);
(iii)
By the Institute in the annual report under subsection (d)(10), except that, in the case of individuals contributing to any such peer review process, such description shall be in a manner such that those individuals cannot be identified with a particular research project.
(B)

Manner of disclosure.—
Conflicts of interest shall be disclosed as described in subparagraph (A) as soon as practicable on the Internet web site of the Institute . The information disclosed under the preceding sentence shall include the type, nature, and magnitude of the interests of the individual involved, except to the extent that the individual recuses himself or herself from participating in the consideration of or any other activity with respect to the study as to which the potential conflict exists.
(i)

Rules.—
The Institute, its Board or staff, shall be prohibited from accepting gifts, bequeaths, or donations of services or property. In addition, the Institute shall be prohibited from establishing a corporation or generating revenues from activities other than as provided under this section.
(j)

Rules of Construction.—
(1)

Coverage.—
Nothing in this section shall be construed—
(A)
to permit the Institute to mandate coverage, reimbursement, or other policies for any public or private payer; or
(B)
as preventing the Secretary from covering the routine costs of clinical care received by an individual entitled to, or enrolled for, benefits under title XVIII, XIX, or XXI in the case where such individual is participating in a clinical trial and such costs would otherwise be covered under such title with respect to the beneficiary.

limitations on certain uses of comparative clinical effectiveness research
Sec. 1182.
[42 U.S.C. 1320e–1]
(a)
The Secretary may only use evidence and findings from research conducted under section 1181 to make a determination regarding coverage under title XVIII if such use is through an iterative and transparent process which includes public comment and considers the effect on subpopulations.
(b)
Nothing in section 1181 shall be construed as—
(1)
superceding or modifying the coverage of items or services under title XVIII that the Secretary determines are reasonable and necessary under section 1862(l)(1); or
(2)
authorizing the Secretary to deny coverage of items or services under such title solely on the basis of comparative clinical effectiveness research.
(c)
(1)
The Secretary shall not use evidence or findings from comparative clinical effectiveness research conducted under section 1181 in determining coverage, reimbursement, or incentive programs under title XVIII in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, nondisabled, or not terminally ill.
(2)
Paragraph (1) shall not be construed as preventing the Secretary from using evidence or findings from such comparative clinical effectiveness research in determining coverage, reimbursement, or incentive programs under title XVIII based upon a comparison of the difference in the effectiveness of alternative treatments in extending an individual's life due to the individual's age, disability, or terminal illness.
(d)
(1)
The Secretary shall not use evidence or findings from comparative clinical effectiveness research conducted under section 1181 in determining coverage, reimbursement, or incentive programs under title XVIII in a manner that precludes, or with the intent to discourage, an individual from choosing a health care treatment based on how the individual values the tradeoff between extending the length of their life and the risk of disability.
(2)
(A)
Paragraph (1) shall not be construed to—
(i)
limit the application of differential copayments under title XVIII based on factors such as cost or type of service; or
(ii)
prevent the Secretary from using evidence or findings from such comparative clinical effectiveness research in determining coverage, reimbursement, or incentive programs under such title based upon a comparison of the difference in the effectiveness of alternative health care treatments in extending an individual's life due to that individual's age, disability, or terminal illness.
(3)
Nothing in the provisions of, or amendments made by the Patient Protection and Affordable Care Act, shall be construed to limit comparative clinical effectiveness research or any other research, evaluation, or dissemination of information concerning the likelihood that a health care treatment will result in disability.
(e)
The Patient-Centered Outcomes Research Institute established under section 1181(b)(1) shall not develop or employ a dollars-per-quality adjusted life year (or similar measure that discounts the value of a life because of an individual's disability) as a threshold to establish what type of health care is cost effective or recommended. The Secretary shall not utilize such an adjusted life year (or such a similar measure) as a threshold to determine coverage, reimbursement, or incentive programs under title XVIII.

trust fund transfers to patient-centered outcomes research trust fund
Sec. 1183.
[42 U.S.C. 1320e–2]
(a)

In General.—
The Secretary shall provide for the transfer, from the Federal Hospital Insurance Trust Fund under section 1817 and the Federal Supplementary Medical Insurance Trust Fund under section 1841, in proportion (as estimated by the Secretary) to the total expenditures during such fiscal year that are made under title XVIII from the respective trust fund, to the Patient-Centered Outcomes Research Trust Fund (referred to in this section as the “PCORTF”) under section 9511 of the Internal Revenue Code of 1986, of the following:
(1)
For fiscal year 2013, an amount equal to $1 multiplied by the average number of individuals entitled to benefits under part A, or enrolled under part B, of title XVIII during such fiscal year.
(2)
For each of fiscal years 2014, 2015, 2016, 2017, 2018, and 2019, an amount equal to $2 multiplied by the average number of individuals entitled to benefits under part A, or enrolled under part B, of title XVIII during such fiscal year.
(b)

Adjustments for Increases in Health Care Spending.—
In the case of any fiscal year beginning after September 30, 2014, the dollar amount in effect under subsection (a)(2) for such fiscal year shall be equal to the sum of such dollar amount for the previous fiscal year (determined after the application of this subsection), plus an amount equal to the product of—
(1)
such dollar amount for the previous fiscal year, multiplied by
(2)
the percentage increase in the projected per capita amount of National Health Expenditures, as most recently published by the Secretary before the beginning of the fiscal year.

INFORMATION EXCHANGE WITH PAYROLL DATA PROVIDERS.
Sec. 1184.
[42 U.S.C. 1320e–3]
(a)

In General.—
The Commissioner of Social Security may enter into an information exchange with a payroll data provider for purposes of—
(1)
efficiently administering—
(A)
monthly insurance benefits under subsections (d)(1)(B)(ii), (d)(6)(A)(ii), (d)(6)(B), (e)(1)(B)(ii), and (f)(1)(B)(ii) of section 202 and subsection (a)(1) of section 223; and
(B)
supplemental security income benefits under title XVI; and
(2)
preventing improper payments of such benefits without the need for verification by independent or collateral sources.
(b)

Notification Requirements.—
Before entering into an information exchange pursuant to subsection (a), the Commissioner shall publish in the Federal Register a notice describing the information exchange and the extent to which the information received through such exchange is—
(1)
relevant and necessary to—
(A)
accurately determine entitlement to, and the amount of, benefits described under subparagraph (A) of subsection (a)(1);
(B)
accurately determine eligibility for, and the amount of, benefits described in subparagraph (B) of such subsection; and
(C)
prevent improper payment of such benefits; and
(2)
sufficiently accurate, up-to-date, and complete.
(c)

Definitions.—
For purposes of this section:
(1)

Payroll data provider.—
The term “payroll data provider” means payroll providers, wage verification companies, and other commercial or non-commercial entities that collect and maintain data regarding employment and wages, without regard to whether the entity provides such data for a fee or without cost.
(2)

Information exchange.—
The term “information exchange” means the automated comparison of a system of records maintained by the Commissioner of Social Security with records maintained by a payroll data provider.
PART E—

PRICE NEGOTIATION PROGRAM TO LOWER PRICES FOR CERTAIN HIGH-PRICED SINGLE SOURCE DRUGS
SEC. 1191.
[42 U.S.C. 1320f]

ESTABLISHMENT OF PROGRAM.
(a)

In General.—
The Secretary shall establish a Drug Price Negotiation Program (in this part referred to as the “program”). Under the program, with respect to each price applicability period, the Secretary shall—
(1)
publish a list of selected drugs in accordance with section 1192;
(2)
enter into agreements with manufacturers of selected drugs with respect to such period, in accordance with section 1193;
(3)
negotiate and, if applicable, renegotiate maximum fair prices for such selected drugs, in accordance with section 1194;
(4)
carry out the publication and administrative duties and compliance monitoring in accordance with sections 1195 and 1196.
(b)

Definitions Relating to Timing.—
For purposes of this part:
(1)

Initial price applicability year.—
The term “initial price applicability year” means a year (beginning with 2026).
(2)

Price applicability period.—
The term “price applicability period” means, with respect to a qualifying single source drug, the period beginning with the first initial price applicability year with respect to which such drug is a selected drug and ending with the last year during which the drug is a selected drug.
(3)

Selected drug publication date.—
The term “selected drug publication date” means, with respect to each initial price applicability year, February 1 of the year that begins 2 years prior to such year.
(4)

Negotiation period.—
The term “negotiation period” means, with respect to an initial price applicability year with respect to a selected drug, the period—
(A)
beginning on the sooner of—
(i)
the date on which the manufacturer of the drug and the Secretary enter into an agreement under section 1193 with respect to such drug; or
(ii)
February 28 following the selected drug publication date with respect to such selected drug; and
(B)
ending on November 1 of the year that begins 2 years prior to the initial price applicability year.
(c)

Other Definitions.—
For purposes of this part:
(1)

Manufacturer.—
The term “manufacturer” has the meaning given that term in section 1847A(c)(6)(A).
(2)

Maximum fair price eligible individual.—
The term “maximum fair price eligible individual” means, with respect to a selected drug—
(A)
in the case such drug is dispensed to the individual at a pharmacy, by a mail order service, or by another dispenser, an individual who is enrolled in a prescription drug plan under part D of title XVIII or an MA–PD plan under part C of such title if coverage is provided under such plan for such selected drug; and
(B)
in the case such drug is furnished or administered to the individual by a hospital, physician, or other provider of services or supplier, an individual who is enrolled under part B of title XVIII, including an individual who is enrolled in an MA plan under part C of such title, if payment may be made under part B for such selected drug.
(3)

Maximum fair price.—
The term “maximum fair price” means, with respect to a year during a price applicability period and with respect to a selected drug (as defined in section 1192(c)) with respect to such period, the price negotiated pursuant to section 1194, and updated pursuant to section 1195(b), as applicable, for such drug and year.
(4)

Reference product.—
The term “reference product” has the meaning given such term in section 351(i) of the Public Health Service Act.
(5)

Total expenditures.—
The term “total expenditures” includes, in the case of expenditures with respect to part D of title XVIII, the total gross covered prescription drug costs (as defined in section 1860D–15(b)(3)). The term “total expenditures” excludes, in the case of expenditures with respect to part B of such title, expenditures for a drug or biological product that are bundled or packaged into the payment for another service.
(6)

Unit.—
The term “unit” means, with respect to a drug or biological product, the lowest identifiable amount (such as a capsule or tablet, milligram of molecules, or grams) of the drug or biological product that is dispensed or furnished.
(d)

Timing for Initial Price Applicability Year 2026.—
Notwithstanding the provisions of this part, in the case of initial price applicability year 2026, the following rules shall apply for purposes of implementing the program:
(1)
Subsection (b)(3) shall be applied by substituting “September 1, 2023” for “, with respect to each initial price applicability year, February 1 of the year that begins 2 years prior to such year”.
(2)
Subsection (b)(4) shall be applied—
(A)
in subparagraph (A)(ii), by substituting “October 1, 2023” for “February 28 following the selected drug publication date with respect to such selected drug”; and
(B)
in subparagraph (B), by substituting “August 1, 2024” for “November 1 of the year that begins 2 years prior to the initial price applicability year”.
(3)
Section 1192 shall be applied—
(A)
in subsection (b)(1)(A), by substituting “during the period beginning on June 1, 2022, and ending on May 31, 2023” for “during the most recent period of 12 months prior to the selected drug publication date (but ending not later than October 31 of the year prior to the year of such drug publication date), with respect to such year, for which data are available”; and
(B)
in subsection (d)(1)(A), by substituting “during the period beginning on June 1, 2022, and ending on May 31, 2023” for “during the most recent period for which data are available of at least 12 months prior to the selected drug publication date (but ending no later than October 31 of the year prior to the year of such drug publication date), with respect to such year”.
(4)
Section 1193(a) shall be applied by substituting “October 1, 2023” for “February 28 following the selected drug publication date with respect to such selected drug”.
(5)
Section 1194(b)(2) shall be applied—
(A)
in subparagraph (A), by substituting “October 2, 2023” for “March 1 of the year of the selected drug publication date, with respect to the selected drug”;
(B)
in subparagraph (B), by substituting “February 1, 2024” for “the June 1 following the selected drug publication date”; and
(C)
in subparagraph (E), by substituting “August 1, 2024” for “the first day of November following the selected drug publication date, with respect to the initial price applicability year ”.
(6)
Section 1195(a)(1) shall be applied by substituting “September 1, 2024” for “November 30 of the year that is 2 years prior to such initial price applicability year”.
SEC. 1192.
[42 U.S.C. 1320f-1]

SELECTION OF NEGOTIATION-ELIGIBLE DRUGS AS SELECTED DRUGS.
(a)

In General.—
Not later than the selected drug publication date with respect to an initial price applicability year, in accordance with subsection (b), the Secretary shall select and publish a list of—
(1)
with respect to the initial price applicability year 2026, 10 negotiation-eligible drugs described in subparagraph (A) of subsection (d)(1), but not subparagraph (B) of such subsection, with respect to such year (or, all (if such number is less than 10) such negotiation-eligible drugs with respect to such year);
(2)
with respect to the initial price applicability year 2027, 15 negotiation-eligible drugs described in subparagraph (A) of subsection (d)(1), but not subparagraph (B) of such subsection, with respect to such year (or, all (if such number is less than 15) such negotiation-eligible drugs with respect to such year);
(3)
with respect to the initial price applicability year 2028, 15 negotiation-eligible drugs described in subparagraph (A) or (B) of subsection (d)(1) with respect to such year (or, all (if such number is less than 15) such negotiation-eligible drugs with respect to such year); and
(4)
with respect to the initial price applicability year 2029 or a subsequent year, 20 negotiation-eligible drugs described in subparagraph (A) or (B) of subsection (d)(1), with respect to such year (or, all (if such number is less than 20) such negotiation-eligible drugs with respect to such year).
Subject to subsection (c)(2) and section 1194(f)(5), each drug published on the list pursuant to the previous sentence and subsection (b)(3) shall be subject to the negotiation process under section 1194 for the negotiation period with respect to such initial price applicability year (and the renegotiation process under such section as applicable for any subsequent year during the applicable price applicability period).
(b)

Selection of Drugs.—
(1)

In general.—
In carrying out subsection (a), subject to paragraph (2), the Secretary shall, with respect to an initial price applicability year, do the following:
(A)
Rank negotiation-eligible drugs described in subsection (d)(1) according to the total expenditures for such drugs under parts B and D of title XVIII, as determined by the Secretary, during the most recent period of 12 months prior to the selected drug publication date (but ending not later than October 31 of the year prior to the year of such drug publication date), with respect to such year, for which data are available, with the negotiation-eligible drugs with the highest total expenditures being ranked the highest.
(B)
Select from such ranked drugs with respect to such year the negotiation-eligible drugs with the highest such rankings.
(C)
In the case of a biological product for which the inclusion of the biological product as a selected drug on a list published under subsection (a) has been delayed under subsection (f)(2), remove such biological product from the rankings under subparagraph (A) before making the selections under subparagraph (B).
(2)

High spend part d drugs for 2026 and 2027.—
With respect to the initial price applicability year 2026 and with respect to the initial price applicability year 2027, the Secretary shall apply paragraph (1) as if the reference to “negotiation-eligible drugs described in subsection (d)(1)” were a reference to “negotiation-eligible drugs described in subsection (d)(1)(A)” and as if the reference to “total expenditures for such drugs under parts B and D of title XVIII” were a reference to “total expenditures for such drugs under part D of title XVIII”.
(3)

Inclusion of delayed biological products.—
Pursuant to subparagraphs (B)(ii)(I) and (C)(i) of subsection (f)(2), the Secretary shall select and include on the list published under subsection (a) the biological products described in such subparagraphs. Such biological products shall count towards the required number of drugs to be selected under subsection (a)(1).
(c)

Selected Drug.—
(1)

In general.—
For purposes of this part, in accordance with subsection (e)(2) and subject to paragraph (2), each negotiation-eligible drug included on the list published under subsection (a) with respect to an initial price applicability year shall be referred to as a “selected drug” with respect to such year and each subsequent year beginning before the first year that begins at least 9 months after the date on which the Secretary determines at least one drug or biological product—
(A)
is approved or licensed (as applicable)—
(i)
under section 505(j) of the Federal Food, Drug, and Cosmetic Act using such drug as the listed drug; or
(ii)
under section 351(k) of the Public Health Service Act using such drug as the reference product; and
(B)
is marketed pursuant to such approval or licensure.
(2)

Clarification.—
A negotiation-eligible drug—
(A)
that is included on the list published under subsection (a) with respect to an initial price applicability year; and
(B)
for which the Secretary makes a determination described in paragraph (1) before or during the negotiation period with respect to such initial price applicability year;
shall not be subject to the negotiation process under section 1194 with respect to such negotiation period and shall continue to be considered a selected drug under this part with respect to the number of negotiation-eligible drugs published on the list under subsection (a) with respect to such initial price applicability year.
(d)

Negotiation-Eligible Drug.—
(1)

In general.—
For purposes of this part, subject to paragraph (2), the term “negotiation-eligible drug” means, with respect to the selected drug publication date with respect to an initial price applicability year, a qualifying single source drug, as defined in subsection (e), that is described in either of the following subparagraphs (or, with respect to the initial price applicability year 2026 or 2027, that is described in subparagraph (A)):
(A)

Part d high spend drugs.—
The qualifying single source drug is, determined in accordance with subsection (e)(2), among the 50 qualifying single source drugs with the highest total expenditures under part D of title XVIII, as determined by the Secretary in accordance with paragraph (3), during the most recent 12-month period for which data are available prior to such selected drug publication date (but ending no later than October 31 of the year prior to the year of such drug publication date).
(B)

Part b high spend drugs.—
The qualifying single source drug is, determined in accordance with subsection (e)(2), among the 50 qualifying single source drugs with the highest total expenditures under part B of title XVIII, as determined by the Secretary in accordance with paragraph (3), during such most recent 12-month period, as described in subparagraph (A).
(2)

Exception for small biotech drugs.—
(A)

In general.—
Subject to subparagraph (C), the term “negotiation-eligible drug” shall not include, with respect to the initial price applicability years 2026, 2027, and 2028, a qualifying single source drug that meets either of the following:
(i)

Part d drugs.—
The total expenditures for the qualifying single source drug under part D of title XVIII, as determined by the Secretary in accordance with paragraph (3)(B), during 2021—
(I)
are equal to or less than 1 percent of the total expenditures under such part D, as so determined, for all covered part D drugs (as defined in section 1860D–2(e)) during such year; and
(II)
are equal to at least 80 percent of the total expenditures under such part D, as so determined, for all covered part D drugs for which the manufacturer of the drug has an agreement in effect under section 1860D–14A during such year.
(ii)

Part b drugs.—
The total expenditures for the qualifying single source drug under part B of title XVIII, as determined by the Secretary in accordance with paragraph (3)(B), during 2021—
(I)
are equal to or less than 1 percent of the total expenditures under such part B, as so determined, for all qualifying single source drugs for which payment may be made under such part B during such year; and
(II)
are equal to at least 80 percent of the total expenditures under such part B, as so determined, for all qualifying single source drugs of the manufacturer for which payment may be made under such part B during such year.
(B)

Clarifications relating to manufacturers.—
(i)

Aggregation rule.—
All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one manufacturer for purposes of this paragraph.
(ii)

Limitation.—
A drug shall not be considered to be a qualifying single source drug described in clause (i) or (ii) of subparagraph (A) if the manufacturer of such drug is acquired after 2021 by another manufacturer that does not meet the definition of a specified manufacturer under section 1860D–14C(g)(4)(B)(ii), effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2025, effective January 1, 2025.
(C)

Drugs not included as small biotech drugs.—
A new formulation, such as an extended release formulation, of a qualifying single source drug shall not be considered a qualifying single source drug described in subparagraph (A).
(3)

Clarifications and determinations.—
(A)

Previously selected drugs and small biotech drugs excluded.—
In applying subparagraphs (A) and (B) of paragraph (1), the Secretary shall not consider or count—
(i)
drugs that are already selected drugs; and
(ii)
for initial price applicability years 2026, 2027, and 2028, qualifying single source drugs described in paragraph (2)(A).
(B)

Use of data.—
In determining whether a qualifying single source drug satisfies any of the criteria described in paragraph (1) or (2), the Secretary shall use data that is aggregated across dosage forms and strengths of the drug, including new formulations of the drug, such as an extended release formulation, and not based on the specific formulation or package size or package type of the drug.
(e)

Qualifying Single Source Drug.—
(1)

In general.—
For purposes of this part, the term “qualifying single source drug” means, with respect to an initial price applicability year, subject to paragraphs (2) through (4), a covered part D drug (as defined in section 1860D–2(e)) that is described in any of the following or a drug or biological product for which payment may be made under part B of title XVIII that is described in any of the following:
(A)

Drug products.—
A drug—
(i)
that is approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act and is marketed pursuant to such approval;
(ii)
for which, as of the selected drug publication date with respect to such initial price applicability year, at least 7 years will have elapsed since the date of such approval; and
(iii)
that is not the listed drug for any drug that is approved and marketed under section 505(j) of such Act.
(B)

Biological products.—
A biological product—
(i)
that is licensed under section 351(a) of the Public Health Service Act and is marketed under section 351 of such Act;
(ii)
for which, as of the selected drug publication date with respect to such initial price applicability year, at least 11 years will have elapsed since the date of such licensure; and
(iii)
that is not the reference product for any biological product that is licensed and marketed under section 351(k) of such Act.
(2)

Treatment of authorized generic drugs.—
(A)

In general.—
In the case of a qualifying single source drug described in subparagraph (A) or (B) of paragraph (1) that is the listed drug (as such term is used in section 505(j) of the Federal Food, Drug, and Cosmetic Act) or a product described in clause (ii) of subparagraph (B), with respect to an authorized generic drug, in applying the provisions of this part, such authorized generic drug and such listed drug or such product shall be treated as the same qualifying single source drug.
(B)

Authorized generic drug defined.—
For purposes of this paragraph, the term “authorized generic drug” means—
(i)
in the case of a drug, an authorized generic drug (as such term is defined in section 505(t)(3) of the Federal Food, Drug, and Cosmetic Act); and
(ii)
in the case of a biological product, a product that—
(I)
has been licensed under section 351(a) of such Act; and
(II)
is marketed, sold, or distributed directly or indirectly to retail class of trade under a different labeling, packaging (other than repackaging as the reference product in blister packs, unit doses, or similar packaging for use in institutions), product code, labeler code, trade name, or trade mark than the reference product.
(3)

Exclusions.—
In this part, the term “qualifying single source drug” does not include any of the following:
(A)

Certain orphan drugs.—
A drug that is designated as a drug for one or more rare diseases or conditions under section 526 of the Federal Food, Drug, and Cosmetic Act and for which the only approved indication (or indications) is for one or more such rare diseases or conditions (as such term is defined in section 526(a)(2) of the Federal Food, Drug, and Cosmetic Act).
(B)

Low spend medicare drugs.—
A drug or biological product with respect to which the total expenditures under parts B and D of title XVIII, as determined by the Secretary in accordance with subsection (d)(3)(B)—
(i)
with respect to initial price applicability year 2026, is less than, during the period beginning on June 1, 2022, and ending on May 31, 2023, $200,000,000;
(ii)
with respect to initial price applicability year 2027, is less than, during the most recent 12-month period applicable under subparagraphs (A) and (B) of subsection (d)(1) for such year, the dollar amount specified in clause (i) increased by the annual percentage increase in the consumer price index for all urban consumers (all items; United States city average) for the period beginning on June 1, 2023, and ending on September 30, 2024; or
(iii)
with respect to a subsequent initial price applicability year, is less than, during the most recent 12-month period applicable under subparagraphs (A) and (B) of subsection (d)(1) for such year, the dollar amount specified in this subparagraph for the previous initial price applicability year increased by the annual percentage increase in such consumer price index for the 12-month period ending on September 30 of the year prior to the year of the selected drug publication date with respect to such subsequent initial price applicability year.
(C)

Plasma-derived products.—
A biological product that is derived from human whole blood or plasma.
(4)

Treatment of former orphan drugs.—
In the case of a drug or biological product that, as of the date of the approval or licensure of such drug or biological product, is a drug or biological product described in paragraph (3)(A), paragraph (1)(A)(ii) or (1)(B)(ii) (as applicable) shall apply as if the reference to “the date of such approval” or “the date of such licensure”, respectively, were instead a reference to “the first day after the date of such approval for which such drug is not a drug described in paragraph (3)(A)” or “the first day after the date of such licensure for which such biological product is not a biological product described in paragraph (3)(A)”, respectively.
(f)

Special Rule to Delay Selection and Negotiation of Biologics for Biosimilar Market Entry.—
(1)

Application.—
(A)

In general.—
Subject to subparagraph (B), in the case of a biological product that would (but for this subsection) be an extended-monopoly drug (as defined in section 1194(c)(4)) included as a selected drug on the list published under subsection (a) with respect to an initial price applicability year, the rules described in paragraph (2) shall apply if the Secretary determines that there is a high likelihood (as described in paragraph (3)) that a biosimilar biological product (for which such biological product will be the reference product) will be licensed and marketed under section 351(k) of the Public Health Service Act before the date that is 2 years after the selected drug publication date with respect to such initial price applicability year.
(B)

Request required.—
(i)

In general.—
The Secretary shall not provide for a delay under—
(I)
paragraph (2)(A) unless a request is made for such a delay by a manufacturer of a biosimilar biological product prior to the selected drug publication date for the list published under subsection (a) with respect to the initial price applicability year for which the biological product may have been included as a selected drug on such list but for subparagraph (2)(A); or
(II)
paragraph (2)(B)(iii) unless a request is made for such a delay by such a manufacturer prior to the selected drug publication date for the list published under subsection (a) with respect to the initial price applicability year that is 1 year after the initial price applicability year for which the biological product described in subsection (a) would have been included as a selected drug on such list but for paragraph (2)(A).
(ii)

Information and documents.—
(I)

In general.—
A request made under clause (i) shall be submitted to the Secretary by such manufacturer at a time and in a form and manner specified by the Secretary, and contain—
- (aa)
information and documents necessary for the Secretary to make determinations under this subsection, as specified by the Secretary and including, to the extent available, items described in subclause (III); and
- (bb)
all agreements related to the biosimilar biological product filed with the Federal Trade Commission or the Assistant Attorney General pursuant to subsections (a) and (c) of section 1112 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
(II)

Additional information and documents.—
After the Secretary has reviewed the request and materials submitted under subclause (I), the manufacturer shall submit any additional information and documents requested by the Secretary necessary to make determinations under this subsection.
(III)

Items described.—
The items described in this clause are the following:
- (aa)
The manufacturing schedule for such biosimilar biological product submitted to the Food and Drug Administration during its review of the application under such section 351(k).
- (bb)
Disclosures (in filings by the manufacturer of such biosimilar biological product with the Securities and Exchange Commission required under section 12(b), 12(g), 13(a), or 15(d) of the Securities Exchange Act of 1934 about capital investment, revenue expectations, and actions taken by the manufacturer that are typical of the normal course of business in the year (or the 2 years, as applicable) before marketing of a biosimilar biological product) that pertain to the marketing of such biosimilar biological product, or comparable documentation that is distributed to the shareholders of privately held companies.
(C)

Aggregation rule.—
(i)

In general.—
All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986, or in a partnership, shall be treated as one manufacturer for purposes of paragraph (2)(D)(iv).
(ii)

Partnership defined.—
In clause (i), the term “partnership” means a syndicate, group, pool, joint venture, or other organization through or by means of which any business, financial operation, or venture is carried on by the manufacturer of the biological product and the manufacturer of the biosimilar biological product.
(2)

Rules described.—
The rules described in this paragraph are the following:
(A)

Delayed selection and negotiation for 1 year.—
If a determination of high likelihood is made under paragraph (3), the Secretary shall delay the inclusion of the biological product as a selected drug on the list published under subsection (a) until such list is published with respect to the initial price applicability year that is 1 year after the initial price applicability year for which the biological product would have been included as a selected drug on such list.
(B)

If not licensed and marketed during the initial delay.—
(i)

In general.—
If, during the time period between the selected drug publication date on which the biological product would have been included on the list as a selected drug pursuant to subsection (a) but for subparagraph (A) and the selected drug publication date with respect to the initial price applicability year that is 1 year after the initial price applicability year for which such biological product would have been included as a selected drug on such list, the Secretary determines that the biosimilar biological product for which the manufacturer submitted the request under paragraph (1)(B)(i)(II) (and for which the Secretary previously made a high likelihood determination under paragraph (3)) has not been licensed and marketed under section 351(k) of the Public Health Service Act, the Secretary shall, at the request of such manufacturer—
(I)
reevaluate whether there is a high likelihood (as described in paragraph (3)) that such biosimilar biological product will be licensed and marketed under such section 351(k) before the date that is 2 years after the selected drug publication date for which such biological product would have been included as a selected drug on such list published but for subparagraph (A); and
(II)
evaluate whether, on the basis of clear and convincing evidence, the manufacturer of such biosimilar biological product has made a significant amount of progress (as determined by the Secretary) towards both such licensure and the marketing of such biosimilar biological product (based on information from items described in subclauses (I)(bb) and (II) of paragraph (1)(B)(ii)) since the receipt by the Secretary of the request made by such manufacturer under paragraph (1)(B)(i)(I).
(ii)

Selection and negotiation.—
If the Secretary determines that there is not a high likelihood that such biosimilar biological product will be licensed and marketed as described in clause (i)(I) or there has not been a significant amount of progress as described in clause (i)(II)—
(I)
the Secretary shall include the biological product as a selected drug on the list published under subsection (a) with respect to the initial price applicability year that is 1 year after the initial price applicability year for which such biological product would have been included as a selected drug on such list but for subparagraph (A); and
(II)
the manufacturer of such biological product shall pay a rebate under paragraph (4) with respect to the year for which such manufacturer would have provided access to a maximum fair price for such biological product but for subparagraph (A).
(iii)

Second 1-year delay.—
If the Secretary determines that there is a high likelihood that such biosimilar biological product will be licensed and marketed (as described in clause (i)(I)) and a significant amount of progress has been made by the manufacturer of such biosimilar biological product towards such licensure and marketing (as described in clause (i)(II)), the Secretary shall delay the inclusion of the biological product as a selected drug on the list published under subsection (a) until the selected drug publication date of such list with respect to the initial price applicability year that is 2 years after the initial price applicability year for which such biological product would have been included as a selected drug on such list but for this subsection.
(C)

If not licensed and marketed during the year two delay.—
If, during the time period between the selected drug publication date of the list for which the biological product would have been included as a selected drug but for subparagraph (B)(iii) and the selected drug publication date with respect to the initial price applicability year that is 2 years after the initial price applicability year for which such biological product would have been included as a selected drug on such list but for this subsection, the Secretary determines that such biosimilar biological product has not been licensed and marketed—
(i)
the Secretary shall include such biological product as a selected drug on such list with respect to the initial price applicability year that is 2 years after the initial price applicability year for which such biological product would have been included as a selected drug on such list; and
(ii)
the manufacturer of such biological product shall pay a rebate under paragraph (4) with respect to the years for which such manufacturer would have provided access to a maximum fair price for such biological product but for this subsection.
(D)

Limitations on delays.—
(i)

Limited to 2 years.—
In no case shall the Secretary delay the inclusion of a biological product on the list published under subsection (a) for more than 2 years.
(ii)

Exclusion of biological products that transitioned to a long-monopoly drug during the delay.—
In the case of a biological product for which the inclusion on the list published pursuant to subsection (a) was delayed by 1 year under subparagraph (A) and for which there would have been a change in status to a long-monopoly drug (as defined in section 1194(c)(5)) if such biological product had been a selected drug, in no case may the Secretary provide for a second 1-year delay under subparagraph (B)(iii).
(iii)

Exclusion of biological products if more than 1 year since licensure.—
In no case shall the Secretary delay the inclusion of a biological product on the list published under subsection (a) if more than 1 year has elapsed since the biosimilar biological product has been licensed under section 351(k) of the Public Health Service Act and marketing has not commenced for such biosimilar biological product.
(iv)

Certain manufacturers of biosimilar biological products excluded.—
In no case shall the Secretary delay the inclusion of a biological product as a selected drug on the list published under subsection (a) if Secretary determined that the manufacturer of the biosimilar biological product described in paragraph (1)(A)—
(I)
is the same as the manufacturer of the reference product described in such paragraph or is treated as being the same pursuant to paragraph (1)(C); or
(II)
has, based on information from items described in paragraph (1)(B)(ii)(I)(bb), entered into any agreement described in such paragraph with the manufacturer of the reference product described in paragraph (1)(A) that—
- (aa)
requires or incentivizes the manufacturer of the biosimilar biological product to submit a request described in paragraph (1)(B); or
- (bb)
restricts the quantity (either directly or indirectly) of the biosimilar biological product that may be sold in the United States over a specified period of time.
(3)

High likelihood.—
For purposes of this subsection, there is a high likelihood described in paragraph (1) or paragraph (2), as applicable, if the Secretary finds that—
(A)
an application for licensure under section 351(k) of the Public Health Service Act for the biosimilar biological product has been accepted for review or approved by the Food and Drug Administration; and
(B)
information from items described in sub clauses (I)(bb) and (III) of paragraph (1)(B)(ii) submitted to the Secretary by the manufacturer requesting a delay under such paragraph provides clear and convincing evidence that such biosimilar biological product will, within the time period specified under paragraph (1)(A) or (2)(B)(i)(I), be marketed.
(4)

Rebate.—
(A)

In general.—
For purposes of subparagraphs (B)(ii)(II) and (C)(ii) of paragraph (2), in the case of a biological product for which the inclusion on the list under subsection (a) was delayed under this subsection and for which the Secretary has negotiated and entered into an agreement under section 1193 with respect to such biological product, the manufacturer shall be required to pay a rebate to the Secretary at such time and in such manner as determined by the Secretary.
(B)

Amount.—
Subject to subparagraph (C), the amount of the rebate under subparagraph (A) with respect to a biological product shall be equal to the estimated amount—
(i)
in the case of a biological product that is a covered part D drug (as defined in section 1860D–2(e)), that is the sum of the products of—
(I)
75 percent of the amount by which—
- (aa)
the average manufacturer price, as reported by the manufacturer of such covered part D drug under section 1927 (or, if not reported by such manufacturer under section 1927, as reported by such manufacturer to the Secretary pursuant to the agreement under section 1193(a)) for such biological product, with respect to each of the calendar quarters of the price applicability period that would have applied but for this subsection; exceeds
- (bb)
in the initial price applicability year that would have applied but for a delay under—
(AA)
paragraph (2)(A), the maximum fair price negotiated under section 1194 for such biological product under such agreement; or
(BB)
paragraph (2)(B)(iii), such maximum fair price, increased as described in section 1195(b)(1)(A); and
(II)
the number of units dispensed under part D of title XVIII for such covered part D drug during each such calendar quarter of such price applicability period; and
(ii)
in the case of a biological product for which payment may be made under part B of title XVIII, that is the sum of the products of—
(I)
80 percent of the amount by which—
- (aa)
the payment amount for such biological product under section 1847A(b), with respect to each of the calendar quarters of the price applicability period that would have applied but for this subsection; exceeds
- (bb)
in the initial price applicability year that would have applied but for a delay under—
(AA)
paragraph (2)(A), the maximum fair price negotiated under section 1194 for such biological product under such agreement; or
(BB)
paragraph (2)(B)(iii), such maximum fair price, increased as described in section 1195(b)(1)(A); and
(II)
the number of units (excluding units that are packaged into the payment amount for an item or service and are not separately payable under such part B) of the billing and payment code of such biological product administered or furnished under such part B during each such calendar quarter of such price applicability period.
(C)

Special rule for delayed biological products that are long-monopoly drugs.—
(i)

In general.—
In the case of a biological product with respect to which a rebate is required to be paid under this paragraph, if such biological product qualifies as a long-monopoly drug (as defined in section 1194(c)(5)) at the time of its inclusion on the list published under subsection (a), in determining the amount of the rebate for such biological product under subparagraph (B), the amount described in clause (ii) shall be substituted for the maximum fair price described in clause (i)(I) or (ii)(I) of such subparagraph (B), as applicable.
(ii)

Amount described.—
The amount described in this clause is an amount equal to 65 percent of the average non-Federal average manufacturer price for the biological product for 2021 (or, in the case that there is not an average non-Federal average manufacturer price available for such biological product for 2021, for the first full year following the market entry for such biological product), increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) from September 2021 (or December of such first full year following the market entry), as applicable, to September of the year prior to the selected drug publication date with respect to the initial price applicability year that would have applied but for this subsection.
(D)

Rebate deposits.—
Amounts paid as rebates under this paragraph shall be deposited into—
(i)
in the case payment is made for such biological product under part B of title XVIII, the Federal Supplementary Medical Insurance Trust Fund established under section 1841; and
(ii)
in the case such biological product is a covered part D drug (as defined in section 1860D–2(e)), the Medicare Prescription Drug Account under section 1860D–16 in such Trust Fund.
(5)

Definitions of biosimilar biological product.—
In this subsection, the term “biosimilar biological product” has the meaning given such term in section 1847A(c)(6).
SEC. 1193.
[42 U.S.C. 1320f-2]

MANUFACTURER AGREEMENTS.
(a)

In General.—
For purposes of section 1191(a)(2), the Secretary shall enter into agreements with manufacturers of selected drugs with respect to a price applicability period, by not later than February 28 following the selected drug publication date with respect to such selected drug, under which—
(1)
during the negotiation period for the initial price applicability year for the selected drug, the Secretary and the manufacturer, in accordance with section 1194, negotiate to determine (and, by not later than the last date of such period, agree to) a maximum fair price for such selected drug of the manufacturer in order for the manufacturer to provide access to such price—
(A)
to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (A) of section 1191(c)(2) and are dispensed such drug (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs) during, subject to paragraph (2), the price applicability period; and
(B)
to hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (B) of such section and are furnished or administered such drug during, subject to paragraph (2), the price applicability period;
(2)
the Secretary and the manufacturer shall, in accordance with section 1194, renegotiate (and, by not later than the last date of the period of renegotiation, agree to) the maximum fair price for such drug, in order for the manufacturer to provide access to such maximum fair price (as so renegotiated)—
(A)
to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (A) of section 1191(c)(2) and are dispensed such drug (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs) during any year during the price applicability period (beginning after such renegotiation) with respect to such selected drug; and
(B)
to hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (B) of such section and are furnished or administered such drug during any year described in subparagraph (A);
(3)
subject to subsection (d), access to the maximum fair price (including as renegotiated pursuant to paragraph (2)), with respect to such a selected drug, shall be provided by the manufacturer to—
(A)
maximum fair price eligible individuals, who with respect to such drug are described in subparagraph (A) of section 1191(c)(2), at the pharmacy, mail order service, or other dispenser at the point-of-sale of such drug (and shall be provided by the manufacturer to the pharmacy, mail order service, or other dispenser, with respect to such maximum fair price eligible individuals who are dispensed such drugs), as described in paragraph (1)(A) or (2)(A), as applicable; and
(B)
hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (B) of such section and are furnished or administered such drug, as described in paragraph (1)(B) or (2)(B), as applicable;
(4)
the manufacturer submits to the Secretary, in a form and manner specified by the Secretary, for the negotiation period for the price applicability period (and, if applicable, before any period of renegotiation pursuant to section 1194(f)), and for section 1192(f), with respect to such drug—
(A)
information on the non-Federal average manufacturer price (as defined in section 8126(h)(5) of title 38, United States Code) for the drug for the applicable year or period;
(B)
information that the Secretary requires to carry out the negotiation (or renegotiation process) under this part; and
(C)
information that the Secretary requires to carry out section 1192(f), including rebates under paragraph (4) of such section; and
(5)
the manufacturer complies with requirements determined by the Secretary to be necessary for purposes of administering the program and monitoring compliance with the program.
(b)

Agreement in Effect Until Drug is No Longer a Selected Drug.—
An agreement entered into under this section shall be effective, with respect to a selected drug, until such drug is no longer considered a selected drug under section 1192(c).
(c)

Confidentiality of Information.—
Information submitted to the Secretary under this part by a manufacturer of a selected drug that is proprietary information of such manufacturer (as determined by the Secretary) shall be used only by the Secretary or disclosed to and used by the Comptroller General of the United States for purposes of carrying out this part.
(d)

Nonduplication With 340B Ceiling Price.—
Under an agreement entered into under this section, the manufacturer of a selected drug—
(1)
shall not be required to provide access to the maximum fair price under subsection (a)(3), with respect to such selected drug and maximum fair price eligible individuals who are eligible to be furnished, administered, or dispensed such selected drug at a covered entity described in section 340B(a)(4) of the Public Health Service Act, to such covered entity if such selected drug is subject to an agreement described in section 340B(a)(1) of such Act and the ceiling price (defined in section 340B(a)(1) of such Act) is lower than the maximum fair price for such selected drug; and
(2)
shall be required to provide access to the maximum fair price to such covered entity with respect to maximum fair price eligible individuals who are eligible to be furnished, administered, or dispensed such selected drug at such entity at such ceiling price in a nonduplicated amount to the ceiling price if such maximum fair price is below the ceiling price for such selected drug.
SEC. 1194.
[42 U.S.C. 1320f-3]

NEGOTIATION AND RENEGOTIATION PROCESS.
(a)

In General.—
For purposes of this part, under an agreement under section 1193 between the Secretary and a manufacturer of a selected drug (or selected drugs), with respect to the period for which such agreement is in effect and in accordance with subsections (b), (c), and (d), the Secretary and the manufacturer—
(1)
shall during the negotiation period with respect to such drug, in accordance with this section, negotiate a maximum fair price for such drug for the purpose described in section 1193(a)(1); and
(2)
renegotiate, in accordance with the process specified pursuant to subsection (f), such maximum fair price for such drug for the purpose described in section 1193(a)(2) if such drug is a renegotiation-eligible drug under such subsection.
(b)

Negotiation Process Requirements.—
(1)

Methodology and process.—
The Secretary shall develop and use a consistent methodology and process, in accordance with paragraph (2), for negotiations under subsection (a) that aims to achieve the lowest maximum fair price for each selected drug.
(2)

Specific elements of negotiation process.—
As part of the negotiation process under this section, with respect to a selected drug and the negotiation period with respect to the initial price applicability year with respect to such drug, the following shall apply:
(A)

Submission of information.—
Not later than March 1 of the year of the selected drug publication date, with respect to the selected drug, the manufacturer of the drug shall submit to the Secretary, in accordance with section 1193(a)(4), the information described in such section.
(B)

Initial offer by secretary.—
Not later than the June 1 following the selected drug publication date, the Secretary shall provide the manufacturer of the selected drug with a written initial offer that contains the Secretary’s proposal for the maximum fair price of the drug and a concise justification based on the factors described in section 1194(e) that were used in developing such offer.
(C)

Response to initial offer.—
(i)

In general.—
Not later than 30 days after the date of receipt of an initial offer under subparagraph (B), the manufacturer shall either accept such offer or propose a counteroffer to such offer.
(ii)

Counteroffer requirements.—
If a manufacturer proposes a counteroffer, such counteroffer—
(I)
shall be in writing; and
(II)
shall be justified based on the factors described in subsection (e).
(D)

Response to counteroffer.—
After receiving a counteroffer under subparagraph (C), the Secretary shall respond in writing to such counteroffer.
(E)

Deadline.—
All negotiations between the Secretary and the manufacturer of the selected drug shall end prior to the first day of November following the selected drug publication date, with respect to the initial price applicability year.
(F)

Limitations on offer amount.—
In negotiating the maximum fair price of a selected drug, with respect to the initial price applicability year for the selected drug, and, as applicable, in renegotiating the maximum fair price for such drug, with respect to a subsequent year during the price applicability period for such drug, the Secretary shall not offer (or agree to a counteroffer for) a maximum fair price for the selected drug that—
(i)
exceeds the ceiling determined under subsection (c) for the selected drug and year; or
(ii)
as applicable, is less than the floor determined under subsection (d) for the selected drug and year.
(c)

Ceiling for Maximum Fair Price.—
(1)

General ceiling.—
(A)

In general.—
The maximum fair price negotiated under this section for a selected drug, with respect to the first initial price applicability year of the price applicability period with respect to such drug, shall not exceed the lower of the amount under subparagraph (B) or the amount under subparagraph (C).
(B)

Subparagraph (B) amount.—
An amount equal to the following:
(i)

Covered part d drug.—
In the case of a covered part D drug (as defined in section 1860D–2(e)), the sum of the plan specific enrollment weighted amounts for each prescription drug plan or MA–PD plan (as determined under paragraph (2)).
(ii)

Part b drug or biological.—
In the case of a drug or biological product for which payment may be made under part B of title XVIII, the payment amount under section 1847A(b)(4) for the drug or biological product for the year prior to the year of the selected drug publication date with respect to the initial price applicability year for the drug or biological product.
(C)

Subparagraph (C) amount.—
An amount equal to the applicable percent described in paragraph (3), with respect to such drug, of the following:
(i)

Initial price applicability year 2026.—
In the case of a selected drug with respect to which such initial price applicability year is 2026, the average non-Federal average manufacturer price for such drug for 2021 (or, in the case that there is not an average non-Federal average manufacturer price available for such drug for 2021, for the first full year following the market entry for such drug), increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) from September 2021 (or December of such first full year following the market entry), as applicable, to September of the year prior to the year of the selected drug publication date with respect to such initial price applicability year.
(ii)

Initial price applicability year 2027 and subsequent years.—
In the case of a selected drug with respect to which such initial price applicability year is 2027 or a subsequent year, the lower of—
(I)
the average non-Federal average manufacturer price for such drug for 2021 (or, in the case that there is not an average non-Federal average manufacturer price available for such drug for 2021, for the first full year following the market entry for such drug), increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) from September 2021 (or December of such first full year following the market entry), as applicable, to September of the year prior to the year of the selected drug publication date with respect to such initial price applicability year; or
(II)
the average non-Federal average manufacturer price for such drug for the year prior to the selected drug publication date with respect to such initial price applicability year.
(2)

Plan specific enrollment weighted amount.—
For purposes of paragraph (1)(B)(i), the plan specific enrollment weighted amount for a prescription drug plan or an MA–PD plan with respect to a covered Part D drug is an amount equal to the product of—
(A)
the negotiated price of the drug under such plan under part D of title XVIII, net of all price concessions received by such plan or pharmacy benefit managers on behalf of such plan, for the most recent year for which data is available; and
(B)
a fraction—
(i)
the numerator of which is the total number of individuals enrolled in such plan in such year; and
(ii)
the denominator of which is the total number of individuals enrolled in a prescription drug plan or an MA–PD plan in such year.
(3)

Applicable percent described.—
For purposes of this subsection, the applicable percent described in this paragraph is the following:
(A)

Short-monopoly drugs and vaccines.—
With respect to a selected drug (other than an extended-monopoly drug and a long-monopoly drug), 75 percent.
(B)

Extended-monopoly drugs.—
With respect to an extended-monopoly drug, 65 percent.
(C)

Long-monopoly drugs.—
With respect to a long-monopoly drug, 40 percent.
(4)

Extended-monopoly drug defined.—
(A)

In general.—
In this part, subject to subparagraph (B), the term “extended-monopoly drug” means, with respect to an initial price applicability year, a selected drug for which at least 12 years, but fewer than 16 years, have elapsed since the date of approval of such drug under section 505(c) of the Federal Food, Drug, and Cosmetic Act or since the date of licensure of such drug under section 351(a) of the Public Health Service Act, as applicable.
(B)

Exclusions.—
The term “extended-monopoly drug” shall not include any of the following:
(i)
A vaccine that is licensed under section 351 of the Public Health Service Act and marketed pursuant to such section.
(ii)
A selected drug for which a manufacturer had an agreement under this part with the Secretary with respect to an initial price applicability year that is before 2030.
(C)

Clarification.—
Nothing in subparagraph (B)(ii) shall limit the transition of a selected drug described in paragraph (3)(A) to a long-monopoly drug if the selected drug meets the definition of a long-monopoly drug.
(5)

Long-monopoly drug defined.—
(A)

In general.—
In this part, subject to subparagraph (B), the term “long-monopoly drug” means, with respect to an initial price applicability year, a selected drug for which at least 16 years have elapsed since the date of approval of such drug under section 505(c) of the Federal Food, Drug, and Cosmetic Act or since the date of licensure of such drug under section 351(a) of the Public Health Service Act, as applicable.
(B)

Exclusion.—
The term “long-monopoly drug” shall not include a vaccine that is licensed under section 351 of the Public Health Service Act and marketed pursuant to such section.
(6)

Average non-federal average manufacturer price.—
In this part, the term “average non-Federal average manufacturer price” means the average of the non-Federal average manufacturer price (as defined in section 8126(h)(5) of title 38, United States Code) for the 4 calendar quarters of the year involved.
(d)

Temporary Floor for Small Biotech Drugs.—
In the case of a selected drug that is a qualifying single source drug described in section 1192(d)(2) and with respect to which the first initial price applicability year of the price applicability period with respect to such drug is 2029 or 2030, the maximum fair price negotiated under this section for such drug for such initial price applicability year may not be less than 66 percent of the average non-Federal average manufacturer price for such drug (as defined in subsection (c)(6)) for 2021 (or, in the case that there is not an average non-Federal average manufacturer price available for such drug for 2021, for the first full year following the market entry for such drug), increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) from September 2021 (or December of such first full year following the market entry), as applicable, to September of the year prior to the selected drug publication date with respect to the initial price applicability year.
(e)

Factors.—
For purposes of negotiating the maximum fair price of a selected drug under this part with the manufacturer of the drug, the Secretary shall consider the following factors, as applicable to the drug, as the basis for determining the offers and counteroffers under subsection (b) for the drug:
(1)

Manufacturer-specific data.—
The following data, with respect to such selected drug, as submitted by the manufacturer:
(A)
Research and development costs of the manufacturer for the drug and the extent to which the manufacturer has recouped research and development costs.
(B)
Current unit costs of production and distribution of the drug.
(C)
Prior Federal financial support for novel therapeutic discovery and development with respect to the drug.
(D)
Data on pending and approved patent applications, exclusivities recognized by the Food and Drug Administration, and applications and approvals under section 505(c) of the Federal Food, Drug, and Cosmetic Act or section 351(a) of the Public Health Service Act for the drug.
(E)
Market data and revenue and sales volume data for the drug in the United States.
(2)

Evidence about alternative treatments.—
The following evidence, as available, with respect to such selected drug and therapeutic alternatives to such drug:
(A)
The extent to which such drug represents a therapeutic advance as compared to existing therapeutic alternatives and the costs of such existing therapeutic alternatives.
(B)
Prescribing information approved by the Food and Drug Administration for such drug and therapeutic alternatives to such drug.
(C)
Comparative effectiveness of such drug and therapeutic alternatives to such drug, taking into consideration the effects of such drug and therapeutic alternatives to such drug on specific populations, such as individuals with disabilities, the elderly, the terminally ill, children, and other patient populations.
(D)
The extent to which such drug and therapeutic alternatives to such drug address unmet medical needs for a condition for which treatment or diagnosis is not addressed adequately by available therapy.
In using evidence described in subparagraph (C), the Secretary shall not use evidence from comparative clinical effectiveness research in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, nondisabled, or not terminally ill.
(f)

Renegotiation Process.—
(1)

In general.—
In the case of a renegotiation-eligible drug (as defined in paragraph (2)) that is selected under paragraph (3), the Secretary shall provide for a process of renegotiation (for years (beginning with 2028) during the price applicability period, with respect to such drug) of the maximum fair price for such drug consistent with paragraph (4).
(2)

Renegotiation-eligible drug defined.—
In this section, the term “renegotiation-eligible drug” means a selected drug that is any of the following:
(A)

Addition of new indication.—
A selected drug for which a new indication is added to the drug.
(B)

Change of status to an extended-monopoly drug.—
A selected drug that—
(i)
is not an extended-monopoly or a long-monopoly drug; and
(ii)
for which there is a change in status to that of an extended-monopoly drug.
(C)

Change of status to a long-monopoly drug.—
A selected drug that—
(i)
is not a long-monopoly drug; and
(ii)
for which there is a change in status to that of a long-monopoly drug.
(D)

Material changes.—
A selected drug for which the Secretary determines there has been a material change of any of the factors described in paragraph (1) or (2) of subsection (e).
(3)

Selection of drugs for renegotiation.—
For each year (beginning with 2028), the Secretary shall select among renegotiation-eligible drugs for renegotiation as follows:
(A)

All extended-monopoly negotiation-eligible drugs.—
The Secretary shall select all renegotiation-eligible drugs described in paragraph (2)(B).
(B)

All long-monopoly negotiation-eligible drugs.—
The Secretary shall select all renegotiation-eligible drugs described in paragraph (2)(C).
(C)

Remaining drugs.—
Among the remaining renegotiation-eligible drugs described in subparagraphs (A) and (D) of paragraph (2), the Secretary shall select renegotiation-eligible drugs for which the Secretary expects renegotiation is likely to result in a significant change in the maximum fair price otherwise negotiated.
(4)

Renegotiation process.—
(A)

In general.—
The Secretary shall specify the process for renegotiation of maximum fair prices with the manufacturer of a renegotiation-eligible drug selected for renegotiation under this subsection.
(B)

Consistent with negotiation process.—
The process specified under subparagraph (A) shall, to the extent practicable, be consistent with the methodology and process established under subsection (b) and in accordance with subsections (c), (d), and (e), and for purposes of applying subsections (c)(1)(A) and (d), the reference to the first initial price applicability year of the price applicability period with respect to such drug shall be treated as the first initial price applicability year of such period for which the maximum fair price established pursuant to such renegotiation applies, including for applying subsection (c)(3)(B) in the case of renegotiation-eligible drugs described in paragraph (3)(A) of this subsection and subsection (c)(3)(C) in the case of renegotiation-eligible drugs described in paragraph (3)(B) of this subsection.
(5)

Clarification.—
A renegotiation-eligible drug for which the Secretary makes a determination described in section 1192(c)(1) before or during the period of renegotiation shall not be subject to the renegotiation process under this section.
(g)

Clarification.—
The maximum fair price for a selected drug described in subparagraph (A) or (B) of paragraph (1) shall take effect no later than the first day of the first calendar quarter that begins after the date described in subparagraph (A) or (B), as applicable.
SEC. 1195.
[42 U.S.C. 1320f-4]

PUBLICATION OF MAXIMUM FAIR PRICES.
(a)

In General.—
With respect to an initial price applicability year and a selected drug with respect to such year—
(1)
not later than November 30 of the year that is 2 years prior to such initial price applicability year, the Secretary shall publish the maximum fair price for such drug negotiated with the manufacturer of such drug under this part; and
(2)
not later than March 1 of the year prior to such initial price applicability year, the Secretary shall publish, subject to section 1193(c), the explanation for the maximum fair price with respect to the factors as applied under section 1194(e) for such drug described in paragraph (1).
(b)

Updates.—
(1)

Subsequent year maximum fair prices.—
For a selected drug, for each year subsequent to the first initial price applicability year of the price applicability period with respect to such drug, with respect to which an agreement for such drug is in effect under section 1193, not later than November 30 of the year that is 2 years prior to such subsequent year, the Secretary shall publish the maximum fair price applicable to such drug and year, which shall be—
(A)
subject to subparagraph (B), the amount equal to the maximum fair price published for such drug for the previous year, increased by the annual percentage increase in the consumer price index for all urban consumers (all items; United States city average) for the 12-month period ending with the July immediately preceding such November 30; or
(B)
in the case the maximum fair price for such drug was renegotiated, for the first year for which such price as so renegotiated applies, such renegotiated maximum fair price.
(2)

Prices negotiated after deadline.—
In the case of a selected drug with respect to an initial price applicability year for which the maximum fair price is determined under this part after the date of publication under this section, the Secretary shall publish such maximum fair price by not later than 30 days after the date such maximum price is so determined.
SEC. 1196.
[42 U.S.C. 1320f-5]

ADMINISTRATIVE DUTIES AND COMPLIANCE MONITORING.
(a)

Administrative Duties.—
For purposes of section 1191(a)(4), the administrative duties described in this section are the following:
(1)
The establishment of procedures to ensure that the maximum fair price for a selected drug is applied before—
(A)
any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of maximum fair price eligible individuals; and
(B)
any other discounts.
(2)
The establishment of procedures to compute and apply the maximum fair price across different strengths and dosage forms of a selected drug and not based on the specific formulation or package size or package type of such drug.
(3)
The establishment of procedures to carry out the provisions of this part, as applicable, with respect to—
(A)
maximum fair price eligible individuals who are enrolled in a prescription drug plan under part D of title XVIII or an MA–PD plan under part C of such title; and
(B)
maximum fair price eligible individuals who are enrolled under part B of such title, including who are enrolled in an MA plan under part C of such title.
(4)
The establishment of a negotiation process and renegotiation process in accordance with section 1194.
(5)
The establishment of a process for manufacturers to submit information described in section 1194(b)(2)(A).
(6)
The sharing with the Secretary of the Treasury of such information as is necessary to determine the tax imposed by section 5000D of the Internal Revenue Code of 1986, including the application of such tax to a manufacturer, producer, or importer or the determination of any date described in section 5000D(c)(1) of such Code. For purposes of the preceding sentence, such information shall include—
(A)
the date on which the Secretary receives notification of any termination of an agreement under the Medicare coverage gap discount program under section 1860D-14A and the date on which any subsequent agreement under such program is entered into;
(B)
the date on which the Secretary receives notification of any termination of an agreement under the manufacturer discount program under section 1860D-14C and the date on which any subsequent agreement under such program is entered into; and
(C)
the date on which the Secretary receives notification of any termination of a rebate agreement described in section 1927(b) and the date on which any subsequent rebate agreement described in such section is entered into.
(7)
The establishment of procedures for purposes of applying subsections (d)(2)(B) and (f)(1)(C) of section 1192.
(b)

Compliance Monitoring.—
The Secretary shall monitor compliance by a manufacturer with the terms of an agreement under section 1193 and establish a mechanism through which violations of such terms shall be reported.
SEC. 1197.
[42 U.S.C. 1320f-6]

CIVIL MONETARY PENALTIES.
(a)

Violations Relating to Offering of Maximum Fair Price.—
Any manufacturer of a selected drug that has entered into an agreement under section 1193, with respect to a year during the price applicability period with respect to such drug, that does not provide access to a price that is equal to or less than the maximum fair price for such drug for such year—
(1)
to a maximum fair price eligible individual who with respect to such drug is described in subparagraph (A) of section 1191(c)(2) and who is dispensed such drug during such year (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs); or
(2)
to a hospital, physician, or other provider of services or supplier with respect to maximum fair price eligible individuals who with respect to such drug is described in subparagraph (B) of such section and is furnished or administered such drug by such hospital, physician, or provider or supplier during such year;
shall be subject to a civil monetary penalty equal to ten times the amount equal to the product of the number of units of such drug so furnished, dispensed, or administered during such year and the difference between the price for such drug made available for such year by such manufacturer with respect to such individual or hospital, physician, provider of services, or supplier and the maximum fair price for such drug for such year.
(b)

Violations Relating to Providing Rebates.—
Any manufacturer that fails to comply with the rebate requirements under section 1192(f)(4) shall be subject to a civil monetary penalty equal to 10 times the amount of the rebate the manufacturer failed to pay under such section.
(c)

Violations of Certain Terms of Agreement.—
Any manufacturer of a selected drug that has entered into an agreement under section 1193, with respect to a year during the price applicability period with respect to such drug, that is in violation of a requirement imposed pursuant to section 1193(a)(5), including the requirement to submit information pursuant to section 1193(a)(4), shall be subject to a civil monetary penalty equal to $1,000,000 for each day of such violation.
(d)

False Information.—
Any manufacturer that knowingly provides false information pursuant to section 1196(a)(7) shall be subject to a civil monetary penalty equal to $100,000,000 for each item of such false information.
(e)

Application.—
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil monetary penalty under this section in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
SEC. 1198.
[42 U.S.C. 1320f-7]

LIMITATION ON ADMINISTRATIVE AND JUDICIAL REVIEW.
There shall be no administrative or judicial review of any of the following:
(1)
The determination of a unit, with respect to a drug or biological product, pursuant to section 1191(c)(6).
(2)
The selection of drugs under section 1192(b), the determination of negotiation-eligible drugs under section 1192(d), and the determination of qualifying single source drugs under section 1192(e) the application of section 1192(f),.34
^{34}
The comma followed by a period at the end of paragraph (2) is so in law. Section 11002(a)(5) of Public Law 117–169 provides for an amendment to insert “the application of section 1192(f),” after “section 1192(e)”. Such amendment was made to “section 1198(b)(2)” and probably should have been made to “section 1198(2)”.
(3)
The determination of a maximum fair price under subsection (b) or (f) of section 1194.
(4)
The determination of renegotiation-eligible drugs under section 1194(f)(2) and the selection of renegotiation-eligible drugs under section 1194(f)(3).
TITLE XII—

ADVANCES TO STATE UNEMPLOYMENT FUNDS1
^1
Title XII of the Social Security Act is administered by the Department of Labor.

TABLE OF CONTENTS OF TITLE2
^2
This table of contents does not appear in the law.
Sec. 1201.
Advances to State unemployment funds.
Sec. 1202.
Repayment by States of advances to State unemployment funds.
Sec. 1203.
Advances to Federal unemployment account.
Sec. 1204.
Definition of Governor.

advances to state unemployment funds
Sec. 1201.
[42 U.S.C. 1321]
(a)
(1)
Advances shall be made to the States from the Federal unemployment account in the Unemployment Trust Fund as provided in this section, and shall be repayable, with interest to the extent provided in section 1202(b), in the manner provided in sections 901(d)(1), 903(b)(2), and 1202. An advance to a State for the payment of compensation in any 3-month period may be made if—
(A)
the Governor of the State applies therefor no earlier than the first day of the month preceding the first month of such 3 month period, and
(B)
he furnishes to the Secretary of Labor his estimate of the amount of an advance which will be required by the State for the payment of compensation in each month of such 3-month period.
(2)
In the case of any application for an advance under this section to any State for any 3-month period, the Secretary of Labor shall—
(A)
determine the amount (if any) which he finds will be required by such State for the payment of compensation in each month of such 3-month period, and
(B)
certify to the Secretary of the Treasury the amount (not greater than the amount estimated by the Governor of the State) determined under subparagraph (A).
The aggregate of the amounts certified by the Secretary of Labor with respect to any 3-month period shall not exceed the amount which the Secretary of the Treasury reports to the Secretary of Labor is available in the Federal unemployment account for advances with respect to each month of such 3-month period.
(3)
For purposes of this subsection—
(A)
an application for an advance shall be made on such forms and shall contain such information and data (fiscal and other wise) concerning the operation and administration of the State unemployment compensation law, as the Secretary of Labor deems necessary or relevant to the performance of his duties under this title,
(B)
the amount required by any State for the payment of compensation in any month shall be determined with due allowance for contingencies and taking into account all other amounts that will be available in the State's unemployment fund for the payment of compensation in such month, and
(C)
the term “compensation” means cash benefits payable to individuals with respect to their unemployment, exclusive of expenses of administration.
(b)
The Secretary of the Treasury shall, prior to audit or settlement by the General Accounting Office, transfer in monthly installments from the Federal unemployment account to the account of the State in the Unemployment Trust Fund the amount certified under subsection (a) by the Secretary of Labor (but not exceeding that portion of the balance in the Federal unemployment account at the time of the transfer which is not restricted as to use pursuant to section 903(b)(1)). The amount of any monthly installment so transferred shall not exceed the amount estimated by the State to be required for the payment of compensation for the month with respect to which such installment is made.

repayment by states of advances to state unemployment funds
Sec. 1202.
[42 U.S.C. 1322]
(a)
The Governor of any State may at any time request that funds be transferred from the account of such State to the Federal unemployment account in repayment of part or all of that balance of advances, made to such State under section 1201, specified in the request. The Secretary of Labor shall certify to the Secretary of the Treasury the amount and balance specified in the request; and the Secretary of the Treasury shall promptly transfer such amount in reduction of such balance.
(b)
(1)
Except as otherwise provided in this subsection, each State shall pay interest on any advance made to such State under section 1201. Interest so payable with respect to periods during any calendar year shall be at the rate determined under paragraph (4) for such calendar year.
(2)
No interest shall be required to be paid under paragraph (1) with respect to any advance or advances made during any calendar year if—
(A)
such advances are repaid in full before the close of September 30 of the calendar year in which the advances revere made,
(B)
no other advance was made to such State under section 1201 during such calendar year and after the date on which the repayment of the advances was completed, and
(C)
such State meets funding goals, established under regulations issued by the Secretary of Labor, relating to the accounts of the States in the Unemployment Trust Fund.
(3)
(A)
Interest payable under paragraph (1) which was attributable to periods during any fiscal year shall be paid by the State to the Secretary of the Treasury prior to the first day of the following fiscal year. If interest is payable under paragraph (1) on any advance(hereinafter this subparagraph referred to as the “first advance”) by reason of another advance made to such State after September 30 of the calendar year in which the first advance was made, interest on such first advance attributable to periods before such September 30 shall be paid not later than the day after the date on which the other advance was made.
(B)
Notwithstanding subparagraph (A), in the case of any advance made during the last 5 months of any fiscal year, interest on such advance attributable to periods during such fiscal year shall not be required to be paid before the last day of the succeeding taxable year. Any interest the time for payment of which is deferred by the preceding sentence shall bear interest in the same manner as if it were an advance made on the day on which it would have been required to be paid but for this subparagraph.
(C)
(i)
In the case of any State which meets the requirements of clause (ii) for any calendar year, any interest otherwise required to be paid under this subsection during such calendar year shall be paid as Alloy
(I)
25 percent of the amount otherwise required to be paid on or before any day during such calendar year shall be paid on or before such day; and
(II)
25 percent of the amount otherwise required to be paid on or before such day shall be paid on or before the corresponding day in each of the 3 succeeding calendar years.
No interest shall accrue on such deferred interest.
(ii)
A State meets the requirements of this clause for any calendar year if the rate of insured unemployment (as determined for purposes of section 203 of the Federal-State Extended Unemployment Compensation Act of 1970) under the State law of the period consisting of the first 6 months of the preceding calendar year equaled or exceeded 7.5 percent.
(4)
The interest rate determined under this paragraph with respect to any calendar year is a percentage (but not in excess of 10 percent) determined by dividing—
(A)
the aggregate amount credited under section 904(e) to State accounts on the last day of the last calendar quarter of the immediately preceding calendar year, by
(B)
the aggregate of the average daily balances of the State accounts for such quarter as determined under section 904(e).
(5)
Interest required to be paid under paragraph (1) shall not be paid (directly or indirectly) by a State from amounts in its unemployment fund. If the Secretary of Labor determines that any State action results in the paying of such interest directly or indirectly (by an equivalent reduction in State unemployment taxes or otherwise) from such unemployment fund, the Secretary of Labor shall not certify such State's unemployment compensation law under section 3304 of the Internal Revenue Code of 1954. Such noncertification shall be made in accordance with section 3304(c) of such Code.
(6)
(A)
For purposes of paragraph (2), any voluntary repayment shall be applied against advances made under section 1201 on the last made first repaid basis. Any other repayment of such an advance shall be applied against advances on a first made first repaid basis.
(B)
For purposes of this paragraph, the term “voluntary repayment” means any repayment made under subsection (a).
(7)
This subsection shall only apply to advances made on or after April 1, 1982.
(8)
(A)
With respect to interest due under this section on September 30 of 1983, 1984, or 1985 (other than interest previously deferred under paragraph (3)(C)), a State may pay 80 percent of such interest in four annual installments of at least 20 percent beginning with the year after the year in which it is otherwise due, if such State meets the criteria of subparagraph (B). No interest shall accrue on such deferred interest.
(B)
To meet the criteria of this subparagraph a State must
(i)
have taken no action since October 1, 1982, which would reduce its net unemployment tax effort or the net solvency of its unemployment system (as determined for purposes of section 3302(f) of the Internal Revenue Code of 1954); and
(ii)
(I)
have taken an action (as certified by the Secretary of Labor) after March 31, 1982, which would have increased revenue liabilities and decreased benefits under the State's unemployment compensation system (hereinafter referred to as a “solvency effort”) by a combined total of the applicable percent age (as compared to such revenues and benefits as would have been in effect without such State action) for the calendar year for which the deferral is requested; or
(II)
have had, for taxable year 1982, an average unemployment tax rate which was equal to or greater than 2.0 percent of the total of the wages (as determined without any limitation on amount) attributable to such State subject to contribution under the State unemployment compensation law with respect to such taxable year.
In the case of the first year for which there is a deferral (over a year period) of the interest otherwise payable for such year, the applicable percentage shall be 25 percent. In the case of the second such year, the applicable percentage shall be 35 percent. In the case of the third such year, the applicable percentage Shall be 50 percent.
(C)
(i)
The base year is the first year for which deferral under this provision is requested and subsequently granted. The Secretary of Labor shall estimate the unemployment rate for the base year. To determine whether a State meets the requirements of subparagraph (B)(ii)(I), the Secretary of Labor shall determine the percentage by which the benefits and taxes in the base year with the application of the action referred to in subparagraph (B)(ii)(I) are lower or greater, as the case may be, than such benefits and taxes would have been without the application of such action. In making this determination, the Secretary shall deem the application of the action referred to in subparagraph (B)(ii)(I) to have been effective for the base year to the same extent as such action is effective for the year following the year for which the deferral is sought. Once a deferral is approved under clause (ii)(I) of subparagraph (B) a State must continue to maintain its solvency effort. Failure to do so shall result in the State being required to make immediate payment of all deferred interest.
(ii)
Increases in the taxable wage base from $6,000 to $7,000 or increases after 1984 in the maximum tax rate to 5.4 percent shall not be counted for purposes of meeting the requirement of subparagraph
(D)
In the case of a State which produces a solvency effort of 50 percent, 80 percent, and 90 percent rather than the 25 percent, 35 percent, and 50 percent required under subparagraph (B), the interest shall be computed at an interest rate which is 1 percentage point less than the otherwise applicable interest rate.
(9)
Any interest otherwise due from a State on September 30 of a calendar year after 1982 may be deferred (and no interest shall accrue on such deferred interest) for a grace period of not to exceed 9 months if, for the most recent 12-month period for which data are available before the date such interest is otherwise due, the State had an average total unemployment rate of 13.5 percent or greater.
(10)
(A)
With respect to the period beginning on the date of enactment of the Emergency Unemployment Insurance Stabilization and Access Act of 2020 and ending on September 6, 2021—
(i)
any interest payment otherwise due from a State under this subsection during such period shall be deemed to have been made by the State; and
(ii)
no interest shall accrue during such period on any advance or advances made under section 1201 to a State.
(B)
The provisions of subparagraph (A) shall have no effect on the requirement for interest payments under this subsection after the period described in such subparagraph or on the accrual of interest under this subsection after such period.
(c)
Interest paid by States in accordance with this section shall be credited to the Federal unemployment account established by section 904(g) in the Unemployment Trust Fund.

advances to federal unemployment account
Sec. 1203.
[42 U.S.C. 1323]
There are hereby authorized to be appropriated to the Federal unemployment account, as repayable advances, such sums as may be necessary to carry out the purposes of this title. Amounts appropriated as repayable advances shall be repaid by transfers from the Federal unemployment account to the general fund of the Treasury, at such times as the amount in the Federal unemployment account is determined by the Secretary of the Treasury, in consultation with the Secretary of Labor, to be adequate for such purpose. Any amount transferred as a repayment under this section shall be credited against, and shall operate to reduce, any balance of advances repayable under this section. Whenever, after the application of sections 901(f)(3) and 902(a) with respect to the excess in the employment security administration account as of the close of any fiscal year, there remains any portion of such excess, so much of such remainder as does not exceed the balance of advances made pursuant to this section shall be transferred to the general fund of the Treasury and shall be credited against, and shall operate to reduce, such balance of advances. Amounts appropriated as repayable advances for purposes of this subsection shall bear interest at a rate equal to the average rate of interest, computed as of the end of the calendar month next preceding the date of such advance, borne by all interest bearing obligations of the United States then forming part of the public debt; except that in cases in which such average rate is not a multiple of one-eighth of 1 percent, the rate of interest shall be the multiple of one-eighth of 1 percent next lower than such average rate.

definition of governor
Sec. 1204.
[42 U.S.C. 1324]
When used in this title, the term “Governor” includes the Commissioners of the District of Columbia.
TITLE XVI—

SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND DISABLED

TABLE OF CONTENTS OF TITLE1
^1
This table of contents does not appear in the law.
Sec. 1601.
Purpose; appropriations.
Sec. 1602.
Basic eligibility for benefits.
Part A—
Determination of Benefits
Sec. 1611.
Eligibility for and amount of benefits.
(a) Definition of eligible individual.
(b) Amounts of benefits.
(c) Period for determination of benefits.
(d) Special limits on gross income.
(e) Limitation on eligibility of certain individuals.
(f) Suspension of payments to individuals who are outside the United States.
(g) Certain individuals deemed to meet resources test.
(h) Certain individuals deemed to meet income test.
(i) Application and review requirements for certain individuals.
Sec. 1612.
Income.
(a) Meaning of income.
(b) Exclusions from income.
Sec. 1613.
Resources.
(a) Exclusions from resources.
(b) Disposition of resources.
(c) Notification of medicaid policy restricting eligibility of institutionalized individuals for benefits based on disposal of resources for less than fair market value.
(d) Funds set aside for burial expenses.
Sec. 1614.
Meaning of terms.
(a) Aged, blind, or disabled individual.
(b) Eligible spouse.
(c) Definition of child.
(d) Determination of marital relationships.
(e) United States.
(f) Income and resources of individuals other than eligible individuals and eligible spouses.
Sec. 1615.
Rehabilitation services for blind and disabled individuals.
Sec. 1616.
Optional State supplementation.
Sec. 1617.
Cost-of-living adjustments in benefits.
Sec. 1618.
Operation of State supplementation programs.
Sec. 1619.
Benefits for individuals who perform substantial gainful activity despite severe medical impairment.
Sec. 1620.
Medical and social services for certain handicapped persons.
Sec. 1621.
Attribution of sponsor's income and resources to aliens.
Part B—
Procedural and General Provisions
Sec. 1631.
Payments and procedures.
(a) Payment of benefits.
(b) Overpayments and underpayments.
(c) Hearings and review.
(d) Procedures; prohibitions of assignments; representation of claimants.
(e) Applications and furnishing of information.
(f) Furnishing of information by other agencies.
(g) Reimbursement to States for interim assistance payments.
(h) Payment of certain travel expenses.
(i) Payment to States with respect to certain unnegotiated checks.
(j) Application and review requirements for certain individuals.
(k) Notifications to applicants and recipients.
(l) Special notice to blind individuals with respect to hearings and other official actions.
(m) Pre-release procedures for institutionalized persons.
(n) Concurrent SSI and supplemental nutrition assistance program benefits applications by institutionalized individuals.
(n) Notice requirements.
Sec. 1632.
Penalties for fraud.
Sec. 1633.
Administration.
Sec. 1634.
Determinations of medicaid eligibility.
Sec. 1635.
Outreach program for children.
Sec. 1636.
Treatment referrals for individuals with an alcoholism or drug addiction condition.

PURPOSE; APPROPRIATIONS
Sec. 1601.
[42 U.S.C. 1381]
For the purpose of establishing a national program to provide supplemental security income to individuals who have attained age 65 or are blind or disabled, there are authorized to be appropriated sums sufficient to carry out this title.

BASIC ELIGIBILITY FOR BENEFITS
Sec. 1602.
[42 U.S.C. 1381a]
Every aged, blind, or disabled individual who is determined under part A to be eligible on the basis of his income and resources shall, in accordance with and subject to the provisions of this title, be paid benefits by the Commissioner of Social Security.
Part A—

Determination of Benefits

ELIGIBILITY FOR AND AMOUNT OF BENEFITS
Sec. 1611.
[42 U.S.C. 1382]
(a)

Definition of Eligible Individual
(1)
Each aged, blind, or disabled individual who does not have an eligible spouse and—
(A)
whose income, other than income excluded pursuant to section 1612(b), is at a rate of not more than $1,752 (or, if greater, the amount determined under section 1617) for the calendar year 1974 or any calendar year thereafter, and
(B)
whose resources, other than resources excluded pursuant to section 1613(a), are not more than (i) in case such individual has a spouse with whom he is living, the applicable amount determined under paragraph (3)(A), or (ii) in case such individual has no spouse with whom he is living, the applicable amount determined under paragraph (3)(B),
shall be an eligible individual for purposes of this title.
(2)
Each aged, blind, or disabled individual who has an eligible spouse and—
(A)
whose income (together with the income of such spouse), other than income excluded pursuant to section 1612(b), is at a rate of not more than $2,628 (or, if greater, the amount determined under section 1617) for the calendar year 1974, or any calendar year thereafter, and
(B)
whose resources (together with the resources of such spouse), other than resources excluded pursuant to section 1613(a), are not more than the applicable amount determined under paragraph (3)(A),
shall be an eligible individual for purposes of this title.
(3)
(A)
The dollar amount referred to in clause (i) of paragraph (1)(B), and in paragraph (2)(B), shall be $2,250 prior to January 1, 1985, and shall be increased to $2,400 on January 1, 1985, to $2,550 on January 1, 1986, to $2,700 on January 1, 1987, to $2,850 on January 1, 1988, and to $3,000 on January 1, 1989.
(B)
The dollar amount referred to in clause (ii) of paragraph (1)(B), shall be $1,500 prior to January 1, 1985, and shall be increased to $1,600 on January 1, 1985, to $1,700 on January 1, 1986, to $1,800 on January 1, 1987, to $1,900 on January 1, 1988, and to $2,000 on January 1, 1989.
(b)

Amounts of Benefits
(1)
The benefit under this title for an individual who does not have an eligible spouse shall be payable at the rate of $1,752 (or, if greater, the amount determined under section 1617) for the calendar year 1974 and any calendar year thereafter, reduced by the amount of income, not excluded pursuant to section 1612(b), of such individual.
(2)
The benefit under this title for an individual who has an eligible spouse shall be payable at the rate of $2,628 (or, if greater, the amount determined under section 1617) for the calendar year 1974 and any calendar year thereafter, reduced by the amount of income, not excluded pursuant to section 1612(b), of such individual and spouse.
(c)

Period for Determination of Benefits
(1)
An individual's eligibility for a benefit under this title for a month shall be determined on the basis of the individual's (and eligible spouse's, if any) income, resources, and other relevant characteristics in such month, and, except as provided in paragraphs (2), (3), (4), (5), and (6), the amount of such benefit shall be determined for such month on the basis of income and other characteristics in the first or, if the Commissioner of Social Security so determines, second month preceding such month. Eligibility for and the amount of such benefits shall be redetermined at such time or times as may be provided by the Commissioner of Social Security.
(2)
The amount of such benefit for the month in which an application for benefits becomes effective (or, if the Commissioner of Social Security so determines, for such month and the following month) and for any month immediately following a month of ineligibility for such benefits (or, if the Commissioner of Social Security so determines, for such month and the following month) shall—
(A)
be determined on the basis of the income of the individual and the eligible spouse, if any, of such individual and other relevant circumstances in such month; and
(B)2
in the case of the first month following a period of ineligibility in which eligibility is restored after the first day of such month, bear the same ratio to the amount of the benefit which would have been payable to such individual if eligibility had been restored on the first day of such month as the number of days in such month including and following the date of restoration of eligibility bears to the total number of days in such month.
^2
Section 433(b) of Public Law 108–203 inserted subparagraph (B), effective with respect to enefits payable for months that begin on or after 1 year after March 2, 2004.
(3)
For purposes of this subsection, an increase in the benefit amount payable under title II (over the amount payable in the preceding month, or, at the election of the Commissioner of Social Security, the second preceding month) to an individual receiving benefits under this title shall be included in the income used to determine the benefit under this title of such individual for any month which is—
(A)
the first month in which the benefit amount payable to such individual under this title is increased pursuant to section 1617, or
(B)
at the election of the Commissioner of Social Security, the month immediately following such month.
(4)
(A)
Notwithstanding paragraph (3), if the Commissioner of Social Security determines that reliable information is currently available with respect to the income and other circumstances of an individual for a month (including information with respect to a class of which such individual is a member and information with respect to scheduled cost-of-living adjustments under other benefit programs), the benefit amount of such individual under this title for such month may be determined on the basis of such information.
(B)
The Commissioner of Social Security shall prescribe by regulation the circumstances in which information with respect to an event may be taken into account pursuant to subparagraph (A) in determining benefit amounts under this title.
(5)
Notwithstanding paragraphs (1) and (2), any income which is paid to or on behalf of an individual in any month pursuant to (A) a State program funded under part A of title IV, (B) section 472 of this Act (relating to foster care assistance), (C) section 412(e) of the Immigration and Nationality Act (relating to assistance for refugees), (D) section 501(a) of Public Law 96–422 (relating to assistance for Cuban and Haitian entrants), or (E) the Act of November 2, 1921 (42 Stat. 208), as amended (relating to assistance furnished by the Bureau of Indian Affairs), shall be taken into account in determining the amount of the benefit under this title of such individual (and his eligible spouse, if any) only for that month, and shall not be taken into account in determining the amount of the benefit for any other month.
(6)
The dollar amount in effect under subsection (b) as a result of any increase in benefits under this title by reason of section 1617 shall be used to determine the value of any in-kind support and maintenance required to be taken into account in determining the benefit payable under this title to an individual (and the eligible spouse, if any, of the individual) for the 1st 2 months for which the increase in benefits applies.
(7)
For purposes of this subsection, an application of an individual for benefits under this title shall be effective on the later of—
(A)
the first day of the month following the date such application is filed, or
(B)
the first day of the month following the date such individual becomes eligible for such benefits with respect to such application.
(8)
The Commissioner of Social Security may waive the limitations specified in subparagraphs (A) and (B) of subsection (e)(1) on an individual's eligibility and benefit amount for a month (to the extent either such limitation is applicable by reason of such individual's presence throughout such month in a hospital, extended care facility, nursing home, or intermediate care facility) if such waiver would promote the individual's removal from such institution or facility. Upon waiver of such limitations, the Commissioner of Social Security shall apply, to the month preceding the month of removal, or, if the Commissioner of Social Security so determines, the two months preceding the month of removal, the benefit rate that is appropriate to such individual's living arrangement subsequent to his removal from such institution or facility.
(9)
(A)3
Notwithstanding paragraphs (1) and (2), any nonrecurring income which is paid to an individual in the first month of any period of eligibility shall be taken into account in determining the amount of the benefit under this title of such individual (and his eligible spouse, if any) only for that month, and shall not be taken into account in determining the amount of the benefit for any other month.
^3
Section 433(a) of Public Law 108–203 inserted paragraph (9), effective with respect to enefits payable for months that begin on or after 1 year after March 2, 2004.
(B)
For purposes of subparagraph (A), payments to an individual in varying amounts from the same or similar source for the same or similar purpose shall not be considered to be nonrecurring income.
(10)4
For purposes of this subsection, remuneration for service performed as a member of a uniformed service may be treated as received in the month in which it was earned, if the Commissioner of Social Security determines that such treatment would promote the economical and efficient administration of the program authorized by this title.
^4
Section 436(a) of Public Law 108–203 added a new paragraph (10) at the end of section 1611(c) of the Social Security Act, as amended by “section 435(a)” of P.L. 108–203. Section 1611(c) was not amended by section 435(a) but was amended by section 433(a), which added a new paragraph (9). This compilation reflects the presumed intent of the amendment.
(d)

Special Limits on Gross Income
The Commissioner of Social Security may prescribe the circumstances under which, consistently with the purposes of this title, the gross income from a trade or business (including farming) will be considered sufficiently large to make an individual ineligible for benefits under this title. For purposes of this subsection, the term “gross income” has the same meaning as when used in chapter 1 of the Internal Revenue Code of 1954.
(e)

Limitation on Eligibility of Certain Individuals
(1)
(A)
Except as provided in subparagraphs (B), (C), (D), (E), and (G), no person shall be an eligible individual or eligible spouse for purposes of this title with respect to any month if throughout such month he is an inmate of a public institution.
(B)
In any case where an eligible individual or his eligible spouse (if any) is, throughout any month (subject to subparagraph (G)), in a medical treatment facility receiving payments (with respect to such individual or spouse) under a State plan approved under title XIX, or an eligible individual is a child described in section 1614(f)(2)(B), or, in the case of an eligible individual who is a child under the age of 18, receiving payments (with respect to such individual) under any health insurance policy issued by a private provider of such insurance the benefit under this title for such individual for such month shall be payable (subject to subparagraph (E))—
(i)
at a rate not in excess of $360 per year (reduced by the amount of any income not excluded pursuant to section 1612(b)) in the case of an individual who does not have an eligible spouse;
(ii)
in the case of an individual who has an eligible spouse, if only one of them is in such a facility throughout such month, at a rate not in excess of the sum of—
(I)
the rate of $360 per year (reduced by the amount of any income, not excluded pursuant to section 1612(b), of the one who is in such facility), and
(II)
the applicable rate specified in subsection (b)(1) (reduced by the amount of any income, not excluded pursuant to section 1612(b), of the other); and
(iii)
at a rate not in excess of $720 per year (reduced by the amount of any income not excluded pursuant to section 1612(b)) in the case of an individual who has an eligible spouse, if both of them are in such a facility throughout such month.
For purposes of this subsection, a medical treatment facility that provides services described in section 1917(c)(1)(C) shall be considered to be receiving payments with respect to an individual under a State plan approved under title XIX during any period of ineligibility of such individual provided for under the State plan pursuant to section 1917(c).
(C)
As used in subparagraph (A), the term “public institution” does not include a publicly operated community residence which serves no more than 16 residents.
(D)
A person may be an eligible individual or eligible spouse for purposes of this title with respect to any month throughout which he is a resident of a public emergency shelter for the homeless (as defined in regulations which shall be prescribed by the Commissioner of Social Security); except that no person shall be an eligible individual or eligible spouse by reason of this subparagraph more than 6 months in any 9-month period.
(E)
Notwithstanding subparagraphs (A) and (B), any individual who—
(i)
(I)
is an inmate of a public institution, the primary purpose of which is the provision of medical or psychiatric care, throughout any month as described in subparagraph (A), or
(II)
is in a medical treatment facility throughout any month as described in subparagraph (B),
(ii)
was eligible under section 1619(a) or (b) for the month preceding such month, and
(iii)
under an agreement of the public institution or the medical treatment facility is permitted to retain any benefit payable by reason of this subparagraph,
may be an eligible individual or eligible spouse for purposes of this title (and entitled to a benefit determined on the basis of the rate applicable under subsection (b)) for the month referred to in subclause (I) or (II) of clause (i) and, if such subclause still applies, for the succeeding month.
(F)
An individual who is an eligible individual or an eligible spouse for a month by reason of subparagraph (E) shall not be treated as being eligible under section 1619(a) or (b) for such month for purposes of clause (ii) of such subparagraph.
(G)
A person may be an eligible individual or eligible spouse for purposes of this title, and subparagraphs (A) and (B) shall not apply, with respect to any particular month throughout which he or she is an inmate of a public institution the primary purpose of which is the provision of medical or psychiatric care, or is in a medical treatment facility receiving payments (with respect to such individual or spouse) under a State plan approved under title XIX or, in the case of an individual who is a child under the age of 18, under any health insurance policy issued by a private provider of such insurance, if it is determined in accordance with subparagraph (H) or (J) that—
(i)
such person's stay in that institution or facility (or in that institution or facility and one or more other such institutions or facilities during a continuous period of institutionalization) is likely (as certified by a physician) not to exceed 3 months, and the particular month involved is one of the first 3 months throughout which such person is in such an institution or facility during a continuous period of institutionalization; and
(ii)
such person needs to continue to maintain and provide for the expenses of the home or living arrangement to which he or she may return upon leaving the institution or facility.
The benefit of any person under this title (including State supplementation if any) for each month to which this subparagraph applies shall be payable, without interruption of benefit payments and on the date the benefit involved is regularly due, at the rate that was applicable to such person in the month prior to the first month throughout which he or she is in the institution or facility.
(H)
The Commissioner of Social Security shall establish procedures for the determinations required by clauses (i) and (ii) of subparagraph (G), and may enter into agreements for making such determinations (or for providing information or assistance in connection with the making of such determinations) with appropriate State and local public and private agencies and organizations. Such procedures and agreements shall include the provision of appropriate assistance to individuals who, because of their physical or mental condition, are limited in their ability to furnish the information needed in connection with the making of such determinations.
(I)
(i)
The Commissioner shall enter into an agreement, with any interested State or local institution comprising a jail, prison, penal institution, or correctional facility, or with any other interested State or local institution a purpose of which is to confine individuals as described in section 202(x)(1)(A)(ii), under which—
(I)
the institution shall provide to the Commissioner, on a monthly basis and in a manner specified by the Commissioner, the first, middle, and last names, social security account numbersor taxpayer identification numbers, prison assigned inmate numbers, last known addresses, dates of birth, confinement commencement dates, dates of release or anticipated dates of release, dates of work release, and, to the extent available to the institution, such other identifying information concerning the inmates of the institution as the Commissioner may require for the purpose of carrying out this paragraph and clause (iv) of this subparagraph and the other provisions of this title; and
(II)
the Commissioner shall pay to any such institution, with respect to each individual who receives in the month preceding the first month throughout which such individual is an inmate of the jail, prison, penal institution, or correctional facility that furnishes information respecting such individual pursuant to subclause (I), or is confined in the institution (that so furnishes such information) as described in section 202(x)(1)(A)(ii), a benefit under this title for such preceding month, and who is determined by the Commissioner to be ineligible for benefits under this title by reason of confinement based on the information provided by such institution, $400 (subject to reduction under clause (ii)) if the institution furnishes the information described in subclause (I) to the Commissioner within 15 days after the date such individual becomes an inmate of such institution, or $200 (subject to reduction under clause (ii)) if the institution furnishes such information after 15 days after such date but within 90 days after such date.
(ii)
The dollar amounts specified in clause (i)(II) shall be reduced by 50 percent if the Commissioner is also required to make a payment to the institution with respect to the same individual under an agreement entered into under section 202(x)(3)(B).
(iii)
The Commissioner shall provide, on a reimbursable basis,5 information obtained pursuant to agreements entered into under clause (i) to any Federal or federally-assisted cash, food, or medical assistance program for eligibility and other administrative purposes under such program, for statistical and research activities conducted by Federal and State agencies, and to the Secretary of the Treasury for the purposes of tax administration, debt collection, and identifying, preventing, and recovering improper payments under federally funded programs.
^5
Section 204 of the Foster Care Independence Act of 1999 (P.L. 106–169) amended this clause (before its redesignation by section 402(c)(1)(B) of P.L. 106–170; 113 Stat. 1909) ``by striking `is authorized to' and inserting `shall'. Section 402(a)(3)(B) of the Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106–170) attempts to amend this clause ``by striking `is authorized to provide, on a reimbursable basis,' and inserting `shall maintain, and shall provide on a reimbursable basis,'''. The amendment could not be executed.
(iv)
Payments to institutions required by clause (i)(II) shall be made from funds otherwise available for the payment of benefits under this title and shall be treated as direct spending for purposes of the Balanced Budget and Emergency Deficit Control Act of 1985.
(v)
(I)
The Commissioner may disclose information received pursuant to this paragraph to any officer, employee, agent, or contractor of the Department of the Treasury whose official duties require such information to assist in the identification, prevention, and recovery of improper payments or in the collection of delinquent debts owed to the United States, including payments certified by the head of an executive, judicial, or legislative paying agency, and payments made to individuals whose eligibility, or continuing eligibility, to participate in a Federal program (including those administered by a State or political subdivision thereof) is being reviewed.
(II)
Notwithstanding the provisions of section 552a of title 5, United States Code, or any other provision of Federal or State law, the Secretary of the Treasury may compare information disclosed under subclause (I) with any other personally identifiable information derived from a Federal system of records or similar records maintained by a Federal contractor, a Federal grantee, or an entity administering a Federal program or activity and may redisclose such comparison of information to any paying or administering agency and to the head of the Federal Bureau of Prisons and the head of any State agency charged with the administration of prisons with respect to inmates whom the Secretary of the Treasury has determined may have been issued, or facilitated in the issuance of, an improper payment.
(III)
The comparison of information disclosed under subclause (I) shall not be considered a matching program for purposes of section 552a of title 5, United States Code.
(J)
For the purpose of carrying out this paragraph, the Commissioner of Social Security shall conduct periodic computer matches with data maintained by the Secretary of Health and Human Services under title XVIII or XIX. The Secretary shall furnish to the Commissioner, in such form and manner and under such terms as the Commissioner and the Secretary shall mutually agree, such information as the Commissioner may request for this purpose. Information obtained pursuant to such a match may be substituted for the physician's certification otherwise required under subparagraph (G)(i).
(2)
No person shall be an eligible individual or eligible spouse for purposes of this title if, after notice to such person by the Commissioner of Social Security that it is likely that such person is eligible for any payments of the type enumerated in section 1612(a)(2)(B), such person fails within 30 days to take all appropriate steps to apply for and (if eligible) obtain any such payments.
(3)
Notwithstanding anything to the contrary in the criteria being used by the Commissioner of Social Security in determining when a husband and wife are to be considered two eligible individuals for purposes of this title and when they are to be considered an eligible individual with an eligible spouse, the State agency administering or supervising the administration of a State plan under any other program under this Act may (in the administration of such plan) treat a husband and wife living in the same medical treatment facility described in paragraph (1)(B) as though they were an eligible individual with his or her eligible spouse for purposes of this title (rather than two eligible individuals), after they have continuously lived in the same such facility for 6 months, if treating such husband and wife as two eligible individuals would prevent either of them from receiving benefits or assistance under such plan or reduce the amount thereof.
(4)
(A)
No person shall be considered an eligible individual or eligible spouse for purposes of this title with respect to any month if during such month the person is—
(i)
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, in jurisdictions that do not define crimes as felonies, is punishable by death or imprisonment for a term exceeding 1 year regardless of the actual sentence imposed; or
(ii)
violating a condition of probation or parole imposed under Federal or State law.
(B)
Notwithstanding subparagraph (A), the Commissioner shall, for good cause shown, treat the person referred to in subparagraph (A) as an eligible individual or eligible spouse if the Commissioner determines that—
(i)
a court of competent jurisdiction has found the person not guilty of the criminal offense, dismissed the charges relating to the criminal offense, vacated the warrant for arrest of the person for the criminal offense, or issued any similar exonerating order (or taken similar exonerating action), or
(ii)
the person was erroneously implicated in connection with the criminal offense by reason of identity fraud.
(C)
Notwithstanding subparagraph (A), the Commissioner may, for good cause shown based on mitigating circumstances, treat the person referred to in subparagraph (A) as an eligible individual or eligible spouse if the Commissioner determines that—
(i)
the offense described in subparagraph (A)(i) or underlying the imposition of the probation or parole described in subparagraph (A)(ii) was nonviolent and not drug-related, and
(ii)
in the case of a person who is not considered an eligible individual or eligible spouse pursuant to subparagraph (A)(ii), the action that resulted in the violation of a condition of probation or parole was nonviolent and not drug-related.
(5)
Notwithstanding any other provision of law (other than section 6103 of the Internal Revenue Code of 1986 and section 1106(c) of this Act), the Commissioner shall furnish any Federal, State, or local law enforcement officer, upon the written request of the officer, with the current address, Social Security number, and photograph (if applicable) of any recipient of benefits under this title, if the officer furnishes the Commissioner with the name of the recipient, and other identifying information as reasonably required by the Commissioner to establish the unique identity of the recipient, and notifies the Commissioner that—
(A)
the recipient is described in clause (i) or (ii) of paragraph (4)(A); and
(B)
the location or apprehension of the recipient is within the officer's official duties.
(f)

Suspension of Payments to Individuals Who Are Outside the United States
(1)
Notwithstanding any other provision of this title, no individual (other than a child described in section 1614(a)(1)(B)(ii)) shall be considered an eligible individual for purposes of this title for any month during all of which such individual is outside the United States (and no person shall be considered the eligible spouse of an individual for purposes of this title with respect to any month during all of which such person is outside the United States). For purposes of the preceding sentence, after an individual has been outside the United States for any period of 30 consecutive days, he shall be treated as remaining outside the United States until he has been in the United States for a period of 30 consecutive days.
(2)
For a period of not more than 1 year, the first sentence of paragraph (1) shall not apply to any individual who—
(A)
was eligible to receive a benefit under this title for the month immediately preceding the first month during all of which the individual was outside the United States; and
(B)
demonstrates to the satisfaction of the Commissioner of Social Security that the absence of the individual from the United States will be—
(i)
for not more than 1 year; and
(ii)
for the purpose of conducting studies as part of an educational program that is—
(I)
designed to substantially enhance the ability of the individual to engage in gainful employment;
(II)
sponsored by a school, college, or university in the United States; and
(III)
not available to the individual in the United States.
(g)

Certain Individuals Deemed To Meet Resources Test
In the case of any individual or any individual and his spouse (as the case may be) who—
(1)
received aid or assistance for December 1973 under a plan of a State approved under title I, X, XIV, or XVI,
(2)
has, since December 31, 1973, continuously resided in the State under the plan of which he or they received such aid or assistance for December 1973, and
(3)
has, since December 31, 1973, continuously been (except for periods not in excess of six consecutive months) an eligible individual or eligible spouse with respect to whom supplemental security income benefits are payable,
the resources of such individual or such individual and his spouse (as the case may be) shall be deemed not to exceed the amount specified in sections 1611(a)(1)(B) and 1611(a)(2)(B) during any period that the resources of such individual or such individual and his spouse (as the case may be) does not exceed the maximum amount of resources specified in the State plan, as in effect for October 1972, under which he or they received such aid or assistance for December 1973.
(h)

Certain Individuals Deemed To Meet Income Test
In determining eligibility for, and the amount of, benefits payable under this section in the case of any individual or any individual and his spouse (as the case may be) who—
(1)
received aid or assistance for December 1973 under a plan of a State approved under title X or XVI,
(2)
is blind under the definition of that term in the plan, as in effect for October 1972, under which he or they received such aid or assistance for December 1973,
(3)
has, since December 31, 1973, continuously resided in the State under the plan of which he or they received such aid or assistance for December 1973, and
(4)
has, since December 31, 1973, continuously been (except for periods not in excess of six consecutive months) an eligible individual or an eligible spouse with respect to whom supplemental security income benefits are payable,
there shall be disregarded an amount equal to the greater of (A) the maximum amount of any earned or unearned income which could have been disregarded under the State plan, as in effect for October 1972, under which he or they received such aid or assistance for December 1973, and (B) the amount which would be required to be disregarded under section 1612 without application of this subsection.
(i)

Application and Review Requirements for Certain Individuals
For application and review requirements affecting the eligibility of certain individuals, see section 1631(j).

INCOME
Sec. 1612.
[42 U.S.C. 1382a]
(a)

Meaning of Income
For purposes of this title, income means both earned income and unearned income; and—
(1)
earned income means only—
(A)
wages as determined under section 203(f)(5)(C) but without the application of section 210(j)(3) (and, in the case of cash remuneration paid for service as a member of a uniformed service (other than payments described in paragraph (2)(H) of this subsection or subsection (b)(20)), without regard to the limitations contained in section 209(d));
(B)
net earnings from self-employment, as defined in section 211 (without the application of the second and third sentences following subsection (a)(11), the last paragraph of subsection (a), and section 210(j)(3)), including earnings for services described in paragraphs (4), (5), and (6) of subsection (c);
(C)
remuneration received for services performed in a sheltered workshop or work activities center; and
(D)
any royalty earned by an individual in connection with any publication of the work of the individual, and that portion of any honorarium which is received for services rendered; and
(2)
unearned income means all other income, including—
(A)
support and maintenance furnished in cash or kind; except that (i) in the case of any individual (and his eligible spouse, if any) living in another person's household and receiving support and maintenance in kind from such person, the dollar amounts otherwise applicable to such individual (and spouse) as specified in subsections (a) and (b) of section 1611 shall be reduced by 33⅓ percent in lieu of including such support and maintenance in the unearned income of such individual (and spouse) as otherwise required by this subparagraph, (ii) in the case of any individual or his eligible spouse who resides in a nonprofit retirement home or similar nonprofit institution, support and maintenance shall not be included to the extent that it is furnished to such individual or such spouse without such institution receiving payment therefor (unless such institution has expressly undertaken an obligation to furnish full support and maintenance to such individual or spouse without any current or future payment therefor) or payment therefor is made by another nonprofit organization, and (iii) support and maintenance shall not be included and the provisions of clause (i) shall not be applicable in the case of any individual (and his eligible spouse, if any) for the period which begins with the month in which such individual (or such individual and his eligible spouse) began to receive support and maintenance while living in a residential facility (including a private household) maintained by another person and ends with the close of the month in which such individual (or such individual and his eligible spouse) ceases to receive support and maintenance while living in such a residential facility (or, if earlier, with the close of the seventeenth month following the month in which such period began), if, not more than 30 days prior to the date on which such individual (or such individual and his eligible spouse) began to receive support and maintenance while living in such a residential facility, (I) such individual (or such individual and his eligible spouse) were residing in a household maintained by such individual (or by such individual and others) as his or their own home, (II) there occurred within the area in which such household is located (and while such individual, or such individual and his spouse, were residing in the household referred to in subclause (I)) a catastrophe on account of which the President declared a major disaster to exist therein for purposes of the Disaster Relief and Emergency Assistance Act, and (III) such individual declares that he (or he and his eligible spouse) ceased to continue living in the household referred to in subclause (II) because of such catastrophe;
(B)
any payments received as an annuity, pension, retirement, or disability benefit, including veterans' compensation and pensions, workmen's compensation payments, old-age, survivors, and disability insurance benefits, railroad retirement annuities and pensions, and unemployment insurance benefits;
(C)
prizes and awards;
(D)
payments to the individual occasioned by the death of another person, to the extent that the total of such payments exceeds the amount expended by such individual for purposes of the deceased person's last illness and burial;
(E)
support and alimony payments, and (subject to the provisions of subparagraph (D) excluding certain amounts expended for purposes of a last illness and burial) gifts (cash or otherwise) and inheritances;
(F)
rents, dividends, interest, and royalties not described in paragraph (1)(E);
(G)6
any earnings of, and additions to, the corpus of a trust established by an individual (within the meaning of section 1613(e)), of which the individual is a beneficiary, to which section 1613(e) applies, and, in the case of an irrevocable trust, with respect to which circumstances exist under which a payment from the earnings or additions could be made to or for the benefit of the individual; and
^6
Margin so in law.
(H)
payments to or on behalf of a member of a uniformed service for housing of the member (and his or her dependents, if any) on a facility of a uniformed service, including payments provided under section 403 of title 37, United States Code, for housing that is acquired or constructed under subchapter IV of chapter 169 of title 10 of such Code, or any related provision of law, and any such payments shall be treated as support and maintenance in kind subject to subparagraph (A) of this paragraph.
(b)

Exclusions From Income
In determining the income of an individual (and his eligible spouse) there shall be excluded—
(1)
subject to limitations (as to amount or otherwise) prescribed by the Commissioner of Social Security, if such individual is under the age of 22 and7 is, as determined by the Commissioner of Social Security, a student regularly attending a school, college, or university, or a course of vocational or technical training designed to prepare him for gainful employment, the earned income of such individual;
^7
Section 432 of Public Law 108–203 struck “a child who” and inserted “under the age of 22 and”, effective with respect to benefits payable for months that begin on or after 1 year after March 2, 2004.
(2)
(A)
the first $240 per year (or proportionately smaller amounts for shorter periods) of income (whether earned or unearned) other than income which is paid on the basis of the need of the eligible individual, and
(B)
monthly (or other periodic) payments received by any individual, under a program established prior to July 1, 1973 (or any program established prior to such date but subsequently amended so as to conform to State or Federal constitutional standards), if (i) such payments are made by the State of which the individual receiving such payments is a resident, (ii) eligibility of any individual for such payments is not based on need and is based solely on attainment of age 65 or any other age set by the State and residency in such State by such individual, and (iii) on or before September 30, 1985, such individual (I) first becomes an eligible individual or an eligible spouse under this title, and (II) satisfies the twenty-five-year residency requirement of such program as such program was in effect prior to January 1, 1983.
(3)
in any calendar quarter, the first—
(A)
$60 of unearned income, and
(B)
$30 of earned income,
of such individual (and such spouse, if any) which, as determined in accordance with criteria prescribed by the Commissioner of Social Security, is received too infrequently or irregularly to be included;
(4)
(A)
if such individual (or such spouse) is blind (and has not attained age 65, or received benefits under this title (or aid under a State plan approved under section 1002 or 1602) for the month before the month in which he attained age 65), (i) the first $780 per year (or proportionately smaller amounts for shorter periods) of earned income not excluded by the preceding paragraphs of this subsection, plus one-half of the remainder thereof, (ii) an amount equal to any expenses reasonably attributable to the earning of any income, and (iii) such additional amounts of other income, where such individual has a plan for achieving self-support approved by the Commissioner of Social Security, as may be necessary for the fulfillment of such plan,
(B)
if such individual (or such spouse) is disabled but not blind (and has not attained age 65, or received benefits under this title (or aid under a State plan approved under section 1402 or 1602) for the month before the month in which he attained age 65), (i) the first $780 per year (or proportionately smaller amounts for shorter periods) of earned income not excluded by the preceding paragraphs of this subsection, (ii) such additional amounts of earned income of such individual, if such individual's disability is sufficiently severe to result in a functional limitation requiring assistance in order for him to work, as may be necessary to pay the costs (to such individual) of attendant care services, medical devices, equipment, prostheses, and similar items and services (not including routine drugs or routine medical services unless such drugs or services are necessary for the control of the disabling condition) which are necessary (as determined by the Commissioner of Social Security in regulations) for that purpose, whether or not such assistance is also needed to enable him to carry out his normal daily functions, except that the amounts to be excluded shall be subject to such reasonable limits as the Commissioner of Social Security may prescribe, (iii) one-half of the amount of earned income not excluded after the application of the preceding provisions of this subparagraph, and (iv) such additional amounts of other income, where such individual has a plan for achieving self-support approved by the Commissioner of Social Security, as may be necessary for the fulfillment of such plan, or
(C)
if such individual (or such spouse) has attained age 65 and is not included under subparagraph (A) or (B), the first $780 per year (or proportionately smaller amounts for shorter periods) of earned income not excluded by the preceding paragraphs of this subsection, plus one-half of the remainder thereof;
(5)
any amount received from any public agency as a return or refund of taxes paid on real property or on food purchased by such individual (or such spouse);
(6)
assistance, furnished to or on behalf of such individual (and spouse), which is based on need and furnished by any State or political subdivision of a State;
(7)
any portion of any grant, scholarship, fellowship, or gift (or portion of a gift) used to pay the cost of tuition and fees at any educational (including technical or vocational education) institution;
(8)
home produce of such individual (or spouse) utilized by the household for its own consumption;
(9)
if such individual is a child, one-third of any payment for his support received from an absent parent;
(10)
any amounts received for the foster care of a child who is not an eligible individual but who is living in the same home as such individual and was placed in such home by a public or nonprofit private child-placement or child-care agency;
(11)
assistance received under the Disaster Relief and Emergency Assistance Act or other assistance provided pursuant to a Federal statute on account of a catastrophe which is declared to be a major disaster by the President;
(12)
interest income received on assistance funds referred to in paragraph (11) within the 9-month period beginning on the date such funds are received (or such longer periods as the Commissioner of Social Security shall by regulations prescribe in cases where good cause is shown by the individual concerned for extending such period);
(13)
any support or maintenance assistance furnished to or on behalf of such individual (and spouse if any) which (as determined under regulations of the Commissioner of Social Security by such State agency as the chief executive officer of the State may designate) is based on need for such support or maintenance, including assistance received to assist in meeting the costs of home energy (including both heating and cooling), and which is (A) assistance furnished in kind by a private nonprofit agency, or (B) assistance furnished by a supplier of home heating oil or gas, by an entity providing home energy whose revenues are primarily derived on a rate-of-return basis regulated by a State or Federal governmental entity, or by a municipal utility providing home energy;
(14)
assistance paid, with respect to the dwelling unit occupied by such individual (or such individual and spouse), under the United States Housing Act of 1937, the National Housing Act, section 101 of the Housing and Urban Development Act of 1965, title V of the Housing Act of 1949, or section 202(h) of the Housing Act of 1959,
(15)
the value of any commercial transportation ticket, for travel by such individual (or spouse) among the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands, which is received as a gift by such individual (or such spouse) and is not converted to cash;
(16)
interest accrued on the value of an agreement entered into by such individual (or such spouse) representing the purchase of a burial space excluded under section 1613(a)(2)(B), and left to accumulate;
(17)
any amount received by such individual (or such spouse) from a fund established by a State to aid victims of crime;
(18)
relocation assistance provided by a State or local government to such individual (or such spouse), comparable to assistance provided under title II of the Uniform Relocation Assistance and Real Property Acquisitions Policies Act of 1970 which is subject to the treatment required by section 216 of such Act;
(19)
any refund of Federal income taxes made to such individual (or such spouse) by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit), and any payment made to such individual (or such spouse) by an employer under section 3507 of such Code (relating to advance payment of earned income credit);
(20)
special pay received pursuant to section 310, or paragraph (1) or (3) of section 351(a), of title 37, United States Code;
(21)
the interest or other earnings on any account established and maintained in accordance with section 1631(a)(2)(F);
(22)
any gift to, or for the benefit of, an individual who has not attained 18 years of age and who has a life-threatening condition, from an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 which is exempt from taxation under section 501(a) of such Code—
(A)
in the case of an in-kind gift, if the gift is not converted to cash; or
(B)
in the case of a cash gift, only to the extent that the total amount excluded from the income of the individual pursuant to this paragraph in the calendar year in which the gift is made does not exceed $2,000;
(23)
interest or dividend income from resources—
(A)
not excluded under section 1613(a), or
(B)
excluded pursuant to Federal law other than section 1613(a);
(24)
any annuity paid by a State to the individual (or such spouse) on the basis of the individual's being a veteran (as defined in section 101 of title 38, United States Code), and blind, disabled, or aged;
(25)
any benefit (whether cash or in-kind) conferred upon (or paid on behalf of) a participant in an AmeriCorps position approved by the Corporation for National and Community Service under section 123 of the National and Community Service Act of 1990 (42 U.S.C. 12573); and
(26)
the first $2,000 received during a calendar year by such individual (or such spouse) as compensation for participation in a clinical trial involving research and testing of treatments for a rare disease or condition (as defined in section 5(b)(2) of the Orphan Drug Act), but only if the clinical trial—
(A)
has been reviewed and approved by an institutional review board that is established—
(i)
to protect the rights and welfare of human subjects participating in scientific research; and
(ii)
in accord with the requirements under part 46 of title 45, Code of Federal Regulations; and
(B)
meets the standards for protection of human subjects as provided under part 46 of title 45, Code of Federal Regulations.

RESOURCES
Sec. 1613.
[42 U.S.C. 1382b]
(a)

Exclusions From Resources
In determining the resources of an individual (and his eligible spouse, if any) there shall be excluded—
(1)
the home (including the land that appertains thereto);
(2)
(A)
household goods, personal effects, and an automobile, to the extent that their total value does not exceed such amount as the Commissioner of Social Security determines to be reasonable; and
(B)
the value of any burial space or agreement (including any interest accumulated thereon) representing the purchase of a burial space (subject to such limits as to size or value as the Commissioner of Social Security may by regulation prescribe) held for the purpose of providing a place for the burial of the individual, his spouse, or any other member of his immediate family;
(3)
other property which is so essential to the means of self-support of such individual (and such spouse) as to warrant its exclusion, as determined in accordance with and subject to limitations prescribed by the Commissioner of Social Security, except that the Commissioner of Social Security shall not establish a limitation on property (including the tools of a tradesperson and the machinery and livestock of a farmer) that is used in a trade or business or by such individual as an employee;
(4)
such resources of an individual who is blind or disabled and who has a plan for achieving self-support approved by the Commissioner of Social Security, as may be necessary for the fulfillment of such plan;
(5)
in the case of Natives of Alaska, shares of stock held in a Regional or a Village Corporation, during the period of twenty years in which such stock is inalienable, as provided in section 7(h) and section 8(c) of the Alaska Native Claims Settlement Act;
(6)
assistance referred to in section 1612(b)(11) for the 9-month period beginning on the date such funds are received (or for such longer period as the Commissioner of Social Security shall by regulations prescribe in cases where good cause is shown by the individual concerned for extending such period); and, for purposes of this paragraph, the term “assistance” includes interest thereon which is excluded from income under section 1612(b)(12);
(7)
any amount received from the United States which is attributable to underpayments of benefits due for one or more prior months, under this title or title II, to such individual (or spouse) or to any other person whose income is deemed to be included in such individual's (or spouse's) income for purposes of this title; but the application of this paragraph in the case of any such individual (and eligible spouse if any), with respect to any amount so received from the United States, shall be limited to the first 9 months following the month in which such amount is received, and written notice of this limitation shall be given to the recipient concurrently with the payment of such amount;
(8)
the value of assistance referred to in section 1612(b)(14), paid with respect to the dwelling unit occupied by such individual (or such individual and spouse);
(9)
for the 9-month period beginning after the month in which received, any amount received by such individual (or such spouse) from a fund established by a State to aid victims of crime, to the extent that such individual (or such spouse) demonstrates that such amount was paid as compensation for expenses incurred or losses suffered as a result of a crime;
(10)
for the 9-month period beginning after the month in which received, relocation assistance provided by a State or local government to such individual (or such spouse), comparable to assistance provided under title II of the Uniform Relocation Assistance and Real Property Acquisitions Policies Act of 1970 which is subject to the treatment required by section 216 of such Act;
(11)
for the 9-month period beginning after the month in which received—
(A)
notwithstanding section 203 of the Economic Growth and Tax Relief Reconciliation Act of 2001, any refund of Federal income taxes made to such individual (or such spouse) under section 24 of the Internal Revenue Code of 1986 (relating to child tax credit) by reason of subsection (d) thereof; and
(B)
any refund of Federal income taxes made to such individual (or such spouse) by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit), and any payment made to such individual (or such spouse) by an employer under section 3507 of such Code (relating to advance payment of earned income credit);
(12)
any account, including accrued interest or other earnings thereon, established and maintained in accordance with section 1631(a)(2)(F);
(13)
any gift to, or for the benefit of, an individual who has not attained 18 years of age and who has a life-threatening condition, from an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 which is exempt from taxation under section 501(a) of such Code—
(A)
in the case of an in-kind gift, if the gift is not converted to cash; or
(B)
in the case of a cash gift, only to the extent that the total amount excluded from the resources of the individual pursuant to this paragraph in the calendar year in which the gift is made does not exceed $2,000;
(14)
for the 9-month period beginning after the month in which received, any amount received by such individual (or spouse) or any other person whose income is deemed to be included in such individual's (or spouse's) income for purposes of this title as restitution for benefits under this title, title II, or title VIII that a representative payee of such individual (or spouse) or such other person under section 205(j), 807, or 1631(a)(2) has misused;
(15)
for the 9-month period beginning after the month in which received, any grant, scholarship, fellowship, or gift (or portion of a gift) used to pay the cost of tuition and fees at any educational (including technical or vocational education) institution;
(16)
for the month of receipt and every month thereafter, any annuity paid by a State to the individual (or such spouse) on the basis of the individual's being a veteran (as defined in section 101 of title 38, United States Code), and blind, disabled, or aged; and
(17)
any amount received by such individual (or such spouse) which is excluded from income under section 1612(b)(26) (relating to compensation for participation in a clinical trial involving research and testing of treatments for a rare disease or condition).
In determining the resources of an individual (or eligible spouse) an insurance policy shall be taken into account only to the extent of its cash surrender value; except that if the total face value of all life insurance policies on any person is $1,500 or less, no part of the value of any such policy shall be taken into account.
(b)

Disposition of Resources
(1)
The Commissioner of Social Security shall prescribe the period or periods of time within which, and the manner in which, various kinds of property must be disposed of in order not to be included in determining an individual's eligibility for benefits. Any portion of the individual's benefits paid for any such period shall be conditioned upon such disposal; and any benefits so paid shall (at the time of the disposal) be considered overpayments to the extent they would not have been paid had the disposal occurred at the beginning of the period for which such benefits were paid.
(2)
Notwithstanding the provisions of paragraph (1), the Commissioner of Social Security shall not require the disposition of any real property for so long as it cannot be sold because (A) it is jointly owned (and its sale would cause undue hardship, due to loss of housing, for the other owner or owners), (B) its sale is barred by a legal impediment, or (C) as determined under regulations issued by the Commissioner of Social Security, the owner's reasonable efforts to sell it have been unsuccessful.
(c)

Disposal of Resources for Less Than Fair Market Value
(1)
(A)
(i)
If an individual or the spouse of an individual disposes of resources for less than fair market value on or after the look-back date described in clause (ii)(I), the individual is ineligible for benefits under this title for months during the period beginning on the date described in clause (iii) and equal to the number of months calculated as provided in clause (iv).
(ii)
(I)
The look-back date described in this subclause is a date that is 36 months before the date described in subclause (II).
(II)
The date described in this subclause is the date on which the individual applies for benefits under this title or, if later, the date on which the individual (or the spouse of the individual) disposes of resources for less than fair market value.
(iii)
The date described in this clause is the first day of the first month in or after which resources were disposed of for less than fair market value and which does not occur in any other period of ineligibility under this paragraph.
(iv)
The number of months calculated under this clause shall be equal to—
(I)
the total, cumulative uncompensated value of all resources so disposed of by the individual (or the spouse of the individual) on or after the look-back date described in clause (ii)(I); divided by
(II)
the amount of the maximum monthly benefit payable under section 1611(b), plus the amount (if any) of the maximum State supplementary payment corresponding to the State's payment level applicable to the individual's living arrangement and eligibility category that would otherwise be payable to the individual by the Commissioner pursuant to an agreement under section 1616(a) of this Act or section 212(b) of Public Law 93–66, for the month in which occurs the date described in clause (ii)(II),
rounded, in the case of any fraction, to the nearest whole number, but shall not in any case exceed 36 months.
(B)
(i)
Notwithstanding subparagraph (A), this subsection shall not apply to a transfer of a resource to a trust if the portion of the trust attributable to the resource is considered a resource available to the individual pursuant to subsection (e)(3) (or would be so considered but for the application of subsection (e)(4)).
(ii)
In the case of a trust established by an individual or an individual's spouse (within the meaning of subsection (e)), if from such portion of the trust, if any, that is considered a resource available to the individual pursuant to subsection (e)(3) (or would be so considered but for the application of subsection (e)(4)) or the residue of the portion on the termination of the trust—
(I)
there is made a payment other than to or for the benefit of the individual; or
(II)
no payment could under any circumstance be made to the individual,
then, for purposes of this subsection, the payment described in clause (I) or the foreclosure of payment described in clause (II) shall be considered a transfer of resources by the individual or the individual's spouse as of the date of the payment or foreclosure, as the case may be.
(C)
An individual shall not be ineligible for benefits under this title by reason of the application of this paragraph to a disposal of resources by the individual or the spouse of the individual, to the extent that—
(i)
the resources are a home and title to the home was transferred to—
(I)
the spouse of the transferor;
(II)
a child of the transferor who has not attained 21 years of age, or is blind or disabled;
(III)
a sibling of the transferor who has an equity interest in such home and who was residing in the transferor's home for a period of at least 1 year immediately before the date the transferor becomes an institutionalized individual; or
(IV)
a son or daughter of the transferor (other than a child described in subclause (II)) who was residing in the transferor's home for a period of at least 2 years immediately before the date the transferor becomes an institutionalized individual, and who provided care to the transferor which permitted the transferor to reside at home rather than in such an institution or facility;
(ii)
the resources—
(I)
were transferred to the transferor's spouse or to another for the sole benefit of the transferor's spouse;
(II)
were transferred from the transferor's spouse to another for the sole benefit of the transferor's spouse;
(III)
were transferred to, or to a trust (including a trust described in section 1917(d)(4)) established solely for the benefit of, the transferor's child who is blind or disabled; or
(IV)
were transferred to a trust (including a trust described in section 1917(d)(4)) established solely for the benefit of an individual who has not attained 65 years of age and who is disabled;
(iii)
a satisfactory showing is made to the Commissioner of Social Security (in accordance with regulations promulgated by the Commissioner) that—
(I)
the individual who disposed of the resources intended to dispose of the resources either at fair market value, or for other valuable consideration;
(II)
the resources were transferred exclusively for a purpose other than to qualify for benefits under this title; or
(III)
all resources transferred for less than fair market value have been returned to the transferor; or
(iv)
the Commissioner determines, under procedures established by the Commissioner, that the denial of eligibility would work an undue hardship as determined on the basis of criteria established by the Commissioner.
(D)
For purposes of this subsection, in the case of a resource held by an individual in common with another person or persons in a joint tenancy, tenancy in common, or similar arrangement, the resource (or the affected portion of such resource) shall be considered to be disposed of by the individual when any action is taken, either by the individual or by any other person, that reduces or eliminates the individual's ownership or control of such resource.
(E)
In the case of a transfer by the spouse of an individual that results in a period of ineligibility for the individual under this subsection, the Commissioner shall apportion the period (or any portion of the period) among the individual and the individual's spouse if the spouse becomes eligible for benefits under this title.
(F)
For purposes of this paragraph—
(i)
the term “benefits under this title” includes payments of the type described in section 1616(a) of this Act and of the type described in section 212(b) of Public Law 93–66;
(ii)
the term “institutionalized individual” has the meaning given such term in section 1917(e)(3); and
(iii)
the term “trust” has the meaning given such term in subsection (e)(6)(A) of this section.
(2)
(A)
At the time an individual (and the individual's eligible spouse, if any) applies for benefits under this title, and at the time the eligibility of an individual (and such spouse, if any) for such benefits is redetermined, the Commissioner of Social Security shall—
(i)
inform such individual of the provisions of paragraph (1) and section 1917(c) providing for a period of ineligibility for benefits under this title and title XIX, respectively, for individuals who make certain dispositions of resources for less than fair market value, and inform such individual that information obtained pursuant to clause (ii) will be made available to the State agency administering a State plan under title XIX (as provided in subparagraph (B)); and
(ii)
obtain from such individual information which may be used in determining whether or not a period of ineligibility for such benefits would be required by reason of paragraph (1) or section 1917(c).
(B)
The Commissioner of Social Security shall make the information obtained under subparagraph (A)(ii) available, on request, to any State agency administering a State plan approved under title XIX.
(d)

Funds Set Aside for Burial Expenses
(1)
In determining the resources of an individual, there shall be excluded an amount, not in excess of $1,500 each with respect to such individual and his spouse (if any), that is separately identifiable and has been set aside to meet the burial and related expenses of such individual or spouse.
(2)
The amount of $1,500, referred to in paragraph (1), with respect to an individual shall be reduced by an amount equal to (A) the total face value of all insurance policies on his life which are owned by him or his spouse and the cash surrender value of which has been excluded in determining the resources of such individual or of such individual and his spouse, and (B) the total of any amounts in an irrevocable trust (or other irrevocable arrangement) available to meet the burial and related expenses of such individual or his spouse.
(3)
If the Commissioner of Social Security finds that any part of the amount excluded under paragraph (1) was used for purposes other than those for which it was set aside in cases where the inclusion of any portion of the amount would cause the resources of such individual, or of such individual and spouse, to exceed the limits specified in paragraph (1) or (2) (whichever may be applicable) of section 1611(a), he shall reduce any future benefits payable to the eligible individual (or to such individual and his spouse) by an amount equal to such part.
(4)
The Commissioner of Social Security may provide by regulations that whenever an amount set aside to meet burial and related expenses is excluded under paragraph (1) in determining the resources of an individual, any interest earned or accrued on such amount (and left to accumulate), and any appreciation in the value of prepaid burial arrangements for which such amount was set aside, shall also be excluded (to such extent and subject to such conditions or limitations as such regulations may prescribe) in determining the resources (and the income) of such individual.
(e)

Trusts
(1)
In determining the resources of an individual, paragraph (3) shall apply to a trust (other than a trust described in paragraph (5)) established by the individual.
(2)
(A)
For purposes of this subsection, an individual shall be considered to have established a trust if any assets of the individual (or of the individual's spouse) are transferred to the trust other than by will.
(B)
In the case of an irrevocable trust to which are transferred the assets of an individual (or of the individual's spouse) and the assets of any other person, this subsection shall apply to the portion of the trust attributable to the assets of the individual (or of the individual's spouse).
(C)
This subsection shall apply to a trust without regard to—
(i)
the purposes for which the trust is established;
(ii)
whether the trustees have or exercise any discretion under the trust;
(iii)
any restrictions on when or whether distributions may be made from the trust; or
(iv)
any restrictions on the use of distributions from the trust.
(3)
(A)
In the case of a revocable trust established by an individual, the corpus of the trust shall be considered a resource available to the individual.
(B)
In the case of an irrevocable trust established by an individual, if there are any circumstances under which payment from the trust could be made to or for the benefit of the individual (or of the individual's spouse), the portion of the corpus from which payment to or for the benefit of the individual (or of the individual's spouse) could be made shall be considered a resource available to the individual.
(4)
The Commissioner of Social Security may waive the application of this subsection with respect to an individual if the Commissioner determines that such application would work an undue hardship (as determined on the basis of criteria established by the Commissioner) on the individual.
(5)
This subsection shall not apply to a trust described in subparagraph (A) or (C) of section 1917(d)(4).
(6)
For purposes of this subsection—
(A)
the term “trust” includes any legal instrument or device that is similar to a trust;
(B)
the term “corpus” means, with respect to a trust, all property and other interests held by the trust, including accumulated earnings and any other addition to the trust after its establishment (except that such term does not include any such earnings or addition in the month in which the earnings or addition is credited or otherwise transferred to the trust); and
(C)
the term “asset” includes any income or resource of the individual (or of the individual's spouse), including—
(i)
any income excluded by section 1612(b);
(ii)
any resource otherwise excluded by this section; and
(iii)
any other payment or property to which the individual (or of the individual's spouse) is entitled but does not receive or have access to because of action by—
(I)
the individual or spouse;
(II)
a person or entity (including a court) with legal authority to act in place of, or on behalf of, the individual or spouse; or
(III)
a person or entity (including a court) acting at the direction of, or on the request of, the individual or spouse.

MEANING OF TERMS
Sec. 1614.
[42 U.S.C. 1382c]
(a)

Aged, Blind, or Disabled Individual
(1)
For purposes of this title, the term “aged, blind, or disabled individual” means an individual who—
(A)
is 65 years of age or older, is blind (as determined under paragraph (2)), or is disabled (as determined under paragraph (3)), and
(B)
(i)
is a resident of the United States, and is either (I) a citizen or (II) 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 212(d)(5) of the Immigration and Nationality Act
(ii)
is a child who is a citizen of the United States, and who is living with a parent of the child who is a member of the Armed Forces of the United States assigned to permanent duty ashore outside the United States.
(2)
An individual shall be considered to be blind for purposes of this title if he has central visual acuity of 20/200 or less in the better eye with the use of a correcting lens. An eye which is accompanied by a limitation in the fields of vision such that the widest diameter of the visual field subtends an angle no greater than 20 degrees shall be considered for purposes of the first sentence of this subsection as having a central visual acuity of 20/200 or less. An individual shall also be considered to be blind for purposes of this title if he is blind as defined under a State plan approved under title X or XVI as in effect for October 1972 and received aid under such plan (on the basis of blindness) for December 1973, so long as he is continuously blind as so defined.
(3)8
(A)
Except as provided in subparagraph (C), an individual shall be considered to be disabled for purposes of this title if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment 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 twelve months.
^8
Section 211(a) of P.L. 104–193 (110 Stat. 2188) made amendments to this paragraph. Subparagraphs (A) and (B) of subsection (d)(2) provides as follows:
(d) Effective Dates, Etc.—
(1) Effective dates.—
(2) Application to current recipients.—
(A) Eligibility redeterminations.—During the period beginning on the date of the enactment of this Act and ending on the date which is 1 year after such date of enactment, the Commissioner of Social Security shall redetermine the eligibility of any individual under age 18 who is eligible for supplemental security income benefits by reason of 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 provisions of, or amendments made by, subsections (a) and (b) of this section. 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) Grandfather provision.—The provisions of, and amendments made by, subsections (a) and (b) of this section, and the redetermination under subparagraph (A), shall only apply with respect to the benefits of an individual described in subparagraph (A) for months beginning on or after the later of July 1, 1997, or the date of the redetermination with respect to such individual.
(B)
For purposes of subparagraph (A), an individual shall be determined to be under a disability only if his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy, regardless of whether such work exists in the immediate area in which he lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for work. For purposes of the preceding sentence (with respect to any individual), “work which exists in the national economy” means work which exists in significant numbers either in the region where such individual lives or in several regions of the country.
(C)
(i)
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.
(ii)
Notwithstanding clause (i), no individual under the age of 18 who engages in substantial gainful activity (determined in accordance with regulations prescribed pursuant to subparagraph (E)) may be considered to be disabled.
(D)
For purposes of this paragraph, a physical or mental impairment is an impairment that results from anatomical, physiological, or psychological abnormalities which are demonstrable by medically acceptable clinical and laboratory diagnostic techniques.
(E)
The Commissioner of Social Security shall by regulations prescribe the criteria for determining when services performed or earnings derived from services demonstrate an individual's ability to engage in substantial gainful activity. In determining whether an individual is able to engage in substantial gainful activity by reason of his earnings, where his disability is sufficiently severe to result in a functional limitation requiring assistance in order for him to work, there shall be excluded from such earnings an amount equal to the cost (to such individual) of any attendant care services, medical devices, equipment, prostheses, and similar items and services (not including routine drugs or routine medical services unless such drugs or services are necessary for the control of the disabling condition) which are necessary (as determined by the Commissioner of Social Security in regulations) for that purpose, whether or not such assistance is also needed to enable him to carry out his normal daily functions; except that the amounts to be excluded shall be subject to such reasonable limits as the Commissioner of Social Security may prescribe. Notwithstanding the provisions of subparagraph (B), an individual whose services or earnings meet such criteria shall be found not to be disabled. The Commissioner of Social Security shall make determinations under this title with respect to substantial gainful activity, without regard to the legality of the activity.
(F)
Notwithstanding the provisions of subparagraphs (A) through (E), an individual shall also be considered to be disabled for purposes of this title if he is permanently and totally disabled as defined under a State plan approved under title XIV or XVI as in effect for October 1972 and received aid under such plan (on the basis of disability) for December 1973 (and for at least one month prior to July 1973), so long as he is continuously disabled as so defined.
(G)
In determining whether an individual's physical or mental impairment or impairments are of a sufficient medical severity that such impairment or impairments could be the basis of eligibility under this section, the Commissioner of Social Security shall consider the combined effect of all of the individual's impairments without regard to whether any such impairment, if considered separately, would be of such severity. If the Commissioner of Social Security does find a medically severe combination of impairments, the combined impact of the impairments shall be considered throughout the disability determination process.
(H)
(i)
In making determinations with respect to disability under this title, the provisions of sections 221(h), 221(k), and 223(d)(5) shall apply in the same manner as they apply to determinations of disability under title II.
(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 is likely to improve (or, at the option of the Commissioner, which is unlikely to improve).
(II)
A representative payee 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.
(III)
If the representative payee refuses to comply without good cause with the requirements of subclause (II), the Commissioner of Social Security shall, if the Commissioner determines it is in the best interest of the individual, promptly suspend payment of benefits to the representative payee, and provide for payment of benefits to an alternative representative payee of the individual or, if the interest of the individual under this title would be served thereby, to the individual.
(IV)
Subclause (II) shall not apply to the representative payee of any individual with respect to whom the Commissioner determines such application would be inappropriate or unnecessary. In making such determination, the Commissioner shall take into consideration the nature of the individual's impairment (or combination of impairments). Section 1631(c) shall not apply to a finding by the Commissioner that the requirements of subclause (II) should not apply to an individual's representative payee.
(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)
by applying the criteria used in determining initial eligibility for individuals who are age 18 or older; and
(II)
either during the 1-year period beginning on the individual's 18th birthday or, in lieu of a continuing disability review, whenever the Commissioner determines that an individual's case is subject to a redetermination under this clause.
With respect to any redetermination under this clause, paragraph (4) shall not apply.
(iv)
(I)
Except as provided in subclause (VI), 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 representative payee 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.
(IV)
If the representative payee refuses to comply without good cause with the requirements of subclause (III), the Commissioner of Social Security shall, if the Commissioner determines it is in the best interest of the individual, promptly suspend payment of benefits to the representative payee, and provide for payment of benefits to an alternative representative payee of the individual or, if the interest of the individual under this title would be served thereby, to the individual.
(V)
Subclause (III) shall not apply to the representative payee of any individual with respect to whom the Commissioner determines such application would be inappropriate or unnecessary. In making such determination, the Commissioner shall take into consideration the nature of the individual's impairment (or combination of impairments). Section 1631(c) shall not apply to a finding by the Commissioner that the requirements of subclause (III) should not apply to an individual's representative payee.
(VI)
Subclause (I) shall not apply in the case of an individual described in that subclause who, at the time of the individual's initial disability determination, the Commissioner determines has an impairment that is not expected to improve within 12 months after the birth of that individual, and who the Commissioner schedules for a continuing disability review at a date that is after the individual attains 1 year of age.
(I)
In making any determination under this title with respect to the disability of an individual who has not attained the age of 18 years and to whom section 221(h) does not apply, the Commissioner of Social Security shall make reasonable efforts to ensure that a qualified pediatrician or other individual who specializes in a field of medicine appropriate to the disability of the individual (as determined by the Commissioner of Social Security) evaluates the case of such individual.
(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.
(4)
A recipient of benefits based on disability under this title may be determined not to be entitled to such benefits on the basis of a finding that the physical or mental impairment on the basis of which such benefits are provided has ceased, does not exist, or is not disabling only if such finding is supported by—
(A)
in the case of an individual who is age 18 or older—
(i)
substantial evidence which demonstrates that—
(I)
there has been any medical improvement in the individual's impairment or combination of impairments (other than medical improvement which is not related to the individual's ability to work), and
(II)
the individual is now able to engage in substantial gainful activity; or
(ii)
substantial evidence (except in the case of an individual eligible to receive benefits under section 1619) which—
(I)
consists of new medical evidence and a new assessment of the individual's residual functional capacity, and demonstrates that—
- (aa)
although the individual has not improved medically, he or she is nonetheless a beneficiary of advances in medical or vocational therapy or technology (related to the individual's ability to work), and
- (bb)
the individual is now able to engage in substantial gainful activity, or
(II)
demonstrates that—
- (aa)
although the individual has not improved medically, he or she has undergone vocational therapy (related to the individual's ability to work), and
- (bb)
the individual is now able to engage in substantial gainful activity; or
(iii)
substantial evidence which demonstrates that, as determined on the basis of new or improved diagnostic techniques or evaluations, the individual's impairment or combination of impairments is not as disabling as it was considered to be at the time of the most recent prior decision that he or she was under a disability or continued to be under a disability, and that therefore the individual is able to engage in substantial gainful activity; or
(B)
in the case of an individual who is under the age of 18—
(i)
substantial evidence which demonstrates that there has been medical improvement in the individual's impairment or combination of impairments, and that such impairment or combination of impairments no longer results in marked and severe functional limitations; or
(ii)
substantial evidence which demonstrates that, as determined on the basis of new or improved diagnostic techniques or evaluations, the individual's impairment or combination of impairments, is not as disabling as it was considered to be at the time of the most recent prior decision that the individual was under a disability or continued to be under a disability, and such impairment or combination of impairments does not result in marked and severe functional limitations; or
(C)
in the case of any individual, substantial evidence (which may be evidence on the record at the time any prior determination of the entitlement to benefits based on disability was made, or newly obtained evidence which relates to that determination) which demonstrates that a prior determination was in error.
Nothing in this paragraph shall be construed to require a determination that an individual receiving benefits based on disability under this title is entitled to such benefits if the prior determination was fraudulently obtained or if the individual is engaged in substantial gainful activity, cannot be located, or fails, without good cause, to cooperate in a review of his or her entitlement or to follow prescribed treatment which would be expected (i) to restore his or her ability to engage in substantial gainful activity, or (ii) in the case of an individual under the age of 18, to eliminate or improve the individual's impairment or combination of impairments so that it no longer results in marked and severe functional limitations. Any determination under this paragraph shall be made on the basis of all the evidence available in the individual's case file, including new evidence concerning the individual's prior or current condition which is presented by the individual or secured by the Commissioner of Social Security. Any determination made under this paragraph shall be made on the basis of the weight of the evidence and on a neutral basis with regard to the individual's condition, without any initial inference as to the presence or absence of disability being drawn from the fact that the individual has previously been determined to be disabled.
(b)

Eligible Spouse
For purposes of this title, the term “eligible spouse” means an aged, blind, or disabled individual who is the husband or wife of another aged, blind, or disabled individual, and who, in a month, is living with such aged, blind, or disabled individual on the first day of the month or, in any case in which either spouse files an application for benefits, on the first day of the month following the date the application is filed, or, in any case in which either spouse requests restoration of eligibility under this title during the month, at the time the request is filed. If two aged, blind, or disabled individuals are husband and wife as described in the preceding sentence, only one of them may be an “eligible individual” within the meaning of section 1611(a).
(c)

Definition of Child
For purposes of this title, the term “child” means an individual who is neither married nor (as determined by the Commissioner of Social Security) the head of a household, and who is (1) under the age of eighteen, or (2) under the age of twenty-two and (as determined by the Commissioner of Social Security) a student regularly attending a school, college, or university, or a course of vocational or technical training designed to prepare him for gainful employment.
(d)

Determination of Marital Relationships
In determining whether two individuals are husband and wife for purposes of this title, appropriate State law shall be applied; except that—
(1)
if a man and woman have been determined to be husband and wife under section 216(h)(1) for purposes of title II they shall be considered (from and after the date of such determination or the date of their application for benefits under this title, whichever is later) to be husband and wife for purposes of this title, or
(2)
if a man and woman are found to be holding themselves out to the community in which they reside as husband and wife, they shall be so considered for purposes of this title notwithstanding any other provision of this section.
(e)

United States
For purposes of this title, the term “United States”, when used in a geographical sense, means the 50 States and the District of Columbia.
(f)

Income and Resources of Individuals Other Than Eligible Individuals and Eligible Spouses
(1)
For purposes of determining eligibility for and the amount of benefits for any individual who is married and whose spouse is living with him in the same household but is not an eligible spouse, such individual's income and resources shall be deemed to include any income and resources of such spouse, whether or not available to such individual, except to the extent determined by the Commissioner of Social Security to be inequitable under the circumstances.
(2)
(A)
For purposes of determining eligibility for and the amount of benefits for any individual who is a child under age 18, such individual's income and resources shall be deemed to include any income and resources of a parent of such individual (or the spouse of such a parent) who is living in the same household as such individual, whether or not available to such individual, except to the extent determined by the Commissioner of Social Security to be inequitable under the circumstances.
(B)
Subparagraph (A) shall not apply in the case of any child who has not attained the age of 18 years who—
(i)
is disabled;
(ii)
received benefits under this title, pursuant to section 1611(e)(1)(B), while in an institution described in section 1611(e)(1)(B);
(iii)
is eligible for medical assistance under a State home care plan approved by the Secretary under the provisions of section 1915(c) relating to waivers, or authorized under section 1902(e)(3); and
(iv)
but for this subparagraph, would not be eligible for benefits under this title.
(3)
For purposes of determining eligibility for and the amount of benefits for any individual who is an alien, such individual's income and resources shall be deemed to include the income and resources of his sponsor and such sponsor's spouse (if such alien has a sponsor) as provided in section 1621. Any such income deemed to be income of such individual shall be treated as unearned income of such individual.
(4)
For purposes of paragraphs (1) and (2), a spouse or parent (or spouse of such a parent) who is absent from the household in which the individual lives due solely to a duty assignment as a member of the Armed Forces on active duty shall, in the absence of evidence to the contrary, be deemed to be living in the same household as the individual.

REHABILITATION SERVICES FOR BLIND AND DISABLED INDIVIDUALS
Sec. 1615.
[42 U.S.C. 1382d]
(a)
In the case of any blind or disabled individual who—
(1)
has not attained age 16; and
(2)
with respect to whom benefits are paid under this title,
the Commissioner of Social Security shall make provision for referral of such individual to the appropriate State agency administering the State program under title V.
[(b)
Repealed.]
[(c)
Repealed.]
(d)
The Commissioner of Social Security is authorized to reimburse the State agency administering or supervising the administration of a State plan for vocational rehabilitation services approved under title I of the Rehabilitation Act of 1973 for the costs incurred under such plan in the provision of rehabilitation services to individuals who are referred for such services pursuant to subsection (a) (1),9 in cases where the furnishing of such services results in the performance by such individuals of substantial gainful activity for a continuous period of nine months, (2) in cases where such individuals receive benefits as a result of section 1631(a)(6) (except that no reimbursement under this subsection shall be made for services furnished to any individual receiving such benefits for any period after the close of such individual's ninth consecutive month of substantial gainful activity or the close of the month with which his or her entitlement to such benefits ceases, whichever first occurs), and (3) in cases where such individuals, without good cause, refuse to continue to accept vocational rehabilitation services or fail to cooperate in such a manner as to preclude their successful rehabilitation. The determination that the vocational rehabilitation services contributed to the successful return of an individual to substantial gainful activity, the determination that an individual, without good cause, refused to continue to accept vocational rehabilitation services or failed to cooperate in such a manner as to preclude successful rehabilitation, and the determination of the amount of costs to be reimbursed under this subsection shall be made by the Commissioner of Social Security in accordance with criteria determined by the Commissioner in the same manner as under section 222(d)(1).
^9
So in original. The comma probably should have been inserted adter the “(a)”.
(e)
The Commissioner of Social Security may reimburse the State agency described in subsection (d) for the costs described therein incurred in the provision of rehabilitation services—
(1)
for any month for which an individual received—
(A)
benefits under section 1611 or 1619(a);
(B)
assistance under section 1619(b); or
(C)
a federally administered State supplementary payment under section 1616 of this Act or section 212(b) of Public Law 93–66; and
(2)
for any month before the 13th consecutive month for which an individual, for a reason other than cessation of disability or blindness, was ineligible for—
(A)
benefits under section 1611 or 1619(a);
(B)
assistance under section 1619(b); or
(C)
a federally administered State supplementary payment under section 1616 of this Act or section 212(b) of Public Law 93–66.

OPTIONAL STATE SUPPLEMENTATION
Sec. 1616.
[42 U.S.C. 1382e]
(a)
Any cash payments which are made by a State (or political subdivision thereof) on a regular basis to individuals who are receiving benefits under this title or who would but for their income be eligible to receive benefits under this title, as assistance based on need in supplementation of such benefits (as determined by the Commissioner of Social Security), shall be excluded under section 1612(b)(6) in determining the income of such individuals for purposes of this title and the Commissioner of Social Security and such State may enter into an agreement which satisfies subsection (b) under which the Commissioner of Social Security will, on behalf of such State (or subdivision) make such supplementary payments to all such individuals.
(b)
Any agreement between the Commissioner of Social Security and a State entered into under subsection (a) shall provide—
(1)
that such payments will be made (subject to subsection (c)) to all individuals residing in such State (or subdivision) who are receiving benefits under this title, and
(2)
such other rules with respect to eligibility for or amount of the supplementary payments, and such procedural or other general administrative provisions, as the Commissioner of Social Security finds necessary (subject to subsection (c)) to achieve efficient and effective administration of both the program which the Commission conducts under this title and the optional State supplementation.
At the option of the State (but subject to paragraph (2) of this subsection), the agreement between the Commissioner of Social Security and such State entered into under subsection (a) shall be modified to provide that the Commissioner of Social Security will make supplementary payments, on and after an effective date to be specified in the agreement as so modified, to individuals receiving benefits determined under section 1611(e)(1)(B).
(c)
(1)
Any State (or political subdivision) making supplementary payments described in subsection (a) may at its option impose as a condition of eligibility for such payments, and include in the State's agreement with the Commissioner of Social Security under such subsection, a residence requirement which excludes individuals who have resided in the State (or political subdivision) for less than a minimum period prior to application for such payments.
(2)
Any State (or political subdivision), in determining the eligibility of any individual for supplementary payments described in subsection (a), may disregard amounts of earned and unearned income in addition to other amounts which it is required or permitted to disregard under this section in determining such eligibility, and shall include a provision specifying the amount of any such income that will be disregarded, if any.
(3)
Any State (or political subdivision) making supplementary payments described in subsection (a) shall have the option of making such payments to individuals who receive benefits under this title under the provisions of section 1619, or who would be eligible to receive such benefits but for their income.
(d)
(1)
Any State which has entered into an agreement with the Commissioner of Social Security under this section which provides that the Commissioner of Social Security will, on behalf of the State (or political subdivision), make the supplementary payments to individuals who are receiving benefits under this title (or who would but for their income be eligible to receive such benefits), shall, in accordance with paragraph (5), pay to the Commissioner of Social Security an amount equal to the expenditures made by the Commissioner of Social Security as such supplementary payments, plus an administration fee assessed in accordance with paragraph (2) and any additional services fee charged in accordance with paragraph (3).
(2)
(A)
The Commissioner of Social Security shall assess each State an administration fee in an amount equal to—
(i)
the number of supplementary payments made by the Commissioner of Social Security on behalf of the State under this section for any month in a fiscal year; multiplied by
(ii)
the applicable rate for the fiscal year.
(B)
As used in subparagraph (A), the term “applicable rate” means—
(i)
for fiscal year 1994, $1.67;
(ii)
for fiscal year 1995, $3.33;
(iii)
for fiscal year 1996, $5.00;
(iv)10
for fiscal year 1997, $5.00;
^{10}
Section 516(a)(1)(A) of the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 1998 (Public Law 105–78) amends this subparagraph by striking “and” at the end of clause (iii), by striking clause (iv) and inserting clauses (iv) through (x). These amendments were duplicative as a result of the amendments made by section 5102(a)(1)(A) of the Balanced Budget Act of 1997 (111 Stat. 595).
(v)
for fiscal year 1998, $6.20;
(vi)
for fiscal year 1999, $7.60;
(vii)
for fiscal year 2000, $7.80;
(viii)
for fiscal year 2001, $8.10;
(ix)
for fiscal year 2002, $8.50; and
(x)
for fiscal year 2003 and each succeeding fiscal year—
(I)
the applicable rate in the preceding fiscal year, increased by the percentage, if any, by which the Consumer Price Index for the month of June of the calendar year of the increase exceeds the Consumer Price Index for the month of June of the calendar year preceding the calendar year of the increase, and rounded to the nearest whole cent; or
(II)
such different rate as the Commissioner determines is appropriate for the State.
(C)
Upon making a determination under subparagraph (B)(x)(II)11, the Commissioner of Social Security shall promulgate the determination in regulations, which may take into account the complexity of administering the State's supplementary payment program.
^{11}
Section 516(a)(1)(B) of the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 1998 (Public Law 105–78; 111 Stat. 1518) amends subparagraph (C) by striking “(B)(iv)” and inserting “(B)(x)(II)”. This amendment was already executed by section 5102(a)(1)(B) of the Balanced Budget Act of 1997 (111 Stat. 595).
(D)
All fees assessed pursuant to this paragraph shall be transferred to the Commissioner of Social Security at the same time that amounts for such supplementary payments are required to be so transferred.
(3)
(A)
The Commissioner of Social Security may charge a State an additional services fee if, at the request of the State, the Commissioner of Social Security provides additional services beyond the level customarily provided, in the administration of State supplementary payments pursuant to this section.
(B)
The additional services fee shall be in an amount that the Commissioner of Social Security determines is necessary to cover all costs (including indirect costs) incurred by the Federal Government in furnishing the additional services referred to in subparagraph (A).
(4)12
(A)
The first $5 of each administration fee assessed pursuant to paragraph (2), upon collection, shall be deposited in the general fund of the Treasury of the United States as miscellaneous receipts.
^{12}
This paragraph is a result of the amendment made by section 516(b)(1)(A) of the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 1998 (Public Law 105–78; 111 Stat. 1518). Such paragraph as amended by section 5102(b)(1)(A) of the Budget Act of 1997 (111 Stat. 596) is as follows:
(4)(A) The first $5 of each administration fee assessed pursuant to paragraph (2), upon collection, shall be deposited in the general fund of the Treasury of the United States as miscellaneous receipts.
(B) That portion of each administration fee in excess of $5, and 100 percent of each additional services fee charged pursuant to paragraph (3), upon collection for fiscal year 1998 and each subsequent fiscal year, shall be credited to a special fund established in the Treasury of the United States for State supplementary payment fees. The amounts so credited, to the extent and in the amounts provided in advance in appropriations Acts, shall be available to defray expenses incurred in carrying out this title and related laws. The amounts so credited shall not be scored as receipts under section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985, and the amounts so credited shall be credited as a discretionary offset to discretionary spending to the extent that the amounts so credited are made available for expenditure in appropriations Acts.
(B)
That portion of each administration fee in excess of $5, and 100 percent of each additional services fee charged pursuant to paragraph (3), upon collection for fiscal year 1998 and each subsequent fiscal year, shall be credited to a special fund established in the Treasury of the United States for State supplementary payment fees. The amounts so credited, to the extent and in the amounts provided in advance in appropriations Acts, shall be available to defray expenses incurred in carrying out this title and related laws.
(5)
(A)
(i)
Any State which has entered into an agreement with the Commissioner of Social Security under this section shall remit the payments and fees required under this subsection with respect to monthly benefits paid to individuals under this title no later than—
(I)
the business day preceding the date that the Commissioner pays such monthly benefits; or
(II)
with respect to such monthly benefits paid for the month that is the last month of the State's fiscal year, the fifth business day following such date.
(ii)
The Commissioner may charge States a penalty in an amount equal to 5 percent of the payment and the fees due if the remittance is received after the date required by clause (i).
(B)
The Cash Management Improvement Act of 1990 shall not apply to any payments or fees required under this subsection that are paid by a State before the date required by subparagraph (A)(i).
(C)
Notwithstanding subparagraph (A)(i), the Commissioner may make supplementary payments on behalf of a State with funds appropriated for payment of benefits under this title, and subsequently to be reimbursed for such payments by the State at such times as the Commissioner and State may agree. Such authority may be exercised only if extraordinary circumstances affecting a State's ability to make payment when required by subparagraph (A)(i) are determined by the Commissioner to exist.
(e)
(1)
Each State shall establish or designate one or more State or local authorities which shall establish, maintain, and insure the enforcement of standards for any category of institutions, foster homes, or group living arrangements in which (as determined by the State) a significant number of recipients of supplemental security income benefits is residing or is likely to reside. Such standards shall be appropriate to the needs of such recipients and the character of the facilities involved, and shall govern such matters as admission policies, safety, sanitation, and protection of civil rights.
(2)
Each State shall annually make available for public review a summary of the standards established pursuant to paragraph (1), and shall make available to any interested individual a copy of such standards, along with the procedures available in the State to insure the enforcement of such standards and a list of any waivers of such standards and any violations of such standards which have come to the attention of the authority responsible for their enforcement.
(3)
Each State shall certify annually to the Commissioner of Social Security that it is in compliance with the requirements of this subsection.
(4)
Payments made under this title with respect to an individual shall be reduced by an amount equal to the amount of any supplementary payment (as described in subsection (a)) or other payment made by a State (or political subdivision thereof) which is made for or on account of any medical or any other type of remedial care provided by an institution of the type described in paragraph (1) to such individual as a resident or an inpatient of such institution if such institution is not approved as meeting the standards described in such paragraph by the appropriate State or local authorities.

COST-OF-LIVING ADJUSTMENTS IN BENEFITS
Sec. 1617.
[42 U.S.C. 1382f]
(a)
Whenever benefit amounts under title II are increased by any percentage effective with any month as a result of a determination made under section 215(i)—
(1)
each of the dollar amounts in effect for such month under subsections (a)(1)(A), (a)(2)(A), (b)(1), and (b)(2) of section 1611, and subsection (a)(1)(A) of section 211 of Public Law 93–66, as specified in such subsections or as previously increased under this section, shall be increased by the amount (if any) by which—
(A)
the amount which would have been in effect for such month under such subsection but for the rounding of such amount pursuant to paragraph (2), exceeds
(B)
the amount in effect for such month under such subsection; and
(2)
the amount obtained under paragraph (1) with respect to each subsection shall be further increased by the same percentage by which benefit amounts under title II are increased for such month, or, if greater (in any case where the increase under title II was determined on the basis of the wage increase percentage rather than the CPI increase percentage), the percentage by which benefit amounts under title II would be increased for such month if the increase had been determined on the basis of the CPI increase percentage, (and rounded, when not a multiple of $12, to the next lower multiple of $12), effective with respect to benefits for months after such month.
(b)
The new dollar amounts to be in effect under section 1611 of this title and under section 211 of Public Law 93–66 by reason of subsection (a) of this section shall be published in the Federal Register together with, and at the same time as, the material required by section 215(i)(2)(D) to be published therein by reason of the determination involved.
(c)
Effective July 1, 1983—
(1)
each of the dollar amounts in effect under subsections (a)(1)(A) and (b)(1) of section 1611, as previously increased under this section, shall be increased by $240 (and the dollar amount in effect under subsection (a)(1)(A) of section 211 of Public Law 93–66, as previously so increased, shall be increased by $120); and
(2)
each of the dollar amounts in effect under subsections (a)(2)(A) and (b)(2) of section 1611, as previously increased under this section, shall be increased by $360.

OPERATION OF STATE SUPPLEMENTATION PROGRAMS
Sec. 1618.
[42 U.S.C. 1382g]
(a)
In order for any State which makes supplementary payments of the type described in section 1616(a) (including payments pursuant to an agreement entered into under section 212(a) of Public Law 93–66), on or after June 30, 1977, to be eligible for payments pursuant to title XIX with respect to expenditures for any calendar quarter which begins—
(1)
after June 30, 1977, or, if later,
(2)
after the calendar quarter in which it first makes such supplementary payments,
such State must have in effect an agreement with the Commissioner of Social Security whereby the State will—
(3)
continue to make such supplementary payments, and
(4)
maintain such supplementary payments at levels which are not lower than the levels of such payments in effect in December 1976, or, if no such payments were made in that month, the levels for the first subsequent month in which such payments were made.
(b)
(1)
The Commissioner of Social Security shall not find that a State has failed to meet the requirements imposed by paragraph (4) of subsection (a) with respect to the levels of its supplementary payments for a particular month or months if the State's expenditures for such payments in the twelve-month period (within which such month or months fall) beginning on the effective date of any increase in the level of supplemental security income benefits pursuant to section 1617 are not less than its expenditures for such payments in the preceding twelve-month period.
(2)
For purposes of determining under paragraph (1) whether a State's expenditures for supplementary payments in the 12-month period beginning on the effective date of any increase in the level of supplemental security income benefits are not less than the State's expenditures for such payments in the preceding 12-month period, the Commissioner of Social Security, in computing the State's expenditures, shall disregard, pursuant to a 1-time election of the State, all expenditures by the State for retroactive supplementary payments that are required to be made in connection with the retroactive supplemental security income benefits referred to in section 5041 of the Omnibus Budget Reconciliation Act of 1990.
(c)
Any State which satisfies the requirements of this section solely by reason of subsection (b) for a particular month or months in any 12-month period (described in such subsection) ending on or after June 30, 1982, may elect, with respect to any month in any subsequent 12-month period (so described), to apply subsection (a)(4) as though the reference to December 1976 in such subsection were a reference to the month of December which occurred in the 12-month period immediately preceding such subsequent period.
(d)
The Commissioner of Social Security shall not find that a State has failed to meet the requirements imposed by paragraph (4) of subsection (a) with respect to the levels of its supplementary payments for any portion of the period July 1, 1980, through June 30, 1981, if the State's expenditures for such payments in that twelve-month period were not less than its expenditures for such payments for the period July 1, 1976, through June 30, 1977 (or, if the State made no supplementary payments in the period July 1, 1976, through June 30, 1977, the expenditures for the first twelve-month period extending from July 1 through June 30 in which the State made such payments).
(e)
(1)
For any particular month after March 1983, a State which is not treated as meeting the requirements imposed by paragraph (4) of subsection (a) by reason of subsection (b) shall be treated as meeting such requirements if and only if—
(A)
the combined level of its supplementary payments (to recipients of the type involved) and the amounts payable (to or on behalf of such recipients) under section 1611(b) of this Act and section 211(a)(1)(A) of Public Law 93–66, for that particular month,
is not less than—
(B)
the combined level of its supplementary payments (to recipients of the type involved) and the amounts payable (to or on behalf of such recipients) under section 1611(b) of this Act and section 211(a)(1)(A) of Public Law 93–66, for March 1983, increased by the amount of all cost-of-living adjustments under section 1617 (and any other benefit increases under this title) which have occurred after March 1983 and before that particular month.
(2)
In determining the amount of any increase in the combined level involved under paragraph (1)(B) of this subsection, any portion of such amount which would otherwise be attributable to the increase under section 1617(c) shall be deemed instead to be equal to the amount of the cost-of-living adjustment which would have occurred in July 1983 (without regard to the 3-percent limitation contained in section 215(i)(1)(B)) if section 111 of the Social Security Amendments of 1983 had not been enacted.
(f)
The Commissioner of Social Security shall not find that a State has failed to meet the requirements imposed by subsection (a) with respect to the levels of its supplementary payments for the period January 1, 1984, through December 31, 1985, if in the period January 1, 1986, through December 31, 1986, its supplementary payment levels (other than to recipients of benefits determined under section 1611(e)(1)(B)) are not less than those in effect in December 1976, increased by a percentage equal to the percentage by which payments under section 1611(b) of this Act and section 211(a)(1)(A) of Public Law 93–66 have been increased as a result of all adjustments under section 1617(a) and (c) which have occurred after December 1976 and before February 1986.
(g)
In order for any State which makes supplementary payments of the type described in section 1616(a) (including payments pursuant to an agreement entered into under section 212(a) of Public Law 93–66) to recipients of benefits determined under section 1611(e)(1)(B), on or after October 1, 1987, to be eligible for payments pursuant to title XIX with respect to any calendar quarter which begins—
(1)
after October 1, 1987, or, if later
(2)
after the calendar quarter in which it first makes such supplementary payments to recipients of benefits so determined,
such State must have in effect an agreement with the Commissioner of Social Security whereby the State will—
(3)
continue to make such supplementary payments to recipients of benefits so determined, and
(4)
maintain such supplementary payments to recipients of benefits so determined at levels which assure (with respect to any particular month beginning with the month in which this subsection is first effective) that—
(A)
the combined level of such supplementary payments and the amounts payable to or on behalf of such recipients under section 1611(e)(1)(B) for that particular month,
is not less than—
(B)
the combined level of such supplementary payments and the amounts payable to or on behalf of such recipients under section 1611(e)(1)(B) for October 1987 (or, if no such supplementary payments were made for that month, the combined level for the first subsequent month for which such payments were made), increased—
(i)
in a case to which clause (i) of such section 1611(e)(1)(B) applies or (with respect to the individual or spouse who is in the hospital, home, or facility involved) to which clause (ii) of such section applies, by $5, and
(ii)
in a case to which clause (iii) of such section 1611(e)(1)(B) applies, by $10.

BENEFITS FOR INDIVIDUALS WHO PERFORM SUBSTANTIAL GAINFUL ACTIVITY DESPITE SEVERE MEDICAL IMPAIRMENT
Sec. 1619.
[42 U.S.C. 1382h]
(a)
(1)
Except as provided in section 1631(j), any individual who was determined to be an eligible individual (or eligible spouse) by reason of being under a disability and was eligible to receive benefits under section 1611 (or a federally administered State supplementary payment) for a month and whose earnings in a subsequent month exceed the amount designated by the Commissioner of Social Security ordinarily to represent substantial gainful activity shall qualify for a monthly benefit under this subsection for such subsequent month (which shall be in lieu of any benefit under section 1611) equal to an amount determined under section 1611(b)(1) (or, in the case of an individual who has an eligible spouse, under section 1611(b)(2)), and for purposes of title XIX shall be considered to be receiving supplemental security income benefits under this title, for so long as—
(A)
such individual continues to have the disabling physical or mental impairment on the basis of which such individual was found to be under a disability; and
(B)
the income of such individual, other than income excluded pursuant to section 1612(b), is not equal to or in excess of the amount which would cause him to be ineligible for payments under section 1611 and such individual meets all other non-disability-related requirements for eligibility for benefits under this title.
(2)
The Commissioner of Social Security shall make a determination under paragraph (1)(A) with respect to an individual not later than 12 months after the first month for which the individual qualifies for a benefit under this subsection.
(b)
(1)
Except as provided in section 1631(j), for purposes of title XIX, any individual who was determined to be a blind or disabled individual eligible to receive a benefit under section 1611 or any federally administered State supplementary payment for a month and who in a subsequent month is ineligible for benefits under this title (and for any federally administered State supplementary payments) because of his or her income shall, nevertheless, be considered to be receiving supplemental security income benefits for such subsequent month provided that the Commissioner of Social Security determines under regulations that—
(A)
such individual continues to be blind or continues to have the disabling physical or mental impairment on the basis of which he was found to be under a disability and, except for his earnings, meets all non-disability-related requirements for eligibility for benefits under this title;
(B)
the income of such individual would not, except for his earnings and increases pursuant to section 215(i) in the level of monthly insurance benefits to which the individual is entitled under title II that occur while such individual is considered to be receiving supplemental security income benefits by reason of this subsection, be equal to or in excess of the amount which would cause him to be ineligible for payments under section 1611(b) (if he were otherwise eligible for such payments);
(C)
the termination of eligibility for benefits under title XIX would seriously inhibit his ability to continue his employment; and
(D)
such individual's earnings are not sufficient to allow him to provide for himself a reasonable equivalent of the benefits under this title (including any federally administered State supplementary payments), benefits under title XIX, and publicly funded attendant care services (including personal care assistance), which would be available to him in the absence of such earnings.
(2)
(A)
Determinations made under paragraph (1)(D) shall be based on information and data updated no less frequently than annually.
(B)
In determining an individual's earnings for purposes of paragraph (1)(D), there shall be excluded from such earnings an amount equal to the sum of any amounts which are or would be excluded under clauses (ii) and (iv) of section 1612(b)(4)(B) (or under clauses (ii) and (iii) of section 1612(b)(4)(A)) in determining his or her income.
(3)
In the case of a State that exercises the option under section 1902(f), any individual who—
(A)
(i)
qualifies for a benefit under subsection (a), or
(ii)
meets the requirements of paragraph (1); and
(B)
was eligible for medical assistance under the State plan approved under title XIX in the month immediately preceding the first month in which the individual qualified for a benefit under such subsection or met such requirements,
shall remain eligible for medical assistance under such plan for so long as the individual qualifies for a benefit under such subsection or meets such requirements.
(c)
Subsection (a)(2) and section 1631(j)(2)(A) shall not be construed, singly or jointly, to require more than 1 determination during any 12-month period with respect to the continuing disability or blindness of an individual.
(d)
The Commissioner of Social Security and the Secretary of Education shall jointly develop and disseminate information, and establish training programs for staff personnel, with respect to the potential availability of benefits and services for disabled individuals under the provisions of this section. The Commissioner of Social Security shall provide such information to individuals who are applicants for and recipients of benefits based on disability under this title and shall conduct such programs for the staffs of the district offices of the Social Security Administration. The Secretary of Education shall conduct such programs for the staffs of the State Vocational Rehabilitation agencies, and in cooperation with such agencies shall also provide such information to other appropriate individuals and to public and private organizations and agencies which are concerned with rehabilitation and social services or which represent the disabled.

MEDICAL AND SOCIAL SERVICES FOR CERTAIN HANDICAPPED PERSONS
Sec. 1620.
[42 U.S.C. 1382i]
(a)
There are authorized to be appropriated such sums as may be necessary to establish and carry out a 3-year Federal-State pilot program to provide medical and social services for certain handicapped individuals in accordance with this section.
(b)
(1)
The total sum of $18,000,000 shall be allotted to the States for such program by the Commissioner of Social Security, during the period beginning September 1, 1981, and ending September 30, 1984, as follows:
(A)
The total sum of $6,000,000 shall be allotted to the States for the fiscal year ending September 30, 1982 (which for purposes of this section shall include the month of September 1981).
(B)
The total sum of $6,000,000, plus any amount remaining available (after the application of paragraph (4)) from the allotment made under subparagraph (A), shall be allotted to the States for the fiscal year ending September 30, 1983.
(C)
The total sum of $6,000,000, plus any amount remaining available (after the application of paragraph (4)) from the allotments made under subparagraphs (A) and (B), shall be allotted to the States for the fiscal year ending September 30, 1984.
(2)
The allotment to each State from the total sum allotted under paragraph (1) for any fiscal year shall bear the same ratio to such total sum as the number of individuals in such State who are over age 17 and under age 65 and are receiving supplemental security income benefits as disabled individuals in such year (as determined by the Commissioner of Social Security on the basis of the most recent data available) bears to the total number of such individuals in all the States. For purposes of the preceding sentence, the term “supplemental security income benefits” includes payments made pursuant to an agreement under section 1616(a) of this Act or under section 212(b) of Public Law 93–66.
(3)
At the beginning of each fiscal year in which the pilot program under this section is in effect, each State that does not intend to use the allotment to which it is entitled for such year (or any allotment which was made to it for a prior fiscal year), or that does not intend to use the full amount of any such allotment, shall certify to the Commissioner of Social Security the amount of such allotment which it does not intend to use, and the State's allotment for the fiscal year (or years) involved shall thereupon be reduced by the amount so certified.
(4)
The portion of the total amount available for allotment for any particular fiscal year under paragraph (1) which is not allotted to States for that year by reason of paragraph (3) (plus the amount of any reductions made at the beginning of such year in the allotments of States for prior fiscal years under paragraph (3)) shall be reallocated in such manner as the Commissioner of Social Security may determine to be appropriate to States which need, and will use, additional assistance in providing services to severely handicapped individuals in that particular year under their approved plans. Any amount reallocated to a State under this paragraph for use in a particular fiscal year shall be treated for purposes of this section as increasing such State's allotment for that year by an equivalent amount.
(c)
In order to participate in the pilot program and be eligible to receive payments for any period under subsection (d), a State (during such period) must have a plan, approved by the Commissioner of Social Security as meeting the requirements of this section, which provides medical and social services for severely handicapped individuals whose earnings are above the level which ordinarily demonstrates an ability to engage in substantial gainful activity and who are not receiving benefits under section 1611 or 1619 or assistance under a State plan approved under section 1902, and which—
(1)
declares the intent of the State to participate in the pilot program;
(2)
designates an appropriate State agency to administer or supervise the administration of the program in the State;
(3)
describes the criteria to be applied by the State in determining the eligibility of any individual for assistance under the plan and in any event requires a determination by the State agency to the effect that (A) such individual's ability to continue his employment would be significantly inhibited without such assistance and (B) such individual's earnings are not sufficient to allow him to provide for himself a reasonable equivalent of the cash and other benefits that would be available to him under this title and titles XIX and XX in the absence of those earnings;
(4)
describes the process by which the eligibility of individuals for such assistance is to be determined (and such process may not involve the performance of functions by any State agency or entity which is engaged in making determinations of disability for purposes of disability insurance or supplemental security income benefits except when the use of a different agency or entity to perform those functions would not be feasible);
(5)
describes the medical and social services to be provided under the plan;
(6)
describes the manner in which the medical and social services involved are to be provided and, if they are not to be provided through the State's medical assistance and social services programs under titles XIX and XX (with the Federal payments being made under subsection (d) of this section rather than under those titles), specifies the particular mechanisms and procedures to be used in providing such services; and
(7)
contains such other provisions as the Commissioner of Social Security may find to be necessary or appropriate to meet the requirements of this section or otherwise carry out its purpose.
(d)
(1)
From its allotment under subsection (b) for any fiscal year (and any amounts remaining available from allotments made to it for prior fiscal years), the Commissioner of Social Security shall from time to time pay to each State which has a plan approved under subsection (c) an amount equal to 75 per centum of the total sum expended under such plan (including the cost of administration of such plan) in providing medical and social services to severely handicapped individuals who are eligible for such services under the plan.
(2)
The method of computing and making payments under this section shall be as follows:
(A)
The Commissioner of Social Security shall, prior to each period for which a payment is to be made to a State, estimate the amount to be paid to the State for such period under the provisions of this section.
(B)
From the allotment available therefor, the Commissioner of Social Security shall pay the amount so estimated, reduced or increased, as the case may be, by any sum (not previously adjusted under this subsection) by which he finds that his estimate of the amount to be paid the State for any prior period under this section was greater or less than the amount which should have been paid to the State for such period under this section.
(e)
Within nine months after the date of the enactment of this section, the Commissioner of Social Security shall prescribe and publish such regulations as may be necessary or appropriate to carry out the pilot program and otherwise implement this section.
(f)
Each State participating in the pilot program under this section shall from time to time report to the Commissioner of Social Security on the operation and results of such program in that State, with particular emphasis upon the work incentive effects of the program. On or before October 1, 1983, the Commissioner of Social Security shall submit to the Congress a report on the program, incorporating the information contained in the State reports along with his findings and recommendations.

ATTRIBUTION OF SPONSOR'S INCOME AND RESOURCES TO ALIENS
Sec. 1621.
[42 U.S.C. 1382j]
(a)
For purposes of determining eligibility for and the amount of benefits under this title for an individual who is an alien, 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 income and resources of such individual (in accordance with subsections (b) and (c)) for a period of 5 years after the individual's entry into the United States. Any such income deemed to be income of such individual shall be treated as unearned income of such individual.
(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 year shall be determined as follows:
(A)
The total yearly rate of earned and unearned income (as determined under section 1612(a)) of such sponsor and such sponsor's spouse (if such spouse is living with the sponsor) shall be determined for such year.
(B)
The amount determined under subparagraph (A) shall be reduced by an amount equal to (i) the maximum amount of the Federal benefit under this title for such year which would be payable to an eligible individual who has no other income and who does not have an eligible spouse (as determined under section 1611(b)(1)), plus (ii) one-half of the amount determined under clause (i) multiplied by the number of individuals who are dependents of such sponsor (or such sponsor's spouse if such spouse is living with the sponsor), other than such alien and such alien's spouse.
(C)
The amount of income which shall be deemed to be unearned income of such alien shall be at a yearly rate equal to the amount determined under subparagraph (B). The period for determination of such amount shall be the same as the period for determination of benefits under section 1611(c).
(2)
The amount of resources of a sponsor (and his spouse) which shall be deemed to be the resources of an alien for any year shall be determined as follows:
(A)
The total amount of the resources (as determined under section 1613) of such sponsor and such sponsor's spouse (if such spouse is living with the sponsor) shall be determined.
(B)
The amount determined under subparagraph (A) shall be reduced by an amount equal to (i) the applicable amount determined under section 1611(a)(3)(B) in the case of a sponsor who has no spouse with whom he is living, or (ii) the applicable amount determined under section 1611(a)(3)(A) in the case of a sponsor who has a spouse with whom he is living.
(C)
The resources of such sponsor (and spouse) as determined under subparagraphs (A) and (B) shall be deemed to be resources of such alien in addition to any resources of such alien.
(c)
In determining the amount of income of an alien during the period of 5 years after such alien's entry into the United States, the reduction in dollar amounts otherwise required under section 1612(a)(2)(A)(i) shall not be applicable if such alien is living in the household of a person who is a sponsor (or such sponsor's spouse) of such alien, and is receiving support and maintenance in kind from such sponsor (or spouse), nor shall support or maintenance furnished in cash or kind to an alien by such alien's sponsor (to the extent that it reflects income or resources which were taken into account in determining the amount of income and resources to be deemed to the alien under subsection (a) or (b)) be considered to be income of such alien under section 1612(a)(2)(A).
(d)
(1)
Any individual who is an alien shall, during the period of 5 years after entry into the United States, in order to be an eligible individual or eligible spouse for purposes of this title, be required to provide to the Commissioner of Social Security such information and documentation with respect to his sponsor as may be necessary in order for the Commissioner of Social Security 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 Commissioner of Social Security such information and documentation as the Commissioner of Social Security may request and which such alien or his sponsor provided in support of such alien's immigration application.
(2)
The Commissioner of Social Security shall enter into agreements with the Secretary of State and the Attorney General whereby any information available to such persons and required in order to make any determination under this section will be provided by such persons to the Commissioner of Social Security, and whereby such persons shall 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.
(e)
Any sponsor of an alien, and such alien, shall be jointly and severally liable for an amount equal to any overpayment made to such alien during the period of 5 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 for such failure existed. Any such overpayment which is not repaid to the Commissioner of Social Security or recovered in accordance with section 1631(b) shall be withheld from any subsequent payment to which such alien or such sponsor is entitled under any provision of this Act.
(f)
(1)
The provisions of this section shall not apply with respect to any individual who is an “aged, blind, or disabled individual” for purposes of this title by reason of blindness (as determined under section 1614(a)(2)) or disability (as determined under section 1614(a)(3)), from and after the onset of the impairment, if such blindness or disability commenced after the date of such individual's admission into the United States for permanent residence.
(2)
The provisions of this section shall not apply with respect to any alien who is—
(A)
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;
(B)
admitted to the United States as a result of the application, after March 31, 1980, of the provisions of section 207(c)(1) of such Act;
(C)
paroled into the United States as a refugee under section 212(d)(5) of such Act; or
(D)
granted political asylum by the Attorney General.
Part B—

Procedural and General Provisions

PAYMENTS AND PROCEDURES
Sec. 1631.
[42 U.S.C. 1383]
(a)

Payment of Benefits
(1)
Benefits under this title shall be paid at such time or times and (subject to paragraph (10)) in such installments as will best effectuate the purposes of this title, as determined under regulations (and may in any case be paid less frequently than monthly where the amount of the monthly benefit would not exceed $10).
(2)
(A)
(i)
Payments of the benefit of any individual may be made to any such individual or to the eligible spouse (if any) of such individual or partly to each.
(ii)
(I)
Upon a determination by the Commissioner of Social Security that the interest of such individual would be served thereby, such payments shall be made, regardless of the legal competency or incompetency of the individual or eligible spouse, to another individual, or an organization, with respect to whom the requirements of subparagraph (B) have been met (in this paragraph referred to as such individual's “representative payee”) for the use and benefit of the individual or eligible spouse.
(II)
In the case of an individual eligible for benefits under this title by reason of disability, the payment of such benefits shall be made to a representative payee if the Commissioner of Social Security determines that such payment would serve the interest of the individual because the individual also has an alcoholism or drug addiction condition (as determined by the Commissioner) and the individual is incapable of managing such benefits.
(iii)
If the Commissioner of Social Security or a court of competent jurisdiction determines that the representative payee of an individual or eligible spouse has misused any benefits which have been paid to the representative payee pursuant to clause (ii) or section 205(j)(1) or 807, the Commissioner of Social Security shall promptly terminate payment of benefits to the representative payee pursuant to this subparagraph, and provide for payment of benefits to an alternative representative payee of the individual or eligible spouse or, if the interest of the individual under this title would be served thereby, to the individual or eligible spouse.
(iv)
For purposes of this paragraph, misuse of benefits by a representative payee occurs in any case in which the representative payee receives payment under this title for the use and benefit of another person and converts such payment, or any part thereof, to a use other than for the use and benefit of such other person. The Commissioner of Social Security may prescribe by regulation the meaning of the term “use and benefit” for purposes of this clause.
(B)
(i)
Any determination made under subparagraph (A) for payment of benefits to the representative payee of an individual or eligible spouse shall be made on the basis of—
(I)
an investigation by the Commissioner of Social Security of the person to serve as representative payee, which shall be conducted in advance of such payment, and shall, to the extent practicable, include a face-to-face interview with such person; and
(II)
adequate evidence that such payment is in the interest of the individual or eligible spouse (as determined by the Commissioner of Social Security in regulations).
(ii)
As part of the investigation referred to in clause (i)(I), the Commissioner of Social Security shall—
(I)
require the person being investigated to submit documented proof of the identity of such person, unless information establishing such identity was submitted with an application for benefits under title II, title VIII, or this title;
(II)
verify the social security account number (or employer identification number) of such person;
(III)
determine whether such person has been convicted of a violation of section 208, 811, or 1632;
(IV)
obtain information concerning whether the person has been convicted of any other offense under Federal or State law which resulted in imprisonment for more than 1 year;
(V)
obtain information concerning whether such person is a person described in section 1611(e)(4)(A);
(VI)
determine whether payment of benefits to such person has been terminated pursuant to subparagraph (A)(iii), whether the designation of such person as a representative payee has been revoked pursuant to section 807(a), and whether certification of payment of benefits to such person has been revoked pursuant to section 205(j), by reason of misuse of funds paid as benefits under title II, title VIII, or this title, and
(VII)
determine whether such person has been convicted (and not subsequently exonerated), under Federal or State law, of a felony provided under clause (xv), or of an attempt or a conspiracy to commit such a felony.
(iii)
Benefits of an individual may not be paid to any other person pursuant to subparagraph (A)(ii) if—
(I)
such person has previously been convicted as described in clause (ii)(III);
(II)
except as provided in clause (iv), payment of benefits to such person pursuant to subparagraph (A)(ii) has previously been terminated as described in clause (ii)(VI), the designation of such person as a representative payee has been revoked pursuant to section 807(a), or certification of payment of benefits to such person under section 205(j) has previously been revoked as described in section 205(j)(2)(B)(i)(VI);
(III)
except as provided in clause (v), such person is a creditor of such individual who provides such individual with goods or services for consideration;
(IV)
the person has previously been convicted as described in clause (ii)(IV) of this subparagraph, unless the Commissioner determines that the payment would be appropriate notwithstanding the conviction;
(V)
such person is a person described in section 1611(e)(4)(A),
(VI)
except as provided in clause (xvii), such person has previously been convicted (and not subsequently exonerated) as described in clause (ii)(VII), or
(VII)
such person’s benefits under this title, title II, or title VIII are certified for payment to a representative payee during the period for which the individual’s benefits would be certified for payment to another person.
(iv)
The Commissioner of Social Security shall prescribe regulations under which the Commissioner of Social Security may grant an exemption from clause (iii)(II) to any person on a case-by-case basis if such exemption would be in the best interest of the individual or eligible spouse whose benefits under this title would be paid to such person pursuant to subparagraph (A)(ii).
(v)
Clause (iii)(III) shall not apply with respect to any person who is a creditor referred to therein if such creditor is—
(I)
a relative of such individual if such relative resides in the same household as such individual;
(II)
a legal guardian or legal representative of such individual;
(III)
a facility that is licensed or certified as a care facility under the law of a State or a political subdivision of a State;
(IV)
a person who is an administrator, owner, or employee of a facility referred to in subclause (III) if such individual resides in such facility, and the payment of benefits under this title to such facility or such person is made only after good faith efforts have been made by the local servicing office of the Social Security Administration to locate an alternative representative payee to whom the payment of such benefits would serve the best interests of such individual; or
(V)
an individual who is determined by the Commissioner of Social Security, on the basis of written findings and under procedures which the Commissioner of Social Security shall prescribe by regulation, to be acceptable to serve as a representative payee.
(vi)
The procedures referred to in clause (v)(V) shall require the individual who will serve as representative payee to establish, to the satisfaction of the Commissioner of Social Security, that—
(I)
such individual poses no risk to the beneficiary;
(II)
the financial relationship of such individual to the beneficiary poses no substantial conflict of interest; and
(III)
no other more suitable representative payee can be found.
(vii)
In the case of an individual described in subparagraph (A)(ii)(II), when selecting such individual's representative payee, preference shall be given to—
(I)
a certified community-based nonprofit social service agency (as defined in subparagraph (I));
(II)
a Federal, State, or local government agency whose mission is to carry out income maintenance, social service, or health care-related activities;
(III)
a State or local government agency with fiduciary responsibilities; or
(IV)
a designee of an agency (other than of a Federal agency) referred to in the preceding subclauses of this clause, if the Commissioner of Social Security deems it appropriate,
unless the Commissioner of Social Security determines that selection of a family member would be appropriate.
(viii)
Subject to clause (ix), if the Commissioner of Social Security makes a determination described in subparagraph (A)(ii) with respect to any individual's benefit and determines that direct payment of the benefit to the individual would cause substantial harm to the individual, the Commissioner of Social Security may defer (in the case of initial entitlement) or suspend (in the case of existing entitlement) direct payment of such benefit to the individual, until such time as the selection of a representative payee is made pursuant to this subparagraph.
(ix)
(I)
Except as provided in subclause (II), any deferral or suspension of direct payment of a benefit pursuant to clause (viii) shall be for a period of not more than 1 month.
(II)
Subclause (I) shall not apply in any case in which the individual or eligible spouse is, as of the date of the Commissioner's determination, legally incompetent, under the age of 15 years, or described in subparagraph (A)(ii)(II).
(x)
Payment pursuant to this subparagraph of any benefits which are deferred or suspended pending the selection of a representative payee shall be made to the individual, or to the representative payee upon such selection, as a single sum or over such period of time as the Commissioner of Social Security determines is in the best interests of the individual entitled to such benefits.
(xi)
Any individual who is dissatisfied with a determination by the Commissioner of Social Security to pay such individual's benefits to a representative payee under this title, or with the designation of a particular person to serve as representative payee, shall be entitled to a hearing by the Commissioner of Social Security, and to judicial review of the Commissioner's final decision, to the same extent as is provided in subsection (c).
(xii)
In advance of the first payment of an individual's benefit to a representative payee under subparagraph (A)(ii), the Commissioner of Social Security shall provide written notice of the Commissioner's initial determination to make any such payment. Such notice shall be provided to such individual, except that, if such individual—
(I)
is under the age of 15,
(II)
is an unemancipated minor under the age of 18, or
(III)
is legally incompetent,
then such notice shall be provided solely to the legal guardian or legal representative of such individual.
(xiii)
Any notice described in clause (xii) shall be clearly written in language that is easily understandable to the reader, shall identify the person to be designated as such individual's representative payee, and shall explain to the reader the right under clause (xi) of such individual or of such individual's legal guardian or legal representative—
(I)
to appeal a determination that a representative payee is necessary for such individual,
(II)
to appeal the designation of a particular person to serve as the representative payee of such individual, and
(III)
to review the evidence upon which such designation is based and submit additional evidence.
(xiv)
Notwithstanding the provisions of section 552a of title 5, United States Code, or any other provision of Federal or State law (other than section 6103 of the Internal Revenue Code of 1986 and section 1106(c) of this Act), the Commissioner shall furnish any Federal, State, or local law enforcement officer, upon the written request of the officer, with the current address, social security account number, and photograph (if applicable) of any person investigated under this subparagraph, if the officer furnishes the Commissioner with the name of such person and such other identifying information as may reasonably be required by the Commissioner to establish the unique identity of such person, and notifies the Commissioner that—
(I)
such person is described in section 1611(e)(4)(A),
(II)
such person has information that is necessary for the officer to conduct the officer's official duties, and
(III)
the location or apprehension of such person is within the officer's official duties.
(xv)
The felony crimes provided under this clause, whether an offense under State or Federal law, are the following:
(I)
Human trafficking, including as prohibited under sections 1590 and 1591 of title 18, United States Code.
(II)
False imprisonment, including as prohibited under section 1201 of title 18, United States Code.
(III)
Kidnapping, including as prohibited under section 1201 of title 18, United States Code.
(IV)
Rape and sexual assault, including as prohibited under sections 2241, 2242, 2243, and 2244 of title 18, United States Code.
(V)
First-degree homicide, including as prohibited under section 1111 of title 18, United States Code.
(VI)
Robbery, including as prohibited under section 2111 of title 18, United States Code.
(VII)
Fraud to obtain access to government assistance, including as prohibited under sections 287, 1001, and 1343 of title 18, United States Code.
(VIII)
Fraud by scheme, including as prohibited under section 1343 of title 18, United States Code.
(IX)
Theft of government funds or property, including as prohibited under section 641 of title 18, United States Code.
(X)
Abuse or neglect, including as prohibited under sections 111, 113, 114, 115, 116, or 117 of title 18, United States Code.
(XI)
Forgery, including as prohibited under section 642 and chapter 25 (except section 512) of title 18, United States Code.
(XII)
Identity theft or identity fraud, including as prohibited under sections 1028 and 1028A of title 18, United States Code.
The Commissioner of Social Security may promulgate regulations to provide for additional felony crimes under this clause.
(xvi)
(I)
For the purpose of carrying out the activities required under clause (ii) as part of the investigation under clause (i)(I), the Commissioner may conduct a background check of any individual seeking to serve as a representative payee under this subsection and may disqualify from service as a representative payee any such individual who fails to grant permission for the Commissioner to conduct such a background check.
(II)
The Commissioner may revoke certification of payment of benefits under this subsection to any individual serving as a representative payee on or after January 1, 2019 who fails to grant permission for the Commissioner to conduct such a background check.
(xvii)
(I)
With respect to any person described in subclause (II)—
- (aa)
clause (ii)(VII) shall not apply; and
- (bb)
the Commissioner may grant an exemption from the provisions of clause (iii)(VI) if the Commissioner determines that such exemption is in the best interest of the individual entitled to benefits.
(II)
A person is described in this subclause if the person—
- (aa)
is the custodial parent of a minor child for whom the person applies to serve;
- (bb)
is the custodial spouse of the beneficiary for whom the person applies to serve;
- (cc)
is the custodial parent of a beneficiary who is under a disability which began before the beneficiary attained the age of 22, for whom the person applies to serve;
- (dd)
is the custodial court appointed guardian of the beneficiary for whom the person applies to serve;
- (ee)
is the custodial grandparent of a minor grandchild for whom the person applies to serve;
- (ff)
is the parent who was previously representative payee for his or her minor child who has since turned 18 and continues to be eligible for such benefit; or
- (gg)
received a presidential or gubernatorial pardon for the relevant conviction.
(C)
(i)
In any case where payment is made under this title to a representative payee of an individual or spouse, the Commissioner of Social Security shall establish a system of accountability monitoring whereby such person shall report not less often than annually with respect to the use of such payments. The Commissioner of Social Security shall establish and implement statistically valid procedures for reviewing such reports in order to identify instances in which such persons are not properly using such payments.
(ii)
Clause (i) shall not apply in any case where the representative payee is a State institution. In such cases, the Commissioner of Social Security shall establish a system of accountability monitoring for institutions in each State.
(iii)
Clause (i) shall not apply in any case where the individual entitled to such payment is a resident of a Federal institution and the representative payee is the institution.
(iv)13
(I)
Clause (i) shall not apply in any case where the representative payee is—
- (aa)
a parent, or other individual who is a legal guardian of, a minor child entitled to such payment who primarily resides in the same household;
- (bb)
a parent of an individual entitled to such payment who is under a disability who primarily resides in the same household; or
- (cc)
the spouse of the individual entitled to such payment.
(II)
The Commissioner of Social Security shall establish and implement procedures as necessary for the Commissioner to determine the eligibility of such parties for the exemption provided in subclause (I). The Commissioner shall prescribe such regulations as may be necessary to determine eligibility for such exemption.
^{13}
Margin for clause (iv) is so in law.
(v)
Notwithstanding clauses (i), (ii), (iii), and (iv), the Commissioner of Social Security may require a report at any time from any representative payee, if the Commissioner of Social Security has reason to believe that the representative payee is misusing such payments.
(vi)
In any case in which the person described in clause (i) or (v) receiving payments on behalf of another fails to submit a report required by the Commissioner of Social Security under clause (i) or (v), the Commissioner may, after furnishing notice to the person and the individual entitled to the payment, require that such person appear in person at a field office of the Social Security Administration serving the area in which the individual resides in order to receive such payments.
(D)
(i)
Except as provided in the next sentence, a qualified organization may collect from an individual a monthly fee for expenses (including overhead) incurred by such organization in providing services performed as such individual's representative payee pursuant to subparagraph (A)(ii) if the fee does not exceed the lesser of—
(I)
10 percent of the monthly benefit involved, or
(II)
$25.00 per month ($50.00 per month in any case in which an individual is described in subparagraph (A)(ii)(II)).
A qualified organization may not collect a fee from an individual for any month with respect to which the Commissioner of Social Security or a court of competent jurisdiction has determined that the organization misused all or part of the individual's benefit, and any amount so collected by the qualified organization for such month shall be treated as a misused part of the individual's benefit for purposes of subparagraphs (E) and (F). The Commissioner of Social Security shall adjust annually (after 1995) each dollar amount set forth in subclause (II) of this clause under procedures providing for adjustments in the same manner and to the same extent as adjustments are provided for under the procedures used to adjust benefit amounts under section 215(i)(2)(A), except that any amount so adjusted that is not a multiple of $1.00 shall be rounded to the nearest multiple of $1.00. Any agreement providing for a fee in excess of the amount permitted under this clause shall be void and shall be treated as misuse by the organization of such individual's benefits.
(ii)
For purposes of this subparagraph, the term “qualified organization” means any State or local government agency whose mission is to carry out income maintenance, social service, or health care-related activities, any State or local government agency with fiduciary responsibilities, or any certified community-based nonprofit social service agency (as defined in subparagraph (I)), if the agency, in accordance with any applicable regulations of the Commissioner of Social Security—
(I)
regularly provides services as a representative payee pursuant to subparagraph (A)(ii) or section 205(j)(4) or 807 concurrently to 5 or more individuals; and
(II)
demonstrates to the satisfaction of the Commissioner of Social Security that such agency is not otherwise a creditor of any such individual.
The Commissioner of Social Security shall prescribe regulations under which the Commissioner of Social Security may grant an exception from subclause (II) for any individual on a case-by-case basis if such exception is in the best interests of such individual.
(iii)
Any qualified organization which knowingly charges or collects, directly or indirectly, any fee in excess of the maximum fee prescribed under clause (i) or makes any agreement, directly or indirectly, to charge or collect any fee in excess of such maximum fee, shall be fined in accordance with title 18, United States Code, or imprisoned not more than 6 months, or both.
(iv)
In the case of an individual who is no longer eligible for benefits under this title but to whom any amount of past-due benefits under this title has not been paid, for purposes of clause (i), any amount of such past-due benefits payable in any month shall be treated as a monthly benefit referred to in clause (i)(I).
(E)

Restitution.—
In cases where the negligent failure of the Commissioner of Social Security to investigate or monitor a representative payee results in misuse of benefits by the representative payee, the Commissioner of Social Security shall make payment to the beneficiary or the beneficiary's representative payee of an amount equal to such misused benefits. In any case in which a representative payee that—
(i)
is not an individual (regardless of whether it is a “qualified organization” within the meaning of subparagraph (D)(ii)); or
(ii)
is an individual who, for any month during a period when misuse occurs, serves 15 or more individuals who are beneficiaries under this title, title II, title VIII, or any combination of such titles;
misuses all or part of an individual's benefit paid to such representative payee, the Commissioner of Social Security shall pay to the beneficiary or the beneficiary's alternative representative payee an amount equal to the amount of such benefit so misused. The provisions of this subparagraph are subject to the limitations of subparagraph (H)(ii). The Commissioner of Social Security shall make a good faith effort to obtain restitution from the terminated representative payee.
(F)
(i)
(I)
Each representative payee of an eligible individual under the age of 18 who is eligible for the payment of benefits described in subclause (II) shall establish on behalf of such individual an account in a financial institution into which such benefits shall be paid, and shall thereafter maintain such account for use in accordance with clause (ii).
(II)
Benefits described in this subclause are past-due monthly benefits under this title (which, for purposes of this subclause, include State supplementary payments made by the Commissioner pursuant to an agreement under section 1616 or section 212(b) of Public Law 93–66) in an amount (after any withholding by the Commissioner for reimbursement to a State for interim assistance under subsection (g) and payment of attorney fees under subsection (d)(2)(B)) that exceeds the product of—
- (aa)
6, and
- (bb)
the maximum monthly benefit payable under this title to an eligible individual.
(ii)
(I)
A representative payee shall use funds in the account established under clause (i) to pay for allowable expenses described in subclause (II).
(II)
An allowable expense described in this subclause is an expense for—
- (aa)
education or job skills training;
- (bb)
personal needs assistance;
- (cc)
special equipment;
- (dd)
housing modification;
- (ee)
medical treatment;
- (ff)
therapy or rehabilitation; or
- (gg)
any other item or service that the Commissioner determines to be appropriate;
provided that such expense benefits such individual and, in the case of an expense described in item (bb), (cc), (dd), (ff), or (gg), is related to the impairment (or combination of impairments) of such individual.
(III)
The use of funds from an account established under clause (i) in any manner not authorized by this clause—
- (aa)
by a representative payee shall be considered a misapplication of benefits for all purposes of this paragraph, and any representative payee who knowingly misapplies benefits from such an account shall be liable to the Commissioner in an amount equal to the total amount of such benefits; and
- (bb)
by an eligible individual who is his or her own payee shall be considered a misapplication of benefits for all purposes of this paragraph and in any case in which the individual knowingly misapplies benefits from such an account, the Commissioner shall reduce future benefits payable to such individual (or to such individual and his spouse) by an amount equal to the total amount of such benefits so misapplied.
(IV)
This clause shall continue to apply to funds in the account after the child has reached age 18, regardless of whether benefits are paid directly to the beneficiary or through a representative payee.
(iii)
The representative payee may deposit into the account established under clause (i) any other funds representing past due benefits under this title to the eligible individual, provided that the amount of such past due benefits is equal to or exceeds the maximum monthly benefit payable under this title to an eligible individual (including State supplementary payments made by the Commissioner pursuant to an agreement under section 1616 or section 212(b) of Public Law 93–66).
(iv)
The Commissioner of Social Security shall establish a system for accountability monitoring whereby such representative payee shall report, at such time and in such manner as the Commissioner shall require, on activity respecting funds in the account established pursuant to clause (i).
(G)
(i)
In addition to such other reviews of representative payees as the Commissioner of Social Security may otherwise conduct, the Commissioner shall provide for the periodic onsite review of any person or agency that receives the benefits payable under this title (alone or in combination with benefits payable under title II or title VIII) to another individual pursuant to the appointment of the person or agency as a representative payee under this paragraph, section 205(j), or section 807 in any case in which—
(I)
the representative payee is a person who serves in that capacity with respect to 15 or more such individuals;
(II)
the representative payee is a certified community-based nonprofit social service agency (as defined in subparagraph (I) of this paragraph or section 205(j)(10)); or
(III)
the representative payee is an agency (other than an agency described in subclause (II)) that serves in that capacity with respect to 50 or more such individuals.
(ii)
Within 120 days after the end of each fiscal year, the Commissioner shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the results of periodic onsite reviews conducted during the fiscal year pursuant to clause (i) and of any other reviews of representative payees conducted during such fiscal year in connection with benefits under this title. Each such report shall describe in detail all problems identified in the reviews and any corrective action taken or planned to be taken to correct the problems, and shall include—
(I)
the number of the reviews;
(II)
the results of such reviews;
(III)
the number of cases in which the representative payee was changed and why;
(IV)
the number of cases involving the exercise of expedited, targeted oversight of the representative payee by the Commissioner conducted upon receipt of an allegation of misuse of funds, failure to pay a vendor, or a similar irregularity;
(V)
the number of cases discovered in which there was a misuse of funds;
(VI)
how any such cases of misuse of funds were dealt with by the Commissioner;
(VII)
the final disposition of such cases of misuse of funds, including any criminal penalties imposed; and
(VIII)
such other information as the Commissioner deems appropriate.
(H)
(i)
If the Commissioner of Social Security or a court of competent jurisdiction determines that a representative payee that is not a Federal, State, or local government agency has misused all or part of an individual's benefit that was paid to the representative payee under this paragraph, the representative payee shall be liable for the amount misused, and the amount (to the extent not repaid by the representative payee) shall be treated as an overpayment of benefits under this title to the representative payee for all purposes of this Act and related laws pertaining to the recovery of the overpayments. Subject to clause (ii), upon recovering all or any part of the amount, the Commissioner shall make payment of an amount equal to the recovered amount to such individual or such individual's alternative representative payee.
(ii)
The total of the amount paid to such individual or such individual's alternative representative payee under clause (i) and the amount paid under subparagraph (E) may not exceed the total benefit amount misused by the representative payee with respect to such individual.
(I)
For purposes of this paragraph, the term “certified community-based nonprofit social service agency” means a community-based nonprofit social service agency which is in compliance with requirements, under regulations which shall be prescribed by the Commissioner, for annual certification to the Commissioner that it is bonded in accordance with requirements specified by the Commissioner and that it is licensed in each State in which it serves as a representative payee (if licensing is available in the State) in accordance with requirements specified by the Commissioner. Any such annual certification shall include a copy of any independent audit on the agency which may have been performed since the previous certification.
(3)
The Commissioner of Social Security may by regulations establish ranges of incomes within which a single amount of benefits under this title shall apply.
(4)
The Commissioner of Social Security—
(A)
may make to any individual initially applying for benefits under this title who is presumptively eligible for such benefits for the month following the date the application is filed and who is faced with financial emergency a cash advance against such benefits, including any federally-administered State supplementary payments, in an amount not exceeding the monthly amount that would be payable to an eligible individual with no other income for the first month of such presumptive eligibility, which shall be repaid through proportionate reductions in such benefits over a period of not more than 6 months; and
(B)
may pay benefits under this title to an individual applying for such benefits on the basis of disability or blindness for a period not exceeding 6 months prior to the determination of such individual's disability or blindness, if such individual is presumptively disabled or blind and is determined to be otherwise eligible for such benefits, and any benefits so paid prior to such determination shall in no event be considered overpayments for purposes of subsection (b) solely because such individual is determined not to be disabled or blind.
(5)
Payment of the benefit of any individual who is an aged, blind, or disabled individual solely by reason of blindness (as determined under section 1614(a)(2)) or disability (as determined under section 1614(a)(3)), and who ceases to be blind or to be under such disability, shall continue (so long as such individual is otherwise eligible) through the second month following the month in which such blindness or disability ceases.
(6)
Notwithstanding any other provision of this title, payment of the benefit of any individual who is an aged, blind, or disabled individual solely by reason of blindness (as determined under section 1614(a)(2)) or disability (as determined under section 1614(a)(3)) shall not be terminated or suspended because the blindness or other physical or mental impairment, on which the individual's eligibility for such benefit is based, has or may have ceased, if—
(A)
such individual is participating in a program consisting of the Ticket to Work and Self-Sufficiency Program under section 1148 or another program of vocational rehabilitation services, employment services, or other support services approved by the Commissioner of Social Security, and,
(B)
the Commissioner of Social Security determines that the completion of such program, or its continuation for a specified period of time, will increase the likelihood that such individual may (following his participation in such program) be permanently removed from the blindness and disability benefit rolls.
(7)
(A)
In any case where—
(i)
an individual is a recipient of benefits based on disability or blindness under this title,
(ii)
the physical or mental impairment on the basis of which such benefits are payable is found to have ceased, not to have existed, or to no longer be disabling, and as a consequence such individual is determined not to be entitled to such benefits, and
(iii)
a timely request for review or for a hearing is pending with respect to the determination that he is not so entitled,
such individual may elect (in such manner and form and within such time as the Commissioner of Social Security shall by regulations prescribe) to have the payment of such benefits continued for an additional period beginning with the first month beginning after the date of the enactment of this paragraph for which (under such determination) such benefits are no longer otherwise payable, and ending with the earlier of (I) the month preceding the month in which a decision is made after such a hearing, or (II) the month preceding the month in which no such request for review or a hearing is pending.
(B)
(i)
If an individual elects to have the payment of his benefits continued for an additional period under subparagraph (A), and the final decision of the Commissioner of Social Security affirms the determination that he is not entitled to such benefits, any benefits paid under this title pursuant to such election (for months in such additional period) shall be considered overpayments for all purposes of this title, except as otherwise provided in clause (ii).
(ii)
If the Commissioner of Social Security determines that the individual's appeal of his termination of benefits was made in good faith, all of the benefits paid pursuant to such individual's election under subparagraph (A) shall be subject to waiver consideration under the provisions of subsection (b)(1).
(C)
The provisions of subparagraphs (A) and (B) shall apply with respect to determinations (that individuals are not entitled to benefits) which are made on or after the date of the enactment of this paragraph, or prior to such date but only on the basis of a timely request for review or for a hearing.
(8)
(A)
In any case in which an administrative law judge has determined after a hearing as provided in subsection (c) that an individual is entitled to benefits based on disability or blindness under this title and the Commissioner of Social Security has not issued his final decision in such case within 110 days after the date of the administrative law judge's determination, such benefits shall be currently paid for the months during the period beginning with the month in which such 110-day period expires and ending with the month in which such final decision is issued.
(B)
For purposes of subparagraph (A), in determining whether the 110-day period referred to in subparagraph (A) has elapsed, any period of time for which the action or inaction of such individual or such individual's representative without good cause results in the delay in the issuance of the Commissioner's final decision shall not be taken into account to the extent that such period of time exceeds 20 calendar days.
(C)
Any benefits currently paid under this title pursuant to this paragraph (for the months described in subparagraph (A)) shall not be considered overpayments for any purposes of this title, unless payment of such benefits was fraudulently obtained.
(9)
Benefits under this title shall not be denied to any individual solely by reason of the refusal of the individual to accept an amount offered as compensation for a crime of which the individual was a victim.
(10)
(A)
If an individual is eligible for past-due monthly benefits under this title in an amount that (after any withholding for reimbursement to a State for interim assistance under subsection (g) and payment of attorney fees under subsection (d)(2)(B)) equals or exceeds the product of—
(i)
3, and
(ii)
the maximum monthly benefit payable under this title to an eligible individual (or, if appropriate, to an eligible individual and eligible spouse),
then the payment of such past-due benefits (after any such reimbursement to a State and payment of attorney fees under subsection (d)(2)(B)) shall be made in installments as provided in subparagraph (B).
(B)
(i)
The payment of past-due benefits subject to this subparagraph shall be made in not to exceed 3 installments that are made at 6-month intervals.
(ii)
Except as provided in clause (iii), the amount of each of the first and second installments may not exceed an amount equal to the product of clauses (i) and (ii) of subparagraph (A).
(iii)
In the case of an individual who has—
(I)
outstanding debt attributable to—
- (aa)
food,
- (bb)
clothing,
- (cc)
shelter, or
- (dd)
medically necessary services, supplies or equipment, or medicine; or
(II)
current expenses or expenses anticipated in the near term attributable to—
- (aa)
medically necessary services, supplies or equipment, or medicine, or
- (bb)
the purchase of a home, and
such debt or expenses are not subject to reimbursement by a public assistance program, the Secretary under title XVIII, a State plan approved under title XIX, or any private entity legally liable to provide payment pursuant to an insurance policy, pre-paid plan, or other arrangement, the limitation specified in clause (ii) may be exceeded by an amount equal to the total of such debt and expenses.
(C)
This paragraph shall not apply to any individual who, at the time of the Commissioner's determination that such individual is eligible for the payment of past-due monthly benefits under this title—
(i)
is afflicted with a medically determinable impairment that is expected to result in death within 12 months; or
(ii)
is ineligible for benefits under this title and the Commissioner determines that such individual is likely to remain ineligible for the next 12 months.
(D)
For purposes of this paragraph, the term “benefits under this title” includes supplementary payments pursuant to an agreement for Federal administration under section 1616(a), and payments pursuant to an agreement entered into under section 212(b) of Public Law 93–66.
(b)

Overpayments and Underpayments
(1)
(A)
Whenever the Commissioner of Social Security finds that more or less than the correct amount of benefits has been paid with respect to any individual, proper adjustment or recovery shall, subject to the succeeding provisions of this subsection, be made by appropriate adjustments in future payments to such individual or by recovery from such individual or his eligible spouse (or from the estate of either) or by payment to such individual or his eligible spouse, or, if such individual is deceased, by payment—
(i)
to any surviving spouse of such individual, whether or not the individual's eligible spouse, if (within the meaning of the first sentence of section 202(i)) such surviving husband or wife was living in the same household with the individual at the time of his death or within the 6 months immediately preceding the month of such death, or
(ii)
if such individual was a disabled or blind child who was living with his parent or parents at the time of his death or within the 6 months immediately preceding the month of such death, to such parent or parents.
(B)
The Commissioner of Social Security (i) shall make such provision as he finds appropriate in the case of payment of more than the correct amount of benefits with respect to an individual with a view to avoiding penalizing such individual or his eligible spouse who was without fault in connection with the overpayment, if adjustment or recovery on account of such overpayment in such case would defeat the purposes of this title, or be against equity and good conscience, or (because of the small amount involved) impede efficient or effective administration of this title, and (ii) shall in any event make the adjustment or recovery (in the case of payment of more than the correct amount of benefits), in the case of an individual or eligible spouse receiving monthly benefit payments under this title (including supplementary payments of the type described in section 1616(a) and payments pursuant to an agreement entered into under section 212(a) of Public Law 93–66), in amounts which in the aggregate do not exceed (for any month) the lesser of (I) the amount of his or their benefit under this title for that month or (II) an amount equal to 10 percent of his or their income for that month (including such benefit but excluding payments under title II when recovery is made from title II payments pursuant to section 1147 and excluding income excluded pursuant to section 1612(b)), and in the case of an individual or eligible spouse to whom a lump sum is payable under this title (including under section 1616(a) of this Act or under an agreement entered into under section 212(a) of Public Law 93–66) shall, as at least one means of recovering such overpayment, make the adjustment or recovery from the lump sum payment in an amount equal to not less than the lesser of the amount of the overpayment or the lump sum payment, unless fraud, willful misrepresentation, or concealment of material information was involved on the part of the individual or spouse in connection with the overpayment, or unless the individual requests that such adjustment or recovery be made at a higher or lower rate and the Commissioner of Social Security determines that adjustment or recovery at such rate is justified and appropriate. The availability (in the case of an individual who has been paid more than the correct amount of benefits) of procedures for adjustment or recovery at a limited rate under clause (ii) of the preceding sentence shall not, in and of itself, prevent or restrict the provision (in such case) of more substantial relief under clause (i) of such sentence. In making for purposes of this subparagraph a determination of whether an adjustment or recovery would defeat the purpose of this title, the Commissioner of Social Security shall require an individual to provide authorization for the Commissioner to obtain (subject to the cost reimbursement requirements of section 1115(a) of the Right to Financial Privacy Act) from any financial institution (within the meaning of section 1101(1) of such Act) any financial record (within the meaning of section 1101(2) of such Act) held by the institution with respect to such individual whenever the Commissioner determines that the record is needed in connection with a determination with respect to such adjustment or recovery, under the terms and conditions established under subsection (e)(1)(B).
(2)
Notwithstanding any other provision of this section, when any payment of more than the correct amount is made to or on behalf of an individual who has died, and such payment—
(A)
is made by direct deposit to a financial institution;
(B)
is credited by the financial institution to a joint account of the deceased individual and another person; and
(C)
such other person is the surviving spouse of the deceased individual, and was eligible for a payment under this title (including any State supplementation payment paid by the Commissioner of Social Security) as an eligible spouse (or as either member of an eligible couple) for the month in which the deceased individual died,
the amount of such payment in excess of the correct amount shall be treated as a payment of more than the correct amount to such other person. If any payment of more than the correct amount is made to a representative payee on behalf of an individual after the individual's death, the representative payee shall be liable for the repayment of the overpayment, and the Commissioner of Social Security shall establish an overpayment control record under the social security account number of the representative payee.
(3)
(A)
When any payment of more than the correct amount is made on behalf of an individual who is a represented minor beneficiary for a month in which such individual is in foster care under the responsibility of a State and the State is the representative payee of such individual, the State shall be liable for the repayment of the overpayment, and there shall be no adjustment of payments to, or recovery by the United States from, such individual.
(B)
For purposes of this paragraph, the term “represented minor beneficiary”, with respect to an individual for a month, means a child (as defined for purposes of section 475(8)) entitled to benefits under this title for such month whose benefits are certified for payment to a representative payee.
(4)
If any overpayment with respect to an individual (or an individual and his or her spouse) is attributable solely to the ownership or possession by such individual (and spouse if any) of resources having a value which exceeds the applicable dollar figure specified in paragraph (1)(B) or (2)(B) of section 1611(a) by $50 or less, such individual (and spouse if any) shall be deemed for purposes of the second sentence of paragraph (1) to have been without fault in connection with the overpayment, and no adjustment or recovery shall be made under the first sentence of such paragraph, unless the Commissioner of Social Security finds that the failure of such individual (and spouse if any) to report such value correctly and in a timely manner was knowing and willful.
(5)
(A)
With respect to any delinquent amount, the Commissioner of Social Security may use the collection practices described in sections 3711(f), 3716, 3717, and 3718 of title 31, United States Code, and in section 5514 of title 5, United States Code, all as in effect immediately after the enactment of the Debt Collection Improvement Act of 1996.
(B)
For purposes of subparagraph (A), the term “delinquent amount” means an amount—
(i)
in excess of the correct amount of payment under this title;
(ii)
paid to a person after such person has attained 18 years of age; and
(iii)
determined by the Commissioner of Social Security, under regulations, to be otherwise unrecoverable under this section after such person ceases to be a beneficiary under this title.
(6)
For payments for which adjustments are made by reason of a retroactive payment of benefits under title II, see section 1127.
(7)
For provisions relating to the cross-program recovery of overpayments made under programs administered by the Commissioner of Social Security, see section 1147.
(8)
(A)
In the case of payment of less than the correct amount of benefits to or on behalf of any individual, no payment shall be made to such individual pursuant to this subsection during any period for which such individual—
(i)
is not an eligible individual or eligible spouse under section 1611(e)(1) because such individual is an inmate of a public institution that is a jail, prison, or other penal institution or correctional facility the purpose of which is to confine individuals as described in clause (ii) or (iii) of section 202(x)(1)(A), or
(ii)
is not an eligible individual or eligible spouse under section 1611(e)(4),
until such person is no longer considered an ineligible individual or ineligible spouse under section 1611(e)(1) or 1611(e)(4).
(B)
Nothing in subparagraph (A) shall be construed to limit the Commissioner's authority to withhold amounts, make adjustments, or recover amounts due under this title, title II, or title VIII that would be deducted from a payment that would otherwise be payable to such individual but for such subparagraph.
(c)

Hearings and Review
(1)
(A)
The Commissioner of Social Security is directed to make findings of fact, and decisions as to the rights of any individual applying for payment under this title. Any such decision by the Commissioner of Social Security which involves a determination of disability and which is in whole or in part unfavorable to such individual shall contain a statement of the case, in understandable language, setting forth a discussion of the evidence, and stating the Commissioner's determination and the reason or reasons upon which it is based. The Commissioner of Social Security shall provide reasonable notice and opportunity for a hearing to any individual who is or claims to be an eligible individual or eligible spouse and is in disagreement with any determination under this title with respect to eligibility of such individual for benefits, or the amount of such individual's benefits, if such individual requests a hearing on the matter in disagreement within sixty days after notice of such determination is received, and, if a hearing is held, shall, on the basis of evidence adduced at the hearing affirm, modify, or reverse his findings of fact and such decision. The Commissioner of Social Security is further authorized, on the Commissioner's own motion, to hold such hearings and to conduct such investigations and other proceedings as the Commissioner may deem necessary or proper for the administration of this title. In the course of any hearing, investigation, or other proceeding, the Commissioner may administer oaths and affirmations, examine witnesses, and receive evidence. Evidence may be received at any hearing before the Commissioner of Social Security even though inadmissible under the rules of evidence applicable to court procedure. The Commissioner of Social Security shall specifically take into account any physical, mental, educational, or linguistic limitation of such individual (including any lack of facility with the English language) in determining, with respect to the eligibility of such individual for benefits under this title, whether such individual acted in good faith or was at fault, and in determining fraud, deception, or intent.
(B)
(i)
A failure to timely request review of an initial adverse determination with respect to an application for any payment under this title or an adverse determination on reconsideration of such an initial determination shall not serve as a basis for denial of a subsequent application for any payment under this title if the applicant demonstrates that the applicant, or any other individual referred to in subparagraph (A), failed to so request such a review acting in good faith reliance upon incorrect, incomplete, or misleading information, relating to the consequences of reapplying for payments in lieu of seeking review of an adverse determination, provided by any officer or employee of the Social Security Administration or any State agency acting under section 221.
(ii)
In any notice of an adverse determination with respect to which a review may be requested under subparagraph (A), the Commissioner of Social Security shall describe in clear and specific language the effect on possible eligibility to receive payments under this title of choosing to reapply in lieu of requesting review of the determination.
(2)
Determination on the basis of such hearing, except to the extent that the matter in disagreement involves a disability (within the meaning of section 1614(a)(3)), shall be made within ninety days after the individual requests the hearing as provided in paragraph (1).
(3)
The final determination of the Commissioner of Social Security after a hearing under paragraph (1) shall be subject to judicial review as provided in section 205(g) to the same extent as the Commissioner's final determinations under section 205.
(d)

Procedures; Prohibitions of Assignments; Representation of Claimants
(1)
The provisions of section 207 and subsections (a), (d), and (e) of section 205 shall apply with respect to this part to the same extent as they apply in the case of title II.
(2)
(A)
The provisions of section 206 (other than subsections (a)(4) and (d) thereof) shall apply to this part to the same extent as they apply in the case of title II, except that such section shall be applied—
(i)
by substituting, in subparagraphs (A)(ii)(I) and (D)(i) of subsection (a)(2), the phrase “(as determined before any applicable reduction under section 1631(g), and reduced by the amount of any reduction in benefits under this title or title II made pursuant to section 1127(a))” for the parenthetical phrase contained therein;
(ii)
by substituting, in subsections (a)(2)(B) and (b)(1)(B)(i), the phrase “paragraph (7)(A) or (8)(A) of section 1631(a) or the requirements of due process of law” for the phrase “subsection (g) or (h) of section 223”;
(iii)
by substituting, in subsection (a)(2)(C)(i), the phrase “under title II” for the phrase “under title XVI”;
(iv)
by substituting, in subsection (b)(1)(A), the phrase “pay the amount of such fee” for the phrase “certify the amount of such fee for payment” and by striking, in subsection (b)(1)(A), the phrase “or certified for payment”;
(v)
by substituting, in subsection (b)(1)(B)(ii), the phrase “deemed to be such amounts as determined before any applicable reduction under section 1631(g), and reduced by the amount of any reduction in benefits under this title or title II made pursuant to section 1127(a)” for the phrase “determined before any applicable reduction under section 1127(a))”; and
(vi)14
by substituting, in subsection (e)(1)—
^{14}
Margin for clause (vi) so in law.
(I)
``subparagraphs (B) and (C) of section 1631(d)(2)'' for ``the preceding provisions of this section''; and
(II)
``title XVI'' for ``this title''.
(B)
Subject to subparagraph (C), if the claimant is determined to be entitled to past-due benefits under this title and the person representing the claimant is an attorney, the Commissioner of Social Security shall pay out of such past-due benefits to such attorney an amount equal to the lesser of—
(i)
so much of the maximum fee as does not exceed 25 percent of such past-due benefits (as determined before any applicable reduction under section 1631(g) and reduced by the amount of any reduction in benefits under this title or title II pursuant to section 1127(a)), or
(ii)
the amount of past-due benefits available after any applicable reductions under sections 1631(g) and 1127(a).
(C)
(i)
Whenever a fee for services is required to be paid to an attorney from a claimant's past-due benefits pursuant to subparagraph (B), the Commissioner shall impose on the attorney an assessment calculated in accordance with clause (ii).
(ii)
(I)
The amount of an assessment under clause (i) shall be equal to the product obtained by multiplying the amount of the representative's fee that would be required to be paid by subparagraph (B) before the application of this subparagraph, by the percentage specified in subclause (II), except that the maximum amount of the assessment may not exceed $75. In the case of any calendar year beginning after the amendments made by section 302 of the Social Security Protection Act of 2003 take effect, the dollar amount specified in the preceding sentence (including a previously adjusted amount) shall be adjusted annually under the procedures used to adjust benefit amounts under section 215(i)(2)(A)(ii), except such adjustment shall be based on the higher of $75 or the previously adjusted amount that would have been in effect for December of the preceding year, but for the rounding of such amount pursuant to the following sentence. Any amount so adjusted that is not a multiple of $1 shall be rounded to the next lowest multiple of $1, but in no case less than $75.
(II)
The percentage specified in this subclause is such percentage rate as the Commissioner determines is necessary in order to achieve full recovery of the costs of determining and approving fees to attorneys from the past-due benefits of claimants, but not in excess of 6.3 percent.
(iii)
The Commissioner may collect the assessment imposed on an attorney under clause (i) by offset from the amount of the fee otherwise required by subparagraph (B) to be paid to the attorney from a claimant's past-due benefits.
(iv)
An attorney subject to an assessment under clause (i) may not, directly or indirectly, request or otherwise obtain reimbursement for such assessment from the claimant whose claim gave rise to the assessment.
(v)
Assessments on attorneys collected under this subparagraph shall be deposited as miscellaneous receipts in the general fund of the Treasury.
(vi)
The assessments authorized under this subparagraph shall be collected and available for obligation only to the extent and in the amount provided in advance in appropriations Acts. Amounts so appropriated are authorized to remain available until expended, for administrative expenses in carrying out this title and related laws.
(D)
The Commissioner of Social Security shall notify each claimant in writing, together with the notice to such claimant of an adverse determination, of the options for obtaining attorneys to represent individuals in presenting their cases before the Commissioner of Social Security. Such notification shall also advise the claimant of the availability to qualifying claimants of legal services organizations which provide legal services free of charge.
(e)

Applications and Furnishing of Information
(1)
(A)
The Commissioner of Social Security shall, subject to subparagraph (B) and subsection (j), prescribe such requirements with respect to the filing of applications, the suspension or termination of assistance, the furnishing of other data and material, and the reporting of events and changes in circumstances, as may be necessary for the effective and efficient administration of this title.
(B)
(i)
The requirements prescribed by the Commissioner of Social Security pursuant to subparagraph (A) shall require that eligibility for benefits under this title will not be determined solely on the basis of declarations by the applicant concerning eligibility factors or other relevant facts, and that relevant information will be verified from independent or collateral sources and additional information obtained as necessary in order to assure that such benefits are only provided to eligible individuals (or eligible spouses) and that the amounts of such benefits are correct. For this purpose and for purposes of federally administered supplementary payments of the type described in section 1616(a) of this Act (including payments pursuant to an agreement entered into under section 212(a) of Public Law 93–66), the Commissioner of Social Security shall, as may be necessary, request and utilize information available pursuant to section 6103(l)(7) of the Internal Revenue Code of 1954, and any information which may be available from State systems under section 1137 of this Act, and shall comply with the requirements applicable to States (with respect to information available pursuant to section 6103(l)(7)(B) of such Code) under subsections (a)(6) and (c) of such section 1137.
(ii)
(I)
The Commissioner of Social Security may require each applicant for, or recipient of, benefits under this title to provide authorization by the applicant or recipient (or by any other person whose income or resources are material to the determination of the eligibility of the applicant or recipient for such benefits) for the Commissioner to obtain (subject to the cost reimbursement requirements of section 1115(a) of the Right to Financial Privacy Act) from any financial institution (within the meaning of section 1101(1) of such Act) any financial record (within the meaning of section 1101(2) of such Act) held by the institution with respect to the applicant or recipient (or any such other person) whenever the Commissioner determines the record is needed in connection with a determination with respect to such eligibility or the amount of such benefits.
(II)
Notwithstanding section 1104(a)(1) of the Right to Financial Privacy Act, an authorization provided by an applicant or recipient (or any other person whose income or resources are material to the determination of the eligibility of the applicant or recipient) pursuant to subclause (I) of this clause shall remain effective until the earliest of—
- (aa)
the rendering of a final adverse decision on the applicant's application for eligibility for benefits under this title;
- (bb)
the cessation of the recipient's eligibility for benefits under this title; or
- (cc)
the express revocation by the applicant or recipient (or such other person referred to in subclause (I)) of the authorization, in a written notification to the Commissioner.
(III)
- (aa)
An authorization obtained by the Commissioner of Social Security pursuant to this clause shall be considered to meet the requirements of the Right to Financial Privacy Act for purposes of section 1103(a) of such Act, and need not be furnished to the financial institution, notwithstanding section 1104(a) of such Act.
- (bb)
The certification requirements of section 1103(b) of the Right to Financial Privacy Act shall not apply to requests by the Commissioner of Social Security pursuant to an authorization provided under this clause.
- (cc)
A request by the Commissioner pursuant to an authorization provided under this clause is deemed to meet the requirements of section 1104(a)(3) of the Right to Financial Privacy Act and the flush language of section 1102 of such Act.
(IV)
The Commissioner shall inform any person who provides authorization pursuant to this clause of the duration and scope of the authorization.
(V)
If an applicant for, or recipient of, benefits under this title (or any such other person referred to in subclause (I)) refuses to provide, or revokes, any authorization made by the applicant or recipient for the Commissioner of Social Security to obtain from any financial institution any financial record, the Commissioner may, on that basis, determine that the applicant or recipient is ineligible for benefits under this title, determine that adjustment or recovery on account of an overpayment with respect to the applicant or recipient would not defeat the purpose of this title, or both.
(iii)
(I)
The Commissioner of Social Security may require each applicant for, or recipient of, benefits under this title to provide authorization by the applicant, recipient or legal guardian (or by any other person whose income or resources are material to the determination of the eligibility of the applicant or recipient for such benefits) for the Commissioner to obtain from any payroll data provider (as defined in section 1184(c)(1)) any record held by the payroll data provider with respect to the applicant or recipient (or any such other person) whenever the Commissioner determines the record is needed in connection with a determination of initial or ongoing eligibility or the amount of such benefits.
(II)
An authorization provided by an applicant, recipient or legal guardian (or any other person whose income or resources are material to the determination of the eligibility of the applicant or recipient) under this clause shall remain effective until the earliest of—
- (aa)
the rendering of a final adverse decision on the applicant’s application for eligibility for benefits under this title;
- (bb)
the cessation of the recipient’s eligibility for benefits under this title;
- (cc)
the express revocation by the applicant, or recipient (or such other person referred to in subclause (I)) of the authorization, in a written notification to the Commissioner; or
- (dd)
the termination of the basis upon which the Commissioner considers another person’s income and resources available to the applicant or recipient.
(III)
The Commissioner of Social Security is not required to furnish any authorization obtained pursuant to this clause to the payroll data provider.
(IV)
The Commissioner shall inform any person who provides authorization pursuant to this clause of the duration and scope of the authorization.
(V)
If an applicant for, or recipient of, benefits under this title (or any such other person referred to in subclause (I)) refuses to provide, or revokes, any authorization required by subclause (I), paragraph (2)(B) and paragraph (10) shall not apply to such applicant or recipient beginning with the first day of the first month in which he or she refuses or revokes such authorization.
(C)
For purposes of making determinations under section 1611(e), the requirements prescribed by the Commissioner of Social Security pursuant to subparagraph (A) of this paragraph shall require each administrator of a nursing home, extended care facility, or intermediate care facility, within 2 weeks after the admission of any eligible individual or eligible spouse receiving benefits under this title, to transmit to the Commissioner a report of the admission.
(2)
(A)
In case of the failure by any individual to submit a report of events and changes in circumstances relevant to eligibility for or amount of benefits under this title as required by the Commissioner of Social Security under paragraph (1), or delay by any individual in submitting a report as so required, the Commissioner of Social Security (in addition to taking any other action the Commissioner may consider appropriate under paragraph (1)) shall reduce any benefits which may subsequently become payable to such individual under this title by—
(i)
$25 in the case of the first such failure or delay,
(ii)
$50 in the case of the second such failure or delay, and
(iii)
$100 in the case of the third or a subsequent such failure or delay,
except where the individual was without fault or good cause for such failure or delay existed.
(B)
For purposes of subparagraph (A), the Commissioner of Social Security shall find that good cause exists for the failure of, or delay by, an individual in submitting a report of an event or change in circumstances relevant to eligibility for or amount of benefits under this title in any case where—
(i)
the individual (or another person referred to in paragraph (1)(B)(iii)(I)) has provided authorization to the Commissioner to access payroll data records related to the individual; and
(ii)
the event or change in circumstance is a change in the individual’s employer.
(3)
The Commissioner of Social Security shall provide a method of making payments under this title to an eligible individual who does not reside in a permanent dwelling or does not have a fixed home or mailing address.
(4)
A translation into English by a third party of a statement made in a foreign language by an applicant for or recipient of benefits under this title shall not be regarded as reliable for any purpose under this title unless the third party, under penalty of perjury—
(A)
certifies that the translation is accurate; and
(B)
discloses the nature and scope of the relationship between the third party and the applicant or recipient, as the case may be.
(5)
In any case in which it is determined to the satisfaction of the Commissioner of Social Security that an individual failed as of any date to apply for benefits under this title by reason of misinformation provided to such individual by any officer or employee of the Social Security Administration relating to such individual's eligibility for benefits under this title, such individual shall be deemed to have applied for such benefits on the later of—
(A)
the date on which such misinformation was provided to such individual, or
(B)
the date on which such individual met all requirements for entitlement to such benefits (other than application therefor).
(6)
In any case in which an individual visits a field office of the Social Security Administration and represents during the visit to an officer or employee of the Social Security Administration in the office that the individual's visit is occasioned by—
(A)
the receipt of a notice from the Social Security Administration indicating a time limit for response by the individual, or
(B)
the theft, loss, or nonreceipt of a benefit payment under this title,
the Commissioner of Social Security shall ensure that the individual is granted a face-to-face interview at the office with an officer or employee of the Social Security Administration before the close of business on the day of the visit.
(7)
(A)
(i)
The Commissioner of Social Security shall immediately redetermine the eligibility of an individual for benefits under this title if there is reason to believe that fraud or similar fault was involved in the application of the individual for such benefits, unless a United States attorney, or equivalent State prosecutor, with jurisdiction over potential or actual related criminal cases, certifies, in writing, that there is a substantial risk that such action by the Commissioner of Social Security with regard to recipients in a particular investigation would jeopardize the criminal prosecution of a person involved in a suspected fraud.
(ii)
When redetermining the eligibility, or making an initial determination of eligibility, of an individual for benefits under this title, the Commissioner of Social Security shall disregard any evidence if there is reason to believe that fraud or similar fault was involved in the providing of such evidence.
(B)
For purposes of subparagraph (A), similar fault is involved with respect to a determination if—
(i)
an incorrect or incomplete statement that is material to the determination is knowingly made; or
(ii)
information that is material to the determination is knowingly concealed.
(C)
If, after redetermining the eligibility of an individual for benefits under this title, the Commissioner of Social Security determines that there is insufficient evidence to support such eligibility, the Secretary may terminate such eligibility and may treat benefits paid on the basis of such insufficient evidence as overpayments.
(8)
(A)
The Commissioner of Social Security shall request the Immigration and Naturalization Service or the Centers for Disease Control to provide the Commissioner of Social Security with whatever medical information, identification information, and employment history either such entity has with respect to any alien who has applied for benefits under title XVI to the extent that the information is relevant to any determination relating to eligibility for such benefits under title XVI.
(B)
Subparagraph (A) shall not be construed to prevent the Commissioner of Social Security from adjudicating the case before receiving such information.
(9)
Notwithstanding any other provision of law, the Commissioner shall, at least 4 times annually and upon request of the Immigration and Naturalization Service (hereafter in this paragraph referred to as the “Service”), furnish the Service with the name and address of, and other identifying information on, any individual who the Commissioner knows is not lawfully present in the United States, and shall ensure that each agreement entered into under section 1616(a) with a State provides that the State shall furnish such information at such times with respect to any individual who the State knows is not lawfully present in the United States.
(10)
An individual who has authorized the Commissioner of Social Security to obtain records from a payroll data provider under paragraph (1)(B)(iii) (or on whose behalf another person described in subclause (I) of such paragraph has provided such authorization) shall not be subject to a penalty under section 1129A for any omission or error with respect to such individual’s wages as reported by the payroll data provider.
(f)

Furnishing of Information by Other Agencies
The head of any Federal agency shall provide such information as the Commissioner of Social Security needs for purposes of determining eligibility for or amount of benefits, or verifying other information with respect thereto.
(g)

Reimbursement to States for Interim Assistance Payments
(1)
Notwithstanding subsection (d)(1) and subsection (b) as it relates to the payment of less than the correct amount of benefits, the Commissioner of Social Security may, upon written authorization by an individual, withhold benefits due with respect to that individual and may pay to a State (or a political subdivision thereof if agreed to by the Commissioner of Social Security and the State) from the benefits withheld an amount sufficient to reimburse the State (or political subdivision) for interim assistance furnished on behalf of the individual by the State (or political subdivision).
(2)
For purposes of this subsection, the term “benefits” with respect to any individual means supplemental security income benefits under this title, and any State supplementary payments under section 1616 or under section 212 of Public Law 93–66 which the Commissioner of Social Security makes on behalf of a State (or political subdivision thereof), that the Commissioner of Social Security has determined to be due with respect to the individual at the time the Commissioner of Social Security makes the first payment of benefits with respect to the period described in clause (A) or (B) of paragraph (3). A cash advance made pursuant to subsection (a)(4)(A) shall not be considered as the first payment of benefits for purposes of the preceding sentence.
(3)
For purposes of this subsection, the term “interim assistance” with respect to any individual means assistance financed from State or local funds and furnished for meeting basic needs (A) during the period, beginning with the month following the month in which the individual filed an application for benefits (as defined in paragraph (2)), for which he was eligible for such benefits, or (B) during the period beginning with the first month for which the individual's benefits (as defined in paragraph (2)) have been terminated or suspended if the individual was subsequently found to have been eligible for such benefits.
(4)
In order for a State to receive reimbursement under the provisions of paragraph (1), the State shall have in effect an agreement with the Commissioner of Social Security which shall provide—
(A)
that if the Commissioner of Social Security makes payment to the State (or a political subdivision of the State as provided for under the agreement) in reimbursement for interim assistance (as defined in paragraph (3)) for any individual in an amount greater than the reimbursable amount authorized by paragraph (1), the State (or political subdivision) shall pay to the individual the balance of such payment in excess of the reimbursable amount as expeditiously as possible, but in any event within ten working days or a shorter period specified in the agreement; and
(B)
that the State will comply with such other rules as the Commissioner of Social Security finds necessary to achieve efficient and effective administration of this subsection and to carry out the purposes of the program established by this title, including protection of hearing rights for any individual aggrieved by action taken by the State (or political subdivision) pursuant to this subsection.
(5)
The provisions of subsection (c) shall not be applicable to any disagreement concerning payment by the Commissioner of Social Security to a State pursuant to the preceding provisions of this subsection nor the amount retained by the State (or political subdivision).
(h)

Payment of Certain Travel Expenses
The Commissioner of Social Security shall pay travel expenses, either on an actual cost or commuted basis, to individuals for travel incident to medical examinations requested by the Commissioner of Social Security in connection with disability determinations under this title, and to parties, their representatives, and all reasonably necessary witnesses for travel within the United States (as defined in section 1614(e)) to attend reconsideration interviews and proceedings before administrative law judges with respect to any determination under this title. The amount available under the preceding sentence for payment for air travel by any person shall not exceed the coach fare for air travel between the points involved unless the use of first-class accommodations is required (as determined under regulations of the Commissioner of Social Security) because of such person's health condition or the unavailability of alternative accommodations; and the amount available for payment for other travel by any person shall not exceed the cost of travel (between the points involved) by the most economical and expeditious means of transportation appropriate to such person's health condition, as specified in such regulations. The amount available for payment under this subsection for travel by a representative to attend an administrative proceeding before an administrative law judge or other adjudicator shall not exceed the maximum amount allowable under this subsection for such travel originating within the geographic area of the office having jurisdiction over such proceeding.
(i)

Payment to States With Respect to Certain Unnegotiated Checks
(1)
The Secretary of the Treasury shall, on a monthly basis, notify the Commissioner of Social Security of all benefit checks issued under this title which include amounts representing State supplementary payments as described in paragraph (2) and which have not been presented for payment within one hundred and eighty days after the day on which they were issued.
(2)
The Commissioner of Social Security shall from time to time determine the amount representing the total of the State supplementary payments made pursuant to agreements under section 1616(a) of this Act and under section 212(b) of Public Law 93–66 which is included in all such benefit checks not presented for payment within one hundred and eighty days after the day on which they were issued, and shall pay each State (or credit each State with) an amount equal to that State's share of all such amount. Amounts not paid to the States shall be returned to the appropriation from which they were originally paid.
(3)
The Commissioner of Social Security, upon notice from the Secretary of the Treasury under paragraph (1), shall notify any State having an agreement described in paragraph (2) of all such benefit checks issued under that State's agreement which were not presented for payment within one hundred and eighty days after the day on which they were issued.
(4)
The Commissioner of Social Security shall, to the maximum extent feasible, investigate the whereabouts and eligibility of the individuals whose benefit checks were not presented for payment within one hundred and eighty days after the day on which they were issued.
(j)

Application and Review Requirements for Certain Individuals
(1)
Notwithstanding any provision of section 1611 or 1619, any individual who—
(A)
was an eligible individual (or eligible spouse) under section 1611 or was eligible for benefits under or pursuant to section 1619, and
(B)
who, after such eligibility, is ineligible for benefits under or pursuant to both such sections for a period of 12 consecutive months (or 24 consecutive months, in the case of such an individual whose ineligibility for benefits under or pursuant to both such sections is a result of being called to active duty pursuant to section 12301(d) or 12302 of title 10, United States Code, or section 502(f) of title 32, United States Code),
may not thereafter become eligible for benefits under or pursuant to either such section until the individual has reapplied for benefits under section 1611 and been determined to be eligible for benefits under such section, or has filed a request for reinstatement of eligibility under subsection (p)(2) and been determined to be eligible for reinstatement.
(2)
(A)
Notwithstanding any provision of section 1611 or section 1619 (other than subsection (c) thereof), any individual who was eligible for benefits pursuant to section 1619(b), and who—
(i)
(I)
on the basis of the same impairment on which his or her eligibility under such section 1619(b) was based becomes eligible (other than pursuant to a request for reinstatement under subsection (p)) for benefits under section 1611 or 1619(a) for a month that follows a period during which the individual was ineligible for benefits under sections 1611 and 1619(a), and
(II)
has earned income (other than income excluded pursuant to section 1612(b)) for any month in the 12-month period preceding such month that is equal to or in excess of the amount that would cause him or her to be ineligible for payments under section 1611(b) for that month (if he or she were otherwise eligible for such payments); or
(ii)
(I)
on the basis of the same impairment on which his or her eligibility under such section 1619(b) was based becomes eligible under section 1619(b) for a month that follows a period during which the individual was ineligible under section 1611 and section 1619, and
(II)
has earned income (other than income excluded pursuant to section 1612(b)) for such month or for any month in the 12-month period preceding such month that is equal to or in excess of the amount that would cause him or her to be ineligible for payments under section 1611(b) for that month (if he or she were otherwise eligible for such payments);
shall, upon becoming eligible (as described in clause (i)(I) or (ii)(I)), be subject to a prompt review of the type described in section 1614(a)(4).
(B)
If the Commissioner of Social Security determines pursuant to a review required by subparagraph (A) that the impairment upon which the eligibility of an individual is based has ceased, does not exist, or is not disabling, such individual may not thereafter become eligible for a benefit under or pursuant to section 1611 or section 1619 until the individual has reapplied for benefits under section 1611 and been determined to be eligible for benefits under such section.
(k)

Notifications to Applicants and Recipients
The Commissioner of Social Security shall notify an individual receiving benefits under section 1611 on the basis of disability or blindness of his or her potential eligibility for benefits under or pursuant to section 1619—
(1)
at the time of the initial award of benefits to the individual under section 1611 (if the individual has attained the age of 18 at the time of such initial award), and
(2)
at the earliest time after an initial award of benefits to an individual under section 1611 that the individual's earned income for a month (other than income excluded pursuant to section 1612(b)) is $200 or more, and periodically thereafter so long as such individual has earned income (other than income so excluded) of $200 or more per month.
(l)

Special Notice to Blind Individuals with Respect to Hearings and Other Official Actions
(1)
In any case where an individual who is applying for or receiving benefits under this title on the basis of blindness is entitled (under subsection (c) or otherwise) to receive notice from the Commissioner of Social Security of any decision or determination made or other action taken or proposed to be taken with respect to his or her rights under this title, such individual shall at his or her election be entitled either (A) to receive a supplementary notice of such decision, determination, or action, by telephone, within 5 working days after the initial notice is mailed, (B) to receive the initial notice in the form of a certified letter, or (C) to receive notification by some alternative procedure established by the Commissioner of Social Security and agreed to by the individual.
(2)
The election under paragraph (1) may be made at any time; but an opportunity to make such an election shall in any event be given (A) to every individual who is an applicant for benefits under this title on the basis of blindness, at the time of his or her application, and (B) to every individual who is a recipient of such benefits on the basis of blindness, at the time of each redetermination of his or her eligibility. Such an election, once made by an individual, shall apply with respect to all notices of decisions, determinations, and actions which such individual may thereafter be entitled to receive under this title until such time as it is revoked or changed.
(m)

Pre-release Procedures for Institutionalized Persons
The Commissioner of Social Security shall develop a system under which an individual can apply for supplemental security income benefits under this title prior to the discharge or release of the individual from a public institution.

CONCURRENT SSI AND SUPPLEMENTAL NUTRITION ASSISTANCE APPLICATIONS BY INSTITUTIONALIZED INDIVIDUALS
(n)
The Commissioner of Social Security and the Secretary of Agriculture shall develop a procedure under which an individual who applies for supplemental security income benefits under this title shall also be permitted to apply at the same time for participation in the supplemental nutrition assistance program authorized under the Food and Nutrition Act of 2008 (7 U.S.C. 2011 et seq.).
(o)

NOTICE REQUIREMENTS
The Commissioner of Social Security shall take such actions as are necessary to ensure that any notice to one or more individuals issued pursuant to this title by the Commissioner of Social Security or by a State agency—
(1)
is written in simple and clear language, and
(2)
includes the address and telephone number of the local office of the Social Security Administration which serves the recipient.
In the case of any such notice which is not generated by a local servicing office, the requirements of paragraph (2) shall be treated as satisfied if such notice includes the address of the local office of the Social Security Administration which services the recipient of the notice and a telephone number through which such office can be reached.
(p)

Reinstatement of Eligibility on the Basis of Blindness or Disability
(1)
(A)
Eligibility for benefits under this title shall be reinstated in any case where the Commissioner determines that an individual described in subparagraph (B) has filed a request for reinstatement meeting the requirements of paragraph (2)(A) during the period prescribed in subparagraph (C). Reinstatement of eligibility shall be in accordance with the terms of this subsection.
(B)
An individual is described in this subparagraph if—
(i)
prior to the month in which the individual files a request for reinstatement—
(I)
the individual was eligible for benefits under this title on the basis of blindness or disability pursuant to an application filed therefor; and
(II)
the individual thereafter was ineligible for such benefits due to earned income (or earned and unearned income) for a period of 12 or more consecutive months;
(ii)
the individual is blind or disabled and the physical or mental impairment that is the basis for the finding of blindness or disability is the same as (or related to) the physical or mental impairment that was the basis for the finding of blindness or disability that gave rise to the eligibility described in clause (i);
(iii)
the individual's blindness or disability renders the individual unable to perform substantial gainful activity; and
(iv)
the individual satisfies the nonmedical requirements for eligibility for benefits under this title.
(C)
(i)
Except as provided in clause (ii), the period prescribed in this subparagraph with respect to an individual is 60 consecutive months beginning with the month following the most recent month for which the individual was eligible for a benefit under this title (including section 1619) prior to the period of ineligibility described in subparagraph (B)(i)(II).
(ii)
In the case of an individual who fails to file a reinstatement request within the period prescribed in clause (i), the Commissioner may extend the period if the Commissioner determines that the individual had good cause for the failure to so file.
(2)
(A)
(i)
A request for reinstatement shall be filed in such form, and containing such information, as the Commissioner may prescribe.
(ii)
A request for reinstatement shall include express declarations by the individual that the individual meets the requirements specified in clauses (ii) through (iv) of paragraph (1)(B).
(B)
A request for reinstatement filed in accordance with subparagraph (A) may constitute an application for benefits in the case of any individual who the Commissioner determines is not eligible for reinstated benefits under this subsection.
(3)
In determining whether an individual meets the requirements of paragraph (1)(B)(ii), the provisions of section 1614(a)(4) shall apply.
(4)
(A)
Eligibility for benefits reinstated under this subsection shall commence with the benefit payable for the month following the month in which a request for reinstatement is filed.
(B)
(i)
Subject to clause (ii), the amount of the benefit payable for any month pursuant to the reinstatement of eligibility under this subsection shall be determined in accordance with the provisions of this title.
(ii)
The benefit under this title payable for any month pursuant to a request for reinstatement filed in accordance with paragraph (2) shall be reduced by the amount of any provisional benefit paid to such individual for such month under paragraph (7).
(C)
Except as otherwise provided in this subsection, eligibility for benefits under this title reinstated pursuant to a request filed under paragraph (2) shall be subject to the same terms and conditions as eligibility established pursuant to an application filed therefor.
(5)
Whenever an individual's eligibility for benefits under this title is reinstated under this subsection, eligibility for such benefits shall be reinstated with respect to the individual's spouse if such spouse was previously an eligible spouse of the individual under this title and the Commissioner determines that such spouse satisfies all the requirements for eligibility for such benefits except requirements related to the filing of an application. The provisions of paragraph (4) shall apply to the reinstated eligibility of the spouse to the same extent that they apply to the reinstated eligibility of such individual.
(6)
An individual to whom benefits are payable under this title pursuant to a reinstatement of eligibility under this subsection for twenty-four months (whether or not consecutive) shall, with respect to benefits so payable after such twenty-fourth month, be deemed for purposes of paragraph (1)(B)(i)(I) to be eligible for such benefits on the basis of an application filed therefor.
(7)
(A)
An individual described in paragraph (1)(B) who files a request for reinstatement in accordance with the provisions of paragraph (2)(A) shall be eligible for provisional benefits payable in accordance with this paragraph, unless the Commissioner determines that the individual does not meet the requirements of paragraph (1)(B)(i) or that the individual's declaration under paragraph (2)(A)(ii) is false. Any such determination by the Commissioner shall be final and not subject to review under paragraph (1) or (3) of subsection (c).
(B)
(i)
Except as otherwise provided in clause (ii), the amount of a provisional benefit for a month shall equal the amount of the monthly benefit that would be payable to an eligible individual under this title with the same kind and amount of income.
(ii)
If the individual has a spouse who was previously an eligible spouse of the individual under this title and the Commissioner determines that such spouse satisfies all the requirements of section 1614(b) except requirements related to the filing of an application, the amount of a provisional benefit for a month shall equal the amount of the monthly benefit that would be payable to an eligible individual and eligible spouse under this title with the same kind and amount of income.
(C)
(i)
Provisional benefits shall begin with the month following the month in which a request for reinstatement is filed in accordance with paragraph (2)(A).
(ii)
Provisional benefits shall end with the earliest of—
(I)
the month in which the Commissioner makes a determination regarding the individual's eligibility for reinstated benefits;
(II)
the fifth month following the month for which provisional benefits are first payable under clause (i); or
(III)
the month in which the Commissioner determines that the individual does not meet the requirements of paragraph (1)(B)(i) or that the individual's declaration made in accordance with paragraph (2)(A)(ii) is false.
(D)
In any case in which the Commissioner determines that an individual is not eligible for reinstated benefits, any provisional benefits paid to the individual under this paragraph shall not be subject to recovery as an overpayment unless the Commissioner determines that the individual knew or should have known that the individual did not meet the requirements of paragraph (1)(B).
(8)
For purposes of this subsection other than paragraph (7), the term “benefits under this title” includes State supplementary payments made pursuant to an agreement under section 1616(a) of this Act or section 212(b) of Public Law 93–66.

PENALTIES FOR FRAUD
Sec. 1632.
[42 U.S.C. 1383a]
(a)
Whoever—
(1)
knowingly and willfully makes or causes to be made any false statement or representation of a material fact in any application for any benefit under this title,
(2)
at any time knowingly and willfully makes or causes to be made any false statement or representation of a material fact for use in determining rights to any such benefit,
(3)
having knowledge of the occurrence of any event affecting (A) his initial or continued right to any such benefit, or (B) the initial or continued right to any such benefit of any other individual in whose behalf he has applied for or is receiving such benefit, conceals or fails to disclose such event with an intent fraudulently to secure such benefit either in a greater amount or quantity than is due or when no such benefit is authorized,
(4)
having made application to receive any such benefit for the use and benefit of another and having received it, knowingly and willfully converts such benefit or any part thereof to a use other than for the use and benefit of such other person, or
(5)
conspires to commit any offense described in any of paragraphs (1) through (3),
shall be fined under title 18, United States Code, imprisoned not more than 5 years, or both, except that in the case of a person who receives a fee or other income for services performed in connection with any determination with respect to benefits under this title (including a claimant representative, translator, or current or former employee of the Social Security Administration), or who is a physician or other health care provider who submits, or causes the submission of, medical or other evidence in connection with any such determination, such person shall be guilty of a felony and upon conviction thereof shall be fined under title 18, United States Code, or imprisoned for not more than ten years, or both.
(b)
(1)
Any Federal court, when sentencing a defendant convicted of an offense under subsection (a), may order, in addition to or in lieu of any other penalty authorized by law, that the defendant make restitution to the Commissioner of Social Security, in any case in which such offense results in—
(A)
the Commissioner of Social Security making a benefit payment that should not have been made, or
(B)
an individual suffering a financial loss due to the defendant's violation of subsection (a) in his or her capacity as the individual's representative payee appointed pursuant to section 1631(a)(2).
(2)
Sections 3612, 3663, and 3664 of title 18, United States Code, shall apply with respect to the issuance and enforcement of orders of restitution under this subsection. In so applying such sections, the Commissioner of Social Security shall be considered the victim.
(3)
If the court does not order restitution, or orders only partial restitution, under this subsection, the court shall state on the record the reasons therefor.
(4)
(A)
Except as provided in subparagraph (B), funds paid to the Commissioner of Social Security as restitution pursuant to a court order shall be deposited as miscellaneous receipts in the general fund of the Treasury.
(B)
In the case of funds paid to the Commissioner of Social Security pursuant to paragraph (1)(B), the Commissioner of Social Security shall certify for payment to the individual described in such paragraph an amount equal to the lesser of the amount of the funds so paid or the individual's outstanding financial loss as described in such paragraph, except that such amount may be reduced by any overpayment of benefits owed under this title, title II, or title VIII by the individual.
(c)
Any person or entity convicted of a violation of subsection (a) of this section or of section 208 may not be certified as a representative payee under section 1631(a)(2).

ADMINISTRATION
Sec. 1633.
[42 U.S.C. 1383b]
(a)
Subject to subsection (b), the Commissioner of Social Security may make such administrative and other arrangements (including arrangements for the determination of blindness and disability under section 1614(a)(2) and (3) in the same manner and subject to the same conditions as provided with respect to disability determinations under section 221) as may be necessary or appropriate to carry out his functions under this title.
(b)
In determining, for purposes of this title, whether an individual is blind, there shall be an examination of such individual by a physician skilled in the diseases of the eye or by an optometrist, whichever the individual may select.
(c)
(1)
In any case in which the Commissioner of Social Security initiates a review under this title, similar to the continuing disability reviews authorized for purposes of title II under section 221(i), the Commissioner of Social Security shall notify the individual whose case is to be reviewed in the same manner as required under section 221(i)(4).
(2)
For suspension of continuing disability reviews and other reviews under this title similar to reviews under section 221 in the case of an individual using a ticket to work and self-sufficiency, see section 1148(i).
(d)
The Commissioner of Social Security shall establish by regulation criteria for time limits and other criteria related to individuals' plans for achieving self-support, that take into account—
(1)
the length of time that the individual will need to achieve the individual's employment goal (within such reasonable period as the Commissioner of Social Security may establish); and
(2)
other factors determined by the Commissioner of Social Security to be appropriate.
(e)
(1)
The Commissioner of Social Security shall review determinations, made by State agencies pursuant to subsection (a) in connection with applications for benefits under this title on the basis of blindness or disability, that individuals who have attained 18 years of age are blind or disabled as of a specified onset date. The Commissioner of Social Security shall review such a determination before any action is taken to implement the determination.
(2)
(A)
In carrying out paragraph (1), the Commissioner of Social Security shall review—
(i)
at least 20 percent of all determinations referred to in paragraph (1) that are made in fiscal year 2006;
(ii)
at least 40 percent of all such determinations that are made in fiscal year 2007; and
(iii)
at least 50 percent of all such determinations that are made in fiscal year 2008 or thereafter.
(B)
In carrying out subparagraph (A), the Commissioner of Social Security shall, to the extent feasible, select for review the determinations which the Commissioner of Social Security identifies as being the most likely to be incorrect.

DETERMINATIONS OF MEDICAID ELIGIBILITY
Sec. 1634.
[42 U.S.C. 1383c]
(a)
The Commissioner of Social Security may enter into an agreement with any State which wishes to do so under which he will determine eligibility for medical assistance in the case of aged, blind, or disabled individuals under such State's plan approved under title XIX. Any such agreement shall provide for payments by the State, for use by the Commissioner of Social Security in carrying out the agreement, of an amount equal to one-half of the cost of carrying out the agreement, but in computing such cost with respect to individuals eligible for benefits under this title, the Commissioner of Social Security shall include only those costs which are additional to the costs incurred in carrying out this title.
(b)
(1)
An eligible disabled widow or widower (described in paragraph (2)) who is entitled to a widow's or widower's insurance benefit based on a disability for any month under section 202(e) or (f) but is not eligible for benefits under this title in that month, and who applies for the protection of this subsection under paragraph (3), shall be deemed for purposes of title XIX to be an individual with respect to whom benefits under this title are paid in that month if he or she—
(A)
has been continuously entitled to such widow's or widower's insurance benefits from the first month for which the increase described in paragraph (2)(C) was reflected in such benefits through the month involved, and
(B)
would be eligible for benefits under this title in the month involved if the amount of the increase described in paragraph (2)(C) in his or her widow's or widower's insurance benefits, and any subsequent cost-of-living adjustments in such benefits under section 215(i), were disregarded.
(2)
For purposes of paragraph (1), the term “eligible disabled widow or widower” means an individual who—
(A)
was entitled to a monthly insurance benefit under title II for December 1983,
(B)
was entitled to a widow's or widower's insurance benefit based on a disability under section 202(e) or (f) for January 1984 and with respect to whom a benefit under this title was paid in that month, and
(C)
because of the increase in the amount of his or her widow's or widower's insurance benefits which resulted from the amendments made by section 134 of the Social Security Amendments of 1983 (Public Law 98–21) (eliminating the additional reduction factor for disabled widows and widowers under age 60), was ineligible for benefits under this title in the first month in which such increase was paid to him or her (and in which a retroactive payment of such increase for prior months was not made).
(3)
This subsection shall only apply to an individual who files a written application for protection under this subsection, in such manner and form as the Commissioner of Social Security may prescribe, no later than July 1, 1988.
(4)
For purposes of this subsection, the term “benefits under this title” includes payments of the type described in section 1616(a) or of the type described in section 212(a) of Public Law 93–66.
(c)
If any individual who has attained the age of 18 and is receiving benefits under this title on the basis of blindness or a disability which began before he or she attained the age of 22—
(1)
becomes entitled, on or after the effective date of this subsection, to child's insurance benefits which are payable under section 202(d) on the basis of such disability or to an increase in the amount of the child's insurance benefits which are so payable, and
(2)
ceases to be eligible for benefits under this title because of such child's insurance benefits or because of the increase in such child's insurance benefits,
such individual shall be treated for purposes of title XIX as receiving benefits under this title so long as he or she would be eligible for benefits under this title in the absence of such child's insurance benefits or such increase.
(d)
(1)
This subsection applies with respect to any person who—
(A)
applies for and obtains benefits under subsection (e) or (f) of section 202 (or under any other subsection of section 202 if such person is also eligible for benefits under such subsection (e) or (f)) being then not entitled to hospital insurance benefits under part A of title XVIII, and
(B)
is determined to be ineligible (by reason of the receipt of such benefits under section 202) for supplemental security income benefits under this title or for State supplementary payments of the type described in section 1616(a) (or payments of the type described in section 212(a) of Public Law 93–66).
(2)
For purposes of title XIX, each person with respect to whom this subsection applies—
(A)
shall be deemed to be a recipient of supplemental security income benefits under this title if such person received such a benefit for the month before the month in which such person began to receive a benefit described in paragraph (1)(A), and
(B)
shall be deemed to be a recipient of State supplementary payments of the type referred to in section 1616(a) of this Act (or payments of the type described in section 212(a) of Public Law 93–66) if such person received such a payment for the month before the month in which such person began to receive a benefit described in paragraph (1)(A),
for so long as such person (i) would be eligible for such supplemental security income benefits, or such State supplementary payments (or payments of the type described in section 212(a) of Public Law 93–66), in the absence of benefits described in paragraph (1)(A), and (ii) is not entitled to hospital insurance benefits under part A of title XVIII.
SEC. 1635.
[42 U.S.C. 1383d]

OUTREACH PROGRAM FOR CHILDREN.
(a)

Establishment.—
The Commissioner of Social Security shall establish and conduct an ongoing program of outreach to children who are potentially eligible for benefits under this title by reason of disability or blindness.
(b)

Requirements.—
Under this program, the Commissioner of Social Security shall—
(1)
aim outreach efforts at populations for whom such efforts would be most effective; and
(2)
work in cooperation with other Federal, State, and private agencies, and nonprofit organizations, which serve blind or disabled individuals and have knowledge of potential recipients of supplemental security income benefits, and with agencies and organizations (including school systems and public and private social service agencies) which focus on the needs of children.

treatment referrals for individuals with an alcoholism or drug addiction condition
Sec. 1636.
[42 U.S.C. 1383e]
In the case of any individual whose benefits under this title are paid to a representative payee pursuant to section 1631(a)(2)(A)(ii)(II), the Commissioner of Social Security shall refer such individual to the appropriate State agency administering the State plan for substance abuse treatment services approved under subpart II of part B of title XIX of the Public Health Service Act (42 U.S.C. 300x–21 et seq.).

ANNUAL REPORT ON PROGRAM
Sec. 1637.
[42 U.S.C. 1383f]
(a)
Not later than May 30 of each year, the Commissioner of Social Security shall prepare and deliver a report annually to the President and the Congress regarding the program under this title, including—
(1)
a comprehensive description of the program;
(2)
historical and current data on allowances and denials, including number of applications and allowance rates for initial determinations, reconsideration determinations, administrative law judge hearings, appeals council reviews, and Federal court decisions;
(3)
historical and current data on characteristics of recipients and program costs, by recipient group (aged, blind, disabled adults, and disabled children);
(4)
historical and current data on prior enrollment by recipients in public benefit programs, including State programs funded under part A of title IV of the Social Security Act and State general assistance programs;
(5)
projections of future number of recipients and program costs, through at least 25 years;
(6)
number of redeterminations and continuing dis-
ability reviews, and the outcomes of such redeterminations and reviews;
(7)
data on the utilization of work incentives;
(8)
detailed information on administrative and other program operation costs;
(9)
summaries of relevant research undertaken by the Social Security Administration, or by other researchers;
(10)
State supplementation program operations;
(11)
a historical summary of statutory changes to this title; and
(12)
such other information as the Commissioner deems useful.
(b)
Each member of the Social Security Advisory Board shall be permitted to provide an individual report, or a joint report if agreed, of views of the program under this title, to be included in the annual report required under this section.
TITLE XVII—

GRANTS FOR PLANNING COMPREHENSIVE ACTION TO COMBAT MENTAL RETARDATION1
^1
Title XVII of the Social Security Act is administered by the Rehabilitation Services Administration, Office of Special Education and Rehabilitative Services, Department of Education.

TABLE OF CONTENTS OF TITLE2
^2
This table of contents does not appear in the law.
Sec. 1701.
Authorization of appropriations.
Sec. 1702.
Grants to States.
Sec. 1703.
Applications.
Sec. 1704.
Payments.

authorization of appropriations
Sec. 1701.
[42 U.S.C. 1391]
For the purpose of assisting the States (including the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa) to plan for and take other steps leading to comprehensive State and community action to combat mental retardation, there is authorized to be appropriated the sum of $2,200,000. There are also authorized to be appropriated, for assisting such States in initiating the implementation and carrying out of planning and other steps to combat mental retardation, $2,750,000 for the fiscal year ending June 30, 1966, and $2,750,000 for the fiscal year ending June 30, 1967.

grants to states
Sec. 1702.
[42 U.S.C. 1392]
The sums appropriated pursuant to the first sentence of section 1701 shall be available for grants to States by the Secretary during the fiscal year ending June 30, 1964, and the succeeding fiscal year; and the sums appropriated pursuant to the second sentence of such section for the fiscal year ending June 30, 1966, shall be available for such grants during such year and the next two fiscal years, and sums appropriated pursuant thereto for the fiscal year ending June 30, 1967, shall be available for such grants during such year and the succeeding fiscal year. Any such grant to a State, which shall not exceed 75 per centum of the cost of the planning and related activities involved, may be used by it to determine what action is needed to combat mental retardation in the State and the resources available for this purpose, to develop public awareness of the mental retardation problem and of the need for combating it, to coordinate State and local activities relating to the various aspects of mental retardation and its prevention, treatment, or amelioration, and to plan other activities leading to comprehensive State and community action to combat mental retardation.

applications
Sec. 1703.
[42 U.S.C. 1393]
In order to be eligible for a grant under section 1702 a State must submit an application therefor which—
(1)
designates or establishes a single State agency, which may be an interdepartmental agency, as the sole agency for carrying out the purposes of this title;
(2)
indicates the manner in which provision will be made to assure full consideration of all aspects of services essential to planning for comprehensive State and community action to combat mental retardation, including services in the fields of education, employment, rehabilitation, welfare, health, and the law, and services provided through community programs for and institutions for the mentally retarded;
(3)
sets forth its plans for expenditure of such grant, which plans provide reasonable assurance of carrying out the purposes of this title;
(4)
provides for submission of a final report of the activities of the State agency in carrying out the purposes of this title, and for submission of such other reports, in such form and containing such information, as the Secretary may from time to time find necessary for carrying out the purposes of this title and for keeping such records and affording such access thereto as he may find necessary to assure the correctness and verification of such reports; and
(5)
provides for such fiscal control and fund accounting procedures as may be necessary to assure proper disbursement of and accounting for funds paid to the State under this title.

payments
Sec. 1704.
[42 U.S.C. 1394]
Payment of grants under this title may be made (after necessary adjustment on account of previously made underpayments or overpayments) in advance or by way of reimbursement, and in such installments and on such conditions, as the Secretary may determine.
TITLE XVIII—

HEALTH INSURANCE FOR THE AGED AND DISABLED

TABLE OF CONTENTS OF TITLE1
^1
This table of contents does not appear in the law.
Sec. 1801.
Prohibition against any Federal interference.
Sec. 1802.
Free choice by patient guaranteed.
Sec. 1803.
Option to individuals to obtain other health insurance protection.
Sec. 1804.
Notice of medicare benefits; medicare and medigap information.
Sec. 1805.
Medicare Payment Advisory Commission.
Sec. 1806.
Explanation of medicare benefits.
Sec. 1807.
Chronic care improvement.
Sec. 1808.
Provisions relating to administration.
Sec. 1809.
Addressing health care disparities.
Part A—
Hospital Insurance Benefits for the Aged and Disabled
Sec. 1811.
Description of program.
Sec. 1812.
Scope of benefits.
Sec. 1813.
Deductibles and coinsurance.
Sec. 1814.
Conditions of and limitations on payment for services.
(a) Requirement of requests and certifications.
(b) Amount paid to providers.
(c) No payments to Federal providers of services.
(d) Payments for emergency hospital services.
(e) Payment for inpatient hospital services prior to notification of noneligibility.
(f) Payment for certain inpatient hospital services furnished outside the United States.
(g) Payment for services of a physician rendered in a teaching hospital.
(h) Payment for certain hospital services provided in Veterans' Administration hospitals.
(i) Payment for hospice care.
(j) Elimination of lesser-of-cost-or-charges provision.
(k) Payments to home health agencies for durable medical equipment.
(l) Payment for inpatient critical access hospital services.
Sec. 1815.
Payment to providers of services.
Sec. 1816.
Provisions relating to the administration of part A.
Sec. 1817.
Federal Hospital Insurance Trust Fund.
Sec. 1818.
Hospital insurance benefits for uninsured elderly individuals not otherwise eligible.
Sec. 1818A.
Hospital insurance benefits for disabled individuals who have exhausted other entitlement.
Sec. 1819.
Requirements for, and assuring quality of care in, skilled nursing facilities.
Sec. 1820.
Medicare rural hospital flexibility program.
Sec. 1821.
Conditions for coverage of religious nonmedical health care institutional services.
Sec. 1822.
Hospice program survey and enforcement procedures.
Part B—
Supplementary Medical Insurance Benefits for the Aged and Disabled
Sec. 1831.
Establishment of supplementary medical insurance program for the aged and the disabled.
Sec. 1832.
Scope of benefits.
Sec. 1833.
Payment of benefits.
Sec. 1834.
Special payment rules for particular items and services.
Sec. 1834A.
Improving policies for clinical diagnostic laboratory tests.
Sec. 1835.
Procedure for payment of claims of providers of services.
Sec. 1836.
Eligible individuals.
Sec. 1837.
Enrollment periods.
Sec. 1838.
Coverage period.
Sec. 1839.
Amounts of premiums.
Sec. 1840.
Payment of premiums.
Sec. 1841.
Federal Supplementary Medical Insurance Trust Fund.
Sec. 1842.
Provisions relating to the administration of part b.
Sec. 1843.
State agreements for coverage of eligible individuals who are receiving money payments under public assistance programs (or are eligible for medical assistance).
Sec. 1844.
Appropriations to cover Government contributions and contingency reserve.
[ Sec. 1845. Repealed. ]
Sec. 1846.
Intermediate sanctions for providers or suppliers of clinical diagnostic laboratory tests.
Sec. 1847.
Competitive acquisition of certain items and services.
Sec. 1847A.
Use of average sales price payment methodology.
Sec. 1847B.
Competitive acquisition of outpatient drugs and biologicals.
Sec. 1848.
Payment for physicians' services.
Part C—
Medicare+Choice Program
Sec. 1851.
Eligibility, election, and enrollment.
Sec. 1852.
Benefits and beneficiary protections.
Sec. 1853.
Payments to Medicare+Choice organizations.
Sec. 1854.
Premiums and bid amounts.
Sec. 1855.
Organizational and financial requirements for Medicare+Choice organizations; provider-sponsored organizations.
Sec. 1856.
Establishment of standards.
Sec. 1857.
Contracts with Medicare+Choice organizations.
Sec. 1858.
Special rules for ma regional plans.
Sec. 1859.
Definitions; miscellaneous provisions.
Part D—
Voluntary Prescription Drug Benefit Program
Subpart 1—
Part D Eligible Individuals and Prescription Drug Benefits
Sec. 1860D
–1. Eligibility, enrollment, and information.
Sec. 1860D
–2. Prescription drug benefits.
Sec. 1860D
–3. Access to a choice of qualified prescription drug coverage.
Sec. 1860D
–4. Beneficiary protections for qualified prescription drug coverage.
Subpart 2—
Prescription Drug Plans; PDP Sponsors; Financing
Sec. 1860D
–11. PDP regions; submission of bids; plan approval.
Sec. 1860D
–12. Requirements for and contracts with prescription drug plan (pdp) sponsors.
Sec. 1860D
–13. Premiums; late enrollment penalty.
Sec. 1860D
–14. Premium and cost-sharing subsidies for low-income individuals.
Sec. 1860D
–14A. Medicare coverage gap discount program.
Sec. 1860D
–14B. Manufacturer rebate for certain drugs with prices increasing faster than inflation.
Sec. 1860D
–14C. Manufacturer discount program.
Sec. 1860D
–14D. Selected drug subsidy program.
Sec. 1860D
–15. Subsidies for part D eligible individuals for qualified prescription drug coverage.
Sec. 1860D
–16. Medicare prescription drug account in the federal supplementary medical insurance trust fund.
Subpart 3—
Application to Medicare Advantage Program and Treatment of Employer-Sponsored Programs and Other Prescription Drug Plans
Sec. 1860D
–21. Application to medicare advantage program and related managed care programs.
Sec. 1860D
–22. Special rules for employer-sponsored programs.
Sec. 1860D
–23. State pharmaceutical assistance programs.
Sec. 1860D
–24. Coordination requirements for plans providing prescription drug coverage.
Subpart 4—
Medicare Prescription Drug Discount Card and Transitional Assistance Program
Sec. 1860D
–31. Medicare prescription drug discount card and transitional assistance program.
Subpart 5—
Definitions and Miscellaneous Provisions
Sec. 1860D
–41. Definitions; treatment of references to provisions in part C.
Sec. 1860D
–42. Miscellaneous provisions.
Sec. 1860D
–43. Condition for coverage of drugs under this part.
Part E—
Miscellaneous Provisions
Sec. 1861.
Definitions of services, institutions, etc.
Sec. 1862.
Exclusions from coverage and medicare as secondary payer.
Sec. 1863.
Consultation with State agencies and other organizations to develop conditions of participation for providers of services.
Sec. 1864.
Use of State agencies to determine compliance by providers of services with conditions of participation.
Sec. 1865.
Effect of accreditation.
Sec. 1866.
Agreements with providers of services; enrollment processes.
Sec. 1866A.
Demonstration of application of physician volume increases to group practices.
Sec. 1866B.
Provisions for administration of demonstration program.
Sec. 1866C.
Health care quality demonstration program.
Sec. 1866D.
National pilot program on payment bundling.
Sec. 1866E.
Independence at home medical practice demonstration program.
Sec. 1867.
Examination and treatment for emergency medical conditions and women in labor.
Sec. 1868.
Practicing physicians advisory council; council for technology and innovation.
Sec. 1869.
Determinations; appeals.
Sec. 1870.
Overpayment on behalf of individuals and settlement of claims for benefits on behalf of deceased individuals.
Sec. 1871.
Regulations.
Sec. 1872.
Application of certain provisions of title II.
Sec. 1873.
Designation of organization or publication by name.
Sec. 1874.
Administration.
Sec. 1874A.
Contracts with Medicare administrative contractors.
Sec. 1875.
Studies and recommendations.
Sec. 1876.
Payments to health maintenance organizations and competitive medical plans.
Sec. 1877.
Limitation on certain physician referrals.
Sec. 1878.
Provider Reimbursement Review Board.
Sec. 1879.
Limitation on liability of beneficiary where medicare claims are disallowed.
Sec. 1880.
Indian Health Service facilities.
Sec. 1881.
Medicare coverage for end stage renal disease patients.
Sec. 1881A.
Medicare coverage for individuals exposed to environmental health hazards.
Sec. 1882.
Certification of medicare supplemental health insurance policies.
Sec. 1883.
Hospital providers of extended care services.
Sec. 1884.
Payments to promote closing and conversion of underutilized hospital facilities.
Sec. 1885.
Withholding of payments for certain medicaid providers.
Sec. 1886.
Payment to hospitals for inpatient hospital services.
Sec. 1887.
Payment of provider-based physicians and payment under certain percentage arrangements.
Sec. 1888.
Payment to skilled nursing facilities for routine service costs.
Sec. 1889.
Provider education and technical assistance.
Sec. 1890.
Contract with a consensus-based entity regarding performance measurement.
Sec. 1890A.
Quality measurement.
Sec. 1891.
Conditions of participation for home health agencies; home health quality.
Sec. 1892.
Offset of payments to individuals to collect past-due obligations arising from breach of scholarship and loan contract.
Sec. 1893.
Medicare integrity program.
Sec. 1894.
Payments to, and coverage of benefits under, programs of all-inclusive care for the elderly (PACE).
Sec. 1895.
Prospective payment for home health services.
Sec. 1896.
Medicare subvention demonstration project for military retirees.
Sec. 1897.
Health care infrastructure improvement program.
Sec. 1898.
Medicare Improvement Fund.
Sec. 1899.
Shared savings program.
Sec. 1899A.
Independent medicare advisory board.

PROHIBITION AGAINST ANY FEDERAL INTERFERENCE
Sec. 1801.
[42 U.S.C. 1395]
Nothing in this title shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer or employee of any institution, agency, or person providing health services; or to exercise any supervision or control over the administration or operation of any such institution, agency, or person.

free choice by patient guaranteed
Sec. 1802.
[42 U.S.C. 1395a]
(a)

Basic Freedom of Choice.—
Any individual entitled to insurance benefits under this title may obtain health services from any institution, agency, or person qualified to participate under this title if such institution, agency, or person undertakes to provide him such services.
(b)

Use of Private Contracts by Medicare Beneficiaries.—
(1)

In general.—
Subject to the provisions of this subsection, nothing in this title shall prohibit a physician or practitioner from entering into a private contract with a medicare beneficiary for any item or service—
(A)
for which no claim for payment is to be submitted under this title, and
(B)
for which the physician or practitioner receives—
(i)
no reimbursement under this title directly or on a capitated basis, and
(ii)
receives no amount for such item or service from an organization which receives reimbursement for such item or service under this title directly or on a capitated basis.
(2)

Beneficiary protections.—
(A)

In general.—
Paragraph (1) shall not apply to any contract unless—
(i)
the contract is in writing and is signed by the medicare beneficiary before any item or service is provided pursuant to the contract;
(ii)
the contract contains the items described in subparagraph (B); and
(iii)
the contract is not entered into at a time when the medicare beneficiary is facing an emergency or urgent health care situation.
(B)

Items required to be included in contract.—
Any contract to provide items and services to which paragraph (1) applies shall clearly indicate to the medicare beneficiary that by signing such contract the beneficiary—
(i)
agrees not to submit a claim (or to request that the physician or practitioner submit a claim) under this title for such items or services even if such items or services are otherwise covered by this title;
(ii)
agrees to be responsible, whether through insurance or otherwise, for payment of such items or services and understands that no reimbursement will be provided under this title for such items or services;
(iii)
acknowledges that no limits under this title (including the limits under section 1848(g)) apply to amounts that may be charged for such items or services;
(iv)
acknowledges that Medigap plans under section 1882 do not, and other supplemental insurance plans may elect not to, make payments for such items and services because payment is not made under this title; and
(v)
acknowledges that the medicare beneficiary has the right to have such items or services provided by other physicians or practitioners for whom payment would be made under this title.
Such contract shall also clearly indicate whether the physician or practitioner is excluded from participation under the medicare program under section 1128.
(3)

Physician or practitioner requirements.—
(A)

In general.—
Paragraph (1) shall not apply to any contract entered into by a physician or practitioner unless an affidavit described in subparagraph (B) is in effect during the period any item or service is to be provided pursuant to the contract.
(B)

Affidavit.—
An affidavit is described in this subparagraph if—
(i)
the affidavit identifies the physician or practitioner and is in writing and is signed by the physician or practitioner;
(ii)
the affidavit provides that the physician or practitioner will not submit any claim under this title for any item or service provided to any medicare beneficiary (and will not receive any reimbursement or amount described in paragraph (1)(B) for any such item or service) during the applicable 2-year period (as defined in subparagraph (D)); and
(iii)
a copy of the affidavit is filed with the Secretary no later than 10 days after the first contract to which such affidavit applies is entered into.
(C)

Enforcement.—
If a physician or practitioner signing an affidavit under subparagraph (B) knowingly and willfully submits a claim under this title for any item or service provided during the applicable 2-year period (or receives any reimbursement or amount described in paragraph (1)(B) for any such item or service) with respect to such affidavit—
(i)
this subsection shall not apply with respect to any items and services provided by the physician or practitioner pursuant to any contract on and after the date of such submission and before the end of such period; and
(ii)
no payment shall be made under this title for any item or service furnished by the physician or practitioner during the period described in clause (i) (and no reimbursement or payment of any amount described in paragraph (1)(B) shall be made for any such item or service).
(D)

Applicable 2-year periods for effectiveness of affidavits.—
In this subsection, the term “applicable 2-year period” means, with respect to an affidavit of a physician or practitioner under subparagraph (B), the 2-year period beginning on the date the affidavit is signed and includes each subsequent 2-year period unless the physician or practitioner involved provides notice to the Secretary (in a form and manner specified by the Secretary), not later than 30 days before the end of the previous 2-year period, that the physician or practitioner does not want to extend the application of the affidavit for such subsequent 2-year period.
(4)

Limitation on actual charge and claim submission requirement not applicable.—
Section 1848(g) shall not apply with respect to any item or service provided to a medicare beneficiary under a contract described in paragraph (1).
(5)

Posting of information on opt-out physicians and practitioners.—
(A)

In general.—
Beginning not later than February 1, 2016, the Secretary shall make publicly available through an appropriate publicly accessible website of the Department of Health and Human Services information on the number and characteristics of opt-out physicians and practitioners and shall update such information on such website not less often than annually.
(B)

Information to be included.—
The information to be made available under subparagraph (A) shall include at least the following with respect to opt-out physicians and practitioners:
(i)
Their number.
(ii)
Their physician or professional specialty or other designation.
(iii)
Their geographic distribution.
(iv)
The timing of their becoming opt-out physicians and practitioners, relative, to the extent feasible, to when they first enrolled in the program under this title and with respect to applicable 2-year periods.
(v)
The proportion of such physicians and practitioners who billed for emergency or urgent care services.
(6)

Definitions.—
In this subsection:
(A)

Medicare beneficiary.—
The term “medicare beneficiary” means an individual who is entitled to benefits under part A or enrolled under part B.
(B)

Physician.—
The term “physician” has the meaning given such term by paragraphs (1), (2), (3), and (4) of section 1861(r).
(C)

Practitioner.—
The term “practitioner” has the meaning given such term by section 1842(b)(18)(C).
(D)

Opt-out physician or practitioner.—
The term “opt-out physician or practitioner” means a physician or practitioner who has in effect an affidavit under paragraph (3)(B).

option to individuals to obtain other health insurance protection
Sec. 1803.
[42 U.S.C. 1395b]
Nothing contained in this title shall be construed to preclude any State from providing, or any individual from purchasing or otherwise securing, protection against the cost of any health services.

notice of medicare benefits; medicare and medigap information
Sec. 1804.
[42 U.S.C. 1395b–2]
(a)
The Secretary shall prepare (in consultation with groups representing the elderly and with health insurers) and provide for distribution of a notice containing—
(1)
a clear, simple explanation of the benefits available under this title and the major categories of health care for which benefits are not available under this title,
(2)
the limitations on payment (including deductibles and coinsurance amounts) that are imposed under this title, and
(3)
a description of the limited benefits for long-term care services available under this title and generally available under State plans approved under title XIX.
Such notice shall be mailed annually to individuals entitled to benefits under part A or part B of this title and when an individual applies for benefits under part A or enrolls under part B.
(b)
The Secretary shall provide information via a toll-free telephone number on the programs under this title. The Secretary shall provide, through the toll-free telephone number 1–800–MEDICARE, for a means by which individuals seeking information about, or assistance with, such programs who phone such toll-free number are transferred (without charge) to appropriate entities for the provision of such information or assistance. Such toll-free number shall be the toll-free number listed for general information and assistance in the annual notice under subsection (a) instead of the listing of numbers of individual contractors.
(c)
The notice provided under subsection (a) shall include—
(1)
a statement which indicates that because errors do occur and because medicare fraud, waste, and abuse is a significant problem, beneficiaries should carefully check any explanation of benefits or itemized statement furnished pursuant to section 1806 for accuracy and report any errors or questionable charges by calling the toll-free phone number described in paragraph (4);
(2)
a statement of the beneficiary's right to request an itemized statement for medicare items and services (as provided in section 1806(b));
(3)
a description of the program to collect information on medicare fraud and abuse established under section 203(b) of the Health Insurance Portability and Accountability Act of 1996; and
(4)
a toll-free telephone number maintained by the Inspector General in the Department of Health and Human Services for the receipt of complaints and information about waste, fraud, and abuse in the provision or billing of services under this title.
(d)
The notice provided under subsection (a) shall include—
(1)
references to educational resources regarding opioid use and pain management;
(2)
a description of categories of alternative, non-opioid pain management treatments covered under this title; and
(3)
a suggestion for the beneficiary to talk to a physician regarding opioid use and pain management.

medicare payment advisory commission
Sec. 1805.
[42 U.S.C. 1395b–6]
(a)

Establishment.—
There is hereby established as an agency of Congress the Medicare Payment Advisory Commission (in this section referred to as the “Commission”).
(b)

Duties.—
(1)

Review of payment policies and annual reports.—
The Commission shall—
(A)
review payment policies under this title, including the topics described in paragraph (2);
(B)
make recommendations to Congress concerning such payment policies;
(C)
by not later than March 15, submit a report to Congress containing the results of such reviews and its recommendations concerning such policies; and
(D)
by not later than June 15 of each year, submit a report to Congress containing an examination of issues affecting the medicare program, including the implications of changes in health care delivery in the United States and in the market for health care services on the medicare program and including a review of the estimate of the conversion factor submitted under section 1848(d)(1)(E)(ii), and (beginning with 2012) containing an examination of the topics described in paragraph (9), to the extent feasible.
(2)

Specific topics to be reviewed.—
(A)

Medicare+choice program.—
Specifically, the Commission shall review, with respect to the Medicare+Choice program under part C, the following:
(i)
The methodology for making payment to plans under such program, including the making of differential payments and the distribution of differential updates among different payment areas.
(ii)
The mechanisms used to adjust payments for risk and the need to adjust such mechanisms to take into account health status of beneficiaries.
(iii)
The implications of risk selection both among Medicare+Choice organizations and between the Medicare+Choice option and the original medicare fee-for-service option.
(iv)
The development and implementation of mechanisms to assure the quality of care for those enrolled with Medicare+Choice organizations.
(v)
The impact of the Medicare+Choice program on access to care for medicare beneficiaries.
(vi)
Other major issues in implementation and further development of the Medicare+Choice program.
(B)

Original medicare fee-for-service system.—
Specifically, the Commission shall review payment policies under parts A and B, including—
(i)
the factors affecting expenditures for the efficient provision of services in different sectors, including the process for updating hospital, skilled nursing facility, physician, and other fees,
(ii)
payment methodologies, and
(iii)
their relationship to access and quality of care for medicare beneficiaries.
(C)

Interaction of medicare payment policies with health care delivery generally.—
Specifically, the Commission shall review the effect of payment policies under this title on the delivery of health care services other than under this title and assess the implications of changes in health care delivery in the United States and in the general market for health care services on the medicare program.
(3)

Comments on certain secretarial reports.—
If the Secretary submits to Congress (or a committee of Congress) a report that is required by law and that relates to payment policies under this title, the Secretary shall transmit a copy of the report to the Commission. The Commission shall review the report and, not later than 6 months after the date of submittal of the Secretary's report to Congress, shall submit to the appropriate committees of Congress written comments on such report. Such comments may include such recommendations as the Commission deems appropriate.
(4)

Agenda and additional reviews.—
The Commission shall consult periodically with the chairmen and ranking minority members of the appropriate committees of Congress regarding the Commission's agenda and progress towards achieving the agenda. The Commission may conduct additional reviews, and submit additional reports to the appropriate committees of Congress, from time to time on such topics relating to the program under this title as may be requested by such chairmen and members and as the Commission deems appropriate.
(5)

Availability of reports.—
The Commission shall transmit to the Secretary a copy of each report submitted under this subsection and shall make such reports available to the public.
(6)

Appropriate committees of congress.—
For purposes of this section, the term “appropriate committees of Congress” means the Committees on Ways and Means and Commerce of the House of Representatives and the Committee on Finance of the Senate.
(7)

Voting and reporting requirements.—
With respect to each recommendation contained in a report submitted under paragraph (1), each member of the Commission shall vote on the recommendation, and the Commission shall include, by member, the results of that vote in the report containing the recommendation.
(8)

Examination of budget consequences.—
Before making any recommendations, the Commission shall examine the budget consequences of such recommendations, directly or through consultation with appropriate expert entities.
(9)

Review and annual report on medicaid and commercial trends.—
The Commission shall review and report on aggregate trends in spending, utilization, and financial performance under the Medicaid program under title XIX and the private market for health care services with respect to providers for which, on an aggregate national basis, a significant portion of revenue or services is associated with the Medicaid program. Where appropriate, the Commission shall conduct such review in consultation with the Medicaid and CHIP Payment and Access Commission established under section 1900 (in this section referred to as “MACPAC”).
(10)

Coordinate and consult with the federal coordinated health care office.—
The Commission shall coordinate and consult with the Federal Coordinated Health Care Office established under section 2081 of the Patient Protection and Affordable Care Act before making any recommendations regarding dual eligible individuals.
(11)

Interaction of medicaid and medicare.—
The Commission shall consult with MACPAC in carrying out its duties under this section, as appropriate. Responsibility for analysis of and recommendations to change Medicare policy regarding Medicare beneficiaries, including Medicare beneficiaries who are dually eligible for Medicare and Medicaid, shall rest with the Commission. Responsibility for analysis of and recommendations to change Medicaid policy regarding Medicaid beneficiaries, including Medicaid beneficiaries who are dually eligible for Medicare and Medicaid, shall rest with MACPAC.
(c)

Membership.—
(1)

Number and appointment.—
The Commission shall be composed of 17 members appointed by the Comptroller General.
(2)

Qualifications.—
(A)

In general.—
The membership of the Commission shall include individuals with national recognition for their expertise in health finance and economics, actuarial science, health facility management, health plans and integrated delivery systems, reimbursement of health facilities, allopathic and osteopathic physicians, and other providers of health services, and other related fields, who provide a mix of different professionals, broad geographic representation, and a balance between urban and rural representatives.
(B)

Inclusion.—
The membership of the Commission shall include (but not be limited to) physicians and other health professionals, experts in the area of pharmaco-economics or prescription drug benefit programs, employers, third-party payers, individuals skilled in the conduct and interpretation of biomedical, health services, and health economics research and expertise in outcomes and effectiveness research and technology assessment. Such membership shall also include representatives of consumers and the elderly.
(C)

Majority nonproviders.—
Individuals who are directly involved in the provision, or management of the delivery, of items and services covered under this title shall not constitute a majority of the membership of the Commission.
(D)

Ethical disclosure.—
The Comptroller General shall establish a system for public disclosure by members of the Commission of financial and other potential conflicts of interest relating to such members. Members of the Commission shall be treated as employees of Congress for purposes of applying subchapter I of chapter 131 of title 5, United States Code.
(3)

Terms.—
(A)

In general.—
The terms of members of the Commission shall be for 3 years except that the Comptroller General shall designate staggered terms for the members first appointed.
(B)

Vacancies.—
Any member appointed to fill a vacancy occurring before the expiration of the term for which the member's predecessor was appointed shall be appointed only for the remainder of that term. A member may serve after the expiration of that member's term until a successor has taken office. A vacancy in the Commission shall be filled in the manner in which the original appointment was made.
(4)

Compensation.—
While serving on the business of the Commission (including traveltime), a member of the Commission shall be entitled to compensation at the per diem equivalent of the rate provided for level IV of the Executive Schedule under section 5315 of title 5, United States Code; and while so serving away from home and the member's regular place of business, a member may be allowed travel expenses, as authorized by the Chairman of the Commission. Physicians serving as personnel of the Commission may be provided a physician comparability allowance by the Commission in the same manner as Government physicians may be provided such an allowance by an agency under section 5948 of title 5, United States Code, and for such purpose subsection (i) of such section shall apply to the Commission in the same manner as it applies to the Tennessee Valley Authority. For purposes of pay (other than pay of members of the Commission) and employment benefits, rights, and privileges, all personnel of the Commission shall be treated as if they were employees of the United States Senate.
(5)

Chairman; vice chairman.—
The Comptroller General shall designate a member of the Commission, at the time of appointment of the member as Chairman and a member as Vice Chairman for that term of appointment, except that in the case of vacancy of the Chairmanship or Vice Chairmanship, the Comptroller General may designate another member for the remainder of that member's term.
(6)

Meetings.—
The Commission shall meet at the call of the Chairman.
(d)

Director and Staff; Experts and Consultants.—
Subject to such review as the Comptroller General deems necessary to assure the efficient administration of the Commission, the Commission may—
(1)
employ and fix the compensation of an Executive Director (subject to the approval of the Comptroller General) and such other personnel as may be necessary to carry out its duties (without regard to the provisions of title 5, United States Code, governing appointments in the competitive service);
(2)
seek such assistance and support as may be required in the performance of its duties from appropriate Federal departments and agencies;
(3)
enter into contracts or make other arrangements, as may be necessary for the conduct of the work of the Commission (without regard to section 3709 of the Revised Statutes (41 U.S.C. 5));
(4)
make advance, progress, and other payments which relate to the work of the Commission;
(5)
provide transportation and subsistence for persons serving without compensation; and
(6)
prescribe such rules and regulations as it deems necessary with respect to the internal organization and operation of the Commission.
(e)

Powers.—
(1)

Obtaining official data.—
The Commission may secure directly from any department or agency of the United States information necessary to enable it to carry out this section. Upon request of the Chairman, the head of that department or agency shall furnish that information to the Commission on an agreed upon schedule.
(2)

Data collection.—
In order to carry out its functions, the Commission shall—
(A)
utilize existing information, both published and unpublished, where possible, collected and assessed either by its own staff or under other arrangements made in accordance with this section,
(B)
carry out, or award grants or contracts for, original research and experimentation, where existing information is inadequate, and
(C)
adopt procedures allowing any interested party to submit information for the Commission's use in making reports and recommendations.
(3)

Access of gao to information.—
The Comptroller General shall have unrestricted access to all deliberations, records, and nonproprietary data of the Commission, immediately upon request.
(4)

Periodic audit.—
The Commission shall be subject to periodic audit by the Comptroller General.
(f)

Authorization of Appropriations.—
(1)

Request for appropriations.—
The Commission shall submit requests for appropriations in the same manner as the Comptroller General submits requests for appropriations, but amounts appropriated for the Commission shall be separate from amounts appropriated for the Comptroller General.
(2)

Authorization.—
There are authorized to be appropriated such sums as may be necessary to carry out the provisions of this section. Sixty percent of such appropriation shall be payable from the Federal Hospital Insurance Trust Fund, and 40 percent of such appropriation shall be payable from the Federal Supplementary Medical Insurance Trust Fund.

explanation of medicare benefits
Sec. 1806.
[42 U.S.C. 1395b–7]
(a)

In General.—
The Secretary shall furnish to each individual for whom payment has been made under this title (or would be made without regard to any deductible) a statement which—
(1)
lists the item or service for which payment has been made and the amount of such payment for each item or service; and
(2)
includes a notice of the individual's right to request an itemized statement (as provided in subsection (b)).
(b)

Request for Itemized Statement for Medicare Items and Services.—
(1)

In general.—
An individual may submit a written request to any physician, provider, supplier, or any other person (including an organization, agency, or other entity) for an itemized statement for any item or service provided to such individual by such person with respect to which payment has been made under this title.
(2)

30-day period to furnish statement.—
(A)

In general.—
Not later than 30 days after the date on which a request under paragraph (1) has been made, a person described in such paragraph shall furnish an itemized statement describing each item or service provided to the individual requesting the itemized statement.
(B)

Penalty.—
Whoever knowingly fails to furnish an itemized statement in accordance with subparagraph (A) shall be subject to a civil money penalty of not more than $100 for each such failure. Such penalty shall be imposed and collected in the same manner as civil money penalties under subsection (a) of section 1128A are imposed and collected under that section.
(3)

Review of itemized statement.—
(A)

In general.—
Not later than 90 days after the receipt of an itemized statement furnished under paragraph (1), an individual may submit a written request for a review of the itemized statement to the Secretary.
(B)

Specific allegations.—
A request for a review of the itemized statement shall identify—
(i)
specific items or services that the individual believes were not provided as claimed, or
(ii)
any other billing irregularity (including duplicate billing).
(4)

Findings of secretary.—
The Secretary shall, with respect to each written request submitted under paragraph (3), determine whether the itemized statement identifies specific items or services that were not provided as claimed or any other billing irregularity (including duplicate billing) that has resulted in unnecessary payments under this title.
(5)

Recovery of amounts.—
The Secretary shall take all appropriate measures to recover amounts unnecessarily paid under this title with respect to a statement described in paragraph (4).
(c)

Format of Statements From Secretary.—
(1)

Electronic option beginning in 2016.—
Subject to paragraph (2), for statements described in subsection (a) that are furnished for a period in 2016 or a subsequent year, in the case that an individual described in subsection (a) elects, in accordance with such form, manner, and time specified by the Secretary, to receive such statement in an electronic format, such statement shall be furnished to such individual for each period subsequent to such election in such a format and shall not be mailed to the individual.
(2)

Limitation on revocation option.—
(A)

In general.—
Subject to subparagraph (B), the Secretary may determine a maximum number of elections described in paragraph (1) by an individual that may be revoked by the individual.
(B)

Minimum of one revocation option.—
In no case may the Secretary determine a maximum number under subparagraph (A) that is less than one.
(3)

Notification.—
The Secretary shall ensure that, in the most cost effective manner and beginning January 1, 2017, a clear notification of the option to elect to receive statements described in subsection (a) in an electronic format is made available, such as through the notices distributed under section 1804, to individuals described in subsection (a).

chronic care improvement
Sec. 1807.
[42 U.S.C. 1395b–8]
(a)

Implementation of Chronic Care Improvement Programs.—
(1)

In general.—
The Secretary shall provide for the phased-in development, testing, evaluation, and implementation of chronic care improvement programs in accordance with this section. Each such program shall be designed to improve clinical quality and beneficiary satisfaction and achieve spending targets with respect to expenditures under this title for targeted beneficiaries with one or more threshold conditions.
(2)

Definitions.—
For purposes of this section:
(A)

Chronic care improvement program.—
The term “chronic care improvement program” means a program described in paragraph (1) that is offered under an agreement under subsection (b) or (c).
(B)

Chronic care improvement organization.—
The term “chronic care improvement organization” means an entity that has entered into an agreement under subsection (b) or (c) to provide, directly or through contracts with subcontractors, a chronic care improvement program under this section. Such an entity may be a disease management organization, health insurer, integrated delivery system, physician group practice, a consortium of such entities, or any other legal entity that the Secretary determines appropriate to carry out a chronic care improvement program under this section.
(C)

Care management plan.—
The term “care management plan” means a plan established under subsection (d) for a participant in a chronic care improvement program.
(D)

Threshold condition.—
The term “threshold condition” means a chronic condition, such as congestive heart failure, diabetes, chronic obstructive pulmonary disease (COPD), or other diseases or conditions, as selected by the Secretary as appropriate for the establishment of a chronic care improvement program.
(E)

Targeted beneficiary.—
The term “targeted beneficiary” means, with respect to a chronic care improvement program, an individual who—
(i)
is entitled to benefits under part A and enrolled under part B, but not enrolled in a plan under part C;
(ii)
has one or more threshold conditions covered under such program; and
(iii)
has been identified under subsection (d)(1) as a potential participant in such program.
(3)

Construction.—
Nothing in this section shall be construed as—
(A)
expanding the amount, duration, or scope of benefits under this title;
(B)
providing an entitlement to participate in a chronic care improvement program under this section;
(C)
providing for any hearing or appeal rights under section 1869, 1878, or otherwise, with respect to a chronic care improvement program under this section; or
(D)
providing benefits under a chronic care improvement program for which a claim may be submitted to the Secretary by any provider of services or supplier (as defined in section 1861(d)).
(b)

Developmental Phase (Phase I).—
(1)

In general.—
In carrying out this section, the Secretary shall enter into agreements consistent with subsection (f) with chronic care improvement organizations for the development, testing, and evaluation of chronic care improvement programs using randomized controlled trials. The first such agreement shall be entered into not later than 12 months after the date of the enactment of this section.
(2)

Agreement period.—
The period of an agreement under this subsection shall be for 3 years.
(3)

Minimum participation.—
(A)

In general.—
The Secretary shall enter into agreements under this subsection in a manner so that chronic care improvement programs offered under this section are offered in geographic areas that, in the aggregate, consist of areas in which at least 10 percent of the aggregate number of medicare beneficiaries reside.
(B)

Medicare beneficiary defined.—
In this paragraph, the term “medicare beneficiary” means an individual who is entitled to benefits under part A, enrolled under part B, or both, and who resides in the United States.
(4)

Site selection.—
In selecting geographic areas in which agreements are entered into under this subsection, the Secretary shall ensure that each chronic care improvement program is conducted in a geographic area in which at least 10,000 targeted beneficiaries reside among other individuals entitled to benefits under part A, enrolled under part B, or both to serve as a control population.
(5)

Independent evaluations of phase i programs.—
The Secretary shall contract for an independent evaluation of the programs conducted under this subsection. Such evaluation shall be done by a contractor with knowledge of chronic care management programs and demonstrated experience in the evaluation of such programs. Each evaluation shall include an assessment of the following factors of the programs:
(A)
Quality improvement measures, such as adherence to evidence-based guidelines and rehospitalization rates.
(B)
Beneficiary and provider satisfaction.
(C)
Health outcomes.
(D)
Financial outcomes, including any cost savings to the program under this title.
(c)

Expanded Implementation Phase (Phase II).—
(1)

In general.—
With respect to chronic care improvement programs conducted under subsection (b), if the Secretary finds that the results of the independent evaluation conducted under subsection (b)(6) indicate that the conditions specified in paragraph (2) have been met by a program (or components of such program), the Secretary shall enter into agreements consistent with subsection (f) to expand the implementation of the program (or components) to additional geographic areas not covered under the program as conducted under subsection (b), which may include the implementation of the program on a national basis. Such expansion shall begin not earlier than 2 years after the program is implemented under subsection (b) and not later than 6 months after the date of completion of such program.
(2)

Conditions for expansion of programs.—
The conditions specified in this paragraph are, with respect to a chronic care improvement program conducted under subsection (b) for a threshold condition, that the program is expected to—
(A)
improve the clinical quality of care;
(B)
improve beneficiary satisfaction; and
(C)
achieve targets for savings to the program under this title specified by the Secretary in the agreement within a range determined to be appropriate by the Secretary, subject to the application of budget neutrality with respect to the program and not taking into account any payments by the organization under the agreement under the program for risk under subsection (f)(3)(B).
(3)

Independent evaluations of phase ii programs.—
The Secretary shall carry out evaluations of programs expanded under this subsection as the Secretary determines appropriate. Such evaluations shall be carried out in the similar manner as is provided under subsection (b)(5).
(d)

Identification and Enrollment of Prospective Program Participants.—
(1)

Identification of prospective program participants.—
The Secretary shall establish a method for identifying targeted beneficiaries who may benefit from participation in a chronic care improvement program.
(2)

Initial contact by secretary.—
The Secretary shall communicate with each targeted beneficiary concerning participation in a chronic care improvement program. Such communication may be made by the Secretary and shall include information on the following:
(A)
A description of the advantages to the beneficiary in participating in a program.
(B)
Notification that the organization offering a program may contact the beneficiary directly concerning such participation.
(C)
Notification that participation in a program is voluntary.
(D)
A description of the method for the beneficiary to participate or for declining to participate and the method for obtaining additional information concerning such participation.
(3)

Voluntary participation.—
A targeted beneficiary may participate in a chronic care improvement program on a voluntary basis and may terminate participation at any time.
(e)

Chronic Care Improvement Programs.—
(1)

In general.—
Each chronic care improvement program shall—
(A)
have a process to screen each targeted beneficiary for conditions other than threshold conditions, such as impaired cognitive ability and co-morbidities, for the purposes of developing an individualized, goal-oriented care management plan under paragraph (2);
(B)
provide each targeted beneficiary participating in the program with such plan; and
(C)
carry out such plan and other chronic care improvement activities in accordance with paragraph (3).
(2)

Elements of care management plans.—
A care management plan for a targeted beneficiary shall be developed with the beneficiary and shall, to the extent appropriate, include the following:
(A)
A designated point of contact responsible for communications with the beneficiary and for facilitating communications with other health care providers under the plan.
(B)
Self-care education for the beneficiary (through approaches such as disease management or medical nutrition therapy) and education for primary caregivers and family members.
(C)
Education for physicians and other providers and collaboration to enhance communication of relevant clinical information.
(D)
The use of monitoring technologies that enable patient guidance through the exchange of pertinent clinical information, such as vital signs, symptomatic information, and health self-assessment.
(E)
The provision of information about hospice care, pain and palliative care, and end-of-life care.
(3)

Conduct of programs.—
In carrying out paragraph (1)(C) with respect to a participant, the chronic care improvement organization shall—
(A)
guide the participant in managing the participant's health (including all co-morbidities, relevant health care services, and pharmaceutical needs) and in performing activities as specified under the elements of the care management plan of the participant;
(B)
use decision-support tools such as evidence-based practice guidelines or other criteria as determined by the Secretary; and
(C)
develop a clinical information database to track and monitor each participant across settings and to evaluate outcomes.
(4)

Additional responsibilities.—
(A)

Outcomes report.—
Each chronic care improvement organization offering a chronic care improvement program shall monitor and report to the Secretary, in a manner specified by the Secretary, on health care quality, cost, and outcomes.
(B)

Additional requirements.—
Each such organization and program shall comply with such additional requirements as the Secretary may specify.
(5)

Accreditation.—
The Secretary may provide that chronic care improvement programs and chronic care improvement organizations that are accredited by qualified organizations (as defined by the Secretary) may be deemed to meet such requirements under this section as the Secretary may specify.
(f)

Terms of Agreements.—
(1)

Terms and conditions.—
(A)

In general.—
An agreement under this section with a chronic care improvement organization shall contain such terms and conditions as the Secretary may specify consistent with this section.
(B)

Clinical, quality improvement, and financial requirements.—
The Secretary may not enter into an agreement with such an organization under this section for the operation of a chronic care improvement program unless—
(i)
the program and organization meet the requirements of subsection (e) and such clinical, quality improvement, financial, and other requirements as the Secretary deems to be appropriate for the targeted beneficiaries to be served; and
(ii)
the organization demonstrates to the satisfaction of the Secretary that the organization is able to assume financial risk for performance under the agreement (as applied under paragraph (3)(B)) with respect to payments made to the organization under such agreement through available reserves, reinsurance, withholds, or such other means as the Secretary determines appropriate.
(2)

Manner of payment.—
Subject to paragraph (3)(B), the payment under an agreement under—
(A)
subsection (b) shall be computed on a per-member per-month basis; or
(B)
subsection (c) may be on a per-member per-month basis or such other basis as the Secretary and organization may agree.
(3)

Application of performance standards.—
(A)

Specification of performance standards.—
Each agreement under this section with a chronic care improvement organization shall specify performance standards for each of the factors specified in subsection (c)(2), including clinical quality and spending targets under this title, against which the performance of the chronic care improvement organization under the agreement is measured.
(B)

Adjustment of payment based on performance.—
(i)

In general.—
Each such agreement shall provide for adjustments in payment rates to an organization under the agreement insofar as the Secretary determines that the organization failed to meet the performance standards specified in the agreement under subparagraph (A).
(ii)

Financial risk for performance.—
In the case of an agreement under subsection (b) or (c), the agreement shall provide for a full recovery for any amount by which the fees paid to the organization under the agreement exceed the estimated savings to the programs under this title attributable to implementation of such agreement.
(4)

Budget neutral payment condition.—
Under this section, the Secretary shall ensure that the aggregate sum of medicare program benefit expenditures for beneficiaries participating in chronic care improvement programs and funds paid to chronic care improvement organizations under this section, shall not exceed the medicare program benefit expenditures that the Secretary estimates would have been made for such targeted beneficiaries in the absence of such programs.
(g)

Funding.—
(1)
Subject to paragraph (2), there are appropriated to the Secretary, in appropriate part from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund, such sums as may be necessary to provide for agreements with chronic care improvement programs under this section.
(2)
In no case shall the funding under this section exceed $100,000,000 in aggregate increased expenditures under this title (after taking into account any savings attributable to the operation of this section) over the 3-fiscal-year period beginning on October 1, 2003.

provisions relating to administration
Sec. 1808.
[42 U.S.C. 1395b–9]
(a)

Coordinated Administration of Medicare Prescription Drug and Medicare Advantage Programs.—
(1)

In general.—
There is within the Centers for Medicare & Medicaid Services a center to carry out the duties described in paragraph (3).
(2)

Director.—
Such center shall be headed by a director who shall report directly to the Administrator of the Centers for Medicare & Medicaid Services.
(3)

Duties.—
The duties described in this paragraph are the following:
(A)
The administration of parts C and D.
(B)
The provision of notice and information under section 1804.
(C)
Such other duties as the Secretary may specify.
(4)

Deadline.—
The Secretary shall ensure that the center is carrying out the duties described in paragraph (3) by not later than January 1, 2008.
(b)

Employment of Management Staff.—
(1)

In general.—
The Secretary may employ, within the Centers for Medicare & Medicaid Services, such individuals as management staff as the Secretary determines to be appropriate. With respect to the administration of parts C and D, such individuals shall include individuals with private sector expertise in negotiations with health benefits plans.
(2)

Eligibility.—
To be eligible for employment under paragraph (1) an individual shall be required to have demonstrated, by their education and experience (either in the public or private sector), superior expertise in at least one of the following areas:
(A)
The review, negotiation, and administration of health care contracts.
(B)
The design of health care benefit plans.
(C)
Actuarial sciences.
(D)
Compliance with health plan contracts.
(E)
Consumer education and decision making.
(F)
Any other area specified by the Secretary that requires specialized management or other expertise.
(3)

Rates of payment.—
(A)

Performance-related pay.—
Subject to subparagraph (B), the Secretary shall establish the rate of pay for an individual employed under paragraph (1). Such rate shall take into account expertise, experience, and performance.
(B)

Limitation.—
In no case may the rate of compensation determined under subparagraph (A) exceed the highest rate of basic pay for the Senior Executive Service under section 5382(b) of title 5, United States Code.
(c)

Medicare Beneficiary Ombudsman.—
(1)

In general.—
The Secretary shall appoint within the Department of Health and Human Services a Medicare Beneficiary Ombudsman who shall have expertise and experience in the fields of health care and education of (and assistance to) individuals entitled to benefits under this title.
(2)

Duties.—
The Medicare Beneficiary Ombudsman shall—
(A)
receive complaints, grievances, and requests for information submitted by individuals entitled to benefits under part A or enrolled under part B, or both, with respect to any aspect of the medicare program;
(B)
provide assistance with respect to complaints, grievances, and requests referred to in subparagraph (A), including—
(i)
assistance in collecting relevant information for such individuals, to seek an appeal of a decision or determination made by a fiscal intermediary, carrier, MA organization, or the Secretary;
(ii)
assistance to such individuals with any problems arising from disenrollment from an MA plan under part C; and
(iii)
assistance to such individuals in presenting information under section 1839(i)(4)(C) (relating to income-related premium adjustment; and
(C)
submit annual reports to Congress and the Secretary that describe the activities of the Office and that include such recommendations for improvement in the administration of this title as the Ombudsman determines appropriate.
The Ombudsman shall not serve as an advocate for any increases in payments or new coverage of services, but may identify issues and problems in payment or coverage policies.
(3)

Working with health insurance counseling programs.—
To the extent possible, the Ombudsman shall work with health insurance counseling programs (receiving funding under section 4360 of Omnibus Budget Reconciliation Act of 1990) to facilitate the provision of information to individuals entitled to benefits under part A or enrolled under part B, or both regarding MA plans and changes to those plans. Nothing in this paragraph shall preclude further collaboration between the Ombudsman and such programs.
(d)

Pharmaceutical and Technology Ombudsman.—
(1)

In general.—
Not later than 12 months after the date of enactment of this paragraph, the Secretary shall provide for a pharmaceutical and technology ombudsman within the Centers for Medicare & Medicaid Services who shall receive and respond to complaints, grievances, and requests that—
(A)
are from entities that manufacture pharmaceutical, biotechnology, medical device, or diagnostic products that are covered or for which coverage is being sought under this title; and
(B)
are with respect to coverage, coding, or payment under this title for such products.
(2)

Application.—
The second sentence of subsection (c)(2) shall apply to the ombudsman under subparagraph (A) in the same manner as such sentence applies to the Medicare Beneficiary Ombudsman under subsection (c).
(e)

Funding for Implementation of Beneficiary Enrollment Simplification.—
For purposes of carrying out the provisions of and the amendments made by section 120 of division CC of the Consolidated Appropriations Act, 2021, the Secretary shall provide for the transfer, from the Federal Hospital Insurance Trust Fund under section 1817 and the Federal Supplementary Medical Insurance Trust Fund under section 1841 (in such proportion as the Secretary determines appropriate), to the Centers for Medicare & Medicaid Services Program Management Account, of $2,000,000 for each of fiscal years 2021 through 2030, to remain available until expended.

addressing health care disparities
Sec. 1809.
[42 U.S.C. 1395b–10]
(a)

Evaluating Data Collection Approaches.—
The Secretary shall evaluate approaches for the collection of data under this title, to be performed in conjunction with existing quality reporting requirements and programs under this title, that allow for the ongoing, accurate, and timely collection and evaluation of data on disparities in health care services and performance on the basis of race, ethnicity, and gender. In conducting such evaluation, the Secretary shall consider the following objectives:
(1)
Protecting patient privacy.
(2)
Minimizing the administrative burdens of data collection and reporting on providers and health plans participating under this title.
(3)
Improving Medicare program data on race, ethnicity, and gender.
(b)

Reports to Congress.—
(1)

Report on evaluation.—
Not later than 18 months after the date of the enactment of this section, the Secretary shall submit to Congress a report on the evaluation conducted under subsection (a). Such report shall, taking into consideration the results of such evaluation—
(A)
identify approaches (including defining methodologies) for identifying and collecting and evaluating data on health care disparities on the basis of race, ethnicity, and gender for the original Medicare fee-for-service program under parts A and B, the Medicare Advantage program under part C, and the Medicare prescription drug program under part D; and
(B)
include recommendations on the most effective strategies and approaches to reporting HEDIS quality measures as required under section 1852(e)(3) and other nationally recognized quality performance measures, as appropriate, on the basis of race, ethnicity, and gender.
(2)

Reports on data analyses.—
Not later than 4 years after the date of the enactment of this section, and 4 years thereafter, the Secretary shall submit to Congress a report that includes recommendations for improving the identification of health care disparities for Medicare beneficiaries based on analyses of the data collected under subsection (c).
(c)

Implementing Effective Approaches.—
Not later than 24 months after the date of the enactment of this section, the Secretary shall implement the approaches identified in the report submitted under subsection (b)(1) for the ongoing, accurate, and timely collection and evaluation of data on health care disparities on the basis of race, ethnicity, and gender.
Part A—

Hospital Insurance Benefits for the Aged and Disabled

DESCRIPTION OF PROGRAM
Sec. 1811.
[42 U.S.C. 1395c]
The insurance program for which entitlement is established by sections 226 and 226A provides basic protection against the costs of hospital, related post-hospital, home health services, and hospice care in accordance with this part for (1) individuals who are age 65 or over and are eligible for retirement benefits under title II of this Act (or would be eligible for such benefits if certain government employment were covered employment under such title) or under the railroad retirement system, (2) individuals under age 65 who have been entitled for not less than 24 months to benefits under title II of this Act (or would have been so entitled to such benefits if certain government employment were covered employment under such title) or under the railroad retirement system on the basis of a disability, and (3) certain individuals who do not meet the conditions specified in either clause (1) or (2) but who are medically determined to have end stage renal disease.

SCOPE OF BENEFITS
Sec. 1812.
[42 U.S.C. 1395d]
(a)
The benefits provided to an individual by the insurance program under this part shall consist of entitlement to have payment made on his behalf or, in the case of payments referred to in section 1814(d)(2) to him (subject to the provisions of this part) for—
(1)
inpatient hospital services or inpatient critical access hospital services for up to 150 days during any spell of illness minus 1 day for each day of such services in excess of 90 received during any preceding spell of illness (if such individual was entitled to have payment for such services made under this part unless he specifies in accordance with regulations of the Secretary that he does not desire to have such payment made);
(2)
(A)
post-hospital extended care services for up to 100 days during any spell of illness, and (B) to the extent provided in subsection (f), extended care services that are not post-hospital extended care services;
(3)
in the case of individuals not enrolled in part B, home health services, and in the case of individuals so enrolled, post-institutional home health services furnished during a home health spell of illness for up to 100 visits during such spell of illness;
(4)
in lieu of certain other benefits, hospice care with respect to the individual during up to two periods of 90 days each and an unlimited number of subsequent periods of 60 days each with respect to which the individual makes an election under subsection (d)(1); and
(5)
for individuals who are terminally ill, have not made an election under subsection (d)(1), and have not previously received services under this paragraph, services that are furnished by a physician (as defined in section 1861(r)(1)) who is either the medical director or an employee of a hospice program and that—
(A)
consist of—
(i)
an evaluation of the individual's need for pain and symptom management, including the individual's need for hospice care; and
(ii)
counseling the individual with respect to hospice care and other care options; and
(B)
may include advising the individual regarding advanced care planning.
(b)
Payment under this part for services furnished an individual during a spell of illness may not (subject to subsection (c)) be made for—
(1)
inpatient hospital services furnished to him during such spell after such services have been furnished to him for 150 days during such spell minus 1 day for each day of inpatient hospital services in excess of 90 received during any preceding spell of illness (if such individual was entitled to have payment for such services made under this part unless he specifies in accordance with regulations of the Secretary that he does not desire to have such payment made);
(2)
post-hospital extended care services furnished to him during such spell after such services have been furnished to him for 100 days during such spell; or
(3)
inpatient psychiatric hospital services furnished to him after such services have been furnished to him for a total of 190 days during his lifetime.
Payment under this part for post-institutional home health services furnished an individual during a home health spell of illness may not be made for such services beginning after such services have been furnished for a total of 100 visits during such spell.
(c)
If an individual is an inpatient of a psychiatric hospital on the first day of the first month for which he is entitled to benefits under this part, the days on which he was an inpatient of such a hospital in the 150-day period immediately before such first day shall be included in determining the number of days limit under subsection (b)(1) insofar as such limit applies to (1) inpatient psychiatric hospital services, or (2) inpatient hospital services for an individual who is an inpatient primarily for the diagnosis or treatment of mental illness (but shall not be included in determining such number of days limit insofar as it applies to other inpatient hospital services or in determining the 190-day limit under subsection (b)(3)).
(d)
(1)
Payment under this part may be made for hospice care provided with respect to an individual only during two periods of 90 days each and an unlimited number of subsequent periods of 60 days each during the individual's lifetime and only, with respect to each such period, if the individual makes an election under this paragraph to receive hospice care under this part provided by, or under arrangements made by, a particular hospice program instead of certain other benefits under this title.
(2)
(A)
Except as provided in subparagraphs (B) and (C) and except in such exceptional and unusual circumstances as the Secretary may provide, if an individual makes such an election for a period with respect to a particular hospice program, the individual shall be deemed to have waived all rights to have payment made under this title with respect to—
(i)
hospice care provided by another hospice program (other than under arrangements made by the particular hospice program) during the period, and
(ii)
services furnished during the period that are determined (in accordance with guidelines of the Secretary) to be—
(I)
related to the treatment of the individual's condition with respect to which a diagnosis of terminal illness has been made or
(II)
equivalent to (or duplicative of) hospice care;
except that clause (ii) shall not apply to physicians' services furnished by the individual's attending physician (if not an employee of the hospice program) or to services provided by (or under arrangements made by) the hospice program.
(B)
After an individual makes such an election with respect to a 90-day period or a subsequent 60-day period, the individual may revoke the election during the period, in which case—
(i)
the revocation shall act as a waiver of the right to have payment made under this part for any hospice care benefits for the remaining time in such period and (for purposes of subsection (a)(4) and subparagraph (A)) the individual shall be deemed to have been provided such benefits during such entire period, and
(ii)
the individual may at any time after the revocation execute a new election for a subsequent period, if the individual otherwise is entitled to hospice care benefits with respect to such a period.
(C)
An individual may, once in each such period, change the hospice program with respect to which the election is made and such change shall not be considered a revocation of an election under subparagraph (B).
(D)
For purposes of this title, an individual's election with respect to a hospice program shall no longer be considered to be in effect with respect to that hospice program after the date the individual's revocation or change of election with respect to that election takes effect.
(e)
For purposes of subsections (b) and (c), inpatient hospital services, inpatient psychiatric hospital services, and post-hospital extended care services shall be taken into account only if payment is or would be, except for this section or the failure to comply with the request and certification requirements of or under section 1814(a), made with respect to such services under this part.
(f)
(1)
The Secretary shall provide for coverage, under clause (B) of subsection (a)(2), of extended care services which are not post-hospital extended care services at such time and for so long as the Secretary determines, and under such terms and conditions (described in paragraph (2)) as the Secretary finds appropriate, that the inclusion of such services will not result in any increase in the total of payments made under this title and will not alter the acute care nature of the benefit described in subsection (a)(2).
(2)
The Secretary may provide—
(A)
for such limitations on the scope and extent of services described in subsection (a)(2)(B) and on the categories of individuals who may be eligible to receive such services, and
(B)
notwithstanding sections 1814, 1861(v), and 1886, for such restrictions and alternatives on the amounts and methods of payment for services described in such subsection,
as may be necessary to carry out paragraph (1).
(g)
For definition of “spell of illness”, and for definitions of other terms used in this part, see section 1861.

DEDUCTIBLES AND COINSURANCE
Sec. 1813.
[42 U.S.C. 1395e]
(a)
(1)
The amount payable for inpatient hospital services or inpatient critical access hospital services furnished an individual during any spell of illness shall be reduced by a deduction equal to the inpatient hospital deductible or, if less, the charges imposed with respect to such individual for such services, except that, if the customary charges for such services are greater than the charges so imposed, such customary charges shall be considered to be the charges so imposed. Such amount shall be further reduced by a coinsurance amount equal to—
(A)
one-fourth of the inpatient hospital deductible for each day (before the 91st day) on which such individual is furnished such services during such spell of illness after such services have been furnished to him for 60 days during such spell; and
(B)
one-half of the inpatient hospital deductible for each day (before the day following the last day for which such individual is entitled under section 1812(a)(1) to have payment made on his behalf for inpatient hospital services or inpatient critical access hospital services during such spell of illness) on which such individual is furnished such services during such spell of illness after such services have been furnished to him for 90 days during such spell;
except that the reduction under this sentence for any day shall not exceed the charges imposed for that day with respect to such individual for such services (and for this purpose, if the customary charges for such services are greater than the charges so imposed, such customary charges shall be considered to be the charges so imposed).
(2)
(A)
The amount payable to any provider of services under this part for services furnished an individual shall be further reduced by a deduction equal to the expenses incurred for the first three pints of whole blood (or equivalent quantities of packed red blood cells, as defined under regulations) furnished to the individual during each calendar year, except that such deductible for such blood shall in accordance with regulations be appropriately reduced to the extent that there has been a replacement of such blood (or equivalent quantities of packed red blood cells, as so defined); and for such purposes blood (or equivalent quantities of packed red blood cells, as so defined) furnished such individual shall be deemed replaced when the institution or other person furnishing such blood (or such equivalent quantities of packed red blood cells, as so defined) is given one pint of blood for each pint of blood (or equivalent quantities of packed red blood cells, as so defined) furnished such individual with respect to which a deduction is made under this sentence.
(B)
The deductible under subparagraph (A) for blood or blood cells furnished an individual in a year shall be reduced to the extent that a deductible has been imposed under section 1833(b) to blood or blood cells furnished the individual in the year.
(3)
The amount payable for post-hospital extended care services furnished an individual during any spell of illness shall be reduced by a coinsurance amount equal to one-eighth of the inpatient hospital deductible for each day (before the 101st day) on which he is furnished such services after such services have been furnished to him for 20 days during such spell.
(4)
(A)
The amount payable for hospice care shall be reduced—
(i)
in the case of drugs and biologicals provided on an outpatient basis by (or under arrangements made by) the hospice program, by a coinsurance amount equal to an amount (not to exceed $5 per prescription) determined in accordance with a drug copayment schedule (established by the hospice program) which is related to, and approximates 5 percent of, the cost of the drug or biological to the program, and
(ii)
in the case of respite care provided by (or under arrangements made by) the hospice program, by a coinsurance amount equal to 5 percent of the amount estimated by the hospice program (in accordance with regulations of the Secretary) to be equal to the amount of payment under section 1814(i) to that program for respite care;
except that the total of the coinsurance required under clause (ii) for an individual may not exceed for a hospice coinsurance period the inpatient hospital deductible applicable for the year in which the period began. For purposes of this subparagraph, the term “hospice coinsurance period” means, for an individual, a period of consecutive days beginning with the first day for which an election under section 1812(d) is in effect for the individual and ending with the close of the first period of 14 consecutive days on each of which such an election is not in effect for the individual.
(B)
During the period of an election by an individual under section 1812(d)(1), no copayments or deductibles other than those under subparagraph (A) shall apply with respect to services furnished to such individual which constitute hospice care, regardless of the setting in which such services are furnished.
(b)
(1)
The inpatient hospital deductible for 1987 shall be $520. The inpatient hospital deductible for any succeeding year shall be an amount equal to the inpatient hospital deductible for the preceding calendar year, changed by the Secretary's best estimate of the payment-weighted average of the applicable percentage increases (as defined in section 1886(b)(3)(B)) which are applied under section 1886(d)(3)(A) for discharges in the fiscal year that begins on October 1 of such preceding calendar year, and adjusted to reflect changes in real case mix (determined on the basis of the most recent case mix data available). Any amount determined under the preceding sentence which is not a multiple of $4 shall be rounded to the nearest multiple of $4 (or, if it is midway between two multiples of $4, to the next higher multiple of $4).
(2)
The Secretary shall promulgate the inpatient hospital deductible and all coinsurance amounts under this section between September 1 and September 15 of the year preceding the year to which they will apply.
(3)
The inpatient hospital deductible for a year shall apply to—
(A)
the deduction under the first sentence of subsection (a)(1) for the year in which the first day of inpatient hospital services or inpatient critical access hospital services occurs in a spell of illness, and
(B)
to the coinsurance amounts under subsection (a) for inpatient hospital services, inpatient critical access hospital services and post-hospital extended care services furnished in that year.

CONDITIONS OF AND LIMITATIONS ON PAYMENT FOR SERVICES
Sec. 1814.
[42 U.S.C. 1395f]
(a)

Requirement of Requests and Certifications
Except as provided in subsections (d) and (g) and in section 1876, payment for services furnished an individual may be made only to providers of services which are eligible therefor under section 1866 and only if—
(1)
written request, signed by such individual, except in cases in which the Secretary finds it impracticable for the individual to do so, is filed for such payment in such form, in such manner, and by such person or persons as the Secretary may by regulation prescribe, no later than the close of the period ending 1 calendar year after the date of service;
(2)
a physician, or, in the case of services described in subparagraph (B), a physician, or a nurse practitioner, a clinical nurse specialist, or a physician assistant (as those terms are defined in section 1861(aa)(5)) who does not have a direct or indirect employment relationship with the facility but is working in collaboration with a physician,,2 or, in the case of services described in subparagraph (C), a physician, a nurse practitioner or clinical nurse specialist (as such terms are defined in section 1861(aa)(5)) who is working in accordance with State law, or a physician assistant (as defined in section 1861(aa)(5)) who is working in accordance with State law, who is enrolled under section 1866(j), certifies (and recertifies, where such services are furnished over a period of time, in such cases, with such frequency, and accompanied by such supporting material, appropriate to the case involved, as may be provided by regulations, except that the first of such recertifications shall be required in each case of inpatient hospital services not later than the 20th day of such period) that—
^2
Double comma so in law.
(A)
in the case of inpatient psychiatric hospital services, such services are or were required to be given on an inpatient basis, by or under the supervision of a physician, for the psychiatric treatment of an individual; and (i) such treatment can or could reasonably be expected to improve the condition for which such treatment is or was necessary or (ii) inpatient diagnostic study is or was medically required and such services are or were necessary for such purposes;
(B)
in the case of post-hospital extended care services, such services are or were required to be given because the individual needs or needed on a daily basis skilled nursing care (provided directly by or requiring the supervision of skilled nursing personnel) or other skilled rehabilitation services, which as a practical matter can only be provided in a skilled nursing facility on an inpatient basis, for any of the conditions with respect to which he was receiving inpatient hospital services (or services which would constitute inpatient hospital services if the institution met the requirements of paragraphs (6) and (9) of section 1861(e)) prior to transfer to the skilled nursing facility or for a condition requiring such extended care services which arose after such transfer and while he was still in the facility for treatment of the condition or conditions for which he was receiving such inpatient hospital services;
(C)
in the case of home health services, such services are or were required because the individual is or was confined to his home (except when receiving items and services referred to in section 1861(m)(7)) and needs or needed skilled nursing care (other than solely venipuncture for the purpose of obtaining a blood sample) on an intermittent basis or physical or speech therapy or, in the case of an individual who has been furnished home health services based on such a need and who no longer has such a need for such care or therapy, continues or continued to need occupational therapy; a plan for furnishing such services to such individual has been established and is periodically reviewed by a physician, a nurse practitioner, a clinical nurse specialist, or a physician assistant (as the case may be); such services are or were furnished while the individual was under the care of a physician, a nurse practitioner, a clinical nurse specialist, or a physician assistant (as the case may be), and, in the case of a certification made by a physician after January 1, 2010, or by a nurse practitioner, clinical nurse specialist, or physician assistant (as the case may be) after a date specified by the Secretary (but in no case later than the date that is 6 months after the date of the enactment of the CARES Act), prior to making such certification a physician, nurse practitioner, clinical nurse specialist, or physician assistant must document that a physician, nurse practitioner, clinical nurse specialist, certified nurse-midwife (as defined in section 1861(gg)) as authorized by State law, or physician assistant has had a face-to-face encounter (including through use of telehealth, subject to the requirements in section 1834(m), and other than with respect to encounters that are incident to services involved) with the individual within a reasonable timeframe as determined by the Secretary; or
(D)
in the case of inpatient hospital services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth, the individual, because of his underlying medical condition and clinical status or because of the severity of the dental procedure, requires hospitalization in connection with the provision of such services;
(3)
with respect to inpatient hospital services (other than inpatient psychiatric hospital services) which are furnished over a period of time, a physician certifies that such services are required to be given on an inpatient basis for such individual's medical treatment, or that inpatient diagnostic study is medically required and such services are necessary for such purpose, except that (A) such certification shall be furnished only in such cases, with such frequency, and accompanied by such supporting material, appropriate to the cases involved, as may be provided by regulations, and (B) the first such certification required in accordance with clause (A) shall be furnished no later than the 20th day of such period;
(4)
in the case of inpatient psychiatric hospital services, the services are those which the records of the hospital indicate were furnished to the individual during periods when he was receiving (A) intensive treatment services, (B) admission and related services necessary for a diagnostic study, or (C) equivalent services;
(5)
with respect to inpatient hospital services furnished such individual after the 20th day of a continuous period of such services, there was not in effect, at the time of admission of such individual to the hospital, a decision under section 1866(d) (based on a finding that utilization review of long-stay cases is not being made in such hospital);
(6)
with respect to inpatient hospital services or post-hospital extended care services furnished such individual during a continuous period, a finding has not been made (by the physician members of the committee or group, as described in section 1861(k)(4), including any finding made in the course of a sample or other review of admissions to the institution) pursuant to the system of utilization review that further inpatient hospital services or further post-hospital extended care services, as the case may be, are not medically necessary; except that, if such a finding has been made, payment may be made for such services furnished before the 4th day after the day on which the hospital or skilled nursing facility, as the case may be, received notice of such finding;
(7)
in the case of hospice care provided an individual—
(A)
(i)
in the first 90-day period—
(I)
the individual's attending physician (as defined in section 1861(dd)(3)(B)) (which for purposes of this subparagraph does not include a nurse practitioner or a physician assistant), and
(II)
the medical director (or physician member of the interdisciplinary group described in section 1861(dd)(2)(B)) of the hospice program providing (or arranging for) the care,
each certify in writing at the beginning of the period, that the individual is terminally ill (as defined in section 1861(dd)(3)(A)) based on the physician's or medical director's clinical judgment regarding the normal course of the individual's illness, and
(ii)
in a subsequent 90- or 60-day period, the medical director or physician described in clause (i)(II) recertifies at the beginning of the period that the individual is terminally ill based on such clinical judgment;
(B)
a written plan for providing hospice care with respect to such individual has been established (before such care is provided by, or under arrangements made by, that hospice program) and is periodically reviewed by the individual's attending physician and by the medical director (and the interdisciplinary group described in section 1861(dd)(2)(B)) of the hospice program;
(C)
such care is being or was provided pursuant to such plan of care;
(D)
on and after January 1, 2011 (and, in the case of clause (ii), before the date of enactment of subparagraph (E))—
(i)
(I)
subject to subclause (II), a hospice physician or nurse practitioner has a face-to-face encounter with the individual to determine continued eligibility of the individual for hospice care prior to the 180th-day recertification and each subsequent recertification under subparagraph (A)(ii) and attests that such visit took place (in accordance with procedures established by the Secretary); and
(II)
during the emergency period described in section 1135(g)(1)(B), and, in the case that such emergency period ends before December 31, 2024, during the period beginning on the first day after the end of such emergency period described in such section 1135(g)(1)(B) and ending on January 30, 2026, a hospice physician or nurse practitioner may conduct a face-to-face encounter required under this clause via telehealth, as determined appropriate by the Secretary; and
(ii)
in the case of hospice care provided an individual for more than 180 days by a hospice program for which the number of such cases for such program comprises more than a percent (specified by the Secretary) of the total number of such cases for all programs under this title, the hospice care provided to such individual is medically reviewed (in accordance with procedures established by the Secretary); and
(E)
on and after the date of enactment of this subparagraph, in the case of hospice care provided an individual for more than 180 days by a hospice program for which the number of such cases for such program comprises more than a percent (specified by the Secretary) of the total number of all cases of individuals provided hospice care by the program under this title, the hospice care provided to such individual is medically reviewed (in accordance with procedures established by the Secretary); and
(8)
in the case of inpatient critical access hospital services, a physician certifies that the individual may reasonably be expected to be discharged or transferred to a hospital within 96 hours after admission to the critical access hospital.
To the extent provided by regulations, the certification and recertification requirements of paragraph (2) shall be deemed satisfied where, at a later date, a physician, nurse practitioner, clinical nurse specialist, or physician assistant (as the case may be) makes certification of the kind provided in subparagraph (A), (B), (C), or (D) of paragraph (2) (whichever would have applied), but only where such certification is accompanied by such medical and other evidence as may be required by such regulations. With respect to the certification required by paragraph (2) for home health services furnished to any individual by a home health agency (other than an agency which is a governmental entity) and with respect to the establishment and review of a plan for such services, the Secretary shall prescribe regulations which shall become effective no later than July 1, 1981 (or in the case of regulations to implement the amendments made by section 3708 of the CARES Act, the Secretary shall prescribe regulations, which shall become effective no later than 6 months after the date of the enactment of such Act), and which prohibit a physician, nurse practitioner, clinical nurse specialist, or physician assistant who has a significant ownership interest in, or a significant financial or contractual relationship with, such home health agency from performing such certification and from establishing or reviewing such plan, except that such prohibition shall not apply with respect to a home health agency which is a sole community home health agency (as determined by the Secretary). For purposes of the preceding sentence, service by a physician, nurse practitioner, clinical nurse specialist, or physician assistant as an uncompensated officer or director of a home health agency shall not constitute having a significant ownership interest in, or a significant financial or contractual relationship with, such agency. For purposes of documentation for physician certification and recertification made under paragraph (2) on or after January 1, 2019 or no later than 6 months after the date of the enactment of the CARES Act for purposes of documentation for certification and recertification made under paragraph (2) by a nurse practitioner, clinical nurse specialist, or physician assistant,,3 and made with respect to home health services furnished by a home health agency, in addition to using documentation in the medical record of the physician, nurse practitioner, clinical nurse specialist, or physician assistant who so certifies or the medical record of the acute or post-acute care facility (in the case that home health services were furnished to an individual who was directly admitted to the home health agency from such a facility), the Secretary may use documentation in the medical record of the home health agency as supporting material, as appropriate to the case involved. For purposes of paragraph (2)(C), an individual shall be considered to be “confined to his home” if the individual has a condition, due to an illness or injury, that restricts the ability of the individual to leave his or her home except with the assistance of another individual or the aid of a supportive device (such as crutches, a cane, a wheelchair, or a walker), or if the individual has a condition such that leaving his or her home is medically contraindicated. While an individual does not have to be bedridden to be considered “confined to his home”, the condition of the individual should be such that there exists a normal inability to leave home and that leaving home requires a considerable and taxing effort by the individual. Any absence of an individual from the home attributable to the need to receive health care treatment, including regular absences for the purpose of participating in therapeutic, psychosocial, or medical treatment in an adult day-care program that is licensed or certified by a State, or accredited, to furnish adult day-care services in the State shall not disqualify an individual from being considered to be “confined to his home”. Any other absence of an individual from the home shall not so disqualify an individual if the absence is of infrequent or of relatively short duration. For purposes of the preceding sentence, any absence for the purpose of attending a religious service shall be deemed to be an absence of infrequent or short duration. In applying paragraph (1), the Secretary may specify exceptions to the 1 calendar year period specified in such paragraph.
^3
Double comma so in law. See amendment made by section 3708(4)(A) of division A of Public Law 116–136.
(b)

Amount Paid to Providers
The amount paid to any provider of services (other than a hospice program providing hospice care, other than a critical access hospital providing inpatient critical access hospital services, and other than a home health agency with respect to durable medical equipment) with respect to services for which payment may be made under this part shall, subject to the provisions of sections 1813, 1886, and 1895, be—
(1)
except as provided in paragraph (3), the lesser of (A) the reasonable cost of such services, as determined under section 1861(v) and as further limited by section 1881(b)(2)(B), or (B) the customary charges with respect to such services;
(2)
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 paragraph), free of charge or at nominal charges to the public, the amount determined on the basis of those items (specified in regulations prescribed by the Secretary) included in the determination of such reasonable cost which the Secretary finds will provide fair compensation to such provider for such services; or
(3)
if some or all of the hospitals in a State have been reimbursed for services (for which payment may be made under this part) pursuant to a reimbursement system approved as a demonstration project under section 402 of the Social Security Amendments of 1967 or section 222 of the Social Security Amendments of 1972, if the rate of increase in such hospitals in their costs per hospital inpatient admission of individuals entitled to benefits under this part over the duration of such project was equal to or less than such rate of increase for admissions of such individuals with respect to all hospitals in the United States during such period, and if either the State has legislative authority to operate such system and the State elects to have reimbursement to such hospitals made in accordance with this paragraph or the system is operated through a voluntary agreement of hospitals and such hospitals elect to have reimbursement to those hospitals made in accordance with this paragraph, then, subject to section 1886(d)(3)(B)(ix)(III), the Secretary may provide for continuation of reimbursement to such hospitals under such system until the Secretary determines that—
(A)
a third-party payor reimburses such a hospital on a basis other than under such system, or
(B)
the aggregate rate of increase from January 1, 1981, to the most recent date for which annual data are available in such hospitals in costs per hospital inpatient admission of individuals entitled to benefits under this part is greater than such rate of increase for admissions of such individuals with respect to all hospitals in the United States for such period.
In the case of any State which has had such a demonstration project reimbursement system in continuous operation since July 1, 1977, the Secretary shall provide under paragraph (3) for continuation of reimbursement to hospitals in the State under such system until the first day of the 37th month beginning after the date the Secretary determines and notifies the Governor of the State that either of the conditions described in subparagraph (A) or (B) of such paragraph has occurred. If, by the end of such 36-month period, the Secretary determines, based on evidence submitted by the Governor of the State, that neither of the conditions described in subparagraph (A) or (B) of paragraph (3) continues to apply, the Secretary shall continue without interruption payment to hospitals in the State under the State's system. If, by the end of such 36-month period, the Secretary determines, based on such evidence, that either of the conditions described in subparagraph (A) or (B) of such paragraph continues to apply, the Secretary shall (i) collect any net excess reimbursement to hospitals in the State during such 36-month period (basing such net excess reimbursement on the net difference, if any, in the rate of increase in costs per hospital inpatient admission under the State system compared to the rate of increase in such costs with respect to all hospitals in the United States over the 36-month period, as measured by including the cumulative savings under the State system based on the difference in the rate of increase in costs per hospital inpatient admission under the State system as compared to the rate of increase in such costs with respect to all hospitals in the United States between January 1, 1981, and the date of the Secretary's initial notice), and (ii) provide a reasonable period, not to exceed 2 years, for transition from the State system to the national payment system. For purposes of applying paragraph (3), there shall be taken into account incentive payments, and payment adjustments under subsection (b)(3)(B)(ix) or (n) of section 1886.
(c)

No Payments to Federal Providers of Services
Subject to section 1880, no payment may be made under this part (except under subsection (d) or subsection (h)) to any Federal provider of services, except a provider of services which the Secretary determines is providing services to the public generally as a community institution or agency; and no such payment may be made to any provider of services for any item or service which such provider is obligated by a law of, or a contract with, the United States to render at public expense.
(d)

Payments for Emergency Hospital Services
(1)
Payments shall also be made to any hospital for inpatient hospital services furnished in a calendar year, by the hospital or under arrangements (as defined in section 1861(w)) with it, to an individual entitled to hospital insurance benefits under section 226 even though such hospital does not have an agreement in effect under this title if (A) such services were emergency services, (B) the Secretary would be required to make such payment if the hospital had such an agreement in effect and otherwise met the conditions of payment hereunder, and (C) such hospital has elected to claim payments for all such inpatient emergency services and for the emergency outpatient services referred to in section 1835(b) furnished during such year. Such payments shall be made only in the amounts provided under subsection (b) and then only if such hospital agrees to comply, with respect to the emergency services provided, with the provisions of section 1866(a).
(2)
Payment may be made on the basis of an itemized bill to an individual entitled to hospital insurance benefits under section 226 for services described in paragraph (1) which are emergency services if (A) payment cannot be made under paragraph (1) solely because the hospital does not elect to claim such payment, and (B) such individual files application (submitted within such time and in such form and manner and by such person, and containing and supported by such information as the Secretary shall by regulations prescribe) for reimbursement.
(3)
The amounts payable under the preceding paragraph with respect to services described therein shall, subject to the provisions of section 1813, be equal to 60 percent of the hospital's reasonable charges for routine services furnished in the accommodations occupied by the individual or in semiprivate accommodations (as defined in section 1861(v)(4)), whichever is less, plus 80 percent of the hospital's reasonable charges for ancillary services. If separate charges for routine and ancillary services are not made by the hospital, reimbursement may be based on two-thirds of the hospital's reasonable charges for the services received but not to exceed the charges which would have been made if the patient had occupied semiprivate accommodations. For purposes of the preceding provisions of this paragraph, the term “routine services” shall mean the regular room, dietary, and nursing services, minor medical and surgical supplies and the use of equipment and facilities for which a separate charge is not customarily made; the term “ancillary services” shall mean those special services for which charges are customarily made in addition to routine services.
(e)

Payment for Inpatient Hospital Services Prior to Notification of Noneligibility
Notwithstanding that an individual is not entitled to have payment made under this part for inpatient hospital services furnished by any hospital, payment shall be made to such hospital (unless it elects not to receive such payment or, if payment has already been made by or on behalf of such individual, fails to refund such payment within the time specified by the Secretary) for such services which are furnished to the individual prior to notification to such hospital from the Secretary of his lack of entitlement, if such payments are precluded only by reason of section 1812 and if such hospital complies with the requirements of and regulations under this title with respect to such payments, has acted in good faith and without knowledge of such lack of entitlement, and has acted reasonably in assuming entitlement existed. Payment under the preceding sentence may not be made for services furnished an individual pursuant to any admission after the 6th elapsed day (not including as an elapsed day Saturday, Sunday, or a legal holiday) after the day on which such admission occurred.
(f)

Payment for Certain Inpatient Hospital Services Furnished Outside the United States
(1)
Payment shall be made for inpatient hospital services furnished to an individual entitled to hospital insurance benefits under section 226 by a hospital located outside the United States, or under arrangements (as defined in section 1861(w)) with it, if—
(A)
such individual is a resident of the United States, and
(B)
such hospital was closer to, or substantially more accessible from, the residence of such individual than the nearest hospital within the United States which was adequately equipped to deal with, and was available for the treatment of, such individual's illness or injury.
(2)
Payment may also be made for emergency inpatient hospital services furnished to an individual entitled to hospital insurance benefits under section 226 by a hospital located outside the United States if—
(A)
such individual was physically present—
(i)
in a place within the United States; or
(ii)
at a place within Canada while traveling without unreasonable delay by the most direct route (as determined by the Secretary) between Alaska and another State;
at the time the emergency which necessitated such inpatient hospital services occurred, and
(B)
such hospital was closer to, or substantially more accessible from, such place than the nearest hospital within the United States which was adequately equipped to deal with, and was available for the treatment of, such individual's illness or injury.
(3)
Payment shall be made in the amount provided under subsection (b) to any hospital for the inpatient hospital services described in paragraph (1) or (2) furnished to an individual by the hospital or under arrangements (as defined in section 1861(w)) with it if (A) the Secretary would be required to make such payment if the hospital had an agreement in effect under this title and otherwise met the conditions of payment hereunder, (B) such hospital elects to claim such payment, and (C) such hospital agrees to comply, with respect to such services, with the provisions of section 1866(a).
(4)
Payment for the inpatient hospital services described in paragraph (1) or (2) furnished to an individual entitled to hospital insurance benefits under section 226 may be made on the basis of an itemized bill to such individual if (A) payment for such services cannot be made under paragraph (3) solely because the hospital does not elect to claim such payment, and (B) such individual files application (submitted within such time and in such form and manner and by such person, and continuing and supported by such information as the Secretary shall by regulations prescribe) for reimbursement. The amount payable with respect to such services shall, subject to the provisions of section 1813, be equal to the amount which would be payable under subsection (d)(3).
(g)

Payment for Services of a Physician Rendered in a Teaching Hospital
For purposes of services for which the reasonable cost thereof is determined under section 1861(v)(1)(D) (or would be if section 1886 did not apply), payment under this part shall be made to such fund as may be designated by the organized medical staff of the hospital in which such services were furnished or, if such services were furnished in such hospital by the faculty of a medical school, to such fund as may be designated by such faculty, but only if—
(1)
such hospital has an agreement with the Secretary under section 1866, and
(2)
the Secretary has received written assurances that (A) such payment will be used by such fund solely for the improvement of care of hospital patients or for educational or charitable purposes and (B) the individuals who were furnished such services or any other persons will not be charged for such services (or if charged, provision will be made for return of any moneys incorrectly collected).
(h)

Payment for Certain Hospital Services Provided in Department of Veterans Affairs Hospitals
(1)
Payments shall also be made to any hospital operated by the Department of Veterans Affairs for inpatient hospital services furnished in a calendar year by the hospital, or under arrangements (as defined in section 1861(w)) with it, to an individual entitled to hospital benefits under section 226 even though the hospital is a Federal provider of services if (A) the individual was not entitled to have the services furnished to him free of charge by the hospital, (B) the individual was admitted to the hospital in the reasonable belief on the part of the admitting authorities that the individual was a person who was entitled to have the services furnished to him free of charge, (C) the authorities of the hospital, in admitting the individual, and the individual, acted in good faith, and (D) the services were furnished during a period ending with the close of the day on which the authorities operating the hospital first became aware of the fact that the individual was not entitled to have the services furnished to him by the hospital free of charge, or (if later) ending with the first day on which it was medically feasible to remove the individual from the hospital by discharging him therefrom or transferring him to a hospital which has in effect an agreement under this title.
(2)
Payment for services described in paragraph (1) shall be in an amount equal to the charge imposed by the Secretary of Veterans Affairs for such services, or (if less) the amount that would be payable for such services under subsection (b) and section 1886 (as estimated by the Secretary). Any such payment shall be made to the entity to which payment for the services involved would have been payable, if payment for such services had been made by the individual receiving the services involved (or by another private person acting on behalf of such individual).
(i)

Payment for Hospice Care
(1)
(A)
Subject to the limitation under paragraph (2) and the provisions of section 1813(a)(4) and except as otherwise provided in this paragraph, the amount paid to a hospice program with respect to hospice care for which payment may be made under this part shall be an amount equal to the costs which are reasonable and related to the cost of providing hospice care or which are based on such other tests of reasonableness as the Secretary may prescribe in regulations (including those authorized under section 1861(v)(1)(A)), except that no payment may be made for bereavement counseling and no reimbursement may be made for other counseling services (including nutritional and dietary counseling) as separate services.
(B)
Notwithstanding subparagraph (A), for hospice care furnished on or after April 1, 1986, the daily rate of payment per day for routine home care shall be $63.17 and the daily rate of payment for other services included in hospice care shall be the daily rate of payment recognized under subparagraph (A) as of July 1, 1985, increased by $10.
(C)
(i)
With respect to routine home care and other services included in hospice care furnished on or after January 1, 1990, and on or before September 30, 1990, the payment rates for such care and services shall be 120 percent of such rates in effect as of September 30, 1989.
(ii)
With respect to routine home care and other services included in hospice care furnished during a subsequent fiscal year (before the first fiscal year in which the payment revisions described in paragraph (6)(D) are implemented), the payment rates for such care and services shall be the payment rates in effect under this subparagraph during the previous fiscal year increased by—
(I)
for a fiscal year ending on or before September 30, 1993, the market basket percentage increase (as defined in section 1886(b)(3)(B)(iii)) for the fiscal year;
(II)
for fiscal year 1994, the market basket percentage increase for the fiscal year minus 2.0 percentage points;
(III)
for fiscal year 1995, the market basket percentage increase for the fiscal year minus 1.5 percentage points;
(IV)
for fiscal year 1996, the market basket percentage increase for the fiscal year minus 1.5 percentage points;
(V)
for fiscal year 1997, the market basket percentage increase for the fiscal year minus 0.5 percentage point;
(VI)
for each of fiscal years 1998 through 2002, the market basket percentage increase for the fiscal year involved minus 1.0 percentage points, plus, in the case of fiscal year 2001, 5.0 percentage points; and
(VII)
for a subsequent fiscal year (before the first fiscal year in which the payment revisions described in paragraph (6)(D) are implemented), subject to clauses (iv) and (vi), the market basket percentage increase for the fiscal year.
(iii)4
With respect to routine home care and other services included in hospice care furnished during fiscal years subsequent to the first fiscal year in which payment revisions described in paragraph (6)(D) are implemented, the payment rates for such care and services shall be the payment rates in effect under this clause during the preceding fiscal year increased by, subject to clauses (iv) and (vi), the market basket percentage increase (as defined in section 1886(b)(3)(B)(iii)) for the fiscal year.
^4
Margin so in law.
(iv)
Subject to clause (vi), after determining the market basket percentage increase under clause (ii)(VII) or (iii), as applicable, with respect to fiscal year 2013 and each subsequent fiscal year, the Secretary shall reduce such percentage—
(I)
for 2013 and each subsequent fiscal year, by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II); and
(II)
subject to clause (v), for each of fiscal years 2013 through 2019, by 0.3 percentage point.
The application of this clause may result in the market basket percentage increase under clause (ii)(VII) or (iii), as applicable, being less than 0.0 for a fiscal year, and may result in payment rates under this subsection for a fiscal year being less than such payment rates for the preceding fiscal year.
(v)
Clause (iv)(II) shall be applied with respect to any of fiscal years 2014 through 2019 by substituting “0.0 percentage points” for “0.3 percentage point”, if for such fiscal year—
(I)
the excess (if any) of—
- (aa)
the total percentage of the non-elderly insured population for the preceding fiscal year (based on the most recent estimates available from the Director of the Congressional Budget Office before a vote in either House on the Patient Protection and Affordable Care Act that, if determined in the affirmative, would clear such Act for enrollment); over
- (bb)
the total percentage of the non-elderly insured population for such preceding fiscal year (as estimated by the Secretary); exceeds
(II)
5 percentage points.
(vi)
For fiscal year 2018, the market basket percentage increase under clause (ii)(VII) or (iii), as applicable, after application of clause (iv), shall be 1 percent.
(2)
(A)
The amount of payment made under this part for hospice care provided by (or under arrangements made by) a hospice program for an accounting year may not exceed the “cap amount” for the year (computed under subparagraph (B)) multiplied by the number of medicare beneficiaries in the hospice program in that year (determined under subparagraph (C)).
(B)
(i)
Except as provided in clause (ii), for purposes of subparagraph (A), the “cap amount” for a year is $6,500, increased or decreased, for accounting years that end after October 1, 1984, by the same percentage as the percentage increase or decrease, respectively, in the medical care expenditure category of the Consumer Price Index for All Urban Consumers (United States city average), published by the Bureau of Labor Statistics, from March 1984 to the fifth month of the accounting year.
(ii)
For purposes of subparagraph (A) for accounting years that end after September 30, 2016, and before October 1, 2033, the “cap amount” is the cap amount under this subparagraph for the preceding accounting year updated by the percentage update to payment rates for hospice care under paragraph (1)(C) for services furnished during the fiscal year beginning on the October 1 preceding the beginning of the accounting year (including the application of any productivity or other adjustment under clause (iv) of that paragraph).
(iii)
For accounting years that end after September 30, 2033, the cap amount shall be computed under clause (i) as if clause (ii) had never applied.
(C)
For purposes of subparagraph (A), the “number of medicare beneficiaries” in a hospice program in an accounting year is equal to the number of individuals who have made an election under subsection (d) with respect to the hospice program and have been provided hospice care by (or under arrangements made by) the hospice program under this part in the accounting year, such number reduced to reflect the proportion of hospice care that each such individual was provided in a previous or subsequent accounting year or under a plan of care established by another hospice program.
(D)
A hospice program shall submit claims for payment for hospice care furnished in an individual's home under this title only on the basis of the geographic location at which the service is furnished, as determined by the Secretary.
(3)
Hospice programs providing hospice care for which payment is made under this subsection shall submit to the Secretary such data with respect to the costs for providing such care for each fiscal year, beginning with fiscal year 1999, as the Secretary determines necessary.
(4)
The amount paid to a hospice program with respect to the services under section 1812(a)(5) for which payment may be made under this part shall be equal to an amount established for an office or other outpatient visit for evaluation and management associated with presenting problems of moderate severity and requiring medical decisionmaking of low complexity under the fee schedule established under section 1848(b), other than the portion of such amount attributable to the practice expense component.
(5)

Quality reporting.—
(A)

Reduction in update for failure to report.—
(i)

In general.—
For purposes of fiscal year 2014 and each subsequent fiscal year, in the case of a hospice program that does not submit data to the Secretary in accordance with subparagraph (C) with respect to such a fiscal year, after determining the market basket percentage increase under paragraph (1)(C)(ii)(VII) or paragraph (1)(C)(iii), as applicable, and after application of clauses (iv) and (vi) of paragraph (1)(C), with respect to the fiscal year, the Secretary shall reduce such market basket percentage increase by 2 percentage points (or, for fiscal year 2024 and each subsequent fiscal year, 4 percentage points).
(ii)

Special rule.—
The application of this subparagraph may result in the market basket percentage increase under paragraph (1)(C)(ii)(VII) or paragraph (1)(C)(iii), as applicable, being less than 0.0 for a fiscal year, and may result in payment rates under this subsection for a fiscal year being less than such payment rates for the preceding fiscal year.
(B)

Noncumulative application.—
Any reduction under subparagraph (A) shall apply only with respect to the fiscal year involved and the Secretary shall not take into account such reduction in computing the payment amount under this subsection for a subsequent fiscal year.
(C)

Submission of quality data.—
For fiscal year 2014 and each subsequent fiscal year, each hospice program shall submit to the Secretary data on quality measures specified under subparagraph (D). Such data shall be submitted in a form and manner, and at a time, specified by the Secretary for purposes of this subparagraph.
(D)

Quality measures.—
(i)

In general.—
Subject to clause (ii), any measure specified by the Secretary under this subparagraph must have been endorsed by the entity with a contract under section 1890(a).
(ii)

Exception.—
In the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a), the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.
(iii)

Time frame.—
Not later than October 1, 2012, the Secretary shall publish the measures selected under this subparagraph that will be applicable with respect to fiscal year 2014.
(E)

Public availability of data submitted.—
The Secretary shall establish procedures for making data submitted under subparagraph (C) available to the public. Such procedures shall ensure that a hospice program has the opportunity to review the data that is to be made public with respect to the hospice program prior to such data being made public. The Secretary shall report quality measures that relate to hospice care provided by hospice programs on the Internet website of the Centers for Medicare & Medicaid Services.
(6)
(A)5
The Secretary shall collect additional data and information as the Secretary determines appropriate to revise payments for hospice care under this subsection pursuant to subparagraph (D) and for other purposes as determined appropriate by the Secretary. The Secretary shall begin to collect such data by not later than January 1, 2011.
^5
Margin so in law.
(B)
The additional data and information to be collected under subparagraph (A) may include data and information on—
(i)
charges and payments;
(ii)
the number of days of hospice care which are attributable to individuals who are entitled to, or enrolled for, benefits under part A; and
(iii)
with respect to each type of service included in hospice care—
(I)
the number of days of hospice care attributable to the type of service;
(II)
the cost of the type of service; and
(III)
the amount of payment for the type of service;
(iv)
charitable contributions and other revenue of the hospice program;
(v)
the number of hospice visits;
(vi)
the type of practitioner providing the visit; and
(vii)
the length of the visit and other basic information with respect to the visit.
(C)
The Secretary may collect the additional data and information under subparagraph (A) on cost reports, claims, or other mechanisms as the Secretary determines to be appropriate.
(D)
(i)
Notwithstanding the preceding paragraphs of this subsection, not earlier than October 1, 2013, the Secretary shall, by regulation, implement revisions to the methodology for determining the payment rates for routine home care and other services included in hospice care under this part, as the Secretary determines to be appropriate. Such revisions may be based on an analysis of data and information collected under subparagraph (A). Such revisions may include adjustments to per diem payments that reflect changes in resource intensity in providing such care and services during the course of the entire episode of hospice care.
(ii)
Revisions in payment implemented pursuant to clause (i) shall result in the same estimated amount of aggregate expenditures under this title for hospice care furnished in the fiscal year in which such revisions in payment are implemented as would have been made under this title for such care in such fiscal year if such revisions had not been implemented.
(E)
The Secretary shall consult with hospice programs and the Medicare Payment Advisory Commission regarding the additional data and information to be collected under subparagraph (A) and the payment revisions under subparagraph (D).
(7)
In the case of hospice care provided by a hospice program under arrangements under section 1861(dd)(5)(D) made by another hospice program, the hospice program that made the arrangements shall bill and be paid for the hospice care.
(j)

Elimination of Lesser-of-Cost-or-Charges Provision
(1)
The lesser-of-cost-or-charges provisions (described in paragraph (2)) will not apply in the case of services provided by a class of provider of services if the Secretary determines and certifies to Congress that the failure of such provisions to apply to the services provided by that class of providers will not result in any increase in the amount of payments made for those services under this title. Such change will take effect with respect to services furnished, or cost reporting periods of providers, on or after such date as the Secretary shall provide in the certification. Such change for a class of provider shall be discontinued if the Secretary determines and notifies Congress that such change has resulted in an increase in the amount of payments made under this title for services provided by that class of provider.
(2)
The lesser-of-cost-or-charges provisions referred to in paragraph (1) are as follows:
(A)
Clause (B) of paragraph (1) and paragraph (2) of subsection (b).
(B)
Section 1834(a)(1)(B).
(C)
So much of subparagraph (A) of section 1833(a)(2) as provides for payment other than of the reasonable cost of such services, as determined under section 1861(v).
(D)
Subclause (II) of clause (i) and clause (ii) of section 1833(a)(2)(B).
(k)

Payments to Home Health Agencies for Durable Medical Equipment
The amount paid to any home health agency with respect to durable medical equipment for which payment may be made under this part shall be the amount described in section 1834(a)(1).
(l)

Payment for Inpatient Critical Access Hospital Services
(1)
Except as provided in the subsequent paragraphs of this subsection, the amount of payment under this part for inpatient critical access hospital services is equal to 101 percent of the reasonable costs of the critical access hospital in providing such services.
(2)
In the case of a distinct part psychiatric or rehabilitation unit of a critical access hospital described in section 1820(c)(2)(E), the amount of payment for inpatient critical access hospital services of such unit shall be equal to the amount of the payment that would otherwise be made if such services were inpatient hospital services of a distinct part psychiatric or rehabilitation unit, respectively, described in the matter following clause (v) of section 1886(d)(1)(B).
(3)
(A)
The following rules shall apply in determining payment and reasonable costs under paragraph (1) for costs described in subparagraph (C) for a critical access hospital that would be a meaningful EHR user (as would be determined under paragraph (3) of section 1886(n)) for an EHR reporting period for a cost reporting period beginning during a payment year if such critical access hospital was treated as an eligible hospital under such section:
(i)
The Secretary shall compute reasonable costs by expensing such costs in a single payment year and not depreciating such costs over a period of years (and shall include as costs with respect to cost reporting periods beginning during a payment year costs from previous cost reporting periods to the extent they have not been fully depreciated as of the period involved).
(ii)
There shall be substituted for the Medicare share that would otherwise be applied under paragraph (1) a percent (not to exceed 100 percent) equal to the sum of—
(I)
the Medicare share (as would be specified under paragraph (2)(D) of section 1886(n)) for such critical access hospital if such critical access hospital was treated as an eligible hospital under such section; and
(II)
20 percentage points.
(B)
The payment under this paragraph with respect to a critical access hospital shall be paid through a prompt interim payment (subject to reconciliation) after submission and review of such information (as specified by the Secretary) necessary to make such payment, including information necessary to apply this paragraph. In no case may payment under this paragraph be made with respect to a cost reporting period beginning during a payment year after 2015 and in no case may a critical access hospital receive payment under this paragraph with respect to more than 4 consecutive payment years.
(C)
The costs described in this subparagraph are costs for the purchase of certified EHR technology to which purchase depreciation (excluding interest) would apply if payment was made under paragraph (1) and not under this paragraph.
(D)
For purposes of this paragraph, paragraph (4), and paragraph (5), the terms “certified EHR technology”, “eligible hospital”, “EHR reporting period”, and “payment year” have the meanings given such terms in sections 1886(n).
(4)
(A)
Subject to subparagraph (C), for cost reporting periods beginning in fiscal year 2015 or a subsequent fiscal year, in the case of a critical access hospital that is not a meaningful EHR user (as would be determined under paragraph (3) of section 1886(n) if such critical access hospital was treated as an eligible hospital under such section) for an EHR reporting period with respect to such fiscal year, paragraph (1) shall be applied by substituting the applicable percent under subparagraph (B) for the percent described in such paragraph (1).
(B)
The percent described in this subparagraph is—
(i)
for fiscal year 2015, 100.66 percent;
(ii)
for fiscal year 2016, 100.33 percent; and
(iii)
for fiscal year 2017 and each subsequent fiscal year, 100 percent.
(C)
The provisions of subclause (II) of section 1886(b)(3)(B)(ix) shall apply with respect to subparagraph (A) for a critical access hospital with respect to a cost reporting period beginning in a fiscal year in the same manner as such subclause applies with respect to subclause (I) of such section for a subsection (d) hospital with respect to such fiscal year.
(5)
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of—
(A)
the methodology and standards for determining the amount of payment and reasonable cost under paragraph (3) and payment adjustments under paragraph (4), including selection of periods under section 1886(n)(2) for determining, and making estimates or using proxies of, inpatient-bed-days, hospital charges, charity charges, and Medicare share under subparagraph (D) of section 1886(n)(2);
(B)
the methodology and standards for determining a meaningful EHR user under section 1886(n)(3) as would apply if the hospital was treated as an eligible hospital under section 1886(n), and the hardship exception under paragraph (4)(C);
(C)
the specification of EHR reporting periods under section 1886(n)(6)(B) as applied under paragraphs (3) and (4); and
(D)
the identification of costs for purposes of paragraph (3)(C).

PAYMENT TO PROVIDERS OF SERVICES
Sec. 1815.
[42 U.S.C. 1395g]
(a)
The Secretary shall periodically determine the amount which should be paid under this part to each provider of services with respect to the services furnished by it, and the provider of services shall be paid, at such time or times as the Secretary believes appropriate (but not less often than monthly) and prior to audit or settlement by the General Accounting Office, from the Federal Hospital Insurance Trust Fund, the amounts so determined, with necessary adjustments on account of previously made overpayments or underpayments; except that no such payments shall be made to any provider unless it has furnished such information as the Secretary may request in order to determine the amounts due such provider under this part for the period with respect to which the amounts are being paid or any prior period.
(b)
No payment shall be made to a provider of services which is a hospital for or with respect to services furnished by it for any period with respect to which it is deemed, under section 1861(w)(2), to have in effect an arrangement with a quality improvement organization for the conduct of utilization review activities by such organization unless such hospital has paid to such organization the amount due (as determined pursuant to such section) to such organization for the review activities conducted by it pursuant to such arrangements or such hospital has provided assurances satisfactory to the Secretary that such organization will promptly be paid the amount so due to it from the proceeds of the payment claimed by the hospital. Payment under this title for utilization review activities provided by a quality improvement organization pursuant to an arrangement or deemed arrangement with a hospital under section 1861(w)(2) shall be calculated without any requirement that the reasonable cost of such activities be apportioned among the patients of such hospital, if any, to whom such activities were not applicable.
(c)
No payment which may be made to a provider of services under this title for any service furnished to an individual shall be made to any other person under an assignment or power of attorney; but nothing in this subsection shall be construed (1) to prevent the making of such a payment in accordance with an assignment from the provider if such assignment is made to a governmental agency or entity or is established by or pursuant to the order of a court of competent jurisdiction, or (2) to preclude an agent of the provider of services from receiving any such payment if (but only if) such agent does so pursuant to an agency agreement under which the compensation to be paid to the agent for his services for or in connection with the billing or collection of payments due such provider under this title is unrelated (directly or indirectly) to the amount of such payments or the billings therefor, and is not dependent upon the actual collection of any such payment.
(d)
Whenever a final determination is made that the amount of payment made under this part to a provider of services was in excess of or less than the amount of payment that is due, and payment of such excess or deficit is not made (or effected by offset) within 30 days of the date of the determination, interest shall accrue on the balance of such excess or deficit not paid or offset (to the extent that the balance is owed by or owing to the provider) at a rate determined in accordance with the regulations of the Secretary of the Treasury applicable to charges for late payments (or, in the case of such a determination made with respect to a payment made on or after the date of the enactment of the CARES Act and during the period at the end of the emergency sentence described in section 1135(g)(1)(B) under the program under subsection (e)(3), including such program as expanded pursuant to subsection (f), at a rate of 4 percent).
(e)
(1)
The Secretary shall provide payment under this part for inpatient hospital services furnished by a subsection (d) hospital (as defined in section 1886(d)(1)(B), and including a distinct psychiatric or rehabilitation unit of such a hospital) and a subsection (d) Puerto Rico hospital (as defined in section 1886(d)(9)(A)) on a periodic interim payment basis (rather than on the basis of bills actually submitted) in the following cases:
(A)
Upon the request of a hospital which is paid through an agency or organization with an agreement with the Secretary under section 1816, if the agency or organization, for three consecutive calendar months, fails to meet the requirements of subsection (c)(2) of such section and if the hospital meets the requirements (in effect as of October 1, 1986) applicable to payment on such a basis, until such time as the agency or organization meets such requirements for three consecutive calendar months.
(B)
In the case of a hospital that—
(i)
has a disproportionate share adjustment percentage (as established in clause (iv) of such section) of at least 5.1 percent (as computed for purposes of establishing the average standardized amounts for discharges occurring during fiscal year 1987), and
(ii)
requests payment on such basis,
but only if the hospital was being paid for inpatient hospital services on such a periodic interim payment basis as of June 30, 1987, and continues to meet the requirements (in effect as of October 1, 1986) applicable to payment on such a basis.
(C)
In the case of a hospital that—
(i)
is located in a rural area,
(ii)
has 100 or fewer beds, and
(iii)
requests payment on such basis,
but only if the hospital was being paid for inpatient hospital services on such a periodic interim payment basis as of June 30, 1987, and continues to meet the requirements (in effect as of October 1, 1986) applicable to payment on such a basis.
(2)
The Secretary shall provide (or continue to provide) for payment on a periodic interim payment basis (under the standards established under section 405.454(j) of title 42, Code of Federal Regulations, as in effect on October 1, 1986, in the cases described in subparagraphs (A) through (D)) with respect to—
(A)
inpatient hospital services of a hospital that is not a subsection (d) hospital (as defined in section 1886(d)(1)(B));
(B)
a hospital which is receiving payment under a State hospital reimbursement system under section 1814(b)(3) or 1886(c), if payment on a periodic interim payment basis is an integral part of such reimbursement system;
(C)
extended care services;
(D)
hospice care; and
(E)
inpatient critical access hospital services;
if the provider of such services elects to receive, and qualifies for, such payments.
(3)
Subject to subsection (f), in the case of a subsection (d) hospital or a subsection (d) Puerto Rico hospital (as defined for purposes of section 1886) which has significant cash flow problems resulting from operations of its intermediary or from unusual circumstances of the hospital's operation, the Secretary may make available appropriate accelerated payments.
(4)
A hospital created by the merger or consolidation of 2 or more hospitals or hospital campuses shall be eligible to receive periodic interim payment on the basis described in paragraph (1)(B) if—
(A)
at least one of the hospitals or campuses received periodic interim payment on such basis prior to the merger or consolidation; and
(B)
the merging or consolidating hospitals or campuses would each meet the requirement of paragraph (1)(B)(i) if such hospitals or campuses were treated as independent hospitals for purposes of this title.
(f)
(1)
During the emergency period described in section 1135(g)(1)(B), the Secretary shall expand the program under subsection (e)(3) pursuant to paragraph (2).
(2)
In expanding the program under subsection (e)(3), the following shall apply:
(A)
(i)
In addition to the hospitals described in subsection (e)(3), the following hospitals shall be eligible to participate in the program:
(I)
Hospitals described in clause (iii) of section 1886(d)(1)(B).
(II)
Hospitals described in clause (v) of such section.
(III)
Critical access hospitals (as defined in section 1861(mm)(1)).
(ii)
Subject to appropriate safeguards against fraud, waste, and abuse, upon a request of a hospital described in clause (i), the Secretary shall (or, with respect to requests submitted to the Secretary after April 26, 2020, may)6 provide accelerated payments under the program to such hospital.
^6
Section 2501(a)(1)(B) of division C of Public Law 116–159 amends clause (ii) by inserting “(or, with respect to requests submitted to the Secretary after April 26, 2020, may)” after “shall[.]”. The amendment was carried out by inserting such phrase after “shall”.
(B)
Upon the request of the hospital, the Secretary may do any of the following:
(i)
Make accelerated payments on a periodic or lump sum basis.
(ii)
Increase the amount of payment that would otherwise be made to hospitals under the program up to 100 percent (or, in the case of critical access hospitals, up to 125 percent).
(iii)
Extend the period that accelerated payments cover so that it covers up to a 6-month period.
(C)
In the case of a payment made under the terms of the program under subsection (e)(3), including such program as expanded pursuant to this subsection, on or after the date of the enactment of the CARES Act and so made during the emergency period described in section 1135(g)(1)(B), upon request of a hospital, the Secretary shall—
(i)
provide 1 year before payments for items and services furnished by the hospital are offset to recoup payments under such program;
(ii)
provide that any such offset be an amount equal to—
(I)
during the first 11 months in which any such offsets are made with respect to payment for items and services furnished by the hospital, 25 percent of the amount of such payment for such items and services; and
(II)
during the succeeding 6 months, 50 percent of the amount of such payment for such items and services; and
(iii)
allow 29 months from the date of the first payment under such program to such provider before requiring that the outstanding balance be paid in full.
(3)
Nothing in this subsection shall preclude the Secretary from carrying out the provisions described in clauses (i), (ii), and (iii) of paragraph (2)(B) and clauses (i) and (ii) of paragraph (2)(C) under the program under subsection (e)(3) after the period for which this subsection applies.
(4)
Notwithstanding any other provision of law, the Secretary may implement the provisions of this subsection by program instruction or otherwise.

provisions relating to the administration of part a
Sec. 1816.
[42 U.S.C. 1395h]
(a)
The administration of this part shall be conducted through contracts with medicare administrative contractors under section 1874A.
[(b)
repealed]
(c)
[(1) repealed]
(2)
(A)
Each contract under section 1874A that provides for making payments under this part shall provide that payment shall be issued, mailed, or otherwise transmitted with respect to not less than 95 percent of all claims submitted under this title—
(i)
which are clean claims, and
(ii)
for which payment is not made on a periodic interim payment basis,
within the applicable number of calendar days after the date on which the claim is received.
(B)
In this paragraph:
(i)
The term “clean claim” means a claim that has no defect or impropriety (including any lack of any required substantiating documentation) or particular circumstance requiring special treatment that prevents timely payment from being made on the claim under this title.
(ii)
The term “applicable number of calendar days” means—
(I)
with respect to claims received in the 12-month period beginning October 1, 1986, 30 calendar days,
(II)
with respect to claims received in the 12-month period beginning October 1, 1987, 26 calendar days,
(III)
with respect to claims received in the 12-month period beginning October 1, 1988, 25 calendar days,
(IV)
with respect to claims received in the 12-month period beginning October 1, 1989, and claims received in any succeeding 12-month period ending on or before September 30, 1993, 24 calendar days, and
(V)
with respect to claims received in the 12-month period beginning October 1, 1993, and claims received in any succeeding 12-month period, 30 calendar days.
(C)
If payment is not issued, mailed, or otherwise transmitted within the applicable number of calendar days (as defined in clause (ii) of subparagraph (B)) after a clean claim (as defined in clause (i) of such subparagraph) is received from a hospital, critical access hospital, skilled nursing facility, home health agency, hospice program, comprehensive outpatient rehabilitation facility, or rehabilitation agency that is not receiving payments on a periodic interim payment basis with respect to such services, interest shall be paid at the rate used for purposes of section 3902(a) of title 31, United States Code (relating to interest penalties for failure to make prompt payments) for the period beginning on the day after the required payment date and ending on the date on which payment is made.
(3)
(A)
Each contract under section 1874A that provides for making payments under this part shall provide that no payment shall be issued, mailed, or otherwise transmitted with respect to any claim submitted under this title within the applicable number of calendar days after the date on which the claim is received.
(B)
In this paragraph, the term “applicable number of calendar days” means—
(i)
with respect to claims submitted electronically as prescribed by the Secretary, 13 days, and
(ii)
with respect to claims submitted otherwise, 28 days.
[(d)-(i) repealed]
(j)
A contract with a medicare administrative contractor under section 1874A with respect to the administration of this part shall require that, with respect to a claim for home health services, extended care services, or post-hospital extended care services submitted by a provider to such medicare administrative contractor that is denied, such medicare administrative contractor—
(1)
furnish the provider and the individual with respect to whom the claim is made with a written explanation of the denial and of the statutory or regulatory basis for the denial; and
(2)
in the case of a request for reconsideration of a denial, promptly notify such individual and the provider of the disposition of such reconsideration.
(k)
A contract with a medicare administrative contractor under section 1874A with respect to the administration of this part shall require that such medicare administrative contractor submit an annual report to the Secretary describing the steps taken to recover payments made for items or services for which payment has been or could be made under a primary plan (as defined in section 1862(b)(2)(A)).

FEDERAL HOSPITAL INSURANCE TRUST FUND
Sec. 1817.
[42 U.S.C. 1395i]
(a)
There is hereby created on the books of the Treasury of the United States a trust fund to be known as the “Federal Hospital Insurance Trust Fund” (hereinafter in this section referred to as the “Trust Fund”). The Trust Fund shall consist of such gifts and bequests as may be made as provided in section 201(i)(1), and such amounts as may be deposited in, or appropriated to, such fund as provided in this part. There are hereby appropriated to the Trust Fund for the fiscal year ending June 30, 1966, and for each fiscal year thereafter, out of any moneys in the Treasury not otherwise appropriated, amounts equivalent to 100 per centum of—
(1)
the taxes imposed by sections 3101(b) and 3111(b) of the Internal Revenue Code of 1954 with respect to wages reported to the Secretary of the Treasury or his delegate pursuant to subtitle F of such Code after December 31, 1965, as determined by the Secretary of the Treasury by applying the applicable rates of tax under such sections to such wages, which wages shall be certified by the Commissioner of Social Security on the basis of records of wages established and maintained by the Commissioner of Social Security in accordance with such reports; and
(2)
the taxes imposed by section 1401(b) of the Internal Revenue Code of 1954 with respect to self-employment income reported to the Secretary of the Treasury or his delegate on tax returns under subtitle F of such Code, as determined by the Secretary of the Treasury by applying the applicable rate of tax under such section to such self-employment income, which self-employment income shall be certified by the Commissioner of Social Security on the basis of records of self-employment established and maintained by the Commissioner of Social Security in accordance with such returns.
The amounts appropriated by the preceding sentence shall be transferred from time to time from the general fund in the Treasury to the Trust Fund, such amounts to be determined on the basis of estimates by the Secretary of the Treasury of the taxes, specified in the preceding sentence, paid to or deposited into the Treasury; and proper adjustments shall be made in amounts subsequently transferred to the extent prior estimates were in excess of or were less than the taxes specified in such sentence.
(b)
With respect to the Trust Fund, there is hereby created a body to be known as the Board of Trustees of the Trust Fund (hereinafter in this section referred to as the “Board of Trustees”) composed of the Commissioner of Social Security, the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services, all ex officio, and of two members of the public (both of whom may not be from the same political party), who shall be nominated by the President for a term of four years and subject to confirmation by the Senate. A member of the Board of Trustees serving as a member of the public and nominated and confirmed to fill a vacancy occurring during a term shall be nominated and confirmed only for the remainder of such term. An individual nominated and confirmed as a member of the public may serve in such position after the expiration of such member's term until the earlier of the time at which the member's successor takes office or the time at which a report of the Board is first issued under paragraph (2) after the expiration of the member's term. The Secretary of the Treasury shall be the Managing Trustee of the Board of Trustees (hereinafter in this section referred to as the “Managing Trustee”). The Administrator of the Centers for Medicare & Medicaid Services shall serve as the Secretary of the Board of Trustees. The Board of Trustees shall meet not less frequently than once each calendar year. It shall be the duty of the Board of Trustees to—
(1)
Hold the Trust Fund;
(2)
Report to the Congress not later than the first day of April of each year on the operation and status of the Trust Fund during the preceding fiscal year and on its expected operation and status during the current fiscal year and the next 2 fiscal years; Each report provided under paragraph (2) beginning with the report in 2005 shall include the information specified in section 801(a) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.7
^7
So in law. See amendment made to paragraph (2) by section 801(d)(1) of P.L. 108–173 (117 Stat. 2359).
(3)
Report immediately to the Congress whenever the Board is of the opinion that the amount of the Trust Fund is unduly small; and
(4)
Review the general policies followed in managing the Trust Fund, and recommend changes in such policies, including necessary changes in the provisions of law which govern the way in which the Trust Fund is to be managed.
The report provided for in paragraph (2) shall include a statement of the assets of, and the disbursements made from, the Trust Fund during the preceding fiscal year, an estimate of the expected income to, and disbursements to be made from, the Trust Fund during the current fiscal year and each of the next 2 fiscal years, and a statement of the actuarial status of the Trust Fund. Such report shall also include an actuarial opinion by the Chief Actuary of the Centers for Medicare & Medicaid Services certifying that the techniques and methodologies used are generally accepted within the actuarial profession and that the assumptions and cost estimates used are reasonable. Such report shall be printed as a House document of the session of the Congress to which the report is made. A person serving on the Board of Trustees shall not be considered to be a fiduciary and shall not be personally liable for actions taken in such capacity with respect to the Trust Fund.
(c)
It shall be the duty of the Managing Trustee to invest such portion of the Trust Fund as is not, in his judgment, required to meet current withdrawals. Such investments may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at the issue price, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under chapter 31 of title 31, United States Code, are hereby extended to authorize the issuance at par of public-debt obligations for purchase by the Trust Fund. Such obligations issued for purchase by the Trust Fund shall have maturities fixed with due regard for the needs of the Trust Fund and shall bear interest at a rate equal to the average market yield (computed by the Managing Trustee on the basis of market quotations as of the end of the calendar month next preceding the date of such issue) on all marketable interest-bearing obligations of the United States then forming a part of the public debt which are not due or callable until after the expiration of 4 years from the end of such calendar month; except that where such average market yield is not a multiple of one-eighth of 1 per centum, the rate of interest on such obligations shall be the multiple of one-eighth of 1 per centum nearest such market yield. The Managing Trustee may purchase other interest-bearing obligations of the United States or obligations guaranteed as to both principal and interest by the United States, on original issue or at the market price, only where he determines that the purchase of such other obligations is in the public interest.
(d)
Any obligations acquired by the Trust Fund (except public-debt obligations issued exclusively to the Trust Fund) may be sold by the Managing Trustee at the market price, and such public-debt obligations may be redeemed at par plus accrued interest.
(e)
The interest on, and the proceeds from the sale or redemption of, any obligations held in the Trust Fund shall be credited to and form a part of the Trust Fund.
(f)
(1)
The Managing Trustee is directed to pay from time to time from the Trust Fund into the Treasury the amount estimated by him as taxes imposed under section 3101(b) which are subject to refund under section 6413(c) of the Internal Revenue Code of 1954 with respect to wages paid after December 31, 1965. Such taxes shall be determined on the basis of the records of wages established and maintained by the Commissioner of Social Security in accordance with the wages reported to the Secretary of the Treasury or his delegate pursuant to subtitle F of the Internal Revenue Code of 1954, and the Commissioner of Social Security shall furnish the Managing Trustee such information as may be required by the Managing Trustee for such purpose. The payments by the Managing Trustee shall be covered into the Treasury as repayments to the account for refunding internal revenue collections.
(2)
Repayments made under paragraph (1) shall not be available for expenditures but shall be carried to the surplus fund of the Treasury. If it subsequently appears that the estimates under such paragraph in any particular period were too high or too low, appropriate adjustments shall be made by the Managing Trustee in future payments.
(g)
There shall be transferred periodically (but not less often than once each fiscal year) to the Trust Fund from the Federal Old-Age and Survivors Insurance Trust Fund and from the Federal Disability Insurance Trust Fund amounts equivalent to the amounts not previously so transferred which the Secretary of Health and Human Services shall have certified as overpayments (other than amounts so certified to the Railroad Retirement Board) pursuant to section 1870(b) of this Act. There shall be transferred periodically (but not less often than once each fiscal year) to the Trust Fund from the Railroad Retirement Account amounts equivalent to the amounts not previously so transferred which the Secretary of Health and Human Services shall have certified as overpayments to the Railroad Retirement Board pursuant to section 1870(b) of this Act.
(h)
The Managing Trustee shall also pay from time to time from the Trust Fund such amounts as the Secretary of Health and Human Services certifies are necessary to make the payments provided for by this part, and the payments with respect to administrative expenses in accordance with section 201(g)(1).
(i)
There are authorized to be made available for expenditure out of the Trust Fund such amounts as are required to pay travel expenses, either on an actual cost or commuted basis, to parties, their representatives, and all reasonably necessary witnesses for travel within the United States (as defined in section 210(i)) to attend reconsideration interviews and proceedings before administrative law judges with respect to any determination under this title. The amount available under the preceding sentence for payment for air travel by any person shall not exceed the coach fare for air travel between the points involved unless the use of first-class accommodations is required (as determined under regulations of the Secretary) because of such person's health condition or the unavailability of alternative accommodations; and the amount available for payment for other travel by any person shall not exceed the cost of travel (between the points involved) by the most economical and expeditious means of transportation appropriate to such person's health condition, as specified in such regulations. The amount available for payment under this subsection for travel by a representative to attend an administrative proceeding before an administrative law judge or other adjudicator shall not exceed the maximum amount allowable under this subsection for such travel originating within the geographic area of the office having jurisdiction over such proceeding.
(j)
(1)
If at any time prior to January 1988 the Managing Trustee determines that borrowing authorized under this subsection is appropriate in order to best meet the need for financing the benefit payments from the Federal Hospital Insurance Trust Fund, the Managing Trustee may, subject to paragraph (5), borrow such amounts as he determines to be appropriate from either the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund for transfer to and deposit in the Federal Hospital Insurance Trust Fund.
(2)
In any case where a loan has been made to the Federal Hospital Insurance Trust Fund under paragraph (1), there shall be transferred on the last day of each month after such loan is made, from such Trust Fund to the lending Trust Fund, the total interest accrued to such day with respect to the unrepaid balance of such loan at a rate equal to the rate which the lending Trust Fund would earn on the amount involved if the loan were an investment under subsection (c) (even if such an investment would earn interest at a rate different than the rate earned by investments redeemed by the lending fund in order to make the loan).
(3)
(A)
If in any month after a loan has been made to the Federal Hospital Insurance Trust Fund under paragraph (1), the Managing Trustee determines that the assets of such Trust Fund are sufficient to permit repayment of all or part of any loans made to such Fund under paragraph (1), he shall make such repayments as he determines to be appropriate.
(B)
(i)
If on the last day of any year after a loan has been made under paragraph (1) by the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund to the Federal Hospital Insurance Trust Fund, the Managing Trustee determines that the Hospital Insurance Trust Fund ratio exceeds 15 percent, he shall transfer from such Trust Fund to the lending trust fund an amount that—
(I)
together with any amounts transferred to another lending trust fund under this paragraph for such year, will reduce the Hospital Insurance Trust Fund ratio to 15 percent; and
(II)
does not exceed the outstanding balance of such loan.
(ii)
Amounts required to be transferred under clause (i) shall be transferred on the last day of the first month of the year succeeding the year in which the determination described in clause (i) is made.
(iii)
For purposes of this subparagraph, the term “Hospital Insurance Trust Fund ratio” means, with respect to any calendar year, the ratio of—
(I)
the balance in the Federal Hospital Insurance Trust Fund, as of the last day of such calendar year; to
(II)
the amount estimated by the Secretary to be the total amount to be paid from the Federal Hospital Insurance Trust Fund during the calendar year following such calendar year (other than payments of interest on, and repayments of, loans from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund under paragraph (1)), and reducing the amount of any transfer to the Railroad Retirement Account by the amount of any transfers into such Trust Fund from the Railroad Retirement Account.
(C)
(i)
The full amount of all loans made under paragraph (1) (whether made before or after January 1, 1983) shall be repaid at the earliest feasible date and in any event no later than December 31, 1989.
(ii)
For the period after December 31, 1987 and before January 1, 1990, the Managing Trustee shall transfer each month from the Federal Hospital Insurance Trust Fund to any Trust Fund that is owed any amount by the Federal Hospital Insurance Trust Fund on a loan made under paragraph (1), an amount not less than an amount equal to (I) the amount owed to such Trust Fund by the Federal Hospital Insurance Trust Fund at the beginning of such month (plus the interest accrued on the outstanding balance of such loan during such month), divided by (II) the number of months elapsing after the preceding month and before January 1990. The Managing Trustee may, during this period, transfer larger amounts than prescribed by the preceding sentence.
(4)
The Board of Trustees shall make a timely report to the Congress of any amounts transferred (including interest payments) under this subsection.
(5)
(A)
No amounts may be loaned by the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund under paragraph (1) during any month if the OASDI trust fund ratio for such month is less than 10 percent.
(B)
For purposes of this paragraph, the term “OASDI trust fund ratio” means, with respect to any month, the ratio of—
(i)
the combined balance in the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, reduced by the outstanding amount of any loan (including interest thereon) theretofore made to either such Trust Fund from the Federal Hospital Insurance Trust Fund under section 201(l), as of the last day of the second month preceding such month, to
(ii)
the amount obtained by multiplying by twelve the total amount which (as estimated by the Secretary) will be paid from the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund during the month for which such ratio is to be determined for all purposes authorized by section 201 (other than payments of interest on, or repayments of, loans from the Federal Hospital Insurance Trust Fund under section 201(l)), but excluding any transfer payments between such trust funds and reducing the amount of any transfers to the Railroad Retirement Account by the amount of any transfers into either such trust fund from that Account.
(k)

Health Care Fraud and Abuse Control Account.—
(1)

Establishment.—
There is hereby established in the Trust Fund an expenditure account to be known as the “Health Care Fraud and Abuse Control Account” (in this subsection referred to as the “Account”).
(2)

Appropriated amounts to trust fund.—
(A)

In general.—
There are hereby appropriated to the Trust Fund—
(i)
such gifts and bequests as may be made as provided in subparagraph (B);
(ii)
such amounts as may be deposited in the Trust Fund as provided in sections 242(b) and 249(c) of the Health Insurance Portability and Accountability Act of 1996, and title XI; and
(iii)
such amounts as are transferred to the Trust Fund under subparagraph (C).
(B)

Authorization to accept gifts.—
The Trust Fund is authorized to accept on behalf of the United States money gifts and bequests made unconditionally to the Trust Fund, for the benefit of the Account or any activity financed through the Account.
(C)

Transfer of amounts.—
The Managing Trustee shall transfer to the Trust Fund, 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:
(i)
Criminal fines recovered in cases involving a Federal health care offense (as defined in section 24(a) of title 18, United States Code).
(ii)
Civil monetary penalties and assessments imposed in health care cases, including amounts recovered under titles XI, XVIII, and XIX, and chapter 38 of title 31, United States Code (except as otherwise provided by law).
(iii)
Amounts resulting from the forfeiture of property by reason of a Federal health care offense.
(iv)
Penalties and damages obtained and otherwise creditable to miscellaneous receipts of the general fund of the Treasury obtained under sections 3729 through 3733 of title 31, United States Code (known as the False Claims Act), in cases involving claims related to the provision of health care items and services (other than funds awarded to a relator, for restitution or otherwise authorized by law).
(D)

Application.—
Nothing in subparagraph (C)(iii) shall be construed to limit the availability of recoveries and forfeitures obtained under title I of the Employee Retirement Income Security Act of 1974 for the purpose of providing equitable or remedial relief for employee welfare benefit plans, and for participants and beneficiaries under such plans, as authorized under such title.
(3)

Appropriated amounts to account for fraud and abuse control program, etc.—
(A)

Departments of health and human services and justice.—
(i)

In general.—
There are hereby appropriated to the Account from the Trust Fund such sums as the Secretary and the Attorney General certify are necessary to carry out the purposes described in subparagraph (C), to be available without further appropriation until expended, in an amount not to exceed—
(I)
for fiscal year 1997, $104,000,000;
(II)
for each of the fiscal years 1998 through 2003, the limit for the preceding fiscal year, increased by 15 percent;
(III)
for each of fiscal years 2004, 2005, and 2006, the limit for fiscal year 2003; and
(IV)
for each fiscal year after fiscal year 2006, the limit under this clause for the preceding fiscal year, increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) over the previous year.
(ii)

Medicare and medicaid activities.—
For each fiscal year, of the amount appropriated in clause (i), the following amounts shall be available only for the purposes of the activities of the Office of the Inspector General of the Department of Health and Human Services with respect to the programs under this title and title XIX—
(I)
for fiscal year 1997, not less than $60,000,000 and not more than $70,000,000;
(II)
for fiscal year 1998, not less than $80,000,000 and not more than $90,000,000;
(III)
for fiscal year 1999, not less than $90,000,000 and not more than $100,000,000;
(IV)
for fiscal year 2000, not less than $110,000,000 and not more than $120,000,000;
(V)
for fiscal year 2001, not less than $120,000,000 and not more than $130,000,000;
(VI)
for fiscal year 2002, not less than $140,000,000 and not more than $150,000,000;
(VII)
for each of fiscal years 2003, 2004, 2005, and 2006, not less than $150,000,000 and not more than $160,000,000;
(VIII)
for fiscal year 2007, not less than $160,000,000, increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) over the previous year; and
(IX)
for each fiscal year after fiscal year 2007, not less than the amount required under this clause for the preceding fiscal year, increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) over the previous year.
(B)

Federal bureau of investigation.—
There are hereby appropriated from the general fund of the United States Treasury and hereby appropriated to the Account for transfer to the Federal Bureau of Investigation to carry out the purposes described in subparagraph (C), to be available without further appropriation until expended—
(i)
for fiscal year 1997, $47,000,000;
(ii)
for fiscal year 1998, $56,000,000;
(iii)
for fiscal year 1999, $66,000,000;
(iv)
for fiscal year 2000, $76,000,000;
(v)
for fiscal year 2001, $88,000,000;
(vi)
for fiscal year 2002, $101,000,000;
(vii)
for each of fiscal years 2003, 2004, 2005, and 2006, $114,000,000; and
(viii)
for each fiscal year after fiscal year 2006, the amount to be appropriated under this subparagraph for the preceding fiscal year, increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) over the previous year.
(C)

Use of funds.—
The purposes described in this subparagraph are to cover the costs (including equipment, salaries and benefits, and travel and training) of the administration and operation of the health care fraud and abuse control program established under section 1128C(a), including the costs of—
(i)
prosecuting health care matters (through criminal, civil, and administrative proceedings);
(ii)
investigations;
(iii)
financial and performance audits of health care programs and operations;
(iv)
inspections and other evaluations; and
(v)
provider and consumer education regarding compliance with the provisions of title XI.
(4)

Appropriated amounts to account for Medicare integrity program.—
(A)

In general.—
There are hereby appropriated to the Account from the Trust Fund for each fiscal year such amounts as are necessary for activities described in paragraph (3)(C) and to carry out the Medicare Integrity Program under section 1893, subject to subparagraphs (B), (C), and (D) and to be available without further appropriation until expended.
(B)

Amounts specified.—
Subject to subparagraph (C), the amount appropriated under subparagraph (A) for a fiscal year is as follows:
(i)
For fiscal year 1997, such amount shall be not less than $430,000,000 and not more than $440,000,000.
(ii)
For fiscal year 1998, such amount shall be not less than $490,000,000 and not more than $500,000,000.
(iii)
For fiscal year 1999, such amount shall be not less than $550,000,000 and not more than $560,000,000.
(iv)
For fiscal year 2000, such amount shall be not less than $620,000,000 and not more than $630,000,000.
(v)
For fiscal year 2001, such amount shall be not less than $670,000,000 and not more than $680,000,000.
(vi)
For fiscal year 2002, such amount shall be not less than $690,000,000 and not more than $700,000,000.
(vii)
For each fiscal year after fiscal year 2002, such amount shall be not less than $710,000,000 and not more than $720,000,000.
(C)

Adjustments.—
The amount appropriated under subparagraph (A) for a fiscal year is increased as follows:
(i)
For fiscal year 2006, $100,000,000.
(ii)
For each fiscal year after 2010, by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) over the previous year.
(D)

Expansion of the medicare-medicaid data match program.—
The amount appropriated under subparagraph (A) for a fiscal year is further increased as follows for purposes of carrying out section 1893(b)(6) for the respective fiscal year:
(i)
$12,000,000 for fiscal year 2006.
(ii)
$24,000,000 for fiscal year 2007.
(iii)
$36,000,000 for fiscal year 2008.
(iv)
$48,000,000 for fiscal year 2009.
(v)
$60,000,000 for fiscal year 2010 and each fiscal year thereafter.
(5)

Annual report.—
Not later than January 1, the Secretary and the Attorney General shall submit jointly a report to Congress which identifies—
(A)
the amounts appropriated to the Trust Fund for the previous fiscal year under paragraph (2)(A) and the source of such amounts; and
(B)
the amounts appropriated from the Trust Fund for such year under paragraph (3) and the justification for the expenditure of such amounts.
(6)

GAO report.—
Not later than June 1, 1998, January 1 of 2000, 2002, and 2004, the Comptroller General of the United States shall submit a report to Congress which—
(A)
identifies—
(i)
the amounts appropriated to the Trust Fund for the previous two fiscal years under paragraph (2)(A) and the source of such amounts; and
(ii)
the amounts appropriated from the Trust Fund for such fiscal years under paragraph (3) and the justification for the expenditure of such amounts;
(B)
identifies any expenditures from the Trust Fund with respect to activities not involving the program under this title;
(C)
identifies any savings to the Trust Fund, and any other savings, resulting from expenditures from the Trust Fund; and
(D)
analyzes such other aspects of the operation of the Trust Fund as the Comptroller General of the United States considers appropriate.
(7)

Additional funding.—
In addition to the funds otherwise appropriated to the Account from the Trust Fund under paragraphs (3) and (4) and for purposes described in paragraphs (3)(C) and (4)(A), there are hereby appropriated an additional $10,000,000 to such Account from such Trust Fund for each of fiscal years 2011 through 2020. The funds appropriated under this paragraph shall be allocated in the same proportion as the total funding appropriated with respect to paragraphs (3)(A) and (4)(A) was allocated with respect to fiscal year 2010, and shall be available without further appropriation until expended.
(8)

Additional funding.—
(A)

In general.—
In addition to the funds otherwise appropriated to the Account from the Trust Fund under paragraphs (3)(C) and (4)(A) and for purposes described in paragraphs (3)(C) and (4)(A), there are hereby appropriated to such Account from such Trust Fund the following additional amounts:
(i)
For fiscal year 2011, $95,000,000.
(ii)
For fiscal year 2012, $55,000,000.
(iii)
For each of fiscal years 2013 and 2014, $30,000,000.
(iv)
For each of fiscal years 2015 and 2016, $20,000,000.
(B)

Allocation.—
The funds appropriated under this paragraph shall be allocated in the same proportion as the total funding appropriated with respect to paragraphs (3)(A) and (4)(A) was allocated with respect to fiscal year 2010, and shall be available without further appropriation until expended.

HOSPITAL INSURANCE BENEFITS FOR UNINSURED ELDERLY INDIVIDUALS NOT OTHERWISE ELIGIBLE
Sec. 1818.
[42 U.S.C. 1395i–2]
(a)
Every individual who—
(1)
has attained the age of 65,
(2)
is enrolled under part B of this title,
(3)
is a resident of the United States, and is either (A) a citizen or (B) an alien lawfully admitted for permanent residence who has resided in the United States continuously during the 5 years immediately preceding the month in which he applies for enrollment under this section, and
(4)
is not otherwise entitled to benefits under this part,
shall be eligible to enroll in the insurance program established by this part. Except as otherwise provided, any reference to an individual entitled to benefits under this part includes an individual entitled to benefits under this part pursuant to an enrollment under this section or section 1818A.
(b)
An individual may enroll under this section only in such manner and form as may be prescribed in regulations, and only during an enrollment period prescribed in or under this section.
(c)
The provisions of section 1837 (except subsections (f) and (o) thereof), section 1838, subsection (b) of section 1839, and subsections (f) and (h) of section 1840 shall apply to persons authorized to enroll under this section except that—
(1)
individuals who meet the conditions of subsection (a)(1), (3), and (4) on or before the last day of the seventh month after the month in which this section is enacted may enroll under this part and (if not already so enrolled) may also enroll under part B during an initial general enrollment period which shall begin on the first day of the second month which begins after the date on which this section is enacted and shall end on the last day of the tenth month after the month in which this section is enacted;
(2)
in the case of an individual who first meets the conditions of eligibility under this section on or after the first day of the eighth month after the month in which this section is enacted, the initial enrollment period shall begin on the first day of the third month before the month in which he first becomes eligible and shall end 7 months later;
(3)
in the case of an individual who enrolls pursuant to paragraph (1) of this subsection, entitlement to benefits shall begin on—
(A)
the first day of the second month after the month in which he enrolls,
(B)
July 1, 1973, or
(C)
the first day of the first month in which he meets the requirements of subsection (a),
whichever is the latest;
(4)
an individual's entitlement under this section shall terminate with the month before the first month in which he becomes eligible for hospital insurance benefits under section 226 of this Act or section 103 of the Social Security Amendments of 1965; and upon such termination, such individual shall be deemed, solely for purposes of hospital insurance entitlement, to have filed in such first month the application required to establish such entitlement;
(5)
termination of coverage for supplementary medical insurance shall result in simultaneous termination of hospital insurance benefits for uninsured individuals who are not otherwise entitled to benefits under this Act;
(6)
any percent increase effected under section 1839(b) in an individual's monthly premium may not exceed 10 percent and shall only apply to premiums paid during a period equal to twice the number of months in the full 12-month periods described in that section and shall be subject to reduction in accordance with subsection (d)(6);
(7)
an individual who meets the conditions of subsection (a) may enroll under this part during a special enrollment period that includes any month during any part of which the individual is enrolled under section 1876 with an eligible organization and ending with the last day of the 8th consecutive month in which the individual is at no time so enrolled;
(8)
in the case of an individual who enrolls during a special enrollment period under paragraph (7)—
(A)
in any month of the special enrollment period in which the individual is at any time enrolled under section 1876 with an eligible organization or in the first month following such a month, the coverage period shall begin on the first day of the month in which the individual so enrolls (or, at the option of the individual, on the first day of any of the following three months), or
(B)
in any other month of the special enrollment period, the coverage period shall begin on the first day of the month following the month in which the individual so enrolls; and
(9)
in applying the provisions of section 1839(b), there shall not be taken into account months for which the individual can demonstrate that the individual was enrolled under section 1876 with an eligible organization.
(d)
(1)
The Secretary shall, during September of each year (beginning with 1988), estimate the monthly actuarial rate for months in the succeeding year. Such actuarial rate shall be one-twelfth of the amount which the Secretary estimates (on an average, per capita basis) is equal to 100 percent of the benefits and administrative costs which will be payable from the Federal Hospital Insurance Trust Fund for services performed and related administrative costs incurred in the succeeding year with respect to individuals age 65 and over who will be entitled to benefits under this part during that year.
(2)
The Secretary shall, during September of each year determine and promulgate the dollar amount which shall be applicable for premiums for months occurring in the following year. Subject to paragraphs (4) and (5), the amount of an individual's monthly premium under this section shall be equal to the monthly actuarial rate determined under paragraph (1) for that following year. Any amount determined under the preceding sentence which is not a multiple of $1 shall be rounded to the nearest multiple of $1 (or, if it is a multiple of 50 cents but not a multiple of $1, to the next higher multiple of $1).
(3)
Whenever the Secretary promulgates the dollar amount which shall be applicable as the monthly premium under this section, he shall, at the time such promulgation is announced, issue a public statement setting forth the actuarial assumptions and bases employed by him in arriving at the amount of an adequate actuarial rate for individuals 65 and older as provided in paragraph (1).
(4)
(A)
In the case of an individual described in subparagraph (B), the monthly premium for a month shall be reduced by the applicable reduction percent specified in the following table:
| The applicable
| reduction
For a month in: | percent is:
1994 | 25 percent
1995 | 30 percent
1996 | 35 percent
1997 | 40 percent
1998 or subsequent year | 45 percent.
(B)
An individual described in this subparagraph with respect to a month is an individual who establishes to the satisfaction of the Secretary that, as of the last day of the previous month, the individual—
(i)
had at least 30 quarters of coverage under title II;
(ii)
was married (and had been married for the previous 1-year period) to an individual who had at least 30 quarters of coverage under such title;
(iii)
had been married to an individual for a period of at least 1 year (at the time of such individual's death) if at such time the individual had at least 30 quarters of coverage under such title; or
(iv)
is divorced from an individual and had been married to the individual for a period of at least 10 years (at the time of the divorce) if at such time the individual had at least 30 quarters of coverage under such title.
(5)
(A)
The amount of the monthly premium shall be zero in the case of an individual who is a person described in subparagraph (B) for a month, if—
(i)
the individual's premium under this section for the month is not (and will not be) paid for, in whole or in part, by a State (under title XIX or otherwise), a political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions thereof; and
(ii)
in each of 84 months before such month, the individual was enrolled in this part under this section and the payment of the individual's premium under this section for the month was not paid for, in whole or in part, by a State (under title XIX or otherwise), a political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions thereof.
(B)
A person described in this subparagraph for a month is a person who establishes to the satisfaction of the Secretary that, as of the last day of the previous month—
(i)
(I)
the person was receiving cash benefits under a qualified State or local government retirement system (as defined in subparagraph (C)) on the basis of the person's employment in one or more positions covered under any such system, and (II) the person would have at least 40 quarters of coverage under title II if remuneration for medicare qualified government employment (as defined in paragraph (1) of section 210(p), but determined without regard to paragraph (3) of such section) paid to such person were treated as wages paid to such person and credited for purposes of determining quarters of coverage under section 213;
(ii)
(I)
the person was married (and had been married for the previous 1-year period) to an individual who is described in clause (i), or (II) the person met the requirement of clause (i)(II) and was married (and had been married for the previous 1-year period) to an individual described in clause (i)(I);
(iii)
the person had been married to an individual for a period of at least 1 year (at the time of such individual's death) if (I) the individual was described in clause (i) at the time of the individual's death, or (II) the person met the requirement of clause (i)(II) and the individual was described in clause (i)(I) at the time of the individual's death; or
(iv)
the person is divorced from an individual and had been married to the individual for a period of at least 10 years (at the time of the divorce) if (I) the individual was described in clause (i) at the time of the divorce, or (II) the person met the requirement of clause (i)(II) and the individual was described in clause (i)(I) at the time of the divorce.
(C)
For purposes of subparagraph (B)(i)(I), the term “qualified State or local government retirement system” means a retirement system that—
(i)
is established or maintained by a State or political subdivision thereof, or an agency or instrumentality of one or more States or political subdivisions thereof;
(ii)
covers positions of some or all employees of such a State, subdivision, agency, or instrumentality; and
(iii)
does not adjust cash retirement benefits based on eligibility for a reduction in premium under this paragraph.
(6)
(A)
In the case where a State, a political subdivision of a State, or an agency or instrumentality of a State or political subdivision thereof determines to pay, for the life of each individual, the monthly premiums due under paragraph (1) on behalf of each of the individuals in a qualified State or local government retiree group who meets the conditions of subsection (a), the amount of any increase otherwise applicable under section 1839(b) (as applied and modified by subsection (c)(6) of this section) with respect to the monthly premium for benefits under this part for an individual who is a member of such group shall be reduced by the total amount of taxes paid under section 3101(b) of the Internal Revenue Code of 1986 by such individual and under section 3111(b) of such Code by the employers of such individual on behalf of such individual with respect to employment (as defined in section 3121(b) of such Code).
(B)
For purposes of this paragraph, the term “qualified State or local government retiree group” means all of the individuals who retire prior to a specified date that is before January 1, 2002, from employment in one or more occupations or other broad classes of employees of—
(i)
the State;
(ii)
a political subdivision of the State; or
(iii)
an agency or instrumentality of the State or political subdivision of the State.
(e)
Payment of the monthly premiums on behalf of any individual who meets the conditions of subsection (a) may be made by any public or private agency or organization under a contract or other arrangement entered into between it and the Secretary if the Secretary determines that payment of such premiums under such contract or arrangement is administratively feasible.
(f)
Amounts paid to the Secretary for coverage under this section shall be deposited in the Treasury to the credit of the Federal Hospital Insurance Trust Fund.
(g)
(1)
The Secretary shall, at the request of a State made after 1989, enter into a modification of an agreement entered into with the State pursuant to section 1843(a) under which the agreement provides for enrollment in the program established by this part of qualified medicare beneficiaries (as defined in section 1905(p)(1)).
(2)
(A)
Except as provided in subparagraph (B), the provisions of subsections (c), (d), (e), and (f) of section 1843 shall apply to qualified medicare beneficiaries enrolled, pursuant to such agreement, in the program established by this part in the same manner and to the same extent as they apply to qualified medicare beneficiaries enrolled, pursuant to such agreement, in part B.
(B)
For purposes of this subsection, section 1843(d)(1) shall be applied by substituting section 1818'' for section 1839'' and “subsection (c)(6) (with reference to subsection (b) of section 1839)” for “subsection (b)”.

HOSPITAL INSURANCE BENEFITS FOR DISABLED INDIVIDUALS WHO HAVE EXHAUSTED OTHER ENTITLEMENT
Sec. 1818A.
[42 U.S.C. 1395i–2a]
(a)
Every individual who—
(1)
has not attained the age of 65;
(2)
(A)
has been entitled to benefits under this part under section 226(b), and
(B)
(i)
continues to have the disabling physical or mental impairment on the basis of which the individual was found to be under a disability or to be a disabled qualified railroad retirement beneficiary, or (ii) is blind (within the meaning of section 216(i)(1)), but
(C)
whose entitlement under section 226(b) ends due solely to the individual having earnings that exceed the substantial gainful activity amount (as defined in section 223(d)(4)); and
(3)
is not otherwise entitled to benefits under this part,
shall be eligible to enroll in the insurance program established by this part.
(b)
(1)
An individual may enroll under this section only in such manner and form as may be prescribed in regulations, and only during an enrollment period prescribed in or under this section.
(2)
The individual's initial enrollment period shall begin with the month in which the individual receives notice that the individual's entitlement to benefits under section 226(b) will end due solely to the individual having earnings that exceed the substantial gainful activity amount (as defined in section 223(d)(4)) and shall end 7 months later.
(3)
There shall be a general enrollment period during the period beginning on January 1 and ending on March 31 of each year (beginning with 1990).
(c)
(1)
The period (in this subsection referred to as a “coverage period”) during which an individual is entitled to benefits under the insurance program under this part shall begin on whichever of the following is the latest:
(A)
In the case of an individual who enrolls under subsection (b)(2) before the month in which the individual first satisfies subsection (a), the first day of such month.
(B)
In the case of an individual who enrolls under subsection (b)(2) in the month in which the individual first satisfies subsection (a), the first day of the month following the month in which the individual so enrolls.
(C)
In the case of an individual who enrolls under subsection (b)(2) in the month following the month in which the individual first satisfies subsection (a), the first day of the second month following the month in which the individual so enrolls.
(D)
In the case of an individual who enrolls under subsection (b)(2) more than one month following the month in which the individual first satisfies subsection (a), the first day of the third month following the month in which the individual so enrolls.
(E)
In the case of an individual who enrolls under subsection (b)(3), the July 1 following the month in which the individual so enrolls.
(2)
An individual's coverage period under this section shall continue until the individual's enrollment is terminated as follows:
(A)
As of the month following the month in which the Secretary provides notice to the individual that the individual no longer meets the condition described in subsection (a)(2)(B).
(B)
As of the month following the month in which the individual files notice that the individual no longer wishes to participate in the insurance program established by this part.
(C)
As of the month before the first month in which the individual becomes eligible for hospital insurance benefits under section 226(a) or 226A.
(D)
As of a date, determined under regulations of the Secretary, for nonpayment of premiums.
The regulations under subparagraph (D) may provide a grace period of not longer than 90 days, which may be extended to not to exceed 180 days in any case where the Secretary determines that there was good cause for failure to pay the overdue premiums within such 90-day period. Termination of coverage under this section shall result in simultaneous termination of any coverage affected under any other part of this title.
(3)
The provisions of subsections (h), (i), and (m) of section 1837 apply to enrollment and nonenrollment under this section in the same manner as they apply to enrollment and nonenrollment and special enrollment periods under section 1818.
(d)
(1)
(A)
Premiums for enrollment under this section shall be paid to the Secretary at such times, and in such manner, as the Secretary shall by regulations prescribe, and shall be deposited in the Treasury to the credit of the Federal Hospital Insurance Trust Fund.
(B)
(i)
Subject to clause (ii), such premiums shall be payable for the period commencing with the first month of an individual's coverage period and ending with the month in which the individual dies or, if earlier, in which the individual's coverage period terminates.
(ii)
Such premiums shall not be payable for any month in which the individual is eligible for benefits under this part pursuant to section 226(b).
(2)
The provisions of subsections (d) through (f) of section 1818 (relating to premiums) shall apply to individuals enrolled under this section in the same manner as they apply to individuals enrolled under that section.

requirements for, and assuring quality of care in, skilled nursing facilities
Sec. 1819.
[42 U.S.C. 1395i–3]
(a)

Skilled Nursing Facility Defined.—
In this title, the term “skilled nursing facility” means an institution (or a distinct part of an institution) which—
(1)
is primarily engaged in providing to residents—
(A)
skilled nursing care and related services for residents who require medical or nursing care, or
(B)
rehabilitation services for the rehabilitation of injured, disabled, or sick persons,
and is not primarily for the care and treatment of mental diseases;
(2)
has in effect a transfer agreement (meeting the requirements of section 1861(l)) with one or more hospitals having agreements in effect under section 1866; and
(3)
meets the requirements for a skilled nursing facility described in subsections (b), (c), and (d) of this section.
(b)

Requirements Relating to Provision of Services.—
(1)

Quality of life.—
(A)

In general.—
A skilled nursing facility must care for its residents in such a manner and in such an environment as will promote maintenance or enhancement of the quality of life of each resident.
(B)

Quality assessment and assurance.—
A skilled nursing facility must maintain a quality assessment and assurance committee, consisting of the director of nursing services, a physician designated by the facility, and at least 3 other members of the facility's staff, which (i) meets at least quarterly to identify issues with respect to which quality assessment and assurance activities are necessary and (ii) develops and implements appropriate plans of action to correct identified quality deficiencies. A State or the Secretary may not require disclosure of the records of such committee except insofar as such disclosure is related to the compliance of such committee with the requirements of this subparagraph.
(2)

Scope of services and activities under plan of care.—
A skilled nursing facility must provide services to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident, in accordance with a written plan of care which—
(A)
describes the medical, nursing, and psychosocial needs of the resident and how such needs will be met;
(B)
is initially prepared, with the participation to the extent practicable of the resident or the resident's family or legal representative, by a team which includes the resident's attending physician and a registered professional nurse with responsibility for the resident; and
(C)
is periodically reviewed and revised by such team after each assessment under paragraph (3).
(3)

Residents' assessment.—
(A)

Requirement.—
A skilled nursing facility must conduct a comprehensive, accurate, standardized, reproducible assessment of each resident's functional capacity, which assessment—
(i)
describes the resident's capability to perform daily life functions and significant impairments in functional capacity;
(ii)
is based on a uniform minimum data set specified by the Secretary under subsection (f)(6)(A);
(iii)
uses an instrument which is specified by the State under subsection (e)(5); and
(iv)
includes the identification of medical problems.
(B)

Certification.—
(i)

In general.—
Each such assessment must be conducted or coordinated (with the appropriate participation of health professionals) by a registered professional nurse who signs and certifies the completion of the assessment. Each individual who completes a portion of such an assessment shall sign and certify as to the accuracy of that portion of the assessment.
(ii)

Penalty for falsification.—
(I)
An individual who willfully and knowingly certifies under clause (i) a material and false statement in a resident assessment is subject to a civil money penalty of not more than $1,000 with respect to each assessment.
(II)
An individual who willfully and knowingly causes another individual to certify under clause (i) a material and false statement in a resident assessment is subject to a civil money penalty of not more than $5,000 with respect to each assessment.
(III)
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this clause in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(iii)

Use of independent assessors.—
If a State determines, under a survey under subsection (g) or otherwise, that there has been a knowing and willful certification of false assessments under this paragraph, the State may require (for a period specified by the State) that resident assessments under this paragraph be conducted and certified by individuals who are independent of the facility and who are approved by the State.
(C)

Frequency.—
(i)

In general.—
Subject to the timeframes prescribed by the Secretary under section 1888(e)(6), such an assessment must be conducted—
(I)
promptly upon (but no later than 14 days after the date of) admission for each individual admitted on or after October 1, 1990, and by not later than January 1, 1991, for each resident of the facility on that date;
(II)
promptly after a significant change in the resident's physical or mental condition; and
(III)
in no case less often than once every 12 months.
(ii)

Resident review.—
The skilled nursing facility must examine each resident no less frequently than once every 3 months and, as appropriate, revise the resident's assessment to assure the continuing accuracy of the assessment.
(D)

Use.—
The results of such an assessment shall be used in developing, reviewing, and revising the resident's plan of care under paragraph (2).
(E)

Coordination.—
Such assessments shall be coordinated with any State-required preadmission screening program to the maximum extent practicable in order to avoid duplicative testing and effort.
(4)

Provision of services and activities.—
(A)

In general.—
To the extent needed to fulfill all plans of care described in paragraph (2), a skilled nursing facility must provide, directly or under arrangements (or, with respect to dental services, under agreements) with others for the provision of—
(i)
nursing services and specialized rehabilitative services to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident;
(ii)
medically-related social services to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident;
(iii)
pharmaceutical services (including procedures that assure the accurate acquiring, receiving, dispensing, and administering of all drugs and biologicals) to meet the needs of each resident;
(iv)
dietary services that assure that the meals meet the daily nutritional and special dietary needs of each resident;
(v)
an on-going program, directed by a qualified professional, of activities designed to meet the interests and the physical, mental, and psychosocial well-being of each resident;
(vi)
routine and emergency dental services to meet the needs of each resident; and
(vii)
treatment and services required by mentally ill and mentally retarded residents not otherwise provided or arranged for (or required to be provided or arranged for) by the State.
The services provided or arranged by the facility must meet professional standards of quality. Nothing in clause (vi) shall be construed as requiring a facility to provide or arrange for dental services described in that clause without additional charge.
(B)
Qualified persons providing services.—Services described in clauses (i), (ii), (iii), (iv), and (vi) of subparagraph (A) must be provided by qualified persons in accordance with each resident's written plan of care.
(C)

Required nursing care.—
(i)
In general.—Except as provided in clause (ii), a skilled nursing facility must provide 24-hour licensed nursing service which is sufficient to meet nursing needs of its residents and must use the services of a registered professional nurse at least 8 consecutive hours a day, 7 days a week.
(ii)

Exception.—
To the extent that clause (i) may be deemed to require that a skilled nursing facility engage the services of a registered professional nurse for more than 40 hours a week, the Secretary is authorized to waive such requirement if the Secretary finds that—
(I)
the facility is located in a rural area and the supply of skilled nursing facility services in such area is not sufficient to meet the needs of individuals residing therein,
(II)
the facility has one full-time registered professional nurse who is regularly on duty at such facility 40 hours a week,
(III)
the facility either has only patients whose physicians have indicated (through physicians' orders or admission notes) that each such patient does not require the services of a registered nurse or a physician for a 48-hour period, or has made arrangements for a registered professional nurse or a physician to spend such time at such facility as may be indicated as necessary by the physician to provide necessary skilled nursing services on days when the regular full-time registered professional nurse is not on duty,
(IV)
the Secretary provides notice of the waiver to the State long-term care ombudsman (established under section 307(a)(12) of the Older Americans Act of 1965) and the protection and advocacy system in the State for the mentally ill and the mentally retarded, and
(V)
the facility that is granted such a waiver notifies residents of the facility (or, where appropriate, the guardians or legal representatives of such residents) and members of their immediate families of the waiver.
A waiver under this subparagraph shall be subject to annual renewal.
(5)

Required training of nurse aides.—
(A)

In general.—
(i)
Except as provided in clause (ii), a skilled nursing facility must not use on a full-time basis any individual as a nurse aide in the facility on or after October 1, 1990 for more than 4 months unless the individual—
(I)
has completed a training and competency evaluation program, or a competency evaluation program, approved by the State under subsection (e)(1)(A), and
(II)
is competent to provide nursing or nursing-related services.
(ii)
A skilled nursing facility must not use on a temporary, per diem, leased, or on any basis other than as a permanent employee any individual as a nurse aide in the facility on or after January 1, 1991, unless the individual meets the requirements described in clause (i).
(B)

Offering competency evaluation programs for current employees.—
A skilled nursing facility must provide, for individuals used as a nurse aide by the facility as of January 1, 1990, for a competency evaluation program approved by the State under subsection (e)(1) and such preparation as may be necessary for the individual to complete such a program by October 1, 1990.
(C)

Competency.—
The skilled nursing facility must not permit an individual, other than in a training and competency evaluation program8 approved by the State, to serve as a nurse aide or provide services of a type for which the individual has not demonstrated competency and must not use such an individual as a nurse aide unless the facility has inquired of any State registry established under subsection (e)(2)(A) that the facility believes will include information concerning the individual.
^8
As in original.
(D)

Re-training required.—
For purposes of subparagraph (A), if, since an individual's most recent completion of a training and competency evaluation program, there has been a continuous period of 24 consecutive months during none of which the individual performed nursing or nursing-related services for monetary compensation, such individual shall complete a new training and competency evaluation program or a new competency evaluation program.
(E)

Regular in-service education.—
The skilled nursing facility must provide such regular performance review and regular in-service education as assures that individuals used as nurse aides are competent to perform services as nurse aides, including training for individuals providing nursing and nursing- related services to residents with cognitive impairments.
(F)

Nurse aide defined.—
In this paragraph, the term “nurse aide” means any individual providing nursing or nursing-related services to residents in a skilled nursing facility, but does not include an individual—
(i)
who is a licensed health professional (as defined in subparagraph (G)) or a registered dietician, or
(ii)
who volunteers to provide such services without monetary compensation.
Such term includes an individual who provides such services through an agency or under a contract with the facility.
(G)

Licensed health professional defined.—
In this paragraph, the term “licensed health professional” means a physician, physician assistant, nurse practitioner, physical, speech, or occupational therapist, physical or occupational therapy assistant, registered professional nurse, licensed practical nurse, licensed or certified social worker, registered respiratory therapist, or certified respiratory therapy technician.
(6)

Physician supervision and clinical records.—
A skilled nursing facility must—
(A)
require that the medical care of every resident be provided under the supervision of a physician;
(B)
provide for having a physician available to furnish necessary medical care in case of emergency; and
(C)
maintain clinical records on all residents, which records include the plans of care (described in paragraph (2)) and the residents' assessments (described in paragraph (3)).
(7)

Required social services.—
In the case of a skilled nursing facility with more than 120 beds, the facility must have at least one social worker (with at least a bachelor's degree in social work or similar professional qualifications) employed full-time to provide or assure the provision of social services.
(8)

Information on nurse staffing.—
(A)

In general.—
A skilled nursing facility shall post daily for each shift the current number of licensed and unlicensed nursing staff directly responsible for resident care in the facility. The information shall be displayed in a uniform manner (as specified by the Secretary) and in a clearly visible place.
(B)

Publication of data.—
A skilled nursing facility shall, upon request, make available to the public the nursing staff data described in subparagraph (A).
(c)

Requirements Relating to Residents' Rights.—
(1)

General rights.—
(A)

Specified rights.—
A skilled nursing facility must protect and promote the rights of each resident, including each of the following rights:
(i)

Free choice.—
The right to choose a personal attending physician, to be fully informed in advance about care and treatment, to be fully informed in advance of any changes in care or treatment that may affect the resident's well-being, and (except with respect to a resident adjudged incompetent) to participate in planning care and treatment or changes in care and treatment.
(ii)

Free from restraints.—
The right to be free from physical or mental abuse, corporal punishment, involuntary seclusion, and any physical or chemical restraints imposed for purposes of discipline or convenience and not required to treat the resident's medical symptoms. Restraints may only be imposed—
(I)
to ensure the physical safety of the resident or other residents, and
(II)
only upon the written order of a physician that specifies the duration and circumstances under which the restraints are to be used (except in emergency circumstances specified by the Secretary until such an order could reasonably be obtained).
(iii)

Privacy.—
The right to privacy with regard to accommodations, medical treatment, written and telephonic communications, visits, and meetings of family and of resident groups.
(iv)

Confidentiality.—
The right to confidentiality of personal and clinical records and to access to current clinical records of the resident upon request by the resident or the resident's legal representative, within 24 hours (excluding hours occurring during a weekend or holiday) after making such a request.
(v)

Accommodation of needs.—
The right—
(I)
to reside and receive services with reasonable accommodation of individual needs and preferences, except where the health or safety of the individual or other residents would be endangered, and
(II)
to receive notice before the room or roommate of the resident in the facility is changed.
(vi)

Grievances.—
The right to voice grievances with respect to treatment or care that is (or fails to be) furnished, without discrimination or reprisal for voicing the grievances and the right to prompt efforts by the facility to resolve grievances the resident may have, including those with respect to the behavior of other residents.
(vii)

Participation in resident and family groups.—
The right of the resident to organize and participate in resident groups in the facility and the right of the resident's family to meet in the facility with the families of other residents in the facility.
(viii)

Participation in other activities.—
The right of the resident to participate in social, religious, and community activities that do not interfere with the rights of other residents in the facility.
(ix)

Examination of survey results.—
The right to examine, upon reasonable request, the results of the most recent survey of the facility conducted by the Secretary or a State with respect to the facility and any plan of correction in effect with respect to the facility.
(x)

Refusal of certain transfers.—
The right to refuse a transfer to another room within the facility, if a purpose of the transfer is to relocate the resident from a portion of the facility that is a skilled nursing facility (for purposes of this title) to a portion of the facility that is not such a skilled nursing facility.
(xi)
Other rights.—Any other right established by the Secretary.
Clause (iii) shall not be construed as requiring the provision of a private room. A resident's exercise of a right to refuse transfer under clause (x) shall not affect the resident's eligibility or entitlement to benefits under this title or to medical assistance under title XIX of this Act.
(B)

Notice of rights and services.—
A skilled nursing facility must—
(i)
inform each resident, orally and in writing at the time of admission to the facility, of the resident's legal rights during the stay at the facility;
(ii)
make available to each resident, upon reasonable request, a written statement of such rights (which statement is updated upon changes in such rights) including the notice (if any) of the State developed under section 1919(e)(6); and
(iii)
inform each other resident, in writing before or at the time of admission and periodically during the resident's stay, of services available in the facility and of related charges for such services, including any charges for services not covered under this title or by the facility's basic per diem charge.
The written description of legal rights under this subparagraph shall include a description of the protection of personal funds under paragraph (6) and a statement that a resident may file a complaint with a State survey and certification agency respecting resident abuse and neglect and misappropriation of resident property in the facility.
(C)

Rights of incompetent residents.—
In the case of a resident adjudged incompetent under the laws of a State, the rights of the resident under this title shall devolve upon, and, to the extent judged necessary by a court of competent jurisdiction, be exercised by, the person appointed under State law to act on the resident's behalf.
(D)

Use of Psychopharmacologic Drugs.—
Psychopharmacologic drugs may be administered only on the orders of a physician and only as part of a plan (included in the written plan of care described in paragraph (2)) designed to eliminate or modify the symptoms for which the drugs are prescribed and only if, at least annually, an independent, external consultant reviews the appropriateness of the drug plan of each resident receiving such drugs. In determining whether such a consultant is qualified to conduct reviews under the preceding sentence, the Secretary shall take into account the needs of nursing facilities under this title to have access to the services of such a consultant on a timely basis.
(E)

Information respecting advance directives.—
A skilled nursing facility must comply with the requirement of section 1866(f) (relating to maintaining written policies and procedures respecting advance directives).
(2)

Transfer and discharge rights.—
(A)

In general.—
A skilled nursing facility must permit each resident to remain in the facility and must not transfer or discharge the resident from the facility unless—
(i)
the transfer or discharge is necessary to meet the resident's welfare and the resident's welfare cannot be met in the facility;
(ii)
the transfer or discharge is appropriate because the resident's health has improved sufficiently so the resident no longer needs the services provided by the facility;
(iii)
the safety of individuals in the facility is endangered;
(iv)
the health of individuals in the facility would otherwise be endangered;
(v)
the resident has failed, after reasonable and appropriate notice, to pay (or to have paid under this title or title XIX on the resident's behalf) for a stay at the facility; or
(vi)
the facility ceases to operate.
In each of the cases described in clauses (i) through (v), the basis for the transfer or discharge must be documented in the resident's clinical record. In the cases described in clauses (i) and (ii), the documentation must be made by the resident's physician, and in the cases described in clauses (iii) and (iv) the documentation must be made by a physician.
(B)

Pre-transfer and pre-discharge notice.—
(i)

In general.—
Before effecting a transfer or discharge of a resident, a skilled nursing facility must—
(I)
notify the resident (and, if known, a family member of the resident or legal representative) of the transfer or discharge and the reasons therefor,
(II)
record the reasons in the resident's clinical record (including any documentation required under subparagraph (A)), and
(III)
include in the notice the items described in clause (iii).
(ii)

Timing of notice.—
The notice under clause (i)(I) must be made at least 30 days in advance of the resident's transfer or discharge except—
(I)
in a case described in clause (iii) or (iv) of subparagraph (A);
(II)
in a case described in clause (ii) of subparagraph (A), where the resident's health improves sufficiently to allow a more immediate transfer or discharge;
(III)
in a case described in clause (i) of subparagraph (A), where a more immediate transfer or discharge is necessitated by the resident's urgent medical needs; or
(IV)
in a case where a resident has not resided in the facility for 30 days.
In the case of such exceptions, notice must be given as many days before the date of the transfer or discharge as is practicable.
(iii)

Items included in notice.—
Each notice under clause (i) must include—
(I)
for transfers or discharges effected on or after October 1, 1990, notice of the resident's right to appeal the transfer or discharge under the State process established under subsection (e)(3); and
(II)
the name, mailing address, and telephone number of the State long-term care ombudsman (established under title III or VII of the Older Americans Act of 1965 in accordance with section 712 of the Act).
(C)

Orientation.—
A skilled nursing facility must provide sufficient preparation and orientation to residents to ensure safe and orderly transfer or discharge from the facility.
(3)

Access and visitation rights.—
A skilled nursing facility must—
(A)
permit immediate access to any resident by any representative of the Secretary, by any representative of the State, by an ombudsman described in paragraph (2)(B)(iii)(II), or by the resident's individual physician;
(B)
permit immediate access to a resident, subject to the resident's right to deny or withdraw consent at any time, by immediate family or other relatives of the resident;
(C)
permit immediate access to a resident, subject to reasonable restrictions and the resident's right to deny or withdraw consent at any time, by others who are visiting with the consent of the resident;
(D)
permit reasonable access to a resident by any entity or individual that provides health, social, legal, or other services to the resident, subject to the resident's right to deny or withdraw consent at any time; and
(E)
permit representatives of the State ombudsman (described in paragraph (2)(B)(iii)(II)), with the permission of the resident (or the resident's legal representative) and consistent with State law, to examine a resident's clinical records.
(4)

Equal access to quality care.—
A skilled nursing facility must establish and maintain identical policies and practices regarding transfer, discharge, and covered services under this title for all individuals regardless of source of payment.
(5)

Admissions Policy.—
(A)

Admissions.—
With respect to admissions practices, a skilled nursing facility must—
(i)
(I)
not require individuals applying to reside or residing in the facility to waive their rights to benefits under this title or under a State plan under title XIX, (II) not require oral or written assurance that such individuals are not eligible for, or will not apply for, benefits under this title or such a State plan, and (III) prominently display in the facility and provide to such individuals written information about how to apply for and use such benefits and how to receive refunds for previous payments covered by such benefits; and
(ii)
not require a third party guarantee of payment to the facility as a condition of admission (or expedited admission) to, or continued stay in, the facility.
(B)

Construction.—
(i)

No preemption of stricter standards.—
Subparagraph (A) shall not be construed as preventing States or political subdivisions therein from prohibiting, under State or local law, the discrimination against individuals who are entitled to medical assistance under this title with respect to admissions practices of skilled nursing facilities.
(ii)

Contracts with legal representatives.—
Subparagraph (A)(ii) shall not be construed as preventing a facility from requiring an individual, who has legal access to a resident's income or resources available to pay for care in the facility, to sign a contract (without incurring personal financial liability) to provide payment from the resident's income or resources for such care.
(6)

Protection of resident funds.—
(A)

In general.—
The skilled nursing facility—
(i)
may not require residents to deposit their personal funds with the facility, and
(ii)
upon the written authorization of the resident, must hold, safeguard, and account for such personal funds under a system established and maintained by the facility in accordance with this paragraph.
(B)

Management of personal funds.—
Upon written authorization of a resident under subparagraph (A)(ii), the facility must manage and account for the personal funds of the resident deposited with the facility as follows:
(i)

Deposit.—
The facility must deposit any amount of personal funds in excess of $100 with respect to a resident in an interest bearing account (or accounts) that is separate from any of the facility's operating accounts and credits all interest earned on such separate account to such account. With respect to any other personal funds, the facility must maintain such funds in a non-interest bearing account or petty cash fund.
(ii)

Accounting and records.—
The facility must assure a full and complete separate accounting of each such resident's personal funds, maintain a written record of all financial transactions involving the personal funds of a resident deposited with the facility, and afford the resident (or a legal representative of the resident) reasonable access to such record.
(iii)

Conveyance upon death.—
Upon the death of a resident with such an account, the facility must convey promptly the resident's personal funds (and a final accounting of such funds) to the individual administering the resident's estate.
(C)

Assurance of financial security.—
The facility must purchase a surety bond, or otherwise provide assurance satisfactory to the Secretary, to assure the security of all personal funds of residents deposited with the facility.
(D)

Limitation on charges to personal funds.—
The facility may not impose a charge against the personal funds of a resident for any item or service for which payment is made under this title or title XIX.
(d)

Requirements Relating to Administration and Other Matters.—
(1)

Administration.—
(A)

In general.—
A skilled nursing facility must be administered in a manner that enables it to use its resources effectively and efficiently to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident (consistent with requirements established under subsection (f)(5)).
(B)

Skilled nursing facility administrator.—
The administrator of a skilled nursing facility must meet standards established by the Secretary under subsection (f)(4).
(C)

Availability of survey, certification, and complaint investigation reports.—
A skilled nursing facility must—
(i)
have reports with respect to any surveys, certifications, and complaint investigations made respecting the facility during the 3 preceding years available for any individual to review upon request; and
(ii)
post notice of the availability of such reports in areas of the facility that are prominent and accessible to the public.
The facility shall not make available under clause (i) identifying information about complainants or residents.
(2)

Licensing and life safety code.—
(A)

Licensing.—
A skilled nursing facility must be licensed under applicable State and local law.
(B)

Life safety code.—
A skilled nursing facility must meet such provisions of such edition (as specified by the Secretary in regulation) of the Life Safety Code of the National Fire Protection Association as are applicable to nursing homes; except that—
(i)
the Secretary may waive, for such periods as he deems appropriate, specific provisions of such Code which if rigidly applied would result in unreasonable hardship upon a facility, but only if such waiver would not adversely affect the health and safety of residents or personnel, and
(ii)
the provisions of such Code shall not apply in any State if the Secretary finds that in such State there is in effect a fire and safety code, imposed by State law, which adequately protects residents of and personnel in skilled nursing facilities.
(3)

Sanitary and infection control and physical environment.—
A skilled nursing facility must—
(A)
establish and maintain an infection control program designed to provide a safe, sanitary, and comfortable environment in which residents reside and to help prevent the development and transmission of disease and infection, and
(B)
be designed, constructed, equipped, and maintained in a manner to protect the health and safety of residents, personnel, and the general public.
(4)

Miscellaneous.—
(A)

Compliance with federal, state, and local laws and professional standards.—
A skilled nursing facility must operate and provide services in compliance with all applicable Federal, State, and local laws and regulations (including the requirements of section 1124) and with accepted professional standards and principles which apply to professionals providing services in such a facility.
(B)

Other.—
A skilled nursing facility must meet such other requirements relating to the health, safety, and well- being of residents or relating to the physical facilities thereof as the Secretary may find necessary.
(e)

State Requirements Relating to Skilled Nursing Facility Requirements.—
The requirements, referred to in section 1864(d), with respect to a State are as follows:
(1)

Specification and review of nurse aide training and competency evaluation programs and of nurse aide competency evaluation programs.—
The State must—
(A)
by not later than January 1, 1989, specify those training and competency evaluation programs, and those competency evaluation programs, that the State approves for purposes of subsection (b)(5) and that meet the requirements established under subsection (f)(2), and
(B)
by not later than January 1, 1990, provide for the review and reapproval of such programs, at a frequency and using a methodology consistent with the requirements established under subsection (f)(2)(A)(iii).
The failure of the Secretary to establish requirements under subsection (f)(2) shall not relieve any State of its responsibility under this paragraph.
(2)

Nurse aide registry.—
(A)

In general.—
By not later than January 1, 1989, the State shall establish and maintain a registry of all individuals who have satisfactorily completed a nurse aide training and competency evaluation program, or a nurse aide competency evaluation program, approved under paragraph (1) in the State, or any individual described in subsection (f)(2)(B)(ii) or in subparagraph (B), (C), or (D) of section 6901(b)(4) of the Omnibus Budget Reconciliation Act of 1989.
(B)

Information in registry.—
The registry under subparagraph (A) shall provide (in accordance with regulations of the Secretary) for the inclusion of specific documented findings by a State under subsection (g)(1)(C) of resident neglect or abuse or misappropriation of resident property involving an individual listed in the registry, as well as any brief statement of the individual disputing the findings, but shall not include any allegations of resident abuse or neglect or misappropriation of resident property that are not specifically documented by the State under such subsection. The State shall make available to the public information in the registry. In the case of inquiries to the registry concerning an individual listed in the registry, any information disclosed concerning such a finding shall also include disclosure of any such statement in the registry relating to the finding or a clear and accurate summary of such a statement.
(C)

Prohibition against charges.—
A State may not impose any charges on a nurse aide relating to the registry established and maintained under subparagraph (A).
(3)

State appeals process for transfers and discharges.—
The State, for transfers and discharges from skilled nursing facilities effected on or after October 1, 1989, must provide for a fair mechanism for hearing appeals on transfers and discharges of residents of such facilities. Such mechanism must meet the guidelines established by the Secretary under subsection (f)(3); but the failure of the Secretary to establish such guidelines shall not relieve any State of its responsibility to provide for such a fair mechanism.
(4)

Skilled nursing facility administrator standards.—
By not later than January 1, 1990, the State must have implemented and enforced the skilled nursing facility administrator standards developed under subsection (f)(4) respecting the qualification of administrators of skilled nursing facilities.
(5)

Specification of resident assessment instrument.—
Effective July 1, 1990, the State shall specify the instrument to be used by nursing facilities in the State in complying with the requirement of subsection (b)(3)(A)(iii). Such instrument shall be—
(A)
one of the instruments designated under subsection (f)(6)(B), or
(B)
an instrument which the Secretary has approved as being consistent with the minimum data set of core elements, common definitions, and utilization guidelines specified by the Secretary under subsection (f)(6)(A).
(f)

Responsibilities of Secretary Relating to Skilled Nursing Facility Requirements.—
(1)

General responsibility.—
It is the duty and responsibility of the Secretary to assure that requirements which govern the provision of care in skilled nursing facilities under this title, and the enforcement of such requirements, are adequate to protect the health, safety, welfare, and rights of residents and to promote the effective and efficient use of public moneys.
(2)

Requirements for nurse aide training and competency evaluation programs and for nurse aide competency evaluation programs.—
(A)

In general.—
For purposes of subsections (b)(5) and (e)(1)(A), the Secretary shall establish, by not later than September 1, 1988—
(i)
requirements for the approval of nurse aide training and competency evaluation programs, including requirements relating to (I) the areas to be covered in such a program (including at least basic nursing skills, personal care skills, recognition of mental health and social service needs, care of cognitively impaired residents, basic restorative services, and residents' rights) and content of the curriculum (including, in the case of initial training and, if the Secretary determines appropriate, in the case of ongoing training, dementia management training, and patient abuse prevention training9, (II) minimum hours of initial and ongoing training and retraining (including not less than 75 hours in the case of initial training), (III) qualifications of instructors, and (IV) procedures for determination of competency;
^9
Section 6121(a)(1) of Public Law 111–148 (124 Stat. 720) provided for an amendment to insert new parenthetical language before “, (II)”. The amendment probably should have included a close parenthesis at the end of the inserted matter.
(ii)
requirements for the approval of nurse aide competency evaluation programs, including requirement relating to the areas to be covered in such a program, including at least basic nursing skills, personal care skills, recognition of mental health and social service needs, care of cognitively impaired residents, basic restorative services, residents' rights, and procedures for determination of competency;
(iii)
requirements respecting the minimum frequency and methodology to be used by a State in reviewing such programs' compliance with the requirements for such programs; and
(iv)
requirements, under both such programs, that—
(I)
provide procedures for determining competency that permit a nurse aide, at the nurse aide's option, to establish competency through procedures or methods other than the passing of a written examination and to have the competency evaluation conducted at the nursing facility at which the aide is (or will be) employed (unless the facility is described in subparagraph (B)(iii)(I)),
(II)
prohibit the imposition on a nurse aide who is employed by (or who has received an offer of employment from) a facility on the date on which the aide begins either such program of any charges (including any charges for textbooks and other required course materials and any charges for the competency evaluation) for either such program, and
(III)
in the case of a nurse aide not described in subclause (II) who is employed by (or who has received an offer of employment from) a facility not later than 12 months after completing either such program, the State shall provide for the reimbursement of costs incurred in completing such program on a prorata basis during the period in which the nurse aide is so employed.
(B)

Approval of certain programs.—
Such requirements—
(i)
may permit approval of programs offered by or in facilities (subject to clause (iii)), as well as outside facilities (including employee organizations), and of programs in effect on the date of the enactment of this section;
(ii)
shall permit a State to find that an individual who has completed (before July 1, 1989) a nurse aide training and competency evaluation program shall be deemed to have completed such a program approved under subsection (b)(5) if the State determines that, at the time the program was offered, the program met the requirements for approval under such paragraph; and
(iii)
subject to subparagraphs (C) and (D), shall prohibit approval of such a program—
(I)
offered by or in a skilled nursing facility which, within the previous 2 years—
- (a)
has operated under a waiver under subsection (b)(4)(C)(ii)(II);
- (b)
has been subject to an extended (or partial extended) survey under subsection (g)(2)(B)(i) or section 1919(g)(2)(B)(i), unless the survey shows that the facility is in compliance with the requirements of subsections (b), (c), and (d) of this section; or
- (c)
has been assessed a civil money penalty described in subsection (h)(2)(B)(ii) or section 1919(h)(2)(A)(ii) of not less than $5,000, or has been subject to a remedy described in clause (i) or (iii) of subsection (h)(2)(B), subsection (h)(4), section 1919(h)(1)(B)(i), or in clause (i), (iii), or (iv) of section 1919(h)(2)(A), or
(II)
offered by or in a skilled nursing facility unless the State makes the determination, upon an individual's completion of the program, that the individual is competent to provide nursing and nursing-related services in skilled nursing facilities.
A State may not delegate (through subcontract or otherwise) its responsibility under clause (iii)(II) to the skilled nursing facility.
(C)

Waiver authorized.—
Clause (iii)(I) of subparagraph (B) shall not apply to a program offered in (but not by) a nursing facility (or skilled nursing facility for purposes of title XVIII) in a State if the State—
(i)
determines that there is no other such program offered within a reasonable distance of the facility,
(ii)
assures, through an oversight effort, that an adequate environment exists for operating the program in the facility, and
(iii)
provides notice of such determination and assurances to the State long-term care ombudsman.
(D)

Waiver of disapproval of nurse-aide training programs.—
Upon application of a nursing facility, the Secretary may waive the application of subparagraph (B)(iii)(I)(c) if the imposition of the civil monetary penalty was not related to the quality of care provided to residents of the facility. Nothing in this subparagraph shall be construed as eliminating any requirement upon a facility to pay a civil monetary penalty described in the preceding sentence.
(3)

Federal guidelines for state appeals process for transfers and discharges.—
For purposes of subsections (c)(2)(B)(iii)(I) and (e)(3), by not later than October 1, 1988, the Secretary shall establish guidelines for minimum standards which State appeals processes under subsection (e)(3) must meet to provide a fair mechanism for hearing appeals on transfers and discharges of residents from skilled nursing facilities.
(4)

Secretarial standards for qualification of administrators.—
For purposes of subsections (d)(1)(C) and (e)(4), the Secretary shall develop, by not later than March 1, 1989, standards to be applied in assuring the qualifications of administrators of skilled nursing facilities.
(5)

Criteria for administration.—
The Secretary shall establish criteria for assessing a skilled nursing facility's compliance with the requirement of subsection (d)(1) with respect to—
(A)
its governing body and management,
(B)
agreements with hospitals regarding transfers of residents to and from the hospitals and to and from other skilled nursing facilities,
(C)
disaster preparedness,
(D)
direction of medical care by a physician,
(E)
laboratory and radiological services,
(F)
clinical records, and
(G)
resident and advocate participation.
(6)

Specification of resident assessment data set and instruments.—
The Secretary shall—
(A)
not later than January 1, 1989, specify a minimum data set of core elements and common definitions for use by nursing facilities in conducting the assessments required under subsection (b)(3), and establish guidelines for utilization of the data set; and
(B)
by not later than April 1, 1990, designate one or more instruments which are consistent with the specification made under subparagraph (A) and which a State may specify under subsection (e)(5)(A) for use by nursing facilities in complying with the requirements of subsection (b)(3)(A)(iii).
(7)

List of items and services furnished in skilled nursing facilities not chargeable to the personal funds of a resident.—
(A)

Regulations required.—
Pursuant to the requirement of section 21(b) of the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977, the Secretary shall issue regulations, on or before the first day of the seventh month to begin after the date of enactment of this section, that define those costs which may be charged to the personal funds of residents in skilled nursing facilities who are individuals receiving benefits under this part and those costs which are to be included in the reasonable cost (or other payment amount) under this title for extended care services.
(B)

Rule if failure to publish regulations.—
If the Secretary does not issue the regulations under subparagraph (A) on or before the date required in such subparagraph, in the case of a resident of a skilled nursing facility who is eligible to receive benefits under this part, the costs which may not be charged to the personal funds of such resident (and for which payment is considered to be made under this title) shall include, at a minimum, the costs for routine personal hygiene items and services furnished by the facility.
(8)

Special focus facility program.—
(A)

In general.—
The Secretary shall conduct a special focus facility program for enforcement of requirements for skilled nursing facilities that the Secretary has identified as having substantially failed to meet applicable requirement of this Act.
(B)

Periodic surveys.—
Under such program the Secretary shall conduct surveys of each facility in the program not less than once every 6 months.
(g)

Survey and Certification Process.—
(1)

State and federal responsibility.—
(A)

In general.—
Pursuant to an agreement under section 1864, each State shall be responsible for certifying, in accordance with surveys conducted under paragraph (2), the compliance of skilled nursing facilities (other than facilities of the State) with the requirements of subsections (b), (c), and (d). The Secretary shall be responsible for certifying, in accordance with surveys conducted under paragraph (2), the compliance of State skilled nursing facilities with the requirements of such subsections.
(B)

Educational program.—
Each State shall conduct periodic educational programs for the staff and residents (and their representatives) of skilled nursing facilities in order to present current regulations, procedures, and policies under this section.
(C)

Investigation of allegations of resident neglect and abuse and misappropriation of resident property.—
The State shall provide, through the agency responsible for surveys and certification of nursing facilities under this subsection, for a process for the receipt and timely review and investigation of allegations of neglect and abuse and misappropriation of resident property by a nurse aide of a resident in a nursing facility or by another individual used by the facility in providing services to such a resident. The State shall, after providing the individual involved with a written notice of the allegations (including a statement of the availability of a hearing for the individual to rebut the allegations) and the opportunity for a hearing on the record, make a written finding as to the accuracy of the allegations. If the State finds that a nurse aide has neglected or abused a resident or misappropriated resident property in a facility, the State shall notify the nurse aide and the registry of such finding. If the State finds that any other individual used by the facility has neglected or abused a resident or misappropriated resident property in a facility, the State shall notify the appropriate licensure authority. A State shall not make a finding that an individual has neglected a resident if the individual demonstrates that such neglect was caused by factors beyond the control of the individual.
(D)

Removal of name from nurse aide registry.—
(i)

In general.—
In the case of a finding of neglect under subparagraph (C), the State shall establish a procedure to permit a nurse aide to petition the State to have his or her name removed from the registry upon a determination by the State that—
(I)
the employment and personal history of the nurse aide does not reflect a pattern of abusive behavior or neglect; and
(II)
the neglect involved in the original finding was a singular occurrence.
(ii)

Timing of determination.—
In no case shall a determination on a petition submitted under clause (i) be made prior to the expiration of the 1-year period beginning on the date on which the name of the petitioner was added to the registry under subparagraph (C).
(E)

Construction.—
The failure of the Secretary to issue regulations to carry out this subsection shall not relieve a State of its responsibility under this subsection.
(2)

Surveys.—
(A)

Standard survey.—
(i)

In general.—
Each skilled nursing facility shall be subject to a standard survey, to be conducted without any prior notice to the facility. Any individual who notifies (or causes to be notified) a skilled nursing facility of the time or date on which such a survey is scheduled to be conducted is subject to a civil money penalty of not to exceed $2,000. 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 such provisions apply to a penalty or proceeding under section 1128A(a). The Secretary shall review each State's procedures for the scheduling and conduct of standard surveys to assure that the State has taken all reasonable steps to avoid giving notice of such a survey through the scheduling procedures and the conduct of the surveys themselves.
(ii)

Contents.—
Each standard survey shall include, for a case-mix stratified sample of residents—
(I)
a survey of the quality of care furnished, as measured by indicators of medical, nursing, and rehabilitative care, dietary and nutrition services, activities and social participation, and sanitation, infection control, and the physical environment,
(II)
written plans of care provided under subsection (b)(2) and an audit of the residents' assessments under subsection (b)(3) to determine the accuracy of such assessments and the adequacy of such plans of care, and
(III)
a review of compliance with residents' rights under subsection (c).
(iii)

Frequency.—
(I)

In general.—
Each skilled nursing facility shall be subject to a standard survey not later than 15 months after the date of the previous standard survey conducted under this subparagraph. The Statewide average interval between standard surveys of skilled nursing facilities under this subsection shall not exceed 12 months.
(II)

Special surveys.—
If not otherwise conducted under subclause (I), a standard survey (or an abbreviated standard survey) may be conducted within 2 months of any change of ownership, administration, management of a skilled nursing facility, or the director of nursing in order to determine whether the change has resulted in any decline in the quality of care furnished in the facility.
(B)

Extended surveys.—
(i)

In general.—
Each skilled nursing facility which is found, under a standard survey, to have provided substandard quality of care shall be subject to an extended survey. Any other facility may, at the Secretary's or State's discretion, be subject to such an extended survey (or a partial extended survey).
(ii)

Timing.—
The extended survey shall be conducted immediately after the standard survey (or, if not practicable, not later than 2 weeks after the date of completion of the standard survey).
(iii)

Contents.—
In such an extended survey, the survey team shall review and identify the policies and procedures which produced such substandard quality of care and shall determine whether the facility has complied with all the requirements described in subsections (b), (c), and (d). Such review shall include an expansion of the size of the sample of residents' assessments reviewed and a review of the staffing, of in-service training, and, if appropriate, of contracts with consultants.
(iv)

Construction.—
Nothing in this paragraph shall be construed as requiring an extended or partial extended survey as a prerequisite to imposing a sanction against a facility under subsection (h) on the basis of findings in a standard survey.
(C)

Survey protocol.—
Standard and extended surveys shall be conducted—
(i)
based upon a protocol which the Secretary has developed, tested, and validated by not later than January 1, 1990, and
(ii)
by individuals, of a survey team, who meet such minimum qualifications as the Secretary establishes by not later than such date.
The failure of the Secretary to develop, test, or validate such protocols or to establish such minimum qualifications shall not relieve any State of its responsibility (or the Secretary of the Secretary's responsibility) to conduct surveys under this subsection.
(D)

Consistency of surveys.—
Each State and the Secretary shall implement programs to measure and reduce inconsistency in the application of survey results among surveyors.
(E)

Survey teams.—
(i)

In general.—
Surveys under this subsection shall be conducted by a multidisciplinary team of professionals (including a registered professional nurse).
(ii)

Prohibition of conflicts of interest.—
A State may not use as a member of a survey team under this subsection an individual who is serving (or has served within the previous 2 years) as a member of the staff of, or as a consultant to, the facility surveyed respecting compliance with the requirements of subsections (b), (c), and (d), or who has a personal or familial financial interest in the facility being surveyed.
(iii)

Training.—
The Secretary shall provide for the comprehensive training of State and Federal surveyors in the conduct of standard and extended surveys under this subsection, including the auditing of resident assessments and plans of care. No individual shall serve as a member of a survey team unless the individual has successfully completed a training and testing program in survey and certification techniques that has been approved by the Secretary.
(3)

Validation surveys.—
(A)

In general.—
The Secretary shall conduct onsite surveys of a representative sample of skilled nursing facilities in each State, within 2 months of the date of surveys conducted under paragraph (2) by the State, in a sufficient number to allow inferences about the adequacies of each State's surveys conducted under paragraph (2). In conducting such surveys, the Secretary shall use the same survey protocols as the State is required to use under paragraph (2). If the State has determined that an individual skilled nursing facility meets the requirements of subsections (b), (c), and (d), but the Secretary determines that the facility does not meet such requirements, the Secretary's determination as to the facility's noncompliance with such requirements is binding and supersedes that of the State survey.
(B)

Scope.—
With respect to each State, the Secretary shall conduct surveys under subparagraph (A) each year with respect to at least 5 percent of the number of skilled nursing facilities surveyed by the State in the year, but in no case less than 5 skilled nursing facilities in the State.
(C)

Remedies for substandard performance.—
If the Secretary finds, on the basis of such surveys, that a State has failed to perform surveys as required under paragraph (2) or that a State's survey and certification performance otherwise is not adequate, the Secretary shall provide for an appropriate remedy, which may include the training of survey teams in the State.
(D)

Special surveys of compliance.—
Where the Secretary has reason to question the compliance of a skilled nursing facility with any of the requirements of subsections (b), (c), and (d), the Secretary may conduct a survey of the facility and, on the basis of that survey, make independent and binding determinations concerning the extent to which the skilled nursing facility meets such requirements.
(4)

Investigation of complaints and monitoring compliance.—
Each State shall maintain procedures and adequate staff to—
(A)
investigate complaints of violations of requirements by skilled nursing facilities, and
(B)
monitor, on-site, on a regular, as needed basis, a skilled nursing facility's compliance with the requirements of subsections (b), (c), and (d), if—
(i)
the facility has been found not to be in compliance with such requirements and is in the process of correcting deficiencies to achieve such compliance;
(ii)
the facility was previously found not to be in compliance with such requirements, has corrected deficiencies to achieve such compliance, and verification of continued compliance is indicated; or
(iii)
the State has reason to question the compliance of the facility with such requirements.
A State may maintain and utilize a specialized team (including an attorney, an auditor, and appropriate health care professionals) for the purpose of identifying, surveying, gathering and preserving evidence, and carrying out appropriate enforcement actions against substandard skilled nursing facilities.
(5)10

Disclosure of results of inspections and activities.—
(A)

Public information.—
Each State, and the Secretary, shall make available to the public—
^{10}
For version of law of section 1819(g)(5)(E) (as amended by section 6103(a)(2)(A) of Public Law 111–148) see note set out in italic typeface that appears after subparagraph (D) below.
(i)
information respecting all surveys and certifications made respecting skilled nursing facilities, including statements of deficiencies, within 14 calendar days after such information is made available to those facilities, and approved plans of correction,
(ii)
copies of cost reports of such facilities filed under this title or title XIX,
(iii)
copies of statements of ownership under section 1124, and
(iv)
information disclosed under section 1126.
(B)

Notice to ombudsman.—
Each State shall notify the State long-term care ombudsman (established under title III or VII of the Older Americans Act of 1965 in accordance with section 712 of the Act) of the State's findings of noncompliance with any of the requirements of subsections (b), (c), and (d), or of any adverse action taken against a skilled nursing facility under paragraph (1), (2), or (4) of subsection (h), with respect to a skilled nursing facility in the State.
(C)

Notice to physicians and skilled nursing facility administrator licensing board.—
If a State finds that a skilled nursing facility has provided substandard quality of care, the State shall notify—
(i)
the attending physician of each resident with respect to which such finding is made, and
(ii)
the State board responsible for the licensing of the skilled nursing facility administrator at the facility.
(D)

Access to fraud control units.—
Each State shall provide its State medicaid fraud and abuse control unit (established under section 1903(q)) with access to all information of the State agency responsible for surveys and certifications under this subsection.
(E)

Submission of survey and certification information to the secretary.—
In order to improve the timeliness of information made available to the public under subparagraph (A) and provided on the Nursing Home Compare Medicare website under subsection (i), each State shall submit information respecting any survey or certification made respecting a skilled nursing facility (including any enforcement actions taken by the State) to the Secretary not later than the date on which the State sends such information to the facility. The Secretary shall use the information submitted under the preceding sentence to update the information provided on the Nursing Home Compare Medicare website as expeditiously as practicable but not less frequently than quarterly.
(h)

Enforcement Process.—
(1)

In general.—
If a State finds, on the basis of a standard, extended, or partial extended survey under subsection (g)(2) or otherwise, that a skilled nursing facility no longer meets a requirement of subsection (b), (c), or (d), and further finds that the facility's deficiencies—
(A)
immediately jeopardize the health or safety of its residents, the State shall recommend to the Secretary that the Secretary take such action as described in paragraph (2)(A)(i); or
(B)
do not immediately jeopardize the health or safety of its residents, the State may recommend to the Secretary that the Secretary take such action as described in paragraph (2)(A)(ii).
If a State finds that a skilled nursing facility meets the requirements of subsections (b), (c), and (d), but, as of a previous period, did not meet such requirements, the State may recommend a civil money penalty under paragraph (2)(B)(ii) for the days in which it finds that the facility was not in compliance with such requirements.
(2)

Secretarial authority.—
(A)

In general.—
With respect to any skilled nursing facility in a State, if the Secretary finds, or pursuant to a recommendation of the State under paragraph (1) finds, that a skilled nursing facility no longer meets a requirement of subsection (b), (c), (d), or (e), and further finds that the facility's deficiencies—
(i)
immediately jeopardize the health or safety of its residents, the Secretary shall take immediate action to remove the jeopardy and correct the deficiencies through the remedy specified in subparagraph (B)(iii), or terminate the facility's participation under this title and may provide, in addition, for one or more of the other remedies described in subparagraph (B); or
(ii)
do not immediately jeopardize the health or safety of its residents, the Secretary may impose any of the remedies described in subparagraph (B).
Nothing in this subparagraph shall be construed as restricting the remedies available to the Secretary to remedy a skilled nursing facility's deficiencies. If the Secretary finds, or pursuant to the recommendation of the State under paragraph (1) finds, that a skilled nursing facility meets such requirements but, as of a previous period, did not meet such requirements, the Secretary may provide for a civil money penalty under subparagraph (B)(ii) for the days on which he finds that the facility was not in compliance with such requirements.
(B)

Specified remedies.—
The Secretary may take the following actions with respect to a finding that a facility has not met an applicable requirement:
(i)

Denial of payment.—
The Secretary may deny any further payments under this title with respect to all individuals entitled to benefits under this title in the facility or with respect to such individuals admitted to the facility after the effective date of the finding.
(ii)

Authority with respect to civil money penalties.—
(I)

In general.—
Subject to subclause (II), the Secretary may impose a civil money penalty in an amount not to exceed $10,000 for each day of noncompliance. 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 such provisions apply to a penalty or proceeding under section 1128A(a).
(II)

Reduction of civil money penalties in certain circumstances.—
Subject to subclause (III), in the case where a facility self-reports and promptly corrects a deficiency for which a penalty was imposed under this clause not later than 10 calendar days after the date of such imposition, the Secretary may reduce the amount of the penalty imposed by not more than 50 percent.
(III)

Prohibitions on reduction for certain deficiencies.—
- (aa)

Repeat deficiencies.—
The Secretary may not reduce the amount of a penalty under subclause (II) if the Secretary had reduced a penalty imposed on the facility in the preceding year under such subclause with respect to a repeat deficiency.
- (bb)

Certain other deficiencies.—
The Secretary may not reduce the amount of a penalty under subclause (II) if the penalty is imposed on the facility for a deficiency that is found to result in a pattern of harm or widespread harm, immediately jeopardizes the health or safety of a resident or residents of the facility, or results in the death of a resident of the facility.
(IV)

Collection of civil money penalties.—
In the case of a civil money penalty imposed under this clause, the Secretary shall issue regulations that—
- (aa)
subject to item (cc), not later than 30 days after the imposition of the penalty, provide for the facility to have the opportunity to participate in an independent informal dispute resolution process which generates a written record prior to the collection of such penalty;
- (bb)
in the case where the penalty is imposed for each day of noncompliance, provide that a penalty may not be imposed for any day during the period beginning on the initial day of the imposition of the penalty and ending on the day on which the informal dispute resolution process under item (aa) is completed;
- (cc)
may provide for the collection of such civil money penalty and the placement of such amounts collected in an escrow account under the direction of the Secretary on the earlier of the date on which the informal dispute resolution process under item (aa) is completed or the date that is 90 days after the date of the imposition of the penalty;
- (dd)
may provide that such amounts collected are kept in such account pending the resolution of any subsequent appeals;
- (ee)
in the case where the facility successfully appeals the penalty, may provide for the return of such amounts collected (plus interest) to the facility; and
- (ff)
in the case where all such appeals are unsuccessful, may provide that some portion of such amounts collected may be used to support activities that benefit residents, including assistance to support and protect residents of a facility that closes (voluntarily or involuntarily) or is decertified (including offsetting costs of relocating residents to home and community-based settings or another facility), projects that support resident and family councils and other consumer involvement in assuring quality care in facilities, and facility improvement initiatives approved by the Secretary (including joint training of facility staff and surveyors, technical assistance for facilities implementing quality assurance programs, the appointment of temporary management firms, and other activities approved by the Secretary).
(iii)

Appointment of temporary management.—
In consultation with the State, the Secretary may appoint temporary management to oversee the operation of the facility and to assure the health and safety of the facility's residents, where there is a need for temporary management while—
(I)
there is an orderly closure of the facility, or
(II)
improvements are made in order to bring the facility into compliance with all the requirements of subsections (b), (c), and (d).
The temporary management under this clause shall not be terminated under subclause (II) until the Secretary has determined that the facility has the management capability to ensure continued compliance with all the requirements of subsections (b), (c), and (d).
The Secretary shall specify criteria, as to when and how each of such remedies is to be applied, the amounts of any fines, and the severity of each of these remedies, to be used in the imposition of such remedies. Such criteria shall be designed so as to minimize the time between the identification of violations and final imposition of the remedies and shall provide for the imposition of incrementally more severe fines for repeated or uncorrected deficiencies. In addition, the Secretary may provide for other specified remedies, such as directed plans of correction.
(C)

Continuation of payments pending remediation.—
The Secretary may continue payments, over a period of not longer than 6 months after the effective date of the findings, under this title with respect to a skilled nursing facility not in compliance with a requirement of subsection (b), (c), or (d), if—
(i)
the State survey agency finds that it is more appropriate to take alternative action to assure compliance of the facility with the requirements than to terminate the certification of the facility,
(ii)
the State has submitted a plan and timetable for corrective action to the Secretary for approval and the Secretary approves the plan of corrective action, and
(iii)
the facility agrees to repay to the Federal Government payments received under this subparagraph if the corrective action is not taken in accordance with the approved plan and timetable.
The Secretary shall establish guidelines for approval of corrective actions requested by States under this subparagraph.
(D)

Assuring prompt compliance.—
If a skilled nursing facility has not complied with any of the requirements of subsections (b), (c), and (d), within 3 months after the date the facility is found to be out of compliance with such requirements, the Secretary shall impose the remedy described in subparagraph (B)(i) for all individuals who are admitted to the facility after such date.
(E)

Repeated noncompliance.—
In the case of a skilled nursing facility which, on 3 consecutive standard surveys conducted under subsection (g)(2), has been found to have provided substandard quality of care, the Secretary shall (regardless of what other remedies are provided)—
(i)
impose the remedy described in subparagraph (B)(i), and
(ii)
monitor the facility under subsection (g)(4)(B),
until the facility has demonstrated, to the satisfaction of the Secretary, that it is in compliance with the requirements of subsections (b), (c), and (d), and that it will remain in compliance with such requirements.
(3)

Effective period of denial of payment.—
A finding to deny payment under this subsection shall terminate when the Secretary finds that the facility is in substantial compliance with all the requirements of subsections (b), (c), and (d).
(4)

Immediate termination of participation for facility where secretary finds noncompliance and immediate jeopardy.—
If the Secretary finds that a skilled nursing facility has not met a requirement of subsection (b), (c), or (d), and finds that the failure immediately jeopardizes the health or safety of its residents, the Secretary shall take immediate action to remove the jeopardy and correct the deficiencies through the remedy specified in paragraph (2)(B)(iii), or the Secretary, subject to section 1128I(h), shall terminate the facility's participation under this title. If the facility's participation under this title is terminated, the State shall provide for the safe and orderly transfer of the residents eligible under this title consistent with the requirements of subsection (c)(2) and section 1128I(h).
(5)

Construction.—
The remedies provided under this subsection are in addition to those otherwise available under State or Federal law and shall not be construed as limiting such other remedies, including any remedy available to an individual at common law. The remedies described in clauses (i), (ii)(IV), and (iii) of paragraph (2)(B) may be imposed during the pendency of any hearing.
(6)

Sharing of information.—
Notwithstanding any other provision of law, all information concerning skilled nursing facilities required by this section to be filed with the Secretary or a State agency shall be made available by such facilities to Federal or State employees for purposes consistent with the effective administration of programs established under this title and title XIX, including investigations by State medicaid fraud control units.
(i)

Nursing Home Compare Website.—
(1)

Inclusion of additional information.—
(A)

In general.—
The Secretary shall ensure that the Department of Health and Human Services includes, as part of the information provided for comparison of nursing homes on the official Internet website of the Federal Government for Medicare beneficiaries (commonly referred to as the “Nursing Home Compare” Medicare website) (or a successor website), the following information in a manner that is prominent, updated on a timely basis, easily accessible, readily understandable to consumers of long-term care services, and searchable:
(i)
Staffing data for each facility (including resident census data and data on the hours of care provided per resident per day) based on data submitted under section 1128I(g), including information on staffing turnover and tenure, in a format that is clearly understandable to consumers of long-term care services and allows such consumers to compare differences in staffing between facilities and State and national averages for the facilities. Such format shall include—
(I)
concise explanations of how to interpret the data (such as a plain English explanation of data reflecting “nursing home staff hours per resident day”);
(II)
differences in types of staff (such as training associated with different categories of staff);
(III)
the relationship between nurse staffing levels and quality of care; and
(IV)
an explanation that appropriate staffing levels vary based on patient case mix.
(ii)
Links to State Internet websites with information regarding State survey and certification programs, links to Form 2567 State inspection reports (or a successor form) on such websites, information to guide consumers in how to interpret and understand such reports, and the facility plan of correction or other response to such report. Any such links shall be posted on a timely basis.
(iii)
The standardized complaint form developed under section 1128I(f), including explanatory material on what complaint forms are, how they are used, and how to file a complaint with the State survey and certification program and the State long-term care ombudsman program.
(iv)
Summary information on the number, type, severity, and outcome of substantiated complaints.
(v)
The number of adjudicated instances of criminal violations by a facility or the employees of a facility—
(I)
that were committed inside the facility;
(II)
with respect to such instances of violations or crimes committed inside of the facility that were the violations or crimes of abuse, neglect, and exploitation, criminal sexual abuse, or other violations or crimes that resulted in serious bodily injury; and
(III)
the number of civil monetary penalties levied against the facility, employees, contractors, and other agents.
(B)

Deadline for provision of information.—
(i)

In general.—
Except as provided in clause (ii), the Secretary shall ensure that the information described in subparagraph (A) is included on such website (or a successor website) not later than 1 year after the date of the enactment of this subsection.
(ii)

Exception.—
The Secretary shall ensure that the information described in subparagraph (A)(i) is included on such website (or a successor website) not later than the date on which the requirements under section 1128I(g) are implemented.
(2)

Review and modification of website.—
(A)

In general.—
The Secretary shall establish a process—
(i)
to review the accuracy, clarity of presentation, timeliness, and comprehensiveness of information reported on such website as of the day before the date of the enactment of this subsection; and
(ii)
not later than 1 year after the date of the enactment of this subsection, to modify or revamp such website in accordance with the review conducted under clause (i).
(B)

Consultation.—
In conducting the review under subparagraph (A)(i), the Secretary shall consult with—
(i)
State long-term care ombudsman programs;
(ii)
consumer advocacy groups;
(iii)
provider stakeholder groups; and
(iv)
any other representatives of programs or groups the Secretary determines appropriate.
(3)

Funding.—
The Secretary shall transfer to the Centers for Medicare & Medicaid Services Program Management Account, from the Federal Hospital Insurance Trust Fund under section 1817 a one-time allocation of $11,000,000. The amount shall be available on the date of the enactment of this paragraph. Such sums shall remain available until expended. Such sums shall be used to implement section 1128I(g).
(j)

Construction.—
Where requirements or obligations under this section are identical to those provided under section 1919 of this Act, the fulfillment of those requirements or obligations under section 1919 shall be considered to be the fulfillment of the corresponding requirements or obligations under this section.
(k)

Funding for Strike Teams.—
In addition to amounts otherwise available, there is appropriated to the Secretary, out of any monies in the Treasury not otherwise appropriated, $250,000,000, to remain available until expended, for purposes of allocating such amount among the States (including the District of Columbia and each territory of the United States) for such a State to establish and implement a strike team that will be deployed to a skilled nursing facility in the State with diagnosed or suspected cases of COVID–19 among residents or staff for the purposes of assisting with clinical care, infection control, or staffing during the emergency period described in section 1135(g)(1)(B) and the 1-year period immediately following the end of such emergency period.

medicare rural hospital flexibility program
Sec. 1820.
[42 U.S.C. 1395i–4]
(a)

Establishment.—
Any State that submits an application in accordance with subsection (b) may establish a medicare rural hospital flexibility program described in subsection (c).
(b)

Application.—
A State may establish a medicare rural hospital flexibility program described in subsection (c) if the State submits to the Secretary at such time and in such form as the Secretary may require an application containing—
(1)
assurances that the State—
(A)
has developed, or is in the process of developing, a State rural health care plan that—
(i)
provides for the creation of 1 or more rural health networks (as defined in subsection (d)) in the State;
(ii)
promotes regionalization of rural health services in the State; and
(iii)
improves access to hospital and other health services for rural residents of the State; and
(B)
has developed the rural health care plan described in subparagraph (A) in consultation with the hospital association of the State, rural hospitals located in the State, and the State Office of Rural Health (or, in the case of a State in the process of developing such plan, that assures the Secretary that the State will consult with its State hospital association, rural hospitals located in the State, and the State Office of Rural Health in developing such plan);
(2)
assurances that the State has designated (consistent with the rural health care plan described in paragraph (1)(A)), or is in the process of so designating, rural nonprofit or public hospitals or facilities located in the State as critical access hospitals; and
(3)
such other information and assurances as the Secretary may require.
(c)

Medicare Rural Hospital Flexibility Program Described.—
(1)

In general.—
A State that has submitted an application in accordance with subsection (b), may establish a medicare rural hospital flexibility program that provides that—
(A)
the State shall develop at least 1 rural health network (as defined in subsection (d)) in the State; and
(B)
at least 1 facility in the State shall be designated as a critical access hospital in accordance with paragraph (2).
(2)

State designation of facilities.—
(A)

In general.—
A State may designate 1 or more facilities as a critical access hospital in accordance with subparagraphs (B), (C), and (D).
(B)

Criteria for designation as critical access hospital.—
A State may designate a facility as a critical access hospital if the facility—
(i)
is a hospital that is located in a county (or equivalent unit of local government) in a rural area (as defined in section 1886(d)(2)(D)) or is treated as being located in a rural area pursuant to section 1886(d)(8)(E), and that—
(I)
is located more than a 35-mile drive (or, in the case of mountainous terrain or in areas with only secondary roads available, a 15-mile drive) from a hospital, or another facility described in this subsection; or
(II)
is certified before January 1, 2006, by the State as being a necessary provider of health care services to residents in the area;
(ii)
makes available 24-hour emergency care services that a State determines are necessary for ensuring access to emergency care services in each area served by a critical access hospital;
(iii)
provides not more than 25 acute care inpatient beds (meeting such standards as the Secretary may establish) for providing inpatient care for a period that does not exceed, as determined on an annual, average basis, 96 hours per patient;
(iv)
meets such staffing requirements as would apply under section 1861(e) to a hospital located in a rural area, except that—
(I)
the facility need not meet hospital standards relating to the number of hours during a day, or days during a week, in which the facility must be open and fully staffed, except insofar as the facility is required to make available emergency care services as determined under clause (ii) and must have nursing services available on a 24-hour basis, but need not otherwise staff the facility except when an inpatient is present;
(II)
the facility may provide any services otherwise required to be provided by a full-time, on site dietitian, pharmacist, laboratory technician, medical technologist, and radiological technologist on a part-time, off site basis under arrangements as defined in section 1861(w)(1); and
(III)
the inpatient care described in clause (iii) may be provided by a physician assistant, nurse practitioner, or clinical nurse specialist subject to the oversight of a physician who need not be present in the facility; and
(v)
meets the requirements of section 1861(aa)(2)(I).
(C)

Recently closed facilities.—
A State may designate a facility as a critical access hospital if the facility—
(i)
was a hospital that ceased operations on or after the date that is 10 years before the date of the enactment of this subparagraph; and
(ii)
as of the effective date of such designation, meets the criteria for designation under subparagraph (B).
(D)

Downsized facilities.—
A State may designate a health clinic or a health center (as defined by the State) as a critical access hospital if such clinic or center—
(i)
is licensed by the State as a health clinic or a health center;
(ii)
was a hospital that was downsized to a health clinic or health center; and
(iii)
as of the effective date of such designation, meets the criteria for designation under subparagraph (B).
(E)

Authority to establish psychiatric and rehabilitation distinct part units.—
(i)

In general.—
Subject to the succeeding provisions of this subparagraph, a critical access hospital may establish—
(I)
a psychiatric unit of the hospital that is a distinct part of the hospital; and
(II)
a rehabilitation unit of the hospital that is a distinct part of the hospital,
if the distinct part meets the requirements (including conditions of participation) that would otherwise apply to the distinct part if the distinct part were established by a subsection (d) hospital in accordance with the matter following clause (v) of section 1886(d)(1)(B), including any regulations adopted by the Secretary under such section.
(ii)

Limitation on number of beds.—
The total number of beds that may be established under clause (i) for a distinct part unit may not exceed 10.
(iii)

Exclusion of beds from bed count.—
In determining the number of beds of a critical access hospital for purposes of applying the bed limitations referred to in subparagraph (B)(iii) and subsection (f), the Secretary shall not take into account any bed established under clause (i).
(iv)

Effect of failure to meet requirements.—
If a psychiatric or rehabilitation unit established under clause (i) does not meet the requirements described in such clause with respect to a cost reporting period, no payment may be made under this title to the hospital for services furnished in such unit during such period. Payment to the hospital for services furnished in the unit may resume only after the hospital has demonstrated to the Secretary that the unit meets such requirements.
(d)

Definition of Rural Health Network.—
(1)

In general.—
In this section, the term “rural health network” means, with respect to a State, an organization consisting of—
(A)
at least 1 facility that the State has designated or plans to designate as a critical access hospital; and
(B)
at least 1 hospital that furnishes acute care services.
(2)

Agreements.—
(A)

In general.—
Each critical access hospital that is a member of a rural health network shall have an agreement with respect to each item described in subparagraph (B) with at least 1 hospital that is a member of the network.
(B)

Items described.—
The items described in this subparagraph are the following:
(i)
Patient referral and transfer.
(ii)
The development and use of communications systems including (where feasible)—
(I)
telemetry systems; and
(II)
systems for electronic sharing of patient data.
(iii)
The provision of emergency and non-emergency transportation among the facility and the hospital.
(C)

Credentialing and quality assurance.—
Each critical access hospital that is a member of a rural health network shall have an agreement with respect to credentialing and quality assurance with at least—
(i)
1 hospital that is a member of the network;
(ii)
1 peer review organization or equivalent entity; or
(iii)
1 other appropriate and qualified entity identified in the State rural health care plan.
(e)

Certification by the Secretary.—
The Secretary shall certify a facility as a critical access hospital if the facility—
(1)
is located in a State that has established a medicare rural hospital flexibility program in accordance with subsection (c);
(2)
is designated as a critical access hospital by the State in which it is located; and
(3)
meets such other criteria as the Secretary may require.
(f)

Permitting Maintenance of Swing Beds.—
Nothing in this section shall be construed to prohibit a State from designating or the Secretary from certifying a facility as a critical access hospital solely because, at the time the facility applies to the State for designation as a critical access hospital, there is in effect an agreement between the facility and the Secretary under section 1883 under which the facility's inpatient hospital facilities are used for the provision of extended care services, so long as the total number of beds that may be used at any time for the furnishing of either such services or acute care inpatient services does not exceed 25 beds. For purposes of the previous sentence, any bed of a unit of the facility that is licensed as a distinct-part skilled nursing facility at the time the facility applies to the State for designation as a critical access hospital shall not be counted.
(g)

Grants.—
(1)

Medicare rural hospital flexibility program.—
The Secretary may award grants to States that have submitted applications in accordance with subsection (b) for—
(A)
engaging in activities relating to planning and implementing a rural health care plan;
(B)
engaging in activities relating to planning and implementing rural health networks;
(C)
designating facilities as critical access hospitals; and
(D)
providing support for critical access hospitals for quality improvement, quality reporting, performance improvements, and benchmarking.
(2)

Rural emergency medical services.—
(A)

In general.—
The Secretary may award grants to States that have submitted applications in accordance with subparagraph (B) for the establishment or expansion of a program for the provision of rural emergency medical services.
(B)

Application.—
An application is in accordance with this subparagraph if the State submits to the Secretary at such time and in such form as the Secretary may require an application containing the assurances described in subparagraphs (A)(ii), (A)(iii), and (B) of subsection (b)(1) and paragraph (3) of that subsection.
(3)

Upgrading data systems.—
(A)

Grants to hospitals.—
The Secretary may award grants to hospitals that have submitted applications in accordance with subparagraph (C) to assist eligible small rural hospitals in meeting the costs of implementing data systems required to meet requirements established under the medicare program pursuant to amendments made by the Balanced Budget Act of 1997 and to assist such hospitals in participating in delivery system reforms under the provisions of and amendments made by the Patient Protection and Affordable Care Act, such as value-based purchasing programs, accountable care organizations under section 1899, the National pilot program on payment bundling under section 1866D, and other delivery system reform programs determined appropriate by the Secretary.
(B)

Eligible small rural hospital defined.—
For purposes of this paragraph, the term “eligible small rural hospital” means a non-Federal, short-term general acute care hospital that—
(i)
is located in a rural area (as defined for purposes of section 1886(d)); and
(ii)
has less than 50 beds.
(C)

Application.—
A hospital seeking a grant under this paragraph shall submit an application to the Secretary on or before such date and in such form and manner as the Secretary specifies.
(D)

Amount of grant.—
A grant to a hospital under this paragraph may not exceed $50,000.
(E)

Use of funds.—
A hospital receiving a grant under this paragraph may use the funds for the purchase of computer software and hardware, the education and training of hospital staff on computer information systems, to offset costs related to the implementation of prospective payment systems and to participate in delivery system reforms under the provisions of and amendments made by the Patient Protection and Affordable Care Act, such as value-based purchasing programs, accountable care organizations under section 1899, the National pilot program on payment bundling under section 1866D, and other delivery system reform programs determined appropriate by the Secretary.
(F)

Reports.—
(i)

Information.—
A hospital receiving a grant under this section shall furnish the Secretary with such information as the Secretary may require to evaluate the project for which the grant is made and to ensure that the grant is expended for the purposes for which it is made.
(ii)

Timing of submission.—
(I)

Interim reports.—
The Secretary shall report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate at least annually on the grant program established under this section, including in such report information on the number of grants made, the nature of the projects involved, the geographic distribution of grant recipients, and such other matters as the Secretary deems appropriate.
(II)

Final report.—
The Secretary shall submit a final report to such committees not later than 180 days after the completion of all of the projects for which a grant is made under this section.
(4)

Additional requirements with respect to flex grants.—
With respect to grants awarded under paragraph (1) or (2) from funds appropriated for fiscal year 2005 and subsequent fiscal years—
(A)

Consultation with the state hospital association and rural hospitals on the most appropriate ways to use grants.—
A State shall consult with the hospital association of such State and rural hospitals located in such State on the most appropriate ways to use the funds under such grant.
(B)

Limitation on use of grant funds for administrative expenses.—
A State may not expend more than the lesser of—
(i)
15 percent of the amount of the grant for administrative expenses; or
(ii)
the State's federally negotiated indirect rate for administering the grant.
(5)

Use of funds for federal administrative expenses.—
Of the total amount appropriated for grants under paragraphs (1) and (2) for a fiscal year (for each of fiscal years 2005 through 2008) and, of the total amount appropriated for grants under paragraphs (1), (2), and (6) for a fiscal year (beginning with fiscal year 2009), up to 5 percent of such amount shall be available to the Health Resources and Services Administration for purposes of administering such grants.
(6)

Providing mental health services and other health services to veterans and other residents of rural areas.—
(A)

Grants to states.—
The Secretary may award grants to States that have submitted applications in accordance with subparagraph (B) for increasing the delivery of mental health services or other health care services deemed necessary to meet the needs of veterans of Operation Iraqi Freedom and Operation Enduring Freedom living in rural areas (as defined for purposes of section 1886(d) and including areas that are rural census tracks, as defined by the Administrator of the Health Resources and Services Administration), including for the provision of crisis intervention services and the detection of post-traumatic stress disorder, traumatic brain injury, and other signature injuries of veterans of Operation Iraqi Freedom and Operation Enduring Freedom, and for referral of such veterans to medical facilities operated by the Department of Veterans Affairs, and for the delivery of such services to other residents of such rural areas.
(B)

Application.—
(i)

In general.—
An application is in accordance with this subparagraph if the State submits to the Secretary at such time and in such form as the Secretary may require an application containing the assurances described in subparagraphs (A)(ii) and (A)(iii) of subsection (b)(1).
(ii)

Consideration of regional approaches, networks, or technology.—
The Secretary may, as appropriate in awarding grants to States under subparagraph (A), consider whether the application submitted by a State under this subparagraph includes 1 or more proposals that utilize regional approaches, networks, health information technology, telehealth, or telemedicine to deliver services described in subparagraph (A) to individuals described in that subparagraph. For purposes of this clause, a network may, as the Secretary determines appropriate, include Federally qualified health centers (as defined in section 1861(aa)(4)), rural health clinics (as defined in section 1861(aa)(2)), home health agencies (as defined in section 1861(o)), community mental health centers (as defined in section 1861(ff)(3)(B)) and other providers of mental health services, pharmacists, local government, and other providers deemed necessary to meet the needs of veterans.
(iii)

Coordination at local level.—
The Secretary shall require, as appropriate, a State to demonstrate consultation with the hospital association of such State, rural hospitals located in such State, providers of mental health services, or other appropriate stakeholders for the provision of services under a grant awarded under this paragraph.
(iv)

Special consideration of certain applications.—
In awarding grants to States under subparagraph (A), the Secretary shall give special consideration to applications submitted by States in which veterans make up a high percentage (as determined by the Secretary) of the total population of the State. Such consideration shall be given without regard to the number of veterans of Operation Iraqi Freedom and Operation Enduring Freedom living in the areas in which mental health services and other health care services would be delivered under the application.
(C)

Coordination with va.—
The Secretary shall, as appropriate, consult with the Director of the Office of Rural Health of the Department of Veterans Affairs in awarding and administering grants to States under subparagraph (A).
(D)

Use of funds.—
A State awarded a grant under this paragraph may, as appropriate, use the funds to reimburse providers of services described in subparagraph (A) to individuals described in that subparagraph.
(E)

Limitation on use of grant funds for administrative expenses.—
A State awarded a grant under this paragraph may not expend more than 15 percent of the amount of the grant for administrative expenses.
(F)

Independent evaluation and final report.—
The Secretary shall provide for an independent evaluation of the grants awarded under subparagraph (A). Not later than 1 year after the date on which the last grant is awarded to a State under such subparagraph, the Secretary shall submit a report to Congress on such evaluation. Such report shall include an assessment of the impact of such grants on increasing the delivery of mental health services and other health services to veterans of the United States Armed Forces living in rural areas (as so defined and including such areas that are rural census tracks), with particular emphasis on the impact of such grants on the delivery of such services to veterans of Operation Enduring Freedom and Operation Iraqi Freedom, and to other individuals living in such rural areas.
(7)

Critical access hospitals transitioning to skilled nursing facilities and assisted living facilities.—
(A)

Grants.—
The Secretary may award grants to eligible critical access hospitals that have submitted applications in accordance with subparagraph (B) for assisting such hospitals in the transition to skilled nursing facilities and assisted living facilities.
(B)

Application.—
An applicable critical access hospital seeking a grant under this paragraph shall submit an application to the Secretary on or before such date and in such form and manner as the Secretary specifies.
(C)

Additional requirements.—
The Secretary may not award a grant under this paragraph to an eligible critical access hospital unless—
(i)
local organizations or the State in which the hospital is located provides matching funds; and
(ii)
the hospital provides assurances that it will surrender critical access hospital status under this title within 180 days of receiving the grant.
(D)

Amount of grant.—
A grant to an eligible critical access hospital under this paragraph may not exceed $1,000,000.
(E)

Funding.—
There are appropriated from the Federal Hospital Insurance Trust Fund under section 1817 for making grants under this paragraph, $5,000,000 for fiscal year 2008.
(F)

Eligible critical access hospital defined.—
For purposes of this paragraph, the term “eligible critical access hospital” means a critical access hospital that has an average daily acute census of less than 0.5 and an average daily swing bed census of greater than 10.0.
(h)

Grandfathering Provisions.—
(1)

In general.—
Any medical assistance facility operating in Montana and any rural primary care hospital designated by the Secretary under this section prior to the date of the enactment of the Balanced Budget Act of 1997 shall be deemed to have been certified by the Secretary under subsection (e) as a critical access hospital if such facility or hospital is otherwise eligible to be designated by the State as a critical access hospital under subsection (c).
(2)

Continuation of medical assistance facility and rural primary care hospital terms.—
Notwithstanding any other provision of this title, with respect to any medical assistance facility or rural primary care hospital described in paragraph (1), any reference in this title to a “critical access hospital” shall be deemed to be a reference to a “medical assistance facility” or “rural primary care hospital”.
(3)

State authority to waive 35-mile rule.—
In the case of a facility that was designated as a critical access hospital before January 1, 2006, and was certified by the State as being a necessary provider of health care services to residents in the area under subsection (c)(2)(B)(i)(II), as in effect before such date, the authority under such subsection with respect to any redesignation of such facility shall continue to apply notwithstanding the amendment made by section 405(h)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
(i)

Waiver of Conflicting Part A Provisions.—
The Secretary is authorized to waive such provisions of this part and part D 11 as are necessary to conduct the program established under this section.
^{11}
The reference to part D in subsection (i) probably should be a reference to part E. Part D of this title was redesignated as part E by section 101(e)(1) of Public Law 108–173.
(j)

Authorization of Appropriations.—
There are authorized to be appropriated from the Federal Hospital Insurance Trust Fund for making grants to all States under subsection (g), $25,000,000 in each of the fiscal years 1998 through 2002, for making grants to all States under paragraphs (1) and (2) of subsection (g), $35,000,000 in each of fiscal years 2005 through 2008, for making grants to all States under paragraphs (1) and (2) of subsection (g), $55,000,000 in each of fiscal years 2009 and 2010, for making grants to all States under paragraph (6) of subsection (g), $50,000,000 in each of fiscal years 2009 and 2010, to remain available until expended and for making grants to all States under subsection (g), such sums as may be necessary in each of fiscal years 2011 and 2012, to remain available until expended.

conditions for coverage of religious nonmedical health care institutional services
Sec. 1821.
[42 U.S.C. 1395i–5]
(a)

In General.—
Subject to subsections (c) and (d), payment under this part may be made for inpatient hospital services or post-hospital extended care services furnished an individual in a religious nonmedical health care institution and for home health services furnished an individual by a religious nonmedical health care institution only if—
(1)
the individual has an election in effect for such benefits under subsection (b); and
(2)
the individual has a condition such that the individual would qualify for benefits under this part for inpatient hospital services, extended care services, or home health services, respectively, if the individual were an inpatient or resident in a hospital or skilled nursing facility, or receiving services from a home health agency, that was not such an institution.
(b)

Election.—
(1)

In general.—
An individual may make an election under this subsection in a form and manner specified by the Secretary consistent with this subsection. Unless otherwise provided, such an election shall take effect immediately upon its execution. Such an election, once made, shall continue in effect until revoked.
(2)

Form.—
The election form under this subsection shall include the following:
(A)
A written statement, signed by the individual (or such individual's legal representative), that—
(i)
the individual is conscientiously opposed to acceptance of nonexcepted medical treatment; and
(ii)
the individual's acceptance of nonexcepted medical treatment would be inconsistent with the individual's sincere religious beliefs.
(B)
A statement that the receipt of nonexcepted medical services shall constitute a revocation of the election and may limit further receipt of services described in subsection (a).
(3)

Revocation.—
An election under this subsection by an individual may be revoked by voluntarily notifying the Secretary in writing of such revocation and shall be deemed to be revoked if the individual receives nonexcepted medical treatment for which reimbursement is made under this title.
(4)

Limitation on subsequent elections.—
Once an individual's election under this subsection has been made and revoked twice—
(A)
the next election may not become effective until the date that is 1 year after the date of most recent previous revocation, and
(B)
any succeeding election may not become effective until the date that is 5 years after the date of the most recent previous revocation.
(5)

Excepted medical treatment.—
For purposes of this subsection:
(A)

Excepted medical treatment.—
The term “excepted medical treatment” means medical care or treatment (including medical and other health services)—
(i)
received involuntarily,
(ii)
required under Federal or State law or law of a political subdivision of a State, or
(iii)
effective beginning on the date of the enactment of this clause, that is a COVID–19 vaccine and its administration described in section 1861(s)(10)(A).
(B)

Nonexcepted medical treatment.—
The term “nonexcepted medical treatment” means medical care or treatment (including medical and other health services) other than excepted medical treatment.
(c)

Monitoring and Safeguard Against Excessive Expenditures.—
(1)

Estimate of expenditures.—
Before the beginning of each fiscal year (beginning with fiscal year 2000), the Secretary shall estimate the level of expenditures under this part for services described in subsection (a) for that fiscal year.
(2)

Adjustment in payments.—
(A)

Proportional adjustment.—
If the Secretary determines that the level estimated under paragraph (1) for a fiscal year will exceed the trigger level (as defined in subparagraph (C)) for that fiscal year, the Secretary shall, subject to subparagraph (B), provide for such a proportional reduction in payment amounts under this part for services described in subsection (a) for the fiscal year involved as will assure that such level (taking into account any adjustment under subparagraph (B)) does not exceed the trigger level for that fiscal year.
(B)

Alternative adjustments.—
The Secretary may, instead of making some or all of the reduction described in subparagraph (A), impose such other conditions or limitations with respect to the coverage of covered services (including limitations on new elections of coverage and new facilities) as may be appropriate to reduce the level of expenditures described in paragraph (1) to the trigger level.
(C)

Trigger level.—
For purposes of this subsection—
(i)

In general.—
Subject to adjustment under paragraph (3)(B), the “trigger level” for a year is the unadjusted trigger level described in clause (ii).
(ii)

Unadjusted trigger level.—
The “unadjusted trigger level” for—
(I)
fiscal year 1998, is $20,000,000, or
(II)
a succeeding fiscal year is the amount specified under this clause for the previous fiscal year increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) for the 12-month period ending with July preceding the beginning of the fiscal year.
(D)

Prohibition of administrative and judicial review.—
There shall be no administrative or judicial review under section 1869, 1878, or otherwise of the estimation of expenditures under subparagraph (A) or the application of reduction amounts under subparagraph (B).
(E)

Effect on billing.—
Notwithstanding any other provision of this title, in the case of a reduction in payment provided under this subsection for services of a religious nonmedical health care institution provided to an individual, the amount that the institution is otherwise permitted to charge the individual for such services is increased by the amount of such reduction.
(3)

Monitoring expenditure level.—
(A)

In general.—
The Secretary shall monitor the expenditure level described in paragraph (2)(A) for each fiscal year (beginning with fiscal year 1999).
(B)

Adjustment in trigger level.—
(i)

In general.—
If the Secretary determines that such level for a fiscal year exceeded, or was less than, the trigger level for that fiscal year, then, subject to clause (ii), the trigger level for the succeeding fiscal year shall be reduced, or increased, respectively, by the amount of such excess or deficit.
(ii)

Limitation on carryforward.—
In no case may the increase effected under clause (i) for a fiscal year exceed $50,000,000.
(d)

Sunset.—
If the Secretary determines that the level of expenditures described in subsection (c)(1) for 3 consecutive fiscal years (with the first such year being not earlier than fiscal year 2002) exceeds the trigger level for such expenditures for such years (as determined under subsection (c)(2)), benefits shall be paid under this part for services described in subsection (a) and furnished on or after the first January 1 that occurs after such 3 consecutive years only with respect to an individual who has an election in effect under subsection (b) as of such January 1 and only during the duration of such election.
(e)

Annual Report.—
At the beginning of each fiscal year (beginning with fiscal year 1999), the Secretary shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate an annual report on coverage and expenditures for services described in subsection (a) under this part and under State plans under title XIX. Such report shall include—
(1)
level of expenditures described in subsection (c)(1) for the previous fiscal year and estimated for the fiscal year involved;
(2)
trends in such level; and
(3)
facts and circumstances of any significant change in such level from the level in previous fiscal years.
SEC. 1822.
[42 U.S.C. 1395i-6]

HOSPICE PROGRAM SURVEY AND ENFORCEMENT PROCEDURES.
(a)

Surveys.—
(1)

Frequency.—
Any entity that is certified as a hospice program (as defined in section 1861(dd)(2)) shall be subject to a standard survey by an appropriate State or local survey agency, or an approved accreditation agency, as determined by the Secretary, not less frequently than once every 36 months.
(2)

Public transparency of survey and certification information.—
(A)

Submission of information to the secretary.—
(i)

In general.—
Each State or local survey agency, and each national accreditation body with respect to which the Secretary has made a finding under section 1865(a) respecting the accreditation of a hospice program by such body, shall submit, in a form and manner, and at a time, specified by the Secretary for purposes of this paragraph, information respecting any survey or certification made with respect to a hospice program by such survey agency or body, as applicable. Such information shall include any inspection report made by such survey agency or body with respect to such survey or certification, any enforcement actions taken as a result of such survey or certification, and any other information determined appropriate by the Secretary.
(ii)

Required inclusion of specified form.—
With respect to a survey under this subsection carried out by a national accreditation body described in clause (i) on or after October 1, 2021, information described in such clause shall include Form CMS-2567 (or a successor form), along with such additional information determined appropriate by such body.
(B)

Public disclosure of information.—
Beginning not later than October 1, 2022, the Secretary shall publish the information submitted under subparagraph (A) on the public website of the Centers for Medicare & Medicaid Services in a manner that is prominent, easily accessible, readily understandable, and searchable. The Secretary shall provide for the timely update of such information so published.
(3)

Consistency of surveys.—
Each State and the Secretary shall implement programs to measure and reduce inconsistency in the application of survey results among surveyors.
(4)

Survey teams.—
(A)

In general.—
In the case of a survey conducted under this subsection on or after October 1, 2021, by more than 1 individual, such survey shall be conducted by a multidisciplinary team of professionals (including a registered professional nurse).
(B)

Prohibition of conflicts of interest.—
Beginning October 1, 2021, a State may not use as a member of a survey team under this subsection an individual who is serving (or has served within the previous 2 years) as a member of the staff of, or as a consultant to, the program surveyed respecting compliance with the requirements of section 1861(dd) or who has a personal or familial financial interest in the program being surveyed.
(C)

Training.—
The Secretary shall provide, not later than October 1, 2021, for the comprehensive training of State and Federal surveyors, and any surveyor employed by a national accreditation body described in paragraph (2)(A)(i), in the conduct of surveys under this subsection, including training with respect to the review of written plans for providing hospice care (as described in section 1814(a)(7)(B)). No individual shall serve as a member of a survey team with respect to a survey conducted on or after such date unless the individual has successfully completed a training and testing program in survey and certification techniques that has been approved by the Secretary.
(5)

Funding.—
The Secretary shall provide for the transfer, from the Federal Hospital Insurance Trust Fund under section 1817 to the Centers for Medicare & Medicaid Services Program Management Account, of $10,000,000 for each fiscal year (beginning with fiscal year 2022) for purposes of carrying out this subsection and subsection (b). Sums so transferred shall remain available until expended. Any transfer pursuant to this paragraph shall be in addition to any transfer pursuant to section 3(a)(2) of the Improving Medicare Post-Acute Care Transformation Act of 2014.
(b)

Special Focus Program.—
(1)

In general.—
The Secretary shall conduct a special focus program for enforcement of requirements for hospice programs that the Secretary has identified as having substantially failed to meet applicable requirements of this Act.
(2)

Periodic surveys.—
Under such special focus program, the Secretary shall conduct surveys of each hospice program in the special focus program not less than once every 6 months.
(c)

Enforcement.—
(1)

Situations involving immediate jeopardy.—
If the Secretary determines on the basis of a standard survey or otherwise that a hospice program that is certified for participation under this title is no longer in compliance with the requirements specified in section 1861(dd) and determines that the deficiencies involved immediately jeopardize the health and safety of the individuals to whom the program furnishes items and services, the Secretary shall take immediate action to ensure the removal of the jeopardy and correction of the deficiencies or terminate the certification of the program, and may provide, in addition, for 1 or more of the other remedies described in paragraph (5)(B).
(2)

Situations not involving immediate jeopardy.—
If the Secretary determines on the basis of a standard survey or otherwise that a hospice program that is certified for participation under this title is no longer in compliance with the requirements specified in section 1861(dd) and determines that the deficiencies involved do not immediately jeopardize the health and safety of the individuals to whom the program furnishes items and services, the Secretary may (for a period not to exceed 6 months) impose remedies developed pursuant to paragraph (5)(A), in lieu of terminating the certification of the program. If, after such a period of remedies, the program is still no longer in compliance with such requirements, the Secretary shall terminate the certification of the program.
(3)

Penalty for previous noncompliance.—
If the Secretary determines that a hospice program that is certified for participation under this title is in compliance with the requirements specified in section 1861(dd) but, as of a previous period, did not meet such requirements, the Secretary may provide for a civil money penalty under paragraph (5)(B)(i) for the days in which the Secretary finds that the program was not in compliance with such requirements.
(4)

Option to continue payments for noncompliant hospice programs.—
The Secretary may continue payments under this title with respect to a hospice program not in compliance with the requirements specified in section 1861(dd) over a period of not longer than 6 months, if—
(A)
the State or local survey agency finds that it is more appropriate to take alternative action to assure compliance of the program with such requirements than to terminate the certification of the program;
(B)
the program has submitted a plan and timetable for corrective action to the Secretary for approval and the Secretary approves the plan of corrective action; and
(C)
the program agrees to repay to the Federal Government payments received under this title during such period if the corrective action is not taken in accordance with the approved plan and timetable.
The Secretary shall establish guidelines for approval of corrective actions requested by hospice programs under this paragraph.
(5)

Remedies.—
(A)

Development.—
(i)

In general.—
Not later than October 1, 2022, the Secretary shall develop and implement—
(I)
a range of remedies to apply to hospice programs under the conditions described in paragraphs (1) through (4); and
(II)
appropriate procedures for appealing determinations relating to the imposition of such remedies.
Remedies developed pursuant to the preceding sentence shall include the remedies specified in subparagraph (B).
(ii)

Conditions of imposition of remedies.—
Not later than October 1, 2022, the Secretary shall develop and implement specific procedures with respect to the conditions under which each of the remedies developed under clause (i) is to be applied, including the amount of any fines and the severity of each of these remedies. Such procedures shall be designed so as to minimize the time between identification of deficiencies and imposition of these remedies and shall provide for the imposition of incrementally more severe fines for repeated or uncorrected deficiencies.
(B)

Specified remedies.—
The remedies specified in this subparagraph are the following:
(i)
Civil money penalties in an amount not to exceed $10,000 for each day of noncompliance by a hospice program with the requirements specified in section 1861(dd).
(ii)
Suspension of all or part of the payments to which a hospice program would otherwise be entitled under this title with respect to items and services furnished by a hospice program on or after the date on which the Secretary determines that remedies should be imposed pursuant to paragraphs (1) and (2).
(iii)
The appointment of temporary management to oversee the operation of the hospice program and to protect and assure the health and safety of the individuals under the care of the program while improvements are made in order to bring the program into compliance with all such requirements.
(C)

Procedures.—
(i)

Civil money penalties.—
(I)

In general.—
Subject to subclause (II), the provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this subsection in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(II)

Retention of amounts for hospice program improvements.—
The Secretary may provide that any portion of civil money penalties collected under this subsection may be used to support activities that benefit individuals receiving hospice care, including education and training programs to ensure hospice program compliance with the requirements of section 1861(dd).
(ii)

Suspension of payment.—
A finding to suspend payment under subparagraph (B)(ii) shall terminate when the Secretary finds that the program is in substantial compliance with all requirements of section 1861(dd).
(iii)

Temporary management.—
The temporary management under subparagraph (B)(iii) shall not be terminated until the Secretary has determined that the program has the management capability to ensure continued compliance with all the requirements referred to in such subparagraph.
(D)

Relationship to other remedies.—
The remedies developed under subparagraph (A) are in addition to sanctions otherwise available under State or Federal law and shall not be construed as limiting other remedies, including any remedy available to an individual at common law.
Part B—

Supplementary Medical Insurance Benefits for the Aged and Disabled

ESTABLISHMENT OF SUPPLEMENTARY MEDICAL INSURANCE PROGRAM FOR THE AGED AND THE DISABLED
Sec. 1831.
[42 U.S.C. 1395j]
There is hereby established a voluntary insurance program to provide medical insurance benefits in accordance with the provisions of this part for aged and disabled individuals who elect to enroll under such program, to be financed from premium payments by enrollees together with contributions from funds appropriated by the Federal Government.

SCOPE OF BENEFITS
Sec. 1832.
[42 U.S.C. 1395k]
(a)
The benefits provided to an individual by the insurance program established by this part shall consist of—
(1)
entitlement to have payment made to him or on his behalf (subject to the provisions of this part) for medical and other health services, except those described in subparagraphs (B) and (D) of paragraph (2) and subparagraphs (E) and (F) of section 1842(b)(6); and
(2)
entitlement to have payment made on his behalf (subject to the provisions of this part) for—
(A)
home health services (other than items described in subparagraph (G) or subparagraph (I));
(B)
medical and other health services (other than items described in subparagraph (G) or subparagraph (I)) furnished by a provider of services or by others under arrangement with them made by a provider of services, excluding—
(i)
physician services except where furnished by—
(I)
a resident or intern of a hospital, or
(II)
a physician to a patient in a hospital which has a teaching program approved as specified in paragraph (6) of section 1861(b) (including services in conjunction with the teaching programs of such hospital whether or not such patient is an inpatient of such hospital) where the conditions specified in paragraph (7) of such section are met,
(ii)
services for which payment may be made pursuant to section 1835(b)(2),
(iii)
services described by section 1861(s)(2)(K)(i), certified nurse-midwife services, qualified psychologist services, and services of a certified registered nurse anesthetist;
(iv)
services of a nurse practitioner or clinical nurse specialist but only if no facility or other provider charges or is paid any amounts with respect to the furnishing of such services; and
(C)
outpatient physical therapy services (other than services to which the second sentence of section 1861(p) applies), outpatient occupational therapy services (other than services to which such sentence applies through the operation of section 1861(g)), and outpatient speech-language pathology services (other than services to which the second sentence of section 1861(p) applies through the application of section 1861(ll)(2));
(D)
(i)
rural health clinic services and (ii) Federally qualified health center services;
(E)
comprehensive outpatient rehabilitation facility services;
(F)
facility services furnished in connection with surgical procedures specified by the Secretary—
(i)
pursuant to section 1833(i)(1)(A) and performed in an ambulatory surgical center (which meets health, safety, and other standards specified by the Secretary in regulations) if the center has an agreement in effect with the Secretary by which the center agrees to accept the standard overhead amount determined under section 1833(i)(2)(A) as full payment for such services (including intraocular lens in cases described in section 1833(i)(2)(A)(iii)) and to accept an assignment described in section 1842(b)(3)(B)(ii) with respect to payment for all such services (including intraocular lens in cases described in section 1833(i)(2)(A)(iii)) furnished by the center to individuals enrolled under this part, or
(ii)
pursuant to section 1833(i)(1)(B) and performed by a physician, described in paragraph (1), (2), or (3) of section 1861(r), in his office, if the Secretary has determined that—
(I)
a quality improvement organization (having a contract with the Secretary under part B of title XI of this Act) is willing, able, and has agreed to carry out a review (on a sample or other reasonable basis) of the physician's performing such procedures in the physician's office,
(II)
the particular physician involved has agreed to make available to such organization such records as the Secretary determines to be necessary to carry out the review, and
(III)
the physician is authorized to perform the procedure in a hospital located in the area in which the office is located,—and if the physician agrees to accept the standard overhead amount determined under section 1833(i)(2)(B) as full payment for such services and to accept payment on an assignment-related basis with respect to payment for all services (including all pre- and post-operative services) described in paragraphs (1) and (2)(A) of section 1861(s) and furnished in connection with such surgical procedure to individuals enrolled under this part;
(G)
covered items (described in section 1834(a)(13)) furnished by a provider of services or by others under arrangements with them made by a provider of services;
(H)
outpatient critical access hospital services (as defined in section 1861(mm)(3));
(I)
prosthetic devices and orthotics and prosthetics (described in section 1834(h)(4)) furnished by a provider of services or by others under arrangements with them made by a provider of services; and
(J)
partial hospitalization services and intensive outpatient services provided by a community mental health center (as described in section 1861(ff)(2)(B)).
(b)
For definitions of “spell of illness”, “medical and other health services”, and other terms used in this part, see section 1861.

PAYMENT OF BENEFITS
Sec. 1833.
[42 U.S.C. 1395l]
(a)
Except as provided in section 1876, and subject to the succeeding provisions of this section, there shall be paid from the Federal Supplementary Medical Insurance Trust Fund, in the case of each individual who is covered under the insurance program established by this part and incurs expenses for services with respect to which benefits are payable under this part, amounts equal to—
(1)
in the case of services described in section 1832(a)(1)—80 percent of the reasonable charges for the services; except that
(A)
an organization which provides medical and other health services (or arranges for their availability) on a prepayment basis (and either is sponsored by a union or employer, or does not provide, or arrange for the provision of, any inpatient hospital services) may elect to be paid 80 percent of the reasonable cost of services for which payment may be made under this part on behalf of individuals enrolled in such organization in lieu of 80 percent of the reasonable charges for such services if the organization undertakes to charge such individuals no more than 20 percent of such reasonable cost plus any amounts payable by them as a result of subsection (b),
(B)
with respect to items and services described in section 1861(s)(10)(A), the amounts paid shall be 100 percent of the reasonable charges for such items and services,
(C)
with respect to expenses incurred for those physicians' services for which payment may be made under this part that are described in section 1862(a)(4), the amounts paid shall be subject to such limitations as may be prescribed by regulations,
(D)
with respect to clinical diagnostic laboratory tests for which payment is made under this part
(i)
(I)
on the basis of a fee schedule under subsection (h)(1) (for tests furnished before January 1, 2017) or section 1834(d)(1), the amount paid shall be equal to 80 percent (or 100 percent, in the case of such tests for which payment is made on an assignment-related basis) of the lesser of the amount determined under such fee schedule, the limitation amount for that test determined under subsection (h)(4)(B), or the amount of the charges billed for the tests, or
(II)
under section 1834A (for tests furnished on or after January 1, 2017), the amount paid shall be equal to 80 percent (or 100 percent, in the case of such tests for which payment is made on an assignment-related basis) of the lesser of the amount determined under such section or the amount of the charges billed for the tests, or
(ii)
for tests furnished before January 1, 2017, on the basis of a negotiated rate established under subsection (h)(6), the amount paid shall be equal to 100 percent of such negotiated rate,,12
(E)
with respect to services furnished to individuals who have been determined to have end stage renal disease, the amounts paid shall be determined subject to the provisions of section 1881,
(F)
with respect to clinical social worker services under section 1861(s)(2)(N), the amounts paid shall be 80 percent of the lesser of
(i)
the actual charge for the services or
(ii)
75 percent of the amount determined for payment of a psychologist under clause (L),
^{12}
Two commas so in law. See amendment made by section 145(a)(2)(B) of Public Law 110–275.
(G)13
with respect to facility services furnished in connection with a surgical procedure specified pursuant to subsection (i)(1)(A) and furnished to an individual in an ambulatory surgical center described in such subsection, for services furnished beginning with the implementation date of a revised payment system for such services in such facilities specified in subsection (i)(2)(D), the amounts paid, subject to subsection (i)(9), shall be 80 percent of the lesser of the actual charge for the services or the amount determined by the Secretary under such revised payment system,
^{13}
The margin so in law. Also the placement of subparagraph (G) after subparagraph (F) was executed to reflect the probable intent of the Congress.
(H)
with respect to services of a certified registered nurse anesthetist under section 1861(s)(11), the amounts paid shall be 80 percent of the least of the actual charge, the prevailing charge that would be recognized (or, for services furnished on or after January 1, 1992, the fee schedule amount provided under section 1848) if the services had been performed by an anesthesiologist, or the fee schedule for such services established by the Secretary in accordance with subsection (l),
(I)
with respect to covered items (described in section 1834(a)(13)), the amounts paid shall be the amounts described in section 1834(a)(1), and
(J)
with respect to expenses incurred for radiologist services (as defined in section 1834(b)(6)), subject to section 1848, the amounts paid shall be 80 percent of the lesser of the actual charge for the services or the amount provided under the fee schedule established under section 1834(b),
(K)
with respect to certified nurse-midwife services under section 1861(s)(2)(L), the amounts paid shall be 80 percent of the lesser of the actual charge for the services or the amount determined by a fee schedule established by the Secretary for the purposes of this subparagraph (but in no event shall such fee schedule exceed 65 percent of the prevailing charge that would be allowed for the same service performed by a physician, or, for services furnished on or after January 1, 1992, 65 percent (or 100 percent for services furnished on or after January 1, 2011) of the fee schedule amount provided under section 1848 for the same service performed by a physician),
(L)
with respect to qualified psychologist services under section 1861(s)(2)(M), the amounts paid shall be 80 percent of the lesser of the actual charge for the services or the amount determined by a fee schedule established by the Secretary for the purposes of this subparagraph,
(M)
with respect to prosthetic devices and orthotics and prosthetics (as defined in section 1834(h)(4)), the amounts paid shall be the amounts described in section 1834(h)(1),
(N)
with respect to expenses incurred for physicians' services (as defined in section 1848(j)(3)) other than personalized prevention plan services (as defined in section 1861(hhh)(1)), the amounts paid shall be 80 percent of the payment basis determined under section 1848(a)(1),
(O)
with respect to services described in section 1861(s)(2)(K) (relating to services furnished by physician assistants, nurse practitioners, or clinic nurse specialists), the amounts paid shall be equal to 80 percent of
(i)
the lesser of the actual charge or 85 percent of the fee schedule amount provided under section 1848, or
(ii)
in the case of services as an assistant at surgery, the lesser of the actual charge or 85 percent of the amount that would otherwise be recognized if performed by a physician who is serving as an assistant at surgery,
(P)
with respect to surgical dressings, the amounts paid shall be the amounts determined under section 1834(i),
(Q)
with respect to items or services for which fee schedules are established pursuant to section 1842(s), the amounts paid shall be 80 percent of the lesser of the actual charge or the fee schedule established in such section,
(R)
with respect to ambulance services,
(i)
the amounts paid shall be 80 percent of the lesser of the actual charge for the services or the amount determined by a fee schedule established by the Secretary under section 1834(l) and
(ii)
with respect to ambulance services described in section 1834(l)(8), the amounts paid shall be the amounts determined under section 1834(g) for outpatient critical access hospital services,
(S)
(i)
except as provided in clause (ii),subject to subparagraph (EE), with respect todrugs and biologicals (including intravenous immune globulin (as defined in section 1861(zz))) not paid on a cost or prospective payment basis as otherwise provided in this part (other than items and services described in subparagraph (B)), the amounts paid shall be 80 percent of the lesser of the actual charge or the payment amount established in section 1842(o) (or, if applicable, under section 1847, 1847A, or 1847B), and
(ii)
with respect to insulin furnished on or after July 1, 2023, through an item of durable medical equipment covered under section 1861(n), the amounts paid shall be, subject to the fourth sentence of this subsection, 80 percent of the payment amount established under section 1847A (or section 1847B, if applicable) for such insulin,
(T)
with respect to medical nutrition therapy services (as defined in section 1861(vv)), the amount paid shall be 80 percent (or 100 percent if such services are recommended with a grade of A or B by the United States Preventive Services Task Force for any indication or population and are appropriate for the individual) of the lesser of the actual charge for the services or 85 percent of the amount determined under the fee schedule established under section 1848(b) for the same services if furnished by a physician,
(U)
with respect to facility fees described in section 1834(m)(2)(B), the amounts paid shall be 80 percent of the lesser of the actual charge or the amounts specified in such section,
(V)
notwithstanding subparagraphs (I) (relating to durable medical equipment), (M) (relating to prosthetic devices and orthotics and prosthetics), and (Q) (relating to 1842(s) items), with respect to competitively priced items and services (described in section 1847(a)(2)) that are furnished in a competitive area, the amounts paid shall be the amounts described in section 1847(b)(5),
(W)
with respect to additional preventive services (as defined in section 1861(ddd)(1)), the amount paid shall be
(i)
in the case of such services which are clinical diagnostic laboratory tests, the amount determined under subparagraph (D) (if such subparagraph were applied, by substituting “100 percent” for “80 percent”), and
(ii)
in the case of all other such services, 100 percent of the lesser of the actual charge for the service or the amount determined under a fee schedule established by the Secretary for purposes of this subparagraph,
(X)
with respect to personalized prevention plan services (as defined in section 1861(hhh)(1)), the amount paid shall be 100 percent of the lesser of the actual charge for the services or the amount determined under the payment basis determined under section 1848,
(Y)
subject to subsection (dd), with respect to preventive services described in subparagraphs (A) and (B) of section 1861(ddd)(3) that are appropriate for the individual and, in the case of such services described in subparagraph (A), are recommended with a grade of A or B by the United States Preventive Services Task Force for any indication or population, the amount paid shall be 100 percent of
(i)
except as provided in clause (ii), the lesser of the actual charge for the services or the amount determined under the fee schedule that applies to such services under this part, and
(ii)
in the case of such services that are covered OPD services (as defined in subsection (t)(1)(B)), the amount determined under subsection (t),
(Z)
with respect to Federally qualified health center services for which payment is made under section 1834(o), the amounts paid shall be 80 percent of the lesser of the actual charge or the amount determined under such section,
(AA)
with respect to an applicable disposable device (as defined in paragraph (2) of section 1834(s)) furnished to an individual pursuant to paragraph (1) of such section, the amount paid shall be equal to 80 percent of the lesser of the actual charge or the amount determined under paragraph (3) of such section,
(BB)
with respect to home infusion therapy, the amount paid shall be an amount equal to 80 percent of the lesser of the actual charge for the services or the amount determined under section 1834(u),
(CC)
with respect to opioid use disorder treatment services furnished during an episode of care, the amount paid shall be equal to the amount payable under section 1834(w) less any copayment required as specified by the Secretary,
(DD)
with respect to a specified COVID–19 testing-related service described in paragraph (1) of subsection (cc) for which payment may be made under a specified outpatient payment provision described in paragraph (2) of such subsection, the amounts paid shall be 100 percent of the payment amount otherwise recognized under such respective specified outpatient payment provision for such service,
(EE)
with respect to a part B rebatable drug (as defined in paragraph (2) of section 1847A(i)) furnished on or after April 1, 2023, for which the payment amount for a calendar quarter under paragraph (3)(A)(ii)(I) of such section (or, in the case of a part B rebatable drug that is a selected drug (as defined in section 1192(c) for which, the payment amount described in section 1847A(b)(1)(B)) for such drug for such quarter exceeds the inflation-adjusted payment under paragraph (3)(A)(ii)(II) of such section for such quarter, the amounts paid shall be equal to the percent of the payment amount under paragraph (3)(A)(ii)(I) of such section or section 1847A(b)(1)(B), as applicable, that equals the difference between (i) 100 percent, and (ii) the percent applied under section 1847A(i)(5)(B)14
(FF)
with respect to marriage and family therapist services and mental health counselor services under section 1861(s)(2)(II), the amounts paid shall be 80 percent of the lesser of the actual charge for the services or 75 percent of the amount determined for payment of a psychologist under subparagraph (L),
(GG)
with respect to lymphedema compression treatment items (as defined in section 1861(mmm)), the amount paid shall be equal to 80 percent of the lesser of the actual charge or the amount determined under the payment basis determined under section 1834(z), and
(HH)
with respect to items and services related to the administration of intravenous immune globulin furnished on or after January 1, 2024, as described in section 1861(zz), the amounts paid shall be the lesser of the 80 percent of the actual charge or the payment amount established under section 1842(o)(8);
^{14}
The lack of punctuation at the end of subparagraph (EE) is so in law.
(2)
in the case of services described in section 1832(a)(2) (except those services described in subparagraphs (C), (D), (E), (F), (G), (H), and (I) of such section and unless otherwise specified in section 1881)—
(A)
with respect to home health services (other than a covered osteoporosis drug) (as defined in section 1861(kk)), the amount determined under the prospective payment system under section 1895;
(B)
with respect to other items and services (except those described in subparagraph (C), (D), or (E) of this paragraph and except as may be provided in section 1886 or section 1888(e)(9))—
(i)
furnished before January 1, 1999, the lesser of—
(I)
the reasonable cost of such services, as determined under section 1861(v), or
(II)
the customary charges with respect to such services,—less the amount a provider may charge as described in clause (ii) of section 1866(a)(2)(A), but in no case may the payment for such other services exceed 80 percent of such reasonable cost, or
(ii)
if such services are furnished before January 1, 1999, 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 clause), free of charge or at nominal charges to the public, 80 percent of the amount determined in accordance with section 1814(b)(2), or
(iii)
if such services are furnished on or after January 1, 1999, the amount determined under subsection (t), or
(iv)
if (and for so long as) the conditions described in section 1814(b)(3) are met, the amounts determined under the reimbursement system described in such section;
(C)
with respect to services described in the second sentence of section 1861(p), 80 percent of the reasonable charges for such services;
(D)
with respect to clinical diagnostic laboratory tests for which payment is made under this part (i)(I) on the basis of a fee schedule determined under subsection (h)(1) (for tests furnished before January 1, 2017) or section 1834(d)(1), the amount paid shall be equal to 80 percent (or 100 percent, in the case of such tests for which payment is made on an assignment-related basis or to a provider having an agreement under section 1866) of the lesser of the amount determined under such fee schedule, the limitation amount for that test determined under subsection (h)(4)(B), or the amount of the charges billed for the tests, or (II) under section 1834A (for tests furnished on or after January 1, 2017), the amount paid shall be equal to 80 percent (or 100 percent, in the case of such tests for which payment is made on an assignment-related basis or to a provider having an agreement under section 1866) of the lesser of the amount determined under such section or the amount of the charges billed for the tests, or (ii) for tests furnished before January 1, 2017, on the basis of a negotiated rate established under subsection (h)(6), the amount paid shall be equal to 100 percent of such negotiated rate for such tests;
(E)
with respect to—
(i)
outpatient hospital radiology services (including diagnostic and therapeutic radiology, nuclear medicine and CAT scan procedures, magnetic resonance imaging, and ultrasound and other imaging services, but excluding screening mammography and, for services furnished on or after January 1, 2005, diagnostic mammography), and
(ii)
effective for procedures performed on or after October 1, 1989, diagnostic procedures (as defined by the Secretary) described in section 1861(s)(3) (other than diagnostic x-ray tests and diagnostic laboratory tests),
the amount determined under subsection (n) or, for services or procedures performed on or after January 1, 1999, subsection (t);
(F)
with respect to a covered osteoporosis drug (as defined in section 1861(kk)) furnished by a home health agency, 80 percent of the reasonable cost of such service, as determined under section 1861(v);
(G)
with respect to items and services described in section 1861(s)(10)(A), the lesser of—
(i)
the reasonable cost of such services, as determined under section 1861(v), or
(ii)
the customary charges with respect to such services; and
(H)
with respect to personalized prevention plan services (as defined in section 1861(hhh)(1)) furnished by an outpatient department of a hospital, the amount determined under paragraph (1)(X),
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);
(3)
in the case of services described in section 1832(a)(2)(D)—
(A)
except as provided in subparagraph (B), the costs which are reasonable and related to the cost of furnishing such services or which are based on such other tests of reasonableness as the Secretary may prescribe in regulations, including those authorized under section 1861(v)(1)(A), less the amount a provider may charge as described in clause (ii) of section 1866(a)(2)(A), but in no case may the payment for such services (other than for items and services described in section 1861(s)(10)(A)) exceed 80 percent of such costs; or
(B)
with respect to the services described in clause (ii) of section 1832(a)(2)(D) that are furnished to an individual enrolled with a MA plan under part C pursuant to a written agreement described in section 1853(a)(4), the amount (if any) by which—
(i)
the amount of payment that would have otherwise been provided (I) under subparagraph (A) (calculated as if “100 percent” were substituted for “80 percent” in such subparagraph) for such services if the individual had not been so enrolled, or (II) in the case of such services furnished on or after the implementation date of the prospective payment system under section 1834(o), under such section (calculated as if “100 percent” were substituted for “80 percent” in such section) for such services if the individual had not been so enrolled; exceeds
(ii)
the amount of the payments received under such written agreement for such services (not including any financial incentives provided for in such agreement such as risk pool payments, bonuses, or withholds),
less the amount the federally qualified health center may charge as described in section 1857(e)(3)(B);
(4)
in the case of facility services described in section 1832(a)(2)(F), and outpatient hospital facility services furnished in connection with surgical procedures specified by the Secretary pursuant to section 1833(i)(1)(A), the applicable amount as determined under paragraph (2) or (3) of subsection (i) or subsection (t);
(5)
in the case of covered items (described in section 1834(a)(13)) the amounts described in section 1834(a)(1);
(6)
in the case of outpatient critical access hospital services, the amounts described in section 1834(g);
(7)
in the case of prosthetic devices and orthotics and prosthetics (as described in section 1834(h)(4)), the amounts described in section 1834(h);
(8)
in the case of—
(A)
outpatient physical therapy services, outpatient speech-language pathology services, and outpatient occupational therapy services furnished—
(i)
by a rehabilitation agency, public health agency, clinic, comprehensive outpatient rehabilitation facility, or skilled nursing facility,
(ii)
by a home health agency to an individual who is not homebound, or
(iii)
by another entity under an arrangement with an entity described in clause (i) or (ii); and
(B)
outpatient physical therapy services, outpatient speech-language pathology services, and outpatient occupational therapy services furnished—
(i)
by a hospital to an outpatient or to a hospital inpatient who is entitled to benefits under part A but has exhausted benefits for inpatient hospital services during a spell of illness or is not so entitled to benefits under part A, or
(ii)
by another entity under an arrangement with a hospital described in clause (i),
the amounts described in section 1834(k);
(9)
in the case of services described in section 1832(a)(2)(E) that are not described in paragraph (8), the amounts described in section 1834(k); and
(10)
with respect to rural emergency hospital services furnished on or after January 1, 2023, the amounts determined under section 1834(x).
Paragraph (3)(A) shall not apply to Federally qualified health center services furnished on or after the implementation date of the prospective payment system under section 1834(o). For services furnished on or after January 1, 2022, paragraph (1)(Y) shall apply with respect to a colorectal cancer screening test regardless of the code that is billed for the establishment of a diagnosis as a result of the test, or for the removal of tissue or other matter or other procedure that is furnished in connection with, as a result of, and in the same clinical encounter as the screening test. The Secretary shall make such adjustments as may be necessary to the amounts paid as specified under paragraph (1)(S)(ii) for insulin furnished on or after July 1, 2023, through an item of durable medical equipment covered under section 1861(n), such that the amount of coinsurance payable by an individual enrolled under this part for a month’s supply of such insulin does not exceed $35.
(b)15
Before applying subsection (a) with respect to expenses incurred by an individual during any calendar year, the total amount of the expenses incurred by such individual during such year (which would, except for this subsection, constitute incurred expenses from which benefits payable under subsection (a) are determinable) shall be reduced by a deductible of $75 for calendar years before 1991, $100 for 1991 through 2004, $110 for 2005, and for a subsequent year the amount of such deductible for the previous year increased by the annual percentage increase in the monthly actuarial rate under section 1839(a)(1) ending with such subsequent year (rounded to the nearest $1); except that (1) such total amount shall not include expenses incurred for preventive services described in subparagraph (A) of section 1861(ddd)(3) that are recommended with a grade of A or B by the United States Preventive Services Task Force for any indication or population and are appropriate for the individual.16, (2) such deductible shall not apply with respect to home health services (other than a covered osteoporosis drug (as defined in section 1861(kk))), (3) such deductible shall not apply with respect to clinical diagnostic laboratory tests for which payment is made under this part (A) under subsection (a)(1)(D)(i) or (a)(2)(D)(i) on an assignment-related basis, or to a provider having an agreement under section 1866, or (B) for tests furnished before January 1, 2017,on the basis of a negotiated rate determined under subsection (h)(6), (4) such deductible shall not apply to Federally qualified health center services, (5) such deductible shall not apply with respect to screening mammography (as described in section 1861(jj)), (6) such deductible shall not apply with respect to screening pap smear and screening pelvic exam (as described in section 1861(nn)), (7) such deductible shall not apply with respect to ultrasound screening for abdominal aortic aneurysm (as defined in section 1861(bbb)), (8) such deductible shall not apply with respect to colorectal cancer screening tests (as described in section 1861(pp)(1)), (9) such deductible shall not apply with respect to an initial preventive physical examination (as defined in section 1861(ww)), (10) such deductible shall not apply with respect to personalized prevention plan services (as defined in section 1861(hhh)(1)), (11) such deductible shall not apply with respect to any specified COVID–19 testing-related service described in paragraph (1) of subsection (cc) for which payment may be made under a specified outpatient payment provision described in paragraph (2) of such subsection, (12) such deductible shall not apply with respect a COVID–19 vaccine and its administration described in section 1861(s)(10)(A),,17 and (13) such deductible shall not apply with respect to insulin furnished on or after July 1, 2023, through an item of durable medical equipment covered under section 1861(n)..17 The total amount of the expenses incurred by an individual as determined under the preceding sentence shall, after the reduction specified in such sentence, be further reduced by an amount equal to the expenses incurred for the first three pints of whole blood (or equivalent quantities of packed red blood cells, as defined under regulations) furnished to the individual during the calendar year, except that such deductible for such blood shall in accordance with regulations be appropriately reduced to the extent that there has been a replacement of such blood (or equivalent quantities of packed red blood cells, as so defined); and for such purposes blood (or equivalent quantities of packed red blood cells, as so defined) furnished such individual shall be deemed replaced when the institution or other person furnishing such blood (or such equivalent quantities of packed red blood cells, as so defined) is given one pint of blood for each pint of blood (or equivalent quantities of packed red blood cells, as so defined) furnished such individual with respect to which a deduction is made under this sentence. The deductible under the previous sentence for blood or blood cells furnished an individual in a year shall be reduced to the extent that a deductible has been imposed under section 1813(a)(2) to blood or blood cells furnished the individual in the year. Paragraph (1) of the first sentence of this subsection shall apply with respect to a colorectal cancer screening test regardless of the code that is billed for the establishment of a diagnosis as a result of the test, or for the removal of tissue or other matter or other procedure that is furnished in connection with, as a result of, and in the same clinical encounter as the screening test.
^{15}
The amendments to subsections (b)(3)(B), (h)(2)(A)(i), (h)(3), (h)(6), and (h)(7) made by subparagraphs (C) through (G), respectively, of section 216(b)(1) of Public Law 113-93 were carried out to reflect the probable intent of Congress. The amendment instructions in the lead-in language in section 216(b)(1) of such Public Law probably should have referenced ‘‘Section 1833’’ instead of ‘‘Section 1833(a)’’.
^{16}
Period so in law. See amendment made by section 4104(c)(1) of Public Law 111–148.
^{17}
The double commas and periods in the first sentence are so in law. See amendment made by section 11407(a)(2) of Public Law 117–169.
(c)
(1)
Notwithstanding any other provision of this part, with respect to expenses incurred in a calendar year in connection with the treatment of mental, psychoneurotic, and personality disorders of an individual who is not an inpatient of a hospital at the time such expenses are incurred, there shall be considered as incurred expenses for purposes of subsections (a) and (b)—
(A)
for expenses incurred in years prior to 2010, only 62½ percent of such expenses;
(B)
for expenses incurred in 2010 or 2011, only 68¾ percent of such expenses;
(C)
for expenses incurred in 2012, only 75 percent of such expenses;
(D)
for expenses incurred in 2013, only 81¼ percent of such expenses; and
(E)
for expenses incurred in 2014 or any subsequent calendar year, 100 percent of such expenses.
(2)
For purposes of subparagraphs (A) through (D) of paragraph (1), the term “treatment” does not include brief office visits (as defined by the Secretary) for the sole purpose of monitoring or changing drug prescriptions used in the treatment of such disorders or partial hospitalization services or intensive outpatient services that are not directly provided by a physician
(d)
No payment may be made under this part with respect to any services furnished an individual to the extent that such individual is entitled (or would be entitled except for section 1813) to have payment made with respect to such services under part A.
(e)
No payment shall be made to any provider of services or other person under this part unless there has been furnished such information as may be necessary in order to determine the amounts due such provider or other person under this part for the period with respect to which the amounts are being paid or for any prior period.
(f)
(1)
In establishing limits under subsection (a) on payment for rural health clinic services provided by rural health clinics (other than such clinics in hospitals with less than 50 beds), the Secretary shall establish such limit, for services provided prior to April 1, 2021—
(A)
in 1988, after March 31, at $46 per visit, and
(B)
in a subsequent year (before April 1, 2021), at the limit established under this paragraph for the previous year increased by the percentage increase in the MEI (as defined in section 1842(i)(3)) applicable to primary care services (as defined in section 1842(i)(4)) furnished as of the first day of that year.
(2)
In establishing limits under subsection (a) on payment for rural health clinic services furnished on or after April 1, 2021, by a rural health clinic (other than a rural health clinic described in paragraph (3)(B)), the Secretary shall establish such limit, for services provided—
(A)
in 2021, after March 31, at $100 per visit;
(B)
in 2022, at $113 per visit;
(C)
in 2023, at $126 per visit;
(D)
in 2024, at $139 per visit;
(E)
in 2025, at $152 per visit;
(F)
in 2026, at $165 per visit;
(G)
in 2027, at $178 per visit;
(H)
in 2028, at $190 per visit; and
(I)
in a subsequent year, at the limit established under this paragraph for the previous year increased by the percentage increase in the MEI applicable to primary care services furnished as of the first day of such subsequent year.
(3)
(A)
In establishing limits under subsection (a) on payment for rural health clinic services furnished on or after April 1, 2021, by a rural health clinic described in subparagraph (B), the Secretary shall establish such limit, with respect to each such rural health clinic, for services provided—
(i)
in 2021, after March 31, at an amount equal to the greater of—
(I)18
with respect to a rural health clinic that had a per visit payment amount established for services furnished in 2020—
- (aa)
the per visit payment amount applicable to such rural health clinic for rural health clinic services furnished in 2020, increased by the percentage increase in the MEI applicable to primary care services furnished as of the first day of 2021; or
- (bb)
the limit described in paragraph (2)(A); and
^{18}
Margins of subclauses (I) and (II) of clause (i) are so in law. They should be moved to the left to conform with the margins of preceding levels.
(II)18
with respect to a rural health clinic that did not have a per visit payment amount established for services furnished in 2020—
- (aa)
the per visit payment amount applicable to such rural health clinic for rural health clinic services furnished in 2021; or
- (bb)
the limit described in paragraph (2)(A); and
(ii)
in a subsequent year, at an amount equal to the greater of—
(I)
the amount established under subclause (I) or (II) of clause (i), as applicable, or this subclause for the previous year with respect to such rural health clinic, increased by the percentage increase in the MEI applicable to primary care services furnished as of the first day of such subsequent year; or
(II)
the limit established under paragraph (2) for such subsequent year.
(B)
A rural health clinic described in this subparagraph is a rural health clinic that—
(i)
as of December 31, 2020, was in a hospital with less than 50 beds and after such date such hospital continues to have less than 50 beds (not taking into account any increase in the number of beds pursuant to a waiver under subsection (b)(1)(A) of section 1135 during the emergency period described in subsection (g)(1)(B) of such section); and
(ii)
(I)
as of December 31, 2020, was enrolled under section 1866(j) (including temporary enrollment during such emergency period for such emergency period); or
(II)
submitted an application for enrollment under section 1866(j) (or a request for such a temporary enrollment for such emergency period) that was received not later than December 31, 2020.
(g)
(1)
(A)
Subject to paragraphs (4) and (5), in the case of physical therapy services of the type described in section 1861(p) and speech-language pathology services of the type described in such section through the application of section 1861(ll)(2), but (except as provided in paragraph (6)) not described in subsection (a)(8)(B), and physical therapy services and speech-language pathology services of such type which are furnished by a physician or as incident to physicians' services, with respect to expenses incurred in any calendar year, no more than the amount specified in paragraph (2) for the year shall be considered as incurred expenses for purposes of subsections (a) and (b). The preceding sentence shall not apply to expenses incurred with respect to services furnished after December 31, 2017.
(B)
With respect to services furnished during 2018 or a subsequent year, in the case of physical therapy services of the type described in section 1861(p), speech-language pathology services of the type described in such section through the application of section 1861(ll)(2), and physical therapy services and speech-language pathology services of such type which are furnished by a physician or as incident to physicians’ services, with respect to expenses incurred in any calendar year, any amount that is more than the amount specified in paragraph (2) for the year shall not be considered as incurred expenses for purposes of subsections (a) and (b) unless the applicable requirements of paragraph (7) are met.
(2)
The amount specified in this paragraph—
(A)
for 1999, 2000, and 2001, is $1,500, and
(B)
for a subsequent year is the amount specified in this paragraph for the preceding year increased by the percentage increase in the MEI (as defined in section 1842(i)(3)) for such subsequent year;
except that if an increase under subparagraph (B) for a year is not a multiple of $10, it shall be rounded to the nearest multiple of $10.
(3)
(A)
Subject to paragraphs (4) and (5), in the case of occupational therapy services (of the type that are described in section 1861(p) (but (except as provided in paragraph (6)) not described in subsection (a)(8)(B)) through the operation of section 1861(g) and of such type which are furnished by a physician or as incident to physicians' services), with respect to expenses incurred in any calendar year, no more than the amount specified in paragraph (2) for the year shall be considered as incurred expenses for purposes of subsections (a) and (b). The preceding sentence shall not apply to expenses incurred with respect to services furnished after December 31, 2017.
(B)
With respect to services furnished during 2018 or a subsequent year, in the case of occupational therapy services (of the type that are described in section 1861(p) through the operation of section 1861(g) and of such type which are furnished by a physician or as incident to physicians' services), with respect to expenses incurred in any calendar year, any amount that is more than the amount specified in paragraph (2) for the year shall not be considered as incurred expenses for purposes of subsections (a) and (b) unless the applicable requirements of paragraph (7) are met.
(4)
This subsection shall not apply to expenses incurred with respect to services furnished during 2000, 2001, 2002, 2004, and 2005.
(5)
(A)
With respect to expenses incurred during the period beginning on January 1, 2006, and ending on December 31, 2017, for services, the Secretary shall implement a process under which an individual enrolled under this part may, upon request of the individual or a person on behalf of the individual, obtain an exception from the uniform dollar limitation specified in paragraph (2), for services described in paragraphs (1) and (3) if the provision of such services is determined to be medically necessary and if the requirement of subparagraph (B) is met. Under such process, if the Secretary does not make a decision on such a request for an exception within 10 business days of the date of the Secretary's receipt of the request made in accordance with such requirement, the Secretary shall be deemed to have found the services to be medically necessary.
(B)
In the case of outpatient therapy services for which an exception is requested under the first sentence of subparagraph (A), the claim for such services shall contain an appropriate modifier (such as the KX modifier used as of the date of the enactment of this subparagraph) indicating that such services are medically necessary as justified by appropriate documentation in the medical record involved.
(C)
(i)
In applying this paragraph with respect to a request for an exception with respect to expenses that would be incurred for outpatient therapy services (including services described in subsection (a)(8)(B)) that would exceed the threshold described in clause (ii) for a year, the request for such an exception, for services furnished on or after October 1, 2012, shall be subject to a manual medical review process that, subject to subparagraph (E), is similar to the manual medical review process used for certain exceptions under this paragraph in 2006.
(ii)
The threshold under this clause for a year is $3,700. Such threshold shall be applied separately—
(I)
for physical therapy services and speech-language pathology services; and
(II)
for occupational therapy services.
[Subparagraph (D) was redesignated as paragraph (8) and moved to follow paragraph (7) of this subsection by section 50202(3)(A) of Public Law 115–123.]
(E)
(i)
In place of the manual medical review process under subparagraph (C)(i), the Secretary shall implement a process for medical review under this subparagraph under which the Secretary shall identify and conduct medical review for services described in subparagraph (C)(i) furnished by a provider of services or supplier (in this subparagraph referred to as a “therapy provider”) using such factors as the Secretary determines to be appropriate.
(ii)
Such factors may include the following:
(I)
The therapy provider has had a high claims denial percentage for therapy services under this part or is less compliant with applicable requirements under this title.
(II)
The therapy provider has a pattern of billing for therapy services under this part that is aberrant compared to peers or otherwise has questionable billing practices for such services, such as billing medically unlikely units of services in a day.
(III)
The therapy provider is newly enrolled under this title or has not previously furnished therapy services under this part.
(IV)
The services are furnished to treat a type of medical condition.
(V)
The therapy provider is part of group that includes another therapy provider identified using the factors determined under this subparagraph.
(iii)
For purposes of carrying out this subparagraph, the Secretary shall provide for the transfer, from the Federal Supplementary Medical Insurance Trust Fund under section 1841, of $5,000,000 to the Centers for Medicare & Medicaid Services Program Management Account for fiscal years 2015 and 2016, to remain available until expended. Such funds may not be used by a contractor under section 1893(h) for medical reviews under this subparagraph.
(iv)
The targeted review process under this subparagraph shall not apply to services for which expenses are incurred beyond the period for which the exceptions process under subparagraph (A) is implemented, except as such process is applied under paragraph (7)(B).
(6)
(A)
In applying paragraphs (1) and (3) to services furnished during the period beginning not later than October 1, 2012, and ending on December 31, 2017, the exclusion of services described in subsection (a)(8)(B) from the uniform dollar limitation specified in paragraph (2) shall not apply to such services furnished during 2012 through 2017.
(B)
(i)
With respect to outpatient therapy services furnished beginning on or after January 1, 2013, and before January 1, 2014, for which payment is made under section 1834(g), the Secretary shall count toward the uniform dollar limitations described in paragraphs (1) and (3) and the threshold described in paragraph (5)(C) the amount that would be payable under this part if such services were paid under section 1834(k)(1)(B) instead of being paid under section 1834(g).
(ii)
Nothing in clause (i) shall be construed as changing the method of payment for outpatient therapy services under section 1834(g).
(7)
For purposes of paragraphs (1)(B) and (3)(B), with respect to services described in such paragraphs, the requirements described in this paragraph are as follows:
(A)

Inclusion of appropriate modifier.—
The claim for such services contains an appropriate modifier (such as the KX modifier described in paragraph (5)(B)) indicating that such services are medically necessary as justified by appropriate documentation in the medical record involved.
(B)

Targeted medical review for certain services above threshold.—
(i)

In general.—
In the case where expenses that would be incurred for such services would exceed the threshold described in clause (ii) for the year, such services shall be subject to the process for medical review implemented under paragraph (5)(E).
(ii)

Threshold.—
The threshold under this clause for—
(I)
a year before 2028, is $3,000;
(II)
2028, is the amount specified in subclause (I) increased by the percentage increase in the MEI (as defined in section 1842(i)(3)) for 2028; and
(III)
a subsequent year, is the amount specified in this clause for the preceding year increased by the percentage increase in the MEI (as defined in section 1842(i)(3)) for such subsequent year;
except that if an increase under subclause (II) or (III) for a year is not a multiple of $10, it shall be rounded to the nearest multiple of $10.
(iii)

Application.—
The threshold under clause (ii) shall be applied separately—
(I)
for physical therapy services and speech-language pathology services; and
(II)
for occupational therapy services.
(iv)

Funding.—
For purposes of carrying out this subparagraph, the Secretary shall provide for the transfer, from the Federal Supplementary Medical Insurance Trust Fund under section 1841 to the Centers for Medicare & Medicaid Services Program Management Account, of $5,000,000 for each fiscal year beginning with fiscal year 2018, to remain available until expended. Such funds may not be used by a contractor under section 1893(h) for medical reviews under this subparagraph.
(8)
With respect to services furnished on or after January 1, 2013, where payment may not be made as a result of application of paragraphs (1) and (3), section 1879 shall apply in the same manner as such section applies to a denial that is made by reason of section 1862(a)(1).
(h)
(1)
(A)
Subject to section 1834(d)(1), the Secretary shall establish fee schedules for clinical diagnostic laboratory tests (including prostate cancer screening tests under section 1861(oo) consisting of prostate-specific antigen blood tests) for which payment is made under this part, other than such tests performed by a provider of services for an inpatient of such provider.
(B)
In the case of clinical diagnostic laboratory tests performed by a physician or by a laboratory (other than tests performed by a qualified hospital laboratory (as defined in subparagraph (D)) for outpatients of such hospital), the fee schedules established under subparagraph (A) shall be established on a regional, statewide, or carrier service area basis (as the Secretary may determine to be appropriate) for tests furnished on or after July 1, 1984.
(C)
In the case of clinical diagnostic laboratory tests performed by a qualified hospital laboratory (as defined in subparagraph (D)) for outpatients of such hospital, the fee schedules established under subparagraph (A) shall be established on a regional, statewide, or carrier service area basis (as the Secretary may determine to be appropriate) for tests furnished on or after July 1, 1984.
(D)
In this subsection, the term “qualified hospital laboratory” means a hospital laboratory, in a sole community hospital (as defined in section 1886(d)(5)(D)(iii)), which provides some clinical diagnostic laboratory tests 24 hours a day in order to serve a hospital emergency room which is available to provide services 24 hours a day and 7 days a week.
(2)
(A)
(i)
Except as provided in clause (v), subparagraph (B), and paragraph (4), the Secretary shall set the fee schedules at 60 percent (or, in the case of a test performed by a qualified hospital laboratory (as defined in paragraph (1)(D)) for outpatients of such hospital, 62 percent) of the prevailing charge level determined pursuant to the third and fourth sentences of section 1842(b)(3) for similar clinical diagnostic laboratory tests for the applicable region, State, or area for the 12-month period beginning July 1, 1984, adjusted annually (to become effective on January 1 of each year) by, subject to clause (iv), a percentage increase or decrease equal to the percentage increase or decrease in the Consumer Price Index for All Urban Consumers (United States city average) minus, for each of the years 2009 and 2010, 0.5 percentage points, and, for tests furnished before the date of enactment of section 1834A, subject to such other adjustments as the Secretary determines are justified by technological changes.
(ii)
Notwithstanding clause (i)—
(I)
any change in the fee schedules which would have become effective under this subsection for tests furnished on or after January 1, 1988, shall not be effective for tests furnished during the 3-month period beginning on January 1, 1988,
(II)
the Secretary shall not adjust the fee schedules under clause (i) to take into account any increase in the consumer price index for 1988,
(III)
the annual adjustment in the fee schedules determined under clause (i) for each of the years 1991, 1992, and 1993 shall be 2 percent, and
(IV)
the annual adjustment in the fee schedules determined under clause (i) for each of the years 1994 and 1995, 1998 through 2002, and 2004 through 2008 shall be 0 percent.
(iii)
In establishing fee schedules under clause (i) with respect to automated tests and tests (other than cytopathology tests) which before July 1, 1984, the Secretary made subject to a limit based on lowest charge levels under the sixth sentence of section 1842(b)(3) performed after March 31, 1988, the Secretary shall reduce by 8.3 percent the fee schedules otherwise established for 1988, and such reduced fee schedules shall serve as the base for 1989 and subsequent years.
(iv)
After determining the adjustment to the fee schedules under clause (i), the Secretary shall reduce such adjustment—
(I)
for 2011 and each subsequent year, by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II); and
(II)
for each of 2011 through 2015, by 1.75 percentage points.
Subclause (I) shall not apply in a year where the adjustment to the fee schedules determined under clause (i) is 0.0 or a percentage decrease for a year. The application of the productivity adjustment under subclause (I) shall not result in an adjustment to the fee schedules under clause (i) being less than 0.0 for a year. The application of subclause (II) may result in an adjustment to the fee schedules under clause (i) being less than 0.0 for a year, and may result in payment rates for a year being less than such payment rates for the preceding year.
(v)
The Secretary shall reduce by 2 percent the fee schedules otherwise determined under clause (i) for 2013, and such reduced fee schedules shall serve as the base for 2014 and subsequent years.
(B)
The Secretary may make further adjustments or exceptions to the fee schedules to assure adequate reimbursement of (i) emergency laboratory tests needed for the provision of bona fide emergency services, and (ii) certain low volume high-cost tests where highly sophisticated equipment or extremely skilled personnel are necessary to assure quality.
(3)
In addition to the amounts provided under the fee schedules (for tests furnished before January 1, 2017) or under section 1834A (for tests furnished on or after January 1, 2017), subject to subsection (b)(5) of such section, the Secretary shall provide for and establish (A) a nominal fee to cover the appropriate costs in collecting the sample on which a clinical diagnostic laboratory test was performed and for which payment is made under this part, except that not more than one such fee may be provided under this paragraph with respect to samples collected in the same encounter, and (B) a fee to cover the transportation and personnel expenses for trained personnel to travel to the location of an individual to collect the sample, except that such a fee may be provided only with respect to an individual who is homebound or an inpatient in an inpatient facility (other than a hospital). In establishing a fee to cover the transportation and personnel expenses for trained personnel to travel to the location of an individual to collect a sample, the Secretary shall provide a method for computing the fee based on the number of miles traveled and the personnel costs associated with the collection of each individual sample, but the Secretary shall only be required to apply such method in the case of tests furnished during the period beginning on April 1, 1989, and ending on December 31, 1990, by a laboratory that establishes to the satisfaction of the Secretary (based on data for the 12-month period ending June 30, 1988) that (i) the laboratory is dependent upon payments under this title for at least 80 percent of its collected revenues for clinical diagnostic laboratory tests, (ii) at least 85 percent of its gross revenues for such tests are attributable to tests performed with respect to individuals who are homebound or who are residents in a nursing facility, and (iii) the laboratory provided such tests for residents in nursing facilities representing at least 20 percent of the number of such facilities in the State in which the laboratory is located.
(4)
(A)
In establishing any fee schedule under this subsection, the Secretary may provide for an adjustment to take into account, with respect to the portion of the expenses of clinical diagnostic laboratory tests attributable to wages, the relative difference between a region's or local area's wage rates and the wage rate presumed in the data on which the schedule is based.
(B)
For purposes of subsections (a)(1)(D)(i) and (a)(2)(D)(i), the limitation amount for a clinical diagnostic laboratory test performed—
(i)
on or after July 1, 1986, and before April 1, 1988, is equal to 115 percent of the median of all the fee schedules established for that test for that laboratory setting under paragraph (1),
(ii)
after March 31, 1988, and before January 1, 1990, is equal to the median of all the fee schedules established for that test for that laboratory setting under paragraph (1),
(iii)
after December 31, 1989, and before January 1, 1991, is equal to 93 percent of the median of all the fee schedules established for that test for that laboratory setting under paragraph (1),
(iv)
after December 31, 1990, and before January 1, 1994, is equal to 88 percent of such median,
(v)
after December 31, 1993, and before January 1, 1995, is equal to 84 percent of such median,
(vi)
after December 31, 1994, and before January 1, 1996, is equal to 80 percent of such median,
(vii)
after December 31, 1995, and before January 1, 1998, is equal to 76 percent of such median, and
(viii)
after December 31, 1997, is equal to 74 percent of such median (or 100 percent of such median in the case of a clinical diagnostic laboratory test performed on or after January 1, 2001, that the Secretary determines is a new test for which no limitation amount has previously been established under this subparagraph).
(5)
(A)
In the case of a bill or request for payment for a clinical diagnostic laboratory test for which payment may otherwise be made under this part on an assignment-related basis or under a provider agreement under section 1866, payment may be made only to the person or entity which performed or supervised the performance of such test; except that—
(i)
if a physician performed or supervised the performance of such test, payment may be made to another physician with whom he shares his practice,
(ii)
in the case of a test performed at the request of a laboratory by another laboratory, payment may be made to the referring laboratory but only if—
(I)
the referring laboratory is located in, or is part of, a rural hospital,
(II)
the referring laboratory is wholly owned by the entity performing such test, the referring laboratory wholly owns the entity performing such test, or both the referring laboratory and the entity performing such test are wholly-owned by a third entity, or
(III)
not more than 30 percent of the clinical diagnostic laboratory tests for which such referring laboratory (but not including a laboratory described in subclause (II)), receives requests for testing during the year in which the test is performed are performed by another laboratory , and
(iii)
in the case of a clinical diagnostic laboratory test provided under an arrangement (as defined in section 1861(w)(1)) made by a hospital, critical access hospital, or skilled nursing facility, payment shall be made to the hospital or skilled nursing facility.
(B)
In the case of such a bill or request for payment for a clinical diagnostic laboratory test for which payment may otherwise be made under this part, and which is not described in subparagraph (A), payment may be made to the beneficiary only on the basis of the itemized bill of the person or entity which performed or supervised the performance of the test.
(C)
Payment for a clinical diagnostic laboratory test, including a test performed in a physician's office but excluding a test performed by a rural health clinic may only be made on an assignment-related basis or to a provider of services with an agreement in effect under section 1866.
(D)
A person may not bill for a clinical diagnostic laboratory test, including a test performed in a physician's office but excluding a test performed by a rural health clinic, other than on an assignment-related basis. If a person knowingly and willfully and on a repeated basis bills for a clinical diagnostic laboratory test in violation of the previous sentence, the Secretary may apply sanctions against the person in the same manner as the Secretary may apply sanctions against a physician in accordance with paragraph (2) of section 1842(j) in the same manner such paragraphs apply with respect to a physician. Paragraph (4) of such section shall apply in this subparagraph in the same manner as such paragraph applies to such section.
(6)
For tests furnished before January 1, 2017, in the case of any diagnostic laboratory test payment for which is not made on the basis of a fee schedule under paragraph (1), the Secretary may establish a payment rate which is acceptable to the person or entity performing the test and which would be considered the full charge for such tests. Such negotiated rate shall be limited to an amount not in excess of the total payment that would have been made for the services in the absence of such rate.
(7)
Notwithstanding paragraphs (1) and (4) and section 1834A, the Secretary shall establish a national minimum payment amount under this part for a diagnostic or screening pap smear laboratory test (including all cervical cancer screening technologies that have been approved by the Food and Drug Administration as a primary screening method for detection of cervical cancer) equal to $14.60 for tests furnished in 2000. For such tests furnished in subsequent years, such national minimum payment amount shall be adjusted annually as provided in paragraph (2).
(8)
(A)
The Secretary shall establish by regulation procedures for determining the basis for, and amount of, payment under this subsection for any clinical diagnostic laboratory test with respect to which a new or substantially revised HCPCS code is assigned on or after January 1, 2005 (in this paragraph referred to as “new tests”).
(B)
Determinations under subparagraph (A) shall be made only after the Secretary—
(i)
makes available to the public (through an Internet website and other appropriate mechanisms) a list that includes any such test for which establishment of a payment amount under this subsection is being considered for a year;
(ii)
on the same day such list is made available, causes to have published in the Federal Register notice of a meeting to receive comments and recommendations (and data on which recommendations are based) from the public on the appropriate basis under this subsection for establishing payment amounts for the tests on such list;
(iii)
not less than 30 days after publication of such notice convenes a meeting, that includes representatives of officials of the Centers for Medicare & Medicaid Services involved in determining payment amounts, to receive such comments and recommendations (and data on which the recommendations are based);
(iv)
taking into account the comments and recommendations (and accompanying data) received at such meeting, develops and makes available to the public (through an Internet website and other appropriate mechanisms) a list of proposed determinations with respect to the appropriate basis for establishing a payment amount under this subsection for each such code, together with an explanation of the reasons for each such determination, the data on which the determinations are based, and a request for public written comments on the proposed determination; and
(v)
taking into account the comments received during the public comment period, develops and makes available to the public (through an Internet website and other appropriate mechanisms) a list of final determinations of the payment amounts for such tests under this subsection, together with the rationale for each such determination, the data on which the determinations are based, and responses to comments and suggestions received from the public.
(C)
Under the procedures established pursuant to subparagraph (A), the Secretary shall—
(i)
set forth the criteria for making determinations under subparagraph (A); and
(ii)
make available to the public the data (other than proprietary data) considered in making such determinations.
(D)
The Secretary may convene such further public meetings to receive public comments on payment amounts for new tests under this subsection as the Secretary deems appropriate.
(E)
For purposes of this paragraph:
(i)
The term “HCPCS” refers to the Health Care Procedure Coding System.
(ii)
A code shall be considered to be “substantially revised” if there is a substantive change to the definition of the test or procedure to which the code applies (such as a new analyte or a new methodology for measuring an existing analyte-specific test).
(9)
Notwithstanding any other provision in this part, in the case of any diagnostic laboratory test for HbA1c that is labeled by the Food and Drug Administration for home use and is furnished on or after April 1, 2008, the payment rate for such test shall be the payment rate established under this part for a glycated hemoglobin test (identified as of October 1, 2007, by HCPCS code 83036 (and any succeeding codes)).
(i)
(1)
The Secretary shall, in consultation with appropriate medical organizations—
(A)
specify those surgical procedures which are appropriately (when considered in terms of the proper utilization of hospital inpatient facilities) performed on an inpatient basis in a hospital but which also can be performed safely on an ambulatory basis in an ambulatory surgical center (meeting the standards specified under section 1832(a)(2)(F)(i)), critical access hospital, or hospital outpatient department, and
(B)
specify those surgical procedures which are appropriately (when considered in terms of the proper utilization of hospital inpatient facilities) performed on an inpatient basis in a hospital but which also can be performed safely on an ambulatory basis in a physician's office.
The lists of procedures established under subparagraphs (A) and (B) shall be reviewed and updated not less often than every 2 years, in consultation with appropriate trade and professional organizations.
(2)
(A)
For services furnished prior to the implementation of the system described in subparagraph (D), subject to subparagraph (E), the amount of payment to be made for facility services furnished in connection with a surgical procedure specified pursuant to paragraph (1)(A) and furnished to an individual in an ambulatory surgical center described in such paragraph shall be equal to 80 percent of a standard overhead amount established by the Secretary (with respect to each such procedure) on the basis of the Secretary's estimate of a fair fee which—
(i)
takes into account the costs incurred by such centers, or classes of centers, generally in providing services furnished in connection with the performance of such procedure, as determined in accordance with a survey (based upon a representative sample of procedures and facilities) of the actual audited costs incurred by such centers in providing such services,
(ii)
takes such costs into account in such a manner as will assure that the performance of the procedure in such a center will result in substantially less amounts paid under this title than would have been paid if the procedure had been performed on an inpatient basis in a hospital, and
(iii)
in the case of insertion of an intraocular lens during or subsequent to cataract surgery includes payment which is reasonable and related to the cost of acquiring the class of lens involved.
Each amount so established shall be reviewed and updated not later than July 1, 1987, and annually thereafter to take account of varying conditions in different areas.
(B)
The amount of payment to be made under this part for facility services furnished, in connection with a surgical procedure specified pursuant to paragraph (1)(B), in a physician's office shall be equal to 80 percent of a standard overhead amount established by the Secretary (with respect to each such procedure) on the basis of the Secretary's estimate of a fair fee which—
(i)
takes into account additional costs, not usually included in the professional fee, incurred by physicians in securing, maintaining, and staffing the facilities and ancillary services appropriate for the performance of such procedure in the physician's office, and
(ii)
takes such items into account in such a manner which will assure that the performance of such procedure in the physician's office will result in substantially less amounts paid under this title than would have been paid if the services had been furnished on an inpatient basis in a hospital.
Each amount so established shall be reviewed and updated not later than July 1, 1987, and annually thereafter to take account of varying conditions in different areas.
(C)
(i)
Notwithstanding the second sentence of each of subparagraphs (A) and (B), except as otherwise specified in clauses (ii), (iii), and (iv), if the Secretary has not updated amounts established under such subparagraphs or under subparagraph (D), with respect to facility services furnished during a fiscal year (beginning with fiscal year 1986 or a calendar year (beginning with 2006)), such amounts shall be increased 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.
(ii)
In each of the fiscal years 1998 through 2002, the increase under this subparagraph shall be reduced (but not below zero) by 2.0 percentage points.
(iii)
In fiscal year 2004, beginning with April 1, 2004, the increase under this subparagraph shall be the Consumer Price Index for all urban consumers (U.S. city average) as estimated by the Secretary for the 12-month period ending with March 31, 2003, minus 3.0 percentage points.
(iv)
In fiscal year 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the increase under this subparagraph shall be 0 percent.
(D)
(i)
Taking into account the recommendations in the report under section 626(d) of Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the Secretary shall implement a revised payment system for payment of surgical services furnished in ambulatory surgical centers.
(ii)
In the year the system described in clause (i) is implemented, such system shall be designed to result in the same aggregate amount of expenditures for such services as would be made if this subparagraph did not apply, as estimated by the Secretary and taking into account reduced expenditures that would apply if subparagraph (E) were to continue to apply, as estimated by the Secretary.
(iii)
The Secretary shall implement the system described in clause (i) for periods in a manner so that it is first effective beginning on or after January 1, 2006, and not later than January 1, 2008.
(iv)
The Secretary may implement such system in a manner so as to provide for a reduction in any annual update for failure to report on quality measures in accordance with paragraph (7).
(v)19
In implementing the system described in clause (i) for 2011 and each subsequent year, any annual update under such system for the year, after application of clause (iv), shall be reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II). The application of the preceding sentence may result in such update being less than 0.0 for a year, and may result in payment rates under the system described in clause (i) for a year being less than such payment rates for the preceding year.
^{19}
Margin so in law.
(vi)
There shall be no administrative or judicial review under section 1869, 1878, or otherwise, of the classification system, the relative weights, payment amounts, and the geographic adjustment factor, if any, under this subparagraph.
(E)
With respect to surgical procedures furnished on or after January 1, 2007, and before the effective date of the implementation of a revised payment system under subparagraph (D), if—
(i)
the standard overhead amount under subparagraph (A) for a facility service for such procedure, without the application of any geographic adjustment, exceeds
(ii)
the Medicare OPD fee schedule amount established under the prospective payment system for hospital outpatient department services under paragraph (3)(D) of section 1833(t) for such service for such year, determined without regard to geographic adjustment under paragraph (2)(D) of such section,
the Secretary shall substitute under subparagraph (A) the amount described in clause (ii) for the standard overhead amount for such service referred to in clause (i).
(3)
(A)
The aggregate amount of the payments to be made under this part for outpatient hospital facility services or critical access hospital services furnished before January 1, 1999, in connection with surgical procedures specified under paragraph (1)(A) shall be equal to the lesser of—
(i)
the amount determined with respect to such services under subsection (a)(2)(B); or
(ii)
the blend amount (described in subparagraph (B)).
(B)
(i)
The blend amount for a cost reporting period is the sum of—
(I)
the cost proportion (as defined in clause (ii)(I)) of the amount described in subparagraph (A)(i), and
(II)
the ASC proportion (as defined in clause (ii)(II)) of the standard overhead amount payable with respect to the same surgical procedure as if it were provided in an ambulatory surgical center in the same area, as determined under paragraph (2)(A), less the amount a provider may charge as described in clause (ii) of section 1866(a)(2)(A).
(ii)
Subject to paragraph (4), in this paragraph:
(I)
The term “cost proportion” means 75 percent for cost reporting periods beginning in fiscal year 1988, 50 percent for portions of cost reporting periods beginning on or after October 1, 1988, and ending on or before December 31, 1990, and 42 percent for portions of cost reporting periods beginning on or after January 1, 1991.
(II)
The term “ASC proportion” means 25 percent for cost reporting periods beginning in fiscal year 1988, 50 percent for portions of cost reporting periods beginning on or after October 1, 1988, and ending on or before December 31, 1990, and 58 percent for portions of cost reporting periods beginning on or after January 1, 1991.
(4)
(A)
In the case of a hospital that—
(i)
makes application to the Secretary and demonstrates that it specializes in eye services or eye and ear services (as determined by the Secretary),
(ii)
receives more than 30 percent of its total revenues from outpatient services, and
(iii)
on October 1, 1987—
(I)
was an eye specialty hospital or an eye and ear specialty hospital, or
(II)
was operated as an eye or eye and ear unit (as defined in subparagraph (B)) of a general acute care hospital which, on the date of the application described in clause (i), operates less than 20 percent of the beds that the hospital operated on October 1, 1987, and has sold or otherwise disposed of a substantial portion of the hospital's other acute care operations,
the cost proportion and ASC proportion in effect under subclauses (I) and (II) of paragraph (3)(B)(ii) for cost reporting periods beginning in fiscal year 1988 shall remain in effect for cost reporting periods beginning on or after October 1, 1988, and before January 1, 1995.
(B)
For purposes of this subparagraph (A)(iii)(II), the term “eye or eye and ear unit” means a physically separate or distinct unit containing separate surgical suites devoted solely to eye or eye and ear services.
(5)
(A)
The Secretary is authorized to provide by regulations that in the case of a surgical procedure, specified by the Secretary pursuant to paragraph (1)(A), performed in an ambulatory surgical center described in such paragraph, there shall be paid (in lieu of any amounts otherwise payable under this part) with respect to the facility services furnished by such center and with respect to all related services (including physicians' services, laboratory, X-ray, and diagnostic services) a single all-inclusive fee established pursuant to subparagraph (B), if all parties furnishing all such services agree to accept such fee (to be divided among the parties involved in such manner as they shall have previously agreed upon) as full payment for the services furnished.
(B)
In implementing this paragraph, the Secretary shall establish with respect to each surgical procedure specified pursuant to paragraph (1)(A) the amount of the all-inclusive fee for such procedure, taking into account such factors as may be appropriate. The amount so established with respect to any surgical procedure shall be reviewed periodically and may be adjusted by the Secretary, when appropriate, to take account of varying conditions in different areas.
(6)
Any person, including a facility having an agreement under section 1832(a)(2)(F)(i), who knowingly and willfully presents, or causes to be presented, a bill or request for payment, for an intraocular lens inserted during or subsequent to cataract surgery for which payment may be made under paragraph (2)(A)(iii), is subject to a civil money penalty of not to exceed $2,000. 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 such provisions apply to a penalty or proceeding under section 1128A(a).
(7)
(A)
For purposes of paragraph (2)(D)(iv), the Secretary may provide, in the case of an ambulatory surgical center that does not submit, to the Secretary in accordance with this paragraph, data required to be submitted on measures selected under this paragraph with respect to a year, any annual increase provided under the system established under paragraph (2)(D) for such year shall be reduced by 2.0 percentage points. A reduction under this subparagraph shall apply only with respect to the year involved and the Secretary shall not take into account such reduction in computing any annual increase factor for a subsequent year.
(B)
Except as the Secretary may otherwise provide, the provisions of subparagraphs (B), (C), (D), and (E) of paragraph (17) of section 1833(t) shall apply with respect to services of ambulatory surgical centers under this paragraph in a similar manner to the manner in which they apply under such paragraph and, for purposes of this subparagraph, any reference to a hospital, outpatient setting, or outpatient hospital services is deemed a reference to an ambulatory surgical center, the setting of such a center, or services of such a center, respectively.
(8)
The Secretary shall conduct a similar type of review as required under paragraph (22) of section 1833(t)), including the second sentence of subparagraph (C) of such paragraph, to payment for services under this subsection, and make such revisions under this paragraph, in an appropriate manner (as determined by the Secretary).
(9)
In the case of a part B rebatable drug (as defined in paragraph (2) of section 1847A(i)) for which payment under this subsection is not packaged into a payment for a service furnished on or after April 1, 2023, under the revised payment system under this subsection, in lieu of calculation of coinsurance and the amount of payment otherwise applicable under this subsection, the provisions of section 1847A(i)(5) and paragraph (1)(EE) of subsection (a), shall, as determined appropriate by the Secretary, apply under this subsection in the same manner as such provisions of section 1847A(i)(5) and subsection (a) apply under such section and subsection.
(10)

Temporary additional payments for non-opioid treatments for pain relief.—
(A)

In general.—
In the case of surgical services furnished on or after January 1, 2025, and before January 1, 2028, the payment system described in paragraph (2)(D)(i) shall provide, in a budget-neutral manner, for an additional payment for a non-opioid treatment for pain relief (as defined in clause (iv) of subsection (t)(16)(G)) furnished as part of such services in the amount specified in clause (ii) of such subsection, subject to the limitation under clause (iii) of such subsection.
(B)

Transition.—
A drug or biological that meets the requirements of section 416.174 of title 42, Code of Federal Regulations (or any successor regulation) and is a non-opioid treatment for pain relief (as defined in clause (iv) of subsection (t)(16)(G)) shall receive additional payment in the amount specified in clause (ii) of such subsection, subject to the limitation under clause (iii) of such subsection.
(j)
Whenever a final determination is made that the amount of payment made under this part either to a provider of services or to another person pursuant to an assignment under section 1842(b)(3)(B)(ii) was in excess of or less than the amount of payment that is due, and payment of such excess or deficit is not made (or effected by offset) within 30 days of the date of the determination, interest shall accrue on the balance of such excess or deficit not paid or offset (to the extent that the balance is owed by or owing to the provider) at a rate determined in accordance with the regulations of the Secretary of the Treasury applicable to charges for late payments (or, in the case of such a determination made with respect to a payment made on or after the date of the enactment of the CARES Act and during the period at the end of the emergency sentence described in section 1135(g)(1)(B) under the program described in section 421.214 of title 42, Code of Federal Regulations (or any successor regulation), at a rate of 4 percent).
(k)
With respect to services described in section 1861(s)(10)(B), the Secretary may provide, instead of the amount of payment otherwise provided under this part, for payment of such an amount or amounts as reasonably reflects the general cost of efficiently providing such services.
(l)
(1)
(A)
The Secretary shall establish a fee schedule for services of certified registered nurse anesthetists under section 1861(s)(11).
(B)
In establishing the fee schedule under this paragraph the Secretary may utilize a system of time units, a system of base and time units, or any appropriate methodology.
(C)
The provisions of this subsection shall not apply to certain services furnished in certain hospitals in rural areas under the provisions of section 9320(k) of the Omnibus Budget Reconciliation Act of 1986, as amended by section 6132 of the Omnibus Budget Reconciliation Act of 1989.
(2)
Except as provided in paragraph (3), the fee schedule established under paragraph (1) shall be initially based on audited data from cost reporting periods ending in fiscal year 1985 and such other data as the Secretary determines necessary.
(3)
(A)
In establishing the initial fee schedule for those services, the Secretary shall adjust the fee schedule to the extent necessary to ensure that the estimated total amount which will be paid under this title for those services plus applicable coinsurance in 1989 will equal the estimated total amount which would be paid under this title for those services in 1989 if the services were included as inpatient hospital services and payment for such services was made under part A in the same manner as payment was made in fiscal year 1987, adjusted to take into account changes in prices and technology relating to the administration of anesthesia.
(B)
The Secretary shall also reduce the prevailing charge of physicians for medical direction of a certified registered nurse anesthetist, or the fee schedule for services of certified registered nurse anesthetists, or both, to the extent necessary to ensure that the estimated total amount which will be paid under this title plus applicable coinsurance for such medical direction and such services in 1989 and 1990 will not exceed the estimated total amount which would have been paid plus applicable coinsurance but for the enactment of the amendments made by section 9320 of the Omnibus Budget Reconciliation Act of 1986. A reduced prevailing charge under this subparagraph shall become the prevailing charge but for subsequent years for purposes of applying the economic index under the fourth sentence of section 1842(b)(3).
(4)
(A)
Except as provided in subparagraphs (C) and (D), in determining the amount paid under the fee schedule under this subsection for services furnished on or after January 1, 1991, by a certified registered nurse anesthetist who is not medically directed—
(i)
the conversion factor shall be—
(I)
for services furnished in 1991, $15.50,
(II)
for services furnished in 1992, $15.75,
(III)
for services furnished in 1993, $16.00,
(IV)
for services furnished in 1994, $16.25,
(V)
for services furnished in 1995, $16.50,
(VI)
for services furnished in 1996, $16.75, and
(VII)
for services furnished in calendar years after 1996, the previous year's conversion factor increased by the update determined under section 1848(d) for physician anesthesia services for that year;
(ii)
the payment areas to be used shall be the fee schedule areas used under section 1848 (or, in the case of services furnished during 1991, the localities used under section 1842(b)) for purposes of computing payments for physicians' services that are anesthesia services;
(iii)
the geographic adjustment factors to be applied to the conversion factor under clause (i) for services in a fee schedule area or locality is—
(I)
in the case of services furnished in 1991, the geographic work index value and the geographic practice cost index value specified in section 1842(q)(1)(B) for physicians' services that are anesthesia services furnished in the area or locality, and
(II)
in the case of services furnished after 1991, the geographic work index value, the geographic practice cost index value, and the geographic malpractice index value used for determining payments for physicians' services that are anesthesia services under section 1848,
with 70 percent of the conversion factor treated as attributable to work and 30 percent as attributable to overhead for services furnished in 1991 (and the portions attributable to work, practice expenses, and malpractice expenses in 1992 and thereafter being the same as is applied under section 1848).
(B)
(i)
Except as provided in clause (ii) and subparagraph (D), in determining the amount paid under the fee schedule under this subsection for services furnished on or after January 1, 1991, and before January 1, 1994, by a certified registered nurse anesthetist who is medically directed, the Secretary shall apply the same methodology specified in subparagraph (A).
(ii)
The conversion factor used under clause (i) shall be—
(I)
for services furnished in 1991, $10.50,
(II)
for services furnished in 1992, $10.75, and
(III)
for services furnished in 1993, $11.00.
(iii)
In the case of services of a certified registered nurse anesthetist who is medically directed or medically supervised by a physician which are furnished on or after January 1, 1994, the fee schedule amount shall be one-half of the amount described in section 1848(a)(5)(B) with respect to the physician.
(C)
Notwithstanding subclauses (I) through (V) of subparagraph (A)(i)—
(i)
in the case of a 1990 conversion factor that is greater than $16.50, the conversion factor for a calendar year after 1990 and before 1996 shall be the 1990 conversion factor reduced by the product of the last digit of the calendar year and one-fifth of the amount by which the 1990 conversion factor exceeds $16.50; and
(ii)
in the case of a 1990 conversion factor that is greater than $15.49 but less than $16.51, the conversion factor for a calendar year after 1990 and before 1996 shall be the greater of—
(I)
the 1990 conversion factor, or
(II)
the conversion factor specified in subparagraph (A)(i) for the year involved.
(D)
Notwithstanding subparagraph (C), in no case may the conversion factor used to determine payment for services in a fee schedule area or locality under this subsection, as adjusted by the adjustment factors specified in subparagraphs (A)(iii), exceed the conversion factor used to determine the amount paid for physicians' services that are anesthesia services in the area or locality.
(5)
(A)
Payment for the services of a certified registered nurse anesthetist (for which payment may otherwise be made under this part) may be made on the basis of a claim or request for payment presented by the certified registered nurse anesthetist furnishing such services, or by a hospital, critical access hospital, physician, group practice, or ambulatory surgical center with which the certified registered nurse anesthetist furnishing such services has an employment or contractual relationship that provides for payment to be made under this part for such services to such hospital, critical access hospital, physician, group practice, or ambulatory surgical center.
(B)
No hospital or critical access hospital that presents a claim or request for payment for services of a certified nurse anesthetist under this part may treat any uncollected coinsurance amount imposed under this part with respect to such services as a bad debt of such hospital or critical access hospital for purposes of this title.
(6)
If an adjustment under paragraph (3)(B) results in a reduction in the reasonable charge for a physicians' service and a nonparticipating physician furnishes the service to an individual entitled to benefits under this part after the effective date of the reduction, the physician's actual charge is subject to a limit under section 1842(j)(1)(D).
(m)
(1)
In the case of physicians' services furnished in a year to an individual, who is covered under the insurance program established by this part and who incurs expenses for such services, in an area that is designated (under section 332(a)(1)(A) of the Public Health Service Act) as a health professional shortage area as identified by the Secretary prior to the beginning of such year, in addition to the amount otherwise paid under this part, there also shall be paid to the physician (or to an employer or facility in the cases described in clause (A) of section 1842(b)(6)) (on a monthly or quarterly basis) from the Federal Supplementary Medical Insurance Trust Fund an amount equal to 10 percent of the payment amount for the service under this part.
(2)
For each health professional shortage area identified in paragraph (1) that consists of an entire county, the Secretary shall provide for the additional payment under paragraph (1) without any requirement on the physician to identify the health professional shortage area involved. The Secretary may implement the previous sentence using the method specified in subsection (u)(4)(C).
(3)
The Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services a list of the health professional shortage areas identified in paragraph (1) that consist of a partial county to facilitate the additional payment under paragraph (1) in such areas.
(4)
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, respecting—
(A)
the identification of a county or area;
(B)
the assignment of a specialty of any physician under this paragraph;
(C)
the assignment of a physician to a county under this subsection; or
(D)
the assignment of a postal ZIP Code to a county or other area under this subsection.
(n)
(1)
(A)
The aggregate amount of the payments to be made for all or part of a cost reporting period for services described in subsection (a)(2)(E)(i) furnished under this part on or after October 1, 1988, and before January 1, 1999, and for services described in subsection (a)(2)(E)(ii) furnished under this part on or after October 1, 1989, and before January 1, 1999, shall be equal to the lesser of—
(i)
the amount determined with respect to such services under subsection (a)(2)(B), or
(ii)
the blend amount for radiology services and diagnostic procedures determined in accordance with subparagraph (B).
(B)
(i)
The blend amount for radiology services and diagnostic procedures for a cost reporting period is the sum of—
(I)
the cost proportion (as defined in clause (ii)) of the amount described in subparagraph (A)(i); and
(II)
the charge proportion (as defined in clause (ii)(II)) of 62 percent (for services described in subsection (a)(2)(E)(i)), or (for procedures described in subsection (a)(2)(E)(ii)), 42 percent or such other percent established by the Secretary (or carriers acting pursuant to guidelines issued by the Secretary) based on prevailing charges established with actual charge data, of the prevailing charge or (for services described in subsection (a)(2)(E)(i) furnished on or after January 1, 1989) the fee schedule amount established for participating physicians for the same services as if they were furnished in a physician's office in the same locality as determined under section 1842(b), less the amount a provider may charge as described in clause (ii) of section 1866(a)(2)(A).
(ii)
In this subparagraph:
(I)
The term “cost proportion” means 50 percent, except that such term means 65 percent in the case of outpatient radiology services for portions of cost reporting periods which occur in fiscal year 1989 and in the case of diagnostic procedures described in subsection (a)(2)(E)(ii) for portions of cost reporting periods which occur in fiscal year 1990, and such term means 42 percent in the case of outpatient radiology services for portions of cost reporting periods beginning on or after January 1, 1991.
(II)
The term “charge proportion” means 100 percent minus the cost proportion.
(o)
(1)
In the case of shoes described in section 1861(s)(12)—
(A)
no payment may be made under this part, with respect to any individual for any year, for the furnishing of—
(i)
more than one pair of custom molded shoes (including inserts provided with such shoes) and 2 additional pairs of inserts for such shoes, or
(ii)
more than one pair of extra-depth shoes (not including inserts provided with such shoes) and 3 pairs of inserts for such shoes, and
(B)
with respect to expenses incurred in any calendar year, no more than the amount of payment applicable under paragraph (2) shall be considered as incurred expenses for purposes of subsections (a) and (b).
Payment for shoes (or inserts) under this part shall be considered to include payment for any expenses for the fitting of such shoes (or inserts).
(2)
(A)
Except as provided by the Secretary under subparagraphs (B) and (C), the amount of payment under this paragraph for custom molded shoes, extra-depth shoes, and inserts shall be the amount determined for such items by the Secretary under section 1834(h).
(B)
The Secretary may establish payment amounts for shoes and inserts that are lower than the amount established under section 1834(h) if the Secretary finds that shoes and inserts of an appropriate quality are readily available at or below the amount established under such section.
(C)
In accordance with procedures established by the Secretary, an individual entitled to benefits with respect to shoes described in section 1861(s)(12) may substitute modification of such shoes instead of obtaining one (or more, as specified by the Secretary) pair of inserts (other than the original pair of inserts with respect to such shoes). In such case, the Secretary shall substitute, for the payment amount established under section 1834(h), a payment amount that the Secretary estimates will assure that there is no net increase in expenditures under this subsection as a result of this subparagraph.
(3)
In this title, the term “shoes” includes, except for purposes of subparagraphs (A)(ii) and (B) of paragraph (2), inserts for extra-depth shoes.
[(p)
Striken.]
(q)
(1)
Each request for payment, or bill submitted, for an item or service furnished by an entity for which payment may be made under this part and for which the entity knows or has reason to believe there has been a referral by a referring physician (within the meaning of section 1877) shall include the name and unique physician identification number for the referring physician.
(2)
(A)
In the case of a request for payment for an item or service furnished by an entity under this part on an assignment-related basis and for which information is required to be provided under paragraph (1) but not included, payment may be denied under this part.
(B)
In the case of a request for payment for an item or service furnished by an entity under this part not submitted on an assignment-related basis and for which information is required to be provided under paragraph (1) but not included—
(i)
if the entity knowingly and willfully fails to provide such information promptly upon request of the Secretary or a carrier, the entity may be subject to a civil money penalty in an amount not to exceed $2,000, and
(ii)
if the entity knowingly, willfully, and in repeated cases fails, after being notified by the Secretary of the obligations and requirements of this subsection to provide the information required under paragraph (1), the entity may be subject to exclusion from participation in the programs under this Act for a period not to exceed 5 years, in accordance with the procedures of subsections (c), (f), and (g) of section 1128.
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to civil money penalties under clause (i) in the same manner as they apply to a penalty or proceeding under section 1128A(a).
(r)
(1)
With respect to services described in section 1861(s)(2)(K)(ii) (relating to nurse practitioner or clinical nurse specialist services), payment may be made on the basis of a claim or request for payment presented by the nurse practitioner or clinical nurse specialist furnishing such services, or by a hospital, critical access hospital, skilled nursing facility or nursing facility (as defined in section 1919(a)), physician, group practice, or ambulatory surgical center with which the nurse practitioner or clinical nurse specialist has an employment or contractual relationship that provides for payment to be made under this part for such services to such hospital, physician, group practice, or ambulatory surgical center.
(2)
No hospital or critical access hospital that presents a claim or request for payment under this part for services described in section 1861(s)(2)(K)(ii) may treat any uncollected coinsurance amount imposed under this part with respect to such services as a bad debt of such hospital for purposes of this title.
(s)
The Secretary may not provide for payment under subsection (a)(1)(A) with respect to an organization unless the organization provides assurances satisfactory to the Secretary that the organization meets the requirement of section 1866(f) (relating to maintaining written policies and procedures respecting advance directives).
(t)

Prospective Payment System for Hospital Outpatient Department Services.—
(1)

Amount of payment.—
(A)

In general.—
With respect to covered OPD services (as defined in subparagraph (B)) furnished during a year beginning with 1999, the amount of payment under this part shall be determined under a prospective payment system established by the Secretary in accordance with this subsection.
(B)

Definition of covered opd services.—
For purposes of this subsection, the term “covered OPD services”—
(i)
means hospital outpatient services designated by the Secretary;
(ii)
subject to clause (iv), includes inpatient hospital services designated by the Secretary that are covered under this part and furnished to a hospital inpatient who (I) is entitled to benefits under part A but has exhausted benefits for inpatient hospital services during a spell of illness, or (II) is not so entitled;
(iii)
includes implantable items described in paragraph (3), (6), or (8) of section 1861(s);
(iv)
does not include any therapy services described in subsection (a)(8) or ambulance services, for which payment is made under a fee schedule described in section 1834(k) or section 1834(l) and does not include screening mammography (as defined in section 1861(jj)), diagnostic mammography, or personalized prevention plan services (as defined in section 1861(hhh)(1)); and
(v)
does not include applicable items and services (as defined in subparagraph (A) of paragraph (21)) that are furnished on or after January 1, 2017, by an off-campus outpatient department of a provider (as defined in subparagraph (B) of such paragraph).
(2)

System requirements.—
Under the payment system—
(A)
the Secretary shall develop a classification system for covered OPD services;
(B)
the Secretary may establish groups of covered OPD services, within the classification system described in subparagraph (A), so that services classified within each group are comparable clinically and with respect to the use of resources and so that an implantable item is classified to the group that includes the service to which the item relates;
(C)
the Secretary shall, using data on claims from 1996 and using data from the most recent available cost reports, establish relative payment weights for covered OPD services (and any groups of such services described in subparagraph (B)) based on median (or, at the election of the Secretary, mean) hospital costs and shall determine projections of the frequency of utilization of each such service (or group of services) in 1999;
(D)
subject to paragraph (19), the Secretary shall determine a wage adjustment factor to adjust the portion of payment and coinsurance attributable to labor-related costs for relative differences in labor and labor-related costs across geographic regions in a budget neutral manner;
(E)
the Secretary shall establish, in a budget neutral manner, outlier adjustments under paragraph (5) and transitional pass-through payments under paragraph (6) and temporary additional payments for non-opioid treatments for pain relief under paragraph (16)(G), and other adjustments as determined to be necessary to ensure equitable payments, such as adjustments for certain classes of hospitals;
(F)
the Secretary shall develop a method for controlling unnecessary increases in the volume of covered OPD services;
(G)
the Secretary shall create additional groups of covered OPD services that classify separately those procedures that utilize contrast agents from those that do not; and
(H)
with respect to devices of brachytherapy consisting of a seed or seeds (or radioactive source), the Secretary shall create additional groups of covered OPD services that classify such devices separately from the other services (or group of services) paid for under this subsection in a manner reflecting the number, isotope, and radioactive intensity of such devices furnished, including separate groups for palladium-103 and iodine-125 devices and for stranded and non-stranded devices furnished on or after July 1, 2007.
For purposes of subparagraph (B), items and services within a group shall not be treated as “comparable with respect to the use of resources” if the highest median cost (or mean cost, if elected by the Secretary under subparagraph (C)) for an item or service within the group is more than 2 times greater than the lowest median cost (or mean cost, if so elected) for an item or service within the group; except that the Secretary may make exceptions in unusual cases, such as low volume items and services, but may not make such an exception in the case of a drug or biological that has been designated as an orphan drug under section 526 of the Federal Food, Drug and Cosmetic Act.
(3)

Calculation of base amounts.—
(A)

Aggregate amounts that would be payable if deductibles were disregarded.—
The Secretary shall estimate the sum of—
(i)
the total amounts that would be payable from the Trust Fund under this part for covered OPD services in 1999, determined without regard to this subsection, as though the deductible under section 1833(b) did not apply, and
(ii)
the total amounts of copayments estimated to be paid under this subsection by beneficiaries to hospitals for covered OPD services in 1999, as though the deductible under section 1833(b) did not apply.
(B)

Unadjusted copayment amount.—
(i)

In general.—
For purposes of this subsection, subject to clause (ii), the “unadjusted copayment amount” applicable to a covered OPD service (or group of such services) is 20 percent of the national median of the charges for the service (or services within the group) furnished during 1996, updated to 1999 using the Secretary's estimate of charge growth during the period.
(ii)

Adjusted to be 20 percent when fully phased in.—
If the pre-deductible payment percentage for a covered OPD service (or group of such services) furnished in a year would be equal to or exceed 80 percent, then the unadjusted copayment amount shall be 20 percent of amount determined under subparagraph (D).
(iii)

Rules for new services.—
The Secretary shall establish rules for establishment of an unadjusted copayment amount for a covered OPD service not furnished during 1996, based upon its classification within a group of such services.
(C)

Calculation of conversion factors.—
(i)

For 1999.—
(I)

In general.—
The Secretary shall establish a 1999 conversion factor for determining the medicare OPD fee schedule amounts for each covered OPD service (or group of such services) furnished in 1999. Such conversion factor shall be established on the basis of the weights and frequencies described in paragraph (2)(C) and in such a manner that the sum for all services and groups of the products (described in subclause (II) for each such service or group) equals the total projected amount described in subparagraph (A).
(II)

Product described.—
The Secretary shall determine for each service or group the product of the medicare OPD fee schedule amounts (taking into account appropriate adjustments described in paragraphs (2)(D) and (2)(E)) and the estimated frequencies for such service or group.
(ii)

Subsequent years.—
Subject to paragraph (8)(B), the Secretary shall establish a conversion factor for covered OPD services furnished in subsequent years in an amount equal to the conversion factor established under this subparagraph and applicable to such services furnished in the previous year increased by the OPD fee schedule increase factor specified under clause (iv) for the year involved.
(iii)

Adjustment for service mix changes.—
Insofar as the Secretary determines that the adjustments for service mix under paragraph (2) for a previous year (or estimates that such adjustments for a future year) did (or are likely to) result in a change in aggregate payments under this subsection during the year that are a result of changes in the coding or classification of covered OPD services that do not reflect real changes in service mix, the Secretary may adjust the conversion factor computed under this subparagraph for subsequent years so as to eliminate the effect of such coding or classification changes.
(iv)

OPD fee schedule increase factor.—
For purposes of this subparagraph, subject to paragraph (17) and subparagraph (F) of this paragraph, the “OPD fee schedule increase factor” for services furnished in a year is equal to the market basket percentage increase applicable under section 1886(b)(3)(B)(iii) to hospital discharges occurring during the fiscal year ending in such year, reduced by 1 percentage point for such factor for services furnished in each of 2000 and 2002. In applying the previous sentence for years beginning with 2000, the Secretary may substitute for the market basket percentage increase an annual percentage increase that is computed and applied with respect to covered OPD services furnished in a year in the same manner as the market basket percentage increase is determined and applied to inpatient hospital services for discharges occurring in a fiscal year.
(D)

Calculation of medicare opd fee schedule amounts.—
The Secretary shall compute a medicare OPD fee schedule amount for each covered OPD service (or group of such services) furnished in a year, in an amount equal to the product of—
(i)
the conversion factor computed under subparagraph (C) for the year, and
(ii)
the relative payment weight (determined under paragraph (2)(C)) for the service or group.
(E)

Pre-deductible payment percentage.—
The pre-deductible payment percentage for a covered OPD service (or group of such services) furnished in a year is equal to the ratio of—
(i)
the medicare OPD fee schedule amount established under subparagraph (D) for the year, minus the unadjusted copayment amount determined under subparagraph (B) for the service or group, to
(ii)
the medicare OPD fee schedule amount determined under subparagraph (D) for the year for such service or group.
(F)

Productivity and other adjustment.—
After determining the OPD fee schedule increase factor under subparagraph (C)(iv), the Secretary shall reduce such increase factor—
(i)
for 2012 and subsequent years, by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II); and
(ii)
for each of 2010 through 2019, by the adjustment described in subparagraph (G).
The application of this subparagraph may result in the increase factor under subparagraph (C)(iv) being less than 0.0 for a year, and may result in payment rates under the payment system under this subsection for a year being less than such payment rates for the preceding year.
(G)

Other adjustment.—
For purposes of subparagraph (F)(ii), the adjustment described in this subparagraph is—
(i)
for each of 2010 and 2011, 0.25 percentage point;
(ii)
for each of 2012 and 2013, 0.1 percentage point;
(iii)
for 2014, 0.3 percentage point;
(iv)
for each of 2015 and 2016, 0.2 percentage point; and
(v)
for each of 2017, 2018, and 2019, 0.75 percentage point.
(4)

Medicare payment amount.—
The amount of payment made from the Trust Fund under this part for a covered OPD service (and such services classified within a group) furnished in a year is determined, subject to paragraph (7), as follows:
(A)

Fee schedule adjustments.—
The medicare OPD fee schedule amount (computed under paragraph (3)(D)) for the service or group and year is adjusted for relative differences in the cost of labor and other factors determined by the Secretary, as computed under paragraphs (2)(D) and (2)(E).
(B)

Subtract applicable deductible.—
Reduce the adjusted amount determined under subparagraph (A) by the amount of the deductible under section 1833(b), to the extent applicable.
(C)

Apply payment proportion to remainder.—
The amount of payment is the amount so determined under subparagraph (B) multiplied by the pre-deductible payment percentage (as determined under paragraph (3)(E)) for the service or group and year involved, plus the amount of any reduction in the copayment amount attributable to paragraph (8)(C).
(5)

Outlier adjustment.—
(A)

In general.—
Subject to subparagraph (D), the Secretary shall provide for an additional payment for each covered OPD service (or group of services) for which a hospital's charges, adjusted to cost, exceed—
(i)
a fixed multiple of the sum of—
(I)
the applicable medicare OPD fee schedule amount determined under paragraph (3)(D), as adjusted under paragraph (4)(A) (other than for adjustments under this paragraph or paragraph (6)); and
(II)
any transitional pass-through payment under paragraph (6); and
(ii)
at the option of the Secretary, such fixed dollar amount as the Secretary may establish.
(B)

Amount of adjustment.—
The amount of the additional payment under subparagraph (A) shall be determined by the Secretary and shall approximate the marginal cost of care beyond the applicable cutoff point under such subparagraph.
(C)

Limit on aggregate outlier adjustments.—
(i)

In general.—
The total of the additional payments made under this paragraph for covered OPD services furnished in a year (as estimated by the Secretary before the beginning of the year) may not exceed the applicable percentage (specified in clause (ii)) of the total program payments estimated to be made under this subsection for all covered OPD services furnished in that year. If this paragraph is first applied to less than a full year, the previous sentence shall apply only to the portion of such year.
(ii)

Applicable percentage.—
For purposes of clause (i), the term “applicable percentage” means a percentage specified by the Secretary up to (but not to exceed)—
(I)
for a year (or portion of a year) before 2004, 2.5 percent; and
(II)
for 2004 and thereafter, 3.0 percent.
(D)

Transitional authority.—
In applying subparagraph (A) for covered OPD services furnished before January 1, 2002, the Secretary may—
(i)
apply such subparagraph to a bill for such services related to an outpatient encounter (rather than for a specific service or group of services) using OPD fee schedule amounts and transitional pass-through payments covered under the bill; and
(ii)
use an appropriate cost-to-charge ratio for the hospital involved (as determined by the Secretary), rather than for specific departments within the hospital.
(E)

Exclusion of separate drug and biological apcs from outlier payments.—
No additional payment shall be made under subparagraph (A) in the case of ambulatory payment classification groups established separately for drugs or biologicals.
(6)

Transitional pass-through for additional costs of innovative medical devices, drugs, and biologicals.—
(A)

In general.—
The Secretary shall provide for an additional payment under this paragraph for any of the following that are provided as part of a covered OPD service (or group of services):
(i)

Current orphan drugs.—
A drug or biological that is used for a rare disease or condition with respect to which the drug or biological has been designated as an orphan drug under section 526 of the Federal Food, Drug and Cosmetic Act if payment for the drug or biological as an outpatient hospital service under this part was being made on the first date that the system under this subsection is implemented.
(ii)

Current cancer therapy drugs and biologicals and brachytherapy.—
A drug or biological that is used in cancer therapy, including (but not limited to) a chemotherapeutic agent, an antiemetic, a hematopoietic growth factor, a colony stimulating factor, a biological response modifier, a bisphosphonate, and a device of brachytherapy or temperature monitored cryoablation, if payment for such drug, biological, or device as an outpatient hospital service under this part was being made on such first date.
(iii)

Current radiopharmaceutical drugs and biological products.—
A radiopharmaceutical drug or biological product used in diagnostic, monitoring, and therapeutic nuclear medicine procedures if payment for the drug or biological as an outpatient hospital service under this part was being made on such first date.
(iv)

New medical devices, drugs, and biologicals.—
A medical device, drug, or biological not described in clause (i), (ii), or (iii) if—
(I)
payment for the device, drug, or biological as an outpatient hospital service under this part was not being made as of December 31, 1996; and
(II)
the cost of the drug or biological or the average cost of the category of devices is not insignificant in relation to the OPD fee schedule amount (as calculated under paragraph (3)(D)) payable for the service (or group of services) involved.
(B)

Use of categories in determining eligibility of a device for pass-through payments.—
The following provisions apply for purposes of determining whether a medical device qualifies for additional payments under clause (ii) or (iv) of subparagraph (A):
(i)

Establishment of initial categories.—
(I)

In general.—
The Secretary shall initially establish under this clause categories of medical devices based on type of device by April 1, 2001. Such categories shall be established in a manner such that each medical device that meets the requirements of clause (ii) or (iv) of subparagraph (A) as of January 1, 2001, is included in such a category and no such device is included in more than one category. For purposes of the preceding sentence, whether a medical device meets such requirements as of such date shall be determined on the basis of the program memoranda issued before such date.
(II)

Authorization of implementation other than through regulations.—
The categories may be established under this clause by program memorandum or otherwise, after consultation with groups representing hospitals, manufacturers of medical devices, and other affected parties.
(ii)

Establishing criteria for additional categories.—
(I)

In general.—
The Secretary shall establish criteria that will be used for creation of additional categories (other than those established under clause (i)) through rulemaking (which may include use of an interim final rule with comment period).
(II)

Standard.—
Such categories shall be established under this clause in a manner such that no medical device is described by more than one category. Such criteria shall include a test of whether the average cost of devices that would be included in a category and are in use at the time the category is established is not insignificant, as described in subparagraph (A)(iv)(II).
(III)

Deadline.—
Criteria shall first be established under this clause by July 1, 2001. The Secretary may establish in compelling circumstances categories under this clause before the date such criteria are established.
(IV)

Adding categories.—
The Secretary shall promptly establish a new category of medical devices under this clause for any medical device that meets the requirements of subparagraph (A)(iv) and for which none of the categories in effect (or that were previously in effect) is appropriate.
(iii)

Period for which category is in effect.—
Subject to subparagraph (K), a category of medical devices established under clause (i) or (ii) shall be in effect for a period of at least 2 years, but not more than 3 years, that begins—
(I)
in the case of a category established under clause (i), on the first date on which payment was made under this paragraph for any device described by such category (including payments made during the period before April 1, 2001); and
(II)
in the case of any other category, on the first date on which payment is made under this paragraph for any medical device that is described by such category.
(iv)

Requirements treated as met.—
A medical device shall be treated as meeting the requirements of subparagraph (A)(iv), regardless of whether the device meets the requirement of subclause (I) of such subparagraph, if—
(I)
the device is described by a category established and in effect under clause (i); or
(II)
the device is described by a category established and in effect under clause (ii) and an application under section 515 of the Federal Food, Drug, and Cosmetic Act has been approved with respect to the device, or the device has been cleared for market under section 510(k) of such Act, or the device is exempt from the requirements of section 510(k) of such Act pursuant to subsection (l) or (m) of section 510 of such Act or section 520(g) of such Act.
Nothing in this clause shall be construed as requiring an application or prior approval (other than that described in subclause (II)) in order for a covered device described by a category to qualify for payment under this paragraph.
(C)

Limited period of payment.—
(i)

Drugs and biologicals.—
Subject to subparagraph (G), the payment under this paragraph with respect to a drug or biological shall only apply during a period of at least 2 years, but not more than 3 years, that begins—
(I)
on the first date this subsection is implemented in the case of a drug or biological described in clause (i), (ii), or (iii) of subparagraph (A) and in the case of a drug or biological described in subparagraph (A)(iv) and for which payment under this part is made as an outpatient hospital service before such first date; or
(II)
in the case of a drug or biological described in subparagraph (A)(iv) not described in subclause (I), on the first date on which payment is made under this part for the drug or biological as an outpatient hospital service.
(ii)

Medical devices.—
Payment shall be made under this paragraph with respect to a medical device only if such device—
(I)
is described by a category of medical devices established and in effect under subparagraph (B); and
(II)
is provided as part of a service (or group of services) paid for under this subsection and provided during the period for which such category is in effect under such subparagraph.
(D)

Amount of additional payment.—
Subject to subparagraph (E)(iii), the amount of the payment under this paragraph with respect to a device, drug, or biological provided as part of a covered OPD service is—
(i)
subject to subparagraph (H), in the case of a drug or biological, the amount by which the amount determined under section 1842(o) (or if the drug or biological is covered under a competitive acquisition contract under section 1847B, an amount determined by the Secretary equal to the average price for the drug or biological for all competitive acquisition areas and year established under such section as calculated and adjusted by the Secretary for purposes of this paragraph) for the drug or biological exceeds the portion of the otherwise applicable medicare OPD fee schedule that the Secretary determines is associated with the drug or biological; or
(ii)
in the case of a medical device, the amount by which the hospital's charges for the device, adjusted to cost, exceeds the portion of the otherwise applicable medicare OPD fee schedule that the Secretary determines is associated with the device.
(E)

Limit on aggregate annual adjustment.—
(i)

In general.—
The total of the additional payments made under this paragraph for covered OPD services furnished in a year (as estimated by the Secretary before the beginning of the year) may not exceed the applicable percentage (specified in clause (ii)) of the total program payments estimated to be made under this subsection for all covered OPD services furnished in that year. If this paragraph is first applied to less than a full year, the previous sentence shall apply only to the portion of such year. This clause shall not apply for 2018 or 2020.
(ii)

Applicable percentage.—
For purposes of clause (i), the term “applicable percentage” means—
(I)
for a year (or portion of a year) before 2004, 2.5 percent; and
(II)
for 2004 and thereafter, a percentage specified by the Secretary up to (but not to exceed) 2.0 percent.
(iii)

Uniform prospective reduction if aggregate limit projected to be exceeded.—
If the Secretary estimates before the beginning of a year that the amount of the additional payments under this paragraph for the year (or portion thereof) as determined under clause (i) without regard to this clause will exceed the limit established under such clause, the Secretary shall reduce pro rata the amount of each of the additional payments under this paragraph for that year (or portion thereof) in order to ensure that the aggregate additional payments under this paragraph (as so estimated) do not exceed such limit.
(F)

Limitation of application of functional equivalence standard.—
(i)

In general.—
The Secretary may not publish regulations that apply a functional equivalence standard to a drug or biological under this paragraph.
(ii)

Application.—
Clause (i) shall apply to the application of a functional equivalence standard to a drug or biological on or after the date of enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 unless—
(I)
such application was being made to such drug or biological prior to such date of enactment; and
(II)
the Secretary applies such standard to such drug or biological only for the purpose of determining eligibility of such drug or biological for additional payments under this paragraph and not for the purpose of any other payments under this title.
(iii)

Rule of construction.—
Nothing in this subparagraph shall be construed to effect the Secretary's authority to deem a particular drug to be identical to another drug if the 2 products are pharmaceutically equivalent and bioequivalent, as determined by the Commissioner of Food and Drugs.
(G)

Pass-through extension for certain drugs and biologicals.—
In the case of a drug or biological whose period of pass-through status under this paragraph ended on December 31, 2017, and for which payment under this subsection was packaged into a payment for a covered OPD service (or group of services) furnished beginning January 1, 2018, such pass-through status shall be extended for a 2-year period beginning on October 1, 2018.
(H)

Temporary payment rule for certain drugs and biologicals.—
In the case of a drug or biological whose period of pass-through status under this paragraph ended on December 31, 2017, and for which payment under this subsection was packaged into a payment for a covered OPD service (or group of services) furnished beginning January 1, 2018, the payment amount for such drug or biological under this subsection that is furnished during the period beginning on October 1, 2018, and ending on March 31, 2019, shall be the greater of—
(i)
the payment amount that would otherwise apply under subparagraph (D)(i) for such drug or biological during such period; or
(ii)
the payment amount that applied under such subparagraph (D)(i) for such drug or biological on December 31, 2017.
(I)

Special payment adjustment rules for last quarter of 2018.—
In the case of a drug or biological whose period of pass-through status under this paragraph ended on December 31, 2017, and for which payment under this subsection was packaged into a payment amount for a covered OPD service (or group of services) beginning January 1, 2018, the following rules shall apply with respect to payment amounts under this subsection for covered a OPD service (or group of services) furnished during the period beginning on October 1, 2018, and ending on December 31, 2018:
(i)
The Secretary shall remove the packaged costs of such drug or biological (as determined by the Secretary) from the payment amount under this subsection for the covered OPD service (or group of services) with which it is packaged.
(ii)
The Secretary shall not make any adjustments to payment amounts under this subsection for a covered OPD service (or group of services) for which no costs were removed under clause (i).
(J)

Additional pass-through extension and special payment adjustment rule for certain diagnostic radiopharmaceuticals.—
In the case of a drug or biological furnished in the context of a clinical study on diagnostic imaging tests approved under a coverage with evidence development determination whose period of pass-through status under this paragraph concluded on December 31, 2018, and for which payment under this subsection was packaged into a payment for a covered OPD service (or group of services) furnished beginning January 1, 2019, the Secretary shall—
(i)
extend such pass-through status for such drug or biological for the 9-month period beginning on January 1, 2020;
(ii)
remove, during such period, the packaged costs of such drug or biological (as determined by the Secretary) from the payment amount under this subsection for the covered OPD service (or group of services) with which it is packaged; and
(iii)
not make any adjustments to payment amounts under this subsection for a covered OPD service (or group of services) for which no costs were removed under clause (ii).
(K)

Pass-through extension for certain devices.—
(i)

In general.—
In the case of a device whose period of pass-through status under this paragraph will end on December 31, 2022, such pass-through status shall be extended for a 1–year period beginning on January 1, 2023.
(ii)

No adjustment for packaged costs.—
For purposes of the 1–year period described in clause (i), the Secretary shall not remove the packaged costs of such device (as determined by the Secretary) from the payment amount under this subsection for a covered OPD service (or group of services) with which it is packaged.
(iii)

No application of aggregate limit or budget neutrality.—
Notwithstanding any other provision of this subsection, this subparagraph shall not be taken into account—
(I)
in applying the limit on annual aggregate adjustments under subparagraph (E) for 2023; or
(II)
in making any budget neutrality adjustments under this subsection for 2023.
(7)

Transitional adjustment to limit decline in payment.—
(A)

Before 2002.—
Subject to subparagraph (D), for covered OPD services furnished before January 1, 2002, for which the PPS amount (as defined in subparagraph (E)) is—
(i)
at least 90 percent, but less than 100 percent, of the pre-BBA amount (as defined in subparagraph (F)), the amount of payment under this subsection shall be increased by 80 percent of the amount of such difference;
(ii)
at least 80 percent, but less than 90 percent, of the pre-BBA amount, the amount of payment under this subsection shall be increased by the amount by which (I) the product of 0.71 and the pre-BBA amount, exceeds (II) the product of 0.70 and the PPS amount;
(iii)
at least 70 percent, but less than 80 percent, of the pre-BBA amount, the amount of payment under this subsection shall be increased by the amount by which (I) the product of 0.63 and the pre-BBA amount, exceeds (II) the product of 0.60 and the PPS amount; or
(iv)
less than 70 percent of the pre-BBA amount, the amount of payment under this subsection shall be increased by 21 percent of the pre-BBA amount.
(B)
2002.—Subject to subparagraph (D), for covered OPD services furnished during 2002, for which the PPS amount is—
(i)
at least 90 percent, but less than 100 percent, of the pre-BBA amount, the amount of payment under this subsection shall be increased by 70 percent of the amount of such difference;
(ii)
at least 80 percent, but less than 90 percent, of the pre-BBA amount, the amount of payment under this subsection shall be increased by the amount by which (I) the product of 0.61 and the pre-BBA amount, exceeds (II) the product of 0.60 and the PPS amount; or
(iii)
less than 80 percent of the pre-BBA amount, the amount of payment under this subsection shall be increased by 13 percent of the pre-BBA amount.
(C)
2003.—Subject to subparagraph (D), for covered OPD services furnished during 2003, for which the PPS amount is—
(i)
at least 90 percent, but less than 100 percent, of the pre-BBA amount, the amount of payment under this subsection shall be increased by 60 percent of the amount of such difference; or
(ii)
less than 90 percent of the pre-BBA amount, the amount of payment under this subsection shall be increased by 6 percent of the pre-BBA amount.
(D)

Hold harmless provisions.—
(i)

Temporary treatment for certain rural hospitals.—
(I)
In the case of a hospital located in a rural area and that has not more than 100 beds or a sole community hospital (as defined in section 1886(d)(5)(D)(iii)) located in a rural area, for covered OPD services furnished before January 1, 2006, for which the PPS amount is less than the pre-BBA amount, the amount of payment under this subsection shall be increased by the amount of such difference.
(II)
In the case of a hospital located in a rural area and that has not more than 100 beds and that is not a sole community hospital (as defined in section 1886(d)(5)(D)(iii)), for covered OPD services furnished on or after January 1, 2006, and before January 1, 2013, for which the PPS amount is less than the pre-BBA amount, the amount of payment under this subsection shall be increased by the applicable percentage of the amount of such difference. For purposes of the preceding sentence, the applicable percentage shall be 95 percent with respect to covered OPD services furnished in 2006, 90 percent with respect to such services furnished in 2007, and 85 percent with respect to such services furnished in 2008, 2009, 2010, 2011, or 2012.
(III)
In the case of a sole community hospital (as defined in section 1886(d)(5)(D)(iii)) that has not more than 100 beds, for covered OPD services furnished on or after January 1, 2009, and before January 1, 2013, for which the PPS amount is less than the pre-BBA amount, the amount of payment under this subsection shall be increased by 85 percent of the amount of such difference. In the case of covered OPD services furnished on or after January 1, 2010, and before March 1, 2012, the preceding sentence shall be applied without regard to the 100-bed limitation.
(ii)

Permanent treatment for cancer hospitals and children's hospitals.—
In the case of a hospital described in clause (iii) or (v) of section 1886(d)(1)(B), for covered OPD services for which the PPS amount is less than the pre-BBA amount, the amount of payment under this subsection shall be increased by the amount of such difference.
(E)

PPS amount defined.—
In this paragraph, the term “PPS amount” means, with respect to covered OPD services, the amount payable under this title for such services (determined without regard to this paragraph), including amounts payable as copayment under paragraph (8), coinsurance under section 1866(a)(2)(A)(ii), and the deductible under section 1833(b).
(F)

Pre-BBA amount defined.—
(i)

In general.—
In this paragraph, the “pre-BBA amount” means, with respect to covered OPD services furnished by a hospital in a year, an amount equal to the product of the reasonable cost of the hospital for such services for the portions of the hospital's cost reporting period (or periods) occurring in the year and the base OPD payment-to-cost ratio for the hospital (as defined in clause (ii)).
(ii)

Base payment-to-cost-ratio defined.—
For purposes of this subparagraph, the “base payment-to-cost ratio” for a hospital means the ratio of—
(I)
the hospital's reimbursement under this part for covered OPD services furnished during the cost reporting period ending in 1996 (or in the case of a hospital that did not submit a cost report for such period, during the first subsequent cost reporting period ending before 2001 for which the hospital submitted a cost report), including any reimbursement for such services through cost-sharing described in subparagraph (E), to
(II)
the reasonable cost of such services for such period.
The Secretary shall determine such ratios as if the amendments made by section 4521 of the Balanced Budget Act of 1997 were in effect in 1996.
(G)

Interim payments.—
The Secretary shall make payments under this paragraph to hospitals on an interim basis, subject to retrospective adjustments based on settled cost reports.
(H)

No effect on copayments.—
Nothing in this paragraph shall be construed to affect the unadjusted copayment amount described in paragraph (3)(B) or the copayment amount under paragraph (8).
(I)

Application without regard to budget neutrality.—
The additional payments made under this paragraph—
(i)
shall not be considered an adjustment under paragraph (2)(E); and
(ii)
shall not be implemented in a budget neutral manner.
(8)

Copayment amount.—
(A)

In general.—
Except as provided in subparagraphs (B) and (C), the copayment amount under this subsection is the amount by which the amount described in paragraph (4)(B) exceeds the amount of payment determined under paragraph (4)(C).
(B)

Election to offer reduced copayment amount.—
The Secretary shall establish a procedure under which a hospital, before the beginning of a year (beginning with 1999), may elect to reduce the copayment amount otherwise established under subparagraph (A) for some or all covered OPD services to an amount that is not less than 20 percent of the medicare OPD fee schedule amount (computed under paragraph (3)(D)) for the service involved. Under such procedures, such reduced copayment amount may not be further reduced or increased during the year involved and the hospital may disseminate information on the reduction of copayment amount effected under this subparagraph.
(C)

Limitation on copayment amount.—
(i)

To inpatient hospital deductible amount.—
In no case shall the copayment amount for a procedure performed in a year exceed the amount of the inpatient hospital deductible established under section 1813(b) for that year.
(ii)

To specified percentage.—
The Secretary shall reduce the national unadjusted copayment amount for a covered OPD service (or group of such services) furnished in a year in a manner so that the effective copayment rate (determined on a national unadjusted basis) for that service in the year does not exceed the following percentage:
(I)
For procedures performed in 2001, on or after April 1, 2001, 57 percent.
(II)
For procedures performed in 2002 or 2003, 55 percent.
(III)
For procedures performed in 2004, 50 percent.
(IV)
For procedures performed in 2005, 45 percent.
(V)
For procedures performed in 2006 and thereafter, 40 percent.
(D)

No impact on deductibles.—
Nothing in this paragraph shall be construed as affecting a hospital's authority to waive the charging of a deductible under section 1833(b).
(E)

Computation ignoring outlier and pass-through adjustments.—
The copayment amount shall be computed under subparagraph (A) as if the adjustments under paragraphs (5) and (6) (and any adjustment made under paragraph (2)(E) in relation to such adjustments) had not occurred.
(F)

Part b rebatable drugs.—
In the case of a part B rebatable drug (as defined in paragraph (2) of section 1847A(i), except if such drug does not have a copayment amount as a result of application of subparagraph (E)) for which payment under this part is not packaged into a payment for a covered OPD service (or group of services) furnished on or after April 1, 2023, and the payment for such drug under this subsection is the same as the amount for a calendar quarter under paragraph (3)(A)(ii)(I) of section 1847A(i), under the system under this subsection, in lieu of calculation of the copayment amount and the amount of payment otherwise applicable under this subsection (other than the application of the limitation described in subparagraph (C)), the provisions of section 1847A(i)(5) and paragraph (1)(EE) of subsection (a), shall, as determined appropriate by the Secretary, apply under this subsection in the same manner as such provisions of section 1847A(i)(5) and subsection (a) apply under such section and subsection.
(9)

Periodic review and adjustments components of prospective payment system.—
(A)

Periodic review.—
The Secretary shall review not less often than annually and revise the groups, the relative payment weights, and the wage and other adjustments described in paragraph (2) to take into account changes in medical practice, changes in technology, the addition of new services, new cost data, and other relevant information and factors. The Secretary shall consult with an expert outside advisory panel composed of an appropriate selection of representatives of providers to review (and advise the Secretary concerning) the clinical integrity of the groups and weights. Such panel may use data collected or developed by entities and organizations (other than the Department of Health and Human Services) in conducting such review.
(B)

Budget neutrality adjustment.—
If the Secretary makes adjustments under subparagraph (A), then the adjustments for a year may not cause the estimated amount of expenditures under this part for the year to increase or decrease from the estimated amount of expenditures under this part that would have been made if the adjustments had not been made. In determining adjustments under the preceding sentence for 2004 and 2005, the Secretary shall not take into account under this subparagraph or paragraph (2)(E) any expenditures that would not have been made but for the application of paragraph (14).
(C)

Update factor.—
If the Secretary determines under methodologies described in paragraph (2)(F) that the volume of services paid for under this subsection increased beyond amounts established through those methodologies, the Secretary may appropriately adjust the update to the conversion factor otherwise applicable in a subsequent year.
(10)

Special rule for ambulance services.—
The Secretary shall pay for hospital outpatient services that are ambulance services on the basis described in section 1861(v)(1)(U), or, if applicable, the fee schedule established under section 1834(l).
(11)

Special rules for certain hospitals.—
In the case of hospitals described in clause (iii) or (v) of section 1886(d)(1)(B)—
(A)
the system under this subsection shall not apply to covered OPD services furnished before January 1, 2000; and
(B)
the Secretary may establish a separate conversion factor for such services in a manner that specifically takes into account the unique costs incurred by such hospitals by virtue of their patient population and service intensity.
(12)

Limitation on review.—
There shall be no administrative or judicial review under section 1869, 1878, or otherwise of—
(A)
the development of the classification system under paragraph (2), including the establishment of groups and relative payment weights for covered OPD services, of wage adjustment factors, other adjustments, and methods described in paragraph (2)(F);
(B)
the calculation of base amounts under paragraph (3);
(C)
periodic adjustments made under paragraph (6);
(D)
the establishment of a separate conversion factor under paragraph (8)(B); and
(E)
the determination of the fixed multiple, or a fixed dollar cutoff amount, the marginal cost of care, or applicable percentage under paragraph (5) or the determination of insignificance of cost, the duration of the additional payments, the determination and deletion of initial and new categories (consistent with subparagraphs (B) and (C) of paragraph (6)), the portion of the medicare OPD fee schedule amount associated with particular devices, drugs, or biologicals, and the application of any pro rata reduction under paragraph (6).
(13)

Authorization of adjustment for rural hospitals.—
(A)

Study.—
The Secretary shall conduct a study to determine if, under the system under this subsection, costs incurred by hospitals located in rural areas by ambulatory payment classification groups (APCs) exceed those costs incurred by hospitals located in urban areas.
(B)

Authorization of adjustment.—
Insofar as the Secretary determines under subparagraph (A) that costs incurred by hospitals located in rural areas exceed those costs incurred by hospitals located in urban areas, the Secretary shall provide for an appropriate adjustment under paragraph (2)(E) to reflect those higher costs by January 1, 2006.
(14)

Drug apc payment rates.—
(A)

In general.—
The amount of payment under this subsection for a specified covered outpatient drug (defined in subparagraph (B)) that is furnished as part of a covered OPD service (or group of services)—
(i)
in 2004, in the case of—
(I)
a sole source drug shall in no case be less than 88 percent, or exceed 95 percent, of the reference average wholesale price for the drug;
(II)
an innovator multiple source drug shall in no case exceed 68 percent of the reference average wholesale price for the drug; or
(III)
a noninnovator multiple source drug shall in no case exceed 46 percent of the reference average wholesale price for the drug;
(ii)
in 2005, in the case of—
(I)
a sole source drug shall in no case be less than 83 percent, or exceed 95 percent, of the reference average wholesale price for the drug;
(II)
an innovator multiple source drug shall in no case exceed 68 percent of the reference average wholesale price for the drug; or
(III)
a noninnovator multiple source drug shall in no case exceed 46 percent of the reference average wholesale price for the drug; or
(iii)
in a subsequent year, shall be equal, subject to subparagraph (E)—
(I)
to the average acquisition cost for the drug for that year (which, at the option of the Secretary, may vary by hospital group (as defined by the Secretary based on volume of covered OPD services or other relevant characteristics)), as determined by the Secretary taking into account the hospital acquisition cost survey data under subparagraph (D); or
(II)
if hospital acquisition cost data are not available, the average price for the drug in the year established under section 1842(o), section 1847A, or section 1847B, as the case may be, as calculated and adjusted by the Secretary as necessary for purposes of this paragraph.
(B)

Specified covered outpatient drug defined.—
(i)

In general.—
In this paragraph, the term “specified covered outpatient drug” means, subject to clause (ii), a covered outpatient drug (as defined in section 1927(k)(2)) for which a separate ambulatory payment classification group (APC) has been established and that is—
(I)
a radiopharmaceutical; or
(II)
a drug or biological for which payment was made under paragraph (6) (relating to pass-through payments) on or before December 31, 2002.
(ii)

Exception.—
Such term does not include—
(I)
a drug or biological for which payment is first made on or after January 1, 2003, under paragraph (6);
(II)
a drug or biological for which a temporary HCPCS code has not been assigned; or
(III)
during 2004 and 2005, an orphan drug (as designated by the Secretary).
(C)

Payment for designated orphan drugs during 2004 and 2005.—
The amount of payment under this subsection for an orphan drug designated by the Secretary under subparagraph (B)(ii)(III) that is furnished as part of a covered OPD service (or group of services) during 2004 and 2005 shall equal such amount as the Secretary may specify.
(D)

Acquisition cost survey for hospital outpatient drugs.—
(i)

Annual gao surveys in 2004 and 2005.—
(I)

In general.—
The Comptroller General of the United States shall conduct a survey in each of 2004 and 2005 to determine the hospital acquisition cost for each specified covered outpatient drug. Not later than April 1, 2005, the Comptroller General shall furnish data from such surveys to the Secretary for use in setting the payment rates under subparagraph (A) for 2006.
(II)

Recommendations.—
Upon the completion of such surveys, the Comptroller General shall recommend to the Secretary the frequency and methodology of subsequent surveys to be conducted by the Secretary under clause (ii).
(ii)

Subsequent secretarial surveys.—
The Secretary, taking into account such recommendations, shall conduct periodic subsequent surveys to determine the hospital acquisition cost for each specified covered outpatient drug for use in setting the payment rates under subparagraph (A).
(iii)

Survey requirements.—
The surveys conducted under clauses (i) and (ii) shall have a large sample of hospitals that is sufficient to generate a statistically significant estimate of the average hospital acquisition cost for each specified covered outpatient drug. With respect to the surveys conducted under clause (i), the Comptroller General shall report to Congress on the justification for the size of the sample used in order to assure the validity of such estimates.
(iv)

Differentiation in cost.—
In conducting surveys under clause (i), the Comptroller General shall determine and report to Congress if there is (and the extent of any) variation in hospital acquisition costs for drugs among hospitals based on the volume of covered OPD services performed by such hospitals or other relevant characteristics of such hospitals (as defined by the Comptroller General).
(v)

Comment on proposed rates.—
Not later than 30 days after the date the Secretary promulgated proposed rules setting forth the payment rates under subparagraph (A) for 2006, the Comptroller General shall evaluate such proposed rates and submit to Congress a report regarding the appropriateness of such rates based on the surveys the Comptroller General has conducted under clause (i).
(E)

Adjustment in payment rates for overhead costs.—
(i)

Medpac report on drug apc design.—
The Medicare Payment Advisory Commission shall submit to the Secretary, not later than July 1, 2005, a report on adjustment of payment for ambulatory payment classifications for specified covered outpatient drugs to take into account overhead and related expenses, such as pharmacy services and handling costs. Such report shall include—
(I)
a description and analysis of the data available with regard to such expenses;
(II)
a recommendation as to whether such a payment adjustment should be made; and
(III)
if such adjustment should be made, a recommendation regarding the methodology for making such an adjustment.
(ii)

Adjustment authorized.—
The Secretary may adjust the weights for ambulatory payment classifications for specified covered outpatient drugs to take into account the recommendations contained in the report submitted under clause (i).
(F)

Classes of drugs.—
For purposes of this paragraph:
(i)

Sole source drugs.—
The term “sole source drug” means—
(I)
a biological product (as defined under section 1861(t)(1)); or
(II)
a single source drug (as defined in section 1927(k)(7)(A)(iv)).
(ii)

Innovator multiple source drugs.—
The term “innovator multiple source drug” has the meaning given such term in section 1927(k)(7)(A)(ii).
(iii)

Noninnovator multiple source drugs.—
The term “noninnovator multiple source drug” has the meaning given such term in section 1927(k)(7)(A)(iii).
(G)

Reference average wholesale price.—
The term “reference average wholesale price” means, with respect to a specified covered outpatient drug, the average wholesale price for the drug as determined under section 1842(o) as of May 1, 2003.
(H)

Inapplicability of expenditures in determining conversion, weighting, and other adjustment factors.—
Additional expenditures resulting from this paragraph shall not be taken into account in establishing the conversion, weighting, and other adjustment factors for 2004 and 2005 under paragraph (9), but shall be taken into account for subsequent years.
(15)

Payment for new drugs and biologicals until hcpcs code assigned.—
With respect to payment under this part for an outpatient drug or biological that is covered under this part and is furnished as part of covered OPD services for which a HCPCS code has not been assigned, the amount provided for payment for such drug or biological under this part shall be equal to 95 percent of the average wholesale price for the drug or biological.
(16)

Miscellaneous provisions.—
(A)

Application of reclassification of certain hospitals.—
If a hospital is being treated as being located in a rural area under section 1886(d)(8)(E), that hospital shall be treated under this subsection as being located in that rural area.
(B)

Threshold for establishment of separate apcs for drugs.—
The Secretary shall reduce the threshold for the establishment of separate ambulatory payment classification groups (APCs) with respect to drugs or biologicals to $50 per administration for drugs and biologicals furnished in 2005 and 2006.
(C)

Payment for devices of brachytherapy and therapeutic radiopharmaceuticals at charges adjusted to cost.—
Notwithstanding the preceding provisions of this subsection, for a device of brachytherapy consisting of a seed or seeds (or radioactive source) furnished on or after January 1, 2004, and before January 1, 2010, and for therapeutic radiopharmaceuticals furnished on or after January 1, 2008, and before January 1, 2010, the payment basis for the device or therapeutic radiopharmaceutical under this subsection shall be equal to the hospital's charges for each device or therapeutic radiopharmaceutical furnished, adjusted to cost. Charges for such devices or therapeutic radiopharmaceuticals shall not be included in determining any outlier payment under this subsection.
(D)

Special payment rule.—
(i)

In general.—
In the case of covered OPD services furnished on or after April 1, 2013, in a hospital described in clause (ii), if—
(I)
the payment rate that would otherwise apply under this subsection for stereotactic radiosurgery, complete course of treatment of cranial lesion(s) consisting of 1 session that is multi-source Cobalt 60 based (identified as of January 1, 2013, by HCPCS code 77371 (and any succeeding code) and reimbursed as of such date under APC 0127 (and any succeeding classification group)); exceeds
(II)
the payment rate that would otherwise apply under this subsection for linear accelerator based stereotactic radiosurgery, complete course of therapy in one session (identified as of January 1, 2013, by HCPCS code G0173 (and any succeeding code) and reimbursed as of such date under APC 0067 (and any succeeding classification group)),
the payment rate for the service described in subclause (I) shall be reduced to an amount equal to the payment rate for the service described in subclause (II).
(ii)

Hospital described.—
A hospital described in this clause is a hospital that is not—
(I)
located in a rural area (as defined in section 1886(d)(2)(D));
(II)
classified as a rural referral center under section 1886(d)(5)(C); or
(III)
a sole community hospital (as defined in section 1886(d)(5)(D)(iii)).
(iii)

Not budget neutral.—
In making any budget neutrality adjustments under this subsection for 2013 (with respect to covered OPD services furnished on or after April 1, 2013, and before January 1, 2014) or a subsequent year, the Secretary shall not take into account the reduced expenditures that result from the application of this subparagraph.
(E)

Application of appropriate use criteria for certain imaging services.—
For provisions relating to the application of appropriate use criteria for certain imaging services, see section 1834(q).
(F)

Payment incentive for the transition from traditional x-ray imaging to digital radiography.—
Notwithstanding the previous provisions of this subsection:
(i)

Limitation on payment for film x-ray imaging services.—
In the case of an imaging service that is an X-ray taken using film and that is furnished during 2017 or a subsequent year, the payment amount for such service (including the X-ray component of a packaged service) that would otherwise be determined under this section (without application of this paragraph and before application of any other adjustment under this subsection) for such year shall be reduced by 20 percent.
(ii)

Phased-in limitation on payment for computed radiography imaging services.—
In the case of an imaging service that is an X-ray taken using computed radiography technology (as defined in section 1848(b)(9)(C))—
(I)
in the case of such a service furnished during 2018, 2019, 2020, 2021, or 2022, the payment amount for such service (including the X-ray component of a packaged service) that would otherwise be determined under this section (without application of this paragraph and before application of any other adjustment under this subsection) for such year shall be reduced by 7 percent; and
(II)
in the case of such a service furnished during 2023 or a subsequent year, the payment amount for such service (including the X-ray component of a packaged service) that would otherwise be determined under this section (without application of this paragraph and before application of any other adjustment under this subsection) for such year shall be reduced by 10 percent.
(iii)

Application without regard to budget neutrality.—
The reductions made under this subparagraph—
(I)
shall not be considered an adjustment under paragraph (2)(E); and
(II)
shall not be implemented in a budget neutral manner.
(iv)

Implementation.—
In order to implement this subparagraph, the Secretary shall adopt appropriate mechanisms which may include use of modifiers.
(G)

Temporary additional payments for non-opioid treatments for pain relief.—
(i)

In general.—
Notwithstanding any other provision of this subsection, with respect to a non-opioid treatment for pain relief (as defined in clause (iv)) furnished on or after January 1, 2025, and before January 1, 2028, the Secretary shall not package payment for such non-opioid treatment for pain relief into a payment for a covered OPD service (or group of services), and shall make an additional payment as specified in clause (ii) for such non-opioid treatment for pain relief.
(ii)

Amount of payment.—
Subject to the limitation under clause (iii), the amount of the payment specified in this clause is, with respect to a non-opioid treatment for pain relief that is—
(I)
a drug or biological product, the amount of payment for such drug or biological determined under section 1847A that exceeds the portion of the otherwise applicable Medicare OPD fee schedule that the Secretary determines is associated with the drug or biological; or
(II)
a medical device, the amount of the hospital’s charges for the device, adjusted to cost, that exceeds the portion of the otherwise applicable Medicare OPD fee schedule that the Secretary determines is associated with the device.
(iii)

Limitation.—
The additional payment amount specified in clause (ii) shall not exceed the estimated average of 18 percent of the OPD fee schedule amount for the OPD service (or group of services) with which the non-opioid treatment for pain relief is furnished, as determined by the Secretary.
(iv)

Definition of non-opioid treatment for pain relief.—
In this subparagraph, the term “non-opioid treatment for pain relief” means a drug, biological product, or medical device that—
(I)
in the case of a drug or biological product, has a label indication approved by the Food and Drug Administration to reduce postoperative pain, or produce postsurgical or regional analgesia, without acting upon the body’s opioid receptors;
(II)
in case of a medical device, is used to deliver a therapy to reduce postoperative pain, or produce postsurgical or regional analgesia, and has—
- (aa)
an application under section 515 of the Federal Food, Drug, and Cosmetic Act that has been approved with respect to the device, been cleared for market under section 510(k) of such Act, or is exempt from the requirements of section 510(k) of such Act pursuant to subsection (l) or (m) or section 510 of such Act or section 520(g) of such Act; and
- (bb)
demonstrated the ability to replace, reduce, or avoid intraoperative or postoperative opioid use or the quantity of opioids prescribed in a clinical trial or through data published in a peer-reviewed journal;
(III)
does not receive transitional pass-through payment under paragraph (6); and
(IV)
has payment that is packaged into a payment for a covered OPD service (or group of services).
(17)

Quality reporting.—
(A)

Reduction in update for failure to report.—
(i)

In general.—
For purposes of paragraph (3)(C)(iv) for 2009 and each subsequent year, in the case of a subsection (d) hospital (as defined in section 1886(d)(1)(B)) that does not submit, to the Secretary in accordance with this paragraph, data required to be submitted on measures selected under this paragraph with respect to such a year, the OPD fee schedule increase factor under paragraph (3)(C)(iv) for such year shall be reduced by 2.0 percentage points.
(ii)

Non-cumulative application.—
A reduction under this subparagraph shall apply only with respect to the year involved and the Secretary shall not take into account such reduction in computing the OPD fee schedule increase factor for a subsequent year.
(B)

Form and manner of submission.—
Each subsection (d) hospital shall submit data on measures selected under this paragraph to the Secretary in a form and manner, and at a time, specified by the Secretary for purposes of this paragraph.
(C)

Development of outpatient measures.—
(i)

In general.—
The Secretary shall develop measures that the Secretary determines to be appropriate for the measurement of the quality of care (including medication errors) furnished by hospitals in outpatient settings and that reflect consensus among affected parties and, to the extent feasible and practicable, shall include measures set forth by one or more national consensus building entities.
(ii)

Construction.—
Nothing in this paragraph shall be construed as preventing the Secretary from selecting measures that are the same as (or a subset of) the measures for which data are required to be submitted under section 1886(b)(3)(B)(viii).
(D)

Replacement of measures.—
For purposes of this paragraph, the Secretary may replace any measures or indicators in appropriate cases, such as where all hospitals are effectively in compliance or the measures or indicators have been subsequently shown not to represent the best clinical practice.
(E)

Availability of data.—
The Secretary shall establish procedures for making data submitted under this paragraph available to the public. Such procedures shall ensure that a hospital has the opportunity to review the data that are to be made public with respect to the hospital prior to such data being made public. The Secretary shall report quality measures of process, structure, outcome, patients' perspectives on care, efficiency, and costs of care that relate to services furnished in outpatient settings in hospitals on the Internet website of the Centers for Medicare & Medicaid Services.
(18)

Authorization of adjustment for cancer hospitals.—
(A)

Study.—
The Secretary shall conduct a study to determine if, under the system under this subsection, costs incurred by hospitals described in section 1886(d)(1)(B)(v) with respect to ambulatory payment classification groups exceed those costs incurred by other hospitals furnishing services under this subsection (as determined appropriate by the Secretary). In conducting the study under this subparagraph, the Secretary shall take into consideration the cost of drugs and biologicals incurred by such hospitals.
(B)

Authorization of adjustment.—
Insofar as the Secretary determines under subparagraph (A) that costs incurred by hospitals described in section 1886(d)(1)(B)(v) exceed those costs incurred by other hospitals furnishing services under this subsection, the Secretary shall, subject to subparagraph (C), provide for an appropriate adjustment under paragraph (2)(E) to reflect those higher costs effective for services furnished on or after January 1, 2011.
(C)

Target pcr adjustment.—
In applying section 419.43(i) of title 42 of the Code of Federal Regulations to implement the appropriate adjustment under this paragraph for services furnished on or after January 1, 2018, the Secretary shall use a target PCR that is 1.0 percentage points less than the target PCR that would otherwise apply. In addition to the percentage point reduction under the previous sentence, the Secretary may consider making an additional percentage point reduction to such target PCR that takes into account payment rates for applicable items and services described in paragraph (21)(C) other than for services furnished by hospitals described in section 1886(d)(1)(B)(v). In making any budget neutrality adjustments under this subsection for 2018 or a subsequent year, the Secretary shall not take into account the reduced expenditures that result from the application of this subparagraph.
(19)

Floor on area wage adjustment factor for hospital outpatient department services in frontier states.—
(A)

In general.—
Subject to subparagraph (B), with respect to covered OPD services furnished on or after January 1, 2011, the area wage adjustment factor applicable under the payment system established under this subsection to any hospital outpatient department which is located in a frontier State (as defined in section 1886(d)(3)(E)(iii)(II)) may not be less than 1.00. The preceding sentence shall not be applied in a budget neutral manner.
(B)

Limitation.—
This paragraph shall not apply to any hospital outpatient department located in a State that receives a non-labor related share adjustment under section 1886(d)(5)(H).
(20)

Not budget neutral application of reduced expenditures resulting from quality incentives for computed tomography.—
The Secretary shall not take into account the reduced expenditures that result from the application of section 1834(p) in making any budget neutrality adjustments this subsection.
(21)

Services furnished by an off-campus outpatient department of a provider.—
(A)

Applicable items and services.—
For purposes of paragraph (1)(B)(v) and this paragraph, the term “applicable items and services” means items and services other than items and services furnished by a dedicated emergency department (as defined in section 489.24(b) of title 42 of the Code of Federal Regulations).
(B)

Off-campus outpatient department of a provider.—
(i)

In general.—
For purposes of paragraph (1)(B)(v) and this paragraph, subject to the subsequent provisions of this subparagraph, the term “off-campus outpatient department of a provider” means a department of a provider (as defined in section 413.65(a)(2) of title 42 of the Code of Federal Regulations, as in effect as of the date of the enactment of this paragraph) that is not located—
(I)
on the campus (as defined in such section 413.65(a)(2)) of such provider; or
(II)
within the distance (described in such definition of campus) from a remote location of a hospital facility (as defined in such section 413.65(a)(2)).
(ii)

Exception.—
For purposes of paragraph (1)(B)(v) and this paragraph, the term “off-campus outpatient department of a provider” shall not include a department of a provider (as so defined) that was billing under this subsection with respect to covered OPD services furnished prior to the date of the enactment of this paragraph.
(iii)

Deemed treatment for 2017.—
For purposes of applying clause (ii) with respect to applicable items and services furnished during 2017, a department of a provider (as so defined) not described in such clause is deemed to be billing under this subsection with respect to covered OPD services furnished prior to November 2, 2015, if the Secretary received from the provider prior to December 2, 2015, an attestation (pursuant to section 413.65(b)(3) of title 42 of the Code of Federal Regulations) that such department was a department of a provider (as so defined).
(iv)

Alternative exception beginning with 2018.—
For purposes of paragraph (1)(B)(v) and this paragraph with respect to applicable items and services furnished during 2018 or a subsequent year, the term “off-campus outpatient department of a provider” also shall not include a department of a provider (as so defined) that is not described in clause (ii) if—
(I)
the Secretary receives from the provider an attestation (pursuant to such section 413.65(b)(3)) not later than December 31, 2016 (or, if later, 60 days after the date of the enactment of this clause), that such department met the requirements of a department of a provider specified in section 413.65 of title 42 of the Code of Federal Regulations;
(II)
the provider includes such department as part of the provider on its enrollment form in accordance with the enrollment process under section 1866(j); and
(III)
the department met the mid-build requirement of clause (v) and the Secretary receives, not later than 60 days after the date of the enactment of this clause, from the chief executive officer or chief operating officer of the provider a written certification that the department met such requirement.
(v)

Mid-build requirement described.—
The mid-build requirement of this clause is, with respect to a department of a provider, that before November 2, 2015, the provider had a binding written agreement with an outside unrelated party for the actual construction of such department.
(vi)

Exclusion for certain cancer hospitals.—
For purposes of paragraph (1)(B)(v) and this paragraph with respect to applicable items and services furnished during 2017 or a subsequent year, the term “off-campus outpatient department of a provider” also shall not include a department of a provider (as so defined) that is not described in clause (ii) if the provider is a hospital described in section 1886(d)(1)(B)(v) and—
(I)
in the case of a department that met the requirements of section 413.65 of title 42 of the Code of Federal Regulations after November 1, 2015, and before the date of the enactment of this clause, the Secretary receives from the provider an attestation that such department met such requirements not later than 60 days after such date of enactment; or
(II)
in the case of a department that meets such requirements after such date of enactment, the Secretary receives from the provider an attestation that such department meets such requirements not later than 60 days after the date such requirements are first met with respect to such department.
(vii)

Audit.—
Not later than December 31, 2018, the Secretary shall audit the compliance with requirements of clause (iv) with respect to each department of a provider to which such clause applies. Not later than 2 years after the date the Secretary receives an attestation under clause (vi) relating to compliance of a department of a provider with requirements referred to in such clause, the Secretary shall audit the compliance with such requirements with respect to the department. If the Secretary finds as a result of an audit under this clause that the applicable requirements were not met with respect to such department, the department shall not be excluded from the term “off-campus outpatient department of a provider” under such clause.
(viii)

Implementation.—
For purposes of implementing clauses (iii) through (vii):
(I)
Notwithstanding any other provision of law, the Secretary may implement such clauses by program instruction or otherwise.
(II)
Subchapter I of chapter 35 of title 44, United States Code, shall not apply.
(III)
For purposes of carrying out this subparagraph with respect to clauses (iii) and (iv) (and clause (vii) insofar as it relates to clause (iv)), $10,000,000 shall be available from the Federal Supplementary Medical Insurance Trust Fund under section 1841, to remain available until December 31, 2018. For purposes of carrying out this subparagraph with respect to clause (vi) (and clause (vii) insofar as it relates to such clause), $2,000,000 shall be available from the Federal Supplementary Medical Insurance Trust Fund under section 1841, to remain available until expended.
(C)

Availability of payment under other payment systems.—
Payments for applicable items and services furnished by an off-campus outpatient department of a provider that are described in paragraph (1)(B)(v) shall be made under the applicable payment system under this part (other than under this subsection) if the requirements for such payment are otherwise met.
(D)

Information needed for implementation.—
Each hospital shall provide to the Secretary such information as the Secretary determines appropriate to implement this paragraph and paragraph (1)(B)(v) (which may include reporting of information on a hospital claim using a code or modifier and reporting information about off-campus outpatient departments of a provider on the enrollment form described in section 1866(j)).
(E)

Limitations.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the following:
(i)
The determination of the applicable items and services under subparagraph (A) and applicable payment systems under subparagraph (C).
(ii)
The determination of whether a department of a provider meets the term described in subparagraph (B).
(iii)
Any information that hospitals are required to report pursuant to subparagraph (D).
(iv)
The determination of an audit under subparagraph (B)(vii).
(22)

Review and revisions of payments for non-opioid alternative treatments.—
(A)

In general.—
With respect to payments made under this subsection for covered OPD services (or groups of services), including covered OPD services assigned to a comprehensive ambulatory payment classification, the Secretary—
(i)
shall, as soon as practicable, conduct a review (part of which may include a request for information) of payments for opioids and evidence-based non-opioid alternatives for pain management (including drugs and devices, nerve blocks, surgical injections, and neuromodulation) with a goal of ensuring that there are not financial incentives to use opioids instead of non-opioid alternatives;
(ii)
may, as the Secretary determines appropriate, conduct subsequent reviews of such payments; and
(iii)
shall consider the extent to which revisions under this subsection to such payments (such as the creation of additional groups of covered OPD services to classify separately those procedures that utilize opioids and non-opioid alternatives for pain management) would reduce payment incentives to use opioids instead of non-opioid alternatives for pain management.
(B)

Priority.—
In conducting the review under clause (i) of subparagraph (A) and considering revisions under clause (iii) of such subparagraph, the Secretary shall focus on covered OPD services (or groups of services) assigned to a comprehensive ambulatory payment classification, ambulatory payment classifications that primarily include surgical services, and other services determined by the Secretary which generally involve treatment for pain management.
(C)

Revisions.—
If the Secretary identifies revisions to payments pursuant to subparagraph (A)(iii), the Secretary shall, as determined appropriate, begin making such revisions for services furnished on or after January 1, 2020. Revisions under the previous sentence shall be treated as adjustments for purposes of application of paragraph (9)(B).
(D)

Rules of construction.—
Nothing in this paragraph shall be construed to preclude the Secretary—
(i)
from conducting a demonstration before making the revisions described in subparagraph (C); or
(ii)
prior to implementation of this paragraph, from changing payments under this subsection for covered OPD services (or groups of services) which include opioids or non-opioid alternatives for pain management.
(u)

Incentive Payments for Physician Scarcity Areas.—
(1)

In general.—
In the case of physicians' services furnished on or after January 1, 2005, and before July 1, 2008—
(A)
by a primary care physician in a primary care scarcity county (identified under paragraph (4)); or
(B)
by a physician who is not a primary care physician in a specialist care scarcity county (as so identified),
in addition to the amount of payment that would otherwise be made for such services under this part, there also shall be paid an amount equal to 5 percent of the payment amount for the service under this part.
(2)

Determination of ratios of physicians to medicare beneficiaries in area.—
Based upon available data, the Secretary shall establish for each county or equivalent area in the United States, the following:
(A)

Number of physicians practicing in the area.—
The number of physicians who furnish physicians' services in the active practice of medicine or osteopathy in that county or area, other than physicians whose practice is exclusively for the Federal Government, physicians who are retired, or physicians who only provide administrative services. Of such number, the number of such physicians who are—
(i)
primary care physicians; or
(ii)
physicians who are not primary care physicians.
(B)

Number of medicare beneficiaries residing in the area.—
The number of individuals who are residing in the county and are entitled to benefits under part A or enrolled under this part, or both (in this subsection referred to as “individuals”).
(C)

Determination of ratios.—
(i)

Primary care ratio.—
The ratio (in this paragraph referred to as the “primary care ratio”) of the number of primary care physicians (determined under subparagraph (A)(i)), to the number of individuals determined under subparagraph (B).
(ii)

Specialist care ratio.—
The ratio (in this paragraph referred to as the “specialist care ratio”) of the number of other physicians (determined under subparagraph (A)(ii)), to the number of individuals determined under subparagraph (B).
(3)

Ranking of counties.—
The Secretary shall rank each such county or area based separately on its primary care ratio and its specialist care ratio.
(4)

Identification of counties.—
(A)

In general.—
The Secretary shall identify—
(i)
those counties and areas (in this paragraph referred to as “primary care scarcity counties”) with the lowest primary care ratios that represent, if each such county or area were weighted by the number of individuals determined under paragraph (2)(B), an aggregate total of 20 percent of the total of the individuals determined under such paragraph; and
(ii)
those counties and areas (in this subsection referred to as “specialist care scarcity counties”) with the lowest specialist care ratios that represent, if each such county or area were weighted by the number of individuals determined under paragraph (2)(B), an aggregate total of 20 percent of the total of the individuals determined under such paragraph.
(B)

Periodic revisions.—
The Secretary shall periodically revise the counties or areas identified in subparagraph (A) (but not less often than once every three years) unless the Secretary determines that there is no new data available on the number of physicians practicing in the county or area or the number of individuals residing in the county or area, as identified in paragraph (2).
(C)

Identification of counties where service is furnished.—
For purposes of paying the additional amount specified in paragraph (1), if the Secretary uses the 5-digit postal ZIP Code where the service is furnished, the dominant county of the postal ZIP Code (as determined by the United States Postal Service, or otherwise) shall be used to determine whether the postal ZIP Code is in a scarcity county identified in subparagraph (A) or revised in subparagraph (B).
(D)

Special rule.—
With respect to physicians' services furnished on or after January 1, 2008, and before July 1, 2008, for purposes of this subsection, the Secretary shall use the primary care scarcity counties and the specialty care scarcity counties (as identified under the preceding provisions of this paragraph) that the Secretary was using under this subsection with respect to physicians' services furnished on December 31, 2007.
(E)

Judicial review.—
There shall be no administrative or judicial review under section 1869, 1878, or otherwise, respecting—
116.(i) the identification of a county or area;
(ii)
the assignment of a specialty of any physician under this paragraph;
(iii)
the assignment of a physician to a county under paragraph (2); or
(iv)
the assignment of a postal ZIP Code to a county or other area under this subsection.
(5)

Rural census tracts.—
To the extent feasible, the Secretary shall treat a rural census tract of a metropolitan statistical area (as determined under the most recent modification of the Goldsmith Modification, originally published in the Federal Register on February 27, 1992 (57 Fed. Reg. 6725)), as an equivalent area for purposes of qualifying as a primary care scarcity county or specialist care scarcity county under this subsection.
(6)

Physician Defined.—
For purposes of this paragraph, the term “physician” means a physician described in section 1861(r)(1) and the term “primary care physician” means a physician who is identified in the available data as a general practitioner, family practice practitioner, general internist, or obstetrician or gynecologist.
(7)

Publication of list of counties; posting on website.—
With respect to a year for which a county or area is identified or revised under paragraph (4), the Secretary shall identify such counties or areas as part of the proposed and final rule to implement the physician fee schedule under section 1848 for the applicable year. The Secretary shall post the list of counties identified or revised under paragraph (4) on the Internet website of the Centers for Medicare & Medicaid Services.
(v)

Increase of FQHC Payment Limits.—
In the case of services furnished by Federally qualified health centers (as defined in section 1861(aa)(4)), the Secretary shall establish payment limits with respect to such services under this part for services furnished—
(1)
in 2010, at the limits otherwise established under this part for such year increased by $5; and
(2)
in a subsequent year, at the limits established under this subsection for the previous year increased by the percentage increase in the MEI (as defined in section 1842(i)(3)) for such subsequent year.
(w)

Methods of Payment.—
The Secretary may develop alternative methods of payment for items and services provided under clinical trials and comparative effectiveness studies sponsored or supported by an agency of the Department of Health and Human Services, as determined by the Secretary, to those that would otherwise apply under this section, to the extent such alternative methods are necessary to preserve the scientific validity of such trials or studies, such as in the case where masking the identity of interventions from patients and investigators is necessary to comply with the particular trial or study design.
(x)

Incentive Payments for Primary Care Services.—
(1)

In general.—
In the case of primary care services furnished on or after January 1, 2011, and before January 1, 2016, by a primary care practitioner, in addition to the amount of payment that would otherwise be made for such services under this part, there also shall be paid (on a monthly or quarterly basis) an amount equal to 10 percent of the payment amount for the service under this part.
(2)

Definitions.—
In this subsection:
(A)

Primary care practitioner.—
The term “primary care practitioner” means an individual—
(i)
who—
(I)
is a physician (as described in section 1861(r)(1)) who has a primary specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine; or
(II)
is a nurse practitioner, clinical nurse specialist, or physician assistant (as those terms are defined in section 1861(aa)(5)); and
(ii)
for whom primary care services accounted for at least 60 percent of the allowed charges under this part for such physician or practitioner in a prior period as determined appropriate by the Secretary.
(B)

Primary care services.—
The term “primary care services” means services identified, as of January 1, 2009, by the following HCPCS codes (and as subsequently modified by the Secretary):
(i)
99201 through 99215.
(ii)
99304 through 99340.
(iii)
99341 through 99350.
(3)

Coordination with other payments.—
The amount of the additional payment for a service under this subsection and subsection (m) shall be determined without regard to any additional payment for the service under subsection (m) and this subsection, respectively. The amount of the additional payment for a service under this subsection and subsection (z) shall be determined without regard to any additional payment for the service under subsection (z) and this subsection, respectively.
(4)

Limitation on review.—
There shall be no administrative or judicial review under section 1869, 1878, or otherwise, respecting the identification of primary care practitioners under this subsection.
(y)

Incentive Payments for Major Surgical Procedures Furnished in Health Professional Shortage Areas.—
(1)

In general.—
In the case of major surgical procedures furnished on or after January 1, 2011, and before January 1, 2016, by a general surgeon in an area that is designated (under section 332(a)(1)(A) of the Public Health Service Act) as a health professional shortage area as identified by the Secretary prior to the beginning of the year involved, in addition to the amount of payment that would otherwise be made for such services under this part, there also shall be paid (on a monthly or quarterly basis) an amount equal to 10 percent of the payment amount for the service under this part.
(2)

Definitions.—
In this subsection:
(A)

General surgeon.—
In this subsection, the term “general surgeon” means a physician (as described in section 1861(r)(1)) who has designated CMS specialty code 02–General Surgery as their primary specialty code in the physician's enrollment under section 1866(j).
(B)

Major surgical procedures.—
The term “major surgical procedures” means physicians' services which are surgical procedures for which a 10-day or 90-day global period is used for payment under the fee schedule under section 1848(b).
(3)

Coordination with other payments.—
The amount of the additional payment for a service under this subsection and subsection (m) shall be determined without regard to any additional payment for the service under subsection (m) and this subsection, respectively. The amount of the additional payment for a service under this subsection and subsection (z) shall be determined without regard to any additional payment for the service under subsection (z) and this subsection, respectively.
(4)

Application.—
The provisions of paragraph (2) and (4) of subsection (m) shall apply to the determination of additional payments under this subsection in the same manner as such provisions apply to the determination of additional payments under subsection (m).
(z)

Incentive Payments for Participation in Eligible Alternative Payment Models.—
(1)

Payment incentive.—
(A)

In general.—
In the case of covered professional services furnished by an eligible professional during a year that is in the period beginning with 2019 and ending with 2026 and for which the professional is a qualifying APM participant with respect to such year, in addition to the amount of payment that would otherwise be made for such covered professional services under this part for such year, there also shall be paid to such professional an amount equal to 5 percent (or, with respect to 2025, 3.5 percent, or, with respect to 2026, 1.88 percent) of the estimated aggregate payment amounts for such covered professional services under this part for the preceding year. For purposes of the previous sentence, the payment amount for the preceding year may be an estimation for the full preceding year based on a period of such preceding year that is less than the full year. The Secretary shall establish policies to implement this subparagraph in cases in which payment for covered professional services furnished by a qualifying APM participant in an alternative payment model—
(i)
is made to an eligible alternative payment entity rather than directly to the qualifying APM participant; or
(ii)
is made on a basis other than a fee-for-service basis (such as payment on a capitated basis).
(B)

Form of payment.—
Payments under this subsection shall be made in a lump sum, on an annual basis, as soon as practicable.
(C)

Treatment of payment incentive.—
Payments under this subsection shall not be taken into account for purposes of determining actual expenditures under an alternative payment model and for purposes of determining or rebasing any benchmarks used under the alternative payment model.
(D)

Coordination.—
The amount of the additional payment under this subsection or subsection (m) shall be determined without regard to any additional payment under subsection (m) and this subsection, respectively. The amount of the additional payment under this subsection or subsection (x) shall be determined without regard to any additional payment under subsection (x) and this subsection, respectively. The amount of the additional payment under this subsection or subsection (y) shall be determined without regard to any additional payment under subsection (y) and this subsection, respectively.
(2)

Qualifying apm participant.—
For purposes of this subsection, the term “qualifying APM participant” means the following:
(A)

2019 and 2020.—
With respect to 2019 and 2020, an eligible professional for whom the Secretary determines that at least 25 percent of payments under this part for covered professional services furnished by such professional during the most recent period for which data are available (which may be less than a year) were attributable to such services furnished under this part through an eligible alternative payment entity.
(B)

2021 through 2026.—
With respect to each of 2021 through 2026, an eligible professional described in either of the following clauses:
(i)

Medicare payment threshold option.—
An eligible professional for whom the Secretary determines that at least 50 percent of payments under this part for covered professional services furnished by such professional during the most recent period for which data are available (which may be less than a year) were attributable to such services furnished under this part through an eligible alternative payment entity.
(ii)

Combination all-payer and medicare payment threshold option.—
An eligible professional—
(I)
for whom the Secretary determines, with respect to items and services furnished by such professional during the most recent period for which data are available (which may be less than a year), that at least 50 percent of the sum of—
- (aa)
payments described in clause (i); and
- (bb)
all other payments, regardless of payer (other than payments made by the Secretary of Defense or the Secretary of Veterans Affairs and other than payments made under title XIX in a State in which no medical home or alternative payment model is available under the State program under that title),
meet the requirement described in clause (iii)(I) with respect to payments described in item (aa) and meet the requirement described in clause (iii)(II) with respect to payments described in item (bb);
(II)
for whom the Secretary determines at least 25 percent of payments under this part for covered professional services furnished by such professional during the most recent period for which data are available (which may be less than a year) were attributable to such services furnished under this part through an eligible alternative payment entity; and
(III)
who provides to the Secretary such information as is necessary for the Secretary to make a determination under subclause (I), with respect to such professional.
(iii)

Requirement.—
For purposes of clause (ii)(I)—
(I)
the requirement described in this subclause, with respect to payments described in item (aa) of such clause, is that such payments are made to an eligible alternative payment entity; and
(II)
the requirement described in this subclause, with respect to payments described in item (bb) of such clause, is that such payments are made under arrangements in which—
- (aa)
quality measures comparable to measures under the performance category described in section 1848(q)(2)(B)(i) apply;
- (bb)
certified EHR technology is used; and
- (cc)
the eligible professional participates in an entity that—
(AA)
bears more than nominal financial risk if actual aggregate expenditures exceeds expected aggregate expenditures; or
(BB)
with respect to beneficiaries under title XIX, is a medical home that meets criteria comparable to medical homes expanded under section 1115A(c).
(C)

Beginning in 2027.—
With respect to 2027 and each subsequent year, an eligible professional described in either of the following clauses:
(i)

Medicare payment threshold option.—
An eligible professional for whom the Secretary determines that at least 75 percent of payments under this part for covered professional services furnished by such professional during the most recent period for which data are available (which may be less than a year) were attributable to such services furnished under this part through an eligible alternative payment entity.
(ii)

Combination all-payer and medicare payment threshold option.—
An eligible professional—
(I)
for whom the Secretary determines, with respect to items and services furnished by such professional during the most recent period for which data are available (which may be less than a year), that at least 75 percent of the sum of—
- (aa)
payments described in clause (i); and
- (bb)
all other payments, regardless of payer (other than payments made by the Secretary of Defense or the Secretary of Veterans Affairs and other than payments made under title XIX in a State in which no medical home or alternative payment model is available under the State program under that title),
meet the requirement described in clause (iii)(I) with respect to payments described in item (aa) and meet the requirement described in clause (iii)(II) with respect to payments described in item (bb);
(II)
for whom the Secretary determines at least 25 percent of payments under this part for covered professional services furnished by such professional during the most recent period for which data are available (which may be less than a year) were attributable to such services furnished under this part through an eligible alternative payment entity; and
(III)
who provides to the Secretary such information as is necessary for the Secretary to make a determination under subclause (I), with respect to such professional.
(iii)

Requirement.—
For purposes of clause (ii)(I)—
(I)
the requirement described in this subclause, with respect to payments described in item (aa) of such clause, is that such payments are made to an eligible alternative payment entity; and
(II)
the requirement described in this subclause, with respect to payments described in item (bb) of such clause, is that such payments are made under arrangements in which—
- (aa)
quality measures comparable to measures under the performance category described in section 1848(q)(2)(B)(i) apply;
- (bb)
certified EHR technology is used; and
- (cc)
the eligible professional participates in an entity that—
(AA)
bears more than nominal financial risk if actual aggregate expenditures exceeds expected aggregate expenditures; or
(BB)
with respect to beneficiaries under title XIX, is a medical home that meets criteria comparable to medical homes expanded under section 1115A(c).
(D)

Use of patient approach.—
The Secretary may base the determination of whether an eligible professional is a qualifying APM participant under this subsection and the determination of whether an eligible professional is a partial qualifying APM participant under section 1848(q)(1)(C)(iii) by using counts of patients in lieu of using payments and using the same or similar percentage criteria (as specified in this subsection and such section, respectively), as the Secretary determines appropriate. With respect to 2023, 2024, 2025, and 2026, the Secretary shall use the same percentage criteria for counts of patients that are used in 2022.
(3)

Additional definitions.—
In this subsection:
(A)

Covered professional services.—
The term “covered professional services” has the meaning given that term in section 1848(k)(3)(A).
(B)

Eligible professional.—
The term “eligible professional” has the meaning given that term in section 1848(k)(3)(B) and includes a group that includes such professionals.
(C)

Alternative payment model (apm).—
The term “alternative payment model” means, other than for purposes of subparagraphs (B)(ii)(I)(bb) and (C)(ii)(I)(bb) of paragraph (2), any of the following:
(i)
A model under section 1115A (other than a health care innovation award).
(ii)
The shared savings program under section 1899.
(iii)
A demonstration under section 1866C.
(iv)
A demonstration required by Federal law.
(D)

Eligible alternative payment entity.—
The term “eligible alternative payment entity” means, with respect to a year, an entity that—
(i)
participates in an alternative payment model that—
(I)
requires participants in such model to use certified EHR technology (as defined in subsection (o)(4)); and
(II)
provides for payment for covered professional services based on quality measures comparable to measures under the performance category described in section 1848(q)(2)(B)(i); and
(ii)
(I)
bears financial risk for monetary losses under such alternative payment model that are in excess of a nominal amount; or
(II)
is a medical home expanded under section 1115A(c).
(4)

Limitation.—
There shall be no administrative or judicial review under section 1869, 1878, or otherwise, of the following:
(A)
The determination that an eligible professional is a qualifying APM participant under paragraph (2) and the determination that an entity is an eligible alternative payment entity under paragraph (3)(D).
(B)
The determination of the amount of the 5 percent (or, with respect to 2025, 3.5 percent, or, with respect to 2026, 1.88 percent) payment incentive under paragraph (1)(A), including any estimation as part of such determination.
(aa)

Medical Review of Spinal Subluxation Services.—
(1)

In general.—
The Secretary shall implement a process for the medical review (as described in paragraph (2)) of treatment by a chiropractor described in section 1861(r)(5) by means of manual manipulation of the spine to correct a subluxation (as described in such section) of an individual who is enrolled under this part and apply such process to such services furnished on or after January 1, 2017, focusing on services such as—
(A)
services furnished by a such a chiropractor whose pattern of billing is aberrant compared to peers; and
(B)
services furnished by such a chiropractor who, in a prior period, has a services denial percentage in the 85th percentile or greater, taking into consideration the extent that service denials are overturned on appeal.
(2)

Medical review.—
(A)

Prior authorization medical review.—
(i)

In general.—
Subject to clause (ii), the Secretary shall use prior authorization medical review for services described in paragraph (1) that are furnished to an individual by a chiropractor described in section 1861(r)(5) that are part of an episode of treatment that includes more than 12 services. For purposes of the preceding sentence, an episode of treatment shall be determined by the underlying cause that justifies the need for services, such as a diagnosis code.
(ii)

Ending application of prior authorization medical review.—
The Secretary shall end the application of prior authorization medical review under clause (i) to services described in paragraph (1) by such a chiropractor if the Secretary determines that the chiropractor has a low denial rate under such prior authorization medical review. The Secretary may subsequently reapply prior authorization medical review to such chiropractor if the Secretary determines it to be appropriate and the chiropractor has, in the time period subsequent to the determination by the Secretary of a low denial rate with respect to the chiropractor, furnished such services described in paragraph (1).
(iii)

Early request for prior authorization review permitted.—
Nothing in this subsection shall be construed to prevent such a chiropractor from requesting prior authorization for services described in paragraph (1) that are to be furnished to an individual before the chiropractor furnishes the twelfth such service to such individual for an episode of treatment.
(B)

Type of review.—
The Secretary may use pre-payment review or post-payment review of services described in section 1861(r)(5) that are not subject to prior authorization medical review under subparagraph (A).
(C)

Relationship to law enforcement activities.—
The Secretary may determine that medical review under this subsection does not apply in the case where potential fraud may be involved.
(3)

No payment without prior authorization.—
With respect to a service described in paragraph (1) for which prior authorization medical review under this subsection applies, the following shall apply:
(A)

Prior authorization determination.—
The Secretary shall make a determination, prior to the service being furnished, of whether the service would or would not meet the applicable requirements of section 1862(a)(1)(A).
(B)

Denial of payment.—
Subject to paragraph (5), no payment may be made under this part for the service unless the Secretary determines pursuant to subparagraph (A) that the service would meet the applicable requirements of such section 1862(a)(1)(A).
(4)

Submission of information.—
A chiropractor described in section 1861(r)(5) may submit the information necessary for medical review by fax, by mail, or by electronic means. The Secretary shall make available the electronic means described in the preceding sentence as soon as practicable.
(5)

Timeliness.—
If the Secretary does not make a prior authorization determination under paragraph (3)(A) within 14 business days of the date of the receipt of medical documentation needed to make such determination, paragraph (3)(B) shall not apply.
(6)

Application of limitation on beneficiary liability.—
Where payment may not be made as a result of the application of paragraph (2)(B), section 1879 shall apply in the same manner as such section applies to a denial that is made by reason of section 1862(a)(1).
(7)

Review by contractors.—
The medical review described in paragraph (2) may be conducted by medicare administrative contractors pursuant to section 1874A(a)(4)(G) or by any other contractor determined appropriate by the Secretary that is not a recovery audit contractor.
(8)

Multiple services.—
The Secretary shall, where practicable, apply the medical review under this subsection in a manner so as to allow an individual described in paragraph (1) to obtain, at a single time rather than on a service-by-service basis, an authorization in accordance with paragraph (3)(A) for multiple services.
(9)

Construction.—
With respect to a service described in paragraph (1) that has been affirmed by medical review under this subsection, nothing in this subsection shall be construed to preclude the subsequent denial of a claim for such service that does not meet other applicable requirements under this Act.
(10)

Implementation.—
(A)

Authority.—
The Secretary may implement the provisions of this subsection by interim final rule with comment period.
(B)

Administration.—
Chapter 35 of title 44, United States Code, shall not apply to medical review under this subsection.
(bb)

Additional Payments for Certain Rural Health Clinics With Physicians or Practitioners Receiving DATA 2000 Waivers.—
(1)

In general.—
In the case of a rural health clinic with respect to which, beginning on or after January 1, 2019, rural health clinic services (as defined in section 1861(aa)(1)) are furnished for the treatment of opioid use disorder by a physician or practitioner who meets the requirements described in paragraph (3), the Secretary shall, subject to availability of funds under paragraph (4), make a payment (at such time and in such manner as specified by the Secretary) to such rural health clinic after receiving and approving an application described in paragraph (2). Such payment shall be in an amount determined by the Secretary, based on an estimate of the average costs of training for purposes of receiving a waiver described in paragraph (3)(B). Such payment may be made only one time with respect to each such physician or practitioner.
(2)

Application.—
In order to receive a payment described in paragraph (1), a rural health clinic shall submit to the Secretary an application for such a payment at such time, in such manner, and containing such information as specified by the Secretary. A rural health clinic may apply for such a payment for each physician or practitioner described in paragraph (1) furnishing services described in such paragraph at such clinic.
(3)

Requirements.—
For purposes of paragraph (1), the requirements described in this paragraph, with respect to a physician or practitioner, are the following:
(A)
The physician or practitioner is employed by or working under contract with a rural health clinic described in paragraph (1) that submits an application under paragraph (2).
(B)
The physician or practitioner first begins prescribing narcotic drugs in schedule III, IV, or V of section 202 of the Controlled Substances Act for the purpose of maintenance or detoxification treatment on or after January 1, 2021.
(4)

Funding.—
For purposes of making payments under this subsection, there are appropriated, out of amounts in the Treasury not otherwise appropriated, $2,000,000, which shall remain available until expended.
(cc)

Specified COVID–19 Testing-Related Services.—
For purposes of subsection (a)(1)(DD):
(1)

Description.—
(A)

In general.—
A specified COVID–19 testing-related service described in this paragraph is a medical visit that—
(i)
is in any of the categories of HCPCS evaluation and management service codes described in subparagraph (B);
(ii)
is furnished during any portion of the emergency period (as defined in section 1135(g)(1)(B)) (beginning on or after the date of enactment of this subsection);
(iii)
results in an order for or administration of a clinical diagnostic laboratory test described in section 1852(a)(1)(B)(iv)(IV); and
(iv)
relates to the furnishing or administration of such test or to the evaluation of such individual for purposes of determining the need of such individual for such test.
(B)

Categories of hcpcs codes.—
For purposes of subparagraph (A), the categories of HCPCS evaluation and management services codes are the following:
(i)
Office and other outpatient services.
(ii)
Hospital observation services.
(iii)
Emergency department services.
(iv)
Nursing facility services.
(v)
Domiciliary, rest home, or custodial care services.
(vi)
Home services.
(vii)
Online digital evaluation and management services.
(2)

Specified outpatient payment provision.—
A specified outpatient payment provision described in this paragraph is any of the following:
(A)
The hospital outpatient prospective payment system under subsection (t).
(B)
The physician fee schedule under section 1848.
(C)
The prospective payment system developed under section 1834(o).
(D)
Section 1834(g), with respect to an outpatient critical access hospital service.
(E)
The payment basis determined in regulations pursuant to section 1833(a)(3) for rural health clinic services.
(dd)

Special Coinsurance Rule for Certain Colorectal Cancer Screening Tests.—
(1)

In general.—
In the case of a colorectal cancer screening test to which paragraph (1)(Y) of subsection (a) would not apply but for the third sentence of such subsection that is furnished during a year beginning on or after January 1, 2022, and before January 1, 2030, the amount paid shall be equal to the specified percent (as defined in paragraph (2)) for such year of the lesser of the actual charge for the service or the amount determined under the fee schedule that applies to such test under this part (or, in the case such test is a covered OPD service (as defined in subsection (t)(1)(B)), the amount determined under subsection (t)).
(2)

Specified percent defined.—
For purposes of paragraph (1), the term “specified percent” means—
(A)
for 2022, 80 percent;
(B)
for 2023 through 2026, 85 percent; and
(C)
for 2027 through 2029, 90 percent.

SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES
Sec. 1834.
[42 U.S.C. 1395m]
(a)

Payment for Durable Medical Equipment.—
(1)

General rule for payment.—
(A)

In general.—
With respect to a covered item (as defined in paragraph (13)) for which payment is determined under this subsection, payment shall be made in the frequency specified in paragraphs (2) through (7) and in an amount equal to 80 percent of the payment basis described in subparagraph (B).
(B)

Payment basis.—
Subject to subparagraph (F)(i), the payment basis described in this subparagraph is the lesser of—
(i)
the actual charge for the item, or
(ii)
the payment amount recognized under paragraphs (2) through (7) of this subsection for the item;
except that clause (i) shall not apply if the covered item is furnished by a public home health agency (or by another home health agency which demonstrates to the satisfaction of the Secretary that a significant portion of its patients are low income) free of charge or at nominal charges to the public.
(C)

Exclusive payment rule.—
Subject to subparagraph (F)(ii), this subsection shall constitute the exclusive provision of this title for payment for covered items under this part or under part A to a home health agency.
(D)

Reduction in fee schedules for certain items.—
With respect to a seat-lift chair or transcutaneous electrical nerve stimulator furnished on or after April 1, 1990, the Secretary shall reduce the payment amount applied under subparagraph (B)(ii) for such an item by 15 percent, and, in the case of a transcutaneous electrical nerve stimulator furnished on or after January 1, 1991, the Secretary shall further reduce such payment amount (as previously reduced) by 45 percent.
(E)

Clinical conditions for coverage.—
(i)

In general.—
The Secretary shall establish standards for clinical conditions for payment for covered items under this subsection.
(ii)

Requirements.—
The standards established under clause (i) shall include the specification of types or classes of covered items that require, as a condition of payment under this subsection, a face-to-face examination of the individual by a physician (as defined in section 1861(r)), a physician assistant, nurse practitioner, or a clinical nurse specialist (as those terms are defined in section 1861(aa)(5)) and a prescription for the item.
(iii)

Priority of establishment of standards.—
In establishing the standards under this subparagraph, the Secretary shall first establish standards for those covered items for which the Secretary determines there has been a proliferation of use, consistent findings of charges for covered items that are not delivered, or consistent findings of falsification of documentation to provide for payment of such covered items under this part.
(iv)

Standards for power wheelchairs.—
Effective on the date of the enactment of this subparagraph, in the case of a covered item consisting of a motorized or power wheelchair for an individual, payment may not be made for such covered item unless a physician (as defined in section 1861(r)(1)), a physician assistant, nurse practitioner, or a clinical nurse specialist (as those terms are defined in section 1861(aa)(5)) has conducted a face-to-face examination of the individual and written a prescription for the item.
(v)

Limitation on payment for covered items.—
Payment may not be made for a covered item under this subsection unless the item meets any standards established under this subparagraph for clinical condition of coverage.
(F)

Application of competitive acquisition; limitation of inherent reasonableness authority.—
In the case of covered items furnished on or after January 1, 2011, subject to subparagraphs (G) and (H), that are included in a competitive acquisition program in a competitive acquisition area under section 1847(a)—
(i)
the payment basis under this subsection for such items and services furnished in such area shall be the payment basis determined under such competitive acquisition program;
(ii)
the Secretary may (and, in the case of covered items furnished on or after January 1, 2016, subject to clause (iii), shall) use information on the payment determined under such competitive acquisition programs to adjust the payment amount otherwise recognized under subparagraph (B)(ii) for an area that is not a competitive acquisition area under section 1847 and in the case of such adjustment, paragraph (10)(B) shall not be applied; and
(iii)
in the case of covered items furnished on or after January 1, 2016, the Secretary shall continue to make such adjustments described in clause (ii) as, under such competitive acquisition programs, additional covered items are phased in or information is updated as contracts under section 1847 are recompeted in accordance with section 1847(b)(3)(B).
(G)

Use of information on competitive bid rates.—
The Secretary shall specify by regulation the methodology to be used in applying the provisions of subparagraph (F)(ii) and subsection (h)(1)(H)(ii). In promulgating such regulation, the Secretary shall consider the costs of items and services in areas in which such provisions would be applied compared to the payment rates for such items and services in competitive acquisition areas.In the case of items and services furnished on or after January 1, 2019, in making any adjustments under clause (ii) or (iii) of subparagraph (F), under subsection (h)(1)(H)(ii), or under section 1842(s)(3)(B), the Secretary shall—
(i)
solicit and take into account stakeholder input; and
(ii)
take into account the highest amount bid by a winning supplier in a competitive acquisition area and a comparison of each of the following with respect to non-competitive acquisition areas and competitive acquisition areas:
(I)
The average travel distance and cost associated with furnishing items and services in the area.
(II)
The average volume of items and services furnished by suppliers in the area.
(III)
The number of suppliers in the area.
(H)

Diabetic supplies.—
(i)

In general.—
On or after the date described in clause (ii), the payment amount under this part for diabetic supplies, including testing strips, that are non-mail order items (as defined by the Secretary) shall be equal to the single payment amounts established under the national mail order competition for diabetic supplies under section 1847.
(ii)

Date described.—
The date described in this clause is the date of the implementation of the single payment amounts under the national mail order competition for diabetic supplies under section 1847.
(I)

Treatment of vacuum erection systems.—
Effective for items and services furnished on and after July 1, 2015, vacuum erection systems described as prosthetic devices described in section 1861(s)(8) shall be treated in the same manner as erectile dysfunction drugs are treated for purposes of section 1860D-2(e)(2)(A).
(2)

Payment for inexpensive and other routinely purchased durable medical equipment.—
(A)

In general.—
Payment for an item of durable medical equipment (as defined in paragraph (13))—
(i)
the purchase price of which does not exceed $150,
(ii)
which the Secretary determines is acquired at least 75 percent of the time by purchase,
(iii)
which is an accessory used in conjunction with a nebulizer, aspirator, or a ventilator excluded under paragraph (3)(A), or
(iv)
in the case of devices furnished on or after October 1, 2015, which serves as a speech generating device or which is an accessory that is needed for the individual to effectively utilize such a device,
shall be made on a rental basis or in a lump-sum amount for the purchase of the item. The payment amount recognized for purchase or rental of such equipment is the amount specified in subparagraph (B) for purchase or rental, except that the total amount of payments with respect to an item may not exceed the payment amount specified in subparagraph (B) with respect to the purchase of the item.
(B)

Payment amount.—
For purposes of subparagraph (A), the amount specified in this subparagraph, with respect to the purchase or rental of an item furnished in a carrier service area—
(i)
in 1989 and in 1990 is the average reasonable charge in the area for the purchase or rental, respectively, of the item for the 12-month period ending on June 30, 1987, increased by the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 6-month period ending with December 1987;
(ii)
in 1991 is the sum of (I) 67 percent of the local payment amount for the item or device computed under subparagraph (C)(i)(I) for 1991, and (II) 33 percent of the national limited payment amount for the item or device computed under subparagraph (C)(ii) for 1991;
(iii)
in 1992 is the sum of (I) 33 percent of the local payment amount for the item or device computed under subparagraph (C)(i)(II) for 1992, and (II) 67 percent of the national limited payment amount for the item or device computed under subparagraph (C)(ii) for 1992; and
(iv)
in 1993 and each subsequent year is the national limited payment amount for the item or device computed under subparagraph (C)(ii) for that year (reduced by 10 percent, in the case of a blood glucose testing strip furnished after 1997 for an individual with diabetes).
(C)

Computation of local payment amount and national limited payment amount.—
For purposes of subparagraph (B)—
(i)
the local payment amount for an item or device for a year is equal to—
(I)
for 1991, the amount specified in subparagraph (B)(i) for 1990 increased by the covered item update for 1991, and
(II)
for 1992, 1993, and 1994 the amount determined under this clause for the preceding year increased by the covered item update for the year; and
(ii)
the national limited payment amount for an item or device for a year is equal to—
(I)
for 1991, the local payment amount determined under clause (i) for such item or device for that year, except that the national limited payment amount may not exceed 100 percent of the weighted average of all local payment amounts determined under such clause for such item for that year and may not be less than 85 percent of the weighted average of all local payment amounts determined under such clause for such item,
(II)
for 1992 and 1993, the amount determined under this clause for the preceding year increased by the covered item update for such subsequent year,
(III)
for 1994, the local payment amount determined under clause (i) for such item or device for that year, except that the national limited payment amount may not exceed 100 percent of the median of all local payment amounts determined under such clause for such item for that year and may not be less than 85 percent of the median of all local payment amounts determined under such clause for such item or device for that year, and
(IV)
for each subsequent year, the amount determined under this clause for the preceding year increased by the covered item update for such subsequent year.
(3)

Payment for items requiring frequent and substantial servicing.—
(A)

In general.—
Payment for a covered item (such as IPPB machines and ventilators, excluding ventilators that are either continuous airway pressure devices or intermittent assist devices with continuous airway pressure devices) for which there must be frequent and substantial servicing in order to avoid risk to the patient's health shall be made on a monthly basis for the rental of the item and the amount recognized is the amount specified in subparagraph (B).
(B)

Payment amount.—
For purposes of subparagraph (A), the amount specified in this subparagraph, with respect to an item or device furnished in a carrier service area—
(i)
in 1989 and in 1990 is the average reasonable charge in the area for the rental of the item or device for the 12-month period ending with June 1987, increased by the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 6-month period ending with December 1987;
(ii)
in 1991 is the sum of (I) 67 percent of the local payment amount for the item or device computed under subparagraph (C)(i)(I) for 1991, and (II) 33 percent of the national limited payment amount for the item or device computed under subparagraph (C)(ii) for 1991;
(iii)
in 1992 is the sum of (I) 33 percent of the local payment amount for the item or device computed under subparagraph (C)(i)(II) for 1992, and (II) 67 percent of the national limited payment amount for the item or device computed under subparagraph (C)(ii) for 1992; and
(iv)
in 1993 and each subsequent year is the national limited payment amount for the item or device computed under subparagraph (C)(ii) for that year.
(C)

Computation of local payment amount and national limited payment amount.—
For purposes of subparagraph (B)—
(i)
the local payment amount for an item or device for a year is equal to—
(I)
for 1991, the amount specified in subparagraph (B)(i) for 1990 increased by the covered item update for 1991, and
(II)
for 1992, 1993, and 1994 the amount determined under this clause for the preceding year increased by the covered item update for the year; and
(ii)
the national limited payment amount for an item or device for a year is equal to—
(I)
for 1991, the local payment amount determined under clause (i) for such item or device for that year, except that the national limited payment amount may not exceed 100 percent of the weighted average of all local payment amounts determined under such clause for such item for that year and may not be less than 85 percent of the weighted average of all local payment amounts determined under such clause for such item,
(II)
for 1992 and 1993, the amount determined under this clause for the preceding year increased by the covered item update for such subsequent year,
(III)
for 1994, the local payment amount determined under clause (i) for such item or device for that year, except that the national limited payment amount may not exceed 100 percent of the median of all local payment amounts determined under such clause for such item for that year and may not be less than 85 percent of the median of all local payment amounts determined under such clause for such item or device for that year, and
(IV)
for each subsequent year, the amount determined under this clause for the preceding year increased by the covered item update for such subsequent year.
(4)

Payment for certain customized items.—
Payment with respect to a covered item that is uniquely constructed or substantially modified to meet the specific needs of an individual patient, and for that reason cannot be grouped with similar items for purposes of payment under this title, shall be made in a lump-sum amount (A) for the purchase of the item in a payment amount based upon the carrier's individual consideration for that item, and (B) for the reasonable and necessary maintenance and servicing for parts and labor not covered by the supplier's or manufacturer's warranty, when necessary during the period of medical need, and the amount recognized for such maintenance and servicing shall be paid on a lump-sum, as needed basis based upon the carrier's individual consideration for that item. In the case of a wheelchair furnished on or after January 1, 1992, the wheelchair shall be treated as a customized item for purposes of this paragraph if the wheelchair has been measured, fitted, or adapted in consideration of the patient's body size, disability, period of need, or intended use, and has been assembled by a supplier or ordered from a manufacturer who makes available customized features, modifications, or components for wheelchairs that are intended for an individual patient's use in accordance with instructions from the patient's physician.
(5)

Payment for oxygen and oxygen equipment.—
(A)

In general.—
Payment for oxygen and oxygen equipment shall be made on a monthly basis in the monthly payment amount recognized under paragraph (9) for oxygen and oxygen equipment (other than portable oxygen equipment), subject to subparagraphs (B), (C), (E), and (F).
(B)

Add-on for portable oxygen equipment.—
When portable oxygen equipment is used, but subject to subparagraph (D), the payment amount recognized under subparagraph (A) shall be increased by the monthly payment amount recognized under paragraph (9) for portable oxygen equipment.
(C)

Volume adjustment.—
When the attending physician prescribes an oxygen flow rate—
(i)
exceeding 4 liters per minute, the payment amount recognized under subparagraph (A), subject to subparagraph (D), shall be increased by 50 percent, or
(ii)
of less than 1 liter per minute, the payment amount recognized under subparagraph (A) shall be decreased by 50 percent.
(D)

Limit on adjustment.—
When portable oxygen equipment is used and the attending physician prescribes an oxygen flow rate exceeding 4 liters per minute, there shall only be an increase under either subparagraph (B) or (C), whichever increase is larger, and not under both such subparagraphs.
(E)

Recertification for patients receiving home oxygen therapy.—
In the case of a patient receiving home oxygen therapy services who, at the time such services are initiated, has an initial arterial blood gas value at or above a partial pressure of 56 or an arterial oxygen saturation at or above 89 percent (or such other values, pressures, or criteria as the Secretary may specify) no payment may be made under this part for such services after the expiration of the 90-day period that begins on the date the patient first receives such services unless the patient's attending physician certifies that, on the basis of a follow-up test of the patient's arterial blood gas value or arterial oxygen saturation conducted during the final 30 days of such 90-day period, there is a medical need for the patient to continue to receive such services.
(F)

Rental Cap 21.—
^{21}
The amendment to the heading for paragraph (5)(F) made by section 144(b)(1)(A) of Public Law 110–275 was executed to reflect probable intent of Congress. The casing for the first word struck and the first word inserted probably should have appeared in small caps.
(i)

In general.—
Payment for oxygen equipment (including portable oxygen equipment) under this paragraph may not extend over a period of continuous use (as determined by the Secretary) of longer than 36 months.
(ii)

Payments and rules after rental cap.—
After the 36th continuous month during which payment is made for the equipment under this paragraph—
(I)
the supplier furnishing such equipment under this subsection shall continue to furnish the equipment during any period of medical need for the remainder of the reasonable useful lifetime of the equipment, as determined by the Secretary;
(II)
payments for oxygen shall continue to be made in the amount recognized for oxygen under paragraph (9) for the period of medical need; and
(III)
maintenance and servicing payments shall, if the Secretary determines such payments are reasonable and necessary, be made (for parts and labor not covered by the supplier's or manufacturer's warranty, as determined by the Secretary to be appropriate for the equipment), and such payments shall be in an amount determined to be appropriate by the Secretary.
(6)

Payment for other covered items (other than durable medical equipment).—
Payment for other covered items (other than durable medical equipment and other covered items described in paragraph (3), (4), or (5)) shall be made in a lump-sum amount for the purchase of the item in the amount of the purchase price recognized under paragraph (8).
(7)

Payment for other items of durable medical equipment.—
(A)

Payment.—
In the case of an item of durable medical equipment not described in paragraphs (2) through (6), the following rules shall apply:
(i)

Rental.—
(I)

In general.—
Except as provided in clause (iii), payment for the item shall be made on a monthly basis for the rental of the item during the period of medical need (but payments under this clause may not extend over a period of continuous use (as determined by the Secretary) of longer than 13 months).
(II)

Payment amount.—
Subject to subclause (III) and subparagraph (B), the amount recognized for the item, for each of the first 3 months of such period, is 10 percent of the purchase price recognized under paragraph (8) with respect to the item, and, for each of the remaining months of such period, is 7.5 percent of such purchase price.
(III)

Special rule for power-driven wheelchairs.—
For purposes of payment for power-driven wheelchairs, subclause (II) shall be applied by substituting “15 percent” and “6 percent” for “10 percent” and “7.5 percent”, respectively.
(ii)

Ownership after rental.—
On the first day that begins after the 13th continuous month during which payment is made for the rental of an item under clause (i), the supplier of the item shall transfer title to the item to the individual.
(iii)

Purchase agreement option for complex, rehabilitative power-driven wheelchairs.—
In the case of a complex, rehabilitative power-driven wheelchair, at the time the supplier furnishes the item, the supplier shall offer the individual the option to purchase the item, and payment for such item shall be made on a lump-sum basis if the individual exercises such option.
(iv)

Maintenance and servicing.—
After the supplier transfers title to the item under clause (ii) or in the case of a power-driven wheelchair for which a purchase agreement has been entered into under clause (iii), maintenance and servicing payments shall, if the Secretary determines such payments are reasonable and necessary, be made (for parts and labor not covered by the supplier's or manufacturer's warranty, as determined by the Secretary to be appropriate for the particular type of durable medical equipment), and such payments shall be in an amount determined to be appropriate by the Secretary.
(B)

Range for rental amounts.—
(i)

For 1989.—
For items furnished during 1989, the payment amount recognized under subparagraph (A)(i) shall not be more than 115 percent, and shall not be less than 85 percent, of the prevailing charge established for rental of the item in January 1987, increased by the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 6-month period ending with December 1987.
(ii)

For 1990.—
For items furnished during 1990, clause (i) shall apply in the same manner as it applies to items furnished during 1989.
(C)

Replacement of items.—
(i)

Establishment of reasonable useful lifetime.—
In accordance with clause (iii), the Secretary shall determine and establish a reasonable useful lifetime for items of durable medical equipment for which payment may be made under this paragraph.
(ii)

Payment for replacement items.—
If the reasonable lifetime of such an item, as so established, has been reached during a continuous period of medical need, or the carrier determines that the item is lost or irreparably damaged, the patient may elect to have payment for an item serving as a replacement for such item made—
(I)
on a monthly basis for the rental of the replacement item in accordance with subparagraph (A); or
(II)
in the case of an item for which a purchase agreement has been entered into under subparagraph (A)(iii), in a lump-sum amount for the purchase of the item.
(iii)

Length of reasonable useful lifetime.—
The reasonable useful lifetime of an item of durable medical equipment under this subparagraph shall be equal to 5 years, except that, if the Secretary determines that, on the basis of prior experience in making payments for such an item under this title, a reasonable useful lifetime of 5 years is not appropriate with respect to a particular item, the Secretary shall establish an alternative reasonable lifetime for such item.
(8)

Purchase price recognized for miscellaneous devices and items.—
For purposes of paragraphs (6) and (7), the amount that is recognized under this paragraph as the purchase price for a covered item is the amount described in subparagraph (C) of this paragraph, determined as follows:
(A)

Computation of local purchase price.—
Each carrier under section 1842 shall compute a base local purchase price for the item as follows:
(i)
The carrier shall compute a base local purchase price, for each item described—
(I)
in paragraph (6) equal to the average reasonable charge in the locality for the purchase of the item for the 12-month period ending with June 1987, or
(II)
in paragraph (7) equal to the average of the purchase prices on the claims submitted on an assignment-related basis for the unused item supplied during the 6-month period ending with December 1986.
(ii)
The carrier shall compute a local purchase price, with respect to the furnishing of each particular item—
(I)
in 1989 and 1990, equal to the base local purchase price computed under clause (i) increased by the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 6-month period ending with December 1987,
(II)
in 1991, equal to the local purchase price computed under this clause for the previous year, increased by the covered item update for 1991, and decreased by the percentage by which the average of the reasonable charges for claims paid for all items described in paragraph (7) is lower than the average of the purchase prices submitted for such items during the final 9 months of 1988; or
(III)
in 1992, 1993, and 1994 equal to the local purchase price computed under this clause for the previous year increased by the covered item update for the year.
(B)

Computation of national limited purchase price.—
With respect to the furnishing of a particular item in a year, the Secretary shall compute a national limited purchase price—
(i)
for 1991, equal to the local purchase price computed under subparagraph (A)(ii) for the item for the year, except that such national limited purchase price may not exceed 100 percent of the weighted average of all local purchase prices for the item computed under such subparagraph for the year, and may not be less than 85 percent of the weighted average of all local purchase prices for the item computed under such subparagraph for the year;
(ii)
for 1992 and 1993, the amount determined under this subparagraph for the preceding year increased by the covered item update for such subsequent year;
(iii)
for 1994, the local purchase price computed under subparagraph (A)(ii) for the item for the year, except that such national limited purchase price may not exceed 100 percent of the median of all local purchase prices computed for the item under such subparagraph for the year and may not be less than 85 percent of the median of all local purchase prices computed under such subparagraph for the item for the year; and
(iv)
for each subsequent year, equal to the amount determined under this subparagraph for the preceding year increased by the covered item update for such subsequent year.
(C)

Purchase price recognized.—
For purposes of paragraphs (6) and (7), the amount that is recognized under this paragraph as the purchase price for each item furnished—
(i)
in 1989 or 1990, is 100 percent of the local purchase price computed under subparagraph (A)(ii)(I);
(ii)
in 1991, is the sum of (I) 67 percent of the local purchase price computed under subparagraph (A)(ii)(II) for 1991, and (II) 33 percent of the national limited purchase price computed under subparagraph (B) for 1991;
(iii)
in 1992, is the sum of (I) 33 percent of the local purchase price computed under subparagraph (A)(ii)(III) for 1992, and (II) 67 percent of the national limited purchase price computed under subparagraph (B) for 1992; and
(iv)
in 1993 or a subsequent year, is the national limited purchase price computed under subparagraph (B) for that year.
(9)

Monthly payment amount recognized with respect to oxygen and oxygen equipment.—
For purposes of paragraph (5), the amount that is recognized under this paragraph for payment for oxygen and oxygen equipment is the monthly payment amount described in subparagraph (C) of this paragraph. Such amount shall be computed separately (i) for all items of oxygen and oxygen equipment (other than portable oxygen equipment) and (ii) for portable oxygen equipment (each such group referred to in this paragraph as an “item”).
(A)

Computation of local monthly payment rate.—
Each carrier under this section shall compute a base local payment rate for each item as follows:
(i)
The carrier shall compute a base local average monthly payment rate per beneficiary as an amount equal to (I) the total reasonable charges for the item during the 12-month period ending with December 1986, divided by (II) the total number of months for all beneficiaries receiving the item in the area during the 12-month period for which the carrier made payment for the item under this title.
(ii)
The carrier shall compute a local average monthly payment rate for the item applicable—
(I)
to 1989 and 1990, equal to 95 percent of the base local average monthly payment rate computed under clause (i) for the item increased by the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 6-month period ending with December 1987, or
(II)
to 1991, 1992, 1993, and 1994 equal to the local average monthly payment rate computed under this clause for the item for the previous year increased by the covered item increase for the year.
(B)

Computation of national limited monthly payment rate.—
With respect to the furnishing of an item in a year, the Secretary shall compute a national limited monthly payment rate equal to—
(i)
for 1991, the local monthly payment rate computed under subparagraph (A)(ii)(II) for the item for the year, except that such national limited monthly payment rate may not exceed 100 percent of the weighted average of all local monthly payment rates computed for the item under such subparagraph for the year, and may not be less than 85 percent of the weighted average of all local monthly payment rates computed for the item under such subparagraph for the year;
(ii)
for 1992 and 1993, the amount determined under this subparagraph for the preceding year increased by the covered item update for such subsequent year;
(iii)
for 1994, the local monthly payment rate computed under subparagraph (A)(ii) for the item for the year, except that such national limited monthly payment rate may not exceed 100 percent of the median of all local monthly payment rates computed for the item under such subparagraph for the year and may not be less than 85 percent of the median of all local monthly payment rates computed for the item under such subparagraph for the year;
(iv)
for 1995, 1996, and 1997, equal to the amount determined under this subparagraph for the preceding year increased by the covered item update for such subsequent year;
(v)
for 1998, 75 percent of the amount determined under this subparagraph for 1997; and
(vi)
for 1999 and each subsequent year, 70 percent of the amount determined under this subparagraph for 1997.
(C)

Monthly payment amount recognized.—
For purposes of paragraph (5), the amount that is recognized under this paragraph as the base monthly payment amount for each item furnished—
(i)
in 1989 and in 1990, is 100 percent of the local average monthly payment rate computed under subparagraph (A)(ii) for the item;
(ii)
in 1991, is the sum of (I) 67 percent of the local average monthly payment rate computed under subparagraph (A)(ii)(II) for the item for 1991, and (II) 33 percent of the national limited monthly payment rate computed under subparagraph (B)(i) for the item for 1991;
(iii)
in 1992, is the sum of (I) 33 percent of the local average monthly payment rate computed under subparagraph (A)(ii)(II) for the item for 1992, and (II) 67 percent of the national limited monthly payment rate computed under subparagraph (B)(ii) for the item for 1992; and
(iv)
in a subsequent year, is the national limited monthly payment rate computed under subparagraph (B) for the item for that year.
(D)

Authority to create classes.—
(i)

In general.—
Subject to clause (ii), the Secretary may establish separate classes for any item of oxygen and oxygen equipment and separate national limited monthly payment rates for each of such classes.
(ii)

Budget neutrality.—
The Secretary may take actions under clause (i) only to the extent such actions do not result in expenditures for any year to be more or less than the expenditures which would have been made if such actions had not been taken. The requirement of the preceding sentence shall not apply beginning with the second calendar quarter beginning on or after the date of the enactment of this sentence.
(10)

Exceptions and adjustments.—
(A)

Areas outside continental united states.—
Exceptions to the amounts recognized under the previous provisions of this subsection shall be made to take into account the unique circumstances of covered items furnished in Alaska, Hawaii, or Puerto Rico.
(B)

Adjustment for inherent reasonableness.—
The Secretary is authorized to apply the provisions of paragraphs (8) and (9) of section 1842(b) to covered items and suppliers of such items and payments under this subsection in an area and with respect to covered items and services for which the Secretary does not make a payment amount adjustment under paragraph (1)(F).
(C)

Transcutaneous electrical nerve stimulator (tens).—
In order to permit an attending physician time to determine whether the purchase of a transcutaneous electrical nerve stimulator is medically appropriate for a particular patient, the Secretary may determine an appropriate payment amount for the initial rental of such item for a period of not more than 2 months. If such item is subsequently purchased, the payment amount with respect to such purchase is the payment amount determined under paragraph (2).
(11)

Improper billing and requirement of physician order.—
(A)

Improper billing for certain rental items.—
Notwithstanding any other provision of this title, a supplier of a covered item for which payment is made under this subsection and which is furnished on a rental basis shall continue to supply the item without charge (other than a charge provided under this subsection for the maintenance and servicing of the item) after rental payments may no longer be made under this subsection. If a supplier knowingly and willfully violates the previous sentence, the Secretary may apply sanctions against the supplier under section 1842(j)(2) in the same manner such sanctions may apply with respect to a physician.
(B)

Requirement of physician order.—
(i)

In general.—
The Secretary is authorized to require, for specified covered items, that payment may be made under this subsection with respect to the item only if a physician enrolled under section 1866(j) or an eligible professional under section 1848(k)(3)(B) that is enrolled under section 1866(j) has communicated to the supplier, before delivery of the item, a written order for the item.
(ii)

Requirement for face to face encounter.—
The Secretary shall require that such an order be written pursuant to a physician, a physician assistant, a nurse practitioner, or a clinical nurse specialist (as those terms are defined in section 1861(aa)(5)) documenting such physician, physician assistant, practitioner, or specialist has had a face-to-face encounter (including through use of telehealth under subsection (m) and other than with respect to encounters that are incident to services involved) with the individual involved during the 6-month period preceding such written order, or other reasonable timeframe as determined by the Secretary.
(12)

Regional carriers.—
The Secretary may designate, by regulation under section 1842, one carrier for one or more entire regions to process all claims within the region for covered items under this section.
(13)

Covered item.—
In this subsection, the term “covered item” means durable medical equipment (as defined in section 1861(n)), including such equipment described in section 1861(m)(5), but not including implantable items for which payment may be made under section 1833(t).
(14)

Covered item update.—
In this subsection, the term “covered item update” means, with respect to a year—
(A)
for 1991 and 1992, the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 12-month period ending with June of the previous year reduced by 1 percentage point;
(B)
for 1993, 1994, 1995, 1996, and 1997, the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 12-month period ending with June of the previous year;
(C)
for each of the years 1998 through 2000, 0 percentage points;
(D)
for 2001, the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 12-month period ending with June 2000;
(E)
for 2002, 0 percentage points;
(F)
for 2003, the percentage increase in the consumer price index for all urban consumers (U.S. urban average) for the 12-month period ending with June of 2002;
(G)
for 2004 through 2006—
(i)
subject to clause (ii), in the case of class III medical devices described in section 513(a)(1)(C) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360(c)(1)(C)), the percentage increase described in subparagraph (B) for the year involved; and
(ii)
in the case of covered items not described in clause (i), 0 percentage points;
(H)
for 2007—
(i)
subject to clause (ii), in the case of class III medical devices described in section 513(a)(1)(C) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360(c)(1)(C)), the percentage change determined by the Secretary to be appropriate taking into account recommendations contained in the report of the Comptroller General of the United States under section 302(c)(1)(B) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003; and
(ii)
in the case of covered items not described in clause (i), 0 percentage points;
(I)
for 2008—
(i)
subject to clause (ii), in the case of class III medical devices described in section 513(a)(1)(C) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360(c)(1)(C)), the percentage increase described in subparagraph (B) (as applied to the payment amount for 2007 determined after the application of the percentage change under subparagraph (H)(i)); and
(ii)
in the case of covered items not described in clause (i), 0 percentage points;
(J)
for 2009—
(i)
in the case of items and services furnished in any geographic area, if such items or services were selected for competitive acquisition in any area under the competitive acquisition program under section 1847(a)(1)(B)(i)(I) before July 1, 2008, including related accessories but only if furnished with such items and services selected for such competition and diabetic supplies but only if furnished through mail order 22, - 9.5 percent; or
^{22}
For the application of paragraph (14)(J)(i), as it relates to diabetic supplies, see paragraph (22) of this subsection.
(ii)
in the case of other items and services, the percentage increase in the consumer price index for all urban consumers (U.S. urban average) for the 12-month period ending with June 2008;
(K)
for 2010, the percentage increase in the consumer price index for all urban consumers (U.S. urban average) for the 12-month period ending with June of the previous year; and
(L)
for 2011 and each subsequent year—
(i)
the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending with June of the previous year, reduced by—
(ii)
the productivity adjustment described in section 1886(b)(3)(B)(xi)(II).
The application of subparagraph (L)(ii) may result in the covered item update under this paragraph being less than 0.0 for a year, and may result in payment rates under this subsection for a year being less than such payment rates for the preceding year.
(15)

Advance determinations of coverage for certain items.—
(A)

Development of lists of items by secretary.—
The Secretary may develop and periodically update a list of items for which payment may be made under this subsection that the Secretary determines, on the basis of prior payment experience, are frequently subject to unnecessary utilization throughout a carrier's entire service area or a portion of such area.
(B)

Development of lists of suppliers by secretary.—
The Secretary may develop and periodically update a list of suppliers of items for which payment may be made under this subsection with respect to whom—
(i)
the Secretary has found that a substantial number of claims for payment under this part for items furnished by the supplier have been denied on the basis of the application of section 1862(a)(1); or
(ii)
the Secretary has identified a pattern of overutilization resulting from the business practice of the supplier.
(C)

Determinations of coverage in advance.—
A carrier shall determine in advance of delivery of an item whether payment for the item may not be made because the item is not covered or because of the application of section 1862(a)(1) if—
(i)
the item is included on the list developed by the Secretary under subparagraph (A);
(ii)
the item is furnished by a supplier included on the list developed by the Secretary under subparagraph (B); or
(iii)
the item is a customized item (other than inexpensive items specified by the Secretary) and the patient to whom the item is to be furnished or the supplier requests that such advance determination be made.
(16)

Disclosure of information and surety bond.—
The Secretary shall not provide for the issuance (or renewal) of a provider number for a supplier of durable medical equipment, for purposes of payment under this part for durable medical equipment furnished by the supplier, unless the supplier provides the Secretary on a continuing basis—
(A)
with—
(i)
full and complete information as to the identity of each person with an ownership or control interest (as defined in section 1124(a)(3)) in the supplier or in any subcontractor (as defined by the Secretary in regulations) in which the supplier directly or indirectly has a 5 percent or more ownership interest; and
(ii)
to the extent determined to be feasible under regulations of the Secretary, the name of any disclosing entity (as defined in section 1124(a)(2)) with respect to which a person with such an ownership or control interest in the supplier is a person with such an ownership or control interest in the disclosing entity; and
(B)
with a surety bond in a form specified by the Secretary and in an amount that is not less than $50,000 that the Secretary determines is commensurate with the volume of the billing of the supplier.
The Secretary may waive the requirement of a bond under subparagraph (B) in the case of a supplier that provides a comparable surety bond under State law. The Secretary, at the Secretary's discretion, may impose the requirements of the first sentence with respect to some or all providers of items or services under part A or some or all suppliers or other persons (other than physicians or other practitioners, as defined in section 1842(b)(18)(C)) who furnish items or services under this part.
(17)

Prohibition against unsolicited telephone contacts by suppliers.—
(A)

In general.—
A supplier of a covered item under this subsection may not contact an individual enrolled under this part by telephone regarding the furnishing of a covered item to the individual unless 1 of the following applies:
(i)
The individual has given written permission to the supplier to make contact by telephone regarding the furnishing of a covered item.
(ii)
The supplier has furnished a covered item to the individual and the supplier is contacting the individual only regarding the furnishing of such covered item.
(iii)
If the contact is regarding the furnishing of a covered item other than a covered item already furnished to the individual, the supplier has furnished at least 1 covered item to the individual during the 15-month period preceding the date on which the supplier makes such contact.
(B)

Prohibiting payment for items furnished subsequent to unsolicited contacts.—
If a supplier knowingly contacts an individual in violation of subparagraph (A), no payment may be made under this part for any item subsequently furnished to the individual by the supplier.
(C)

Exclusion from program for suppliers engaging in pattern of unsolicited contacts.—
If a supplier knowingly contacts individuals in violation of subparagraph (A) to such an extent that the supplier's conduct establishes a pattern of contacts in violation of such subparagraph, the Secretary shall exclude the supplier from participation in the programs under this Act, in accordance with the procedures set forth in subsections (c), (f), and (g) of section 1128.
(18)

Refund of amounts collected for certain disallowed items.—
(A)

In general.—
If a nonparticipating supplier furnishes to an individual enrolled under this part a covered item for which no payment may be made under this part by reason of paragraph (17)(B), the supplier shall refund on a timely basis to the patient (and shall be liable to the patient for) any amounts collected from the patient for the item, unless—
(i)
the supplier establishes that the supplier did not know and could not reasonably have been expected to know that payment may not be made for the item by reason of paragraph (17)(B), or
(ii)
before the item was furnished, the patient was informed that payment under this part may not be made for that item and the patient has agreed to pay for that item.
(B)

Sanctions.—
If a supplier knowingly and willfully fails to make refunds in violation of subparagraph (A), the Secretary may apply sanctions against the supplier in accordance with section 1842(j)(2).
(C)

Notice.—
Each carrier with a contract in effect under this part with respect to suppliers of covered items shall send any notice of denial of payment for covered items by reason of paragraph (17)(B) and for which payment is not requested on an assignment-related basis to the supplier and the patient involved.
(D)

Timely basis defined.—
A refund under subparagraph (A) is considered to be on a timely basis only if—
(i)
in the case of a supplier who does not request reconsideration or seek appeal on a timely basis, the refund is made within 30 days after the date the supplier receives a denial notice under subparagraph (C), or
(ii)
in the case in which such a reconsideration or appeal is taken, the refund is made within 15 days after the date the supplier receives notice of an adverse determination on reconsideration or appeal.
(19)

Certain upgraded items.—
(A)

Individual's right to choose upgraded item.—
Notwithstanding any other provision of this title, the Secretary may issue regulations under which 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.—
Any regulations under subparagraph (A) shall provide 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 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.
(20)

Identification of quality standards.—
(A)

In general.—
Subject to subparagraph (C), the Secretary shall establish and implement quality standards for suppliers of items and services described in subparagraph (D) to be applied by recognized independent accreditation organizations (as designated under subparagraph (B)) and with which such suppliers shall be required to comply in order to—
(i)
furnish any such item or service for which payment is made under this part; and
(ii)
receive or retain a provider or supplier number used to submit claims for reimbursement for any such item or service for which payment may be made under this title.
(B)

Designation of independent accreditation organizations.—
Not later than the date that is 1 year after the date on which the Secretary implements the quality standards under subparagraph (A), notwithstanding section 1865(a), the Secretary shall designate and approve one or more independent accreditation organizations for purposes of such subparagraph.
(C)

Quality standards.—
The quality standards described in subparagraph (A) may not be less stringent than the quality standards that would otherwise apply if this paragraph did not apply and shall include consumer services standards.
(D)

Items and services described.—
The items and services described in this subparagraph are the following items and services, as the Secretary determines appropriate:
(i)
Covered items (as defined in paragraph (13)) for which payment may otherwise be made under this subsection.
(ii)
Prosthetic devices and orthotics and prosthetics described in section 1834(h)(4).
(iii)
Items and services described in section 1842(s)(2).
(iv)
Lymphedema compression treatment items (as defined in section 1861(mmm)).
(E)

Implementation.—
The Secretary may establish by program instruction or otherwise the quality standards under this paragraph, including subparagraph (F), after consultation with representatives of relevant parties. Such standards shall be applied prospectively and shall be published on the Internet website of the Centers for Medicare & Medicaid Services.
(F)

Application of accreditation requirement.—
In implementing quality standards under this paragraph—
(i)
subject to clause (ii) and subparagraph (G), the Secretary shall require suppliers furnishing items and services described in subparagraph (D) on or after October 1, 2009, directly or as a subcontractor for another entity, to have submitted to the Secretary evidence of accreditation by an accreditation organization designated under subparagraph (B) as meeting applicable quality standards, except that the Secretary shall not require under this clause pharmacies to obtain such accreditation before January 1, 2010, except that the Secretary shall not require a pharmacy to have submitted to the Secretary such evidence of accreditation prior to January 1, 2011; and
(ii)
in applying such standards and the accreditation requirement of clause (i) with respect to eligible professionals (as defined in section 1848(k)(3)(B)), and including such other persons, such as orthotists and prosthetists, as specified by the Secretary, furnishing such items and services—
(I)
such standards and accreditation requirement shall not apply to such professionals and persons unless the Secretary determines that the standards being applied are designed specifically to be applied to such professionals and persons; and
(II)
the Secretary may exempt such professionals and persons from such standards and requirement if the Secretary determines that licensing, accreditation, or other mandatory quality requirements apply to such professionals and persons with respect to the furnishing of such items and services.
(G)

Application of accreditation requirement to certain pharmacies.—
(i)

In general.—
With respect to items and services furnished on or after January 1, 2011, in implementing quality standards under this paragraph—
(I)
subject to subclause (II), in applying such standards and the accreditation requirement of subparagraph (F)(i) with respect to pharmacies described in clause (ii) furnishing such items and services, such standards and accreditation requirement shall not apply to such pharmacies; and
(II)
the Secretary may apply to such pharmacies an alternative accreditation requirement established by the Secretary if the Secretary determines such alternative accreditation requirement is more appropriate for such pharmacies.
(ii)

Pharmacies described.—
A pharmacy described in this clause is a pharmacy that meets each of the following criteria:
(I)
The total billings by the pharmacy for such items and services under this title are less than 5 percent of total pharmacy sales, as determined based on the average total pharmacy sales for the previous 3 calendar years, 3 fiscal years, or other yearly period specified by the Secretary.
(II)
The pharmacy has been enrolled under section 1866(j) as a supplier of durable medical equipment, prosthetics, orthotics, and supplies, has been issued (which may include the renewal of) a provider number for at least 5 years, and for which a final adverse action (as defined in section 424.57(a) of title 42, Code of Federal Regulations) has not been imposed in the past 5 years.
(III)
The pharmacy submits to the Secretary an attestation, in a form and manner, and at a time, specified by the Secretary, that the pharmacy meets the criteria described in subclauses (I) and (II). Such attestation shall be subject to section 1001 of title 18, United States Code.
(IV)
The pharmacy agrees to submit materials as requested by the Secretary, or during the course of an audit conducted on a random sample of pharmacies selected annually, to verify that the pharmacy meets the criteria described in subclauses (I) and (II). Materials submitted under the preceding sentence shall include a certification by an accountant on behalf of the pharmacy or the submission of tax returns filed by the pharmacy during the relevant periods, as requested by the Secretary.
(21)

Special payment rule for specified items and supplies.—
(A)

In general.—
Notwithstanding the preceding provisions of this subsection, for specified items and supplies (described in subparagraph (B)) furnished during 2005, the payment amount otherwise determined under this subsection for such specified items and supplies shall be reduced by the percentage difference between—
(i)
the amount of payment otherwise determined for the specified item or supply under this subsection for 2002, and
(ii)
the amount of payment for the specified item or supply under chapter 89 of title 5, United States Code, as identified in the column entitled “Median FEHP Price” in the table entitled “SUMMARY OF MEDICARE PRICES COMPARED TO VA, MEDICAID, RETAIL, AND FEHP PRICES FOR 16 ITEMS” included in the Testimony of the Inspector General before the Senate Committee on Appropriations, June 12, 2002, or any subsequent report by the Inspector General.
(B)

Specified item or supply described.—
For purposes of subparagraph (A), a specified item or supply means oxygen and oxygen equipment, standard wheelchairs (including standard power wheelchairs), nebulizers, diabetic supplies consisting of lancets and testing strips, hospital beds, and air mattresses, but only if the HCPCS code for the item or supply is identified in a table referred to in subparagraph (A)(ii).
(C)

Application of update to special payment amount.—
The covered item update under paragraph (14) for specified items and supplies for 2006 and each subsequent year shall be applied to the payment amount under subparagraph (A) unless payment is made for such items and supplies under section 1847.
(22)

Special payment rule for diabetic supplies.—
Notwithstanding the preceding provisions of this subsection, for purposes of determining the payment amount under this subsection for diabetic supplies furnished on or after the first day of the calendar quarter during 2013 that is at least 30 days after the date of the enactment of this paragraph and before the date described in paragraph (1)(H)(ii), the Secretary shall recalculate and apply the covered item update under paragraph (14) as if subparagraph (J)(i) of such paragraph was amended by striking “but only if furnished through mail order”.
(b)

Fee Schedules for Radiologist Services.—
(1)

Development.—
The Secretary shall develop—
(A)
a relative value scale to serve as the basis for the payment for radiologist services under this part, and
(B)
using such scale and appropriate conversion factors and subject to subsection (c)(1)(A), fee schedules (on a regional, statewide, locality, or carrier service area basis) for payment for radiologist services under this part, to be implemented for such services furnished during 1989.
(2)

Consultation.—
In carrying out paragraph (1), the Secretary shall regularly consult closely with the Physician Payment Review Commission, the American College of Radiology, and other organizations representing physicians or suppliers who furnish radiologist services and shall share with them the data and data analysis being used to make the determinations under paragraph (1), including data on variations in current medicare payments by geographic area, and by service and physician specialty.
(3)

Considerations.—
In developing the relative value scale and fee schedules under paragraph (1), the Secretary—
(A)
shall take into consideration variations in the cost of furnishing such services among geographic areas and among different sites where services are furnished, and
(B)
may also take into consideration such other factors respecting the manner in which physicians in different specialties furnish such services as may be appropriate to assure that payment amounts are equitable and designed to promote effective and efficient provision of radiologist services by physicians in the different specialties.
(4)

Savings.—
(A)

Budget neutral fee schedules.—
The Secretary shall develop preliminary fee schedules for 1989, which are designed to result in the same amount of aggregate payments (net of any coinsurance and deductibles under sections 1833(a)(1)(J) and 1833(b)) for radiologist services furnished in 1989 as would have been made if this subsection had not been enacted.
(B)

Initial savings.—
The fee schedules established for payment purposes under this subsection for services furnished in 1989 shall be 97 percent of the amounts permitted under these preliminary fee schedules developed under subparagraph (A).
(C)

1990 fee schedules.—
For radiologist services (other than portable X-ray services) furnished under this part during 1990, after March 31 of such year, the conversion factors used under this subsection shall be 96 percent of the conversion factors that applied under this subsection as of December 31, 1989.
(D)

1991 fee schedules.—
For radiologist services (other than portable X-ray services) furnished under this part during 1991, the conversion factors used in a locality under this subsection shall, subject to clause (vii), be reduced to the adjusted conversion factor for the locality determined as follows:
(i)

National weighted average conversion factor.—
The Secretary shall estimate the national weighted average of the conversion factors used under this subsection for services furnished during 1990 beginning on April 1, using the best available data.
(ii)

Reduced national weighted average.—
The national weighted average estimated under clause (i) shall be reduced by 13 percent.
(iii)

Computation of 1990 locality index relative to national average.—
The Secretary shall establish an index which reflects, for each locality, the ratio of the conversion factor used in the locality under this subsection to the national weighted average estimated under clause (i).
(iv)

Adjusted conversion factor.—
The adjusted conversion factor for the professional or technical component of a service in a locality is the sum of ½ of the locally-adjusted amount determined under clause (v) and ½ of the GPCI-adjusted amount determined under clause (vi).
(v)

Locally-adjusted amount.—
For purposes of clause (iv), the locally adjusted amount determined under this clause is the product of (I) the national weighted average conversion factor computed under clause (ii), and (II) the index value established under clause (iii) for the locality.
(vi)

GPCI-adjusted amount.—
For purposes of clause (iv), the GPCI-adjusted amount determined under this clause is the sum of—
(I)
the product of (a) the portion of the reduced national weighted average conversion factor computed under clause (ii) which is attributable to physician work and (b) the geographic work index value for the locality (specified in Addendum C to the Model Fee Schedule for Physician Services (published on September 4, 1990, 55 Federal Register pp. 36238–36243)); and
(II)
the product of (a) the remaining portion of the reduced national weighted average conversion factor computed under clause (ii), and (b) the geographic practice cost index value specified in section 1842(b)(14)(C)(iv) for the locality.
In applying this clause with respect to the professional component of a service, 80 percent of the conversion factor shall be considered to be attributable to physician work and with respect to the technical component of the service, 0 percent shall be considered to be attributable to physician work.
(vii)

Limits on conversion factor.—
The conversion factor to be applied to a locality to the professional or technical component of a service shall not be reduced under this subparagraph by more than 9.5 percent below the conversion factor applied in the locality under subparagraph (C) to such component, but in no case shall the conversion factor be less than 60 percent of the national weighted average of the conversion factors (computed under clause (i)).
(E)

Rule for certain scanning services.—
In the case of the technical components of magnetic resonance imaging (MRI) services and computer assisted tomography (CAT) services furnished after December 31, 1990, the amount otherwise payable shall be reduced by 10 percent.
(F)

Subsequent updating.—
For radiologist services furnished in subsequent years, the fee schedules shall be the schedules for the previous year updated by the percentage increase in the MEI (as defined in section 1842(i)(3)) for the year.
(G)

Nonparticipating physicians and suppliers.—
Each fee schedule so established shall provide that the payment rate recognized for nonparticipating physicians and suppliers is equal to the appropriate percent (as defined in section 1842(b)(4)(A)(iv)) of the payment rate recognized for participating physicians and suppliers.
(5)

Limiting charges of nonparticipating physicians and suppliers.—
(A)

In general.—
In the case of radiologist services furnished after January 1, 1989, for which payment is made under a fee schedule under this subsection, if a nonparticipating physician or supplier furnishes the service to an individual entitled to benefits under this part, the physician or supplier may not charge the individual more than the limiting charge (as defined in subparagraph (B)).
(B)

Limiting charge defined.—
In subparagraph (A), the term “limiting charge” means, with respect to a service furnished—
(i)
in 1989, 125 percent of the amount specified for the service in the appropriate fee schedule established under paragraph (1),
(ii)
in 1990, 120 percent of the amount specified for the service in the appropriate fee schedule established under paragraph (1), and
(iii)
after 1990, 115 percent of the amount specified for the service in the appropriate fee schedule established under paragraph (1).
(C)

Enforcement.—
If a physician or supplier knowingly and willfully bills in violation of subparagraph (A), the Secretary may apply sanctions against such physician or supplier in accordance with section 1842(j)(2) in the same manner as such sanctions may apply to a physician.
(6)

Radiologist services defined.—
For the purposes of this subsection and section 1833(a)(1)(J), the term “radiologist services” only includes radiology services performed by, or under the direction or supervision of, a physician—
(A)
who is certified, or eligible to be certified, by the American Board of Radiology, or
(B)
for whom radiology services account for at least 50 percent of the total amount of charges made under this part.
(c)

Payment and Standards for Screening Mammography.—
(1)

In general.—
With respect to expenses incurred for screening mammography (as defined in section 1861(jj)), payment may be made only—
(A)
for screening mammography conducted consistent with the frequency permitted under paragraph (2); and
(B)
if the screening mammography is conducted by a facility that has a certificate (or provisional certificate) issued under section 354 of the Public Health Service Act.
(2)

Frequency covered.—
(A)

In general.—
Subject to revision by the Secretary under subparagraph (B)—
(i)
no payment may be made under this part for screening mammography performed on a woman under 35 years of age;
(ii)
payment may be made under this part for only one screening mammography performed on a woman over 34 years of age, but under 40 years of age; and
(iii)
in the case of a woman over 39 years of age, payment may not be made under this part for screening mammography performed within 11 months following the month in which a previous screening mammography was performed.
(B)

Revision of frequency.—
(i)

Review.—
The Secretary, in consultation with the Director of the National Cancer Institute, shall review periodically the appropriate frequency for performing screening mammography, based on age and such other factors as the Secretary believes to be pertinent.
(ii)

Revision of frequency.—
The Secretary, taking into consideration the review made under clause (i), may revise from time to time the frequency with which screening mammography may be paid for under this subsection.
(d)

Frequency Limits and Payment for Colorectal Cancer Screening Tests.—
(1)

Screening fecal-occult blood tests.—
(A)

Payment amount.—
The payment amount for colorectal cancer screening tests consisting of screening fecal-occult blood tests is equal to the payment amount established for diagnostic fecal-occult blood tests under section 1833(h).
(B)

Frequency limit.—
No payment may be made under this part for a colorectal cancer screening test consisting of a screening fecal-occult blood test—
(i)
if the individual is under 50 years of age; or
(ii)
if the test is performed within the 11 months after a previous screening fecal-occult blood test.
(2)

Screening flexible sigmoidoscopies.—
(A)

Fee schedule.—
With respect to colorectal cancer screening tests consisting of screening flexible sigmoidoscopies, payment under section 1848 shall be consistent with payment under such section for similar or related services.
(B)

Payment limit.—
In the case of screening flexible sigmoidoscopy services, payment under this part shall not exceed such amount as the Secretary specifies, based upon the rates recognized for diagnostic flexible sigmoidoscopy services.
(C)

Facility payment limit.—
(i)

In general.—
Notwithstanding subsections (i)(2)(A) and (t) of section 1833, in the case of screening flexible sigmoidoscopy services furnished on or after January 1, 1999, that—
(I)
in accordance with regulations, may be performed in an ambulatory surgical center and for which the Secretary permits ambulatory surgical center payments under this part, and
(II)
are performed in an ambulatory surgical center or hospital outpatient department,
payment under this part shall be based on the lesser of the amount under the fee schedule that would apply to such services if they were performed in a hospital outpatient department in an area or the amount under the fee schedule that would apply to such services if they were performed in an ambulatory surgical center in the same area.
(ii)

Limitation on coinsurance.—
Subject to section 1833(a)(1)(Y), but notwithstanding any other provision of this title, in the case of a beneficiary who receives the services described in clause (i)—
(I)
in computing the amount of any applicable copayment, the computation of such coinsurance shall be based upon the fee schedule under which payment is made for the services, and
(II)
the amount of such coinsurance is equal to 25 percent of the payment amount under the fee schedule described in subclause (I).
(D)

Special rule for detected lesions.—
Subject to section 1833(a)(1)(Y), if during the course of such screening flexible sigmoidoscopy, a lesion or growth is detected which results in a biopsy or removal of the lesion or growth, payment under this part shall not be made for the screening flexible sigmoidoscopy but shall be made for the procedure classified as a flexible sigmoidoscopy with such biopsy or removal.
(E)

Frequency limit.—
No payment may be made under this part for a colorectal cancer screening test consisting of a screening flexible sigmoidoscopy—
(i)
if the individual is under 50 years of age; or
(ii)
if the procedure is performed within the 47 months after a previous screening flexible sigmoidoscopy or, in the case of an individual who is not at high risk for colorectal cancer, if the procedure is performed within the 119 months after a previous screening colonoscopy.
(3)

Screening colonoscopy.—
(A)

Fee schedule.—
With respect to colorectal cancer screening test consisting of a screening colonoscopy, payment under section 1848 shall be consistent with payment amounts under such section for similar or related services.
(B)

Payment limit.—
In the case of screening colonoscopy services, payment under this part shall not exceed such amount as the Secretary specifies, based upon the rates recognized for diagnostic colonoscopy services.
(C)

Facility payment limit.—
(i)

In general.—
Notwithstanding subsections (i)(2)(A) and (t) of section 1833, in the case of screening colonoscopy services furnished on or after January 1, 1999, that are performed in an ambulatory surgical center or a hospital outpatient department, payment under this part shall be based on the lesser of the amount under the fee schedule that would apply to such services if they were performed in a hospital outpatient department in an area or the amount under the fee schedule that would apply to such services if they were performed in an ambulatory surgical center in the same area.
(ii)

Limitation on coinsurance.—
Subject to section 1833(a)(1)(Y), but notwithstanding any other provision of this title, in the case of a beneficiary who receives the services described in clause (i)—
(I)
in computing the amount of any applicable coinsurance, the computation of such coinsurance shall be based upon the fee schedule under which payment is made for the services, and
(II)
the amount of such coinsurance is equal to 25 percent of the payment amount under the fee schedule described in subclause (I).
(D)

Special rule for detected lesions.—
Subject to section 1833(a)(1)(Y), if during the course of such screening colonoscopy, a lesion or growth is detected which results in a biopsy or removal of the lesion or growth, payment under this part shall not be made for the screening colonoscopy but shall be made for the procedure classified as a colonoscopy with such biopsy or removal.
(E)

Frequency limit.—
No payment may be made under this part for a colorectal cancer screening test consisting of a screening colonoscopy for individuals at high risk for colorectal cancer if the procedure is performed within the 23 months after a previous screening colonoscopy or for other individuals if the procedure is performed within the 119 months after a previous screening colonoscopy or within 47 months after a previous screening flexible sigmoidoscopy.
(e)

Accreditation Requirement for Advanced Diagnostic Imaging Services.—
(1)

In general.—
(A)

In general.—
Beginning with January 1, 2012, with respect to the technical component of advanced diagnostic imaging services for which payment is made under the fee schedule established under section 1848(b) and that are furnished by a supplier, payment may only be made if such supplier is accredited by an accreditation organization designated by the Secretary under paragraph (2)(B)(i).
(B)

Advanced diagnostic imaging services defined.—
In this subsection, the term “advanced diagnostic imaging services” includes—
(i)
diagnostic magnetic resonance imaging, computed tomography, and nuclear medicine (including positron emission tomography); and
(ii)
such other diagnostic imaging services, including services described in section 1848(b)(4)(B) (excluding X-ray, ultrasound, and fluoroscopy), as specified by the Secretary in consultation with physician specialty organizations and other stakeholders.
(C)

Supplier defined.—
In this subsection, the term “supplier” has the meaning given such term in section 1861(d).
(2)

Accreditation organizations.—
(A)

Factors for designation of accreditation organizations.—
The Secretary shall consider the following factors in designating accreditation organizations under subparagraph (B)(i) and in reviewing and modifying the list of accreditation organizations designated pursuant to subparagraph (C):
(i)
The ability of the organization to conduct timely reviews of accreditation applications.
(ii)
Whether the organization has established a process for the timely integration of new advanced diagnostic imaging services into the organization's accreditation program.
(iii)
Whether the organization uses random site visits, site audits, or other strategies for ensuring accredited suppliers maintain adherence to the criteria described in paragraph (3).
(iv)
The ability of the organization to take into account the capacities of suppliers located in a rural area (as defined in section 1886(d)(2)(D)).
(v)
Whether the organization has established reasonable fees to be charged to suppliers applying for accreditation.
(vi)
Such other factors as the Secretary determines appropriate.
(B)

Designation.—
Not later than January 1, 2010, the Secretary shall designate organizations to accredit suppliers furnishing the technical component of advanced diagnostic imaging services. The list of accreditation organizations so designated may be modified pursuant to subparagraph (C).
(C)

Review and modification of list of accreditation organizations.—
(i)

In general.—
The Secretary shall review the list of accreditation organizations designated under subparagraph (B) taking into account the factors under subparagraph (A). Taking into account the results of such review, the Secretary may, by regulation, modify the list of accreditation organizations designated under subparagraph (B).
(ii)

Special rule for accreditations done prior to removal from list of designated accreditation organizations.—
In the case where the Secretary removes an organization from the list of accreditation organizations designated under subparagraph (B), any supplier that is accredited by the organization during the period beginning on the date on which the organization is designated as an accreditation organization under subparagraph (B) and ending on the date on which the organization is removed from such list shall be considered to have been accredited by an organization designated by the Secretary under subparagraph (B) for the remaining period such accreditation is in effect.
(3)

Criteria for accreditation.—
The Secretary shall establish procedures to ensure that the criteria used by an accreditation organization designated under paragraph (2)(B) to evaluate a supplier that furnishes the technical component of advanced diagnostic imaging services for the purpose of accreditation of such supplier is specific to each imaging modality. Such criteria shall include—
(A)
standards for qualifications of medical personnel who are not physicians and who furnish the technical component of advanced diagnostic imaging services;
(B)
standards for qualifications and responsibilities of medical directors and supervising physicians, including standards that recognize the considerations described in paragraph (4);
(C)
procedures to ensure that equipment used in furnishing the technical component of advanced diagnostic imaging services meets performance specifications;
(D)
standards that require the supplier have procedures in place to ensure the safety of persons who furnish the technical component of advanced diagnostic imaging services and individuals to whom such services are furnished;
(E)
standards that require the establishment and maintenance of a quality assurance and quality control program by the supplier that is adequate and appropriate to ensure the reliability, clarity, and accuracy of the technical quality of diagnostic images produced by such supplier; and
(F)
any other standards or procedures the Secretary determines appropriate.
(4)

Recognition in standards for the evaluation of medical directors and supervising physicians.—
The standards described in paragraph (3)(B) shall recognize whether a medical director or supervising physician—
(A)
in a particular specialty receives training in advanced diagnostic imaging services in a residency program;
(B)
has attained, through experience, the necessary expertise to be a medical director or a supervising physician;
(C)
has completed any continuing medical education courses relating to such services; or
(D)
has met such other standards as the Secretary determines appropriate.
(5)

Rule for accreditations made prior to designation.—
In the case of a supplier that is accredited before January 1, 2010, by an accreditation organization designated by the Secretary under paragraph (2)(B) as of January 1, 2010, such supplier shall be considered to have been accredited by an organization designated by the Secretary under such paragraph as of January 1, 2012, for the remaining period such accreditation is in effect.
(f)

Reduction in Payments for Physician Pathology Services During 1991.—
(1)

In general.—
For physician pathology services furnished under this part during 1991, the prevailing charges used in a locality under this part shall be 7 percent below the prevailing charges used in the locality under this part in 1990 after March 31.
(2)

Limitation.—
The prevailing charge for the technical and professional components of an 23 physician pathology service furnished by a physician through an independent laboratory shall not be reduced pursuant to paragraph (1) to the extent that such reduction would reduce such prevailing charge below 115 percent of the prevailing charge for the professional component of such service when furnished by a hospital-based physician in the same locality. For purposes of the preceding sentence, an independent laboratory is a laboratory that is independent of a hospital and separate from the attending or consulting physicians' office.
^{23}
As in original; possibly should be “a”.
(g)

Payment for Outpatient Critical Access Hospital Services.—
(1)

In general.—
The amount of payment for outpatient critical access hospital services of a critical access hospital is equal to 101 percent of the reasonable costs of the hospital in providing such services, unless the hospital makes the election under paragraph (2).
(2)

Election of cost-based hospital outpatient service payment plus fee schedule for professional services.—
A critical access hospital may elect to be paid for outpatient critical access hospital services amounts equal to the sum of the following, less the amount that such hospital may charge as described in section 1866(a)(2)(A):
(A)

Facility fee.—
With respect to facility services, not including any services for which payment may be made under subparagraph (B), 101 percent of the reasonable costs of the critical access hospital in providing such services.
(B)

Fee schedule for professional services.—
With respect to professional services otherwise included within outpatient critical access hospital services, 115 percent of such amounts as would otherwise be paid under this part if such services were not included in outpatient critical access hospital services. Subsections (x) and (y) of section 1833 shall not be taken into account in determining the amounts that would otherwise be paid pursuant to the preceding sentence.
The Secretary may not require, as a condition for applying subparagraph (B) with respect to a critical access hospital, that each physician or other practitioner providing professional services in the hospital must assign billing rights with respect to such services, except that such subparagraph shall not apply to those physicians and practitioners who have not assigned such billing rights.
(3)

Disregarding charges.—
The payment amounts under this subsection shall be determined without regard to the amount of the customary or other charge.
(4)

Treatment of clinical diagnostic laboratory services 24.—
No coinsurance, deductible, copayment, or other cost-sharing otherwise applicable under this part shall apply with respect to clinical diagnostic laboratory services furnished as an outpatient critical access hospital service. Nothing in this title shall be construed as providing for payment for clinical diagnostic laboratory services furnished as part of outpatient critical access hospital services, other than on the basis described in this subsection. For purposes of the preceding sentence and section 1861(mm)(3), clinical diagnostic laboratory services furnished by a critical access hospital shall be treated as being furnished as part of outpatient critical access services without regard to whether the individual with respect to whom such services are furnished is physically present in the critical access hospital, or in a skilled nursing facility or a clinic (including a rural health clinic) that is operated by a critical access hospital, at the time the specimen is collected.
^{24}
The amendment made by section 148(a)(1) of Public Law 110–275 was executed to reflect the probable intent of Congress. The casing for the first letter of the first word for each of the stricken and inserted text should have been uppercase.
(5)

Coverage of costs for certain emergency room on-call providers.—
In determining the reasonable costs of outpatient critical access hospital services under paragraphs (1) and (2)(A), the Secretary shall recognize as allowable costs, amounts (as defined by the Secretary) for reasonable compensation and related costs for physicians, physician assistants, nurse practitioners, and clinical nurse specialists who are on-call (as defined by the Secretary) to provide emergency services but who are not present on the premises of the critical access hospital involved, and are not otherwise furnishing services covered under this title and are not on-call at any other provider or facility.
(h)

Payment for Prosthetic Devices and Orthotics and Prosthetics.—
(1)

General rule for payment.—
(A)

In general.—
Payment under this subsection for prosthetic devices and orthotics and prosthetics shall be made in a lump-sum amount for the purchase of the item in an amount equal to 80 percent of the payment basis described in subparagraph (B).
(B)

Payment basis.—
Except as provided in subparagraphs (C), (E), and (H)(i), the payment basis described in this subparagraph is the lesser of—
(i)
the actual charge for the item; or
(ii)
the amount recognized under paragraph (2) as the purchase price for the item.
(C)

Exception for certain public home health agencies.—
Subparagraph (B)(i) shall not apply to an item furnished by a public home health agency (or by another home health agency which demonstrates to the satisfaction of the Secretary that a significant portion of its patients are low income) free of charge or at nominal charges to the public.
(D)

Exclusive payment rule.—
Subject to subparagraph (H)(ii), this subsection shall constitute the exclusive provision of this title for payment for prosthetic devices, orthotics, and prosthetics under this part or under part A to a home health agency.
(E)

Exception for certain items.—
Payment for ostomy supplies, tracheostomy supplies, and urologicals shall be made in accordance with subparagraphs (B) and (C) of section 1834(a)(2).
(F)

Special payment rules for certain prosthetics and custom-fabricated orthotics.—
(i)

In general.—
No payment shall be made under this subsection for an item of custom-fabricated orthotics described in clause (ii) or for an item of prosthetics unless such item is—
(I)
furnished by a qualified practitioner; and
(II)
fabricated by a qualified practitioner or a qualified supplier at a facility that meets such criteria as the Secretary determines appropriate.
(ii)

Description of custom-fabricated item.—
(I)

In general.—
An item described in this clause is an item of custom-fabricated orthotics that requires education, training, and experience to custom-fabricate and that is included in a list established by the Secretary in subclause (II). Such an item does not include shoes and shoe inserts.
(II)

List of items.—
The Secretary, in consultation with appropriate experts in orthotics (including national organizations representing manufacturers of orthotics), shall establish and update as appropriate a list of items to which this subparagraph applies. No item may be included in such list unless the item is individually fabricated for the patient over a positive model of the patient.
(iii)

Qualified practitioner defined.—
In this subparagraph, the term “qualified practitioner” means a physician or other individual who—
(I)
is a qualified physical therapist or a qualified occupational therapist;
(II)
in the case of a State that provides for the licensing of orthotics and prosthetics, is licensed in orthotics or prosthetics by the State in which the item is supplied; or
(III)
in the case of a State that does not provide for the licensing of orthotics and prosthetics, is specifically trained and educated to provide or manage the provision of prosthetics and custom-designed or -fabricated orthotics, and is certified by the American Board for Certification in Orthotics and Prosthetics, Inc. or by the Board for Orthotist/Prosthetist Certification, or is credentialed and approved by a program that the Secretary determines, in consultation with appropriate experts in orthotics and prosthetics, has training and education standards that are necessary to provide such prosthetics and orthotics.
(iv)

Qualified supplier defined.—
In this subparagraph, the term “qualified supplier” means any entity that is accredited by the American Board for Certification in Orthotics and Prosthetics, Inc. or by the Board for Orthotist/Prosthetist Certification, or accredited and approved by a program that the Secretary determines has accreditation and approval standards that are essentially equivalent to those of such Board.
(G)

Replacement of prosthetic devices and parts.—
(i)

In general.—
Payment shall be made for the replacement of prosthetic devices which are artificial limbs, or for the replacement of any part of such devices, without regard to continuous use or useful lifetime restrictions if an ordering physician determines that the provision of a replacement device, or a replacement part of such a device, is necessary because of any of the following:
(I)
A change in the physiological condition of the patient.
(II)
An irreparable change in the condition of the device, or in a part of the device.
(III)
The condition of the device, or the part of the device, requires repairs and the cost of such repairs would be more than 60 percent of the cost of a replacement device, or, as the case may be, of the part being replaced.
(ii)

Confirmation may be required if device or part being replaced is less than 3 years old.—
If a physician determines that a replacement device, or a replacement part, is necessary pursuant to clause (i)—
(I)
such determination shall be controlling; and
(II)
such replacement device or part shall be deemed to be reasonable and necessary for purposes of section 1862(a)(1)(A);
except that if the device, or part, being replaced is less than 3 years old (calculated from the date on which the beneficiary began to use the device or part), the Secretary may also require confirmation of necessity of the replacement device or replacement part, as the case may be.
(H)

Application of competitive acquisition to orthotics; limitation of inherent reasonableness authority.—
In the case of orthotics described in paragraph (2)(C) of section 1847(a) furnished on or after January 1, 2011, subject to subsection (a)(1)(G), that are included in a competitive acquisition program in a competitive acquisition area under such section—
(i)
the payment basis under this subsection for such orthotics furnished in such area shall be the payment basis determined under such competitive acquisition program; and
(ii)
subject to subsection (a)(1)(G), the Secretary may use information on the payment determined under such competitive acquisition programs to adjust the payment amount otherwise recognized under subparagraph (B)(ii) for an area that is not a competitive acquisition area under section 1847, and in the case of such adjustment, paragraphs (8) and (9) of section 1842(b) shall not be applied.
(2)

Purchase price recognized.—
For purposes of paragraph (1), the amount that is recognized under this paragraph as the purchase price for prosthetic devices, orthotics, and prosthetics is the amount described in subparagraph (C) of this paragraph, determined as follows:
(A)

Computation of local purchase price.—
Each carrier under section 1842 shall compute a base local purchase price for the item as follows:
(i)
The carrier shall compute a base local purchase price for each item equal to the average reasonable charge in the locality for the purchase of the item for the 12-month period ending with June 1987.
(ii)
The carrier shall compute a local purchase price, with respect to the furnishing of each particular item—
(I)
in 1989 and 1990, equal to the base local purchase price computed under clause (i) increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 6-month period ending with December 1987, or
(II)
in 1991, 1992 or 1993, equal to the local purchase price computed under this clause for the previous year increased by the applicable percentage increase for the year.
(B)

Computation of regional purchase price.—
With respect to the furnishing of a particular item in each region (as defined by the Secretary), the Secretary shall compute a regional purchase price—
(i)
for 1992, equal to the average (weighted by relative volume of all claims among carriers) of the local purchase prices for the carriers in the region computed under subparagraph (A)(ii)(II) for the year, and
(ii)
for each subsequent year, equal to the regional purchase price computed under this subparagraph for the previous year increased by the applicable percentage increase for the year.
(C)

Purchase price recognized.—
For purposes of paragraph (1) and subject to subparagraph (D), the amount that is recognized under this paragraph as the purchase price for each item furnished—
(i)
in 1989, 1990, or 1991, is 100 percent of the local purchase price computed under subparagraph (A)(ii);
(ii)
in 1992, is the sum of (I) 75 percent of the local purchase price computed under subparagraph (A)(ii)(II) for 1992, and (II) 25 percent of the regional purchase price computed under subparagraph (B) for 1992;
(iii)
in 1993, is the sum of (I) 50 percent of the local purchase price computed under subparagraph (A)(ii)(II) for 1993, and (II) 50 percent of the regional purchase price computed under subparagraph (B) for 1993; and
(iv)
in 1994 or a subsequent year, is the regional purchase price computed under subparagraph (B) for that year.
(D)

Range on amount recognized.—
The amount that is recognized under subparagraph (C) as the purchase price for an item furnished—
(i)
in 1992, may not exceed 125 percent, and may not be lower than 85 percent, of the average of the purchase prices recognized under such subparagraph for all the carrier service areas in the United States in that year; and
(ii)
in a subsequent year, may not exceed 120 percent, and may not be lower than 90 percent, of the average of the purchase prices recognized under such subparagraph for all the carrier service areas in the United States in that year.
(3)

Applicability of certain provisions relating to durable medical equipment.—
Paragraphs (12) and (17) and subparagraphs (A) and (B) of paragraph (10) and paragraph (11) of subsection (a) shall apply to prosthetic devices, orthotics, and prosthetics in the same manner as such provisions apply to covered items under such subsection.
(4)

Definitions.—
In this subsection—
(A)
the term “applicable percentage increase” means—
(i)
for 1991, 0 percent;
(ii)
for 1992 and 1993, the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending with June of the previous year;
(iii)
for 1994 and 1995, 0 percent;
(iv)
for 1996 and 1997, the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending with June of the previous year;
(v)
for each of the years 1998 through 2000, 1 percent;
(vi)
for 2001, the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 12-month period ending with June 2000;
(vii)
for 2002, 1 percent;
(viii)
for 2003, the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending with June of the previous year;
(ix)
for 2004, 2005, and 2006, 0 percent;
(x)
for for 25 each of 2007 through 2010, the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending with June of the previous year; and
^{25}
So in law. See amendment made by section 3401(n)(1)(B) of Public Law 111–148.
(xi)
for 2011 and each subsequent year—
(I)
the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending with June of the previous year, reduced by—
(II)
the productivity adjustment described in section 1886(b)(3)(B)(xi)(II).
(B)
the term “prosthetic devices” has the meaning given such term in section 1861(s)(8), except that such term does not include parenteral and enteral nutrition nutrients, supplies, and equipment and does not include an implantable item for which payment may be made under section 1833(t); and
(C)
the term “orthotics and prosthetics” has the meaning given such term in section 1861(s)(9) (and includes shoes described in section 1861(s)(12)), but does not include intraocular lenses or medical supplies (including catheters, catheter supplies, ostomy bags, and supplies related to ostomy care) furnished by a home health agency under section 1861(m)(5).
The application of subparagraph (A)(xi)(II) may result in the applicable percentage increase under subparagraph (A) being less than 0.0 for a year, and may result in payment rates under this subsection for a year being less than such payment rates for the preceding year.
(5)

Documentation created by orthotists and prosthetists.—
For purposes of determining the reasonableness and medical necessity of orthotics and prosthetics, documentation created by an orthotist or prosthetist shall be considered part of the individual’s medical record to support documentation created by eligible professionals described in section 1848(k)(3)(B).
(i)

Payment for Surgical Dressings.—
(1)

In general.—
Payment under this subsection for surgical dressings (described in section 1861(s)(5)) shall be made in a lump sum amount for the purchase of the item in an amount equal to 80 percent of the lesser of—
(A)
the actual charge for the item; or
(B)
a payment amount determined in accordance with the methodology described in subparagraphs (B) and (C) of subsection (a)(2) (except that in applying such methodology, the national limited payment amount referred to in such subparagraphs shall be initially computed based on local payment amounts using average reasonable charges for the 12-month period ending December 31, 1992, increased by the covered item updates described in such subsection for 1993 and 1994).
(2)

Exceptions.—
Paragraph (1) shall not apply to surgical dressings that are—
(A)
furnished as an incident to a physician's professional service; or
(B)
furnished by a home health agency.
(j)

Requirements for Suppliers of Medical Equipment and Supplies.—
(1)

Issuance and renewal of supplier number.—
(A)

Payment.—
Except as provided in subparagraph (C), no payment may be made under this part after the date of the enactment of the Social Security Act Amendments of 1994 for items furnished by a supplier of medical equipment and supplies unless such supplier obtains (and renews at such intervals as the Secretary may require) a supplier number.
(B)

Standards for possessing a supplier number.—
A supplier may not obtain a supplier number unless—
(i)
for medical equipment and supplies furnished on or after the date of the enactment of the Social Security Act Amendments of 1994 and before January 1, 1996, the supplier meets standards prescribed by the Secretary in regulations issued on June 18, 1992; and
(ii)
for medical equipment and supplies furnished on or after January 1, 1996, the supplier meets revised standards prescribed by the Secretary (in consultation with representatives of suppliers of medical equipment and supplies, carriers, and consumers) that shall include requirements that the supplier—
(I)
comply with all applicable State and Federal licensure and regulatory requirements;
(II)
maintain a physical facility on an appropriate site;
(III)
have proof of appropriate liability insurance; and
(IV)
meet such other requirements as the Secretary may specify.
(C)

Exception for items furnished as incident to a physician's service.—
Subparagraph (A) shall not apply with respect to medical equipment and supplies furnished incident to a physician's service.
(D)

Prohibition against multiple supplier numbers.—
The Secretary may not issue more than one supplier number to any supplier of medical equipment and supplies unless the issuance of more than one number is appropriate to identify subsidiary or regional entities under the supplier's ownership or control.
(E)

Prohibition against delegation of supplier determinations.—
The Secretary may not delegate (other than by contract under section 1842) the responsibility to determine whether suppliers meet the standards necessary to obtain a supplier number.
(2)

Certificates of medical necessity.—
(A)

Limitation on information provided by suppliers on certificates of medical necessity.—
(i)

In general.—
Effective 60 days after the date of the enactment of the Social Security Act Amendments of 1994, a supplier of medical equipment and supplies may distribute to physicians, or to individuals entitled to benefits under this part, a certificate of medical necessity for commercial purposes which contains no more than the following information completed by the supplier:
(I)
An identification of the supplier and the beneficiary to whom such medical equipment and supplies are furnished.
(II)
A description of such medical equipment and supplies.
(III)
Any product code identifying such medical equipment and supplies.3
(IV)
Any other administrative information (other than information relating to the beneficiary's medical condition) identified by the Secretary.
(ii)

Information on payment amount and charges.—
If a supplier distributes a certificate of medical necessity containing any of the information permitted to be supplied under clause (i), the supplier shall also list on the certificate of medical necessity the fee schedule amount and the supplier's charge for the medical equipment or supplies being furnished prior to distribution of such certificate to the physician.
(iii)

Penalty.—
Any supplier of medical equipment and supplies who knowingly and willfully distributes a certificate of medical necessity in violation of clause (i) or fails to provide the information required under clause (ii) is subject to a civil money penalty in an amount not to exceed $1,000 for each such certificate of medical necessity so distributed. The provisions of section 1128A (other than subsections (a) and (b)) shall apply to civil money penalties under this subparagraph in the same manner as they apply to a penalty or proceeding under section 1128A(a).
(B)

Definition.—
For purposes of this paragraph, the term “certificate of medical necessity” means a form or other document containing information required by the carrier to be submitted to show that an item is reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.
(3)

Coverage and review criteria.—
The Secretary shall annually review the coverage and utilization of items of medical equipment and supplies to determine whether such items should be made subject to coverage and utilization review criteria, and if appropriate, shall develop and apply such criteria to such items.
(4)

Limitation on patient liability.—
If a supplier of medical equipment and supplies (as defined in paragraph (5))—
(A)
furnishes an item or service to a beneficiary for which no payment may be made by reason of paragraph (1);
(B)
furnishes an item or service to a beneficiary for which payment is denied in advance under subsection (a)(15); or
(C)
furnishes an item or service to a beneficiary for which payment is denied under section 1862(a)(1);
any expenses incurred for items and services furnished to an individual by such a supplier not on an assigned basis shall be the responsibility of such supplier. The individual shall have no financial responsibility for such expenses and the supplier shall refund on a timely basis to the individual (and shall be liable to the individual for) any amounts collected from the individual for such items or services. The provisions of subsection (a)(18) shall apply to refunds required under the previous sentence in the same manner as such provisions apply to refunds under such subsection.
(5)

Definition.—
The term “medical equipment and supplies” means—
(A)
durable medical equipment (as defined in section 1861(n));
(B)
prosthetic devices (as described in section 1861(s)(8));
(C)
orthotics and prosthetics (as described in section 1861(s)(9));
(D)
surgical dressings (as described in section 1861(s)(5));
(E)26
items and services related to the administration of intravenous immune globulin furnished on or after January 1, 2024, as described in section 1861(zz);
^{26}
There are two subparagraph (E)s’ in law. See amendments made by section 4133(b)(2)(B) and 4134(c)(2) of division FF of Public Law 117–328. The amendment made by 4134(c)(1) of such Public Law redesignates subparagraphs (E) and (F) as subparagraphs (F) and (G), respectively was not carried out above.
(E)26
lymphedema compression treatment items (as defined in section 1861(mmm));
(F)
such other items as the Secretary may determine; and
(G)
for purposes of paragraphs (1) and (3)—
(i)
home dialysis supplies and equipment (as described in section 1861(s)(2)(F)),
(ii)
immunosuppressive drugs (as described in section 1861(s)(2)(J)),
(iii)
therapeutic shoes for diabetics (as described in section 1861(s)(12)),
(iv)
oral drugs prescribed for use as an anticancer therapeutic agent (as described in section 1861(s)(2)(Q)), and
(v)
self-administered erythropoetin (as described in section 1861(s)(2)(P)).
(k)

Payment for Outpatient Therapy Services and Comprehensive Outpatient Rehabilitation Services.—
(1)

In general.—
With respect to services described in section 1833(a)(8) or 1833(a)(9) for which payment is determined under this subsection, the payment basis shall be—
(A)
for services furnished during 1998, the amount determined under paragraph (2); or
(B)
for services furnished during a subsequent year, 80 percent of the lesser of—
(i)
the actual charge for the services, or
(ii)
the applicable fee schedule amount (as defined in paragraph (3)) for the services.
(2)

Payment in 1998 based upon adjusted reasonable costs.—
The amount under this paragraph for services is the lesser of—
(A)
the charges imposed for the services, or
(B)
the adjusted reasonable costs (as defined in paragraph (4)) for the services,
less 20 percent of the amount of the charges imposed for such services.
(3)

Applicable fee schedule amount.—
In this subsection, the term “applicable fee schedule amount” means, with respect to services furnished in a year, the amount determined under the fee schedule established under section 1848 for such services furnished during the year or, if there is no such fee schedule established for such services, the amount determined under the fee schedule established for such comparable services as the Secretary specifies.
(4)

Adjusted reasonable costs.—
In paragraph (2), the term “adjusted reasonable costs” means, with respect to any services, reasonable costs determined for such services, reduced by 10 percent. The 10-percent reduction shall not apply to services described in section 1833(a)(8)(B) (relating to services provided by hospitals).
(5)

Uniform coding.—
For claims for services submitted on or after April 1, 1998, for which the amount of payment is determined under this subsection, the claim shall include a code (or codes) under a uniform coding system specified by the Secretary that identifies the services furnished.
(6)

Restraint on billing.—
The provisions of subparagraphs (A) and (B) of section 1842(b)(18) shall apply to therapy services for which payment is made under this subsection in the same manner as they apply to services provided by a practitioner described in section 1842(b)(18)(C).
(7)

Adjustment in discount for certain multiple therapy services.—
In the case of therapy services furnished on or after April 1, 2013, and for which payment is made under this subsection pursuant to the applicable fee schedule amount (as defined in paragraph (3)), instead of the 25 percent multiple procedure payment reduction specified in the final rule published by the Secretary in the Federal Register on November 29, 2010, the reduction percentage shall be 50 percent.
(l)

Establishment of Fee Schedule for Ambulance Services.—
(1)

In general.—
The Secretary shall establish a fee schedule for payment for ambulance services whether provided directly by a supplier or provider or under arrangement with a provider under this part through a negotiated rulemaking process described in title 5, United States Code, and in accordance with the requirements of this subsection.
(2)

Considerations.—
In establishing such fee schedule, the Secretary shall—
(A)
establish mechanisms to control increases in expenditures for ambulance services under this part;
(B)
establish definitions for ambulance services which link payments to the type of services provided;
(C)
consider appropriate regional and operational differences;
(D)
consider adjustments to payment rates to account for inflation and other relevant factors; and
(E)
phase in the application of the payment rates under the fee schedule in an efficient and fair manner consistent with paragraph (11), except that such phase-in shall provide for full payment of any national mileage rate for ambulance services provided by suppliers that are paid by carriers in any of the 50 States where payment by a carrier for such services for all such suppliers in such State did not, prior to the implementation of the fee schedule, include a separate amount for all mileage within the county from which the beneficiary is transported.
(3)

Savings.—
In establishing such fee schedule, the Secretary shall—
(A)
ensure that the aggregate amount of payments made for ambulance services under this part during 2000 does not exceed the aggregate amount of payments which would have been made for such services under this part during such year if the amendments made by section 4531(a) of the Balanced Budget Act of 1997 continued in effect, except that in making such determination the Secretary shall assume an update in such payments for 2002 equal to percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 12-month period ending with June of the previous year reduced in the case of 2002 by 1.0 percentage points;
(B)
set the payment amounts provided under the fee schedule for services furnished in 2001 and each subsequent year at amounts equal to the payment amounts under the fee schedule for services furnished during the previous year, increased, subject to subparagraph (C) and the succeeding sentence of this paragraph, by the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the 12-month period ending with June of the previous year reduced in the case of 2002 by 1.0 percentage points; and
(C)
for 2011 and each subsequent year, after determining the percentage increase under subparagraph (B) for the year, reduce such percentage increase by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II).
The application of subparagraph (C) may result in the percentage increase under subparagraph (B) being less than 0.0 for a year, and may result in payment rates under the fee schedule under this subsection for a year being less than such payment rates for the preceding year.
(4)

Consultation.—
In establishing the fee schedule for ambulance services under this subsection, the Secretary shall consult with various national organizations representing individuals and entities who furnish and regulate ambulance services and share with such organizations relevant data in establishing such schedule.
(5)

Limitation on review.—
There shall be no administrative or judicial review under section 1869 or otherwise of the amounts established under the fee schedule for ambulance services under this subsection, including matters described in paragraph (2).
(6)

Restraint on billing.—
The provisions of subparagraphs (A) and (B) of section 1842(b)(18) shall apply to ambulance services for which payment is made under this subsection in the same manner as they apply to services provided by a practitioner described in section 1842(b)(18)(C).
(7)

Coding system.—
The Secretary may require the claim for any services for which the amount of payment is determined under this subsection to include a code (or codes) under a uniform coding system specified by the Secretary that identifies the services furnished.
(8)

Services furnished by critical access hospitals.—
Notwithstanding any other provision of this subsection, the Secretary shall pay 101 percent of the reasonable costs incurred in furnishing ambulance services if such services are furnished—
(A)
by a critical access hospital (as defined in section 1861(mm)(1)), or
(B)
by an entity that is owned and operated by a critical access hospital,
but only if the critical access hospital or entity is the only provider or supplier of ambulance services that is located within a 35-mile drive of such critical access hospital.
(9)

Transitional assistance for rural providers.—
In the case of ground ambulance services furnished on or after July 1, 2001, and before January 1, 2004, for which the transportation originates in a rural area (as defined in section 1886(d)(2)(D)) or in a rural census tract of a metropolitan statistical area (as determined under the most recent modification of the Goldsmith Modification, originally published in the Federal Register on February 27, 1992 (57 Fed. Reg. 6725)), the fee schedule established under this subsection shall provide that, with respect to the payment rate for mileage for a trip above 17 miles, and up to 50 miles, the rate otherwise established shall be increased by not less than ½ of the additional payment per mile established for the first 17 miles of such a trip originating in a rural area.
(10)

Phase-in providing floor using blend of fee schedule and regional fee schedules.—
In carrying out the phase-in under paragraph (2)(E) for each level of ground service furnished in a year, the portion of the payment amount that is based on the fee schedule shall be the greater of the amount determined under such fee schedule (without regard to this paragraph) or the following blended rate of the fee schedule under paragraph (1) and of a regional fee schedule for the region involved:
(A)
For 2004 (for services furnished on or after July 1, 2004), the blended rate shall be based 20 percent on the fee schedule under paragraph (1) and 80 percent on the regional fee schedule.
(B)
For 2005, the blended rate shall be based 40 percent on the fee schedule under paragraph (1) and 60 percent on the regional fee schedule.
(C)
For 2006, the blended rate shall be based 60 percent on the fee schedule under paragraph (1) and 40 percent on the regional fee schedule.
(D)
For 2007, 2008, and 2009, the blended rate shall be based 80 percent on the fee schedule under paragraph (1) and 20 percent on the regional fee schedule.
(E)
For 2010 and each succeeding year, the blended rate shall be based 100 percent on the fee schedule under paragraph (1).
For purposes of this paragraph, the Secretary shall establish a regional fee schedule for each of the nine census divisions (referred to in section 1886(d)(2)) using the methodology (used in establishing the fee schedule under paragraph (1)) to calculate a regional conversion factor and a regional mileage payment rate and using the same payment adjustments and the same relative value units as used in the fee schedule under such paragraph.
(11)

Adjustment in payment for certain long trips.—
In the case of ground ambulance services furnished on or after July 1, 2004, and before January 1, 2009, regardless of where the transportation originates, the fee schedule established under this subsection shall provide that, with respect to the payment rate for mileage for a trip above 50 miles the per mile rate otherwise established shall be increased by ¼ of the payment per mile otherwise applicable to miles in excess of 50 miles in such trip.
(12)

Assistance for rural providers furnishing services in low population density areas.—
(A)

In general.—
In the case of ground ambulance services furnished on or after July 1, 2004, and before January 31, 2026, for which the transportation originates in a qualified rural area (identified under subparagraph (B)(iii)), the Secretary shall provide for a percent increase in the base rate of the fee schedule for a trip established under this subsection. In establishing such percent increase, the Secretary shall estimate the average cost per trip for such services (not taking into account mileage) in the lowest quartile as compared to the average cost per trip for such services (not taking into account mileage) in the highest quartile of all rural county populations.
(B)

Identification of qualified rural areas.—
(i)

Determination of population density in area.—
Based upon data from the United States decennial census for the year 2000, the Secretary shall determine, for each rural area, the population density for that area.
(ii)

Ranking of areas.—
The Secretary shall rank each such area based on such population density.
(iii)

Identification of qualified rural areas.—
The Secretary shall identify those areas (in subparagraph (A) referred to as “qualified rural areas”) with the lowest population densities that represent, if each such area were weighted by the population of such area (as used in computing such population densities), an aggregate total of 25 percent of the total of the population of all such areas.
(iv)

Rural area.—
For purposes of this paragraph, the term “rural area” has the meaning given such term in section 1886(d)(2)(D). If feasible, the Secretary shall treat a rural census tract of a metropolitan statistical area (as determined under the most recent modification of the Goldsmith Modification, originally published in the Federal Register on February 27, 1992 (57 Fed. Reg. 6725) as a rural area for purposes of this paragraph.
(v)

Judicial review.—
There shall be no administrative or judicial review under section 1869, 1878, or otherwise, respecting the identification of an area under this subparagraph.
(13)

Temporary increase for ground ambulance services.—
(A)

In general.—
After computing the rates with respect to ground ambulance services under the other applicable provisions of this subsection, in the case of such services furnished on or after July 1, 2004, and before January 1, 2007, and for such services furnished on or after July 1, 2008, and before January 31, 2026, for which the transportation originates in—
(i)
a rural area described in paragraph (9) or in a rural census tract described in such paragraph, the fee schedule established under this section shall provide that the rate for the service otherwise established, after the application of any increase under paragraphs (11) and (12), shall be increased by 2 percent (or 3 percent if such service is furnished on or after July 1, 2008, and before January 31, 2026); and
(ii)
an area not described in clause (i), the fee schedule established under this subsection shall provide that the rate for the service otherwise established, after the application of any increase under paragraph (11), shall be increased by 1 percent (or 2 percent if such service is furnished on or after July 1, 2008, and before January 31, 2026).
(B)

Application of increased payments after applicable period.—
The increased payments under subparagraph (A) shall not be taken into account in calculating payments for services furnished after the applicable period specified in such subparagraph.
(14)

Providing appropriate coverage of rural air ambulance services.—
(A)

In general.—
The regulations described in section 1861(s)(7) shall provide, to the extent that any ambulance services (whether ground or air) may be covered under such section, that a rural air ambulance service (as defined in subparagraph (C)) is reimbursed under this subsection at the air ambulance rate if the air ambulance service—
(i)
is reasonable and necessary based on the health condition of the individual being transported at or immediately prior to the time of the transport; and
(ii)
complies with equipment and crew requirements established by the Secretary.
(B)

Satisfaction of requirement of medically necessary.—
The requirement of subparagraph (A)(i) is deemed to be met for a rural air ambulance service if—
(i)
subject to subparagraph (D), such service is requested by a physician or other qualified medical personnel (as specified by the Secretary) who certifies or reasonably determines that the individual's condition is such that the time needed to transport the individual by land or the instability of transportation by land poses a threat to the individual's survival or seriously endangers the individual's health; or
(ii)
such service is furnished pursuant to a protocol that is established by a State or regional emergency medical service (EMS) agency and recognized or approved by the Secretary under which the use of an air ambulance is recommended, if such agency does not have an ownership interest in the entity furnishing such service.
(C)

Rural air ambulance service defined.—
For purposes of this paragraph, the term “rural air ambulance service” means fixed wing and rotary wing air ambulance service in which the point of pick up of the individual occurs in a rural area (as defined in section 1886(d)(2)(D)) or in a rural census tract of a metropolitan statistical area (as determined under the most recent modification of the Goldsmith Modification, originally published in the Federal Register on February 27, 1992 (57 Fed. Reg. 6725)).
(D)

Limitation.—
(i)

In general.—
Subparagraph (B)(i) shall not apply if there is a financial or employment relationship between the person requesting the rural air ambulance service and the entity furnishing the ambulance service, or an entity under common ownership with the entity furnishing the air ambulance service, or a financial relationship between an immediate family member of such requester and such an entity.
(ii)

Exception.—
Where a hospital and the entity furnishing rural air ambulance services are under common ownership, clause (i) shall not apply to remuneration (through employment or other relationship) by the hospital of the requester or immediate family member if the remuneration is for provider-based physician services furnished in a hospital (as described in section 1887) which are reimbursed under part A and the amount of the remuneration is unrelated directly or indirectly to the provision of rural air ambulance services.
(15)

Payment adjustment for non-emergency ambulance transports for esrd beneficiaries.—
The fee schedule amount otherwise applicable under the preceding provisions of this subsection shall be reduced by 10 percent for ambulance services furnished during the period beginning on October 1, 2013, and ending on September 30, 2018, and by 23 percent for such services furnished on or after October 1, 2018, consisting of non-emergency basic life support services involving transport of an individual with end-stage renal disease for renal dialysis services (as described in section 1881(b)(14)(B)) furnished other than on an emergency basis by a provider of services or a renal dialysis facility.
(16)

Prior authorization for repetitive scheduled non-emergent ambulance transports.—
(A)

In general.—
Beginning January 1, 2017, if the expansion to all States of the model of prior authorization described in paragraph (2) of section 515(a) of the Medicare Access and CHIP Reauthorization Act of 2015 meets the requirements described in paragraphs (1) through (3) of section 1115A(c), then the Secretary shall expand such model to all States.
(B)

Funding.—
The Secretary shall use funds made available under section 1893(h)(10) to carry out this paragraph.
(C)

Clarification regarding budget neutrality.—
Nothing in this paragraph may be construed to limit or modify the application of section 1115A(b)(3)(B) to models described in such section, including with respect to the model described in subparagraph (A) and expanded beginning on January 1, 2017, under such subparagraph.
(17)

Submission of cost and other information.—
(A)

Development of data collection system.—
The Secretary shall develop a data collection system (which may include use of a cost survey) to collect cost, revenue, utilization, and other information determined appropriate by the Secretary with respect to providers of services (in this paragraph referred to as “providers”) and suppliers of ground ambulance services. Such system shall be designed to collect information—
(i)
needed to evaluate the extent to which reported costs relate to payment rates under this subsection;
(ii)
on the utilization of capital equipment and ambulance capacity, including information consistent with the type of information described in section 1121(a); and
(iii)
on different types of ground ambulance services furnished in different geographic locations, including rural areas and low population density areas described in paragraph (12).
(B)

Specification of data collection system.—
(i)

In general.—
The Secretary shall—
(I)
not later than December 31, 2019, specify the data collection system under subparagraph (A); and
(II)
identify the providers and suppliers of ground ambulance services that would be required to submit information under such data collection system, including the representative sample described in clause (ii).
(ii)

Determination of representative sample.—
(I)

In general.—
Not later than December 31, 2019, with respect to the data collection for the first year under such system, and for each subsequent year through 2024, the Secretary shall determine a representative sample to submit information under the data collection system.
(II)

Requirements.—
The sample under subclause (I) shall be representative of the different types of providers and suppliers of ground ambulance services (such as those providers and suppliers that are part of an emergency service or part of a government organization) and the geographic locations in which ground ambulance services are furnished (such as urban, rural, and low population density areas).
(III)

Limitation.—
The Secretary shall not include an individual provider or supplier of ground ambulance services in the sample under subclause (I) in 2 consecutive years, to the extent practicable.
(C)

Reporting of cost information.—
For each year, a provider or supplier of ground ambulance services identified by the Secretary under subparagraph (B)(i)(II) as being required to submit information under the data collection system with respect to a period for the year shall submit to the Secretary information specified under the system. Such information shall be submitted in a form and manner, and at a time, specified by the Secretary for purposes of this subparagraph.
(D)

Payment reduction for failure to report.—
(i)

In general.—
Beginning January 1, 2022, subject to clause (ii), a 10 percent reduction to payments under this subsection shall be made for the applicable period (as defined in clause (ii)) to a provider or supplier of ground ambulance services that—
(I)
is required to submit information under the data collection system with respect to a period under subparagraph (C); and
(II)
does not sufficiently submit such information, as determined by the Secretary.
(ii)

Applicable period defined.—
For purposes of clause (i), the term “applicable period” means, with respect to a provider or supplier of ground ambulance services, a year specified by the Secretary not more than 2 years after the end of the period with respect to which the Secretary has made a determination under clause (i)(II) that the provider or supplier of ground ambulance services failed to sufficiently submit information under the data collection system.
(iii)

Hardship exemption.—
The Secretary may exempt a provider or supplier from the payment reduction under clause (i) with respect to an applicable period in the event of significant hardship, such as a natural disaster, bankruptcy, or other similar situation that the Secretary determines interfered with the ability of the provider or supplier of ground ambulance services to submit such information in a timely manner for the specified period.
(iv)

Informal review.—
The Secretary shall establish a process under which a provider or supplier of ground ambulance services may seek an informal review of a determination that the provider or supplier is subject to the payment reduction under clause (i).
(E)

Ongoing data collection.—
(i)

Revision of data collection system.—
The Secretary may, as the Secretary determines appropriate and, if available, taking into consideration the report (or reports) under subparagraph (F), revise the data collection system under subparagraph (A).
(ii)

Subsequent data collection.—
In order to continue to evaluate the extent to which reported costs relate to payment rates under this subsection and for other purposes the Secretary deems appropriate, the Secretary shall require providers and suppliers of ground ambulance services to submit information for years after 2024 as the Secretary determines appropriate, but in no case less often than once every 3 years.
(F)

Ground ambulance data collection system study.—
(i)

In general.—
Not later than the second June 15th following the date on which the Secretary transmits data for the first representative sample of providers and suppliers of ground ambulance services to the Medicare Payment Advisory Commission, and as determined necessary by such Commission thereafter,,27 such Commission shall assess, and submit to Congress a report on, information submitted by providers and suppliers of ground ambulance services through the data collection system under subparagraph (A), the adequacy of payments for ground ambulance services under this subsection, and geographic variations in the cost of furnishing such services.
^{27}
Double commas in subparagraph (F)(i) are so in law. See amendment made by section 311 of division P of Public Law 117–103.
(ii)

Contents.—
A report under clause (i) shall contain the following:
(I)
An analysis of information submitted through the data collection system.
(II)
An analysis of any burden on providers and suppliers of ground ambulance services associated with the data collection system.
(III)
A recommendation as to whether information should continue to be submitted through such data collection system or if such system should be revised under subparagraph (E)(i).
(IV)
Other information determined appropriate by the Commission.
(G)

Public availability.—
The Secretary shall post information on the results of the data collection under this paragraph on the Internet website of the Centers for Medicare & Medicaid Services, as determined appropriate by the Secretary.
(H)

Implementation.—
The Secretary shall implement this paragraph through notice and comment rulemaking.
(I)

Administration.—
Chapter 35 of title 44, United States Code, shall not apply to the collection of information required under this subsection.
(J)

Limitations on review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the data collection system or identification of respondents under this paragraph.
(K)

Funding for implementation.—
For purposes of carrying out subparagraph (A), the Secretary shall provide for the transfer, from the Federal Supplementary Medical Insurance Trust Fund under section 1841, of $15,000,000 to the Centers for Medicare & Medicaid Services Program Management Account for fiscal year 2018. Amounts transferred under this subparagraph shall remain available until expended.
(m)

Payment for Telehealth Services.—
(1)

In general.—
Subject to paragraphs (8) and (9), the Secretary shall pay for telehealth services that are furnished via a telecommunications system by a physician (as defined in section 1861(r)) or a practitioner (as defined in paragraph (4)(E)) to an eligible telehealth individual enrolled under this part notwithstanding that the individual physician or practitioner providing the telehealth service is not at the same location as the beneficiary. For purposes of the preceding sentence, in the case of any Federal telemedicine demonstration program conducted in Alaska or Hawaii, the term “telecommunications system” includes store-and-forward technologies that provide for the asynchronous transmission of health care information in single or multimedia formats.
(2)

Payment amount.—
(A)

Distant site.—
Subject to paragraph (8), the Secretary shall pay to a physician or practitioner located at a distant site that furnishes a telehealth service to an eligible telehealth individual an amount equal to the amount that such physician or practitioner would have been paid under this title had such service been furnished without the use of a telecommunications system.
(B)

Facility fee for originating site.—
(i)

In general.—
Subject to clauses (ii) and (iii) and paragraph (6)(C), with respect to a telehealth service, subject to section 1833(a)(1)(U), there shall be paid to the originating site a facility fee equal to—
(I)
for the period beginning on October 1, 2001, and ending on December 31, 2001, and for 2002, $20; and
(II)
for a subsequent year, the facility fee specified in subclause (I) or this subclause for the preceding year increased by the percentage increase in the MEI (as defined in section 1842(i)(3)) for such subsequent year.
(ii)

No facility fee if originating site is the home.—
No facility fee shall be paid under this subparagraph to an originating site described in paragraph (4)(C)(ii)(X).
(iii)

No facility fee for new sites.—
In the case that the emergency period described in section 1135(g)(1)(B) ends before December 31, 2024, with respect to telehealth services identified in paragraph (4)(F)(i) as of the date of the enactment of this clause that are furnished during the period beginning on the first day after the end of such emergency period and ending January 30, 2026, a facility fee shall only be paid under this subparagraph to an originating site that is described in paragraph (4)(C)(ii) (other than subclause (X) of such paragraph).
(C)

Telepresenter not required.—
Nothing in this subsection shall be construed as requiring an eligible telehealth individual to be presented by a physician or practitioner at the originating site for the furnishing of a service via a telecommunications system, unless it is medically necessary (as determined by the physician or practitioner at the distant site).
(3)

Limitation on beneficiary charges.—
(A)

Physician and practitioner.—
The provisions of section 1848(g) and subparagraphs (A) and (B) of section 1842(b)(18) shall apply to a physician or practitioner receiving payment under this subsection in the same manner as they apply to physicians or practitioners under such sections.
(B)

Originating site.—
The provisions of section 1842(b)(18) shall apply to originating sites receiving a facility fee in the same manner as they apply to practitioners under such section.
(4)

Definitions.—
For purposes of this subsection:
(A)

Distant site.—
Subject to paragraph (8), the term“distant site” means the site at which the physician or practitioner is located at the time the service is provided via a telecommunications system.
(B)

Eligible telehealth individual.—
The term “eligible telehealth individual” means an individual enrolled under this part who receives a telehealth service furnished at an originating site.
(C)

Originating site.—
(i)

In general.—
Except as provided in clause (iii) and paragraphs (5), (6), and (7), the term“originating site” means only those sites described in clause (ii) at which the eligible telehealth individual is located at the time the service is furnished via a telecommunications system and only if such site is located—
(I)
in an area that is designated as a rural health professional shortage area under section 332(a)(1)(A) of the Public Health Service Act (42 U.S.C. 254e(a)(1)(A));
(II)
in a county that is not included in a Metropolitan Statistical Area; or
(III)
from an entity that participates in a Federal telemedicine demonstration project that has been approved by (or receives funding from) the Secretary of Health and Human Services as of December 31, 2000.
(ii)

Sites described.—
The sites referred to in clause (i) are the following sites:
(I)
The office of a physician or practitioner.
(II)
A critical access hospital (as defined in section 1861(mm)(1)).
(III)
A rural health clinic (as defined in section 1861(aa)(2)).
(IV)
A Federally qualified health center (as defined in section 1861(aa)(4)).
(V)
A hospital (as defined in section 1861(e)).
(VI)
A hospital-based or critical access hospital-based renal dialysis center (including satellites).
(VII)
A skilled nursing facility (as defined in section 1819(a)).
(VIII)
A community mental health center (as defined in section 1861(ff)(3)(B)).
(IX)
A renal dialysis facility, but only for purposes of section 1881(b)(3)(B).
(X)
The home of an individual, but only for purposes of section 1881(b)(3)(B) or telehealth services described in paragraph (7).
(XI)
A rural emergency hospital (as defined in section 1861(kkk)(2)).
(iii)

Expanding access to telehealth services.—
In the case that the emergency period described in section 1135(g)(1)(B) ends before December 31, 2024, with respect to telehealth services identified in subparagraph (F)(i) as of the date of the enactment of this clause that are furnished during the period beginning on the first day after the end of such emergency period and ending on January 30, 2026, the term “originating site” means any site in the United States at which the eligible telehealth individual is located at the time the service is furnished via a telecommunications system, including the home of an individual.
(D)

Physician.—
The term “physician” has the meaning given that term in section 1861(r).
(E)

Practitioner.—
The term “practitioner” has the meaning given that term in section 1842(b)(18)(C) and, in the case that the emergency period described in section 1135(g)(1)(B) ends before December 31, 2024, for the period beginning on the first day after the end of such emergency period and ending on January 30, 2026, shall include a qualified occupational therapist (as such term is used in section 1861(g)), a qualified physical therapist (as such term is used in section 1861(p)), a qualified speech-language pathologist (as defined in section 1861(ll)(4)(A)), and a qualified audiologist (as defined in section 1861(ll)(4)(B)).
(F)

Telehealth service.—
(i)

In general.—
Subject to paragraph (8), the term“telehealth service” means professional consultations, office visits, and office psychiatry services (identified as of July 1, 2000, by HCPCS codes 99241–99275, 99201–99215, 90804–90809, and 90862 (and as subsequently modified by the Secretary)), and any additional service specified by the Secretary.
(ii)

Yearly update.—
The Secretary shall establish a process that provides, on an annual basis, for the addition or deletion of services (and HCPCS codes), as appropriate, to those specified in clause (i) for authorized payment under paragraph (1).
(5)

Treatment of home dialysis monthly esrd-related visit.—
The geographic requirements described in paragraph (4)(C)(i) shall not apply with respect to telehealth services furnished on or after January 1, 2019, for purposes of section 1881(b)(3)(B), at an originating site described in subclause (VI), (IX), or (X) of paragraph (4)(C)(ii).
(6)

Treatment of stroke telehealth services.—
(A)

Non-application of originating site requirements.—
The requirements described in paragraph (4)(C) shall not apply with respect to telehealth services furnished on or after January 1, 2019, for purposes of diagnosis, evaluation, or treatment of symptoms of an acute stroke, as determined by the Secretary.
(B)

Inclusion of certain sites.—
With respect to telehealth services described in subparagraph (A), the term “originating site” shall include any hospital (as defined in section 1861(e)) or critical access hospital (as defined in section 1861(mm)(1)), any mobile stroke unit (as defined by the Secretary), or any other site determined appropriate by the Secretary, at which the eligible telehealth individual is located at the time the service is furnished via a telecommunications system.
(C)

No originating site facility fee for new sites.—
No facility fee shall be paid under paragraph (2)(B) to an originating site with respect to a telehealth service described in subparagraph (A) if the originating site does not otherwise meet the requirements for an originating site under paragraph (4)(C).
(7)

Treatment of substance use disorder services and mental health services furnished through telehealth.—
(A)

In general.—
The geographic requirements described in paragraph (4)(C)(i) shall not apply with respect to telehealth services furnished on or after July 1, 2019, to an eligible telehealth individual with a substance use disorder diagnosis for purposes of treatment of such disorder or co-occurring mental health disorder, as determined by the Secretary, or, on or after the first day after the end of the emergency period described in section 1135(g)(1)(B), subject to subparagraph (B), to an eligible telehealth individual for purposes of diagnosis, evaluation, or treatment of a mental health disorder, as determined by the Secretary, at an originating site described in paragraph (4)(C)(ii) (other than an originating site described in subclause (IX) of such paragraph) or, for the period for which clause (iii) of paragraph (4)(C) applies, at any site described in such clause.
(B)

Requirements for mental health services furnished through telehealth.—
(i)

In general.—
Payment may not be made under this paragraph for telehealth services furnished on or after January 31, 2026, by a physician or practitioner to an eligible telehealth individual for purposes of diagnosis, evaluation, or treatment of a mental health disorder unless such physician or practitioner furnishes an item or service in person, without the use of telehealth, for which payment is made under this title (or would have been made under this title if such individual were entitled to, or enrolled for, benefits under this title at the time such item or service is furnished)—
(I)
within the 6-month period prior to the first time such physician or practitioner furnishes such a telehealth service to the eligible telehealth individual; and
(II)
during subsequent periods in which such physician or practitioner furnishes such telehealth services to the eligible telehealth individual, at such times as the Secretary determines appropriate.
(ii)

Clarification.—
This subparagraph shall not apply if payment would otherwise be allowed—
(I)
under this paragraph (with respect to telehealth services furnished to an eligible telehealth individual with a substance use disorder diagnosis for purposes of treatment of such disorder or co-occurring mental health disorder); or
(II)
under this subsection without application of this paragraph.
(8)

Enhancing telehealth services for federally qualified health centers and rural health clinics.—
(A)

In general.—
During the emergency period described in section 1135(g)(1)(B) and, in the case that such emergency period ends before December 31, 2024, during the period beginning on the first day after the end of such emergency period and ending on January 30, 2026—
(i)
the Secretary shall pay for telehealth services that are furnished via a telecommunications system by a Federally qualified health center or a rural health clinic to an eligible telehealth individual enrolled under this part notwithstanding that the Federally qualified health center or rural clinic providing the telehealth service is not at the same location as the beneficiary;
(ii)
the amount of payment to a Federally qualified health center or rural health clinic that serves as a distant site for such a telehealth service shall be determined under subparagraph (B); and
(iii)
for purposes of this subsection—
(I)
the term “distant site” includes a Federally qualified health center or rural health clinic that furnishes a telehealth service to an eligible telehealth individual; and
(II)
the term “telehealth services” includes a rural health clinic service or Federally qualified health center service that is furnished using telehealth to the extent that payment codes corresponding to services identified by the Secretary under clause (i) or (ii) of paragraph (4)(F) are listed on the corresponding claim for such rural health clinic service or Federally qualified health center service.
(B)

Special payment rule.—
(i)

In general.—
The Secretary shall develop and implement payment methods that apply under this subsection to a Federally qualified health center or rural health clinic that serves as a distant site that furnishes a telehealth service to an eligible telehealth individual during the periods for which subparagraph (A) applies. Such payment methods shall be based on payment rates that are similar to the national average payment rates for comparable telehealth services under the physician fee schedule under section 1848. Notwithstanding any other provision of law, the Secretary may implement such payment methods through program instruction or otherwise.
(ii)

Exclusion from fqhc pps calculation and rhc air calculation.—
Costs associated with telehealth services shall not be used to determine the amount of payment for Federally qualified health center services under the prospective payment system under section 1834(o) or for rural health clinic services under the methodology for all-inclusive rates (established by the Secretary) under section 1833(a)(3).
(9)

Treatment of telehealth services furnished using audio-only telecommunications technology.—
In the case that the emergency period described in section 1135(g)(1)(B) ends before December 31, 2024, the Secretary shall continue to provide coverage and payment under this part for telehealth services identified in paragraph (4)(F)(i) as of the date of the enactment of this paragraph that are furnished via an audio-only communications system during the period beginning on the first day after the end of such emergency period and ending on January 30, 2026. For purposes of the previous sentence, the term “telehealth service” means a telehealth service identified as of the date of the enactment of this paragraph by a HCPCS code (and any succeeding codes) for which the Secretary has not applied the requirements of paragraph (1) and the first sentence of section 410.78(a)(3) of title 42, Code of Federal Regulations, during such emergency period.
(n)

Authority To Modify or Eliminate Coverage of Certain Preventive Services.—
Notwithstanding any other provision of this title, effective beginning on January 1, 2010, if the Secretary determines appropriate, the Secretary may—
(1)
modify—
(A)
the coverage of any preventive service described in subparagraph (A) of section 1861(ddd)(3) to the extent that such modification is consistent with the recommendations of the United States Preventive Services Task Force; and
(B)
the services included in the initial preventive physical examination described in subparagraph (B) of such section; and
(2)
provide that no payment shall be made under this title for a preventive service described in subparagraph (A) of such section that has not received a grade of A, B, C, or I by such Task Force.
(o)

Development and Implementation of Prospective Payment System.—
(1)

Development.—
(A)

In general.—
The Secretary shall develop a prospective payment system for payment for Federally qualified health center services furnished by Federally qualified health centers under this title. Such system shall include a process for appropriately describing the services furnished by Federally qualified health centers and shall establish payment rates for specific payment codes based on such appropriate descriptions of services. Such system shall be established to take into account the type, intensity, and duration of services furnished by Federally qualified health centers. Such system may include adjustments, including geographic adjustments, determined appropriate by the Secretary.
(B)

Collection of data and evaluation.—
By not later than January 1, 2011, the Secretary shall require Federally qualified health centers to submit to the Secretary such information as the Secretary may require in order to develop and implement the prospective payment system under this subsection, including the reporting of services using HCPCS codes.
(2)

Implementation.—
(A)

In general.—
Notwithstanding section 1833(a)(3)(A), the Secretary shall provide, for cost reporting periods beginning on or after October 1, 2014, for payments of prospective payment rates for Federally qualified health center services furnished by Federally qualified health centers under this title in accordance with the prospective payment system developed by the Secretary under paragraph (1).
(B)

Payments.—
(i)

Initial payments.—
The Secretary shall implement such prospective payment system so that the estimated aggregate amount of prospective payment rates (determined prior to the application of section 1833(a)(1)(Z)) under this title for Federally qualified health center services in the first year that such system is implemented is equal to 100 percent of the estimated amount of reasonable costs (determined without the application of a per visit payment limit or productivity screen and prior to the application of section 1866(a)(2)(A)(ii)) that would have occurred for such services under this title in such year if the system had not been implemented.
(ii)

Payments in subsequent years.—
Payment rates in years after the year of implementation of such system shall be the payment rates in the previous year increased—
(I)
in the first year after implementation of such system, by the percentage increase in the MEI (as defined in section 1842(i)(3)) for the year involved; and
(II)
in subsequent years, by the percentage increase in a market basket of Federally qualified health center goods and services as promulgated through regulations, or if such an index is not available, by the percentage increase in the MEI (as defined in section 1842(i)(3)) for the year involved.
(C)

Preparation for pps implementation.—
Notwithstanding any other provision of law, the Secretary may establish and implement by program instruction or otherwise the payment codes to be used under the prospective payment system under this section.
(3)

Additional payments for certain fqhcs with physicians or other practitioners receiving data 2000 waivers.—
(A)

In general.—
In the case of a Federally qualified health center with respect to which, beginning on or after January 1, 2019, Federally qualified health center services (as defined in section 1861(aa)(3)) are furnished for the treatment of opioid use disorder by a physician or practitioner who meets the requirements described in subparagraph (C), the Secretary shall, subject to availability of funds under subparagraph (D), make a payment (at such time and in such manner as specified by the Secretary) to such Federally qualified health center after receiving and approving an application submitted by such Federally qualified health center under subparagraph (B). Such a payment shall be in an amount determined by the Secretary, based on an estimate of the average costs of training for purposes of receiving a waiver described in subparagraph (C)(ii). Such a payment may be made only one time with respect to each such physician or practitioner.
(B)

Application.—
In order to receive a payment described in subparagraph (A), a Federally qualified health center shall submit to the Secretary an application for such a payment at such time, in such manner, and containing such information as specified by the Secretary. A Federally qualified health center may apply for such a payment for each physician or practitioner described in subparagraph (A) furnishing services described in such subparagraph at such center.
(C)

Requirements.—
For purposes of subparagraph (A), the requirements described in this subparagraph, with respect to a physician or practitioner, are the following:
(i)
The physician or practitioner is employed by or working under contract with a Federally qualified health center described in subparagraph (A) that submits an application under subparagraph (B).
(ii)
The physician or practitionerfirst begins prescribing narcotic drugs in schedule III, IV, or V of section 202 of the Controlled Substances Act for the purpose of maintenance or detoxification treatment on or after January 1, 2021.
(D)

Funding.—
For purposes of making payments under this paragraph, there are appropriated, out of amounts in the Treasury not otherwise appropriated, $6,000,000, which shall remain available until expended.
(4)

Payment for certain services furnished by federally qualified health centers.—
(A)

Attending physician services for hospice patients.—
In the case of services described in section 1812(d)(2)(A)(ii) furnished on or after January 1, 2022, by an attending physician (as defined in section 1861(dd)(3)(B), other than a physician or practitioner who is employed by a hospice program) who is employed by or working under contract with a Federally qualified health center, a Federally qualified health center shall be paid for such services under the prospective payment system under this subsection.
(B)

Mental health visits furnished via telecommunications technology.—
In the case of mental health visits furnished via interactive, real-time, audio and video telecommunications technology or audio-only interactions, the in-person mental health visit requirements established under section 405.2463(b)(3) of title 42 of the Code of Federal Regulations (or a successor regulation) shall not apply prior to January 31, 2026.
(5)

Special payment rule for intensive outpatient services.—
(A)

In general.—
In the case of intensive outpatient services furnished by a Federally qualified health center, the payment amount for such services shall be equal to the amount that would have been paid under this title for such services had such services been covered OPD services furnished by a hospital.
(B)

Exclusion.—
Costs associated with intensive outpatient services shall not be used to determine the amount of payment for Federally qualified health center services under the prospective payment system under this subsection.
(p)

Quality Incentives To Promote Patient Safety and Public Health in Computed Tomography.—
(1)

Quality incentives.—
In the case of an applicable computed tomography service (as defined in paragraph (2)) for which payment is made under an applicable payment system (as defined in paragraph (3)) and that is furnished on or after January 1, 2016, using equipment that is not consistent with the CT equipment standard (described in paragraph (4)), the payment amount for such service shall be reduced by the applicable percentage (as defined in paragraph (5)).
(2)

Applicable computed tomography services defined.—
In this subsection, the term “applicable computed tomography service” means a service billed using diagnostic radiological imaging codes for computed tomography (identified as of January 1, 2014, by HCPCS codes 70450–70498, 71250–71275, 72125–72133, 72191–72194, 73200–73206, 73700–73706, 74150–74178, 74261–74263, and 75571–75574 (and any succeeding codes).
(3)

Applicable payment system defined.—
In this subsection, the term “applicable payment system” means the following:
(A)
The technical component and the technical component of the global fee under the fee schedule established under section 1848(b).
(B)
The prospective payment system for hospital outpatient department services under section 1833(t).
(4)

Consistency with ct equipment standard.—
In this subsection, the term “not consistent with the CT equipment standard” means, with respect to an applicable computed tomography service, that the service was furnished using equipment that does not meet each of the attributes of the National Electrical Manufacturers Association (NEMA) Standard XR–29–2013, entitled “Standard Attributes on CT Equipment Related to Dose Optimization and Management”. Through rulemaking, the Secretary may apply successor standards.
(5)

Applicable percentage defined.—
In this subsection, the term “applicable percentage” means—
(A)
for 2016, 5 percent; and
(B)
for 2017 and subsequent years, 15 percent.
(6)

Implementation.—
(A)

Information.—
The Secretary shall require that information be provided and attested to by a supplier and a hospital outpatient department that indicates whether an applicable computed tomography service was furnished that was not consistent with the CT equipment standard (described in paragraph (4)). Such information may be included on a claim and may be a modifier. Such information shall be verified, as appropriate, as part of the periodic accreditation of suppliers under section 1834(e) and hospitals under section 1865(a).
(B)

Administration.—
Chapter 35 of title 44, United States Code, shall not apply to information described in subparagraph (A).
(q)

Recognizing Appropriate Use Criteria for Certain Imaging Services.—
(1)

Program established.—
(A)

In general.—
The Secretary shall establish a program to promote the use of appropriate use criteria (as defined in subparagraph (B)) for applicable imaging services (as defined in subparagraph (C)) furnished in an applicable setting (as defined in subparagraph (D)) by ordering professionals and furnishing professionals (as defined in subparagraphs (E) and (F), respectively).
(B)

Appropriate use criteria defined.—
In this subsection, the term “appropriate use criteria” means criteria, only developed or endorsed by national professional medical specialty societies or other provider-led entities, to assist ordering professionals and furnishing professionals in making the most appropriate treatment decision for a specific clinical condition for an individual. To the extent feasible, such criteria shall be evidence-based.
(C)

Applicable imaging service defined.—
In this subsection, the term “applicable imaging service” means an advanced diagnostic imaging service (as defined in subsection (e)(1)(B)) for which the Secretary determines—
(i)
one or more applicable appropriate use criteria specified under paragraph (2) apply;
(ii)
there are one or more qualified clinical decision support mechanisms listed under paragraph (3)(C); and
(iii)
one or more of such mechanisms is available free of charge.
(D)

Applicable setting defined.—
In this subsection, the term “applicable setting” means a physician’s office, a hospital outpatient department (including an emergency department), an ambulatory surgical center, and any other provider-led outpatient setting determined appropriate by the Secretary.
(E)

Ordering professional defined.—
In this subsection, the term “ordering professional” means a physician (as defined in section 1861(r)) or a practitioner described in section 1842(b)(18)(C) who orders an applicable imaging service.
(F)

Furnishing professional defined.—
In this subsection, the term “furnishing professional” means a physician (as defined in section 1861(r)) or a practitioner described in section 1842(b)(18)(C) who furnishes an applicable imaging service.
(2)

Establishment of applicable appropriate use criteria.—
(A)

In general.—
Not later than November 15, 2015, the Secretary shall through rulemaking, and in consultation with physicians, practitioners, and other stakeholders, specify applicable appropriate use criteria for applicable imaging services only from among appropriate use criteria developed or endorsed by national professional medical specialty societies or other provider-led entities.
(B)

Considerations.—
In specifying applicable appropriate use criteria under subparagraph (A), the Secretary shall take into account whether the criteria—
(i)
have stakeholder consensus;
(ii)
are scientifically valid and evidence based; and
(iii)
are based on studies that are published and reviewable by stakeholders.
(C)

Revisions.—
The Secretary shall review, on an annual basis, the specified applicable appropriate use criteria to determine if there is a need to update or revise (as appropriate) such specification of applicable appropriate use criteria and make such updates or revisions through rulemaking.
(D)

Treatment of multiple applicable appropriate use criteria.—
In the case where the Secretary determines that more than one appropriate use criterion applies with respect to an applicable imaging service, the Secretary shall apply one or more applicable appropriate use criteria under this paragraph for the service.
(3)

Mechanisms for consultation with applicable appropriate use criteria.—
(A)

Identification of mechanisms to consult with applicable appropriate use criteria.—
(i)

In general.—
The Secretary shall specify qualified clinical decision support mechanisms that could be used by ordering professionals to consult with applicable appropriate use criteria for applicable imaging services.
(ii)

Consultation.—
The Secretary shall consult with physicians, practitioners, health care technology experts, and other stakeholders in specifying mechanisms under this paragraph.
(iii)

Inclusion of certain mechanisms.—
Mechanisms specified under this paragraph may include any or all of the following that meet the requirements described in subparagraph (B)(ii):
(I)
Use of clinical decision support modules in certified EHR technology (as defined in section 1848(o)(4)).
(II)
Use of private sector clinical decision support mechanisms that are independent from certified EHR technology, which may include use of clinical decision support mechanisms available from medical specialty organizations.
(III)
Use of a clinical decision support mechanism established by the Secretary.
(B)

Qualified clinical decision support mechanisms.—
(i)

In general.—
For purposes of this subsection, a qualified clinical decision support mechanism is a mechanism that the Secretary determines meets the requirements described in clause (ii).
(ii)

Requirements.—
The requirements described in this clause are the following:
(I)
The mechanism makes available to the ordering professional applicable appropriate use criteria specified under paragraph (2) and the supporting documentation for the applicable imaging service ordered.
(II)
In the case where there is more than one applicable appropriate use criterion specified under such paragraph for an applicable imaging service, the mechanism indicates the criteria that it uses for the service.
(III)
The mechanism determines the extent to which an applicable imaging service ordered is consistent with the applicable appropriate use criteria so specified.
(IV)
The mechanism generates and provides to the ordering professional a certification or documentation that documents that the qualified clinical decision support mechanism was consulted by the ordering professional.
(V)
The mechanism is updated on a timely basis to reflect revisions to the specification of applicable appropriate use criteria under such paragraph.
(VI)
The mechanism meets privacy and security standards under applicable provisions of law.
(VII)
The mechanism performs such other functions as specified by the Secretary, which may include a requirement to provide aggregate feedback to the ordering professional.
(C)

List of mechanisms for consultation with applicable appropriate use criteria.—
(i)

Initial list.—
Not later than April 1, 2016, the Secretary shall publish a list of mechanisms specified under this paragraph.
(ii)

Periodic updating of list.—
The Secretary shall identify on an annual basis the list of qualified clinical decision support mechanisms specified under this paragraph.
(4)

Consultation with applicable appropriate use criteria.—
(A)

Consultation by ordering professional.—
Beginning with January 1, 2017, subject to subparagraph (C), with respect to an applicable imaging service ordered by an ordering professional that would be furnished in an applicable setting and paid for under an applicable payment system (as defined in subparagraph (D)), an ordering professional shall—
(i)
consult with a qualified decision support mechanism listed under paragraph (3)(C); and
(ii)
provide to the furnishing professional the information described in clauses (i) through (iii) of subparagraph (B).
(B)

Reporting by furnishing professional.—
Beginning with January 1, 2017, subject to subparagraph (C), with respect to an applicable imaging service furnished in an applicable setting and paid for under an applicable payment system (as defined in subparagraph (D)), payment for such service may only be made if the claim for the service includes the following:
(i)
Information about which qualified clinical decision support mechanism was consulted by the ordering professional for the service.
(ii)
Information regarding—
(I)
whether the service ordered would adhere to the applicable appropriate use criteria specified under paragraph (2);
(II)
whether the service ordered would not adhere to such criteria; or
(III)
whether such criteria was not applicable to the service ordered.
(iii)
The national provider identifier of the ordering professional (if different from the furnishing professional).
(C)

Exceptions.—
The provisions of subparagraphs (A) and (B) and paragraph (6)(A) shall not apply to the following:
(i)

Emergency services.—
An applicable imaging service ordered for an individual with an emergency medical condition (as defined in section 1867(e)(1)).
(ii)

Inpatient services.—
An applicable imaging service ordered for an inpatient and for which payment is made under part A.
(iii)

Significant hardship.—
An applicable imaging service ordered by an ordering professional who the Secretary may, on a case-by-case basis, exempt from the application of such provisions if the Secretary determines, subject to annual renewal, that consultation with applicable appropriate use criteria would result in a significant hardship, such as in the case of a professional who practices in a rural area without sufficient Internet access.
(D)

Applicable payment system defined.—
In this subsection, the term “applicable payment system” means the following:
(i)
The physician fee schedule established under section 1848(b).
(ii)
The prospective payment system for hospital outpatient department services under section 1833(t).
(iii)
The ambulatory surgical center payment systems under section 1833(i).
(5)

Identification of outlier ordering professionals.—
(A)

In general.—
With respect to applicable imaging services furnished beginning with 2017, the Secretary shall determine, on an annual basis, no more than five percent of the total number of ordering professionals who are outlier ordering professionals.
(B)

Outlier ordering professionals.—
The determination of an outlier ordering professional shall—
(i)
be based on low adherence to applicable appropriate use criteria specified under paragraph (2), which may be based on comparison to other ordering professionals; and
(ii)
include data for ordering professionals for whom prior authorization under paragraph (6)(A) applies.
(C)

Use of two years of data.—
The Secretary shall use two years of data to identify outlier ordering professionals under this paragraph.
(D)

Process.—
The Secretary shall establish a process for determining when an outlier ordering professional is no longer an outlier ordering professional.
(E)

Consultation with stakeholders.—
The Secretary shall consult with physicians, practitioners and other stakeholders in developing methods to identify outlier ordering professionals under this paragraph.
(6)

Prior authorization for ordering professionals who are outliers.—
(A)

In general.—
Beginning January 1, 2020, subject to paragraph (4)(C), with respect to services furnished during a year, the Secretary shall, for a period determined appropriate by the Secretary, apply prior authorization for applicable imaging services that are ordered by an outlier ordering professional identified under paragraph (5).
(B)

Appropriate use criteria in prior authorization.—
In applying prior authorization under subparagraph (A), the Secretary shall utilize only the applicable appropriate use criteria specified under this subsection.
(C)

Funding.—
For purposes of carrying out this paragraph, the Secretary shall provide for the transfer, from the Federal Supplementary Medical Insurance Trust Fund under section 1841, of $5,000,000 to the Centers for Medicare & Medicaid Services Program Management Account for each of fiscal years 2019 through 2021. Amounts transferred under the preceding sentence shall remain available until expended.
(7)

Construction.—
Nothing in this subsection shall be construed as granting the Secretary the authority to develop or initiate the development of clinical practice guidelines or appropriate use criteria.
(r)

Payment for Renal Dialysis Services for Individuals With Acute Kidney Injury.—
(1)

Payment rate.—
In the case of renal dialysis services (as defined in subparagraph (B) of section 1881(b)(14)) furnished under this part by a renal dialysis facility or provider of services paid under such section during a year (beginning with 2017) to an individual with acute kidney injury (as defined in paragraph (2)), the amount of payment under this part for such services shall be the base rate for renal dialysis services determined for such year under such section, as adjusted by any applicable geographic adjustment factor applied under subparagraph (D)(iv)(II) of such section and may be adjusted by the Secretary (on a budget neutral basis for payments under this paragraph) by any other adjustment factor under subparagraph (D) of such section.
(2)

Individual with acute kidney injury defined.—
In this subsection, the term “individual with acute kidney injury” means an individual who has acute loss of renal function and does not receive renal dialysis services for which payment is made under section 1881(b)(14).
(s)

Payment for Applicable Disposable Devices.—
(1)

Separate payment.—
The Secretary shall make a payment (separate from the payments otherwise made under section 1895) in the amount established under paragraph (3) to a home health agency for an applicable disposable device (as defined in paragraph (2)) when furnished on or after January 1, 2017, to an individual who receives home health services for which payment is made under section 1895(b).
(2)

Applicable disposable device.—
In this subsection, the term applicable disposable device means a disposable device that, as determined by the Secretary, is—
(A)
a disposable negative pressure wound therapy device that is an integrated system comprised of a non-manual vacuum pump, a receptacle for collecting exudate, and dressings for the purposes of wound therapy; and
(B)
a substitute for, and used in lieu of, a negative pressure wound therapy durable medical equipment item that is an integrated system of a negative pressure vacuum pump, a separate exudate collection canister, and dressings that would otherwise be covered for individuals for such wound therapy.
(3)

Payment.—
(A)

In general.—
The separate payment amount established under this paragraph for an applicable disposable device for a year shall be equal to—
(i)
for a year before 2024, the amount of the payment that would be made under section 1833(t) (relating to payment for covered OPD services) for the year for the Level I Healthcare Common Procedure Coding System (HCPCS) code for which the description for a professional service includes the furnishing of such device;
(ii)
for 2024, the supply price used to determine the relative value for the service under the fee schedule under section 1848 (as of January 1, 2022) for the applicable disposable device, updated by the specified adjustment described in subparagraph (B) for such year; and
(iii)
for 2025 and each subsequent year, the payment amount established under this paragraph for such device for the previous year, updated by the specified adjustment described in subparagraph (B) for such year.
(B)

Specified adjustment.—
(i)

In general.—
For purposes of subparagraph (A), the specified adjustment described in this subparagraph for a year is equal to—
(I)
the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending in June of the previous year; minus
(II)
the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) for such year.
(ii)

Clarification on application of the productivity adjustment.—
The application of clause (i)(II) may result in a specified adjustment of less than 0.0 for a year, and may result in the separate payment amount under this subsection for an applicable device for a year being less than such separate payment amount for such device for the preceding year.
(C)

Exclusion of nursing and therapy services from separate payment.—
With respect to applicable devices furnished on or after January 1, 2024, the separate payment amount determined under this paragraph shall not include payment for nursing or therapy services described in section 1861(m). Payment for such nursing or therapy services shall be made under the prospective payment system established under section 1895 and shall not be separately billable.
(4)

Implementation.—
As part of submitting claims for the separate payment established under this subsection, beginning with 2024, the Secretary shall accept and process claims submitted using the type of bill that is most commonly used by home health agencies to bill services under a home health plan of care.
(t)

Site-of-Service Price Transparency.—
(1)

In general.—
In order to facilitate price transparency with respect to items and services for which payment may be made either to a hospital outpatient department or to an ambulatory surgical center under this title, the Secretary shall, for 2018 and each year thereafter, make available to the public via a searchable Internet website, with respect to an appropriate number of such items and services—
(A)
the estimated payment amount for the item or service under the outpatient department fee schedule under subsection (t) of section 1833 and the ambulatory surgical center payment system under subsection (i) of such section; and
(B)
the estimated amount of beneficiary liability applicable to the item or service.
(2)

Calculation of estimated beneficiary liability.—
For purposes of paragraph (1)(B), the estimated amount of beneficiary liability, with respect to an item or service, is the amount for such item or service for which an individual who does not have coverage under a Medicare supplemental policy certified under section 1882 or any other supplemental insurance coverage is responsible.
(3)

Implementation.—
In carrying out this subsection, the Secretary—
(A)
shall include in the notice described in section 1804(a) a notification of the availability of the estimated amounts made available under paragraph (1); and
(B)
may utilize mechanisms in existence on the date of enactment of this subsection, such as the portion of the Internet website of the Centers for Medicare & Medicaid Services on which information comparing physician performance is posted (commonly referred to as the Physician Compare Internet website), to make available such estimated amounts under such paragraph.
(4)

Funding.—
For purposes of implementing this subsection, the Secretary shall provide for the transfer, from the Federal Supplementary Medical Insurance Trust Fund under section 1841 to the Centers for Medicare & Medicaid Services Program Management Account, of $6,000,000 for fiscal year 2017, to remain available until expended.
(u)

Payment and Related Requirements for Home Infusion Therapy.—
(1)

Payment.—
(A)

Single payment.—
(i)

In general.—
Subject to clause (iii) and subparagraphs (B) and (C), the Secretary shall implement a payment system under which a single payment is made under this title to a qualified home infusion therapy supplier for items and services described in subparagraphs (A) and (B) of section 1861(iii)(2)) furnished by a qualified home infusion therapy supplier (as defined in section 1861(iii)(3)(D)) in coordination with the furnishing of home infusion drugs (as defined in section 1861(iii)(3)(C)) under this part.
(ii)

Unit of single payment.—
A unit of single payment under the payment system implemented under this subparagraph is for each infusion drug administration calendar day in the individual’s home. The Secretary shall, as appropriate, establish single payment amounts for types of infusion therapy, including to take into account variation in utilization of nursing services by therapy type.
(iii)

Limitation.—
The single payment amount determined under this subparagraph after application of subparagraph (B) and paragraph (3) shall not exceed the amount determined under the fee schedule under section 1848 for infusion therapy services furnished in a calendar day if furnished in a physician office setting, except such single payment shall not reflect more than 5 hours of infusion for a particular therapy in a calendar day.
(B)

Required adjustments.—
The Secretary shall adjust the single payment amount determined under subparagraph (A) for home infusion therapy services under section 1861(iii)(1) to reflect other factors such as—
(i)
a geographic wage index and other costs that may vary by region; and
(ii)
patient acuity and complexity of drug administration.
(C)

Discretionary adjustments.—
(i)

In general.—
Subject to clause (ii), the Secretary may adjust the single payment amount determined under subparagraph (A) (after application of subparagraph (B)) to reflect outlier situations and other factors as the Secretary determines appropriate.
(ii)

Requirement of budget neutrality.—
Any adjustment under this subparagraph shall be made in a budget neutral manner.
(2)

Considerations.—
In developing the payment system under this subsection, the Secretary may consider the costs of furnishing infusion therapy in the home, consult with home infusion therapy suppliers, consider payment amounts for similar items and services under this part and part A, and consider payment amounts established by Medicare Advantage plans under part C and in the private insurance market for home infusion therapy (including average per treatment day payment amounts by type of home infusion therapy).
(3)

Annual updates.—
(A)

In general.—
Subject to subparagraph (B), the Secretary shall update the single payment amount under this subsection from year to year beginning in 2022 by increasing the single payment amount from the prior year by the percentage increase in the Consumer Price Index for all urban consumers (United States city average) for the 12-month period ending with June of the preceding year.
(B)

Adjustment.—
For each year, the Secretary shall reduce the percentage increase described in subparagraph (A) by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II). The application of the preceding sentence may result in a percentage being less than 0.0 for a year, and may result in payment being less than such payment rates for the preceding year.
(4)

Authority to apply prior authorization.—
The Secretary may, as determined appropriate by the Secretary, apply prior authorization for home infusion therapy services under section 1861(iii)(1).
(5)

Accreditation of qualified home infusion therapy suppliers.—
(A)

Factors for designation of accreditation organizations.—
The Secretary shall consider the following factors in designating accreditation organizations under subparagraph (B) and in reviewing and modifying the list of accreditation organizations designated pursuant to subparagraph (C):
(i)
The ability of the organization to conduct timely reviews of accreditation applications.
(ii)
The ability of the organization to take into account the capacities of suppliers located in a rural area (as defined in section 1886(d)(2)(D)).
(iii)
Whether the organization has established reasonable fees to be charged to suppliers applying for accreditation.
(iv)
Such other factors as the Secretary determines appropriate.
(B)

Designation.—
Not later than January 1, 2021, the Secretary shall designate organizations to accredit suppliers furnishing home infusion therapy. The list of accreditation organizations so designated may be modified pursuant to subparagraph (C).
(C)

Review and modification of list of accreditation organizations.—
(i)

In general.—
The Secretary shall review the list of accreditation organizations designated under subparagraph (B) taking into account the factors under subparagraph (A). Taking into account the results of such review, the Secretary may, by regulation, modify the list of accreditation organizations designated under subparagraph (B).
(ii)

Special rule for accreditations done prior to removal from list of designated accreditation organizations.—
In the case where the Secretary removes an organization from the list of accreditation organizations designated under subparagraph (B), any supplier that is accredited by the organization during the period beginning on the date on which the organization is designated as an accreditation organization under subparagraph (B) and ending on the date on which the organization is removed from such list shall be considered to have been accredited by an organization designated by the Secretary under subparagraph (B) for the remaining period such accreditation is in effect.
(D)

Rule for accreditations made prior to designation.—
In the case of a supplier that is accredited before January 1, 2021, by an accreditation organization designated by the Secretary under subparagraph (B) as of January 1, 2019, such supplier shall be considered to have been accredited by an organization designated by the Secretary under such paragraph as of January 1, 2023, for the remaining period such accreditation is in effect.
(6)

Notification of infusion therapy options available prior to furnishing home infusion therapy.—
Prior to the furnishing of home infusion therapy to an individual, the physician who establishes the plan described in section 1861(iii)(1) for the individual shall provide notification (in a form, manner, and frequency determined appropriate by the Secretary) of the options available (such as home, physician’s office, hospital outpatient department) for the furnishing of infusion therapy under this part.
(7)

Home infusion therapy services temporary transitional payment.—
(A)

Temporary transitional payment.—
(i)

In general.—
The Secretary shall, in accordance with the payment methodology described in subparagraph (B) and subject to the provisions of this paragraph, provide a home infusion therapy services temporary transitional payment under this part to an eligible home infusion supplier (as defined in subparagraph (F)) for items and services described in subparagraphs (A) and (B) of section 1861(iii)(2)) furnished during the period specified in clause (ii) by such supplier in coordination with the furnishing of transitional home infusion drugs (as defined in clause (iii)).
(ii)

Period specified.—
For purposes of clause (i), the period specified in this clause is the period beginning on January 1, 2019, and ending on the day before the date of the implementation of the payment system under paragraph (1)(A).
(iii)

Transitional home infusion drug defined.—
For purposes of this paragraph, the term “transitional home infusion drug” has the meaning given to the term “home infusion drug” under section 1861(iii)(3)(C)), except that clause (ii) of such section shall not apply if a drug described in such clause is identified in clauses (i), (ii), (iii) or (iv) of subparagraph (C) as of the date of the enactment of this paragraph.
(B)

Payment methodology.—
For purposes of this paragraph, the Secretary shall establish a payment methodology, with respect to items and services described in subparagraph (A)(i). Under such payment methodology the Secretary shall—
(i)
create the three payment categories described in clauses (i), (ii), and (iii) of subparagraph (C);
(ii)
assign drugs to such categories, in accordance with such clauses;
(iii)
assign appropriate Healthcare Common Procedure Coding System (HCPCS) codes to each payment category; and
(iv)
establish a single payment amount for each such payment category, in accordance with subparagraph (D), for each infusion drug administration calendar day in the individual’s home for drugs assigned to such category.
(C)

Payment categories.—
(i)

Payment category 1.—
The Secretary shall create a payment category 1 and assign to such category drugs which are covered under the Local Coverage Determination on External Infusion Pumps (LCD number L33794) and billed with the following HCPCS codes (as identified as of January 1, 2018, and as subsequently modified by the Secretary): J0133, J0285, J0287, J0288, J0289, J0895, J1170, J1250, J1265, J1325, J1455, J1457, J1570, J2175, J2260, J2270, J2274, J2278, J3010, or J3285.
(ii)

Payment category 2.—
The Secretary shall create a payment category 2 and assign to such category drugs which are covered under such local coverage determination and billed with the following HCPCS codes (as identified as of January 1, 2018, and as subsequently modified by the Secretary): J1555 JB, J1559 JB, J1561 JB, J1562 JB, J1569 JB, or J1575 JB.
(iii)

Payment category 3.—
The Secretary shall create a payment category 3 and assign to such category drugs which are covered under such local coverage determination and billed with the following HCPCS codes (as identified as of January 1, 2018, and as subsequently modified by the Secretary): J9000, J9039, J9040, J9065, J9100, J9190, J9200, J9360, or J9370.
(iv)

Infusion drugs not otherwise included.—
With respect to drugs that are not included in payment category 1, 2, or 3 under clause (i), (ii), or (iii), respectively, the Secretary shall assign to the most appropriate of such categories, as determined by the Secretary, drugs which are—
(I)
covered under such local coverage determination and billed under HCPCS codes J7799 or J7999 (as identified as of July 1, 2017, and as subsequently modified by the Secretary); or
(II)
billed under any code that is implemented after the date of the enactment of this paragraph and included in such local coverage determination or included in subregulatory guidance as a home infusion drug described in subparagraph (A)(i).
(D)

Payment amounts.—
(i)

In general.—
Under the payment methodology, the Secretary shall pay eligible home infusion suppliers, with respect to items and services described in subparagraph (A)(i) furnished during the period described in subparagraph (A)(ii) by such supplier to an individual, at amounts equal to the amounts determined under the physician fee schedule established under section 1848 for services furnished during the year for codes and units of such codes described in clauses (ii), (iii), and (iv) with respect to drugs included in the payment category under subparagraph (C) specified in the respective clause, determined without application of the geographic adjustment under subsection (e) of such section.
(ii)

Payment amount for category 1.—
For purposes of clause (i), the codes and units described in this clause, with respect to drugs included in payment category 1 described in subparagraph (C)(i), are one unit of HCPCS code 96365 plus three units of HCPCS code 96366 (as identified as of January 1, 2018, and as subsequently modified by the Secretary).
(iii)

Payment amount for category 2.—
For purposes of clause (i), the codes and units described in this clause, with respect to drugs included in payment category 2 described in subparagraph (C)(i), are one unit of HCPCS code 96369 plus three units of HCPCS code 96370 (as identified as of January 1, 2018, and as subsequently modified by the Secretary).
(iv)

Payment amount for category 3.—
For purposes of clause (i), the codes and units described in this clause, with respect to drugs included in payment category 3 described in subparagraph (C)(i), are one unit of HCPCS code 96413 plus three units of HCPCS code 96415 (as identified as of January 1, 2018, and as subsequently modified by the Secretary).
(E)

Clarifications.—
(i)

Infusion drug administration day.—
For purposes of this subsection, with respect to the furnishing of transitional home infusion drugs or home infusion drugs to an individual by an eligible home infusion supplier or a qualified home infusion therapy supplier, a reference to payment to such supplier for an infusion drug administration calendar day in the individual’s home shall refer to payment only for the date on which professional services (as described in section 1861(iii)(2)(A)) were furnished to administer such drugs to such individual. For purposes of the previous sentence, an infusion drug administration calendar day shall include all such drugs administered to such individual on such day.
(ii)

Treatment of multiple drugs administered on same infusion drug administration day.—
In the case that an eligible home infusion supplier, with respect to an infusion drug administration calendar day in an individual’s home, furnishes to such individual transitional home infusion drugs which are not all assigned to the same payment category under subparagraph (C), payment to such supplier for such infusion drug administration calendar day in the individual’s home shall be a single payment equal to the amount of payment under this paragraph for the drug, among all such drugs so furnished to such individual during such calendar day, for which the highest payment would be made under this paragraph.
(F)

Eligible home infusion suppliers.—
In this paragraph, the term “eligible home infusion supplier” means a supplier that is enrolled under this part as a pharmacy that provides external infusion pumps and external infusion pump supplies and that maintains all pharmacy licensure requirements in the State in which the applicable infusion drugs are administered.
(G)

Implementation.—
Notwithstanding any other provision of law, the Secretary may implement this paragraph by program instruction or otherwise.
(v)

Payment for Outpatient Physical Therapy Services and Outpatient Occupational Therapy Services Furnished by a Therapy Assistant.—
(1)

In general.—
In the case of an outpatient physical therapy service or outpatient occupational therapy service furnished on or after January 1, 2022, for which payment is made under section 1848 or subsection (k), that is furnished in whole or in part by a therapy assistant (as defined by the Secretary), the amount of payment for such service shall be an amount equal to 85 percent of the amount of payment otherwise applicable for the service under this part. Nothing in the preceding sentence shall be construed to change applicable requirements with respect to such services.
(2)

Use of modifier.—
(A)

Establishment.—
Not later than January 1, 2019, the Secretary shall establish a modifier to indicate (in a form and manner specified by the Secretary), in the case of an outpatient physical therapy service or outpatient occupational therapy service furnished in whole or in part by a therapy assistant (as so defined), that the service was furnished by a therapy assistant.
(B)

Required use.—
Each request for payment, or bill submitted, for an outpatient physical therapy service or outpatient occupational therapy service furnished in whole or in part by a therapy assistant (as so defined) on or after January 1, 2020, shall include the modifier established under subparagraph (A) for each such service.
(3)

Implementation.—
The Secretary shall implement this subsection through notice and comment rulemaking.
(w)

Opioid Use Disorder Treatment Services.—
(1)

In general.—
The Secretary shall pay to an opioid treatment program (as defined in paragraph (2) of section 1861(jjj)) an amount that is equal to 100 percent of a bundled payment under this part for opioid use disorder treatment services (as defined in paragraph (1) of such section) that are furnished by such program to an individual during an episode of care (as defined by the Secretary) beginning on or after January 1, 2020. The Secretary shall ensure, as determined appropriate by the Secretary, that no duplicative payments are made under this part or part D for items and services furnished by an opioid treatment program.
(2)

Considerations.—
The Secretary may implement this subsection through one or more bundles based on the type of medication provided (such as buprenorphine, methadone, naltrexone, or a new innovative drug), the frequency of services, the scope of services furnished, characteristics of the individuals furnished such services, or other factors as the Secretary determine appropriate. In developing such bundles, the Secretary may consider payment rates paid to opioid treatment programs for comparable services under State plans under title XIX or under the TRICARE program under chapter 55 of title 10 of the United States Code.
(3)

Annual updates.—
The Secretary shall provide an update each year to the bundled payment amounts under this subsection.
(x)

Payment Rules Relating to Rural Emergency Hospitals.—
(1)

Payment for rural emergency hospital services.—
In the case of rural emergency hospital services (as defined in section 1861(kkk)(1)), furnished by a rural emergency hospital (as defined in section 1861(kkk)(2)) on or after January 1, 2023, the amount of payment for such services shall be equal to the amount of payment that would otherwise apply under section 1833(t) for covered OPD services (as defined in section 1833(t)(1)(B) (other than clause (ii) of such section)), increased by 5 percent to reflect the higher costs incurred by such hospitals, and shall include the application of any copayment amount determined under section 1833(t)(8) as if such increase had not occurred.
(2)

Additional facility payment.—
(A)

In general.—
The Secretary shall make monthly payments to a rural emergency hospital in an amount that is equal to 1⁄12 of the annual additional facility payment specified in subparagraph (B).
(B)

Annual additional facility payment amount.—
The annual additional facility payment amount specified in this subparagraph is—
(i)
for 2023, a Medicare subsidy amount determined under subparagraph (C); and
(ii)
for 2024 and each subsequent year, the amount determined under this subparagraph for the preceding year, increased by the hospital market basket percentage increase.
(C)

Determination of medicare subsidy amount.—
For purposes of subparagraph (B)(i), the Medicare subsidy amount determined under this subparagraph is an amount equal to—
(i)
the excess (if any) of—
(I)
the total amount that the Secretary determines was paid under this title to all critical access hospitals in 2019; over
(II)
the estimated total amount that the Secretary determines would have been paid under this title to such hospitals in 2019 if payment were made for inpatient hospital, outpatient hospital, and skilled nursing facility services under the applicable prospective payment systems for such services during such year; divided by
(ii)
the total number of such hospitals in 2019.
(D)

Reporting on use of the additional facility payment.—
A rural emergency hospital receiving the additional facility payment under this paragraph shall maintain detailed information as specified by the Secretary as to how the facility has used the additional facility payments. Such information shall be made available to the Secretary upon request.
(3)

Payment for ambulance services.—
For provisions relating to payment for ambulance services furnished by an entity owned and operated by a rural emergency hospital, see section 1834(l).
(4)

Payment for post-hospital extended care services.—
For provisions relating to payment for post-hospital extended care services furnished by a rural emergency hospital that has a unit that is a distinct part licensed as a skilled nursing facility, see section 1888(e).
(5)

Source of payments.—
(A)

In general.—
Except as provided in subparagraph (B), payments under this subsection shall be made from the Federal Supplementary Medical Insurance Trust Fund under section 1841.
(B)

Additional facility payment and post-hospital extended care services.—
Payments under paragraph (2) shall be made from the Federal Hospital Insurance Trust Fund under section 1817.
(y)

Payment for Certain Services Furnished by Rural Health Clinics.—
(1)

Attending physician services for hospice patients.—
In the case of services described in section 1812(d)(2)(A)(ii) furnished on or after January 1, 2022, by an attending physician (as defined in section 1861(dd)(3)(B), other than a physician or practitioner who is employed by a hospice program) who is employed by or working under contract with a rural health clinic, a rural health clinic shall be paid for such services under the methodology for all-inclusive rates (established by the Secretary) under section 1833(a)(3), subject to the limits described in section 1833(f).
(2)

Mental health visits furnished via telecommunications technology.—
In the case of mental health visits furnished via interactive, real-time, audio and video telecommunications technology or audio-only interactions, the in-person mental health visit requirements established under section 405.2463(b)(3) of title 42 of the Code of Federal Regulations (or a successor regulation) shall not apply prior to January 31, 2026.
(3)

Special payment rule for intensive outpatient services.—
(A)

In general.—
In the case of intensive outpatient services furnished by a rural health clinic, the payment amount for such services shall be equal to the amount that would have been paid under this title for such services had such services been covered OPD services furnished by a hospital.
(B)

Exclusion.—
Costs associated with intensive outpatient services shall not be used to determine the amount of payment for rural health clinic services under the methodology for all-inclusive rates (established by the Secretary) under section 1833(a)(3).
(z)

Payment for Lymphedema Compression Treatment Items.—
(1)

In general.—
The Secretary shall determine an appropriate payment basis for lymphedema compression treatment items (as defined in section 1861(mmm)). In making such a determination, the Secretary may take into account payment rates for such items under State plans (or waivers of such plans) under title XIX, the Veterans Health Administration, and group health plans and health insurance coverage (as such terms are defined in section 2791 of the Public Health Service Act), and such other information as the Secretary determines appropriate.
(2)

Frequency limitation.—
No payment may be made under this part for lymphedema compression treatment items furnished other than at such frequency as the Secretary may establish.
(3)

Application of competitive acquisition.—
In the case of lymphedema compression treatment items that are included in a competitive acquisition program in a competitive acquisition area under section 1847(a)—
(A)
the payment basis under this subsection for such items furnished in such area shall be the payment basis determined under such competitive acquisition program; and
(B)
the Secretary may use information on the payment determined under such competitive acquisition programs to adjust the payment amount otherwise determined under this subsection for an area that is not a competitive acquisition area under section 1847, and in the case of such adjustment, paragraphs (8) and (9) of section 1842(b) shall not be applied.
SEC. 1834A.
[42 U.S.C. 1395m–1]

IMPROVING POLICIES FOR CLINICAL DIAGNOSTIC LABORATORY TESTS.
(a)

Reporting of Private Sector Payment Rates for Establishment of Medicare Payment Rates.—
(1)

In general.—
(A)

General reporting requirements.—
Subject to subparagraph (B), beginning January 1, 2016, and every 3 years thereafter (or, annually, in the case of reporting with respect to an advanced diagnostic laboratory test, as defined in subsection (d)(5)), an applicable laboratory (as defined in paragraph (2)) shall report to the Secretary, at a time specified by the Secretary (referred to in this subsection as the “reporting period”), applicable information (as defined in paragraph (3)) for a data collection period (as defined in paragraph (4)) for each clinical diagnostic laboratory test that the laboratory furnishes during such period for which payment is made under this part.
(B)

Revised reporting period.—
In the case of reporting with respect to clinical diagnostic laboratory tests that are not advanced diagnostic laboratory tests, the Secretary shall revise the reporting period under subparagraph (A) such that—
(i)
no reporting is required during the period beginning January 1, 2020, and ending January 31, 2026;
(ii)
reporting is required during the period beginning February 1, 2026, and ending April 30, 2026; and
(iii)
reporting is required every three years after the period described in clause (ii).
(2)

Definition of applicable laboratory.—
In this section, the term “applicable laboratory” means a laboratory that, with respect to its revenues under this title, a majority of such revenues are from this section, section 1833(h), or section 1848. The Secretary may establish a low volume or low expenditure threshold for excluding a laboratory from the definition of applicable laboratory under this paragraph, as the Secretary determines appropriate.
(3)

Applicable information defined.—
(A)

In general.—
In this section, subject to subparagraph (B), the term “applicable information” means, with respect to a laboratory test for a data collection period, the following:
(i)
The payment rate (as determined in accordance with paragraph (5)) that was paid by each private payor for the test during the period.
(ii)
The volume of such tests for each such payor for the period.
(B)

Exception for certain contractual arrangements.—
Such term shall not include information with respect to a laboratory test for which payment is made on a capitated basis or other similar payment basis during the data collection period.
(4)

Data collection period defined.—
(A)

In general.—
Subject to subparagraph (B), in this section , the term “data collection period” means a period of time, such as a previous 12 month period, specified by the Secretary.
(B)

Exception.—
In the case of the reporting period described in paragraph (1)(B)(ii) with respect to clinical diagnostic laboratory tests that are not advanced diagnostic laboratory tests, the term “data collection period” means the period beginning January 1, 2019, and ending June 30, 2019.
(5)

Treatment of discounts.—
The payment rate reported by a laboratory under this subsection shall reflect all discounts, rebates, coupons, and other price concessions, including those described in section 1847A(c)(3).
(6)

Ensuring complete reporting.—
In the case where an applicable laboratory has more than one payment rate for the same payor for the same test or more than one payment rate for different payors for the same test, the applicable laboratory shall report each such payment rate and the volume for the test at each such rate under this subsection. Beginning with January 1, 2019, the Secretary may establish rules to aggregate reporting with respect to the situations described in the preceding sentence.
(7)

Certification.—
An officer of the laboratory shall certify the accuracy and completeness of the information reported under this subsection.
(8)

Private payor defined.—
In this section, the term “private payor” means the following:
(A)
A health insurance issuer and a group health plan (as such terms are defined in section 2791 of the Public Health Service Act).
(B)
A Medicare Advantage plan under part C.
(C)
A medicaid managed care organization (as defined in section 1903(m)).
(9)

Civil money penalty.—
(A)

In general.—
If the Secretary determines that an applicable laboratory has failed to report or made a misrepresentation or omission in reporting information under this subsection with respect to a clinical diagnostic laboratory test, the Secretary may apply a civil money penalty in an amount of up to $10,000 per day for each failure to report or each such misrepresentation or omission.
(B)

Application.—
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this paragraph in the same manner as they apply to a civil money penalty or proceeding under section 1128A(a).
(10)

Confidentiality of information.—
Notwithstanding any other provision of law, information disclosed by a laboratory under this subsection is confidential and shall not be disclosed by the Secretary or a Medicare contractor in a form that discloses the identity of a specific payor or laboratory, or prices charged or payments made to any such laboratory, except—
(A)
as the Secretary determines to be necessary to carry out this section;
(B)
to permit the Comptroller General to review the information provided;
(C)
to permit the Director of the Congressional Budget Office to review the information provided; and
(D)
to permit the Medicare Payment Advisory Commission to review the information provided.
(11)

Protection from public disclosure.—
A payor shall not be identified on information reported under this subsection. The name of an applicable laboratory under this subsection shall be exempt from disclosure under section 552(b)(3) of title 5, United States Code.
(12)

Regulations.—
Not later than June 30, 2015, the Secretary shall establish through notice and comment rulemaking parameters for data collection under this subsection.
(b)

Payment for Clinical Diagnostic Laboratory Tests.—
(1)

Use of private payor rate information to determine medicare payment rates.—
(A)

In general.—
Subject to paragraph (3) and subsections (c) and (d), in the case of a clinical diagnostic laboratory test furnished on or after January 1, 2017, the payment amount under this section shall be equal to the weighted median determined for the test under paragraph (2) for the most recent data collection period.
(B)

Application of payment amounts to hospital laboratories.—
The payment amounts established under this section shall apply to a clinical diagnostic laboratory test furnished by a hospital laboratory if such test is paid for separately, and not as part of a bundled payment under section 1833(t).
(2)

Calculation of weighted median.—
For each laboratory test with respect to which information is reported under subsection (a) for a data collection period, the Secretary shall calculate a weighted median for the test for the period, by arraying the distribution of all payment rates reported for the period for each test weighted by volume for each payor and each laboratory.
(3)

Phase-in of reductions from private payor rate implementation.—
(A)

In general.—
Payment amounts determined under this subsection for a clinical diagnostic laboratory test for each of 2017 through 2028 shall not result in a reduction in payments for a clinical diagnostic laboratory test for the year of greater than the applicable percent (as defined in subparagraph (B)) of the amount of payment for the test for the preceding year.
(B)

Applicable percent defined.—
In this paragraph, the term “applicable percent” means—
(i)
for each of 2017 through 2020, 10 percent;
(ii)
for each of 2021 through 2025 and for the period beginning on January 1, 2026, and ending on January 30, 2026, 0 percent; and
(iii)
for the period beginning on January 31, 2026, and ending on December 31, 2026, and for each of 2027 and 2028, 15 percent.
(C)

No application to new tests.—
This paragraph shall not apply to payment amounts determined under this section for either of the following.
(i)
A new test under subsection (c).
(ii)
A new advanced diagnostic test (as defined in subsection (d)(5)) under subsection (d).
(4)

Application of market rates.—
(A)

In general.—
Subject to paragraph (3), once established for a year following a data collection period, the payment amounts under this subsection shall continue to apply until the year following the next data collection period.
(B)

Other adjustments not applicable.—
The payment amounts under this section shall not be subject to any adjustment (including any geographic adjustment, budget neutrality adjustment, annual update, or other adjustment).
(5)

Sample collection fee.—
In the case of a sample collected from an individual in a skilled nursing facility or by a laboratory on behalf of a home health agency, the nominal fee that would otherwise apply under section 1833(h)(3)(A) shall be increased by $2.
(c)

Payment for New Tests that are not Advanced Diagnostic Laboratory Tests.—
(1)

Payment during initial period.—
In the case of a clinical diagnostic laboratory test that is assigned a new or substantially revised HCPCS code on or after the date of enactment of this section, and which is not an advanced diagnostic laboratory test (as defined in subsection (d)(5)), during an initial period until payment rates under subsection (b) are established for the test, payment for the test shall be determined—
(A)
using cross-walking (as described in section 414.508(a) of title 42, Code of Federal Regulations, or any successor regulation) to the most appropriate existing test under the fee schedule under this section during that period; or
(B)
if no existing test is comparable to the new test, according to the gapfilling process described in paragraph (2).
(2)

Gapfilling process described.—
The gapfilling process described in this paragraph shall take into account the following sources of information to determine gapfill amounts, if available:
(A)
Charges for the test and routine discounts to charges.
(B)
Resources required to perform the test.
(C)
Payment amounts determined by other payors.
(D)
Charges, payment amounts, and resources required for other tests that may be comparable or otherwise relevant.
(E)
Other criteria the Secretary determines appropriate.
(3)

Additional consideration.—
In determining the payment amount under crosswalking or gapfilling processes under this subsection, the Secretary shall consider recommendations from the panel established under subsection (f)(1).
(4)

Explanation of payment rates.—
In the case of a clinical diagnostic laboratory test for which payment is made under this subsection, the Secretary shall make available to the public an explanation of the payment rate for the test, including an explanation of how the criteria described in paragraph (2) and paragraph (3) are applied.
(d)

Payment for New Advanced Diagnostic Laboratory Tests.—
(1)

Payment during initial period.—
(A)

In general.—
In the case of an advanced diagnostic laboratory test for which payment has not been made under the fee schedule under section 1833(h) prior to the date of enactment of this section, during an initial period of three quarters, the payment amount for the test for such period shall be based on the actual list charge for the laboratory test.
(B)

Actual list charge.—
For purposes of subparagraph (A), the term “actual list charge”, with respect to a laboratory test furnished during such period, means the publicly available rate on the first day at which the test is available for purchase by a private payor.
(2)

Special rule for timing of initial reporting.—
With respect to an advanced diagnostic laboratory test described in paragraph (1)(A), an applicable laboratory shall initially be required to report under subsection (a) not later than the last day of the second quarter of the initial period under such paragraph.
(3)

Application of market rates after initial period.—
Subject to paragraph (4), data reported under paragraph (2) shall be used to establish the payment amount for an advanced diagnostic laboratory test after the initial period under paragraph (1)(A) using the methodology described in subsection (b). Such payment amount shall continue to apply until the year following the next data collection period.
(4)

Recoupment if actual list charge exceeds market rate.—
With respect to the initial period described in paragraph (1)(A), if, after such period, the Secretary determines that the payment amount for an advanced diagnostic laboratory test under paragraph (1)(A) that was applicable during the period was greater than 130 percent of the payment amount for the test established using the methodology described in subsection (b) that is applicable after such period, the Secretary shall recoup the difference between such payment amounts for tests furnished during such period.
(5)

Advanced diagnostic laboratory test defined.—
In this subsection, the term “advanced diagnostic laboratory test” means a clinical diagnostic laboratory test covered under this part that is offered and furnished only by a single laboratory and not sold for use by a laboratory other than the original developing laboratory (or a successor owner) and meets one of the following criteria:
(A)
The test is an analysis of multiple biomarkers of DNA, RNA, or proteins combined with a unique algorithm to yield a single patient-specific result.
(B)
The test is cleared or approved by the Food and Drug Administration.
(C)
The test meets other similar criteria established by the Secretary.
(e)

Coding.—
(1)

Temporary codes for certain new tests.—
(A)

In general.—
The Secretary shall adopt temporary HCPCS codes to identify new advanced diagnostic laboratory tests (as defined in subsection (d)(5)) and new laboratory tests that are cleared or approved by the Food and Drug Administration.
(B)

Duration.—
(i)

In general.—
Subject to clause (ii), the temporary code shall be effective until a permanent HCPCS code is established (but not to exceed 2 years).
(ii)

Exception.—
The Secretary may extend the temporary code or establish a permanent HCPCS code, as the Secretary determines appropriate.
(2)

Existing tests.—
Not later than January 1, 2016, for each existing advanced diagnostic laboratory test (as so defined) and each existing clinical diagnostic laboratory test that is cleared or approved by the Food and Drug Administration for which payment is made under this part as of the date of enactment of this section, if such test has not already been assigned a unique HCPCS code, the Secretary shall—
(A)
assign a unique HCPCS code for the test; and
(B)
publicly report the payment rate for the test.
(3)

Establishment of unique identifier for certain tests.—
For purposes of tracking and monitoring, if a laboratory or a manufacturer requests a unique identifier for an advanced diagnostic laboratory test (as so defined) or a laboratory test that is cleared or approved by the Food and Drug Administration, the Secretary shall utilize a means to uniquely track such test through a mechanism such as a HCPCS code or modifier.
(f)

Input From Clinicians and Technical Experts.—
(1)

In general.—
The Secretary shall consult with an expert outside advisory panel, established by the Secretary not later than July 1, 2015, composed of an appropriate selection of individuals with expertise, which may include molecular pathologists, researchers, and individuals with expertise in laboratory science or health economics, in issues related to clinical diagnostic laboratory tests, which may include the development, validation, performance, and application of such tests, to provide—
(A)
input on—
(i)
the establishment of payment rates under this section for new clinical diagnostic laboratory tests, including whether to use crosswalking or gapfilling processes to determine payment for a specific new test; and
(ii)
the factors used in determining coverage and payment processes for new clinical diagnostic laboratory tests; and
(B)
recommendations to the Secretary under this section.
(2)

Compliance with chapter 10 of title 5, united states code.—
The panel shall be subject to chapter 10 of title 5, United States Code.
(3)

Continuation of annual meeting.—
The Secretary shall continue to convene the annual meeting described in section 1833(h)(8)(B)(iii) after the implementation of this section for purposes of receiving comments and recommendations (and data on which the recommendations are based) as described in such section on the establishment of payment amounts under this section.
(g)

Coverage.—
(1)

Issuance of coverage policies.—
(A)

In general.—
A medicare administrative contractor shall only issue a coverage policy with respect to a clinical diagnostic laboratory test in accordance with the process for making a local coverage determination (as defined in section 1869(f)(2)(B)), including the appeals and review process for local coverage determinations under part 426 of title 42, Code of Federal Regulations (or successor regulations).
(B)

No effect on national coverage determination process.—
This paragraph shall not apply to the national coverage determination process (as defined in section 1869(f)(1)(B)).
(C)

Effective date.—
This paragraph shall apply to coverage policies issued on or after January 1, 2015.
(2)

Designation of one or more medicare administrative contractors for clinical diagnostic laboratory tests.—
The Secretary may designate one or more (not to exceed 4) medicare administrative contractors to either establish coverage policies or establish coverage policies and process claims for payment for clinical diagnostic laboratory tests, as determined appropriate by the Secretary.
(h)

Implementation.—
(1)

Implementation.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of the establishment of payment amounts under this section.
(2)

Administration.—
Chapter 35 of title 44, United States Code, shall not apply to information collected under this section.
(3)

Funding.—
For purposes of implementing this section, the Secretary shall provide for the transfer, from the Federal Supplementary Medical Insurance Trust Fund under section 1841, to the Centers for Medicare & Medicaid Services Program Management Account, for each of fiscal years 2014 through 2018, $4,000,000, and for each of fiscal years 2019 through 2023, $3,000,000. Amounts transferred under the preceding sentence shall remain available until expended.
(i)

Transitional Rule.—
During the period beginning on the date of enactment of this section and ending on December 31, 2016, with respect to advanced diagnostic laboratory tests under this part, the Secretary shall use the methodologies for pricing, coding, and coverage in effect on the day before such date of enactment, which may include cross-walking or gapfilling methods.

PROCEDURE FOR PAYMENT OF CLAIMS OF PROVIDERS OF SERVICES
Sec. 1835.
[42 U.S.C. 1395n]
(a)
Except as provided in subsections (b), (c), and (e), payment for services described in section 1832(a)(2) furnished an individual may be made only to providers of services which are eligible therefor under section 1866(a), and only if—
(1)
written request, signed by such individual, except in cases in which the Secretary finds it impracticable for the individual to do so, is filed for such payment in such form, in such manner and by such person or persons as the Secretary may by regulation prescribe, no later than the close of the period ending 1 calendar year after the date of service; and
(2)
a physician, or, in the case of services described in subparagraph (A), a physician, a nurse practitioner or clinical nurse specialist (as those terms are defined in section 1861(aa)(5)) who is working in accordance with State law, or a physician assistant (as defined in section 1861(aa)(5)) who is working in accordance with State law, who is enrolled under section 1866(j), certifies (and recertifies, where such services are furnished over a period of time, in such cases, with such frequency, and accompanied by such supporting material, appropriate to the case involved, as may be provided by regulations) that—
(A)
in the case of home health services (i) such services are or were required because the individual is or was confined to his home (except when receiving items and services referred to in section 1861(m)(7)) and needs or needed skilled nursing care (other than solely venipuncture for the purpose of obtaining a blood sample) on an intermittent basis or physical or speech therapy or, in the case of an individual who has been furnished home health services based on such a need and who no longer has such a need for such care or therapy, continues or continued to need occupational therapy, (ii) a plan for furnishing such services to such individual has been established and is periodically reviewed by a physician, a nurse practitioner, a clinical nurse specialist, or a physician assistant (as the case may be), (iii) such services are or were furnished while the individual is or was under the care of a physician, a nurse practitioner, a clinical nurse specialist, or a physician assistant (as the case may be), and (iv) in the case of a certification made by a physician after January 1, 2010, or by a nurse practitioner, clinical nurse specialist, or physician assistant (as the case may be) after a date specified by the Secretary (but in no case later than the date that is 6 months after the date of the enactment of the CARES Act), prior to making such certification a physician, nurse practitioner, clinical nurse specialist, or physician assistant must document that a physician, nurse practitioner, clinical nurse specialist, certified nurse-midwife (as defined in section 1861(gg)) as authorized by State law, or physician assistant has had a face-to-face encounter (including through use of telehealth and other than with respect to encounters that are incident to services involved) with the individual during the 6-month period preceding such certification, or other reasonable timeframe as determined by the Secretary;
(B)
in the case of medical and other health services, except services described in subparagraphs (B), (C), and (D) of section 1861(s)(2), such services are or were medically required;
(C)
in the case of outpatient physical therapy services or outpatient occupational therapy services, (i) such services are or were required because the individual needed physical therapy services or occupational therapy services, respectively, (ii) a plan for furnishing such services has been established by a physician or by the qualified physical therapist or qualified occupational therapist, respectively, providing such services and is periodically reviewed by a physician, and (iii) such services are or were furnished while the individual is or was under the care of a physician;
(D)
in the case of outpatient speech pathology services, (i) such services are or were required because the individual needed speech pathology services, (ii) a plan for furnishing such services has been established by a physician or by the speech pathologist providing such services and is periodically reviewed by a physician, and (iii) such services are or were furnished while the individual is or was under the care of a physician;
(E)
in the case of comprehensive outpatient rehabilitation facility services, (i) such services are or were required because the individual needed skilled rehabilitation services, (ii) a plan for furnishing such services has been established and is periodically reviewed by a physician, and (iii) such services are or were furnished while the individual is or was under the care of a physician; and
(F)
in the case of partial hospitalization services, (i) the individual would require inpatient psychiatric care in the absence of such services, (ii) an individualized, written plan for furnishing such services has been established by a physician and is reviewed periodically by a physician, and (iii) such services are or were furnished while the individual is or was under the care of a physician.
For purposes of this section, the term “provider of services” shall include a clinic, rehabilitation agency, or public health agency if, in the case of a clinic or rehabilitation agency, such clinic or agency meets the requirements of section 1861(p)(4)(A) (or meets the requirements of such section through the operation of subsection (g) or (ll)(2) of section 1861), or if, in the case of a public health agency, such agency meets the requirements of section 1861(p)(4)(B) (or meets the requirements of such section through the operation of subsection (g) or (ll)(2) of section 1861), but only with respect to the furnishing of outpatient physical therapy services (as therein defined) or (through the operation of subsection (g) or (ll)(2) of section 1861) with respect to the furnishing of outpatient occupational therapy services or outpatient speech-language pathology services, respectively.
To the extent provided by regulations, the certification and recertification requirements of paragraph (2) shall be deemed satisfied where, at a later date, a physician, nurse practitioner, clinical nurse specialist, or physician assistant (as the case may be) makes a certification of the kind provided in subparagraph (A) or (B) of paragraph (2) (whichever would have applied), but only where such certification is accompanied by such medical and other evidence as may be required by such regulations. With respect to the certification required by paragraph (2) for home health services furnished to any individual by a home health agency (other than an agency which is a governmental entity) and with respect to the establishment and review of a plan for such services, the Secretary shall prescribe regulations which shall become effective no later than July 1, 1981 (or in the case of regulations to implement the amendments made by section 3708 of the CARES Act the Secretary shall prescribe regulations which shall become effective no later than 6 months after the enactment of such Act), and which prohibit a physician, nurse practitioner, clinical nurse specialist, or physician assistant who has a significant ownership interest in, or a significant financial or contractual relationship with, such home health agency from performing such certification and from establishing or reviewing such plan, except that such prohibition shall not apply with respect to a home health agency which is a sole community home health agency (as determined by the Secretary). For purposes of the preceding sentence, service by a physician, nurse practitioner, clinical nurse specialist, or physician assistant as an uncompensated officer or director of a home health agency shall not constitute having a significant ownership interest in, or a significant financial or contractual relationship with, such agency. For purposes of documentation for physician certification and recertification made under paragraph (2) on or after January 1, 2019 or no later than 6 months after the date of the enactment of the CARES Act for purposes of documentation for certification and recertification made under paragraph (2) by a nurse practitioner, clinical nurse specialist, or physician assistant,,29 and made with respect to home health services furnished by a home health agency, in addition to using documentation in the medical record of the physician, nurse practitioner, clinical nurse specialist, or physician assistant who so certifies or the medical record of the acute or post-acute care facility (in the case that home health services were furnished to an individual who was directly admitted to the home health agency from such a facility), the Secretary may use documentation in the medical record of the home health agency as supporting material, as appropriate to the case involved. For purposes of paragraph (2)(A), an individual shall be considered to be “confined to his home” if the individual has a condition, due to an illness or injury, that restricts the ability of the individual to leave his or her home except with the assistance of another individual or the aid of a supportive device (such as crutches, a cane, a wheelchair, or a walker), or if the individual has a condition such that leaving his or her home is medically contraindicated. While an individual does not have to be bedridden to be considered “confined to his home”, the condition of the individual should be such that there exists a normal inability to leave home and that leaving home requires a considerable and taxing effort by the individual. Any absence of an individual from the home attributable to the need to receive health care treatment, including regular absences for the purpose of participating in therapeutic, psychosocial, or medical treatment in an adult day-care program that is licensed or certified by a State, or accredited, to furnish adult day-care services in the State shall not disqualify an individual from being considered to be “confined to his home”. Any other absence of an individual from the home shall not so disqualify an individual if the absence is of infrequent or of relatively short duration. For purposes of the preceding sentence, any absence for the purpose of attending a religious service shall be deemed to be an absence of infrequent or short duration. In applying paragraph (1), the Secretary may specify exceptions to the 1 calendar year period specified in such paragraph.
^{29}
Double comma so in law. See amendment made by section 3708(b)(5)(A) of division A of Public Law 116-136.
(b)
(1)
Payment may also be made to any hospital for services described in section 1861(s) furnished as an outpatient service by a hospital or by others under arrangements made by it to an individual entitled to benefits under this part even though such hospital does not have an agreement in effect under this title if (A) such services were emergency services, (B) the Secretary would be required to make such payment if the hospital had such an agreement in effect and otherwise met the conditions of payment hereunder, and (C) such hospital has made an election pursuant to section 1814(d)(1)(C) with respect to the calendar year in which such emergency services are provided. Such payments shall be made only in the amounts provided under section 1833(a)(2) and then only if such hospital agrees to comply, with respect to the emergency services provided, with the provisions of section 1866(a).
(2)
Payment may also be made on the basis of an itemized bill to an individual for services described in paragraph (1) of this subsection if (A) payment cannot be made under such paragraph (1) solely because the hospital does not elect, in accordance with section 1814(d)(1)(C), to claim such payments and (B) such individual files application (submitted within such time and in such form and manner, and containing and supported by such information as the Secretary shall by regulations prescribe) for reimbursement. The amounts payable under this paragraph shall, subject to the provisions of section 1833, be equal to 80 percent of the hospital's reasonable charges for such services.
(c)
Notwithstanding the provisions of this section and sections 1832, 1833, and 1866(a)(1)(A), a hospital or a critical access hospital may, subject to such limitations as may be prescribed by regulations, collect from an individual the customary charges for services specified in section 1861(s) and furnished to him by such hospital as an outpatient, but only if such charges for such services do not exceed the applicable supplementary medical insurance deductible, and such customary charges shall be regarded as expenses incurred by such individual with respect to which benefits are payable in accordance with section 1833(a)(1). Payments under this title to hospitals which have elected to make collections from individuals in accordance with the preceding sentence shall be adjusted periodically to place the hospital in the same position it would have been had it instead been reimbursed in accordance with section 1833(a)(2) (or, in the case of a critical access hospital, in accordance with section 1833(a)(6)).
(d)
Subject to section 1880, no payment may be made under this part to any Federal provider of services or other Federal agency, except a provider of services which the Secretary determines is providing services to the public generally as a community institution or agency; and no such payment may be made to any provider of services or other person for any item or service which such provider or person is obligated by a law of, or a contract with, the United States to render at public expense.
(e)
For purposes of services (1) which are inpatient hospital services by reason of paragraph (7) of section 1861(b) or for which entitlement exists by reason of clause (II) of section 1832(a)(2)(B)(i), and (2) for which the reasonable cost thereof is determined under section 1861(v)(1)(D) (or would be if section 1886 did not apply), payment under this part shall be made to such fund as may be designated by the organized medical staff of the hospital in which such services were furnished or, if such services were furnished in such hospital by the faculty of a medical school, to such fund as may be designated by such faculty, but only if—
(A)
such hospital has an agreement with the Secretary under section 1866, and
(B)
the Secretary has received written assurances that (i) such payment will be used by such fund solely for the improvement of care to patients in such hospital or for educational or charitable purposes and (ii) the individuals who were furnished such services or any other persons will not be charged for such services (or if charged provision will be made for return of any moneys incorrectly collected).

ELIGIBLE INDIVIDUALS
Sec. 1836.
[42 U.S.C. 1395o]
(a)

In general.—
Every individual who—
(1)
is entitled to hospital insurance benefits under part A, or
(2)
has attained age 65 and is a resident of the United States, and is either (A) a citizen or (B) an alien lawfully admitted for permanent residence who has resided in the United States continuously during the 5 years immediately preceding the month in which he applies for enrollment under this part,
is eligible to enroll in the insurance program established by this part.
(b)

Individuals Eligible for Immunosuppressive Drug Coverage.—
(1)

In general.—
Except as provided under paragraph (2), every individual whose entitlement to insurance benefits under part A ends (whether before, on, or after January 1, 2023) by reason of section 226A(b)(2) is eligible to enroll or to be deemed to have enrolled in the medical insurance program established by this part solely for purposes of coverage of immunosuppressive drugs in accordance with section 1837(n).
(2)

Exception if other coverage is available.—
(A)

In general.—
An individual described in paragraph (1) shall not be eligible for enrollment in the program for purposes of coverage described in such paragraph with respect to any period in which the individual, as determined in accordance with subparagraph (B)—
(i)
is enrolled in a group health plan or group or individual health insurance coverage, as such terms are defined in section 2791 of the Public Health Service Act;
(ii)
is enrolled for coverage under the TRICARE for Life program under section 1086(d) of title 10, United States Code;
(iii)
is enrolled under a State plan (or waiver of such plan) under title XIX and is eligible to receive benefits for immunosuppressive drugs described in this subsection under such plan (or such waiver);
(iv)
is enrolled under a State child health plan (or waiver of such plan) under title XXI and is eligible to receive benefits for such drugs under such plan (or such waiver); or
(v)
(I)
is enrolled in the patient enrollment system of the Department of Veterans Affairs established and operated under section 1705 of title 38, United States Code;
(II)
is not required to enroll under section 1705 of such title to receive immunosuppressive drugs described in this subsection; or
(III)
is otherwise eligible under a provision of title 38, United States Code, other than section 1710 of such title to receive immunosuppressive drugs described in this subsection.
(B)

Eligibility determinations.—
(i)

In general.—
The Secretary, in coordination with the Commissioner of Social Security, shall establish a process for determining whether an individual described in paragraph (1) who is to be enrolled or deemed to be enrolled in the medical insurance program described in such paragraph meets the requirements for such enrollment under this subsection, including the requirement that the individual not be enrolled in other coverage as described in subparagraph (A).
(ii)

Attestation regarding other coverage.—
The process established under clause (i) shall include, at a minimum, a requirement that—
(I)
the individual provide to the Commissioner an attestation that the individual is not enrolled and does not expect to enroll in such other coverage; and
(II)
the individual notify the Commissioner within 60 days of enrollment in such other coverage.

ENROLLMENT PERIODS
Sec. 1837.
[42 U.S.C. 1395p]
(a)
An individual may enroll in the insurance program established by this part only in such manner and form as may be prescribed by regulations, and only during an enrollment period prescribed in or under this section.
[(b)
Repealed.]
(c)
In the case of individuals who first satisfy paragraph (1) or (2) of section 1836(a) before March 1, 1966, the initial general enrollment period shall begin on the first day of the second month which begins after the date of enactment of this title and shall end on May 31, 1966. For purposes of this subsection and subsection (d), an individual who has attained age 65 and who satisfies paragraph (1) of section 1836(a) but not paragraph (2) of such section shall be treated as satisfying such paragraph (1) on the first day on which he is (or on filing application would have been) entitled to hospital insurance benefits under part A.
(d)
In the case of an individual who first satisfies paragraph (1) or (2) of section 1836(a) on or after March 1, 1966, his initial enrollment period shall begin on the first day of the third month before the month in which he first satisfies such paragraphs and shall end seven months later. Where the Secretary finds that an individual who has attained age 65 failed to enroll under this part during his initial enrollment period (based on a determination by the Secretary of the month in which such individual attained age 65), because such individual (relying on documentary evidence) was mistaken as to his correct date of birth, the Secretary shall establish for such individual an initial enrollment period based on his attaining age 65 at the time shown in such documentary evidence (with a coverage period determined under section 1838 as though he had attained such age at that time).
(e)
There shall be a general enrollment period during the period beginning on January 1 and ending on March 31 of each year.
(f)
Any individual—
(1)
who is eligible under section 1836(a) to enroll in the medical insurance program by reason of entitlement to hospital insurance benefits as described in paragraph (1) of such section, and
(2)
whose initial enrollment period under subsection (d) begins after March 31, 1973, and
(3)
who is residing in the United States, exclusive of Puerto Rico,
shall be deemed to have enrolled in the medical insurance program established by this part.
(g)
All of the provisions of this section shall apply to individuals satisfying subsection (f), except that—
(1)
in the case of an individual who satisfies subsection (f) by reason of entitlement to disability insurance benefits described in section 226(b), his initial enrollment period shall begin on the first day of the later of (A) April 1973 or (B) the third month before the 25th month of such entitlement, and shall reoccur with each continuous period of eligibility (as defined in section 1839(d)) and upon attainment of age 65;
(2)
(A)
in the case of an individual who is entitled to monthly benefits under section 202 or 223 on the first day of his initial enrollment period or becomes entitled to monthly benefits under section 202 during the first 3 months of such period, his enrollment shall be deemed to have occurred in the third month of his initial enrollment period, and
(B)
in the case of an individual who is not entitled to benefits under section 202 on the first day of his initial enrollment period and does not become so entitled during the first 3 months of such period, his enrollment shall be deemed to have occurred in the month in which he files the application establishing his entitlement to hospital insurance benefits provided such filing occurs during the last 4 months of his initial enrollment period; and
(3)
in the case of an individual who would otherwise satisfy subsection (f) but does not establish his entitlement to hospital insurance benefits until after the last day of his initial enrollment period (as defined in subsection (d) of this section), his enrollment shall be deemed to have occurred on the first day of the earlier of the then current or immediately succeeding general enrollment period (as defined in subsection (e) of this section).
(h)
In any case where the Secretary finds that an individual's enrollment or nonenrollment in the insurance program established by this part or part A pursuant to section 1818 is unintentional, inadvertent, or erroneous and is the result of the error, misrepresentation, or inaction of an officer, employee, or agent of the Federal Government, or its instrumentalities, the Secretary may take such action (including the designation for such individual of a special initial or subsequent enrollment period, with a coverage period determined on the basis thereof and with appropriate adjustments of premiums) as may be necessary to correct or eliminate the effects of such error, misrepresentation, or inaction.
(i)
(1)
In the case of an individual who—
(A)
at the time the individual first satisfies paragraph (1) or (2) of section 1836(a), is enrolled in a group health plan described in section 1862(b)(1)(A)(v) by reason of the individual's (or the individual's spouse's) current employment status, and
(B)
has elected not to enroll (or to be deemed enrolled) under this section during the individual's initial enrollment period,
there shall be a special enrollment period described in paragraph (3). In the case of an individual not described in the previous sentence who has not attained the age of 65, at the time the individual first satisfies paragraph (1) of section 1836(a), is enrolled in a large group health plan (as that term is defined in section 1862(b)(1)(B)(iii)) by reason of the individual's current employment status (or the current employment status of a family member of the individual), and has elected not to enroll (or to be deemed enrolled) under this section during the individual's initial enrollment period, there shall be a special enrollment period described in paragraph (3)(B).
(2)
In the case of an individual who—
(A)
(i)
has enrolled (or has been deemed to have enrolled) in the medical insurance program established under this part during the individual's initial enrollment period, or (ii) is an individual described in paragraph (1)(A);
(B)
has enrolled in such program during any subsequent special enrollment period under this subsection during which the individual was not enrolled in a group health plan described in section 1862(b)(1)(A)(v) by reason of the individual's (or individual's spouse's) current employment status; and
(C)
has not terminated enrollment under this section at any time at which the individual is not enrolled in such a group health plan by reason of the individual's (or individual's spouse's) current employment status,
there shall be a special enrollment period described in paragraph (3). In the case of an individual not described in the previous sentence who has not attained the age of 65, has enrolled (or has been deemed to have enrolled) in the medical insurance program established under this part during the individual's initial enrollment period, or is an individual described in the second sentence of paragraph (1), has enrolled in such program during any subsequent special enrollment period under this subsection during which the individual was not enrolled in a large group health plan (as that term is defined in section 1862(b)(1)(B)(iii)) by reason of the individual's current employment status (or the current employment status of a family member of the individual), and has not terminated enrollment under this section at any time at which the individual is not enrolled in such a large group health plan by reason of the individual's current employment status (or the current employment status of a family member of the individual), there shall be a special enrollment period described in paragraph (3)(B).
(3)
(A)
The special enrollment period referred to in the first sentences of paragraphs (1) and (2) is the period including each month during any part of which the individual is enrolled in a group health plan described in section 1862(b)(1)(A)(v) by reason of current employment status ending with the last day of the eighth consecutive month in which the individual is at no time so enrolled.
(B)
The special enrollment period referred to in the second sentences of paragraphs (1) and (2) is the period including each month during any part of which the individual is enrolled in a large group health plan (as that term is defined in section 1862(b)(1)(B)(iii)) by reason of the individual's current employment status (or the current employment status of a family member of the individual) ending with the last day of the eighth consecutive month in which the individual is at no time so enrolled.
(4)
(A)
In the case of an individual who is entitled to benefits under part A pursuant to section 226(b) and—
(i)
who at the time the individual first satisfies paragraph (1) of section 1836(a)—
(I)
is enrolled in a group health plan described in section 1862(b)(1)(A)(v) by reason of the individual's current or former employment or by reason of the current or former employment status of a member of the individual's family, and
(II)
has elected not to enroll (or to be deemed enrolled) under this section during the individual's initial enrollment period; and
(ii)
whose continuous enrollment under such group health plan is involuntarily terminated at a time when the enrollment under the plan is not by reason of the individual's current employment or by reason of the current employment of a member of the individual's family,
there shall be a special enrollment period described in subparagraph (B).
(B)
The special enrollment period referred to in subparagraph (A) is the 6-month period beginning on the first day of the month which includes the date of the enrollment termination described in subparagraph (A)(ii).
(j)
In applying this section in the case of an individual who is entitled to benefits under part A pursuant to the operation of section 226(h), the following special rules apply:
(1)
The initial enrollment period under subsection (d) shall begin on the first day of the first month in which the individual satisfies the requirement of section 1836(a)(1).
(2)
In applying subsection (g)(1), the initial enrollment period shall begin on the first day of the first month of entitlement to disability insurance benefits referred to in such subsection.
(k)
(1)
In the case of an individual who—
(A)
at the time the individual first satisfies paragraph (1) or (2) of section 1836(a), is described in paragraph (3), and has elected not to enroll (or to be deemed enrolled) under this section during the individual's initial enrollment period; or
(B)
has terminated enrollment under this section during a month in which the individual is described in paragraph (3),
there shall be a special enrollment period described in paragraph (2).
(2)
The special enrollment period described in this paragraph is the 6-month period beginning on the first day of the month which includes the date that the individual is no longer described in paragraph (3).
(3)
For purposes of paragraph (1), an individual described in this paragraph is an individual who—
(A)
is serving as a volunteer outside of the United States through a program—
(i)
that covers at least a 12-month period; and
(ii)
that is sponsored by an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code; and
(B)
demonstrates health insurance coverage while serving in the program.
(l)
(1)
In the case of any individual who is a covered beneficiary (as defined in section 1072(5) of title 10, United States Code) at the time the individual is entitled to part A under section 226(b) or section 226A and who is eligible to enroll but who has elected not to enroll (or to be deemed enrolled) during the individual's initial enrollment period, there shall be a special enrollment period described in paragraph (2).
(2)
The special enrollment period described in this paragraph, with respect to an individual, is the 12-month period beginning on the day after the last day of the initial enrollment period of the individual or, if later, the 12-month period beginning with the month the individual is notified of enrollment under this section.
(3)
In the case of an individual who enrolls during the special enrollment period provided under paragraph (1), the coverage period under this part shall begin on the first day of the month in which the individual enrolls, or, at the option of the individual, the first month after the end of the individual's initial enrollment period.
(4)
An individual may only enroll during the special enrollment period provided under paragraph (1) one time during the individual's lifetime.
(5)
The Secretary shall ensure that the materials relating to coverage under this part that are provided to an individual described in paragraph (1) prior to the individual's initial enrollment period contain information concerning the impact of not enrolling under this part, including the impact on health care benefits under the TRICARE program under chapter 55 of title 10, United States Code.
(6)
The Secretary of Defense shall collaborate with the Secretary of Health and Human Services and the Commissioner of Social Security to provide for the accurate identification of individuals described in paragraph (1). The Secretary of Defense shall provide such individuals with notification with respect to this subsection. The Secretary of Defense shall collaborate with the Secretary of Health and Human Services and the Commissioner of Social Security to ensure appropriate follow up pursuant to any notification provided under the preceding sentence.
(m)
Beginning January 1, 2023, the Secretary may establish special enrollment periods in the case of individuals who satisfy paragraph (1) or (2) of section 1836(a) and meet such exceptional conditions as the Secretary may provide.
(n)
(1)
Any individual who is eligible for coverage of immunosuppressive drugs under section 1836(b) may enroll or be deemed to have enrolled only in such manner and form as may be prescribed by regulations, and only during an enrollment period described in this subsection.
(2)
An individual described in paragraph (1) whose entitlement for hospital insurance benefits under part A ends by reason of section 226A(b)(2) prior to January 1, 2023, may enroll beginning on October 1, 2022, or the day on which the individual first satisfies section 1836(b), whichever is later.
(3)
An individual described in paragraph (1) whose entitlement for hospital insurance benefits under part A ends by reason of section 226A(b)(2) on or after January 1, 2023, shall be deemed to have enrolled in the medical insurance program established by this part for purposes of coverage of immunosuppressive drugs.
(4)
The Secretary shall establish a process under which an individual described in paragraph (1) whose other coverage described in section 1836(b)(2)(A), or coverage under this part (including the medical insurance program established under this part for purposes of coverage of immunosuppressive drugs), is terminated voluntarily or involuntary may enroll or reenroll, if applicable, in the medical insurance program established under this part for purposes of coverage of immunosuppressive drugs.
(o)
(1)
In the case of an individual who—
(A)
as of January 1, 2024, is—
(i)
a Postal Service annuitant who is entitled to benefits under part A of title XVIII of the Social Security Act, but excluding an individual who is eligible to enroll under such part under section 1818 of such Act or 1818A of such Act (42 U.S.C. 1395i–2, 1395i–2a); or
(ii)
a member of family (as defined in section 8901(5) of title 5, United States Code) of a Postal Service annuitant and is entitled to benefits under part A of title XVIII of the Social Security Act, but excluding an individual who is eligible to enroll under such part under section 1818 of such Act or 1818A of such Act (42 U.S.C. 1395i–2, 1395i–2a); and
(B)
is not enrolled under this part, the individual may elect to be enrolled under this part during a special enrollment period during the 6–month period beginning on April 1, 2024.
(2)
In this subsection, the term “Postal Service annuitant” means an annuitant enrolled in a health benefits plan under chapter 89 of title 5, United States Code, whose Government contribution is required to be paid under section 8906(g)(2) of such title.

COVERAGE PERIOD
Sec. 1838.
[42 U.S.C. 1395q]
(a)
The period during which an individual is entitled to benefits under the insurance program established by this part (hereinafter referred to as his “coverage period”) shall begin on whichever of the following is the latest:
(1)
July 1, 1966, or (in the case of a disabled individual who has not attained age 65) July 1, 1973; or
(2)
(A)
in the case of an individual who enrolls pursuant to subsection (d) of section 1837 before the month in which he first satisfies paragraph (1) or (2) of section 1836(a), the first day of such month,
(B)
in the case of an individual who first satisfies such paragraph in a month beginning before January 2023 and who enrolls pursuant to such subsection (d)—
(i)
in such month in which he first satisfies such paragraph, the first day of the month following the month in which he so enrolls,
(ii)
in the month following such month in which he first satisfies such paragraph, the first day of the second month following the month in which he so enrolls, or
(iii)
more than one month following such month in which he satisfies such paragraph, the first day of the third month following the month in which he so enrolls,
(C)
in the case of an individual who first satisfies such paragraph in a month beginning on or after January 1, 2023, and who enrolls pursuant to such subsection (d) in such month in which he first satisfies such paragraph or in any subsequent month of his initial enrollment period, the first day of the month following the month in which he so enrolls, or
(D)
in the case of an individual who enrolls pursuant to subsection (e) of section 1837 in a month beginning—
(i)
before January 1, 2023, the July 1 following the month in which he so enrolls; or
(ii)
on or after January 1, 2023, the first day of the month following the month in which he so enrolls; or
(3)
in the case of an individual who is deemed to have enrolled—
(A)
on or before the last day of the third month of his initial enrollment period, the first day of the month in which he first meets the applicable requirements of section 1836(a) or July 1, 1973, whichever is later, or
(B)
on or after the first day of the fourth month of his initial enrollment period, and where such month begins—
(i)
before January 1, 2023, as prescribed under subparagraphs (B)(i), (B)(ii), (B)(iii), and (D)(i) of paragraph (2), or
(ii)
on or after January 1, 2023, as prescribed under subparagraphs (C) and (D)(ii) of paragraph (2).
(b)
An individual's coverage period shall continue until his enrollment has been terminated—
(1)
by the filing of notice that the individual no longer wishes to participate in the insurance program established by this part, or
(2)
for nonpayment of premiums.
The termination of a coverage period under paragraph (1) shall (except as otherwise provided in section 1843(e)) take effect at the close of the month following the month in which the notice is filed. The termination of a coverage period under paragraph (2) shall take effect on a date determined under regulations, which may be determined so as to provide a grace period in which overdue premiums may be paid and coverage continued. The grace period determined under the preceding sentence shall not exceed 90 days; except that it may be extended to not to exceed 180 days in any case where the Secretary determines that there was good cause for failure to pay the overdue premiums within such 90-day period.
Where an individual who is deemed to have enrolled for medical insurance pursuant to section 1837(f) or section 1837(n)(3) files a notice before the first day of the month in which his coverage period begins advising that he does not wish to be so enrolled, the termination of the coverage period resulting from such deemed enrollment shall take effect with the first day of the month the coverage would have been effective. Where an individual who is deemed enrolled for medical insurance benefits pursuant to section 1837(f) or section 1837(n)(3) files a notice requesting termination of his deemed coverage in or after the month in which such coverage becomes effective, the termination of such coverage shall take effect at the close of the month following the month in which the notice is filed.
(c)
In the case of an individual satisfying paragraph (1) of section 1836(a) whose entitlement to hospital insurance benefits under part A is based on a disability rather than on his having attained the age of 65, his coverage period (and his enrollment under this part) shall be terminated as of the close of the last month for which he is entitled to hospital insurance benefits.
(d)
No payments may be made under this part with respect to the expenses of an individual unless such expenses were incurred by such individual during a period which, with respect to him, is a coverage period.
(e)
Notwithstanding subsection (a), in the case of an individual who enrolls during a special enrollment period pursuant to section 1837(i)(3) or 1837(i)(4)(B)—
(1)
in any month of the special enrollment period in which the individual is at any time enrolled in a plan (specified in subparagraph (A) or (B), as applicable, of section 1837(i)(3) or specified in section 1837(i)(4)(A)(i)) or in the first month following such a month, the coverage period shall begin on the first day of the month in which the individual so enrolls (or, at the option of the individual, on the first day of any of the following three months), or
(2)
in any other month of the special enrollment period, the coverage period shall begin on the first day of the month following the month in which the individual so enrolls.
(f)
Notwithstanding subsection (a), in the case of an individual who enrolls during a special enrollment period pursuant to section 1837(k), the coverage period shall begin on the first day of the month following the month in which the individual so enrolls.
(g)
Notwithstanding subsection (a), in the case of an individual who enrolls during a special enrollment period pursuant to section 1837(m), the coverage period shall begin on a date the Secretary provides in a manner consistent (to the extent practicable) with protecting continuity of health benefit coverage.
(h)
In the case of an individual described in section 1836(b)(1), the following rules shall apply:
(1)
In the case of such an individual who is deemed to have enrolled in part B for coverage of immunosuppressive drugs under section 1837(n)(3), such individual’s coverage period shall begin on the first day of the month in which the individual first satisfies section 1836(b).
(2)
In the case of such an individual who enrolls (or reenrolls, if applicable) in part B for coverage of immunosuppressive drugs under paragraph (2) or (4) of section 1837(n), such individual’s coverage period shall begin on January 1, 2023, or the month following the month in which the individual so enrolls (or reenrolls), whichever is later.
(3)
The provisions of subsections (b) and (d) shall apply with respect to an individual described in paragraph (1) or (2).
(4)
In addition to the reasons for termination under subsection (b), the coverage period of an individual described in paragraph (1) or (2) shall end when the individual becomes entitled to benefits under this title under subsection (a) or (b) of section 226, or under section 226A, or is no longer eligible for such coverage as a result of the application of section 1836(b)(2).
(5)
The Secretary may conduct public education activities to raise awareness of the availability of more comprehensive, individual health insurance coverage (as defined in section 2791 of the Public Health Service Act) for individuals eligible under section 1836(b) to enroll or to be deemed enrolled in the medical insurance program established under this part for purposes of coverage of immunosuppressive drugs.
(i)
Notwithstanding subsection (a), in the case of an individual who enrolls during the special enrollment period pursuant to section 1837(o), the coverage period shall begin on January 1, 2025.

amounts of premiums
Sec. 1839.
[42 U.S.C. 1395r]
(a)
(1)
The Secretary shall, during September of 1983 and of each year thereafter, determine the monthly actuarial rate for enrollees age 65 and over which shall be applicable for the succeeding calendar year. Subject to paragraphs (5), (6), and (7), such actuarial rate shall be the amount the Secretary estimates to be necessary so that the aggregate amount for such calendar year with respect to those enrollees age 65 and older will equal one-half of the total of the benefits and administrative costs which he estimates will be payable from the Federal Supplementary Medical Insurance Trust Fund for services performed and related administrative costs incurred in such calendar year with respect to such enrollees. In calculating the monthly actuarial rate, the Secretary shall include an appropriate amount for a contingency margin. In applying this paragraph there shall not be taken into account additional payments under section 1848(o) and section 1853(l)(3) and the Government contribution under section 1844(a)(3).
(2)
The monthly premium of each individual enrolled under this part for each month after December 1983 shall be the amount determined under paragraph (3), adjusted as required in accordance with subsections (b), (c), (f), and (i), and to reflect any credit provided under section 1854(b)(1)(C)(ii)(III).
(3)
The Secretary, during September of each year, shall determine and promulgate a monthly premium rate for the succeeding calendar year that (except as provided in subsection (g)) is 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. Whenever the Secretary promulgates the dollar amount which shall be applicable as the monthly premium rate for any period, he shall, at the time such promulgation is announced, issue a public statement setting forth the actuarial assumptions and bases employed by him in arriving at the amount of an adequate actuarial rate for enrollees age 65 and older as provided in paragraph (1).
(4)
The Secretary shall also, during September of 1983 and of each year thereafter, determine the monthly actuarial rate for disabled enrollees under age 65 which shall be applicable for the succeeding calendar year. Such actuarial rate shall be the amount the Secretary estimates to be necessary so that the aggregate amount for such calendar year with respect to disabled enrollees under age 65 will equal one-half of the total of the benefits and administrative costs which he estimates will be payable from the Federal Supplementary Medical Insurance Trust Fund for services performed and related administrative costs incurred in such calendar year with respect to such enrollees. In calculating the monthly actuarial rate under this paragraph, the Secretary shall include an appropriate amount for a contingency margin.
(5)
(A)
In applying this part (including subsection (i) and section 1833(b)), the monthly actuarial rate for enrollees age 65 and over for 2016 shall be determined as if subsection (f) did not apply.
(B)
Subsection (f) shall continue to be applied to paragraph (6)(A) (during a repayment month, as described in paragraph (6)(B)) and without regard to the application of subparagraph (A).
(6)
(A)
With respect to a repayment month (as described in subparagraph (B)), the monthly premium otherwise established under paragraph (3) shall be increased by, subject to subparagraph (D), $3.
(B)
For purposes of this paragraph, a repayment month is a month during a year, beginning with 2016, for which a balance due amount is computed under subparagraph (C) as greater than zero.
(C)
For purposes of this paragraph, the balance due amount computed under this subparagraph, with respect to a month, is the amount estimated by the Chief Actuary of the Centers for Medicare & Medicaid Services to be equal to—
(i)
the amount transferred under subsections (d)(1) and (e)(1) of section 1844; plus
(ii)
the amount that is equal to the aggregate reduction, for all individuals enrolled under this part, in the income related monthly adjustment amount as a result of the application of paragraphs (5) and (7); minus
(iii)
the amounts payable under this part as a result of the application of this paragraph for preceding months.
(D)
If the balance due amount computed under subparagraph (C), without regard to this subparagraph, for December of a year would be less than zero, the Chief Actuary of the Centers for Medicare & Medicaid Services shall estimate, and the Secretary shall apply, a reduction to the dollar amount increase applied under subparagraph (A) for each month during such year in a manner such that the balance due amount for January of the subsequent year is equal to zero.
(7)
(A)
In applying this part (including subsection (i) and section 1833(b)), the monthly actuarial rate for enrollees age 65 and over for 2021 shall be determined to be equal to the sum of—
(i)
the monthly actuarial rate for enrollees age 65 and over for 2020; plus
(ii)
25 percent of the difference between such rate for 2020 and the preliminary monthly actuarial rate for enrollees age 65 and over for 2021 (as estimated under subparagraph (B)).
(B)
For purposes of subparagraph (A)(ii), the Secretary shall estimate a preliminary monthly actuarial rate for enrollees age 65 and over for 2021 using the methodology described in paragraph (1) and as if subparagraph (A) of this paragraph did not apply. The Secretary shall make the estimate under the previous sentence as if the transfers described in section 1844(f)(1) have been made.
(b)
In the case of an individual whose coverage period began pursuant to an enrollment after his initial enrollment period (determined pursuant to subsection (c) or (d) of section 1837) and not pursuant to a special enrollment period under subsection (i)(4), (l), or (m) of section 1837, the monthly premium determined under subsection (a) (without regard to any adjustment under subsection (i)) shall be increased by 10 percent of the monthly premium so determined for each full 12 months (in the same continuous period of eligibility) in which he could have been but was not enrolled. For purposes of the preceding sentence, there shall be taken into account (1) the months which elapsed between the close of his initial enrollment period and the close of the enrollment period in which he enrolled, plus (in the case of an individual who reenrolls)30 (2) the months which elapsed between the date of termination of a previous coverage period and the close of the enrollment period in which he reenrolled, but there shall not be taken into account months for which the individual can demonstrate that the individual was enrolled in a group health plan described in section 1862(b)(1)(A)(v) by reason of the individual's (or the individual's spouse's) current employment 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 as an active individual (as those terms are defined in section 1862(b)(1)(B)(iii)) or months for which the individual can demonstrate that the individual was an individual described in section 1837(k)(3). Any increase in an individual's monthly premium under the first sentence of this subsection with respect to a particular continuous period of eligibility shall not be applicable with respect to any other continuous period of eligibility which such individual may have. No increase in the premium shall be effected for a month in the case of an individual who enrolls under this part during 2001, 2002, 2003, or 2004 and who demonstrates to the Secretary before December 31, 2004, that the individual is a covered beneficiary (as defined in section 1072(5) of title 10, United States Code). The Secretary of Health and Human Services shall consult with the Secretary of Defense in identifying individuals described in the previous sentence. For purposes of determining any increase under this subsection for individuals whose enrollment occurs on or after January 1, 2023, the second sentence of this subsection shall be applied by substituting “close of the month” for “close of the period at the end of the enrollment sentence” each place it appears. No increase in the premium shall be effected for individuals who are enrolled pursuant to section 1836(b) for coverage only of immunosuppressive drugs.
^{30}
As in original. Punctuation omitted.
(c)
If any monthly premium determined under the foregoing provisions of this section is not a multiple of 10 cents, such premium shall be rounded to the nearest multiple of 10 cents.
(d)
For purposes of subsection (b) (and section 1837(g)(1)), an individual's “continuous period of eligibility” is the period beginning with the first day on which he is eligible to enroll under section 1836(a) and ending with his death; except that any period during all of which an individual satisfied paragraph (1) of section 1836(a) and which terminated in or before the month preceding the month in which he attained age 65 shall be a separate “continuous period of eligibility” with respect to such individual (and each such period which terminates shall be deemed not to have existed for purposes of subsequently applying this section).
(e)
(1)
Upon the request of a State (or any appropriate State or local governmental entity specified by the Secretary), the Secretary may enter into an agreement with the State (or such entity) under which the State (or such entity) agrees to pay on a quarterly or other periodic basis to the Secretary (to be deposited in the Treasury to the credit of the Federal Supplementary Medical Insurance Trust Fund) an amount equal to the amount of the part B late enrollment premium increases with respect to the premiums for eligible individuals (as defined in paragraph (3)(A)(i)). The Secretary shall enter into an agreement with the United States Postal Service under which the United States Postal Service agrees to pay on a quarterly or other periodic basis to the Secretary (to be deposited in the Treasury to the credit of the Federal Supplementary Medical Insurance Trust Fund) an amount equal to the amount of the part B late enrollment premium increases with respect to the premiums for eligible individuals (as defined in paragraph (3)(A)(ii))..31
^{31}
Two periods at the end of paragraph (1) are so in law. See amendment made by section 101(b)(3)(A) of Public Law 117–108.
(2)
No part B late enrollment premium increase shall apply to an eligible individual for premiums for months for which the amount of such an increase is payable under an agreement under paragraph (1).
(3)
In this subsection:
(A)32
The term “eligible individual” means an individual who is enrolled under this part B and who—
(i)
in the case of an agreement entered into under the first sentence of paragraph (1), is within a class of individuals specified in such agreement; and
(ii)
in the case of an agreement entered into under the second sentence of paragraph (1), is so enrolled under this part pursuant to the special enrollment period under section 1837(o)33
^{32}
The margin of subparagraph (A) (as amended by section 101(b)(3)(B) of Public Law 117–108) should be moved to the left in order to conform with the margins of existing subparagraphs.
(B)
The term “part B late enrollment premium increase” means any increase in a premium as a result of the application of subsection (b).
^{33}
So in law. A period is missing at the end of subparagraph (A)(ii). See amendment made by section 101(b)(3)(B) of Public Law 117–108.
(f)
For any calendar year after 1988, if an individual is entitled to monthly benefits under section 202 or 223 or to a monthly annuity under section 3(a), 4(a), or 4(f) of the Railroad Retirement Act of 1974 for November and December of the preceding year, if the monthly premium of the individual under this section for December and for January is deducted from those benefits under section 1840(a)(1) or section 1840(b)(1), and if the amount of the individual's premium is not adjusted for such January under subsection (i), the monthly premium otherwise determined under this section for an individual for that year shall not be increased, pursuant to this subsection, to the extent that such increase would reduce the amount of benefits payable to that individual for that December below the amount of benefits payable to that individual for that November (after the deduction of the premium under this section). For purposes of this subsection, retroactive adjustments or payments and deductions on account of work shall not be taken into account in determining the monthly benefits to which an individual is entitled under section 202 or 223 or under the Railroad Retirement Act of 1974. Any increase in the premium for an individual who was enrolled under section 1836(b) attributable to such individual otherwise enrolling under this part shall not be taken into account in applying this subsection.
(g)
In estimating the benefits and administrative costs which will be payable from the Federal Supplementary Medical Insurance Trust Fund for a year for purposes of determining the monthly premium rate under subsection (a)(3), the Secretary shall exclude an estimate of any benefits and administrative costs attributable to—
(1)
the application of section 1861(v)(1)(L)(viii) or to the establishment under section 1861(v)(1)(L)(i)(V) of a per visit limit at 106 percent of the median (instead of 105 percent of the median), but only to the extent payment for home health services under this title is not being made under section 1895 (relating to prospective payment for home health services); and
(2)
the medicare prescription drug discount card and transitional assistance program under section 1860D–31.
(h)

Potential Application of Comparative Cost Adjustment in CCA Areas.—
(1)

In general.—
Certain individuals who are residing in a CCA area under section 1860C–1 who are not enrolled in an MA plan under part C may be subject to a premium adjustment under subsection (f) of such section for months in which the CCA program under such section is in effect in such area.
(2)

No effect on late enrollment penalty or income-related adjustment in subsidies.—
Nothing in this subsection or section 1860C–1(f) shall be construed as affecting the amount of any premium adjustment under subsection (b) or (i). Subsection (f) shall be applied without regard to any premium adjustment referred to in paragraph (1).
(3)

Implementation.—
In order to carry out a premium adjustment under this subsection and section 1860C–1(f) (insofar as it is effected through the manner of collection of premiums under section 1840(a)), the Secretary shall transmit to the Commissioner of Social Security—
(A)
at the beginning of each year, the name, social security account number, and the amount of the premium adjustment (if any) for each individual enrolled under this part for each month during the year; and
(B)
periodically throughout the year, information to update the information previously transmitted under this paragraph for the year.
(i)

Reduction in Premium Subsidy Based on Income.—
(1)

In general.—
In the case of an individual whose modified adjusted gross income exceeds the threshold amount under paragraph (2), the monthly amount of the premium subsidy applicable to the premium under this section for a month after December 2006 shall be reduced (and the monthly premium shall be increased) by the monthly adjustment amount specified in paragraph (3).
(2)

Threshold amount.—
For purposes of this subsection, subject to paragraph (6), the threshold amount is—
(A)
except as provided in subparagraph (B), $80,000 (or, beginning with 2018, $85,000), and
(B)
in the case of a joint return, twice the amount applicable under subparagraph (A) for the calendar year.
(3)

Monthly adjustment amount.—
(A)

In general.—
Subject to subparagraph (B), the monthly adjustment amount specified in this paragraph for an individual for a month in a year is equal to the product of the following:
(i)

Sliding scale percentage.—
Subject to paragraph (6), the applicable percentage specified in the applicable table in subparagraph (C) for the individual minus 25 percentage points.
(ii)

Unsubsidized part b premium amount.—
(I)
200 percent of the monthly actuarial rate for enrollees age 65 and over (as determined under subsection (a)(1) for the year); plus
(II)
4 times the amount of the increase in the monthly premium under subsection (a)(6) for a month in the year (or, with respect to an individual enrolled under section 1836(b) and not otherwise enrolled under this part, 0 times the amount of such increase).
(B)

3-year phase in.—
The monthly adjustment amount specified in this paragraph for an individual for a month in a year before 2009 is equal to the following percentage of the monthly adjustment amount specified in subparagraph (A):
(i)
For 2007, 33 percent.
(ii)
For 2008, 67 percent.
(C)

Applicable percentage.—
(i)

In general.—
(I)
Subject to paragraphs (5) and (6), for years before 2018:
If the modified adjusted gross income is: | The applicable
percentage is:
More than $80,000 but not more than $100,000 | 35 percent
More than $100,000 but not more than $150,000 | 50 percent
More than $150,000 but not more than $200,000 | 65 percent
More than $200,000 | 80 percent.
(II)
Subject to paragraph (5), for 2018:
If the modified adjusted gross income is: | The applicable percentage is:
More than $85,000 but not more than $107,000 | 35 percent
More than $107,000 but not more than $133,500 | 50 percent
More than $133,500 but not more than $160,000 | 65 percent
More than $160,000 | 80 percent.
(III)
Subject to paragraph (5), for years beginning with 2019:
If the modified adjusted gross income is: | The applicable percentage is:
More than $85,000 but not more than $107,000 | 35 percent
More than $107,000 but not more than $133,500 | 50 percent
More than $133,500 but not more than $160,000 | 65 percent
More than $160,000 but less than $500,000 | 80 percent
At least $500,000 | 85 percent.
(ii)

Joint returns.—
In the case of a joint return, clause (i) shall be applied by substituting dollar amounts which are twice the dollar amounts otherwise applicable under clause (i) for the calendar year except, with respect to the dollar amounts applied in the last row of the table under subclause (III) of such clause (and the second dollar amount specified in the second to last row of such table), clause (i) shall be applied by substituting dollar amounts which are 150 percent of such dollar amounts for the calendar year.
(iii)

Married individuals filing separate returns.—
In the case of an individual who—
(I)
is married as of the close of the taxable year (within the meaning of section 7703 of the Internal Revenue Code of 1986) but does not file a joint return for such year, and
(II)
does not live apart from such individual's spouse at all times during the taxable year,
clause (i) shall be applied by reducing each of the dollar amounts otherwise applicable under such clause for the calendar year by the threshold amount for such year applicable to an unmarried individual.
(4)

Modified adjusted gross income.—
(A)

In general.—
For purposes of this subsection, the term “modified adjusted gross income” means adjusted gross income (as defined in section 62 of the Internal Revenue Code of 1986)—
(i)
determined without regard to sections 135, 911, 931, and 933 of such Code; and
(ii)
increased by the amount of interest received or accrued during the taxable year which is exempt from tax under such Code.
In the case of an individual filing a joint return, any reference in this subsection to the modified adjusted gross income of such individual shall be to such return's modified adjusted gross income.
(B)

Taxable year to be used in determining modified adjusted gross income.—
(i)

In general.—
In applying this subsection for an individual's premiums in a month in a year, subject to clause (ii) and subparagraph (C), the individual's modified adjusted gross income shall be such income determined for the individual's last taxable year beginning in the second calendar year preceding the year involved.
(ii)

Temporary use of other data.—
If, as of October 15 before a calendar year, the Secretary of the Treasury does not have adequate data for an individual in appropriate electronic form for the taxable year referred to in clause (i), the individual's modified adjusted gross income shall be determined using the data in such form from the previous taxable year. Except as provided in regulations prescribed by the Commissioner of Social Security in consultation with the Secretary, the preceding sentence shall cease to apply when adequate data in appropriate electronic form are available for the individual for the taxable year referred to in clause (i), and proper adjustments shall be made to the extent that the premium adjustments determined under the preceding sentence were inconsistent with those determined using such taxable year.
(iii)

Non-filers.—
In the case of individuals with respect to whom the Secretary of the Treasury does not have adequate data in appropriate electronic form for either taxable year referred to in clause (i) or clause (ii), the Commissioner of Social Security, in consultation with the Secretary, shall prescribe regulations which provide for the treatment of the premium adjustment with respect to such individual under this subsection, including regulations which provide for—
(I)
the application of the highest applicable percentage under paragraph (3)(C) to such individual if the Commissioner has information which indicates that such individual's modified adjusted gross income might exceed the threshold amount for the taxable year referred to in clause (i), and
(II)
proper adjustments in the case of the application of an applicable percentage under subclause (I) to such individual which is inconsistent with such individual's modified adjusted gross income for such taxable year.
(C)

Use of more recent taxable year.—
(i)

In general.—
The Commissioner of Social Security in consultation with the Secretary of the Treasury shall establish a procedures under which an individual's modified adjusted gross income shall, at the request of such individual, be determined under this subsection—
(I)
for a more recent taxable year than the taxable year otherwise used under subparagraph (B), or
(II)
by such methodology as the Commissioner, in consultation with such Secretary, determines to be appropriate, which may include a methodology for aggregating or disaggregating information from tax returns in the case of marriage or divorce.
(ii)

Standard for granting requests.—
A request under clause (i)(I) to use a more recent taxable year may be granted only if—
(I)
the individual furnishes to such Commissioner with respect to such year such documentation, such as a copy of a filed Federal income tax return or an equivalent document, as the Commissioner specifies for purposes of determining the premium adjustment (if any) under this subsection; and
(II)
the individual's modified adjusted gross income for such year is significantly less than such income for the taxable year determined under subparagraph (B) by reason of the death of such individual's spouse, the marriage or divorce of such individual, or other major life changing events specified in regulations prescribed by the Commissioner in consultation with the Secretary.
(5)

Inflation adjustment.—
(A)

In general.—
Subject to subparagraph (C), in the case of any calendar year beginning after 2007 (other than 2018 and 2019), each dollar amount in paragraph (2) or (3) shall be increased by an amount equal to—
(i)
such dollar amount, multiplied by
(ii)
the percentage (if any) by which the average of the Consumer Price Index for all urban consumers (United States city average) for the 12-month period ending with August of the preceding calendar year exceeds such average for the 12-month period ending with August 2006 (or, in the case of a calendar year beginning with 2020, August 2018).
(B)

Rounding.—
If any dollar amount after being increased under subparagraph (A) or (C) is not a multiple of $1,000, such dollar amount shall be rounded to the nearest multiple of $1,000.
(C)

Treatment of adjustments for certain higher income individuals.—
(i)

In general.—
Subparagraph (A) shall not apply with respect to each dollar amount in paragraph (3) of $500,000.
(ii)

Adjustment beginning 2028.—
In the case of any calendar year beginning after 2027, each dollar amount in paragraph (3) of $500,000 shall be increased by an amount equal to—
(I)
such dollar amount, multiplied by
(II)
the percentage (if any) by which the average of the Consumer Price Index for all urban consumers (United States city average) for the 12-month period ending with August of the preceding calendar year exceeds such average for the 12-month period ending with August 2026.
(6)

Temporary adjustment to income thresholds.—
Notwithstanding any other provision of this subsection, during the period beginning on January 1, 2011, and ending on December 31, 2017—
(A)
the threshold amount otherwise applicable under paragraph (2) shall be equal to such amount for 2010; and
(B)
the dollar amounts otherwise applicable under paragraph (3)(C)(i) shall be equal to such dollar amounts for 2010.
(7)

Joint return defined.—
For purposes of this subsection, the term “joint return” has the meaning given to such term by section 7701(a)(38) of the Internal Revenue Code of 1986.
(j)

Determination of Premium for Individuals Only Eligible for Coverage of Immunosuppressive Drugs.—
The Secretary shall, during September of each year (beginning with 2022), determine and promulgate a monthly premium rate for the succeeding calendar year for individuals enrolled only for the purpose of coverage of immunosuppressive drugs under section 1836(b). Such premium shall be equal to 15 percent of the monthly actuarial rate for enrollees age 65 and over (as would be determined in accordance with subsection (a)(1) if the reference to “one-half” in such subsection were a reference to “100 percent”) for that succeeding calendar year. The monthly premium of each individual enrolled for coverage of immunosuppressive drugs under section 1836(b) for each month shall be the amount promulgated in this subsection. In the case of such individual not otherwise enrolled under this part, such premium shall be in lieu of any other monthly premium applicable under this section. Such amount shall be adjusted in accordance with subsections (c), (f), and (i), but shall not be adjusted under subsection (b).

PAYMENT OF PREMIUMS
Sec. 1840.
[42 U.S.C. 1395s]
(a)
(1)
In the case of an individual who is entitled to monthly benefits under section 202 or 223, his monthly premiums under this part shall (except as provided in subsections (b)(1) and (c)) be collected by deducting the amount thereof from the amount of such monthly benefits. Such deduction shall be made in such manner and at such times as the Commissioner of Social Security shall by regulation prescribe. Such regulations shall be prescribed after consultation with the Secretary.
(2)
The Secretary of the Treasury shall, from time to time, transfer from the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund to the Federal Supplementary Medical Insurance Trust Fund the aggregate amount deducted under paragraph (1) for the period to which such transfer relates from benefits under section 202 or 223 which are payable from such Trust Fund. Such transfer shall be made on the basis of a certification by the Commissioner of Social Security and shall be appropriately adjusted to the extent that prior transfers were too great or too small.
(b)
(1)
In the case of an individual who is entitled to receive for a month an annuity under the Railroad Retirement Act of 1974 (whether or not such individual is also entitled for such month to a monthly insurance benefit under section 202), his monthly premiums under this part shall (except as provided in subsection (c)) be collected by deducting the amount thereof from such annuity or pension. Such deduction shall be made in such manner and at such times as the Secretary shall by regulations prescribe. Such regulations shall be prescribed only after consultation with the Railroad Retirement Board.
(2)
The Secretary of the Treasury shall, from time to time, transfer from the Railroad Retirement Account to the Federal Supplementary Medical Insurance Trust Fund the aggregate amount deducted under paragraph (1) for the period to which such transfer relates. Such transfers shall be made on the basis of a certification by the Railroad Retirement Board and shall be appropriately adjusted to the extent that prior transfers were too great or too small.
(c)
If an individual to whom subsection (a) or (b) applies estimates that the amount which will be available for deduction under such subsection for any premium payment period will be less than the amount of the monthly premiums for such period, he may (under regulations) pay to the Secretary such portion of the monthly premiums for such period as he desires.
(d)
(1)
In the case of an individual receiving an annuity under subchapter III of chapter 83 of title 5, United States Code, or any other law administered by the Director of the Office of Personnel Management providing retirement or survivorship protection, to whom neither subsection (a) nor subsection (b) applies, his monthly premiums under this part (and the monthly premiums of the spouse of such individual under this part if neither subsection (a) nor subsection (b) applies to such spouse and if such individual agrees) shall, upon notice from the Secretary of Health and Human Services to the Director of the Office of Personnel Management, be collected by deducting the amount thereof from each installment of such annuity. Such deduction shall be made in such manner and at such times as the Director of the Office of Personnel Management may determine. The Director of the Office of Personnel Management shall furnish such information as the Secretary of Health and Human Services may reasonably request in order to carry out his functions under this part with respect to individuals to whom this subsection applies. A plan described in section 8903 or 8903a of title 5, United States Code, may reimburse each annuitant enrolled in such plan an amount equal to the premiums paid by him under this part if such reimbursement is paid entirely from funds of such plan which are derived from sources other than the contributions described in section 8906 of such title.
(2)
The Secretary of the Treasury shall, from time to time, but not less often than quarterly, transfer from the Civil Service Retirement and Disability Fund, or the account (if any) applicable in the case of such other law administered by the Director of the Office of Personnel Management, to the Federal Supplementary Medical Insurance Trust Fund the aggregate amount deducted under paragraph (1) for the period to which such transfer relates. Such transfer shall be made on the basis of a certification by the Director of the Office of Personnel Management and shall be appropriately adjusted to the extent that prior transfers were too great or too small.
(e)
In the case of an individual who participates in the insurance program established by this part but with respect to whom none of the preceding provisions of this section applies, or with respect to whom subsection (c) applies, the premiums shall be paid to the Secretary at such times, and in such manner, as the Secretary shall by regulations prescribe.
(f)
Amounts paid to the Secretary under subsection (c) or (e) shall be deposited in the Treasury to the credit of the Federal Supplementary Medical Insurance Trust Fund.
(g)
In the case of an individual who participates in the insurance program established by this part, premiums shall be payable for the period commencing with the first month of his coverage period and ending with the month in which he dies or, if earlier, in which his coverage under such program terminates.
(h)
In the case of an individual who is enrolled under the program established by this part as a member of a coverage group to which an agreement with a State entered into pursuant to section 1843 is applicable, subsections (a), (b), (c), and (d) of this section shall not apply to his monthly premium for any month in his coverage period which is determined under section 1843(d).
(i)
In the case of an individual enrolled in a Medicare+Choice plan, the Secretary shall provide for necessary adjustments of the monthly beneficiary premium to reflect 80 percent of any reduction elected under section 1854(f)(1)(E) and to reflect any credit provided under section 1854(b)(1)(C)(iv). To the extent to which the Secretary determines that such an adjustment is appropriate, with the concurrence of any agency responsible for the administration of such benefits, such premium adjustment may be provided directly, as an adjustment to any social security, railroad retirement, or civil service retirement benefits, or, in the case of an individual who receives medical assistance under title XIX for medicare costs described in section 1905(p)(3)(A)(ii), as an adjustment to the amount otherwise owed by the State for such medical assistance.

FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST FUND
Sec. 1841.
[42 U.S.C. 1395t]
(a)
There is hereby created on the books of the Treasury of the United States a trust fund to be known as the “Federal Supplementary Medical Insurance Trust Fund” (hereinafter in this section referred to as the “Trust Fund”). The Trust Fund shall consist of such gifts and bequests as may be made as provided in section 201(i)(1), such amounts as may be deposited in, or appropriated to, such fund as provided in this part or section 9008(c) of the Patient Protection and Affordable Care Act of 2009, and such amounts as may be deposited in, or appropriated to, the Medicare Prescription Drug Account established by section 1860D–16 or the Transitional Assistance Account established by section 1860D–31(k)(1).
(b)
With respect to the Trust Fund, there is hereby created a body to be known as the Board of Trustees of the Trust Fund (hereinafter in this section referred to as the “Board of Trustees”) composed of the Commissioner of Social Security, Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services, all ex officio, and of two members of the public (both of whom may not be from the same political party), who shall be nominated by the President for a term of four years and subject to confirmation by the Senate. A member of the Board of Trustees serving as a member of the public and nominated and confirmed to fill a vacancy occurring during a term shall be nominated and confirmed only for the remainder of such term. An individual nominated and confirmed as a member of the public may serve in such position after the expiration of such member's term until the earlier of the time at which the member's successor takes office or the time at which a report of the Board is first issued under paragraph (2) after the expiration of the member's term. The Secretary of the Treasury shall be the Managing Trustee of the Board of Trustees (hereinafter in this section referred to as the “Managing Trustee”). The Administrator of the Centers for Medicare & Medicaid Services shall serve as the Secretary of the Board of Trustees. The Board of Trustees shall meet not less frequently than once each calendar year. It shall be the duty of the Board of Trustees to—
(1)
Hold the Trust Fund;
(2)
Report to the Congress not later than the first day of April of each year on the operation and status of the Trust Fund during the preceding fiscal year and on its expected operation and status during the current fiscal year and the next 2 fiscal years; Each report provided under paragraph (2) beginning with the report in 2005 shall include the information specified in section 801(a) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.34
^{34}
So in law. See amendment made to paragraph (2) by section 801(d)(2) of P.L. 108–173 (117 Stat. 2359).
(3)
Report immediately to the Congress whenever the Board is of the opinion that the amount of the Trust Fund is unduly small; and
(4)
Review the general policies followed in managing the Trust Fund, and recommend changes in such policies, including necessary changes in the provisions of law which govern the way in which the Trust Fund is to be managed.
The report provided for in paragraph (2) shall include a statement of the assets of, and the disbursements made from, the Trust Fund during the preceding fiscal year, an estimate of the expected income to, and disbursements to be made from, the Trust Fund during the current fiscal year and each of the next 2 fiscal years, and a statement of the actuarial status of the Trust Fund. Such report shall also include an actuarial opinion by the Chief Actuary of the Centers for Medicare & Medicaid Services certifying that the techniques and methodologies used are generally accepted within the actuarial profession and that the assumptions and cost estimates used are reasonable. Such report shall be printed as a House document of the session of the Congress to which the report is made. A person serving on the Board of Trustees shall not be considered to be a fiduciary and shall not be personally liable for actions taken in such capacity with respect to the Trust Fund.
(c)
It shall be the duty of the Managing Trustee to invest such portion of the Trust Fund as is not, in his judgment, required to meet current withdrawals. Such investments may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at the issue price, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under chapter 31 of title 31, United States Code, are hereby extended to authorize the issuance at par of public-debt obligations for purchase by the Trust Fund. Such obligations issued for purchase by the Trust Fund shall have maturities fixed with due regard for the needs of the Trust Fund and shall bear interest at a rate equal to the average market yield (computed by the Managing Trustee on the basis of market quotations as of the end of the calendar month next preceding the date of such issue) on all marketable interest-bearing obligations of the United States then forming a part of the public debt which are not due or callable until after the expiration of 4 years from the end of such calendar month; except that where such average market yield is not a multiple of one-eighth of 1 per centum, the rate of interest on such obligations shall be the multiple of one-eighth of 1 per centum nearest such market yield. The Managing Trustee may purchase other interest-bearing obligations of the United States or obligations guaranteed as to both principal and interest by the United States, on original issue or at the market price, only where he determines that the purchase of such other obligations is in the public interest.
(d)
Any obligations acquired by the Trust Fund (except public-debt obligations issued exclusively to the Trust Fund) may be sold by the Managing Trustee at the market price, and such public-debt obligations may be redeemed at par plus accrued interest.
(e)
The interest on, and the proceeds from the sale or redemption of, any obligations held in the Trust Fund shall be credited to and form a part of the Trust Fund.
(f)
There shall be transferred periodically (but not less often than once each fiscal year) to the Trust Fund from the Federal Old-Age and Survivors Insurance Trust Fund and from the Federal Disability Insurance Trust Fund amounts equivalent to the amounts not previously so transferred which the Secretary of Health and Human Services shall have certified as overpayments (other than amounts so certified to the Railroad Retirement Board) pursuant to section 1870(b) of this Act. There shall be transferred periodically (but not less often than once each fiscal year) to the Trust Fund from the Railroad Retirement Account amounts equivalent to the amounts not previously so transferred which the Secretary of Health and Human Services shall have certified as overpayments to the Railroad Retirement Board pursuant to section 1870(b) of this Act.
(g)
The Managing Trustee shall pay from time to time from the Trust Fund such amounts as the Secretary of Health and Human Services certifies are necessary to make the payments provided for by this part, and the payments with respect to administrative expenses in accordance with section 201(g)(1). The payments provided for under part D, other than under section 1860D–31(k)(2), shall be made from the Medicare Prescription Drug Account in the Trust Fund. The payments provided for under section 1860D–31(k)(2) shall be made from the Transitional Assistance Account in the Trust Fund.
(h)
The Managing Trustee shall pay from time to time from the Trust Fund such amounts as the Secretary of Health and Human Services certifies are necessary to pay the costs incurred by the Director of the Office of Personnel Management in making deductions pursuant to section 1840(d) or pursuant to section 1860D–13(c)(1) or 1854(d)(2)(A) (in which case payments shall be made in appropriate part from the Medicare Prescription Drug Account in the Trust Fund). During each fiscal year, or after the close of such fiscal year, the Director of the Office of Personnel Management shall certify to the Secretary the amount of the costs the Director incurred in making such deductions, and such certified amount shall be the basis for the amount of such costs certified by the Secretary to the Managing Trustee.
(i)
The Managing Trustee shall pay from time to time from the Trust Fund such amounts as the Secretary of Health and Human Services certifies are necessary to pay the costs incurred by the Railroad Retirement Board for services performed pursuant to section 1840(b)(1) and section 1842(g) and pursuant to sections 1860D–13(c)(1) and 1854(d)(2)(A) (in which case payments shall be made in appropriate part from the Medicare Prescription Drug Account in the Trust Fund). During each fiscal year or after the close of such fiscal year, the Railroad Retirement Board shall certify to the Secretary the amount of the costs it incurred in performing such services and such certified amount shall be the basis for the amount of such costs certified by the Secretary to the Managing Trustee.
[Sec. 1841A. Repealed.]
[Sec. 1841B. Repealed.]

provisions relating to the administration of part b
Sec. 1842.
[42 U.S.C. 1395u]
(a)
The administration of this part shall be conducted through contracts with medicare administrative contractors under section 1874A.
(b)
[(1) Stricken]
(2)
[(A) & (B) Stricken]
(C)
In the case of residents of nursing facilities who receive services described in clause (i) or (ii) of section 1861(s)(2)(K) performed by a member of a team, the Secretary shall instruct medicare administrative contractors to develop mechanisms which permit routine payment under this part for up to 1.5 visits per month per resident. In the previous sentence, the term “team” refers to a physician and includes a physician assistant acting under the supervision of the physician or a nurse practitioner working in collaboration with that physician, or both.
(3)
The Secretary—
(A)
shall take such action as may be necessary to assure that, where payment under this part for a service is on a cost basis, the cost is reasonable cost (as determined under section 1861(v));
(B)
shall take such action as may be necessary to assure that, where payment under this part for a service is on a charge basis, such charge will be reasonable and not higher than the charge applicable, for a comparable service and under comparable circumstances, to the policyholders and subscribers of the medicare administrative contractor, and such payment will (except as otherwise provided in section 1870(f)) be made—
(i)
on the basis of an itemized bill; or
(ii)
on the basis of an assignment under the terms of which (I) the reasonable charge is the full charge for the service, (II) the physician or other person furnishing such service agrees not to charge (and to refund amounts already collected) for services for which payment under this title is denied under section 1154(a)(2) by reason of a determination under section 1154(a)(1)(B), and (III) the physician or other person furnishing such service agrees not to charge (and to refund amounts already collected) for such service if payment may not be made therefor by reason of the provisions of paragraph (1) of section 1862(a), and if the individual to whom such service was furnished was without fault in incurring the expenses of such service, and if the Secretary's determination that payment (pursuant to such assignment) was incorrect and was made subsequent to the third year following the year in which notice of such payment was sent to such individual; except that the Secretary may reduce such three-year period to not less than one year if he finds such reduction is consistent with the objectives of this title (except in the case of physicians' services and ambulance service furnished as described in section 1862(a)(4), other than for purposes of section 1870(f));
but (in the case of bills submitted, or requests for payment made, after March 1968) only if the bill is submitted, or a written request for payment is made in such other form as may be permitted under regulations, no later than the period ending 1 calendar year after the date of service;
(F)
shall take such action as may be necessary to assure that where payment under this part for a service rendered is on a charge basis, such payment shall be determined on the basis of the charge that is determined in accordance with this section on the basis of customary and prevailing charge levels in effect at the time the service was rendered or, in the case of services rendered more than 12 months before the year in which the bill is submitted or request for payment is made, on the basis of such levels in effect for the 12-month period preceding such year;
(G)
shall, for a service that is furnished with respect to an individual enrolled under this part, that is not paid on an assignment-related basis, and that is subject to a limiting charge under section 1848(g)—
(i)
determine, prior to making payment, whether the amount billed for such service exceeds the limiting charge applicable under section 1848(g)(2);
(ii)
notify the physician, supplier, or other person periodically (but not less often than once every 30 days) of determinations that amounts billed exceeded such applicable limiting charges; and
(iii)
provide for prompt response to inquiries of physicians, suppliers, and other persons concerning the accuracy of such limiting charges for their services;
(H)
shall implement—
(i)
programs to recruit and retain physicians as participating physicians in the area served by themedicare administrative contractor, including educational and outreach activities and the use of professional relations personnel to handle billing and other problems relating to payment of claims of participating physicians; and
(ii)
programs to familiarize beneficiaries with the participating physician program and to assist such beneficiaries in locating participating physicians;
(L)
shall monitor and profile physicians' billing patterns within each area or locality and provide comparative data to physicians whose utilization patterns vary significantly from other physicians in the same payment area or locality.
In determining the reasonable charge for services for purposes of this paragraph, there shall be taken into consideration the customary charges for similar services generally made by the physician or other person furnishing such services, as well as the prevailing charges in the locality for similar services. No charge may be determined to be reasonable in the case of bills submitted or requests for payment made under this part after December 31, 1970, if it exceeds the higher of (i) the prevailing charge recognized by the carrier and found acceptable by the Secretary for similar services in the same locality in administering this part on December 31, 1970, or (ii) the prevailing charge level that, on the basis of statistical data and methodology acceptable to the Secretary, would cover 75 percent of the customary charges made for similar services in the same locality during the 12-month period ending on the June 30 last preceding the start of the calendar year in which the service is rendered. In the case of physicians' services the prevailing charge level determined for purposes of clause (ii) of the preceding sentence for any twelve-month period (beginning after June 30, 1973) specified in clause (ii) of such sentence may not exceed (in the aggregate) the level determined under such clause for the fiscal year ending June 30, 1973, or (with respect to physicians' services furnished in a year after 1987) the level determined under this sentence (or under any other provision of law affecting the prevailing charge level) for the previous year except to the extent that the Secretary finds, on the basis of appropriate economic index data, that such higher level is justified by year-to-year economic changes. With respect to power-operated wheelchairs for which payment may be made in accordance with section 1861(s)(6), charges determined to be reasonable may not exceed the lowest charge at which power-operated wheelchairs are available in the locality. In the case of medical services, supplies, and equipment (including equipment servicing) that, in the judgment of the Secretary, do not generally vary significantly in quality from one supplier to another, the charges incurred after December 31, 1972, determined to be reasonable may not exceed the lowest charge levels at which such services, supplies, and equipment are widely and consistently available in a locality except to the extent and under the circumstances specified by the Secretary. The requirement in subparagraph (B) that a bill be submitted or request for payment be made by the close of the following calendar year shall not apply if (I) failure to submit the bill or request the payment by the close of such year is due to the error or misrepresentation of an officer, employee, fiscal intermediary, carrier, medicare administrative contractor, or agent of the Department of Health and Human Services performing functions under this title and acting within the scope of his or its authority, and (II) the bill is submitted or the payment is requested promptly after such error or misrepresentation is eliminated or corrected. Notwithstanding the provisions of the third and fourth sentences preceding this sentence, the prevailing charge level in the case of a physician service in a particular locality determined pursuant to such third and fourth sentences for any calendar year after 1974 shall, if lower than the prevailing charge level for the fiscal year ending June 30, 1975, in the case of a similar physician service in the same locality by reason of the application of economic index data, be raised to such prevailing charge level for the fiscal year ending June 30, 1975, and shall remain at such prevailing charge level until the prevailing charge for a year (as adjusted by economic index data) equals or exceeds such prevailing charge level. The amount of any charges for outpatient services which shall be considered reasonable shall be subject to the limitations established by regulations issued by the Secretary pursuant to section 1861(v)(1)(K), and in determining the reasonable charge for such services, the Secretary may limit such reasonable charge to a percentage of the amount of the prevailing charge for similar services furnished in a physician's office, taking into account the extent to which overhead costs associated with such outpatient services have been included in the reasonable cost or charge of the facility. In applying subparagraph (B), the Secretary may specify exceptions to the 1 calendar year period specified in such subparagraph.
(4)
(A)
(i)
In determining the prevailing charge levels under the third and fourth sentences of paragraph (3) for physicians' services furnished during the 15-month period beginning July 1, 1984, the Secretary shall not set any level higher than the same level as was set for the 12-month period beginning July 1, 1983.
(ii)
(I)
In determining the prevailing charge levels under the third and fourth sentences of paragraph (3) for physicians' services furnished during the 8-month period beginning May 1, 1986, by a physician who is not a participating physician (as defined in subsection (h)(1)) at the time of furnishing the services, the Secretary shall not set any level higher than the same level as was set for the 12-month period beginning July 1, 1983.
(II)
In determining the prevailing charge levels under the fourth sentence of paragraph (3) for physicians' services furnished during the 8-month period beginning May 1, 1986, by a physician who is a participating physician (as defined in subsection (h)(1)) at the time of furnishing the services, the Secretary shall permit an additional one percentage point increase in the increase otherwise permitted under that sentence.
(iii)
In determining the maximum allowable prevailing charges which may be recognized consistent with the index described in the fourth sentence of paragraph (3) for physicians' services furnished on or after January 1, 1987, by participating physicians, the Secretary shall treat the maximum allowable prevailing charges recognized as of December 31, 1986, under such sentence with respect to participating physicians as having been justified by economic changes.
(iv)
The reasonable charge for physicians' services furnished on or after January 1, 1987, and before January 1, 1992, by a nonparticipating physician shall be no greater than the applicable percent of the prevailing charge levels established under the third and fourth sentences of paragraph (3) (or under any other applicable provision of law affecting the prevailing charge level). In the previous sentence, the term “applicable percent” means for services furnished (I) on or after January 1, 1987, and before April 1, 1988, 96 percent, (II) on or after April 1, 1988, and before January 1, 1989, 95.5 percent, and (III) on or after January 1, 1989, 95 percent.
(v)
In determining the prevailing charge levels under the third and fourth sentences of paragraph (3) for physicians' services furnished during the 3-month period beginning January 1, 1988, the Secretary shall not set any level higher than the same level as was set for the 12-month period beginning January 1, 1987.
(vi)
Before each year (beginning with 1989), the Secretary shall establish a prevailing charge floor for primary care services (as defined in subsection (i)(4)) equal to 60 percent of the estimated average prevailing charge levels based on the best available data (determined, under the third and fourth sentences of paragraph (3) and under paragraph (4), without regard to this clause and without regard to physician specialty) for such service for all localities in the United States (weighted by the relative frequency of the service in each locality) for the year.
(vii)
Beginning with 1987, the percentage increase in the MEI (as defined in subsection (i)(3)) for each year shall be the same for nonparticipating physicians as for participating physicians.
(B)
(i)
In determining the reasonable charge under paragraph (3) for physicians' services furnished during the 15-month period beginning July 1, 1984, the customary charges shall be the same customary charges as were recognized under this section for the 12-month period beginning July 1, 1983.
(ii)
In determining the reasonable charge under paragraph (3) for physicians' services furnished during the 8-month period beginning May 1, 1986, by a physician who is not a participating physician (as defined in subsection (h)(1)) at the time of furnishing the services—
(I)
if the physician was not a participating physician at any time during the 12-month period beginning on October 1, 1984, the customary charges shall be the same customary charges as were recognized under this section for the 12-month period beginning July 1, 1983, and
(II)
if the physician was a participating physician at any time during the 12-month period beginning on October 1, 1984, the physician's customary charges shall be determined based upon the physician's actual charges billed during the 12-month period ending on March 31, 1985.
(iii)
In determining the reasonable charge under paragraph (3) for physicians' services furnished during the 3-month period beginning January 1, 1988, the customary charges shall be the same customary charges as were recognized under this section for the 12-month period beginning January 1, 1987.
(iv)
In determining the reasonable charge under paragraph (3) for physicians' services (other than primary care services, as defined in subsection (i)(4)) furnished during 1991, the customary charges shall be the same customary charges as were recognized under this section for the 9-month period beginning April 1, 1990. In a case in which subparagraph (F) applies (relating to new physicians) so as to limit the customary charges of a physician during 1990 to a percent of prevailing charges, the previous sentence shall not prevent such limit on customary charges under such subparagraph from increasing in 1991 to a higher percent of such prevailing charges.
(C)
In determining the prevailing charge levels under the third and fourth sentences of paragraph (3) for physicians' services furnished during periods beginning after September 30, 1985, the Secretary shall treat the level as set under subparagraph (A)(i) as having fully provided for the economic changes which would have been taken into account but for the limitations contained in subparagraph (A)(i).
(D)
(i)
In determining the customary charges for physicians' services furnished during the 8-month period beginning May 1, 1986, or the 12-month period beginning January 1, 1987, by a physician who was not a participating physician (as defined in subsection (h)(1)) on September 30, 1985, the Secretary shall not recognize increases in actual charges for services furnished during the 15- month period beginning on July 1, 1984, above the level of the physician's actual charges billed in the 3-month period ending on June 30, 1984.
(ii)
In determining the customary charges for physicians' services furnished during the 12-month period beginning January 1, 1987, by a physician who is not a participating physician (as defined in subsection (h)(1)) on April 30, 1986, the Secretary shall not recognize increases in actual charges for services furnished during the 7-month period beginning on October 1, 1985, above the level of the physician's actual charges billed during the 3-month period ending on June 30, 1984.
(iii)
In determining the customary charges for physicians' services furnished during the 12-month period beginning January 1, 1987, or January 1, 1988, by a physician who is not a participating physician (as defined in subsection (h)(1)) on December 31, 1986, the Secretary shall not recognize increases in actual charges for services furnished during the 8-month period beginning on May 1, 1986, above the level of the physician's actual charges billed during the 3-month period ending on June 30, 1984.
(iv)
In determining the customary charges for a 35 physicians' service furnished on or after January 1, 1988, if a physician was a nonparticipating physician in a previous year (beginning with 1987), the Secretary shall not recognize any amount of such actual charges (for that service furnished during such previous year) that exceeds the maximum allowable actual charge for such service established under subsection (j)(1)(C).
^{35}
As in original.
(E)
(i)
For purposes of this part for physicians' services furnished in 1987, the percentage increase in the MEI is 3.2 percent.
(ii)
For purposes of this part for physicians' services furnished in 1988, on or after April 1, the percentage increase in the MEI is—
(I)
3.6 percent for primary care services (as defined in subsection (i)(4)), and
(II)
1 percent for other physicians' services.
(iii)
For purposes of this part for physicians' services furnished in 1989, the percentage increase in the MEI is—
(I)
3.0 percent for primary care services, and
(II)
1 percent for other physicians' services.
(iv)
For purposes of this part for items and services furnished in 1990, after March 31, 1990, the percentage increase in the MEI is—
(I)
0 percent for radiology services, for anesthesia services, and for other services specified in the list referred to in paragraph (14)(C)(i),
(II)
2 percent for other services (other than primary care services), and
(III)
such percentage increase in the MEI (as defined in subsection (i)(3)) as would be otherwise determined for primary care services (as defined in subsection (i)(4)).
(v)
For purposes of this part for items and services furnished in 1991, the percentage increase in the MEI is—
(I)
0 percent for services (other than primary care services), and
(II)
2 percent for primary care services (as defined in subsection (i)(4)).
[(5)
Repealed.]
(6)
No payment under this part for a service provided to any individual shall (except as provided in section 1870) be made to anyone other than such individual or (pursuant to an assignment described in subparagraph (B)(ii) of paragraph (3)) the physician or other person who provided the service, except that (A) payment may be made (i) to the employer of such physician or other person if such physician or other person is required as a condition of his employment to turn over his fee for such service to his employer, or (ii) where the service was provided under a contractual arrangement between such physician or other person and an entity, to the entity if, under the contractual arrangement, the entity submits the bill for the service and the contractual arrangement meets such program integrity and other safeguards as the Secretary may determine to be appropriate, (B) payment may be made to an entity (i) which provides coverage of the services under a health benefits plan, but only to the extent that payment is not made under this part, (ii) which has paid the person who provided the service an amount (including the amount payable under this part) which that person has accepted as payment in full for the service, and (iii) to which the individual has agreed in writing that payment may be made under this part, (C) in the case of services described in clause (i) of section 1861(s)(2)(K), for such services furnished before January 1, 2022, payment shall be made to either (i) the employer of the physician assistant involved, or (ii) with respect to a physician assistant who was the owner of a rural health clinic (as described in section 1861(aa)(2)) for a continuous period beginning prior to the date of the enactment of the Balanced Budget Act of 1997 and ending on the date that the Secretary determines such rural health clinic no longer meets the requirements of section 1861(aa)(2), payment may be made directly to the physician assistant, (D) payment may be made to a physician for physicians' services (and services furnished incident to such services) furnished by a second physician to patients of the first physician if (i) the first physician is unavailable to provide the services; (ii) the services are furnished pursuant to an arrangement between the two physicians that (I) is informal and reciprocal, or (II) involves per diem or other fee-for-time compensation for such services; (iii) the services are not provided by the second physician over a continuous period of more than 60 days or are provided over a longer continuous period during all of which the first physician has been called or ordered to active duty as a member of a reserve component of the Armed Forces 36; and (iv) the claim form submitted to the medicare administrative contractor for such services includes the second physician's unique identifier (provided under the system established under subsection (r)) and indicates that the claim meets the requirements of this subparagraph for payment to the first physician, (E) in the case of an item or service (other than services described in section 1888(e)(2)(A)(ii)) furnished by, or under arrangements made by, a skilled nursing facility to an individual who (at the time the item or service is furnished) is a resident of a skilled nursing facility, payment shall be made to the facility, (F) in the case of home health services (including medical supplies described in section 1861(m)(5), but excluding durable medical equipment to the extent provided for in such section) furnished to an individual who (at the time the item or service is furnished) is under a plan of care of a home health agency, payment shall be made to the agency (without regard to whether or not the item or service was furnished by the agency, by others under arrangement with them made by the agency, or when any other contracting or consulting arrangement, or otherwise), (G) in the case of services in a hospital or clinic to which section 1880(e) applies, payment shall be made to such hospital or clinic, (H) in the case of services described in section 1861(aa)(3) that are furnished by a health care professional under contract with a Federally qualified health center, payment shall be made to the center, (I) in the case of home infusion therapy, payment shall be made to the qualified home infusion therapy supplier or, in the case of items and services described in clause (i) of section 1834(u)(7)(A) furnished to an individual during the period described in clause (ii) of such section, payment shall be made to the eligible home infusion therapy supplier, and (J) in the case of outpatient physical therapy services furnished by physical therapists in a health professional shortage area (as defined in section 332(a)(1)(A) of the Public Health Service Act), a medically underserved area (as designated pursuant to section 330(b)(3)(A) of such Act), or a rural area (as defined in section 1886(d)(2)(D)), subparagraph (D) of this sentence shall apply to such services and therapists in the same manner as such subparagraph applies to physicians’ services furnished by physicians. No payment which under the preceding sentence may be made directly to the physician or other person providing the service involved (pursuant to an assignment described in subparagraph (B)(ii) of paragraph (3)) shall be made to anyone else under a reassignment or power of attorney (except to an employer or entity as described in subparagraph (A) of such sentence); but nothing in this subsection shall be construed (i) to prevent the making of such a payment in accordance with an assignment from the individual to whom the service was provided or a reassignment from the physician or other person providing such service if such assignment or reassignment is made to a governmental agency or entity or is established by or pursuant to the order of a court of competent jurisdiction, or (ii) to preclude an agent of the physician or other person providing the service from receiving any such payment if (but only if) such agent does so pursuant to an agency agreement under which the compensation to be paid to the agent for his services for or in connection with the billing or collection of payments due such physician or other person under this title is unrelated (directly or indirectly) to the amount of such payments or the billings therefor, and is not dependent upon the actual collection of any such payment. For purposes of subparagraph (C) of the first sentence of this paragraph, an employment relationship may include any independent contractor arrangement, and employer status shall be determined in accordance with the law of the State in which the services described in such clause are performed.
^{36}
Section 1(b) of Public Law 110–54 states: The amendment made by subsection (a) shall apply to services furnished on or after the date of the enactment of this section.
(7)
(A)
In the case of physicians' services furnished to a patient in a hospital with a teaching program approved as specified in section 1861(b)(6) but which does not meet the conditions described in section 1861(b)(7), the Secretary shall not provide (except on the basis described in subparagraph (C)) for payment for such services under this part—
(i)
unless—
(I)
the physician renders sufficient personal and identifiable physicians' services to the patient to exercise full, personal control over the management of the portion of the case for which the payment is sought,
(II)
the services are of the same character as the services the physician furnishes to patients not entitled to benefits under this title, and
(III)
at least 25 percent of the hospital's patients (during a representative past period, as determined by the Secretary) who were not entitled to benefits under this title and who were furnished services described in subclauses (I) and (II) paid all or a substantial part of charges (other than nominal charges) imposed for such services; and
(ii)
to the extent that the payment is based upon a reasonable charge for the services in excess of the customary charge as determined in accordance with subparagraph (B).
(B)
The customary charge for such services in a hospital shall be determined in accordance with regulations issued by the Secretary and taking into account the following factors:
(i)
In the case of a physician who is not a teaching physician (as defined by the Secretary), the Secretary shall take into account the amounts the physician charges for similar services in the physician's practice outside the teaching setting.
(ii)
In the case of a teaching physician, if the hospital, its physicians, or other appropriate billing entity has established one or more schedules of charges which are collected for medical and surgical services, the Secretary shall base payment under this title on the greatest of—
(I)
the charges (other than nominal charges) which are most frequently collected in full or substantial part with respect to patients who were not entitled to benefits under this title and who were furnished services described in subclauses (I) and (II) of subparagraph (A)(i),
(II)
the mean of the charges (other than nominal charges) which were collected in full or substantial part with respect to such patients, or
(III)
85 percent of the prevailing charges paid for similar services in the same locality.
(iii)
If all the teaching physicians in a hospital agree to have payment made for all of their physicians' services under this part furnished to patients in such hospital on an assignment-related basis, the customary charge for such services shall be equal to 90 percent of the prevailing charges paid for similar services in the same locality.
(C)
In the case of physicians' services furnished to a patient in a hospital with a teaching program approved as specified in section 1861(b)(6) but which does not meet the conditions described in section 1861(b)(7), if the conditions described in subclauses (I) and (II) of subparagraph (A)(i) are met and if the physician elects payment to be determined under this subparagraph, the Secretary shall provide for payment for such services under this part on the basis of regulations of the Secretary governing reimbursement for the services of hospital-based physicians (and not on any other basis).
(D)
(i)
In the case of physicians' services furnished to a patient in a hospital with a teaching program approved as specified in section 1861(b)(6) but which does not meet the conditions described in section 1861(b)(7), no payment shall be made under this part for services of assistants at surgery with respect to a surgical procedure if such hospital has a training program relating to the medical specialty required for such surgical procedure and a qualified individual on the staff of the hospital is available to provide such services; except that payment may be made under this part for such services, to the extent that such payment is otherwise allowed under this paragraph, if such services, as determined under regulations of the Secretary—
(I)
are required due to exceptional medical circumstances,
(II)
are performed by team physicians needed to perform complex medical procedures, or
(III)
constitute concurrent medical care relating to a medical condition which requires the presence of, and active care by, a physician of another specialty during surgery,
and under such other circumstances as the Secretary determines by regulation to be appropriate.
(ii)
For purposes of this subparagraph, the term “assistant at surgery” means a physician who actively assists the physician in charge of a case in performing a surgical procedure.
(iii)
The Secretary shall determine appropriate methods of reimbursement of assistants at surgery where such services are reimbursable under this part.
(8)
(A)
(i)
The Secretary shall by regulation—
(I)
describe the factors to be used in determining the cases (of particular items or services) in which the application of this title to payment under this part (other than to physicians' services paid under section 1848) results in the determination of an amount that, because of its being grossly excessive or grossly deficient, is not inherently reasonable, and
(II)
provide in those cases for the factors to be considered in determining an amount that is realistic and equitable.
(ii)
Notwithstanding the determination made in clause (i), the Secretary may not apply factors that would increase or decrease the payment under this part during any year for any particular item or service by more than 15 percent from such payment during the preceding year except as provided in subparagraph (B).
(B)
The Secretary may make a determination under this subparagraph that would result in an increase or decrease under subparagraph (A) of more than 15 percent of the payment amount for a year, but only if—
(i)
the Secretary's determination takes into account the factors described in subparagraph (C) and any additional factors the Secretary determines appropriate,
(ii)
the Secretary's determination takes into account the potential impacts described in subparagraph (D), and
(iii)
the Secretary complies with the procedural requirements of paragraph (9).
(C)
The factors described in this subparagraph are as follows:
(i)
The programs established under this title and title XIX are the sole or primary sources of payment for an item or service.
(ii)
The payment amount does not reflect changing technology, increased facility with that technology, or reductions in acquisition or production costs.
(iii)
The payment amount for an item or service under this part is substantially higher or lower than the payment made for the item or service by other purchasers.
(D)
The potential impacts of a determination under subparagraph (B) on quality, access, and beneficiary liability, including the likely effects on assignment rates and participation rates.
(9)
(A)
The Secretary shall consult with representatives of suppliers or other individuals who furnish an item or service before making a determination under paragraph (8)(B) with regard to that item or service.
(B)
The Secretary shall publish notice of a proposed determination under paragraph (8)(B) in the Federal Register—
(i)
specifying the payment amount proposed to be established with respect to an item or service,
(ii)
explaining the factors and data that the Secretary took into account in determining the payment amount so specified, and
(iii)
explaining the potential impacts described in paragraph (8)(D).
(C)
After publication of the notice required by subparagraph (B), the Secretary shall allow not less than 60 days for public comment on the proposed determination.
(D)
(i)
Taking into consideration the comments made by the public, the Secretary shall publish in the Federal Register a final determination under paragraph (8)(B) with respect to the payment amount to be established with respect to the item or service.
(ii)
A final determination published pursuant to clause (i) shall explain the factors and data that the Secretary took into consideration in making the final determination.
(10)
(A)
(i)
In determining the reasonable charge for procedures described in subparagraph (B) and performed during the 9-month period beginning on April 1, 1988, the prevailing charge for such procedure shall be the prevailing charge otherwise recognized for such procedure for 1987—
(I)
subject to clause (iii), reduced by 2.0 percent, and
(II)
further reduced by the applicable percentage specified in clause (ii).
(ii)
For purposes of clause (i), the applicable percentage specified in this clause is—
(I)
15 percent, in the case of a prevailing charge otherwise recognized (without regard to this paragraph and determined without regard to physician specialty) that is at least 150 percent of the weighted national average (as determined by the Secretary) of such prevailing charges for such procedure for all localities in the United States for 1987;
(II)
0 percent, in the case of a prevailing charge that does not exceed 85 percent of such weighted national average; and
(III)
in the case of any other prevailing charge, a percent determined on the basis of a straight line sliding scale, equal to 3⅓ of a percentage point for each percent by which the prevailing charge exceeds 85 percent of such weighted national average.
(iii)
In no case shall the reduction under clause (i) for a procedure result in a prevailing charge in a locality for 1988 which is less than 85 percent of the Secretary's estimate of the weighted national average of such prevailing charges for such procedure for all localities in the United States for 1987 (based upon the best available data and determined without regard to physician specialty) after making the reduction described in clause (i)(I).
(B)
The procedures described in this subparagraph are as follows: bronchoscopy, carpal tunnel repair, cataract surgery (including subsequent insertion of an intraocular lens), coronary artery bypass surgery, diagnostic and/or therapeutic dilation and curettage, knee arthroscopy, knee arthroplasty, pacemaker implantation surgery, total hip replacement, suprapubic prostatectomy, transurethral resection of the prostate, and upper gastrointestinal endoscopy.
(C)
In the case of a reduction in the reasonable charge for a physicians' service under subparagraph (A), if a nonparticipating physician furnishes the service to an individual entitled to benefits under this part, after the effective date of such reduction, the physician's actual charge is subject to a limit under subsection (j)(1)(D).
(D)
There shall be no administrative or judicial review under section 1869 or otherwise of any determination under subparagraph (A) or under paragraph (11)(B)(ii).
(11)
(A)
In providing payment for cataract eyeglasses and cataract contact lenses, and professional services relating to them, under this part, each carrier shall—
(i)
provide for separate determinations of the payment amount for the eyeglasses and lenses and of the payment amount for the professional services of a physician (as defined in section 1861(r)), and
(ii)
not recognize as reasonable for such eyeglasses and lenses more than such amount as the Secretary establishes in guidelines relating to the inherent reasonableness of charges for such eyeglasses and lenses.
(B)
(i)
In determining the reasonable charge under paragraph (3) for a cataract surgical procedure, subject to clause (ii), the prevailing charge for such procedure otherwise recognized for participating and nonparticipating physicians shall be reduced by 10 percent with respect to procedures performed in 1987.
(ii)
In no case shall the reduction under clause (i) for a surgical procedure result in a prevailing charge in a locality for a year which is less than 75 percent of the weighted national average of such prevailing charges for such procedure for all the localities in the United States for 1986.
(C)
(i)
The prevailing charge level determined with respect to A-mode ophthalmic ultrasound procedures may not exceed 5 percent of the prevailing charge level established with respect to extracapsular cataract removal with lens insertion.
(ii)
The reasonable charge for an intraocular lens inserted during or subsequent to cataract surgery in a physician's office may not exceed the actual acquisition cost for the lens (taking into account any discount) plus a handling fee (not to exceed 5 percent of such actual acquisition cost).
(D)
In the case of a reduction in the reasonable charge for a physicians' service or item under subparagraph (B) or (C), if a nonparticipating physician furnishes the service or item to an individual entitled to benefits under this part after the effective date of such reduction, the physician's actual charge is subject to a limit under subsection (j)(1)(D).
[(12)
repealed.]
(13)
(A)
In determining payments under section 1833(l) and section 1848 for anesthesia services furnished on or after January 1, 1994, the methodology for determining the base and time units used shall be the same for services furnished by physicians, for medical direction by physicians of two, three, or four certified registered nurse anesthetists, or for services furnished by a certified registered nurse anesthetist (whether or not medically directed) and shall be based on the methodology in effect, for anesthesia services furnished by physicians, as of the date of the enactment of the Omnibus Budget Reconciliation Act of 1993.
(B)
The Secretary shall require claims for physicians' services for medical direction of nurse anesthetists during the periods in which the provisions of subparagraph (A) apply to indicate the number of such anesthetists being medically directed concurrently at any time during the procedure, the name of each nurse anesthetist being directed, and the type of procedure for which the services are provided.
(14)
(A)
(i)
In determining the reasonable charge for a physicians' service specified in subparagraph (C)(i) and furnished during the 9-month period beginning on April 1, 1990, the prevailing charge for such service shall be the prevailing charge otherwise recognized for such service for 1989 reduced by 15 percent or, if less, ⅓ of the percent (if any) by which the prevailing charge otherwise applied in the locality in 1989 exceeds the locally-adjusted reduced prevailing amount (as determined under subparagraph (B)(i)) for the service.
(ii)
In determining the reasonable charge for a physicians' service specified in subparagraph (C)(i) and furnished during 1991, the prevailing charge for such service shall be the prevailing charge otherwise recognized for such service for the period during 1990 beginning on April 1, reduced by the same amount as the amount of the reduction effected under this paragraph (as amended by the Omnibus Budget Reconciliation Act of 1990) for such service during such period.
(B)
For purposes of this paragraph:
(i)
The “locally-adjusted reduced prevailing amount” for a locality for a physicians' service is equal to the product of—
(I)
the reduced national weighted average prevailing charge for the service (specified under clause (ii)), and
(II)
the adjustment factor (specified under clause (iii)) for the locality.
(ii)
The “reduced national weighted average prevailing charge” for a physicians' service is equal to the national weighted average prevailing charge for the service (specified in subparagraph (C)(ii)) reduced by the percentage change (specified in subparagraph (C)(iii)) for the service.
(iii)
The “adjustment factor”, for a physicians' service for a locality, is the sum of—
(I)
the practice expense component (percent), divided by 100, specified in appendix A (pages 187 through 194) of the Report of the Medicare and Medicaid Health Budget Reconciliation Amendments of 1989, prepared by the Subcommittee on Health and the Environment of the Committee on Energy and Commerce, House of Representatives, (Committee Print 101–M, 101st Congress, 1st Session) for the service, multiplied by the geographic practice cost index value (specified in subparagraph (C)(iv)) for the locality, and
(II)
1 minus the practice expense component (percent), divided by 100.
(C)
For purposes of this paragraph:
(i)
The physicians' services specified in this clause are the procedures specified (by code and description) in the Overvalued Procedures List for Finance Committee, Revised September 20, 1989, prepared by the Physician Payment Review Commission which specification is of physicians' services that have been identified as overvalued by at least 10 percent based on a comparison of payments for such services under a resource- based relative value scale and of the national average prevailing charges under this part.
(ii)
The “national weighted average prevailing charge” specified in this clause, for a physicians' service specified in clause (i), is the national weighted average prevailing charge for the service in 1989 as determined by the Secretary using the best data available.
(iii)
The “percentage change” specified in this clause, for a physicians' service specified in clause (i), is the percent difference (but expressed as a positive number) specified for the service in the list referred to in clause (i).
(iv)
The geographic practice cost index value specified in this clause for a locality is the Geographic Overhead Costs Index specified for the locality in table 1 of the September 1989 Supplement to the Geographic Medicare Economic Index: Alternative Approaches (prepared by the Urban Institute and the Center for Health Economics Research).
(D)
In the case of a reduction in the prevailing charge for a physicians' service under subparagraph (A), if a nonparticipating physician furnishes the service to an individual entitled to benefits under this part, after the effective date of such reduction, the physician's actual charge is subject to a limit under subsection (j)(1)(D).
(15)
(A)
In determining the reasonable charge for surgery, radiology, and diagnostic physicians' services which the Secretary shall designate (based on their high volume of expenditures under this part) and for which the prevailing charge (but for this paragraph) differs by physician specialty, the prevailing charge for such a service may not exceed the prevailing charge or fee schedule amount for that specialty of physicians that furnish the service most frequently nationally.
(B)
In the case of a reduction in the prevailing charge for a physician's service under subparagraph (A), if a nonparticipating physician furnishes the service to an individual entitled to benefits under this part, after the effective date of the reduction, the physician's actual charge is subject to a limit under subsection (j)(1)(D).
(16)
(A)
In determining the reasonable charge for all physicians' services other than physicians' services specified in subparagraph (B) furnished during 1991, the prevailing charge for a locality shall be 6.5 percent below the prevailing charges used in the locality under this part in 1990 after March 31.
(B)
For purposes of subparagraph (A), the physicians' services specified in this subparagraph are as follows:
(i)
Radiology, anesthesia and physician pathology services, the technical components of diagnostic tests specified in paragraph (17) and physicians' services specified in paragraph (14)(C)(i).
(ii)
Primary care services specified in subsection (i)(4), hospital inpatient medical services, consultations, other visits, preventive medicine visits, psychiatric services, emergency care facility services, and critical care services.
(iii)
Partial mastectomy; tendon sheath injections and small joint arthrocentesis; femoral fracture and trochanteric fracture treatments; endotracheal intubation; thoracentesis; thoracostomy; aneurysm repair; cystourethroscopy; transurethral fulguration and resection; tympanoplasty with mastoidectomy; and ophthalmoscopy.
(17)
With respect to payment under this part for the technical (as distinct from professional) component of diagnostic tests (other than clinical diagnostic laboratory tests, tests specified in paragraph (14)(C)(i), and radiology services, including portable X-ray services) which the Secretary shall designate (based on their high volume of expenditures under this part), the reasonable charge for such technical component (including the applicable portion of a global service) may not exceed the national median of such charges for all localities, as estimated by the Secretary using the best available data.
(18)
(A)
Payment for any service furnished by a practitioner described in subparagraph (C) and for which payment may be made under this part on a reasonable charge or fee schedule basis may only be made under this part on an assignment-related basis.
(B)
A practitioner described in subparagraph (C) or other person may not bill (or collect any amount from) the individual or another person for any service described in subparagraph (A), except for deductible and coinsurance amounts applicable under this part. No person is liable for payment of any amounts billed for such a service in violation of the previous sentence. If a practitioner or other person knowingly and willfully bills (or collects an amount) for such a service in violation of such sentence, the Secretary may apply sanctions against the practitioner or other person in the same manner as the Secretary may apply sanctions against a physician in accordance with subsection (j)(2) in the same manner as such section applies with respect to a physician. Paragraph (4) of subsection (j) shall apply in this subparagraph in the same manner as such paragraph applies to such section.
(C)
A practitioner described in this subparagraph is any of the following:
(i)
A physician assistant, nurse practitioner, or clinical nurse specialist (as defined in section 1861(aa)(5)).
(ii)
A certified registered nurse anesthetist (as defined in section 1861(bb)(2)).
(iii)
A certified nurse-midwife (as defined in section 1861(gg)(2)).
(iv)
A clinical social worker (as defined in section 1861(hh)(1)).
(v)
A clinical psychologist (as defined by the Secretary for purposes of section 1861(ii)).
(vi)
A registered dietitian or nutrition professional.
(vii)
A marriage and family therapist (as defined in section 1861(lll)(2)).
(viii)
A mental health counselor (as defined in section 1861(lll)(4)).
(D)
For purposes of this paragraph, a service furnished by a practitioner described in subparagraph (C) includes any services and supplies furnished as incident to the service as would otherwise be covered under this part if furnished by a physician or as incident to a physician's service.
(19)
For purposes of section 1833(a)(1), the reasonable charge for ambulance services (as described in section 1861(s)(7)) provided during calendar year 1998 and calendar year 1999 may not exceed the reasonable charge for such services provided during the previous calendar year (after application of this paragraph), increased 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 1.0 percentage point.
(c)
[(1) stricken.]
(2)
(A)
Each contract under section 1874A that provides for making payments under this part shall provide that payment shall be issued, mailed, or otherwise transmitted with respect to not less than 95 percent of all claims submitted under this part—
(i)
which are clean claims, and
(ii)
for which payment is not made on a periodic interim payment basis,
within the applicable number of calendar days after the date on which the claim is received.
(B)
In this paragraph:
(i)
The term “clean claim” means a claim that has no defect or impropriety (including any lack of any required substantiating documentation) or particular circumstance requiring special treatment that prevents timely payment from being made on the claim under this part.
(ii)
The term “applicable number of calendar days” means—
(I)
with respect to claims received in the 12-month period beginning October 1, 1986, 30 calendar days,
(II)
with respect to claims received in the 12-month period beginning October 1, 1987, 26 calendar days (or 19 calendar days with respect to claims submitted by participating physicians),
(III)
with respect to claims received in the 12-month period beginning October 1, 1988, 25 calendar days (or 18 calendar days with respect to claims submitted by participating physicians),
(IV)
with respect to claims received in the 12-month period beginning October 1, 1989, and claims received in any succeeding 12-month period ending on or before September 30, 1993, 24 calendar days (or 17 calendar days with respect to claims submitted by participating physicians), and
(V)
with respect to claims received in the 12-month period beginning October 1, 1993, and claims received in any succeeding 12-month period, 30 calendar days.
(C)
If payment is not issued, mailed, or otherwise transmitted within the applicable number of calendar days (as defined in clause (ii) of subparagraph (B)) after a clean claim (as defined in clause (i) of such subparagraph) is received, interest shall be paid at the rate used for purposes of section 3902(a) of title 31, United States Code (relating to interest penalties for failure to make prompt payments) for the period beginning on the day after the required payment date and ending on the date on which payment is made.
(3)
(A)
Each contract under this section which provides for the disbursement of funds, as described in section 1874A(a)(3)(B), shall provide that no payment shall be issued, mailed, or otherwise transmitted with respect to any claim submitted under this title within the applicable number of calendar days after the date on which the claim is received.
(B)
In this paragraph, the term “applicable number of calendar days” means—
(i)
with respect to claims submitted electronically as prescribed by the Secretary, 13 days, and
(ii)
with respect to claims submitted otherwise, 28 days.
(4)
Neither a medicare administrative contractor nor the Secretary may impose a fee under this title—
(A)
for the filing of claims related to physicians' services,
(B)
for an error in filing a claim relating to physicians' services or for such a claim which is denied,
(C)
for any appeal under this title with respect to physicians' services,
(D)
for applying for (or obtaining) a unique identifier under subsection (r), or
(E)
for responding to inquiries respecting physicians' services or for providing information with respect to medical review of such services.
[Subsections (d)–(f) repealed.]
(g)
The Railroad Retirement Board shall, in accordance with such regulations as the Secretary may prescribe, contract with a medicare administrative contractor or contractors to perform the functions set out in this section with respect to individuals entitled to benefits as qualified railroad retirement beneficiaries pursuant to section 226(a) of this Act and section 7(d) of the Railroad Retirement Act of 1974.
(h)
(1)
Any physician or supplier may voluntarily enter into an agreement with the Secretary to become a participating physician or supplier. For purposes of this section, the term “participating physician or supplier” means a physician or supplier (excluding any provider of services) who, before the beginning of any year beginning with 1984, enters into an agreement with the Secretary which provides that such physician or supplier will accept payment under this part on an assignment-related basis for all items and services furnished to individuals enrolled under this part during such year. In the case of a newly licensed physician or a physician who begins a practice in a new area, or in the case of a new supplier who begins a new business, or in such similar cases as the Secretary may specify, such physician or supplier may enter into such an agreement after the beginning of a year, for items and services furnished during the remainder of the year.
(2)
The Secretary shall maintain a toll-free telephone number or numbers at which individuals enrolled under this part may obtain the names, addresses, specialty, and telephone numbers of participating physicians and suppliers and may request a copy of an appropriate directory published under paragraph (4). The Secretary shall, without charge, mail a copy of such directory upon such a request.
(3)
(A)
In any case in which medicare administrative contractor having a contract under section 1874A that provides for making payments under this part is able to develop a system for the electronic transmission to such contractor of bills for services, such carrier shall establish direct lines for the electronic receipt of claims from participating physicians and suppliers.
(B)
The Secretary shall establish a procedure whereby an individual enrolled under this part may assign, in an appropriate manner on the form claiming a benefit under this part for an item or service furnished by a participating physician or supplier, the individual's rights of payment under a medicare supplemental policy (described in section 1882(g)(1)) in which the individual is enrolled. In the case such an assignment is properly executed and a payment determination is made by a medicare administrative contractor with a contract under this section, the contractor shall transmit to the private entity issuing the medicare supplemental policy notice of such fact and shall include an explanation of benefits and any additional information that the Secretary may determine to be appropriate in order to enable the entity to decide whether (and the amount of) any payment is due under the policy. The Secretary may enter into agreements for the transmittal of such information to entities electronically. The Secretary shall impose user fees for the transmittal of information under this subparagraph by a medicare administrative contractor, whether electronically or otherwise, and such user fees shall be collected and retained by the contractor.
(4)
At the beginning of each year the Secretary shall publish directories (for appropriate local geographic areas) containing the name, address, and specialty of all participating physicians and suppliers (as defined in paragraph (1)) for that area for that year. Each directory shall be organized to make the most useful presentation of the information (as determined by the Secretary) for individuals enrolled under this part. Each participating physician directory for an area shall provide an alphabetical listing of all participating physicians practicing in the area and an alphabetical listing by locality and specialty of such physicians.
(5)
(A)
The Secretary shall promptly notify individuals enrolled under this part through an annual mailing of the participation program under this subsection and the publication and availability of the directories and shall make the appropriate area directory or directories available in each district and branch office of the Social Security Administration, in the offices of medicare administrative contractors, and to senior citizen organizations.
(B)
The annual notice provided under subparagraph (A) shall include—
(i)
a description of the participation program,
(ii)
an explanation of the advantages to beneficiaries of obtaining covered services through a participating physician or supplier,
(iii)
an explanation of the assistance offered by medicare administrative contractors in obtaining the names of participating physicians and suppliers, and
(iv)
the toll-free telephone number under paragraph (2)(A) for inquiries concerning the program and for requests for free copies of appropriate directories.
(6)
The Secretary shall provide that the directories shall be available for purchase by the public. The Secretary shall provide that each appropriate area directory is sent to each participating physician located in that area and that an appropriate number of copies of each such directory is sent to hospitals located in the area. Such copies shall be sent free of charge.
(7)
The Secretary shall provide that each explanation of benefits provided under this part for services furnished in the United States, in conjunction with the payment of claims under section 1833(a)(1) (made other than on an assignment-related basis), shall include—
(A)
a prominent reminder of the participating physician and supplier program established under this subsection (including the limitation on charges that may be imposed by such physicians and suppliers and a clear statement of any amounts charged for the particular items or services on the claim involved above the amount recognized under this part),
(B)
the toll-free telephone number or numbers, maintained under paragraph (2), at which an individual enrolled under this part may obtain information on participating physicians and suppliers,
(C)
(i)
an offer of assistance to such an individual in obtaining the names of participating physicians of appropriate specialty and (ii) an offer to provide a free copy of the appropriate participating physician directory, and
(D)
in the case of services for which the billed amount exceeds the limiting charge imposed under section 1848(g), information regarding such applicable limiting charge (including information concerning the right to a refund under section 1848(g)(1)(A)(iv)).
(8)
The Secretary may refuse to enter into an agreement with a physician or supplier under this subsection, or may terminate or refuse to renew such agreement, in the event that such physician or supplier has been convicted of a felony under Federal or State law for an offense which the Secretary determines is detrimental to the best interests of the program or program beneficiaries.
(9)
The Secretary may revoke enrollment, for a period of not more than one year for each act, for a physician or supplier under section 1866(j) if such physician or supplier fails to maintain and, upon request of the Secretary, provide access to documentation relating to written orders or requests for payment for durable medical equipment, certifications for home health services, or referrals for other items or services written or ordered by such physician or supplier under this title, as specified by the Secretary.
(i)
For purposes of this title:
(1)
A claim is considered to be paid on an “assignment-related basis” if the claim is paid on the basis of an assignment described in subsection (b)(3)(B)(ii), in accordance with subsection (b)(6)(B), or under the procedure described in section 1870(f)(1).
(2)
The term “participating physician” refers, with respect to the furnishing of services, to a physician who at the time of furnishing the services is a participating physician (under subsection (h)(1)); the term “nonparticipating physician” refers, with respect to the furnishing of services, to a physician who at the time of furnishing the services is not a participating physician; and the term “nonparticipating supplier or other person” means a supplier or other person (excluding a provider of services) that is not a participating physician or supplier (as defined in subsection (h)(1)).
(3)
The term “percentage increase in the MEI” means, with respect to physicians' services furnished in a year, the percentage increase in the medicare economic index (referred to in the fourth sentence of subsection (b)(3)) applicable to such services furnished as of the first day of that year.
(4)
The term “primary care services” means physicians' services which constitute office medical services, emergency department services, home medical services, skilled nursing, intermediate care, and long-term care medical services, or nursing home, boarding home, domiciliary, or custodial care medical services.
(j)
(1)
(A)
In the case of a physician who is not a participating physician for items and services furnished during a portion of the 30-month period beginning July 1, 1984, the Secretary shall monitor the physician's actual charges to individuals enrolled under this part for physicians' services during that portion of that period. If such physician knowingly and willfully bills individuals enrolled under this part for actual charges in excess of such physician's actual charges for the calendar quarter beginning on April 1, 1984, the Secretary may apply sanctions against such physician in accordance with paragraph (2).
(B)
(i)
During any period (on or after January 1, 1987, and before the date specified in clause (ii)), during which a physician is a nonparticipating physician, the Secretary shall monitor the actual charges of each such physician for physicians' services furnished to individuals enrolled under this part. If such physician knowingly and willfully bills on a repeated basis for such a service an actual charge in excess of the maximum allowable actual charge determined under subparagraph (C) for that service, the Secretary may apply sanctions against such physician in accordance with paragraph (2).
(ii)
Clause (i) shall not apply to services furnished after December 31, 1990.
(C)
(i)
For a particular physicians' service furnished by a nonparticipating physician to individuals enrolled under this part during a year, for purposes of subparagraph (B), the maximum allowable actual charge is determined as follows: If the physician's maximum allowable actual charge for that service in the previous year was—
(I)
less than 115 percent of the applicable percent (as defined in subsection (b)(4)(A)(iv)) of the prevailing charge for the year and service involved, the maximum allowable actual charge for the year involved is the greater of the maximum allowable actual charge described in subclause (II) or the charge described in clause (ii), or
(II)
equal to, or greater than, 115 percent of the applicable percent (as defined in subsection (b)(4)(A)(iv)) of the prevailing charge for the year and service involved, the maximum allowable actual charge is 101 percent of the physician's maximum allowable actual charge for the service for the previous year.
(ii)
For purposes of clause (i)(I), the charge described in this clause for a particular physicians' service furnished in a year is the maximum allowable actual charge for the service of the physician for the previous year plus the product of (I) the applicable fraction (as defined in clause (iii)) and (II) the amount by which 115 percent of the prevailing charge for the year involved for such service furnished by nonparticipating physicians, exceeds the physician's maximum allowable actual charge for the service for the previous year.
(iii)
In clause (ii), the “applicable fraction” is—
(I)
for 1987, ¼,
(II)
for 1988, ⅓,
(III)
for 1989, ½, and
(IV)
for any subsequent year, 1.
(iv)
For purposes of determining the maximum allowable actual charge under clauses (i) and (ii) for 1987, in the case of a physicians' service for which the physician has actual charges for the calendar quarter beginning on April 1, 1984, the “maximum allowable actual charge” for 1986 is the physician's actual charge for such service furnished during such quarter.
(v)
For purposes of determining the maximum allowable actual charge under clauses (i) and (ii) for a year after 1986, in the case of a physicians' service for which the physician has no actual charges for the calendar quarter beginning on April 1, 1984, and for which a maximum allowable actual charge has not been previously established under this clause, the “maximum allowable actual charge” for the previous year shall be the 50th percentile of the customary charges for the service (weighted by frequency of the service) performed by nonparticipating physicians in the locality during the 12-month period ending June 30 of that previous year.
(vi)
For purposes of this subparagraph, a “physician's actual charge” for a physicians' service furnished in a year or other period is the weighted average (or, at the option of the Secretary for a service furnished in the calendar quarter beginning April 1, 1984, the median) of the physician's charges for such service furnished in the year or other period.
(vii)
In the case of a nonparticipating physician who was a participating physician during a previous period, for the purpose of computing the physician's maximum allowable actual charge during the physician's period of nonparticipation, the physician shall be deemed to have had a maximum allowable actual charge during the period of participation, and such deemed maximum allowable actual charge shall be determined according to clauses (i) through (vi).
(viii)
Notwithstanding any other provision of this subparagraph, the maximum allowable actual charge for a particular physician's service furnished by a nonparticipating physician to individuals enrolled under this part during the 3-month period beginning on January 1, 1988, shall be the amount determined under this subparagraph for 1987. The maximum allowable actual charge for any such service otherwise determined under this subparagraph for 1988 shall take effect on April 1, 1988.
(ix)
If there is a reduction under subsection (b)(13) in the reasonable charge for medical direction furnished by a nonparticipating physician, the maximum allowable actual charge otherwise permitted under this subsection for such services shall be reduced in the same manner and in the same percentage as the reduction in such reasonable charge.
(D)
(i)
If an action described in clause (ii) results in a reduction in a reasonable charge for a physicians' service or item and a nonparticipating physician furnishes the service or item to an individual entitled to benefits under this part after the effective date of such action, the physician may not charge the individual more than 125 percent of the reduced payment allowance (as defined in clause (iii)) plus (for services or items furnished during the 12-month period (or 9-month period in the case of an action described in clause (ii)(II)) beginning on the effective date of the action) ½ of the amount by which the physician's maximum allowable actual charge for the service or item for the previous 12- month period exceeds such 125 percent level.
(ii)
The first sentence of clause (i) shall apply to—
(I)
an adjustment under subsection (b)(8)(B) (relating to inherent reasonableness),
(II)
a reduction under subsection (b)(10)(A) or (b)(14)(A) (relating to certain overpriced procedures),
(III)
a reduction under subsection (b)(11)(B) (relating to certain cataract procedures),
(IV)
a prevailing charge limit established under subsection (b)(11)(C)(i) or (b)(15)(A),
(V)
a reasonable charge limit established under subsection (b)(11)(C)(ii), and
(VI)
an adjustment under section 1833(l)(3)(B) (relating to physician supervision of certified registered nurse anesthetists).
(iii)
In clause (i), the term “reduced payment allowance” means, with respect to an action—
(I)
under subsection (b)(8)(B), the inherently reasonable charge established under subsection (b)(8);
(II)
under subsection (b)(10)(A), (b)(11)(B), (b)(11)(C)(i), (b)(14)(A), or (b)(15)(A) or under section 1833(l)(3)(B), the prevailing charge for the service after the action; or
(III)
under subsection (b)(11)(C)(ii), the payment allowance established under such subsection.
(iv)
If a physician knowingly and willfully bills in violation of clause (i) (whether or not such charge violates subparagraph (B)), the Secretary may apply sanctions against such physician in accordance with paragraph (2).
(v)
Clause (i) shall not apply to items and services furnished after December 31, 1990.
(2)
Subject to paragraph (3), the sanctions which the Secretary may apply under this paragraph are—
(A)
excluding a physician from participation in the programs under this Act for a period not to exceed 5 years, in accordance with the procedures of subsections (c), (f), and (g) of section 1128, or
(B)
civil monetary penalties and assessments, in the same manner as such penalties and assessments are authorized under section 1128A(a),
or both. The provisions of section 1128A (other than the first 2 sentences of subsection (a) and other than subsection (b)) shall apply to a civil money penalty and assessment under subparagraph (B) in the same manner as such provisions apply to a penalty, assessment, or proceeding under section 1128A(a), except to the extent such provisions are inconsistent with subparagraph (A) or paragraph (3).
(3)
(A)
The Secretary may not exclude a physician pursuant to paragraph (2)(A) if such physician is a sole community physician or sole source of essential specialized services in a community.
(B)
The Secretary shall take into account access of beneficiaries to physicians' services for which payment may be made under this part in determining whether to bar a physician from participation under paragraph (2)(A).
(4)
The Secretary may, out of any civil monetary penalty or assessment collected from a physician pursuant to this subsection, make a payment to a beneficiary enrolled under this part in the nature of restitution for amounts paid by such beneficiary to such physician which was determined to be an excess charge under paragraph (1).
(k)
(1)
If a physician knowingly and willfully presents or causes to be presented a claim or bills an individual enrolled under this part for charges for services as an assistant at surgery for which payment may not be made by reason of section 1862(a)(15), the Secretary may apply sanctions against such physician in accordance with subsection (j)(2) in the case of surgery performed on or after March 1, 1987.
(2)
If a physician knowingly and willfully presents or causes to be presented a claim or bills an individual enrolled under this part for charges that includes a charge for an assistant at surgery for which payment may not be made by reason of section 1862(a)(15), the Secretary may apply sanctions against such physician in accordance with subsection (j)(2) in the case of surgery performed on or after March 1, 1987.
(l)
(1)
(A)
Subject to subparagraph (C), if—
(i)
a nonparticipating physician furnishes services to an individual enrolled for benefits under this part,
(ii)
payment for such services is not accepted on an assignment-related basis,
(iii)
(I)
a medicare administrative contractor determines under this part or a quality improvement organization determines under part B of title XI that payment may not be made by reason of section 1862(a)(1) because a service otherwise covered under this title is not reasonable and necessary under the standards described in that section or (II) payment under this title for such services is denied under section 1154(a)(2) by reason of a determination under section 1154(a)(1)(B), and
(iv)
the physician has collected any amounts for such services,
the physician shall refund on a timely basis to the individual (and shall be liable to the individual for) any amounts so collected.
(B)
A refund under subparagraph (A) is considered to be on a timely basis only if—
(i)
in the case of a physician who does not request reconsideration or seek appeal on a timely basis, the refund is made within 30 days after the date the physician receives a denial notice under paragraph (2), or
(ii)
in the case in which such a reconsideration or appeal is taken, the refund is made within 15 days after the date the physician receives notice of an adverse determination on reconsideration or appeal.
(C)
Subparagraph (A) shall not apply to the furnishing of a service by a physician to an individual in the case described in subparagraph (A)(iii)(I) if—
(i)
the physician establishes that the physician did not know and could not reasonably have been expected to know that payment may not be made for the service by reason of section 1862(a)(1), or
(ii)
before the service was provided, the individual was informed that payment under this part may not be made for the specific service and the individual has agreed to pay for that service.
(2)
Each medicare administrative contractor with a contract in effect under this section with respect to physicians and each quality improvement organization with a contract under part B of title XI shall send any notice of denial of payment for physicians' services based on section 1862(a)(1) and for which payment is not requested on an assignment-related basis to the physician and the individual involved.
(3)
If a physician knowingly and willfully fails to make refunds in violation of paragraph (1)(A), the Secretary may apply sanctions against such physician in accordance with subsection (j)(2).
(m)
(1)
In the case of a nonparticipating physician who—
(A)
performs an elective surgical procedure for an individual enrolled for benefits under this part and for which the physician's actual charge is at least $500, and
(B)
does not accept payment for such procedure on an assignment-related basis,
the physician must disclose to the individual, in writing and in a form approved by the Secretary, the physician's estimated actual charge for the procedure, the estimated approved charge under this part for the procedure, the excess of the physician's actual charge over the approved charge, and the coinsurance amount applicable to the procedure. The written estimate may not be used as the basis for, or evidence in, a civil suit.
(2)
A physician who fails to make a disclosure required under paragraph (1) with respect to a procedure shall refund on a timely basis to the individual (and shall be liable to the individual for) any amounts collected for the procedure in excess of the charges recognized and approved under this part.
(3)
If a physician knowingly and willfully fails to comply with paragraph (2), the Secretary may apply sanctions against such physician in accordance with subsection (j)(2).
(4)
The Secretary shall provide for such monitoring of requests for payment for physicians' services to which paragraph (1) applies as is necessary to assure compliance with paragraph (2).
(n)
(1)
If a physician's bill or a request for payment for services billed by a physician includes a charge for a diagnostic test described in section 1861(s)(3) (other than a clinical diagnostic laboratory test) for which the bill or request for payment does not indicate that the billing physician personally performed or supervised the performance of the test or that another physician with whom the physician who shares a practice personally performed or supervised the performance of the test, the amount payable with respect to the test shall be determined as follows:
(A)
If the bill or request for payment indicates that the test was performed by a supplier, identifies the supplier, and indicates the amount the supplier charged the billing physician, payment for the test (less the applicable deductible and coinsurance amounts) shall be the actual acquisition costs (net of any discounts) or, if lower, the supplier's reasonable charge (or other applicable limit) for the test.
(B)
If the bill or request for payment (i) does not indicate who performed the test, or (ii) indicates that the test was performed by a supplier but does not identify the supplier or include the amount charged by the supplier, no payment shall be made under this part.
(2)
A physician may not bill an individual enrolled under this part—
(A)
any amount other than the payment amount specified in paragraph (1)(A) and any applicable deductible and coinsurance for a diagnostic test for which payment is made pursuant to paragraph (1)(A), or
(B)
any amount for a diagnostic test for which payment may not be made pursuant to paragraph (1)(B).
(3)
If a physician knowingly and willfully in repeated cases bills one or more individuals in violation of paragraph (2), the Secretary may apply sanctions against such physician in accordance with section 1842(j)(2).
(o)
(1)
If a physician's, supplier's, or any other person's bill or request for payment for services includes a charge for a drug or biological for which payment may be made under this part and the drug or biological is not paid on a cost or prospective payment basis as otherwise provided in this part, the amount payable for the drug or biological is equal to the following:
(A)
In the case of any of the following drugs or biologicals, 95 percent of the average wholesale price:
(i)
A drug or biological furnished before January 1, 2004.
(ii)
Blood clotting factors furnished during 2004.
(iii)
A drug or biological furnished during 2004 that was not available for payment under this part as of April 1, 2003.
(iv)
A vaccine described in subparagraph (A) or (B) of section 1861(s)(10) furnished on or after January 1, 2004.
(v)
A drug or biological furnished during 2004 in connection with the furnishing of renal dialysis services if separately billed by renal dialysis facilities.
(B)
In the case of a drug or biological furnished during 2004 that is not described in—
(i)
clause (ii), (iii), (iv), or (v) of subparagraph (A),
(ii)
subparagraph (D)(i), or
(iii)
subparagraph (F),
the amount determined under paragraph (4).
(C)
In the case of a drug or biological that is not described in subparagraph (A)(iv), (D)(i), or (F) furnished on or after January 1, 2005 (and including a drug or biological described in subparagraph (D)(i) furnished on or after January 1, 2017), the amount provided under section 1847, section 1847A, section 1847B, or section 1881(b)(13), as the case may be for the drug or biological.
(D)
(i)
Except as provided in clause (ii), in the case of infusion drugs or biologicals furnished through an item of durable medical equipment covered under section 1861(n) on or after January 1, 2004, and before January 1, 2017, 95 percent of the average wholesale price in effect on October 1, 2003.
(ii)
In the case of such infusion drugs or biologicals furnished in a competitive acquisition area under section 1847 on or after January 1, 2007, and before the date of the enactment of the 21st Century Cures Act.,37 the amount provided under section 1847.
^{37}
The “.,” is so in law due to the amendment made by section 5004(b)(2) of Public Law 114–255.
(E)
In the case of a drug or biological, consisting of intravenous immune globulin, furnished—
(i)
in 2004, the amount of payment provided under paragraph (4); and
(ii)
in 2005 and subsequent years, the amount of payment provided under section 1847A.
(F)
In the case of blood and blood products (other than blood clotting factors), the amount of payment shall be determined in the same manner as such amount of payment was determined on October 1, 2003.
(G)
In the case of inhalation drugs or biologicals furnished through durable medical equipment covered under section 1861(n) that are furnished—
(i)
in 2004, the amount provided under paragraph (4) for the drug or biological; and
(ii)
in 2005 and subsequent years, the amount provided under section 1847A for the drug or biological.
(2)
If payment for a drug or biological is made to a licensed pharmacy approved to dispense drugs or biologicals under this part, the Secretary may pay a dispensing fee (less the applicable deductible and coinsurance amounts) to the pharmacy. This paragraph shall not apply in the case of payment under paragraph (1)(C).
(3)
(A)
Payment for a charge for any drug or biological for which payment may be made under this part may be made only on an assignment-related basis.
(B)
The provisions of subsection (b)(18)(B) shall apply to charges for such drugs or biologicals in the same manner as they apply to services furnished by a practitioner described in subsection (b)(18)(C).
(4)
(A)
Subject to the succeeding provisions of this paragraph, the amount of payment for a drug or biological under this paragraph furnished in 2004 is equal to 85 percent of the average wholesale price (determined as of April 1, 2003) for the drug or biological.
(B)
The Secretary shall substitute for the percentage under subparagraph (A) for a drug or biological the percentage that would apply to the drug or biological under the column entitled “Average of GAO and OIG data (percent)” in the table entitled “Table 3.—Medicare Part B Drugs in the Most Recent GAO and OIG Studies” published on August 20, 2003, in the Federal Register (68 Fed. Reg. 50445).
(C)
(i)
The Secretary may substitute for the percentage under subparagraph (A) a percentage that is based on data and information submitted by the manufacturer of the drug or biological by October 15, 2003.
(ii)
The Secretary may substitute for the percentage under subparagraph (A) with respect to drugs and biologicals furnished during 2004 on or after April 1, 2004, a percentage that is based on data and information submitted by the manufacturer of the drug or biological after October 15, 2003, and before January 1, 2004.
(D)
In no case may the percentage substituted under subparagraph (B) or (C) be less than 80 percent.
(5)
(A)
Subject to subparagraph (B), in the case of clotting factors furnished on or after January 1, 2005, the Secretary shall, after reviewing the January 2003 report to Congress by the Comptroller General of the United States entitled “Payment for Blood Clotting Factor Exceeds Providers Acquisition Cost”, provide for a separate payment, to the entity which furnishes to the patient blood clotting factors, for items and services related to the furnishing of such factors in an amount that the Secretary determines to be appropriate. Such payment amount may take into account any or all of the following:
(i)
The mixing (if appropriate) and delivery of factors to an individual, including special inventory management and storage requirements.
(ii)
Ancillary supplies and patient training necessary for the self-administration of such factors.
(B)
In determining the separate payment amount under subparagraph (A) for blood clotting factors furnished in 2005, the Secretary shall ensure that the total amount of payments under this part (as estimated by the Secretary) for such factors under paragraph (1)(C) and such separate payments for such factors does not exceed the total amount of payments that would have been made for such factors under this part (as estimated by the Secretary) if the amendments made by section 303 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 had not been enacted.
(C)
The separate payment amount under this subparagraph for blood clotting factors furnished in 2006 or a subsequent year shall be equal to the separate payment amount determined under this paragraph for the previous year increased by the percentage increase in the consumer price index for medical care for the 12-month period ending with June of the previous year.
(6)
In the case of an immunosuppressive drug described in subparagraph (J) of section 1861(s)(2) and an oral drug described in subparagraph (Q) or (T) of such section, the Secretary shall pay to the pharmacy a supplying fee for such a drug determined appropriate by the Secretary (less the applicable deductible and coinsurance amounts).
(7)
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of determinations of payment amounts, methods, or adjustments under paragraphs (4) through (6).
(8)38
In the case of intravenous immune globulin described in section 1861(s)(2)(Z) that are furnished on or after January 1, 2024, to an individual by a supplier in the patient’s home, the Secretary shall provide for a separate bundled payment to the supplier for all items and services related to the administration of such intravenous immune globulin to such individual in the patient’s home during a calendar day in an amount that the Secretary determines to be appropriate, which may be based on the payment established pursuant to subsection (d) of section 101 of the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012. For purposes of the preceding sentence, such separate bundled payment shall not apply in the case of an individual receiving home health services under section 1895.
^{38}
The margin for paragraph (8) is so in law.
(p)
(1)
Each request for payment, or bill submitted, for an item or service furnished by a physician or practitioner specified in subsection (b)(18)(C) for which payment may be made under this part shall include the appropriate diagnosis code (or codes) as established by the Secretary for such item or service.
(2)
In the case of a request for payment for an item or service furnished by a physician or practitioner specified in subsection (b)(18)(C) on an assignment-related basis which does not include the code (or codes) required under paragraph (1), payment may be denied under this part.
(3)
In the case of a request for payment for an item or service furnished by a physician not submitted on an assignment-related basis and which does not include the code (or codes) required under paragraph (1)—
(A)
if the physician knowingly and willfully fails to provide the code (or codes) promptly upon request of the Secretary or a medicare administrative contractor, the physician may be subject to a civil money penalty in an amount not to exceed $2,000, and
(B)
if the physician knowingly, willfully, and in repeated cases fails, after being notified by the Secretary of the obligations and requirements of this subsection, to include the code (or codes) required under paragraph (1), the physician may be subject to the sanction described in section 1842(j)(2)(A).
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to civil money penalties under subparagraph (A) in the same manner as they apply to a penalty or proceeding under section 1128A(a).
(4)
In the case of an item or service defined in paragraph (3), (6), (8), or (9) of subsection 1861(s) ordered by a physician or a practitioner specified in subsection (b)(18)(C), but furnished by another entity, if the Secretary (or fiscal agent of the Secretary) requires the entity furnishing the item or service to provide diagnostic or other medical information in order for payment to be made to the entity, the physician or practitioner shall provide that information to the entity at the time that the item or service is ordered by the physician or practitioner.
(q)
(1)
(A)
The Secretary, in consultation with groups representing physicians who furnish anesthesia services, shall establish by regulation a relative value guide for use in all localities in making payment for physician anesthesia services furnished under this part. Such guide shall be designed so as to result in expenditures under this title for such services in an amount that would not exceed the amount of such expenditures which would otherwise occur.
(B)
For physician anesthesia services furnished under this part during 1991, the prevailing charge conversion factor used in a locality under this subsection shall, subject to clause (iv), be reduced to the adjusted prevailing charge conversion factor for the locality determined as follows:
(i)
The Secretary shall estimate the national weighted average of the prevailing charge conversion factors used under this subsection for services furnished during 1990 after March 31, using the best available data.
(ii)
The national weighted average estimated under clause (i) shall be reduced by 7 percent.
(iii)
The adjusted prevailing charge conversion factor for a locality is the sum of—
(I)
the product of (a) the portion of the reduced national weighted average prevailing charge conversion factor computed under clause (ii) which is attributable to physician work and (b) the geographic work index value for the locality (specified in Addendum C to the Model Fee Schedule for Physician Services (published on September 4, 1990, 55 Federal Register pp. 36238–36243)); and
(II)
the product of (a) the remaining portion of the reduced national weighted average prevailing charge conversion factor computed under clause (ii) and (b) the geographic practice cost index value specified in section 1842(b)(14)(C)(iv) for the locality.
In applying this clause, 70 percent of the prevailing charge conversion factor shall be considered to be attributable to physician work.
(iv)
The prevailing charge conversion factor to be applied to a locality under this subparagraph shall not be reduced by more than 15 percent below the prevailing charge conversion factor applied in the locality for the period during 1990 after March 31, but in no case shall the prevailing charge conversion factor be less than 60 percent of the national weighted average of the prevailing charge conversion factors (computed under clause (i)).
(2)
For purposes of payment for anesthesia services (whether furnished by physicians or by certified registered nurse anesthetists) under this part, the time units shall be counted based on actual time rather than rounded to full time units.
(r)
The Secretary shall establish a system which provides for a unique identifier for each physician who furnishes services for which payment may be made under this title. Under such system, the Secretary may impose appropriate fees on such physicians to cover the costs of investigation and recertification activities with respect to the issuance of the identifiers.
(s)
(1)
(A)
Subject to paragraph (3), the Secretary may implement a statewide or other areawide fee schedule to be used for payment of any item or service described in paragraph (2) which is paid on a reasonable charge basis.
(B)
Any fee schedule established under this paragraph for such item or service shall be updated—
(i)
for years before 2011—
(I)
subject to subclause (II), by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending with June of the preceding year; and
(II)
for items and services described in paragraph (2)(D) for 2009, section 1834(a)(14)(J) shall apply under this paragraph instead of the percentage increase otherwise applicable; and
(ii)
for 2011 and subsequent years—
(I)
the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending with June of the previous year, reduced by—
(II)
the productivity adjustment described in section 1886(b)(3)(B)(xi)(II).
The application of subparagraph (B)(ii)(II) may result in the update under this paragraph being less than 0.0 for a year, and may result in payment rates under any fee schedule established under this paragraph for a year being less than such payment rates for the preceding year.
(2)
The items and services described in this paragraph are as follows:
(A)
Medical supplies.
(B)
Home dialysis supplies and equipment (as defined in section 1881(b)(8)).
[(C)
Repealed.]
(D)
Parenteral and enteral nutrients, equipment, and supplies.
(E)
Electromyogram devices.
(F)
Salivation devices.
(G)
Blood products.
(H)
Transfusion medicine.
(3)
In the case of items and services described in paragraph (2)(D) that are included in a competitive acquisition program in a competitive acquisition area under section 1847(a)—
(A)
the payment basis under this subsection for such items and services furnished in such area shall be the payment basis determined under such competitive acquisition program; and
(B)
subject to section 1834(a)(1)(G), the Secretary may use information on the payment determined under such competitive acquisition programs to adjust the payment amount otherwise applicable under paragraph (1) for an area that is not a competitive acquisition area under section 1847, and in the case of such adjustment, paragraphs (8) and (9) of section 1842(b) shall not be applied.
(t)
(1)
Each request for payment, or bill submitted, for an item or service furnished to an individual who is a resident of a skilled nursing facility for which payment may be made under this part shall include the facility's medicare provider number.
(2)
Each request for payment, or bill submitted, for therapy services described in paragraph (1) or (3) of section 1833(g), including services described in section 1833(a)(8)(B), furnished on or after October 1, 2012, for which payment may be made under this part shall include the national provider identifier of the physician who periodically reviews the plan for such services under section 1861(p)(2).
(u)
Each request for payment, or bill submitted, for a drug furnished to an individual for the treatment of anemia in connection with the treatment of cancer shall include (in a form and manner specified by the Secretary) information on the hemoglobin or hematocrit levels for the individual.

state agreements for coverage of eligible individuals who are receiving money payments under public assistance programs (or are eligible for medical assistance)
Sec. 1843.
[42 U.S.C. 1395v]
(a)
The Secretary shall, at the request of a State made before January 1, 1970, or during 1981 or after 1988, enter into an agreement with such State pursuant to which all eligible individuals in either of the coverage groups described in subsection (b) (as specified in the agreement) will be enrolled under the program established by this part.
(b)
An agreement entered into with any State pursuant to subsection (a) may be applicable to either of the following coverage groups:
(1)
individuals receiving money payments under the plan of such State approved under title I or title XVI; or
(2)
individuals receiving money payments under all of the plans of such State approved under titles I, X, XIV, and XVI, and part A of title IV.
Except as provided in subsection (g), there shall be excluded from any coverage group any individual who is entitled to monthly insurance benefits under title II or who is entitled to receive an annuity under the Railroad Retirement Act of 1974. Effective January 1, 1974, and subject to section 1902(f), the Secretary shall, at the request of any State not eligible to participate in the State plan program established under title XVI, continue in effect the agreement entered into under this section with such State subject to such modifications as the Secretary may by regulations provide to take account of the termination of any plans of such State approved under titles I, X, XIV, and XVI and the establishment of the supplemental security income program under title XVI.
(c)
For purposes of this section, an individual shall be treated as an eligible individual only if he is an eligible individual (within the meaning of section 1836) on the date an agreement covering him is entered into under subsection (a) or he becomes an eligible individual (within the meaning of such section) at any time after such date; and he shall be treated as receiving money payments described in subsection (b) if he receives such payments for the month in which the agreement is entered into or any month thereafter.
(d)
In the case of any individual enrolled pursuant to this section—
(1)
the monthly premium to be paid by the State shall be determined under section 1839 (without any increase under subsection (b) thereof);
(2)
his coverage period shall begin on whichever of the following is the latest:
(A)
July 1, 1966;
(B)
the first day of the third month following the month in which the State agreement is entered into;
(C)
the first day of the first month in which he is both an eligible individual and a member of a coverage group specified in the agreement under this section; or
(D)
such date as may be specified in the agreement; and
(3)
his coverage period attributable to the agreement with the State under this section shall end on the last day of whichever of the following first occurs:
(A)
the month in which he is determined by the State agency to have become ineligible both for money payments of a kind specified in the agreement and (if there is in effect a modification entered into under subsection (h)) for medical assistance, or
(B)
the month preceding the first month for which he becomes entitled to monthly benefits under title II or to an annuity or pension under the Railroad Retirement Act of 1974.
(e)
Any individual whose coverage period attributable to the State agreement is terminated pursuant to subsection (d)(3) shall be deemed for purposes of this part (including the continuation of his coverage period under this part) to have enrolled under section 1837 in the initial general enrollment period provided by section 1837(c). The coverage period under this part of any such individual who (in the last month of his coverage period attributable to the State agreement or in any of the following six months) files notice that he no longer wishes to participate in the insurance program established by this part, shall terminate at the close of the month in which the notice is filed.
(f)
With respect to eligible individuals receiving money payments under the plan of a State approved under title I, X, XIV, or XVI, or part A of title IV, or eligible to receive medical assistance under the plan of such State approved under title XIX, if the agreement entered into under this section so provides, the term “carrier” as defined in section 1842(f) also includes the State agency, specified in such agreement, which administers or supervises the administration of the plan of such State approved under title I, XVI, or XIX. The agreement shall also contain such provisions as will facilitate the financial transactions of the State and the carrier with respect to deductions, coinsurance, and otherwise, and as will lead to economy and efficiency of operation, with respect to individuals receiving money payments under plans of the State approved under titles I, X, XIV, and XVI, and part A of title IV, and individuals eligible to receive medical assistance under the plan of the State approved under title XIX.
(g)
(1)
The Secretary shall, at the request of a State made before January 1, 1970, or during 1981 or after 1988, enter into a modification of an agreement entered into with such State pursuant to subsection (a) under which the second sentence of subsection (b) shall not apply with respect to such agreement.
(2)
In the case of any individual who would (but for this subsection) be excluded from the applicable coverage group described in subsection (b) by the second sentence of such subsection—
(A)
subsections (c) and (d)(2) shall be applied as if such subsections referred to the modification under this subsection (in lieu of the agreement under subsection (a)), and
(B)
subsection (d)(3)(B) shall not apply so long as there is in effect a modification entered into by the State under this subsection.
(h)
(1)
The Secretary shall, at the request of a State made before January 1, 1970, or during 1981 or after 1988, enter into a modification of an agreement entered into with such State pursuant to subsection (a) under which the coverage group described in subsection (b) and specified in such agreement is broadened to include (A) individuals who are eligible to receive medical assistance under the plan of such State approved under title XIX, or (B) qualified medicare beneficiaries (as defined in section 1905(p)(1)).
(2)
For purposes of this section, an individual shall be treated as eligible to receive medical assistance under the plan of the State approved under title XIX if, for the month in which the modification is entered into under this subsection or for any month thereafter, he has been determined to be eligible to receive medical assistance under such plan. In the case of any individual who would (but for this subsection) be excluded from the agreement, subsections (c) and (d)(2) shall be applied as if they referred to the modification under this subsection (in lieu of the agreement under subsection (a)), and subsection (d)(2)(C) shall be applied (except in the case of qualified medicare beneficiaries, as defined in section 1905(p)(1)) by substituting “second month following the first month” for “first month”.
(3)
In this subsection, the term “qualified medicare beneficiary” also includes an individual described in section 1902(a)(10)(E)(iii).
(i)
For provisions relating to enrollment of qualified medicare beneficiaries under part A, see section 1818(g).

appropriations to cover government contributions and contingency reserve
Sec. 1844.
[42 U.S.C. 1395w]
(a)
There are authorized to be appropriated from time to time, out of any moneys in the Treasury not otherwise appropriated, to the Federal Supplementary Medical Insurance Trust Fund—
(1)
(A)
a Government contribution equal to the aggregate premiums payable for a month for enrollees age 65 and over under this part and deposited in the Trust Fund, multiplied by the ratio of—
(i)
twice the dollar amount of the actuarially adequate rate per enrollee age 65 and over as determined under section 1839(a)(1) for such month minus the dollar amount of the premium per enrollee for such month, as determined under section 1839(a)(3), to
(ii)
the dollar amount of the premium per enrollee for such month, plus
(B)
a Government contribution equal to the aggregate premiums payable for a month for enrollees under age 65 under this part and deposited in the Trust Fund, multiplied by the ratio of—
(i)
twice the dollar amount of the actuarially adequate rate per enrollee under age 65 as determined under section 1839(a)(4) for such month minus the dollar amount of the premium per enrollee for such month, as determined under section 1839(a)(3), to
(ii)
the dollar amount of the premium per enrollee for such month; minus
(C)
the aggregate amount of additional premium payments attributable to the application of section 1839(i); plus
(2)
such sums as the Secretary deems necessary to place the Trust Fund, at the end of any fiscal year occurring after June 30, 1967, in the same position in which it would have been at the end of such fiscal year if (A) a Government contribution representing the excess of the premiums deposited in the Trust Fund during the fiscal year ending June 30, 1967, over the Government contribution actually appropriated to the Trust Fund during such fiscal year had been appropriated to it on June 30, 1967, and (B) the Government contribution for premiums deposited in the Trust Fund after June 30, 1967, had been appropriated to it when such premiums were deposited; plus
(3)
a Government contribution equal to the amount of payment incentives payable under sections 1848(o) and 1853(l)(3); plus
(4)
a Government contribution equal to the estimated aggregate reduction in premiums payable under part B that results from establishing the premium at 15 percent of the actuarial rate (as would be determined in accordance with section 1839(a)(1) if the reference to “one-half” in such section were a reference to “100 percent”) under section 1839(j) instead of 25 percent of such rate (as so determined) for individuals enrolled only for the purpose of coverage of immunosuppressive drugs under section 1836(b).
In applying paragraph (1), the amounts transferred under subsection (d)(1) with respect to enrollees described in subparagraphs (A) and (B) of such subsection shall be treated as premiums payable and deposited in the Trust Fund under subparagraphs (A) and (B), respectively, of paragraph (1). In applying paragraph (1), the amounts transferred under subsection (e)(1) with respect to enrollees described in subparagraphs (A) and (B) of such subsection shall be treated as premiums payable and deposited in the Trust Fund under subparagraphs (A) and (B), respectively, of paragraph (1).
The 39 Government contribution under paragraph (4) shall be treated as premiums payable and deposited for purposes of subparagraphs (A) and (B) of paragraph (1).
^{39}
The margin of last sentence is so in law. See amendment by section 402(e)(3) of division CC of Public Law 116–260. Such amendment may have been intended to run into the text of the flush left text that precedes this new one.
(b)
In order to assure prompt payment of benefits provided under this part and the administrative expenses thereunder during the early months of the program established by this part, and to provide a contingency reserve, there is also authorized to be appropriated, out of any moneys in the Treasury not otherwise appropriated, to remain available through the calendar year 1969 for repayable advances (without interest) to the Trust Fund, an amount equal to $18 multiplied by the number of individuals (as estimated by the Secretary) who could be covered in July 1966 by the insurance program established by this part if they had theretofore enrolled under this part.
(c)
The Secretary shall determine the Government contribution under subparagraphs (A) and (B) of subsection (a)(1) without regard to any premium reduction resulting from an election under section 1854(f)(1)(E) or any credits provided under section 1854(b)(1)(C)(iv) and without regard to any premium adjustment effected under section 1839(i).
(d)
(1)
For 2016, there shall be transferred from the General Fund to the Trust Fund an amount, as estimated by the Chief Actuary of the Centers for Medicare & Medicaid Services, equal to the reduction in aggregate premiums payable under this part for a month in such year (excluding any changes in amounts collected under section 1839(i)) that is attributable to the application of section 1839(a)(5)(A) with respect to—
(A)40
enrollees age 65 and over; and
^{40}
Margins of subparagraphs (A) and (B) are so in law. Probably should be moved 2ems to the right.
(B)
enrollees under age 65.
Such amounts shall be transferred from time to time as appropriate.
(2)
Premium increases affected under section 1839(a)(6) shall not be taken into account in applying subsection (a).
(3)
There shall be transferred from the Trust Fund to the General Fund of the Treasury amounts equivalent to the additional premiums payable as a result of the application of section 1839(a)(6), excluding the aggregate payments attributable to the application of section 1839(i)(3)(A)(ii)(II).
(e)
(1)
For 2021, there shall be transferred from the General Fund to the Trust Fund an amount, as estimated by the Chief Actuary of the Centers for Medicare & Medicaid Services, equal to the reduction in aggregate premiums payable under this part for a month in such year (excluding any changes in amounts collected under section 1839(i)) that are attributable to the application of section 1839(a)(7) with respect to—
(A)41
enrollees age 65 and over; and
(B)41
enrollees under age 65.
Such amounts shall be transferred from time to time as appropriate.
(2)
Premium increases affected under section 1839(a)(6) shall not be taken into account in applying subsection (a).
(3)
There shall be transferred from the Trust Fund to the General Fund of the Treasury amounts equivalent to the additional premiums payable as a result of the application of section 1839(a)(6), excluding the aggregate payments attributable to the application of section 1839(i)(3)(A)(ii)(II).
^{41}
Margins for subparagraphs (A) and (B) are so in law. See amendment made by section 2401(b)(2) in Public Law 116-159.
(f)
(1)
There shall be transferred from the General Fund of the Treasury to the Trust Fund an amount, as estimated by the Chief Actuary of the Centers for Medicare & Medicaid Services, equal to amounts paid in advance for items and services under this part during the period beginning on the first day of the emergency period described in section 1135(g)(1)(B) and ending on the date of the enactment of this paragraph.
(2)
There shall be transferred from the Trust Fund to the General Fund of the Treasury amounts equivalent to the sum of—
(A)
the amounts by which claims have offset (in whole or in part) the amount of such payments described in paragraph (1); and
(B)
the amount of such payments that have been repaid (in whole or in part).
(3)
Amounts described in paragraphs (1) and (2) shall be transferred from time to time as appropriate.
Sec. 1845.
Repealed.

INTERMEDIATE SANCTIONS FOR PROVIDERS OR SUPPLIERS OF CLINICAL DIAGNOSTIC LABORATORY TESTS
Sec. 1846.
[42 U.S.C. 1395w–2]
(a)
If the Secretary determines that any provider or clinical laboratory approved for participation under this title no longer substantially meets the conditions of participation or for coverage specified under this title with respect to the provision of clinical diagnostic laboratory tests under this part, the Secretary may (for a period not to exceed one year) impose intermediate sanctions developed pursuant to subsection (b), in lieu of terminating immediately the provider agreement or cancelling immediately approval of the clinical laboratory.
(b)
(1)
The Secretary shall develop and implement—
(A)
a range of intermediate sanctions to apply to providers or clinical laboratories under the conditions described in subsection (a), and
(B)
appropriate procedures for appealing determinations relating to the imposition of such sanctions.
(2)
(A)
The intermediate sanctions developed under paragraph (1) shall include—
(i)
directed plans of correction,
(ii)
civil money penalties in an amount not to exceed $10,000 for each day of substantial noncompliance,
(iii)
payment for the costs of onsite monitoring by an agency responsible for conducting surveys, and
(iv)
suspension of all or part of the payments to which a provider or clinical laboratory would otherwise be entitled under this title with respect to clinical diagnostic laboratory tests furnished on or after the date on which the Secretary determines that intermediate sanctions should be imposed pursuant to subsection (a).
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under clause (ii) in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(B)
The sanctions specified in subparagraph (A) are in addition to sanctions otherwise available under State or Federal law.
(3)
The Secretary shall develop and implement specific procedures with respect to when and how each of the intermediate sanctions developed under paragraph (1) is to be applied, the amounts of any penalties, and the severity of each of these penalties. Such procedures shall be designed so as to minimize the time between identification of violations and imposition of these sanctions and shall provide for the imposition of incrementally more severe penalties for repeated or uncorrected deficiencies.

competitive acquisition of certain items and services
Sec. 1847.
[42 U.S.C. 1395w–3]
(a)

Establishment of Competitive Acquisition Programs.—
(1)

Implementation of programs.—
(A)

In general.—
The Secretary shall establish and implement programs under which competitive acquisition areas are established throughout the United States for contract award purposes for the furnishing under this part of competitively priced items and services (described in paragraph (2)) for which payment is made under this part. Such areas may differ for different items and services.
(B)

Phased-in implementation.—
The programs—
(i)
shall be phased in among competitive acquisition areas in a manner consistent with subparagraph (D) so that the competition under the programs occurs in—
(I)
10 of the largest metropolitan statistical areas in 2007;
(II)
an additional 91 of the largest metropolitan statistical areas in 2011; and
(III)
additional areas after 2011 (or, in the case of national mail order for items and services, after 2010); and
(ii)
may be phased in first among the highest cost and highest volume items and services or those items and services that the Secretary determines have the largest savings potential.
(C)

Waiver of certain provisions.—
In carrying out the programs, the Secretary may waive such provisions of the Federal Acquisition Regulation as are necessary for the efficient implementation of this section, other than provisions relating to confidentiality of information and such other provisions as the Secretary determines appropriate.
(D)

Changes in competitive acquisition programs.—
(i)

Round 1 of competitive acquisition program.—
Notwithstanding subparagraph (B)(i)(I) and in implementing the first round of the competitive acquisition programs under this section—
(I)
the contracts awarded under this section before the date of the enactment of this subparagraph are terminated, no payment shall be made under this title on or after the date of the enactment of this subparagraph based on such a contract, and, to the extent that any damages may be applicable as a result of the termination of such contracts, such damages shall be payable from the Federal Supplementary Medical Insurance Trust Fund under section 1841;
(II)
the Secretary shall conduct the competition for such round in a manner so that it occurs in 2009 with respect to the same items and services and the same areas, except as provided in subclauses (III) and (IV);
(III)
the Secretary shall exclude Puerto Rico so that such round of competition covers 9, instead of 10, of the largest metropolitan statistical areas; and
(IV)
there shall be excluded negative pressure wound therapy items and services.
Nothing in subclause (I) shall be construed to provide an independent cause of action or right to administrative or judicial review with regard to the termination provided under such subclause.
(ii)

Round 2 of competitive acquisition program.—
In implementing the second round of the competitive acquisition programs under this section described in subparagraph (B)(i)(II)—
(I)
the metropolitan statistical areas to be included shall be those metropolitan statistical areas selected by the Secretary for such round as of June 1, 2008;
(II)42
the Secretary shall include the next 21 largest metropolitan statistical areas by total population (after those selected under subclause (I)) for such round; and
^{42}
Margin so in law.
(III)
the Secretary may subdivide metropolitan statistical areas with populations (based upon the most recent data from the Census Bureau) of at least 8,000,000 into separate areas for competitive acquisition purposes.
(iii)

Exclusion of certain areas in subsequent rounds of competitive acquisition programs.—
In implementing subsequent rounds of the competitive acquisition programs under this section, including under subparagraph (B)(i)(III), for competitions occurring before 2015, the Secretary shall exempt from the competitive acquisition program (other than national mail order) the following:
(I)
Rural areas.
(II)
Metropolitan statistical areas not selected under round 1 or round 2 with a population of less than 250,000.
(III)
Areas with a low population density within a metropolitan statistical area that is otherwise selected, as determined for purposes of paragraph (3)(A).
(E)

Verification by oig.—
The Inspector General of the Department of Health and Human Services shall, through post-award audit, survey, or otherwise, assess the process used by the Centers for Medicare & Medicaid Services to conduct competitive bidding and subsequent pricing determinations under this section that are the basis for pivotal bid amounts and single payment amounts for items and services in competitive bidding areas under rounds 1 and 2 of the competitive acquisition programs under this section and may continue to verify such calculations for subsequent rounds of such programs.
(F)

Supplier feedback on missing financial documentation.—
(i)

In general.—
In the case of a bid where one or more covered documents in connection with such bid have been submitted not later than the covered document review date specified in clause (ii), the Secretary—
(I)
shall provide, by not later than 45 days (in the case of the first round of the competitive acquisition programs as described in subparagraph (B)(i)(I)) or 90 days (in the case of a subsequent round of such programs) after the covered document review date, for notice to the bidder of all such documents that are missing as of the covered document review date; and
(II)
may not reject the bid on the basis that any covered document is missing or has not been submitted on a timely basis, if all such missing documents identified in the notice provided to the bidder under subclause (I) are submitted to the Secretary not later than 10 business days after the date of such notice.
(ii)

Covered document review date.—
The covered document review date specified in this clause with respect to a competitive acquisition program is the later of—
(I)
the date that is 30 days before the final date specified by the Secretary for submission of bids under such program; or
(II)
the date that is 30 days after the first date specified by the Secretary for submission of bids under such program.
(iii)

Limitations of process.—
The process provided under this subparagraph—
(I)
applies only to the timely submission of covered documents;
(II)
does not apply to any determination as to the accuracy or completeness of covered documents submitted or whether such documents meet applicable requirements;
(III)
shall not prevent the Secretary from rejecting a bid based on any basis not described in clause (i)(II); and
(IV)
shall not be construed as permitting a bidder to change bidding amounts or to make other changes in a bid submission.
(iv)

Covered document defined.—
In this subparagraph, the term “covered document” means a financial, tax, or other document required to be submitted by a bidder as part of an original bid submission under a competitive acquisition program in order to meet required financial standards. Such term does not include other documents, such as the bid itself or accreditation documentation.
(G)

Requiring bid bonds for bidding entities.—
With respect to rounds of competitions beginning under this subsection for contracts beginning not earlier than January 1, 2017, and not later than January 1, 2019, an entity may not submit a bid for a competitive acquisition area unless, as of the deadline for bid submission, the entity has obtained (and provided the Secretary with proof of having obtained) a bid surety bond (in this paragraph referred to as a “bid bond”) in a form specified by the Secretary consistent with subparagraph (H) and in an amount that is not less than $50,000 and not more than $100,000 for each competitive acquisition area in which the entity submits the bid.
(H)

Treatment of bid bonds submitted.—
(i)

For bidders that submit bids at or below the median and are offered but do not accept the contract.—
In the case of a bidding entity that is offered a contract for any product category for a competitive acquisition area, if—
(I)
the entity’s composite bid for such product category and area was at or below the median composite bid rate for all bidding entities included in the calculation of the single payment amounts for such product category and area; and
(II)
the entity does not accept the contract offered for such product category and area,
the bid bond submitted by such entity for such area shall be forfeited by the entity and the Secretary shall collect on it.
(ii)

Treatment of other bidders.—
In the case of a bidding entity for any product category for a competitive acquisition area, if the entity does not meet the bid forfeiture conditions in subclauses (I) and (II) of clause (i) for any product category for such area, the bid bond submitted by such entity for such area shall be returned within 90 days of the public announcement of the contract suppliers for such area.
(2)

Items and services described.—
The items and services referred to in paragraph (1) are the following:
(A)

Durable medical equipment and medical supplies.—
Covered items (as defined in section 1834(a)(13)) for which payment would otherwise be made under section 1834(a), including items used in infusion and drugs (other than inhalation drugs) and supplies used in conjunction with durable medical equipment, but excluding class III devices under the Federal Food, Drug, and Cosmetic Act, excluding certain complex rehabilitative power wheelchairs recognized by the Secretary as classified within group 3 or higher, complex rehabilitative manual wheelchairs (as determined by the Secretary), and certain manual wheelchairs (identified, as of October 1, 2018, by HCPCS codes E1235, E1236, E1237, E1238, and K0008 or any successor to such codes) (and related accessories when furnished in connection with such complex rehabilitative power wheelchairs, complex rehabilitative manual wheelchairs, and certain manual wheelchairs), and excluding drugs and biologicals describedin section 1842(o)(1)(D).
(B)

Other equipment and supplies.—
Items and services described in section 1842(s)(2)(D), other than parenteral nutrients, equipment, and supplies.
(C)

Off-the-shelf orthotics.—
Orthotics described in section 1861(s)(9) for which payment would otherwise be made under section 1834(h) which require minimal self-adjustment for appropriate use and do not require expertise in trimming, bending, molding, assembling, or customizing to fit to the individual.
(D)

Lymphedema compression treatment items.—
Lymphedema compression treatment items (as defined in section 1861(mmm)) for which payment would otherwise be made under section 1834(z).
(3)

Exception authority.—
In carrying out the programs under this section, the Secretary may exempt—
(A)
rural areas and areas with low population density within urban areas that are not competitive, unless there is a significant national market through mail order for a particular item or service; and
(B)
items and services for which the application of competitive acquisition is not likely to result in significant savings.
(4)

Special rule for certain rented items of durable medical equipment and oxygen.—
In the case of a covered item for which payment is made on a rental basis under section 1834(a) and in the case of payment for oxygen under section 1834(a)(5), the Secretary shall establish a process by which rental agreements for the covered items and supply arrangements with oxygen suppliers entered into before the application of the competitive acquisition program under this section for the item may be continued notwithstanding this section. In the case of any such continuation, the supplier involved shall provide for appropriate servicing and replacement, as required under section 1834(a).
(5)

Physician authorization.—
(A)

In general.—
With respect to items or services included within a particular HCPCS code, the Secretary may establish a process for certain items and services under which a physician may prescribe a particular brand or mode of delivery of an item or service within such code if the physician determines that use of the particular item or service would avoid an adverse medical outcome on the individual, as determined by the Secretary.
(B)

No effect on payment amount.—
A prescription under subparagraph (A) shall not affect the amount of payment otherwise applicable for the item or service under the code involved.
(6)

Application.—
For each competitive acquisition area in which the program is implemented under this subsection with respect to items and services, the payment basis determined under the competition conducted under subsection (b) shall be substituted for the payment basis otherwise applied under section 1834(a), section 1834(h), or section 1842(s), as appropriate.
(7)

Exemption from competitive acquisition.—
The programs under this section shall not apply to the following:
(A)

Certain off-the-shelf orthotics.—
Items and services described in paragraph (2)(C) if furnished—
(i)
by a physician or other practitioner (as defined by the Secretary) to the physician's or practitioner's own patients as part of the physician's or practitioner's professional service; or
(ii)
by a hospital to the hospital's own patients during an admission or on the date of discharge.
(B)

Certain durable medical equipment.—
Those items and services described in paragraph (2)(A)—
(i)
that are furnished by a hospital to the hospital's own patients during an admission or on the date of discharge; and
(ii)
to which such programs would not apply, as specified by the Secretary, if furnished by a physician to the physician's own patients as part of the physician's professional service.
(b)

Program Requirements.—
(1)

In general.—
The Secretary shall conduct a competition among entities supplying items and services described in subsection (a)(2) for each competitive acquisition area in which the program is implemented under subsection (a) with respect to such items and services.
(2)

Conditions for awarding contract.—
(A)

In general.—
The Secretary may not award a contract to any entity under the competition conducted in an competitive acquisition area pursuant to paragraph (1) to furnish such items or services unless the Secretary finds all of the following:
(i)
The entity meets applicable quality standards specified by the Secretary under section 1834(a)(20).
(ii)
The entity meets applicable financial standards specified by the Secretary, taking into account the needs of small providers.
(iii)
The total amounts to be paid to contractors in a competitive acquisition area are expected to be less than the total amounts that would otherwise be paid.
(iv)
Access of individuals to a choice of multiple suppliers in the area is maintained.
(v)
The entity meets applicable State licensure requirements.
(B)

Timely implementation of program.—
Any delay in the implementation of quality standards under section 1834(a)(20) or delay in the receipt of advice from the program oversight committee established under subsection (c) shall not delay the implementation of the competitive acquisition program under this section.
(3)

Contents of contract.—
(A)

In general.—
A contract entered into with an entity under the competition conducted pursuant to paragraph (1) is subject to terms and conditions that the Secretary may specify.
(B)

Term of contracts.—
The Secretary shall recompete contracts under this section not less often than once every 3 years.
(C)

Disclosure of subcontractors.—
(i)

Initial disclosure.—
Not later than 10 days after the date a supplier enters into a contract with the Secretary under this section, such supplier shall disclose to the Secretary, in a form and manner specified by the Secretary, the information on—
(I)
each subcontracting relationship that such supplier has in furnishing items and services under the contract; and
(II)
whether each such subcontractor meets the requirement of section 1834(a)(20)(F)(i), if applicable to such subcontractor.
(ii)

Subsequent disclosure.—
Not later than 10 days after such a supplier subsequently enters into a subcontracting relationship described in clause (i)(II), such supplier shall disclose to the Secretary, in such form and manner, the information described in subclauses (I) and (II) of clause (i).
(4)

Limit on number of contractors.—
(A)

In general.—
The Secretary may limit the number of contractors in a competitive acquisition area to the number needed to meet projected demand for items and services covered under the contracts. In awarding contracts, the Secretary shall take into account the ability of bidding entities to furnish items or services in sufficient quantities to meet the anticipated needs of individuals for such items or services in the geographic area covered under the contract on a timely basis.
(B)

Multiple winners.—
The Secretary shall award contracts to multiple entities submitting bids in each area for an item or service.
(5)

Payment.—
(A)

In general.—
Payment under this part for competitively priced items and services described in subsection (a)(2) shall be based on bids submitted and accepted under this section for such items and services. Based on such bids the Secretary shall determine a single payment amount for each item or service in each competitive acquisition area.
(B)

Reduced beneficiary cost-sharing.—
(i)

Application of coinsurance.—
Payment under this section for items and services shall be in an amount equal to 80 percent of the payment basis described in subparagraph (A).
(ii)

Application of deductible.—
Before applying clause (i), the individual shall be required to meet the deductible described in section 1833(b).
(C)

Payment on assignment-related basis.—
Payment for any item or service furnished by the entity may only be made under this section on an assignment-related basis.
(D)

Construction.—
Nothing in this section shall be construed as precluding the use of an advanced beneficiary notice with respect to a competitively priced item and service.
(6)

Participating contractors.—
(A)

In general.—
Except as provided in subsection (a)(4), payment shall not be made for items and services described in subsection (a)(2) furnished by a contractor and for which competition is conducted under this section unless—
(i)
the contractor has submitted a bid for such items and services under this section; and
(ii)
the Secretary has awarded a contract to the contractor for such items and services under this section.
(B)

Bid defined.—
In this section, the term “bid” means an offer to furnish an item or service for a particular price and time period that includes, where appropriate, any services that are attendant to the furnishing of the item or service.
(C)

Rules for mergers and acquisitions.—
In applying subparagraph (A) to a contractor, the contractor shall include a successor entity in the case of a merger or acquisition, if the successor entity assumes such contract along with any liabilities that may have occurred thereunder.
(D)

Protection of small suppliers.—
In developing procedures relating to bids and the awarding of contracts under this section, the Secretary shall take appropriate steps to ensure that small suppliers of items and services have an opportunity to be considered for participation in the program under this section.
(7)

Consideration in determining categories for bids.—
The Secretary may consider the clinical efficiency and value of specific items within codes, including whether some items have a greater therapeutic advantage to individuals.
(8)

Authority to contract for education, monitoring, outreach, and complaint services.—
The Secretary may enter into contracts with appropriate entities to address complaints from individuals who receive items and services from an entity with a contract under this section and to conduct appropriate education of and outreach to such individuals and monitoring quality of services with respect to the program.
(9)

Authority to contract for implementation.—
The Secretary may contract with appropriate entities to implement the competitive bidding program under this section.
(10)

Special rule in case of competition for diabetic testing strips.—
(A)

In general.—
With respect to the competitive acquisition program for diabetic testing strips conducted after the first round of the competitive acquisition programs, if an entity does not demonstrate to the Secretary that its bid covers types of diabetic testing strip products that, in the aggregate and taking into account volume for the different products, cover 50 percent (or such higher percentage as the Secretary may specify) of all such types of products, the Secretary shall reject such bid. With respect to bids to furnish such types of products on or after January 1, 2019, the volume for such types of products shall be determined by the Secretary through the use of multiple sources of data (from mail order and non-mail order Medicare markets), including market-based data measuring sales of diabetic testing strip products that are not exclusively sold by a single retailer from such markets.
(B)

Study of types of testing strip products.—
Before 2011, the Inspector General of the Department of Health and Human Services shall conduct a study to determine the types of diabetic testing strip products by volume that could be used to make determinations pursuant to subparagraph (A) for the first competition under the competitive acquisition program described in such subparagraph and submit to the Secretary a report on the results of the study. The Inspector General shall also conduct such a study and submit such a report before the Secretary conducts a subsequent competitive acquistion program described in subparagraph (A).
(C)

Demonstration of ability to furnish types of diabetic testing strip products.—
With respect to bids to furnish diabetic testing strip products on or after January 1, 2019, an entity shall attest to the Secretary that the entity has the ability to obtain an inventory of the types and quantities of diabetic testing strip products that will allow the entity to furnish such products in a manner consistent with its bid and—
(i)
demonstrate to the Secretary, through letters of intent with manufacturers, wholesalers, or other suppliers, or other evidence as the Secretary may specify, such ability; or
(ii)
demonstrate to the Secretary that it made a good faith attempt to obtain such a letter of intent or such other evidence.
(D)

Use of unlisted types in calculation of percentage.—
With respect to bids to furnish diabetic testing strip products on or after January 1, 2019, in determining under subparagraph (A) whether a bid submitted by an entity under such subparagraph covers 50 percent (or such higher percentage as the Secretary may specify) of all types of diabetic testing strip products, the Secretary may not attribute a percentage to types of diabetic testing strip products that the Secretary does not identify by brand, model, and market share volume.
(E)

Adherence to demonstration.—
(i)

In general.—
In the case of an entity that is furnishing diabetic testing strip products on or after January 1, 2019, under a contract entered into under the competition conducted pursuant to paragraph (1), the Secretary shall establish a process to monitor, on an ongoing basis, the extent to which such entity continues to cover the product types included in the entity’s bid.
(ii)

Termination.—
If the Secretary determines that an entity described in clause (i) fails to maintain in inventory, or otherwise maintain ready access to (through requirements, contracts, or otherwise) a type of product included in the entity’s bid, the Secretary may terminate such contract unless the Secretary finds that the failure of the entity to maintain inventory of, or ready access to, the product is the result of the discontinuation of the product by the product manufacturer, a market-wide shortage of the product, or the introduction of a newer model or version of the product in the market involved.
(11)

Additional special rules in case of competition for diabetic testing strips.—
(A)

In general.—
With respect to an entity that is furnishing diabetic testing strip products to individuals under a contract entered into under the competitive acquisition program established under this section, the entity shall furnish to each individual a brand of such products that is compatible with the home blood glucose monitor selected by the individual.
(B)

Prohibition on influencing and incentivizing.—
An entity described in subparagraph (A) may not attempt to influence or incentivize an individual to switch the brand of glucose monitor or diabetic testing strip product selected by the individual, including by—
(i)
persuading, pressuring, or advising the individual to switch; or
(ii)
furnishing information about alternative brands to the individual where the individual has not requested such information.
(C)

Provision of information.—
(i)

Standardized information.—
Not later than January 1, 2019, the Secretary shall develop and make available to entities described in subparagraph (A) standardized information that describes the rights of an individual with respect to such an entity. The information described in the preceding sentence shall include information regarding—
(I)
the requirements established under subparagraphs (A) and (B);
(II)
the right of the individual to purchase diabetic testing strip products from another mail order supplier of such products or a retail pharmacy if the entity is not able to furnish the brand of such product that is compatible with the home blood glucose monitor selected by the individual; and
(III)
the right of the individual to return diabetic testing strip products furnished to the individual by the entity.
(ii)

Requirement.—
With respect to diabetic testing strip products furnished on or after the date on which the Secretary develops the standardized information under clause (i), an entity described in subparagraph (A) may not communicate directly to an individual until the entity has verbally provided the individual with such standardized information.
(D)

Order refills.—
With respect to diabetic testing strip products furnished on or after January 1, 2019, the Secretary shall require an entity furnishing diabetic testing strip products to an individual to contact and receive a request from the individual for such products not more than 14 days prior to dispensing a refill of such products to the individual.
(12)

No administrative or judicial review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of—
(A)
the establishment of payment amounts under paragraph (5);
(B)
the awarding of contracts under this section;
(C)
the designation of competitive acquisition areas under subsection (a)(1)(A) and the identification of areas under subsection (a)(1)(D)(iii);
(D)
the phased-in implementation under subsection (a)(1)(B) and implementation of subsection (a)(1)(D);
(E)
the selection of items and services for competitive acquisition under subsection (a)(2);
(F)
the bidding structure and number of contractors selected under this section; or
(G)
the implementation of the special rule described in paragraph (10).
(c)

Program Advisory and Oversight Committee.—
(1)

Establishment.—
The Secretary shall establish a Program Advisory and Oversight Committee (hereinafter in this section referred to as the “Committee”).
(2)

Membership; terms.—
The Committee shall consist of such members as the Secretary may appoint who shall serve for such term as the Secretary may specify.
(3)

Duties.—
(A)

Advice.—
The Committee shall provide advice to the Secretary with respect to the following functions:
(i)
The implementation of the program under this section.
(ii)
The establishment of financial standards for purposes of subsection (b)(2)(A)(ii).
(iii)
The establishment of requirements for collection of data for the efficient management of the program.
(iv)
The development of proposals for efficient interaction among manufacturers, providers of services, suppliers (as defined in section 1861(d)), and individuals.
(v)
The establishment of quality standards under section 1834(a)(20).
(B)

Additional duties.—
The Committee shall perform such additional functions to assist the Secretary in carrying out this section as the Secretary may specify.
(4)

Inapplicability of chapter 10 of title 5, united states code.—
The provisions of chapter 10 of title 5, United States Code, shall not apply.
(5)

Termination.—
The Committee shall terminate on December 31, 2011.
(d)

Report.—
Not later than July 1, 2011, the Secretary shall submit to Congress a report on the programs under this section. The report shall include information on savings, reductions in cost-sharing, access to and quality of items and services, and satisfaction of individuals.
[(e)
Repealed.]
(f)

Competitive Acquisition Ombudsman.—
The Secretary shall provide for a competitive acquisition ombudsman within the Centers for Medicare & Medicaid Services in order to respond to complaints and inquiries made by suppliers and individuals relating to the application of the competitive acquisition program under this section. The ombudsman may be within the office of the Medicare Beneficiary Ombudsman appointed under section 1808(c). The ombudsman shall submit to Congress an annual report on the activities under this subsection, which report shall be coordinated with the report provided under section 1808(c)(2)(C).

use of average sales price payment methodology
Sec. 1847A.
[42 U.S.C. 1395w–3a]
(a)

Application.—
(1)

In general.—
Except as provided in paragraph (2), this section shall apply to payment for drugs and biologicals that are described in section 1842(o)(1)(C) and that are furnished on or after January 1, 2005.
(2)

Election.—
This section shall not apply in the case of a physician who elects under subsection (a)(1)(A)(ii) of section 1847B for that section to apply instead of this section for the payment for drugs and biologicals.
(b)

Payment Amount.—
(1)

In general.—
Subject to paragraph (7) and subsections (d)(3)(C) and (e), the amount of payment determined under this section for the billing and payment code for a drug or biological (based on a minimum dosage unit) is, subject to applicable deductible and coinsurance—
(A)
in the case of a multiple source drug (as defined in subsection (c)(6)(C)), 106 percent of the amount determined under paragraph (3) for a multiple source drug furnished before April 1, 2008, or 106 percent of the amount determined under paragraph (6) for a multiple source drug furnished on or after April 1, 2008;
(B)
in the case of a single source drug or biological (as defined in subsection (c)(6)(D)), 106 percent of the amount determined under paragraph (4) or in the case of such a drug or biological product that is a selected drug (as referred to in section 1192(c)), with respect to a price applicability period (as defined in section 1191(b)(2)), 106 percent of the maximum fair price (as defined in section 1191(c)(3)) applicable for such drug and a year during such period; or
(C)
in the case of a biosimilar biological product (as defined in subsection (c)(6)(H)), the amount determined under paragraph (8).
(2)

Specification of unit.—
(A)

Specification by manufacturer.—
The manufacturer of a drug or biological shall specify the unit associated with each National Drug Code (including package size) as part of the submission of data under section 1927(b)(3)(A)(iii) or subsection (f)(2), as applicable.
(B)

Unit defined.—
In this section, the term “unit” means, with respect to each National Drug Code (including package size) associated with a drug or biological, the lowest identifiable quantity (such as a capsule or tablet, milligram of molecules, or grams) of the drug or biological that is dispensed, exclusive of any diluent without reference to volume measures pertaining to liquids. For years after 2004, the Secretary may establish the unit for a manufacturer to report and methods for counting units as the Secretary determines appropriate to implement this section.
(3)

Multiple source drug.—
For all drug products included within the same multiple source drug billing and payment code, the amount specified in this paragraph is the volume-weighted average of the average sales prices reported under section 1927(b)(3)(A)(iii) or subsection (f)(2), as applicable, determined by—
(A)
computing the sum of the products (for each National Drug Code assigned to such drug products) of—
(i)
the manufacturer's average sales price (as defined in subsection (c)); and
(ii)
the total number of units specified under paragraph (2) sold; and
(B)
dividing the sum determined under subparagraph (A) by the sum of the total number of units under subparagraph (A)(ii) for all National Drug Codes assigned to such drug products.
(4)

Single source drug or biological.—
The amount specified in this paragraph for a single source drug or biological is the lesser of the following:
(A)

Average sales price.—
The average sales price as determined using the methodology applied under paragraph (3) for single source drugs and biologicals furnished before April 1, 2008, and using the methodology applied under paragraph (6) for single source drugs and biologicals furnished on or after April 1, 2008, for all National Drug Codes assigned to such drug or biological product.
(B)

Wholesale acquisition cost (wac).—
The wholesale acquisition cost (as defined in subsection (c)(6)(B)) using the methodology applied under paragraph (3) for single source drugs and biologicals furnished before April 1, 2008, and using the methodology applied under paragraph (6) for single source drugs and biologicals furnished on or after April 1, 2008, for all National Drug Codes assigned to such drug or biological product.
(5)

Basis for payment amount.—
The payment amount shall be determined under this subsection based on information reported under subsection (f) and without regard to any special packaging, labeling, or identifiers on the dosage form or product or package.
(6)

Use of volume-weighted average sales prices in calculation of average sales price.—
(A)

In general.—
For all drug products included within the same multiple source drug billing and payment code, the amount specified in this paragraph is the volume-weighted average of the average sales prices reported under section 1927(b)(3)(A)(iii) or subsection (f)(2), as applicable, determined by—
(i)
computing the sum of the products (for each National Drug Code assigned to such drug products) of—
(I)
the manufacturer's average sales price (as defined in subsection (c)), determined by the Secretary without dividing such price by the total number of billing units for the National Drug Code for the billing and payment code; and
(II)
the total number of units specified under paragraph (2) sold; and
(ii)
dividing the sum determined under clause (i) by the sum of the products (for each National Drug Code assigned to such drug products) of—
(I)
the total number of units specified under paragraph (2) sold; and
(II)
the total number of billing units for the National Drug Code for the billing and payment code.
(B)

Billing unit defined.—
For purposes of this subsection, the term “billing unit” means the identifiable quantity associated with a billing and payment code, as established by the Secretary.
(7)

Special rule.—
Beginning with April 1, 2008, the payment amount for—
(A)
each single source drug or biological described in section 1842(o)(1)(G) that is treated as a multiple source drug because of the application of subsection (c)(6)(C)(ii) is the lower of—
(i)
the payment amount that would be determined for such drug or biological applying such subsection; or
(ii)
the payment amount that would have been determined for such drug or biological if such subsection were not applied; and
(B)
a multiple source drug described in section 1842(o)(1)(G) (excluding a drug or biological that is treated as a multiple source drug because of the application of such subsection) is the lower of—
(i)
the payment amount that would be determined for such drug or biological taking into account the application of such subsection; or
(ii)
the payment amount that would have been determined for such drug or biological if such subsection were not applied.
(8)

Biosimilar biological product.—
(A)

In general.—
Subject to subparagraph (B), the amount specified in this paragraph for a biosimilar biological product described in paragraph (1)(C) is the sum of—
(i)
the average sales price as determined using the methodology described under paragraph (6) applied to a biosimilar biological product for all National Drug Codes assigned to such product in the same manner as such paragraph is applied to drugs described in such paragraph; and
(ii)
6 percent of the amount determined under paragraph (4) for the reference biological product (as defined in subsection (c)(6)(I)).
(B)

Temporary payment increase.—
(i)

In general.—
In the case of a qualifying biosimilar biological product that is furnished during the applicable 5-year period for such product, the amount specified in this paragraph for such product with respect to such period is the sum determined under subparagraph (A), except that clause (ii) of such subparagraph shall be applied by substituting “8 percent” for “6 percent”.
(ii)

Applicable 5-year period.—
For purposes of clause (i), the applicable 5-year period for a qualifying biosimilar biological product is—
(I)
in the case of such a product for which payment was made under this paragraph as of September 30, 2022, the 5-year period beginning on October 1, 2022; and
(II)
in the case of such a product for which payment is first made under this paragraph during a calendar quarter during the period beginning October 1, 2022, and ending December 31, 2027, the 5-year period beginning on the first day of such calendar quarter during which such payment is first made.
(iii)

Qualifying biosimilar biological product defined.—
For purposes of this subparagraph, the term “qualifying biosimilar biological product” means a biosimilar biological product described in paragraph (1)(C) with respect to which—
(I)
in the case of a product described in clause (ii)(I), the average sales price under paragraph (8)(A)(i) for a calendar quarter during the 5-year period described in such clause is not more than the average sales price under paragraph (4)(A) for such quarter for the reference biological product; and
(II)
in the case of a product described in clause (ii)(II), the average sales price under paragraph (8)(A)(i) for a calendar quarter during the 5-year period described in such clause is not more than the average sales price under paragraph (4)(A) for such quarter for the reference biological product.
(c)

Manufacturer's Average Sales Price.—
(1)

In general.—
For purposes of this section, subject to paragraphs (2) and (3), the manufacturer's “average sales price” means, of a drug or biological for a National Drug Code for a calendar quarter for a manufacturer for a unit—
(A)
the manufacturer's sales to all purchasers (excluding sales exempted in paragraph (2)) in the United States for such drug or biological in the calendar quarter; divided by
(B)
the total number of such units of such drug or biological sold by the manufacturer in such quarter.
(2)

Certain sales exempted from computation.—
In calculating the manufacturer's average sales price under this subsection, the following sales shall be excluded:
(A)

Sales exempt from best price.—
Sales exempt from the inclusion in the determination of ``best price' under section 1927(c)(1)(C)(i).
(B)

Sales at nominal charge.—
Such other sales as the Secretary identifies as sales to an entity that are merely nominal in amount (as applied for purposes of section 1927(c)(1)(C)(ii)(III), except as the Secretary may otherwise provide).
(3)

Sale price net of discounts.—
In calculating the manufacturer's average sales price under this subsection, such price shall include volume discounts, prompt pay discounts, cash discounts, free goods that are contingent on any purchase requirement, chargebacks, and rebates (other than rebates under subsection (i), section 1927, or section 1860D–14B). For years after 2004, the Secretary may include in such price other price concessions, which may be based on recommendations of the Inspector General, that would result in a reduction of the cost to the purchaser.
(4)

Payment methodology in cases where average sales price during first quarter of sales is unavailable.—
(A)

In general.—
Subject to subparagraph (B), in the case of a drug or biological during an initial period (not to exceed a full calendar quarter) in which data on the prices for sales for the drug or biological is not sufficiently available from the manufacturer to compute an average sales price for the drug or biological, the Secretary may determine the amount payable under this section—
(i)
in the case of a drug or biological furnished prior to January 1, 2019, based on—
(I)
the wholesale acquisition cost; or
(II)
the methodologies in effect under this part on November 1, 2003, to determine payment amounts for drugs or biologicals; and
(ii)
in the case of a drug or biological furnished on or after January 1, 2019—
(I)
at an amount not to exceed 103 percent of the wholesale acquisition cost; or
(II)
based on the methodologies in effect under this part on November 1, 2003, to determine payment amounts for drugs or biologicals.
(B)

Limitation on payment amount for biosimilar biological products during initial period.—
In the case of a biosimilar biological product furnished on or after July 1, 2024, during the initial period described in subparagraph (A) with respect to the biosimilar biological product, the amount payable under this section for the biosimilar biological product is the lesser of the following:
(i)
The amount determined under clause (ii) of such subparagraph for the biosimilar biological product.
(ii)
The amount determined under subsection (b)(1)(B) for the reference biological product.
(5)

Frequency of determinations.—
(A)

In general on a quarterly basis.—
The manufacturer's average sales price, for a drug or biological of a manufacturer, shall be calculated by such manufacturer under this subsection on a quarterly basis. In making such calculation insofar as there is a lag in the reporting of the information on rebates and chargebacks under paragraph (3) so that adequate data are not available on a timely basis, the manufacturer shall apply a methodology based on a 12-month rolling average for the manufacturer to estimate costs attributable to rebates and chargebacks. For years after 2004, the Secretary may establish a uniform methodology under this subparagraph to estimate and apply such costs.
(B)

Updates in payment amounts.—
The payment amounts under subsection (b) shall be updated by the Secretary on a quarterly basis and shall be applied based upon the manufacturer's average sales price calculated for the most recent calendar quarter for which data is available.
(C)

Use of contractors; implementation.—
The Secretary may contract with appropriate entities to calculate the payment amount under subsection (b). Notwithstanding any other provision of law, the Secretary may implement, by program instruction or otherwise, any of the provisions of this section.
(6)

Definitions and other rules.—
In this section:
(A)

Manufacturer.—
The term “manufacturer” means, with respect to a drug or biological, the manufacturer (as defined in section 1927(k)(5)), except that, for purposes of subsection (f)(2), the Secretary may, if the Secretary determines appropriate, exclude repackagers of a drug or biological from such term.
(B)

Wholesale acquisition cost.—
The term “wholesale acquisition cost” means, with respect to a drug or biological, the manufacturer's list price for the drug or biological to wholesalers or direct purchasers in the United States, not including prompt pay or other discounts, rebates or reductions in price, for the most recent month for which the information is available, as reported in wholesale price guides or other publications of drug or biological pricing data.
(C)

Multiple source drug.—
(i)

In general.—
The term “multiple source drug” means, for a calendar quarter, a drug for which there are 2 or more drug products which—
(I)
are rated as therapeutically equivalent (under the Food and Drug Administration's most recent publication of “Approved Drug Products with Therapeutic Equivalence Evaluations”),
(II)
except as provided in subparagraph (E), are pharmaceutically equivalent and bioequivalent, as determined under subparagraph (F) and as determined by the Food and Drug Administration, and
(III)
are sold or marketed in the United States during the quarter.
(ii)

Exception.—
With respect to single source drugs or biologicals that are within the same billing and payment code as of October 1, 2003, the Secretary shall treat such single source drugs or biologicals as if the single source drugs or biologicals were multiple source drugs.
(D)

Single source drug or biological.—
The term “single source drug or biological” means—
(i)
a biological; or
(ii)
a drug which is not a multiple source drug and which is produced or distributed under a new drug application approved by the Food and Drug Administration, including a drug product marketed by any cross-licensed producers or distributors operating under the new drug application.
(E)

Exception from pharmaceutical equivalence and bioequivalence requirement.—
Subparagraph (C)(ii) shall not apply if the Food and Drug Administration changes by regulation the requirement that, for purposes of the publication described in subparagraph (C)(i), in order for drug products to be rated as therapeutically equivalent, they must be pharmaceutically equivalent and bioequivalent, as defined in subparagraph (F).
(F)

Determination of pharmaceutical equivalence and bioequivalence.—
For purposes of this paragraph—
(i)
drug products are pharmaceutically equivalent if the products contain identical amounts of the same active drug ingredient in the same dosage form and meet compendial or other applicable standards of strength, quality, purity, and identity; and
(ii)
drugs are bioequivalent if they do not present a known or potential bioequivalence problem, or, if they do present such a problem, they are shown to meet an appropriate standard of bioequivalence.
(G)

Inclusion of vaccines.—
In applying provisions of section 1927 under this section, “other than a vaccine” is deemed deleted from section 1927(k)(2)(B).
(H)

Biosimilar biological product.—
The term “biosimilar biological product” means a biological product approved under an abbreviated application for a license of a biological product that relies in part on data or information in an application for another biological product licensed under section 351 of the Public Health Service Act.
(I)

Reference biological product.—
The term “reference biological product” means the biological product licensed under such section 351 that is referred to in the application described in subparagraph (H) of the biosimilar biological product.
(d)

Monitoring of Market Prices.—
(1)

In general.—
The Inspector General of the Department of Health and Human Services shall conduct studies, which may include surveys, to determine the widely available market prices of drugs and biologicals to which this section applies, as the Inspector General, in consultation with the Secretary, determines to be appropriate.
(2)

Comparison of prices.—
Based upon such studies and other data for drugs and biologicals, the Inspector General shall compare the average sales price under this section for drugs and biologicals with—
(A)
the widely available market price for such drugs and biologicals (if any); and
(B)
the average manufacturer price (as determined under section 1927(k)(1)) for such drugs and biologicals.
(3)

Limitation on average sales price.—
(A)

In general.—
The Secretary may disregard the average sales price for a drug or biological that exceeds the widely available market price or the average manufacturer price for such drug or biological by the applicable threshold percentage (as defined in subparagraph (B)).
(B)

Applicable threshold percentage defined.—
In this paragraph, the term “applicable threshold percentage” means—
(i)
in 2005, in the case of an average sales price for a drug or biological that exceeds widely available market price or the average manufacturer price, 5 percent; and
(ii)
in 2006 and subsequent years, the percentage applied under this subparagraph subject to such adjustment as the Secretary may specify for the widely available market price or the average manufacturer price, or both.
(C)

Authority to adjust average sales price.—
If the Inspector General finds that the average sales price for a drug or biological exceeds such widely available market price or average manufacturer price for such drug or biological by the applicable threshold percentage, the Inspector General shall inform the Secretary (at such times as the Secretary may specify to carry out this subparagraph) and the Secretary shall, effective as of the next quarter, substitute for the amount of payment otherwise determined under this section for such drug or biological the lesser of—
(i)
the widely available market price for the drug or biological (if any); or
(ii)
103 percent of the average manufacturer price (as determined under section 1927(k)(1)) for the drug or biological.
(4)

Civil money penalty.—
(A)

Misrepresentation.—
If the Secretary determines that a manufacturer has made a misrepresentation in the reporting of the manufacturer's average sales price for a drug or biological, the Secretary may apply a civil money penalty in an amount of up to $10,000 for each such price misrepresentation and for each day in which such price misrepresentation was applied.
(B)

Failure to provide timely information.—
If the Secretary determines that a manufacturer described in subsection (f)(2) has failed to report on information described in section 1927(b)(3)(A)(iii) with respect to a drug or biological in accordance with such subsection, the Secretary shall apply a civil money penalty in an amount of $10,000 for each day the manufacturer has failed to report such information and such amount shall be paid to the Treasury.
(C)

False information.—
Any manufacturer required to submit information under subsection (f)(2) that knowingly provides false information is subject to a civil money penalty in an amount not to exceed $100,000 for each item of false information. Such civil money penalties are in addition to other penalties as may be prescribed by law.
(D)

Increasing oversight and enforcement.—
For calendar quarters beginning on or after January 1, 2022, section 1927(b)(3)(C)(iv) shall be applied as if—
(i)
each reference to “under this subparagraph and subsection (c)(4)(B)(ii)(III)” were a reference to “under this subparagraph, subsection (c)(4)(B)(ii)(III), and subparagraphs (A), (B), and (C) of section 1847A(d)(4)”; and
(ii)
the reference to “activities related to the oversight and enforcement of this section and agreements under this section” were a reference to “activities related to the oversight and enforcement of this section and under subsection (f)(2) of section 1847A and subparagraphs (A), (B), and (C) of section 1847A(d)(4) and, if applicable, agreements under this section”.
(E)

Procedures.—
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to civil money penalties under subparagraph (A), (B), or (C) in the same manner as they apply to a penalty or proceeding under section 1128A(a).
(5)

Widely available market price.—
(A)

In general.—
In this subsection, the term “widely available market price” means the price that a prudent physician or supplier would pay for the drug or biological. In determining such price, the Inspector General shall take into account the discounts, rebates, and other price concessions routinely made available to such prudent physicians or suppliers for such drugs or biologicals.
(B)

Considerations.—
In determining the price under subparagraph (A), the Inspector General shall consider information from one or more of the following sources:
(i)
Manufacturers.
(ii)
Wholesalers.
(iii)
Distributors.
(iv)
Physician supply houses.
(v)
Specialty pharmacies.
(vi)
Group purchasing arrangements.
(vii)
Surveys of physicians.
(viii)
Surveys of suppliers.
(ix)
Information on such market prices from insurers.
(x)
Information on such market prices from private health plans.
(e)

Authority To Use Alternative Payment in Response to Public Health Emergency.—
In the case of a public health emergency under section 319 of the Public Health Service Act in which there is a documented inability to access drugs and biologicals, and a concomitant increase in the price, of a drug or biological which is not reflected in the manufacturer's average sales price for one or more quarters, the Secretary may use the wholesale acquisition cost (or other reasonable measure of drug or biological price) instead of the manufacturer's average sales price for such quarters and for subsequent quarters until the price and availability of the drug or biological has stabilized and is substantially reflected in the applicable manufacturer's average sales price.
(f)

Quarterly Report on Average Sales Price.—
(1)

In general.—
For requirements for reporting the manufacturer's average sales price (and, if required to make payment, the manufacturer's wholesale acquisition cost) for the drug or biological under this section, see section 1927(b)(3).
(2)

Manufacturers without a rebate agreement under title xix.—
(A)

In general.—
If the manufacturer of a drug or biological described in subparagraph (C), (E), or (G) of section 1842(o)(1) or in section 1881(b)(14)(B) that is payable under this part has not entered into and does not have in effect a rebate agreement described in subsection (b) of section 1927, for calendar quarters beginning on January 1, 2022, such manufacturer shall report to the Secretary the information described in subsection (b)(3)(A)(iii) of such section 1927 with respect to such drug or biological in a time and manner specified by the Secretary. For purposes of applying this paragraph, a drug or biological described in the previous sentence includes items, services, supplies, and products that are payable under this part as a drug or biological.
(B)

Audit.—
Information reported under subparagraph (A) is subject to audit by the Inspector General of the Department of Health and Human Services.
(C)

Verification.—
The Secretary may survey wholesalers and manufacturers that directly distribute drugs or biologicals described in subparagraph (A), when necessary, to verify manufacturer prices and manufacturer’s average sales prices (including wholesale acquisition cost) if required to make payment reported under subparagraph (A). The Secretary may impose a civil monetary penalty in an amount not to exceed $100,000 on a wholesaler, manufacturer, or direct seller, if the wholesaler, manufacturer, or direct seller of such a drug or biological refuses a request for information about charges or prices by the Secretary in connection with a survey under this subparagraph or knowingly provides false information. The provisions of section 1128A (other than subsections (a) (with respect to amounts of penalties or additional assessments) and (b)) shall apply to a civil money penalty under this subparagraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(D)

Confidentiality.—
Notwithstanding any other provision of law, information disclosed by manufacturers or wholesalers under this paragraph (other than the wholesale acquisition cost for purposes of carrying out this section) is confidential and shall not be disclosed by the Secretary in a form which discloses the identity of a specific manufacturer or wholesaler or prices charged for drugs or biologicals by such manufacturer or wholesaler, except—
(i)
as the Secretary determines to be necessary to carry out this section (including the determination and implementation of the payment amount), or to carry out section 1847B;
(ii)
to permit the Comptroller General of the United States to review the information provided;
(iii)
to permit the Director of the Congressional Budget Office to review the information provided;
(iv)
to permit the Medicare Payment Advisory Commission to review the information provided; and
(v)
to permit the Medicaid and CHIP Payment and Access Commission to review the information provided.
(g)

Payment Adjustment for Certain Drugs for Which There is a Self-administered NDC.—
(1)

OIG studies.—
The Inspector General of the Department of Health and Human Services shall conduct periodic studies to identify National Drug Codes for drug or biological products that are self-administered for which payment may not be made under this part because such products are not covered pursuant to section 1861(s)(2) and which the Inspector General determines (based on the same or similar methodologies to the methodologies used in the final recommendation followup report of the Inspector General described in paragraph (3) or in the November 2017 final report of the Inspector General entitled “Excluding Noncovered Versions When Setting Payment for Two Part B Drugs Would Have Resulted in Lower Drug Costs for Medicare and its Beneficiaries”) should be excluded from the determination of the payment amount under this section.
(2)

Payment adjustment.—
If the Inspector General identifies a National Drug Code for a drug or biological product under paragraph (1), the Inspector General shall inform the Secretary (at such times as the Secretary may specify to carry out this paragraph) and the Secretary shall, to the extent the Secretary deems appropriate, apply as the amount of payment under this section for the applicable billing and payment code the lesser of—
(A)
the amount of payment that would be determined under this section for such billing and payment code if such National Drug Code for such product so identified under paragraph (1) were excluded from such determination; or
(B)
the amount of payment otherwise determined under this section for such billing and payment code without application of this subsection.
(3)

Application to certain identified products.—
In the case of a National Drug Code for a drug or biological product that is self-administered for which payment is not made under this part because such product is not covered pursuant to section 1861(s)(2) that was identified by the Inspector General of the Department of Health and Human Services in the final recommendation followup report of the Inspector General published July 2020, entitled Loophole in Drug Payment Rule Continues To Cost Medicare and Beneficiaries Hundreds of Millions of Dollars, beginning July 1, 2021, the amount of payment under this section for the applicable billing and payment code shall be the lesser of—
(A)
the amount of payment that would be determined under this section for such billing and payment code if such National Drug Code for such drug or biological products so identified were excluded from such determination; or
(B)
the amount of payment otherwise determined under this section for such billing and payment code without application of this subsection.
(h)

Refund for Certain Discarded Single-dose Container or Single-use Package Drugs.—
(1)

Secretarial provision of information.—
(A)

In general.—
For each calendar quarter beginning on or after January 1, 2023, the Secretary shall, with respect to a refundable single-dose container or single-use package drug (as defined in paragraph (8)), report to each manufacturer (as defined in subsection (c)(6)(A)) of such refundable single-dose container or single-use package drug the following for the calendar quarter:
(i)
Subject to subparagraph (C), information on the total number of units of the billing and payment code of such drug, if any, that were discarded during such quarter, as determined using a mechanism such as the JW modifier used as of the date of enactment of this subsection (or any such successor modifier that includes such data as determined appropriate by the Secretary).
(ii)
The refund amount that the manufacturer is liable for pursuant to paragraph (3).
(B)

Determination of discarded amounts.—
For purposes of subparagraph (A)(i), with respect to a refundable single-dose container or single-use package drug furnished during a quarter, the amount of such drug that was discarded shall be determined based on the amount of such drug that was unused and discarded for each drug on the date of service.
(C)

Exclusion of units of packaged drugs.—
The total number of units of the billing and payment code of a refundable single-dose container or single-use package drug of a manufacturer furnished during a calendar quarter for purposes of subparagraph (A)(i), and the determination of the estimated total allowed charges for the drug in the quarter for purposes of paragraph (3)(A)(ii), shall not include such units that are packaged into the payment amount for an item or service and are not separately payable.
(2)

Manufacturer requirement.—
For each calendar quarter beginning on or after January 1, 2023, the manufacturer of a refundable single-dose container or single-use package drug shall, for such drug, provide to the Secretary a refund that is equal to the amount specified in paragraph (3) for such drug for such quarter.
(3)

Refund amount.—
(A)

In general.—
The amount of the refund specified in this paragraph is, with respect to a refundable single-dose container or single-use package drug of a manufacturer assigned to a billing and payment code for a calendar quarter beginning on or after January 1, 2023, an amount equal to the estimated amount (if any) by which—
(i)
the product of—
(I)
the total number of units of the billing and payment code for such drug that were discarded during such quarter (as determined under paragraph (1)); and
(II)
- (aa)
in the case of a refundable single-dose container or single-use package drug that is a single source drug or biological, the amount of payment determined for such drug or biological under subsection (b)(1)(B) for such quarter; or
- (bb)
in the case of a refundable single-dose container or single-use package drug that is a biosimilar biological product, the amount of payment determined for such product under subsection (b)(1)(C) for such quarter; exceeds
(ii)
an amount equal to the applicable percentage (as defined in subparagraph (B)) of the estimated total allowed charges for such drug under this part during the quarter.
(B)

Applicable percentage defined.—
(i)

In general.—
For purposes of subparagraph (A)(ii), the term “applicable percentage” means—
(I)
subject to subclause (II), 10 percent; and
(II)
if applicable, in the case of a refundable single-dose container or single-use package drug described in clause (ii), a percentage specified by the Secretary pursuant to such clause.
(ii)

Treatment of drugs that have unique circumstances.—
In the case of a refundable single-dose container or single-use package drug that has unique circumstances involving similar loss of product as that described in paragraph (8)(B)(ii), the Secretary, through notice and comment rulemaking, may increase the applicable percentage otherwise applicable under clause (i)(I) as determined appropriate by the Secretary.
(4)

Frequency.—
Amounts required to be refunded pursuant to paragraph (2) shall be paid in regular intervals (as determined appropriate by the Secretary).
(5)

Refund deposits.—
Amounts paid as refunds pursuant to paragraph (2) shall be deposited into the Federal Supplementary Medical Insurance Trust Fund established under section 1841.
(6)

Enforcement.—
(A)

Audits.—
(i)

Manufacturer audits.—
Each manufacturer of a refundable single-dose container or single-use package drug that is required to provide a refund under this subsection shall be subject to periodic audit with respect to such drug and such refunds by the Secretary.
(ii)

Provider audits.—
The Secretary shall conduct periodic audits of claims submitted under this part with respect to refundable single-dose container or single-use package drugs in accordance with the authority under section 1833(e) to ensure compliance with the requirements applicable under this subsection.
(B)

Civil money penalty.—
(i)

In general.—
The Secretary shall impose a civil money penalty on a manufacturer of a refundable single-dose container or single-use package drug who has failed to comply with the requirement under paragraph (2) for such drug for a calendar quarter in an amount equal to the sum of—
(I)
the amount that the manufacturer would have paid under such paragraph with respect to such drug for such quarter; and
(II)
25 percent of such amount.
(ii)

Application.—
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this subparagraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(7)

Implementation.—
The Secretary shall implement this subsection through notice and comment rulemaking.
(8)

Definition of refundable single-dose container or single-use package drug.—
(A)

In general.—
Except as provided in subparagraph (B), in this subsection, the term “refundable single-dose container or single-use package drug” means a single source drug or biological (as defined in section 1847A(c)(6)(D)) or a biosimilar biological product (as defined in section 1847A(c)(6)(H)) for which payment is made under this part and that is furnished from a single-dose container or single-use package.
(B)

Exclusions.—
The term “refundable single-dose container or single-use package drug” does not include—
(i)
a drug or biological that is either a radiopharmaceutical or an imaging agent;
(ii)
a drug or biological approved by the Food and Drug Administration for which dosage and administration instructions included in the labeling require filtration during the drug preparation process, prior to dilution and administration, and require that any unused portion of such drug after the filtration process be discarded after the completion of such filtration process; or
(iii)
a drug or biological approved by the Food and Drug Administration on or after the date of enactment of this subsection and with respect to which payment has been made under this part for fewer than 18 months.
(9)

Report to congress.—
Not later than 3 years after the date of enactment of this subsection, the Office of the Inspector General, after consultation with the Centers for Medicare & Medicaid Services and the Food and Drug Administration, shall submit to the Committee on Finance of the Senate and the Committee on Energy and Commerce and the Committee on Ways and Means of the House of Representatives, a report on any impact this section is reported to have on the licensure, market entry, market retention, or marketing of biosimilar biological products. Such report shall be updated periodically at the direction of the Committee on Finance of the Senate and the Committee on Energy and Commerce and the Committee on Ways and Means of the House of Representatives.
(i)

Rebate by Manufacturers for Single Source Drugs and Biologicals With Prices Increasing Faster Than Inflation.—
(1)

Requirements.—
(A)

Secretarial provision of information.—
Not later than 6 months after the end of each calendar quarter beginning on or after January 1, 2023, the Secretary shall, for each part B rebatable drug, report to each manufacturer of such part B rebatable drug the following for such calendar quarter:
(i)
Information on the total number of units of the billing and payment code described in subparagraph (A)(i) of paragraph (3) with respect to such drug and calendar quarter.
(ii)
Information on the amount (if any) of the excess average sales price increase described in subparagraph (A)(ii) of such paragraph for such drug and calendar quarter.
(iii)
The rebate amount specified under such paragraph for such part B rebatable drug and calendar quarter.
(B)

Manufacturer requirement.—
For each calendar quarter beginning on or after January 1, 2023, the manufacturer of a part B rebatable drug shall, for such drug, not later than 30 days after the date of receipt from the Secretary of the information described in subparagraph (A) for such calendar quarter, provide to the Secretary a rebate that is equal to the amount specified in paragraph (3) for such drug for such calendar quarter.
(C)

Transition rule for reporting.—
The Secretary may, for each part B rebatable drug, delay the timeframe for reporting the information described in subparagraph (A) for calendar quarters beginning in 2023 and 2024 until not later than September 30, 2025.
(2)

Part b rebatable drug defined.—
(A)

In general.—
In this subsection, the term “part B rebatable drug” means a single source drug or biological (as defined in subparagraph (D) of subsection (c)(6)), including a biosimilar biological product (as defined in subparagraph (H) of such subsection) but excluding a qualifying biosimilar biological product (as defined in subsection (b)(8)(B)(iii)), for which payment is made under this part, except such term shall not include such a drug or biological—
(i)
if, as determined by the Secretary, the average total allowed charges for such drug or biological under this part for a year per individual that uses such a drug or biological are less than, subject to subparagraph (B), $100; or
(ii)
that is a vaccine described in subparagraph (A) or (B) of section 1861(s)(10).
(B)

Increase.—
The dollar amount applied under subparagraph (A)(i)—
(i)
for 2024, shall be the dollar amount specified under such subparagraph for 2023, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending with June of the previous year; and
(ii)
for a subsequent year, shall be the dollar amount specified in this clause (or clause (i)) for the previous year (without application of subparagraph (C)), increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending with June of the previous year.
(C)

Rounding.—
Any dollar amount determined under subparagraph (B) that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
(3)

Rebate amount.—
(A)

In general.—
For purposes of paragraph (1), the amount specified in this paragraph for a part B rebatable drug assigned to a billing and payment code for a calendar quarter is, subject to subparagraphs (B) and (G) and paragraph (4), the estimated amount equal to the product of—
(i)
the total number of units determined under subparagraph (B) for the billing and payment code of such drug; and
(ii)
the amount (if any) by which—
(I)
the amount equal to—
- (aa)
in the case of a part B rebatable drug described in paragraph (1)(B) of subsection (b), 106 percent of the amount determined under paragraph (4) of such section for such drug during the calendar quarter; or
- (bb)
in the case of a part B rebatable drug described in paragraph (1)(C) of such subsection, the payment amount under such paragraph for such drug during the calendar quarter; exceeds
(II)
the inflation-adjusted payment amount determined under subparagraph (C) for such part B rebatable drug during the calendar quarter.
(B)

Total number of units.—
For purposes of subparagraph (A)(i), the total number of units for the billing and payment code with respect to a part B rebatable drug furnished during a calendar quarter described in subparagraph (A) is equal to—
(i)
the number of units for the billing and payment code of such drug furnished during such calendar quarter, minus
(ii)
the number of units for such billing and payment code of such drug furnished during such calendar quarter—
(I)
with respect to which the manufacturer provides a discount under the program under section 340B of the Public Health Service Act or a rebate under section 1927; or
(II)
that are packaged into the payment amount for an item or service and are not separately payable.
(C)

Determination of inflation-adjusted payment amount.—
The inflation-adjusted payment amount determined under this subparagraph for a part B rebatable drug for a calendar quarter is—
(i)
the payment amount for the billing and payment code for such drug in the payment amount benchmark quarter (as defined in subparagraph (D)); increased by
(ii)
the percentage by which the rebate period CPI–U (as defined in subparagraph (F)) for the calendar quarter exceeds the benchmark period CPI–U (as defined in subparagraph (E)).
(D)

Payment amount benchmark quarter.—
The term “payment amount benchmark quarter” means the calendar quarter beginning July 1, 2021.
(E)

Benchmark period cpi–u.—
The term “benchmark period CPI–U” means the consumer price index for all urban consumers (United States city average) for January 2021.
(F)

Rebate period cpi–u.—
The term “rebate period CPI–U” means, with respect to a calendar quarter described in subparagraph (C), the greater of the benchmark period CPI–U and the consumer price index for all urban consumers (United States city average) for the first month of the calendar quarter that is two calendar quarters prior to such described calendar quarter.
(G)

Reduction or waiver for shortages and severe supply chain disruptions.—
The Secretary shall reduce or waive the amount under subparagraph (A) with respect to a part B rebatable drug and a calendar quarter—
(i)
in the case of a part B rebatable drug that is described as currently in shortage on the shortage list in effect under section 506E of the Federal Food, Drug, and Cosmetic Act at any point during the calendar quarter; or
(ii)
in the case of a biosimilar biological product, when the Secretary determines there is a severe supply chain disruption during the calendar quarter, such as that caused by a natural disaster or other unique or unexpected event.
(4)

Special treatment of certain drugs and exemption.—
(A)

Subsequently approved drugs.—
In the case of a part B rebatable drug first approved or licensed by the Food and Drug Administration after December 1, 2020, clause (i) of paragraph (3)(C) shall be applied as if the term “payment amount benchmark quarter” were defined under paragraph (3)(D) as the third full calendar quarter after the day on which the drug was first marketed and clause (ii) of paragraph (3)(C) shall be applied as if the term “benchmark period CPI–U” were defined under paragraph (3)(E) as if the reference to “January 2021” under such paragraph were a reference to “the first month of the first full calendar quarter after the day on which the drug was first marketed”.
(B)

Timeline for provision of rebates for subsequently approved drugs.—
In the case of a part B rebatable drug first approved or licensed by the Food and Drug Administration after December 1, 2020, paragraph (1)(B) shall be applied as if the reference to “January 1, 2023” under such paragraph were a reference to “the later of the 6th full calendar quarter after the day on which the drug was first marketed or January 1, 2023”.
(C)

Selected drugs.—
In the case of a part B rebatable drug that is a selected drug (as defined in section 1192(c)) with respect to a price applicability period (as defined in section 1191(b)(2)), in the case such drug is no longer considered to be a selected drug under section 1192(c), for each applicable period (as defined under subsection (g)(7)) beginning after the price applicability period with respect to such drug, clause (i) of paragraph (3)(C) shall be applied as if the term “payment amount benchmark quarter” were defined under paragraph (3)(D) as the calendar quarter beginning January 1 of the last year during such price applicability period with respect to such selected drug and clause (ii) of paragraph (3)(C) shall be applied as if the term “benchmark period CPI–U” were defined under paragraph (3)(E) as if the reference to “January 2021” under such paragraph were a reference to “the July of the year preceding such last year”.
(5)

Application to beneficiary coinsurance.—
In the case of a part B rebatable drug furnished on or after April 1, 2023, if the payment amount described in paragraph (3)(A)(ii)(I) (or, in the case of a part B rebatable drug that is a selected drug (as defined in section 1192(c)), the payment amount described in subsection (b)(1)(B) for such drug) for a calendar quarter exceeds the inflation adjusted payment for such quarter—
(A)
in computing the amount of any coinsurance applicable under this part to an individual to whom such drug is furnished, the computation of such coinsurance shall be equal to 20 percent of the inflation-adjusted payment amount determined under paragraph (3)(C) for such part B rebatable drug; and
(B)
the amount of such coinsurance for such calendar quarter, as computed under subparagraph (A), shall be applied as a percent, as determined by the Secretary, to the payment amount that would otherwise apply under subparagraphs (B) or (C) of subsection (b)(1).
(6)

Rebate deposits.—
Amounts paid as rebates under paragraph (1)(B) shall be deposited into the Federal Supplementary Medical Insurance Trust Fund established under section 1841.
(7)

Civil money penalty.—
If a manufacturer of a part B rebatable drug has failed to comply with the requirements under paragraph (1)(B) for such drug for a calendar quarter, the manufacturer shall be subject to, in accordance with a process established by the Secretary pursuant to regulations, a civil money penalty in an amount equal to at least 125 percent of the amount specified in paragraph (3) for such drug for such calendar quarter. The provisions of section 1128A (other than subsections (a) (with respect to amounts of penalties or additional assessments) and (b)) shall apply to a civil money penalty under this paragraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(8)

Limitation on administrative or judicial review.—
There shall be no administrative or judicial review of any of the following:
(A)
The determination of units under this subsection.
(B)
The determination of whether a drug is a part B rebatable drug under this subsection.
(C)
The calculation of the rebate amount under this subsection.
(D)
The computation of coinsurance under paragraph (5) of this subsection.
(E)
The computation of amounts paid under section 1833(a)(1)(EE).
(j)

Judicial Review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of—
(1)
determinations of payment amounts under this section, including the assignment of National Drug Codes to billing and payment codes;
(2)
the identification of units (and package size) under subsection (b)(2);
(3)
the method to allocate rebates, chargebacks, and other price concessions to a quarter if specified by the Secretary;
(4)
the manufacturer's average sales price when it is used for the determination of a payment amount under this section; and
(5)
the disclosure of the average manufacturer price by reason of an adjustment under subsection (d)(3)(C) or (e).

competitive acquisition of outpatient drugs and biologicals
Sec. 1847B.
[42 U.S.C. 1395w–3b]
(a)

Implementation of Competitive Acquisition.—
(1)

Implementation of program.—
(A)

In general.—
The Secretary shall establish and implement a competitive acquisition program under which—
(i)
competitive acquisition areas are established for contract award purposes for acquisition of and payment for categories of competitively biddable drugs and biologicals (as defined in paragraph (2)) under this part;
(ii)
each physician is given the opportunity annually to elect to obtain drugs and biologicals under the program, rather than under section 1847A; and
(iii)
each physician who elects to obtain drugs and biologicals under the program makes an annual selection under paragraph (5) of the contractor through which drugs and biologicals within a category of drugs and biologicals will be acquired and delivered to the physician under this part.
This section shall not apply in the case of a physician who elects section 1847A to apply.
(B)

Implementation.—
For purposes of implementing the program, the Secretary shall establish categories of competitively biddable drugs and biologicals. The Secretary shall phase in the program with respect to those categories beginning in 2006 in such manner as the Secretary determines to be appropriate.
(C)

Waiver of certain provisions.—
In order to promote competition, in carrying out the program the Secretary may waive such provisions of the Federal Acquisition Regulation as are necessary for the efficient implementation of this section, other than provisions relating to confidentiality of information and such other provisions as the Secretary determines appropriate.
(D)

Exclusion authority.—
The Secretary may exclude competitively biddable drugs and biologicals (including a class of such drugs and biologicals) from the competitive bidding system under this section if the application of competitive bidding to such drugs or biologicals—
(i)
is not likely to result in significant savings; or
(ii)
is likely to have an adverse impact on access to such drugs or biologicals.
(2)

Competitively biddable drugs and biologicals and program defined.—
For purposes of this section—
(A)

Competitively biddable drugs and biologicals defined.—
The term “competitively biddable drugs and biologicals” means a drug or biological described in section 1842(o)(1)(C) and furnished on or after January 1, 2006.
(B)

Program.—
The term “program” means the competitive acquisition program under this section.
(C)

Competitive acquisition area; area.—
The terms “competitive acquisition area” and “area” mean an appropriate geographic region established by the Secretary under the program.
(D)

Contractor.—
The term “contractor” means an entity that has entered into a contract with the Secretary under this section.
(3)

Application of program payment methodology.—
(A)

In general.—
With respect to competitively biddable drugs and biologicals which are supplied under the program in an area and which are prescribed by a physician who has elected this section to apply—
(i)
the claim for such drugs and biologicals shall be submitted by the contractor that supplied the drugs and biologicals;
(ii)
collection of amounts of any deductible and coinsurance applicable with respect to such drugs and biologicals shall be the responsibility of such contractor and shall not be collected unless the drug or biological is administered to the individual involved; and
(iii)
the payment under this section (and related amounts of any applicable deductible and coinsurance) for such drugs and biologicals shall be made only to such contractor upon receipt of a claim for a drug or biological supplied by the contractor for administration to a beneficiary.
(B)

Process for adjustments.—
The Secretary shall provide a process for adjustments to payments in the case in which payment is made for drugs and biologicals which were billed at the time of dispensing but which were not actually administered.
(C)

Information for purposes of cost-sharing.—
The Secretary shall provide a process by which physicians submit information to contractors for purposes of the collection of any applicable deductible or coinsurance amounts under subparagraph (A)(ii).
(D)

Post-payment review process.—
The Secretary shall establish (by program instruction or otherwise) a post-payment review process (which may include the use of statistical sampling) to assure that payment is made for a drug or biological under this section only if the drug or biological has been administered to a beneficiary. The Secretary shall recoup, offset, or collect any overpayments determined by the Secretary under such process.
(4)

Contract required.—
Payment may not be made under this part for competitively biddable drugs and biologicals prescribed by a physician who has elected this section to apply within a category and a competitive acquisition area with respect to which the program applies unless—
(A)
the drugs or biologicals are supplied by a contractor with a contract under this section for such category of drugs and biologicals and area; and
(B)
the physician has elected such contractor under paragraph (5) for such category and area.
(5)

Contractor selection process.—
(A)

Annual selection.—
(i)

In general.—
The Secretary shall provide a process for the selection of a contractor, on an annual basis and in such exigent circumstances as the Secretary may provide and with respect to each category of competitively biddable drugs and biologicals for an area by selecting physicians.
(ii)

Timing of selection.—
The selection of a contractor under clause (i) shall be made at the time of the election described in section 1847A(a) for this section to apply and shall be coordinated with agreements entered into under section 1842(h).
(B)

Information on contractors.—
The Secretary shall make available to physicians on an ongoing basis, through a directory posted on the Internet website of the Centers for Medicare & Medicaid Services or otherwise and upon request, a list of the contractors under this section in the different competitive acquisition areas.
(C)

Selecting physician defined.—
For purposes of this section, the term “selecting physician” means, with respect to a contractor and category and competitive acquisition area, a physician who has elected this section to apply and has selected to apply under this section such contractor for such category and area.
(b)

Program Requirements.—
(1)

Contract for competitively biddable drugs and biologicals.—
The Secretary shall conduct a competition among entities for the acquisition of competitively biddable drugs and biologicals. Notwithstanding any other provision of this title, in the case of a multiple source drug, the Secretary shall conduct such competition among entities for the acquisition of at least one competitively biddable drug and biological within each billing and payment code within each category for each competitive acquisition area.
(2)

Conditions for awarding contract.—
(A)

In general.—
The Secretary may not award a contract to any entity under the competition conducted in a competitive acquisition area pursuant to paragraph (1) with respect to the acquisition of competitively biddable drugs and biologicals within a category unless the Secretary finds that the entity meets all of the following with respect to the contract period involved:
(i)

Capacity to supply competitively biddable drug or biological within category.—
(I)

In general.—
The entity has sufficient arrangements to acquire and to deliver competitively biddable drugs and biologicals within such category in the area specified in the contract.
(II)

Shipment methodology.—
The entity has arrangements in effect for the shipment at least 5 days each week of competitively biddable drugs and biologicals under the contract and for the timely delivery (including for emergency situations) of such drugs and biologicals in the area under the contract.
(ii)

Quality, service, financial performance and solvency standards.—
The entity meets quality, service, financial performance, and solvency standards specified by the Secretary, including—
(I)
the establishment of procedures for the prompt response and resolution of complaints of physicians and individuals and of inquiries regarding the shipment of competitively biddable drugs and biologicals; and
(II)
a grievance and appeals process for the resolution of disputes.
(B)

Additional considerations.—
The Secretary may refuse to award a contract under this section, and may terminate such a contract, with an entity based upon—
(i)
the suspension or revocation, by the Federal Government or a State government, of the entity's license for the distribution of drugs or biologicals (including controlled substances); or
(ii)
the exclusion of the entity under section 1128 from participation under this title.
(C)

Application of medicare provider ombudsman.—
For provision providing for a program-wide Medicare Provider Ombudsman to review complaints, see section 1868(b), as added by section 923 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
(3)

Awarding multiple contracts for a category and area.—
The Secretary may limit (but not below 2) the number of qualified entities that are awarded such contracts for any category and area. The Secretary shall select among qualified entities based on the following:
(A)
The bid prices for competitively biddable drugs and biologicals within the category and area.
(B)
Bid price for distribution of such drugs and biologicals.
(C)
Ability to ensure product integrity.
(D)
Customer service.
(E)
Past experience in the distribution of drugs and biologicals, including controlled substances.
(F)
Such other factors as the Secretary may specify.
(4)

Terms of contracts.—
(A)

In general.—
A contract entered into with an entity under the competition conducted pursuant to paragraph (1) is subject to terms and conditions that the Secretary may specify consistent with this section.
(B)

Period of contracts.—
A contract under this section shall be for a term of 3 years, but may be terminated by the Secretary or the entity with appropriate, advance notice.
(C)

Integrity of drug and biological distribution system.—
A contractor (as defined in subsection (a)(2)(D)) shall—
(i)
acquire all drug and biological products it distributes directly from the manufacturer or from a distributor that has acquired the products directly from the manufacturer; and
(ii)
comply with any product integrity safeguards as may be determined to be appropriate by the Secretary.
Nothing in this subparagraph shall be construed to relieve or exempt any contractor from the provisions of the Federal Food, Drug, and Cosmetic Act that relate to the wholesale distribution of prescription drugs or biologicals.
(D)

Compliance with code of conduct and fraud and abuse rules.—
Under the contract—
(i)
the contractor shall comply with a code of conduct, specified or recognized by the Secretary, that includes standards relating to conflicts of interest; and
(ii)
the contractor shall comply with all applicable provisions relating to prevention of fraud and abuse, including compliance with applicable guidelines of the Department of Justice and the Inspector General of the Department of Health and Human Services.
(E)

Direct delivery of drugs and biologicals to physicians.—
Under the contract the contractor shall only supply competitively biddable drugs and biologicals directly to the selecting physicians and not directly to individuals, except under circumstances and settings where an individual currently receives a drug or biological in the individual's home or other non-physician office setting as the Secretary may provide. The contractor shall not deliver drugs and biologicals to a selecting physician except upon receipt of a prescription for such drugs and biologicals, and such necessary data as may be required by the Secretary to carry out this section. This section does not—
(i)
require a physician to submit a prescription for each individual treatment; or
(ii)
change a physician's flexibility in terms of writing a prescription for drugs or biologicals for a single treatment or a course of treatment.
(5)

Permitting access to drugs and biologicals.—
The Secretary shall establish rules under this section under which drugs and biologicals which are acquired through a contractor under this section may be used to resupply inventories of such drugs and biologicals which are administered consistent with safe drug practices and with adequate safeguards against fraud and abuse. The previous sentence shall apply if the physicians can demonstrate to the Secretary all of the following:
(A)
The drugs or biologicals are required immediately.
(B)
The physician could not have reasonably anticipated the immediate requirement for the drugs or biologicals.
(C)
The contractor could not deliver to the physician the drugs or biologicals in a timely manner.
(D)
The drugs or biologicals were administered in an emergency situation.
(6)

Construction.—
Nothing in this section shall be construed as waiving applicable State requirements relating to licensing of pharmacies.
(c)

Bidding Process.—
(1)

In general.—
In awarding a contract for a category of drugs and biologicals in an area under the program, the Secretary shall consider with respect to each entity seeking to be awarded a contract the bid price and the other factors referred to in subsection (b)(3).
(2)

Bid defined.—
In this section, the term “bid” means an offer to furnish a competitively biddable drug or biological for a particular price and time period.
(3)

Bidding on a national or regional basis.—
Nothing in this section shall be construed as precluding a bidder from bidding for contracts in all areas of the United States or as requiring a bidder to submit a bid for all areas of the United States.
(4)

Uniformity of bids within area.—
The amount of the bid submitted under a contract offer for any competitively biddable drug or biological for an area shall be the same for that drug or biological for all portions of that area.
(5)

Confidentiality of bids.—
The provisions of subparagraph (D) of section 1927(b)(3) shall apply to periods during which a bid is submitted with respect to a competitively biddable drug or biological under this section in the same manner as it applies to information disclosed under such section, except that any reference—
(A)
in that subparagraph to a “manufacturer or wholesaler” is deemed a reference to a “bidder” under this section;
(B)
in that section to “prices charged for drugs” is deemed a reference to a “bid” submitted under this section; and
(C)
in clause (i) of that section to “this section”, is deemed a reference to “part B of title XVIII”.
(6)

Inclusion of costs.—
The bid price submitted in a contract offer for a competitively biddable drug or biological shall—
(A)
include all costs related to the delivery of the drug or biological to the selecting physician (or other point of delivery); and
(B)
include the costs of dispensing (including shipping) of such drug or biological and management fees, but shall not include any costs related to the administration of the drug or biological, or wastage, spillage, or spoilage.
(7)

Price adjustments during contract period; disclosure of costs.—
Each contract awarded shall provide for—
(A)
disclosure to the Secretary the contractor's reasonable, net acquisition costs for periods specified by the Secretary, not more often than quarterly, of the contract; and
(B)
appropriate price adjustments over the period of the contract to reflect significant increases or decreases in a contractor's reasonable, net acquisition costs, as so disclosed.
(d)

Computation of Payment Amounts.—
(1)

In general.—
Payment under this section for competitively biddable drugs or biologicals shall be based on bids submitted and accepted under this section for such drugs or biologicals in an area. Based on such bids the Secretary shall determine a single payment amount for each competitively biddable drug or biological in the area.
(2)

Special rules.—
The Secretary shall establish rules regarding the use under this section of the alternative payment amount provided under section 1847A to the use of a price for specific competitively biddable drugs and biologicals in the following cases:
(A)

New drugs and biologicals.—
A competitively biddable drug or biological for which a payment and billing code has not been established.
(B)

Other cases.—
Such other exceptional cases as the Secretary may specify in regulations.
(e)

Cost-sharing.—
(1)

Application of coinsurance.—
Payment under this section for competitively biddable drugs and biologicals shall be in an amount equal to 80 percent of the payment basis described in subsection (d)(1).
(2)

Deductible.—
Before applying paragraph (1), the individual shall be required to meet the deductible described in section 1833(b).
(3)

Collection.—
Such coinsurance and deductible shall be collected by the contractor that supplies the drug or biological involved. Subject to subsection (a)(3)(B), such coinsurance and deductible may be collected in a manner similar to the manner in which the coinsurance and deductible are collected for durable medical equipment under this part.
(f)

Special Payment Rules.—
(1)

Use in exclusion cases.—
If the Secretary excludes a drug or biological (or class of drugs or biologicals) under subsection (a)(1)(D), the Secretary may provide for payment to be made under this part for such drugs and biologicals (or class) using the payment methodology under section 1847A.
(2)

Application of requirement for assignment.—
For provision requiring assignment of claims for competitively biddable drugs and biologicals, see section 1842(o)(3).
(3)

Protection for beneficiary in case of medical necessity denial.—
For protection of individuals against liability in the case of medical necessity determinations, see section 1842(b)(3)(B)(ii)(III).
(g)

Judicial Review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of—
(1)
the establishment of payment amounts under subsection (d)(1);
(2)
the awarding of contracts under this section;
(3)
the establishment of competitive acquisition areas under subsection (a)(2)(C);
(4)
the phased-in implementation under subsection (a)(1)(B);
(5)
the selection of categories of competitively biddable drugs and biologicals for competitive acquisition under such subsection or the selection of a drug in the case of multiple source drugs; or
(6)
the bidding structure and number of contractors selected under this section.

PAYMENT FOR PHYSICIANS' SERVICES
Sec. 1848.
[42 U.S.C. 1395w–4]
(a)

Payment Based on Fee Schedule.—
(1)

In general.—
Effective for all physicians' services (as defined in subsection (j)(3)) furnished under this part during a year (beginning with 1992) for which payment is otherwise made on the basis of a reasonable charge or on the basis of a fee schedule under section 1834(b), payment under this part shall instead be based on the lesser of—
(A)
the actual charge for the service, or
(B)
subject to the succeeding provisions of this subsection, the amount determined under the fee schedule established under subsection (b) for services furnished during that year (in this subsection referred to as the “fee schedule amount”).
(2)

Transition to full fee schedule.—
(A)

Limiting reductions and increases to 15 percent in 1992.—
(i)

Limit on increase.—
In the case of a service in a fee schedule area (as defined in subsection (j)(2)) for which the adjusted historical payment basis (as defined in subparagraph (D)) is less than 85 percent of the fee schedule amount for services furnished in 1992, there shall be substituted for the fee schedule amount an amount equal to the adjusted historical payment basis plus 15 percent of the fee schedule amount otherwise established (without regard to this paragraph).
(ii)

Limit in reduction.—
In the case of a service in a fee schedule area for which the adjusted historical payment basis exceeds 115 percent of the fee schedule amount for services furnished in 1992, there shall be substituted for the fee schedule amount an amount equal to the adjusted historical payment basis minus 15 percent of the fee schedule amount otherwise established (without regard to this paragraph).
(B)

Special rule for 1993, 1994, and 1995.—
If a physicians' service in a fee schedule area is subject to the provisions of subparagraph (A) in 1992, for physicians' services furnished in the area—
(i)
during 1993, there shall be substituted for the fee schedule amount an amount equal to the sum of—
(I)
75 percent of the fee schedule amount determined under subparagraph (A), adjusted by the update established under subsection (d)(3) for 1993, and
(II)
25 percent of the fee schedule amount determined under paragraph (1) for 1993 without regard to this paragraph;
(ii)
during 1994, there shall be substituted for the fee schedule amount an amount equal to the sum of—
(I)
67 percent of the fee schedule amount determined under clause (i), adjusted by the update established under subsection (d)(3) for 1994 and as adjusted under subsection (c)(2)(F)(ii) and under section 13515(b) of the Omnibus Budget Reconciliation Act of 1993, and
(II)
33 percent of the fee schedule amount determined under paragraph (1) for 1994 without regard to this paragraph; and
(iii)
during 1995, there shall be substituted for the fee schedule amount an amount equal to the sum of—
(I)
50 percent of the fee schedule amount determined under clause (ii) adjusted by the update established under subsection (d)(3) for 1995, and
(II)
50 percent of the fee schedule amount determined under paragraph (1) for 1995 without regard to this paragraph.
(C)

Special rule for anesthesia and radiology services.—
With respect to physicians' services which are anesthesia services, the Secretary shall provide for a transition in the same manner as a transition is provided for other services under subparagraph (B). With respect to radiology services, “109 percent” and “9 percent” shall be substituted for “115 percent” and “15 percent”, respectively, in subparagraph (A)(ii).
(D)

Adjusted historical payment basis defined.—
(i)

In general.—
In this paragraph, the term “adjusted historical payment basis” means, with respect to a physicians' service furnished in a fee schedule area, the weighted average prevailing charge applied in the area for the service in 1991 (as determined by the Secretary without regard to physician specialty and as adjusted to reflect payments for services with customary charges below the prevailing charge or other payment limitations imposed by law or regulation) adjusted by the update established under subsection (d)(3) for 1992.
(ii)

Application to radiology services.—
In applying clause (i) in the case of physicians' services which are radiology services (including radiologist services, as defined in section 1834(b)(6)), but excluding nuclear medicine services that are subject to section 6105(b) of the Omnibus Budget Reconciliation Act of 1989, there shall be substituted for the weighted average prevailing charge the amount provided under the fee schedule established for the service for the fee schedule area under section 1834(b).
(iii)

Nuclear medicine services.—
In applying clause (i) in the case of physicians' services which are nuclear medicine services, there shall be substituted for the weighted average prevailing charge the amount provided under section 6105(b) of the Omnibus Budget Reconciliation Act of 1989.
(3)

Incentives for participating physicians and suppliers.—
In applying paragraph (1)(B) in the case of a nonparticipating physician or a nonparticipating supplier or other person, the fee schedule amount shall be 95 percent of such amount otherwise applied under this subsection (without regard to this paragraph). In the case of physicians' services (including services which the Secretary excludes pursuant to subsection (j)(3)) of a nonparticipating physician, supplier, or other person for which payment is made under this part on a basis other than the fee schedule amount, the payment shall be based on 95 percent of the payment basis for such services furnished by a participating physician, supplier, or other person.
(4)

Special rule for medical direction.—
(A)

In general.—
With respect to physicians' services furnished on or after January 1, 1994, and consisting of medical direction of two, three, or four concurrent anesthesia cases, except as provided in paragraph (5), the fee schedule amount to be applied shall be equal to one-half of the amount described in subparagraph (B).
(B)

Amount.—
The amount described in this subparagraph, for a physician's medical direction of the performance of anesthesia services, is the following percentage of the fee schedule amount otherwise applicable under this section if the anesthesia services were personally performed by the physician alone:
(i)
For services furnished during 1994, 120 percent.
(ii)
For services furnished during 1995, 115 percent.
(iii)
For services furnished during 1996, 110 percent.
(iv)
For services furnished during 1997, 105 percent.
(v)
For services furnished after 1997, 100 percent.
(5)

Incentives for electronic prescribing.—
(A)

Adjustment.—
(i)

In general.—
Subject to subparagraph (B) and subsection (m)(2)(B), with respect to covered professional services furnished by an eligible professional during 2012, 2013 or 2014, if the eligible professional is not a successful electronic prescriber for the reporting period for the year (as determined under subsection (m)(3)(B)), the fee schedule amount for such services furnished by such professional during the year (including the fee schedule amount for purposes of determining a payment based on such amount) shall be equal to the applicable percent of the fee schedule amount that would otherwise apply to such services under this subsection (determined after application of paragraph (3) but without regard to this paragraph).
(ii)

Applicable percent.—
For purposes of clause (i), the term “applicable percent” means—
(I)
for 2012, 99 percent;
(II)
for 2013, 98.5 percent; and
(III)
for 2014, 98 percent.
(B)

Significant hardship exception.—
The Secretary may, on a case-by-case basis, exempt an eligible professional from the application of the payment adjustment under subparagraph (A) if the Secretary determines, subject to annual renewal, that compliance with the requirement for being a successful electronic prescriber would result in a significant hardship, such as in the case of an eligible professional who practices in a rural area without sufficient Internet access.
(C)

Application.—
(i)

Physician reporting system rules.—
Paragraphs (5), (6), and (8) of subsection (k) shall apply for purposes of this paragraph in the same manner as they apply for purposes of such subsection.
(ii)

Incentive payment validation rules.—
Clauses (ii) and (iii) of subsection (m)(5)(D) shall apply for purposes of this paragraph in a similar manner as they apply for purposes of such subsection.
(D)

Definitions.—
For purposes of this paragraph:
(i)

Eligible professional; covered professional services.—
The terms “eligible professional” and “covered professional services” have the meanings given such terms in subsection (k)(3).
(ii)

Physician reporting system.—
The term “physician reporting system” means the system established under subsection (k).
(iii)

Reporting period.—
The term “reporting period” means, with respect to a year, a period specified by the Secretary.
(6)

Special rule for teaching anesthesiologists.—
With respect to physicians' services furnished on or after January 1, 2010, in the case of teaching anesthesiologists involved in the training of physician residents in a single anesthesia case or two concurrent anesthesia cases, the fee schedule amount to be applied shall be 100 percent of the fee schedule amount otherwise applicable under this section if the anesthesia services were personally performed by the teaching anesthesiologist alone and paragraph (4) shall not apply if—
(A)
the teaching anesthesiologist is present during all critical or key portions of the anesthesia service or procedure involved; and
(B)
the teaching anesthesiologist (or another anesthesiologist with whom the teaching anesthesiologist has entered into an arrangement) is immediately available to furnish anesthesia services during the entire procedure.
(7)

Incentives for meaningful use of certified ehr technology.—
(A)

Adjustment.—
(i)

In general.—
Subject to subparagraphs (B) and (D), with respect to covered professional services furnished by an eligible professional during each of 2015 through 2018, if the eligible professional is not a meaningful EHR user (as determined under subsection (o)(2)) for an EHR reporting period for the year, the fee schedule amount for such services furnished by such professional during the year (including the fee schedule amount for purposes of determining a payment based on such amount) shall be equal to the applicable percent of the fee schedule amount that would otherwise apply to such services under this subsection (determined after application of paragraph (3) but without regard to this paragraph).
(ii)

Applicable percent.—
Subject to clause (iii), for purposes of clause (i), the term “applicable percent” means—
(I)
for 2015, 99 percent (or, in the case of an eligible professional who was subject to the application of the payment adjustment under section 1848(a)(5) for 2014, 98 percent);
(II)
for 2016, 98 percent; and
(III)
for 2017 and 2018, 97 percent.
(iii)

Authority to decrease applicable percentage for 2018.—
For 2018, if the Secretary finds that the proportion of eligible professionals who are meaningful EHR users (as determined under subsection (o)(2)) is less than 75 percent, the applicable percent shall be decreased by 1 percentage point from the applicable percent in the preceding year.
(B)

Significant hardship exception.—
The Secretary may, on a case-by-case basis (and, with respect to the payment adjustment under subparagraph (A) for 2017, for categories of eligible professionals, as established by the Secretary and posted on the Internet website of the Centers for Medicare & Medicaid Services prior to December 15, 2015, an application for which must be submitted to the Secretary by not later than March 15, 2016), exempt an eligible professional from the application of the payment adjustment under subparagraph (A) if the Secretary determines, subject to annual renewal, that compliance with the requirement for being a meaningful EHR user would result in a significant hardship, such as in the case of an eligible professional who practices in a rural area without sufficient Internet access. The Secretary shall exempt an eligible professional from the application of the payment adjustment under subparagraph (A) with respect to a year, subject to annual renewal, if the Secretary determines that compliance with the requirement for being a meaningful EHR user is not possible because the certified EHR technology used by such professional has been decertified under a program kept or recognized pursuant to section 3001(c)(5) of the Public Health Service Act. In no case may an eligible professional be granted an exemption under this subparagraph for more than 5 years.
(C)

Application of physician reporting system rules.—
Paragraphs (5), (6), and (8) of subsection (k) shall apply for purposes of this paragraph in the same manner as they apply for purposes of such subsection.
(D)

Non-application to hospital-based and ambulatory surgical center-based eligible professionals.—
(i)

Hospital-based.—
No payment adjustment may be made under subparagraph (A) in the case of hospital-based eligible professionals (as defined in subsection (o)(1)(C)(ii)).
(ii)

Ambulatory surgical center-based.—
Subject to clause (iv), no payment adjustment may be made under subparagraph (A) for 2017 and 2018 in the case of an eligible professional with respect to whom substantially all of the covered professional services furnished by such professional are furnished in an ambulatory surgical center.
(iii)

Determination.—
The determination of whether an eligible professional is an eligible professional described in clause (ii) may be made on the basis of—
(I)
the site of service (as defined by the Secretary); or
(II)
an attestation submitted by the eligible professional.
Determinations made under subclauses (I) and (II) shall be made without regard to any employment or billing arrangement between the eligible professional and any other supplier or provider of services.
(iv)

Sunset.—
Clause (ii) shall no longer apply as of the first year that begins more than 3 years after the date on which the Secretary determines, through notice and comment rulemaking, that certified EHR technology applicable to the ambulatory surgical center setting is available.
(E)

Definitions.—
For purposes of this paragraph:
(i)

Covered professional services.—
The term “covered professional services” has the meaning given such term in subsection (k)(3).
(ii)

EHR reporting period.—
The term “EHR reporting period” means, with respect to a year, a period (or periods) specified by the Secretary.
(iii)

Eligible professional.—
The term “eligible professional” means a physician, as defined in section 1861(r).
(8)

Incentives for quality reporting.—
(A)

Adjustment.—
(i)

In general.—
With respect to covered professional services furnished by an eligible professional during each of 2015 through 2018, if the eligible professional does not satisfactorily submit data on quality measures for covered professional services for the quality reporting period for the year (as determined under subsection (m)(3)(A)), the fee schedule amount for such services furnished by such professional during the year (including the fee schedule amount for purposes of determining a payment based on such amount) shall be equal to the applicable percent of the fee schedule amount that would otherwise apply to such services under this subsection (determined after application of paragraphs (3), (5), and (7), but without regard to this paragraph).
(ii)

Applicable percent.—
For purposes of clause (i), the term “applicable percent” means—
(I)
for 2015, 98.5 percent; and
(II)
for 2016, 2017, and 2018, 98 percent.
(B)

Application.—
(i)

Physician reporting system rules.—
Paragraphs (5), (6), and (8) of subsection (k) shall apply for purposes of this paragraph in the same manner as they apply for purposes of such subsection.
(ii)

Incentive payment validation rules.—
Clauses (ii) and (iii) of subsection (m)(5)(D) shall apply for purposes of this paragraph in a similar manner as they apply for purposes of such subsection.
(C)

Definitions.—
For purposes of this paragraph:
(i)

Eligible professional; covered professional services.—
The terms “eligible professional” and “covered professional services” have the meanings given such terms in subsection (k)(3).
(ii)

Physician reporting system.—
The term “physician reporting system” means the system established under subsection (k).
(iii)

Quality reporting period.—
The term “quality reporting period” means, with respect to a year, a period specified by the Secretary.
(9)

Information reporting on services included in global surgical packages.—
With respect to services for which a physician is required to report information in accordance with subsection (c)(8)(B)(i), the Secretary may through rulemaking delay payment of 5 percent of the amount that would otherwise be payable under the physician fee schedule under this section for such services until the information so required is reported.
(b)

Establishment of Fee Schedules.—
(1)

In general.—
Before November 1 of the preceding year, for each year beginning with 1998, subject to subsection (p), the Secretary shall establish, by regulation, fee schedules that establish payment amounts for all physicians' services furnished in all fee schedule areas (as defined in subsection (j)(2)) for the year. Except as provided in paragraph (2), each such payment amount for a service shall be equal to the product of—
(A)
the relative value for the service (as determined in subsection (c)(2)),
(B)
the conversion factor (established under subsection (d)) for the year, and
(C)
the geographic adjustment factor (established under subsection (e)(2)) for the service for the fee schedule area.
(2)

Treatment of radiology services and anesthesia services.—
(A)

Radiology services.—
With respect to radiology services (including radiologist services, as defined in section 1834(b)(6)), the Secretary shall base the relative values on the relative value scale developed under section 1834(b)(1)(A), with appropriate modifications of the relative values to assure that the relative values established for radiology services which are similar or related to other physicians' services are consistent with the relative values established for those similar or related services.
(B)

Anesthesia services.—
In establishing the fee schedule for anesthesia services for which a relative value guide has been established under section 4048(b) of the Omnibus Budget Reconciliation Act of 1987, the Secretary shall use, to the extent practicable, such relative value guide, with appropriate adjustment of the conversion factor, in a manner to assure that the fee schedule amounts for anesthesia services are consistent with the fee schedule amounts for other services determined by the Secretary to be of comparable value. In applying the previous sentence, the Secretary shall adjust the conversion factor by geographic adjustment factors in the same manner as such adjustment is made under paragraph (1)(C).
(C)

Consultation.—
The Secretary shall consult with the Physician Payment Review Commission and organizations representing physicians or suppliers who furnish radiology services and anesthesia services in applying subparagraphs (A) and (B).
(3)

Treatment of interpretation of electrocardiograms.—
The Secretary—
(A)
shall make separate payment under this section for the interpretation of electrocardiograms performed or ordered to be performed as part of or in conjunction with a visit to or a consultation with a physician, and
(B)
shall adjust the relative values established for visits and consultations under subsection (c) so as not to include relative value units for interpretations of electrocardiograms in the relative value for visits and consultations.
(4)

Special rule for imaging services.—
(A)

In general.—
In the case of imaging services described in subparagraph (B) furnished on or after January 1, 2007, if—
(i)
the technical component (including the technical component portion of a global fee) of the service established for a year under the fee schedule described in paragraph (1) without application of the geographic adjustment factor described in paragraph (1)(C), exceeds
(ii)
the Medicare OPD fee schedule amount established under the prospective payment system for hospital outpatient department services under paragraph (3)(D) of section 1833(t) for such service for such year, determined without regard to geographic adjustment under paragraph (2)(D) of such section,
the Secretary shall substitute the amount described in clause (ii), adjusted by the geographic adjustment factor described in paragraph (1)(C), for the fee schedule amount for such technical component for such year.
(B)

Imaging services described.—
For purposes of this paragraph, imaging services described in this subparagraph are imaging and computer-assisted imaging services, including X-ray, ultrasound (including echocardiography), nuclear medicine (including positron emission tomography), magnetic resonance imaging, computed tomography, and fluoroscopy, but excluding diagnostic and screening mammography, and for 2010, 2011, and the first 2 months of 2012, dual-energy x-ray absorptiometry services (as described in paragraph (6)).
(C)

Adjustment in imaging utilization rate.—
With respect to fee schedules established for 2011, 2012, and 2013, in the methodology for determining practice expense relative value units for expensive diagnostic imaging equipment under the final rule published by the Secretary in the Federal Register on November 25, 2009 (42 CFR 410 et al.), the Secretary shall use a 75 percent assumption instead of the utilization rates otherwise established in such final rule. With respect to fee schedules established for 2014 and subsequent years, in such methodology, the Secretary shall use a 90 percent utilization rate.
(D)

Adjustment in technical component discount on single-session imaging involving consecutive body parts.—
For services furnished on or after July 1, 2010, the Secretary shall increase the reduction in payments attributable to the multiple procedure payment reduction applicable to the technical component for imaging under the final rule published by the Secretary in the Federal Register on November 21, 2005 (part 405 of title 42, Code of Federal Regulations) from 25 percent to 50 percent.
(5)

Treatment of intensive cardiac rehabilitation program.—
(A)

In general.—
In the case of an intensive cardiac rehabilitation program described in section 1861(eee)(4), the Secretary shall substitute the Medicare OPD fee schedule amount established under the prospective payment system for hospital outpatient department service under paragraph (3)(D) of section 1833(t) for cardiac rehabilitation (under HCPCS codes 93797 and 93798 for calendar year 2007, or any succeeding HCPCS codes for cardiac rehabilitation).
(B)

Definition of session.—
Each of the services described in subparagraphs (A) through (E) of section 1861(eee)(3), when furnished for one hour, is a separate session of intensive cardiac rehabilitation.
(C)

Multiple sessions per day.—
Payment may be made for up to 6 sessions per day of the series of 72 one-hour sessions of intensive cardiac rehabilitation services described in section 1861(eee)(4)(B).
(6)

Treatment of bone mass scans.—
For dual-energy x-ray absorptiometry services (identified in 2006 by HCPCS codes 76075 and 76077 (and any succeeding codes)) furnished during 2010, 2011, and the first 2 months of 2012, instead of the payment amount that would otherwise be determined under this section for such years, the payment amount shall be equal to 70 percent of the product of—
(A)
the relative value for the service (as determined in subsection (c)(2)) for 2006;
(B)
the conversion factor (established under subsection (d)) for 2006; and
(C)
the geographic adjustment factor (established under subsection (e)(2)) for the service for the fee schedule area for 2010, 2011, and the first 2 months of 2012, respectively.
(7)

Adjustment in discount for certain multiple therapy services.—
In the case of therapy services furnished on or after January 1, 2011, and before April 1, 2013, and for which payment is made under fee schedules established under this section, instead of the 25 percent multiple procedure payment reduction specified in the final rule published by the Secretary in the Federal Register on November 29, 2010, the reduction percentage shall be 20 percent. In the case of such services furnished on or after April 1, 2013, and for which payment is made under such fee schedules, instead of the 25 percent multiple procedure payment reduction specified in such final rule, the reduction percentage shall be 50 percent.
(8)

Encouraging care management for individuals with chronic care needs.—
(A)

In general.—
In order to encourage the management of care for individuals with chronic care needs the Secretary shall, subject to subparagraph (B), make payment (as the Secretary determines to be appropriate) under this section for chronic care management services furnished on or after January 1, 2015, by a physician (as defined in section 1861(r)(1)), physician assistant or nurse practitioner (as defined in section 1861(aa)(5)(A)), clinical nurse specialist (as defined in section 1861(aa)(5)(B)), or certified nurse midwife (as defined in section 1861(gg)(2)).
(B)

Policies relating to payment.—
In carrying out this paragraph, with respect to chronic care management services, the Secretary shall—
(i)
make payment to only one applicable provider for such services furnished to an individual during a period;
(ii)
not make payment under subparagraph (A) if such payment would be duplicative of payment that is otherwise made under this title for such services; and
(iii)
not require that an annual wellness visit (as defined in section 1861(hhh)) or an initial preventive physical examination (as defined in section 1861(ww)) be furnished as a condition of payment for such management services.
(9)

Special rule to incentivize transition from traditional x-ray imaging to digital radiography.—
(A)

Limitation on payment for film x-ray imaging services.—
In the case of an imaging service (including the imaging portion of a service) that is an X-ray taken using film and that is furnished during 2017 or a subsequent year, the payment amount for the technical component (including the technical component portion of a global service) of such service that would otherwise be determined under this section (without application of this paragraph and before application of any other adjustment under this section) for such year shall be reduced by 20 percent.
(B)

Phased-in limitation on payment for computed radiography imaging services.—
In the case of an imaging service (including the imaging portion of a service) that is an X-ray taken using computed radiography technology—
(i)
in the case of such a service furnished during 2018, 2019, 2020, 2021, or 2022, the payment amount for the technical component (including the technical component portion of a global service) of such service that would otherwise be determined under this section (without application of this paragraph and before application of any other adjustment under this section) for such year shall be reduced by 7 percent; and
(ii)
in the case of such a service furnished during 2023 or a subsequent year, the payment amount for the technical component (including the technical component portion of a global service) of such service that would otherwise be determined under this section (without application of this paragraph and before application of any other adjustment under this section) for such year shall be reduced by 10 percent.
(C)

Computed radiography technology defined.—
For purposes of this paragraph, the term “computed radiography technology” means cassette-based imaging which utilizes an imaging plate to create the image involved.
(D)

Implementation.—
In order to implement this paragraph, the Secretary shall adopt appropriate mechanisms which may include use of modifiers.
(10)

Reduction of discount in payment for professional component of multiple imaging services.—
In the case of the professional component of imaging services furnished on or after January 1, 2017, instead of the 25 percent reduction for multiple procedures specified in the final rule published by the Secretary in the Federal Register on November 28, 2011, as amended in the final rule published by the Secretary in the Federal Register on November 16, 2012, the reduction percentage shall be 5 percent.
(11)

Special rule for certain radiation therapy services.—
The code definitions, the work relative value units under subsection (c)(2)(C)(i), and the direct inputs for the practice expense relative value units under subsection (c)(2)(C)(ii) for radiation treatment delivery and related imaging services (identified in 2016 by HCPCS G-codes G6001 through G6015) for the fee schedule established under this subsection for services furnished in 2017, 2018, and 2019 shall be the same as such definitions, units, and inputs for such services for the fee schedule established for services furnished in 2016.
(12)

Payment for psychotherapy for crisis services furnished in an applicable site of service.—
(A)

In general.—
The Secretary shall establish new HCPCS codes under the fee schedule established under this subsection for services described in subparagraph (B) that are furnished on or after January 1, 2024.
(B)

Services described.—
The services described in this subparagraph are psychotherapy for crisis services that are a furnished in an applicable site of service.
(C)

Amount of payment.—
For services described in subparagraph (B) that are furnished to an individual in a year (beginning with 2024), in lieu of the fee schedule amount that would otherwise be determined under this subsection for such year, the fee schedule amount for such services for such year shall be equal to 150 percent of the fee schedule amount for non-facility sites of service for such year determined for services identified, as of January 1, 2022, by HCPCS codes 90839 and 90840 (and any succeeding codes).
(D)

Definitions.—
In this paragraph:
(i)

Applicable site of service.—
The term “applicable site of service” means a site of service other than a site where the facility rate under the fee schedule under this subsection applies and other than an office setting.
(ii)

Psychotherapy for crisis services.—
The code descriptions for services described in subparagraph (B) shall be the same as the code descriptions for services identified, as of January 1, 2022, by HCPCS codes 90839 and 90840 (and any succeeding codes), except that such new codes shall be limited to services furnished in an applicable site of service.
(c)

Determination of Relative Values for Physicians' Services.—
(1)

Division of physicians' services into components.—
In this section, with respect to a physicians' service:
(A)

Work component defined.—
The term “work component” means the portion of the resources used in furnishing the service that reflects physician time and intensity in furnishing the service. Such portion shall—
(i)
include activities before and after direct patient contact, and
(ii)
be defined, with respect to surgical procedures, to reflect a global definition including pre-operative and post-operative physicians' services.
(B)

Practice expense component defined.—
The term “practice expense component” means the portion of the resources used in furnishing the service that reflects the general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising practice expenses.
(C)

Malpractice component defined.—
The term “malpractice component” means the portion of the resources used in furnishing the service that reflects malpractice expenses in furnishing the service.
(2)

Determination of relative values.—
(A)

In general.—
(i)

Combination of units for components.—
The Secretary shall develop a methodology for combining the work, practice expense, and malpractice relative value units, determined under subparagraph (C), for each service in a manner to produce a single relative value for that service. Such relative values are subject to adjustment under subparagraph (F)(i) and section 13515(b) of the Omnibus Budget Reconciliation Act of 1993.
(ii)

Extrapolation.—
The Secretary may use extrapolation and other techniques to determine the number of relative value units for physicians' services for which specific data are not available and shall take into account recommendations of the Physician Payment Review Commission and the results of consultations with organizations representing physicians who provide such services.
(B)

Periodic review and adjustments in relative values.—
(i)

Periodic review.—
The Secretary, not less often than every 5 years, shall review the relative values established under this paragraph for all physicians' services.
(ii)

Adjustments.—
(I)

In general.—
The Secretary shall, to the extent the Secretary determines to be necessary and subject to subclause (II) and paragraph (7), adjust the number of such units to take into account changes in medical practice, coding changes, new data on relative value components, or the addition of new procedures. The Secretary shall publish an explanation of the basis for such adjustments.
(II)

Limitation on annual adjustments.—
Subject to clauses (iv) and (v), the adjustments under subclause (I) for a year may not cause the amount of expenditures under this part for the year to differ by more than $20,000,000 from the amount of expenditures under this part that would have been made if such adjustments had not been made.
(iii)

Consultation.—
The Secretary, in making adjustments under clause (ii), shall consult with the Medicare Payment Advisory Commission and organizations representing physicians.
(iv)

Exemption of certain additional expenditures from budget neutrality.—
The additional expenditures attributable to—
(I)
subparagraph (H) shall not be taken into account in applying clause (ii)(II) for 2004;
(II)
subparagraph (I) insofar as it relates to a physician fee schedule for 2005 or 2006 shall not be taken into account in applying clause (ii)(II) for drug administration services under the fee schedule for such year for a specialty described in subparagraph (I)(ii)(II);
(III)
subparagraph (J) insofar as it relates to a physician fee schedule for 2005 or 2006 shall not be taken into account in applying clause (ii)(II) for drug administration services under the fee schedule for such year;
(IV)
subsection (b)(6) shall not be taken into account in applying clause (ii)(II) for 2010, 2011, or the first 2 months of 2012;
(V)
subsection (t) shall not be taken into account in applying clause (ii)(II) for 2021, 2022, 2023, 2024, or 2026; and
(VI)
subsection (b)(12) shall not be taken into account in applying clause (ii)(II) for 2024.
(v)

Exemption of certain reduced expenditures from budget-neutrality calculation.—
The following reduced expenditures, as estimated by the Secretary, shall not be taken into account in applying clause (ii)(II):
(I)

Reduced payment for multiple imaging procedures.—
Effective for fee schedules established beginning with 2007, reduced expenditures attributable to the multiple procedure payment reduction for imaging under the final rule published by the Secretary in the Federal Register on November 21, 2005 (42 CFR 405, et al.) insofar as it relates to the physician fee schedules for 2006 and 2007.
(II)

OPD payment cap for imaging services.—
Effective for fee schedules established beginning with 2007, reduced expenditures attributable to subsection (b)(4).
(III)

Change in utilization rate for certain imaging services.—
Effective for fee schedules established beginning with 2011, reduced expenditures attributable to the changes in the utilization rate applicable to 2011 and 2014, as described in the first and second sentence, respectively, of subsection (b)(4)(C).
(VI)

Additional reduced payment for multiple imaging procedures.—
Effective for fee schedules established beginning with 2010 (but not applied for services furnished prior to July 1, 2010), reduced expenditures attributable to the increase in the multiple procedure payment reduction from 25 to 50 percent (as described in subsection (b)(4)(D)).
(VII)

Reduced expenditures for multiple therapy services.—
Effective for fee schedules established beginning with 2011, reduced expenditures attributable to the multiple procedure payment reduction for therapy services (as described in subsection (b)(7)).
(VIII)

Reduced expenditures attributable to application of quality incentives for computed tomography.—
Effective for fee schedules established beginning with 2016, reduced expenditures attributable to the application of the quality incentives for computed tomography under section 1834(p)43
^{43}
A period should be added at the end of the first subclause (VIII).
(IX)

Reductions for misvalued services if target not met.—
Effective for fee schedules beginning with 2016, reduced expenditures attributable to the application of the target recapture amount described in subparagraph (O)(iii).
(X)

Reduced expenditures attributable to incentives to transition to digital radiography.—
Effective for fee schedules established beginning with 2017, reduced expenditures attributable to subparagraph (A) of subsection (b)(9) and effective for fee schedules established beginning with 2018, reduced expenditures attributable to subparagraph (B) of such subsection.
(XI)

Discount in payment for professional component of imaging services.—
Effective for fee schedules established beginning with 2017, reduced expenditures attributable to subsection (b)(10).
(vi)

Alternative application of budget-neutrality adjustment.—
Notwithstanding subsection (d)(9)(A), effective for fee schedules established beginning with 2009, with respect to the 5-year review of work relative value units used in fee schedules for 2007 and 2008, in lieu of continuing to apply budget-neutrality adjustments required under clause (ii) for 2007 and 2008 to work relative value units, the Secretary shall apply such budget-neutrality adjustments to the conversion factor otherwise determined for years beginning with 2009.
(C)

Computation of relative value units for components.—
For purposes of this section for each physicians' service—
(i)

Work relative value units.—
The Secretary shall determine a number of work relative value units for the service or group of services based on the relative resources incorporating physician time and intensity required in furnishing the service or group of services.
(ii)

Practice expense relative value units.—
The Secretary shall determine a number of practice expense relative value units for the service for years before 1999 equal to the product of—
(I)
the base allowed charges (as defined in subparagraph (D)) for the service, and
(II)
the practice expense percentage for the service (as determined under paragraph (3)(C)(ii)),
and for years beginning with 1999 based on the relative practice expense resources involved in furnishing the service or group of services. For 1999, such number of units shall be determined based 75 percent on such product and based 25 percent on the relative practice expense resources involved in furnishing the service.44 For 2000, such number of units shall be determined based 50 percent on such product and based 50 percent on such relative practice expense resources. For 2001, such number of units shall be determined based 25 percent on such product and based 75 percent on such relative practice expense resources. For a subsequent year, such number of units shall be determined based entirely on such relative practice expense resources.
^{44}
The amendment made by section 4505(b)(1)(A) (111 Stat. 435) states as follows:
(b) Phased-in Implementation.—
(1) In general.—Section 1848(c)(2)(C)(ii) (42 U.S.C. 1395w–4(c)(2)(C)(ii)) is further amended—
(A) by striking the comma at the end of clause (ii) and inserting a period and the following:
* * * * * * *
It should have read as follows:
(b) Phased-in Implementation.—
(1) In general.—Section 1848(c)(2)(C)(ii) (42 U.S.C. 1395w–4(c)(2)(C)(ii)) is further amended by inserting at the end the following:
* * * * * * *
(iii)

Malpractice relative value units.—
The Secretary shall determine a number of malpractice relative value units for the service or group of services for years before 2000 equal to the product of—
(I)
the base allowed charges (as defined in subparagraph (D)) for the service or group of services, and
(II)
the malpractice percentage for the service or group of services (as determined under paragraph (3)(C)(iii)),
and for years beginning with 2000 based on the malpractice expense resources involved in furnishing the service or group of services.
(D)

Base allowed charges defined.—
In this paragraph, the term “base allowed charges” means, with respect to a physician's service, the national average allowed charges for the service under this part for services furnished during 1991, as estimated by the Secretary using the most recent data available.
(E)

Reduction in practice expense relative value units for certain services.—
(i)

In general.—
Subject to clause (ii), the Secretary shall reduce the practice expense relative value units applied to services described in clause (iii) furnished in—
(I)
1994, by 25 percent of the number by which the number of practice expense relative value units (determined for 1994 without regard to this subparagraph) exceeds the number of work relative value units determined for 1994,
(II)
1995, by an additional 25 percent of such excess, and
(III)
1996, by an additional 25 percent of such excess.
(ii)

Floor on reductions.—
The practice expense relative value units for a physician's service shall not be reduced under this subparagraph to a number less than 128 percent of the number of work relative value units.
(iii)
Services covered.—For purposes of clause (i), the services described in this clause are physicians' services that are not described in clause (iv) and for which—
(I)
there are work relative value units, and
(II)
the number of practice expense relative value units (determined for 1994) exceeds 128 percent of the number of work relative value units (determined for such year).
(iv)

Excluded services.—
For purposes of clause (iii), the services described in this clause are services which the Secretary determines at least 75 percent of which are provided under this title in an office setting.
(F)

Budget neutrality adjustments.—
The Secretary—
(i)
shall reduce the relative values for all services (other than anesthesia services) established under this paragraph (and in the case of anesthesia services, the conversion factor established by the Secretary for such services) by such percentage as the Secretary determines to be necessary so that, beginning in 1996, the amendment made by section 13514(a) of the Omnibus Budget Reconciliation Act of 1993 would not result in expenditures under this section that exceed the amount of such expenditures that would have been made if such amendment had not been made, and
(ii)
shall reduce the amounts determined under subsection (a)(2)(B)(ii)(I) by such percentage as the Secretary determines to be required to assure that, taking into account the reductions made under clause (i), the amendment made by section 13514(a) of the Omnibus Budget Reconciliation Act of 1993 would not result in expenditures under this section in 1994 that exceed the amount of such expenditures that would have been made if such amendment had not been made.
(G)

Adjustments in relative value units for 1998.—
(i)

In general.—
The Secretary shall—
(I)
subject to clauses (iv) and (v), reduce the practice expense relative value units applied to any services described in clause (ii) furnished in 1998 to a number equal to 110 percent of the number of work relative value units, and
(II)
increase the practice expense relative value units for office visit procedure codes during 1998 by a uniform percentage which the Secretary estimates will result in an aggregate increase in payments for such services equal to the aggregate decrease in payments by reason of subclause (I).
(ii)

Services covered.—
For purposes of clause (i), the services described in this clause are physicians' services that are not described in clause (iii) and for which—
(I)
there are work relative value units, and
(II)
the number of practice expense relative value units (determined for 1998) exceeds 110 percent of the number of work relative value units (determined for such year).
(iii)

Excluded services.—
For purposes of clause (ii), the services described in this clause are services which the Secretary determines at least 75 percent of which are provided under this title in an office setting.
(iv)

Limitation on aggregate reallocation.—
If the application of clause (i)(I) would result in an aggregate amount of reductions under such clause in excess of $390,000,000, such clause shall be applied by substituting for 110 percent such greater percentage as the Secretary estimates will result in the aggregate amount of such reductions equaling $390,000,000.
(v)

No reduction for certain services.—
Practice expense relative value units for a procedure performed in an office or in a setting out of an office shall not be reduced under clause (i) if the in-office or out-of-office practice expense relative value, respectively, for the procedure would increase under the proposed rule on resource-based practice expenses issued by the Secretary on June 18, 1997 (62 Federal Register 33158 et seq.).
(H)

Adjustments in practice expense relative value units for certain drug administration services beginning in 2004.—
(i)

Use of survey data.—
In establishing the physician fee schedule under subsection (b) with respect to payments for services furnished on or after January 1, 2004, the Secretary shall, in determining practice expense relative value units under this subsection, utilize a survey submitted to the Secretary as of January 1, 2003, by a physician specialty organization pursuant to section 212 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 if the survey—
(I)
covers practice expenses for oncology drug administration services; and
(II)
meets criteria established by the Secretary for acceptance of such surveys.
(ii)

Pricing of clinical oncology nurses in practice expense methodology.—
If the survey described in clause (i) includes data on wages, salaries, and compensation of clinical oncology nurses, the Secretary shall utilize such data in the methodology for determining practice expense relative value units under subsection (c).
(iii)

Work relative value units for certain drug administration services.—
In establishing the relative value units under this paragraph for drug administration services described in clause (iv) furnished on or after January 1, 2004, the Secretary shall establish work relative value units equal to the work relative value units for a level 1 office medical visit for an established patient.
(iv)

Drug administration services described.—
The drug administration services described in this clause are physicians' services—
(I)
which are classified as of October 1, 2003, within any of the following groups of procedures: therapeutic or diagnostic infusions (excluding chemotherapy); chemotherapy administration services; and therapeutic, prophylactic, or diagnostic injections;
(II)
for which there are no work relative value units assigned under this subsection as of such date; and
(III)
for which national relative value units have been assigned under this subsection as of such date.
(I)

Adjustments in practice expense relative value units for certain drug administration services beginning with 2005.—
(i)

In general.—
In establishing the physician fee schedule under subsection (b) with respect to payments for services furnished on or after January 1, 2005 or 2006, the Secretary shall adjust the practice expense relative value units for such year consistent with clause (ii).
(ii)

Use of supplemental survey data.—
(I)

In general.—
Subject to subclause (II), if a specialty submits to the Secretary by not later than March 1, 2004, for 2005, or March 1, 2005, for 2006, data that includes expenses for the administration of drugs and biologicals for which the payment amount is determined pursuant to section 1842(o), the Secretary shall use such supplemental survey data in carrying out this subparagraph for the years involved insofar as they are collected and provided by entities and organizations consistent with the criteria established by the Secretary pursuant to section 212(a) of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999.
(II)

Limitation on specialty.—
Subclause (I) shall apply to a specialty only insofar as not less than 40 percent of payments for the specialty under this title in 2002 are attributable to the administration of drugs and biologicals, as determined by the Secretary.
(III)

Application.—
This clause shall not apply with respect to a survey to which subparagraph (H)(i) applies.
(J)

Provisions for appropriate reporting and billing for physicians' services associated with the administration of covered outpatient drugs and biologicals.—
(i)

Evaluation of codes.—
The Secretary shall promptly evaluate existing drug administration codes for physicians' services to ensure accurate reporting and billing for such services, taking into account levels of complexity of the administration and resource consumption.
(ii)

Use of existing processes.—
In carrying out clause (i), the Secretary shall use existing processes for the consideration of coding changes and, to the extent coding changes are made, shall use such processes in establishing relative values for such services.
(iii)

Implementation.—
In carrying out clause (i), the Secretary shall consult with representatives of physician specialties affected by the implementation of section 1847A or section 1847B, and shall take such steps within the Secretary's authority to expedite such considerations under clause (ii).
(iv)

Subsequent, budget neutral adjustments permitted.—
Nothing in subparagraph (H) or (I) or this subparagraph shall be construed as preventing the Secretary from providing for adjustments in practice expense relative value units under (and consistent with) subparagraph (B) for years after 2004, 2005, or 2006, respectively.
(K)

Potentially misvalued codes.—
(i)

In general.—
The Secretary shall—
(I)
periodically identify services as being potentially misvalued using criteria specified in clause (ii); and
(II)
review and make appropriate adjustments to the relative values established under this paragraph for services identified as being potentially misvalued under subclause (I).
(ii)

Identification of potentially misvalued codes.—
For purposes of identifying potentially misvalued codes pursuant to clause (i)(I), the Secretary shall examine codes (and families of codes as appropriate) based on any or all of the following criteria:
(I)
Codes that have experienced the fastest growth.
(II)
Codes that have experienced substantial changes in practice expenses.
(III)
Codes that describe new technologies or services within an appropriate time period (such as 3 years) after the relative values are initially established for such codes.
(IV)
Codes which are multiple codes that are frequently billed in conjunction with furnishing a single service.
(V)
Codes with low relative values, particularly those that are often billed multiple times for a single treatment.
(VI)
Codes that have not been subject to review since implementation of the fee schedule.
(VII)
Codes that account for the majority of spending under the physician fee schedule.
(VIII)
Codes for services that have experienced a substantial change in the hospital length of stay or procedure time.
(IX)
Codes for which there may be a change in the typical site of service since the code was last valued.
(X)
Codes for which there is a significant difference in payment for the same service between different sites of service.
(XI)
Codes for which there may be anomalies in relative values within a family of codes.
(XII)
Codes for services where there may be efficiencies when a service is furnished at the same time as other services.
(XIII)
Codes with high intra-service work per unit of time.
(XIV)
Codes with high practice expense relative value units.
(XV)
Codes with high cost supplies.
(XVI)
Codes as determined appropriate by the Secretary.
(iii)

Review and adjustments.—
(I)
The Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services described in clause (i)(II).
(II)
The Secretary may conduct surveys, other data collection activities, studies, or other analyses as the Secretary determines to be appropriate to facilitate the review and appropriate adjustment described in clause (i)(II).
(III)
The Secretary may use analytic contractors to identify and analyze services identified under clause (i)(I), conduct surveys or collect data, and make recommendations on the review and appropriate adjustment of services described in clause (i)(II).
(IV)
The Secretary may coordinate the review and appropriate adjustment described in clause (i)(II) with the periodic review described in subparagraph (B).
(V)
As part of the review and adjustment described in clause (i)(II), including with respect to codes with low relative values described in clause (ii), the Secretary may make appropriate coding revisions (including using existing processes for consideration of coding changes) which may include consolidation of individual services into bundled codes for payment under the fee schedule under subsection (b).
(VI)
The provisions of subparagraph (B)(ii)(II) and paragraph (7) shall apply to adjustments to relative value units made pursuant to this subparagraph in the same manner as such provisions apply to adjustments under subparagraph (B)(ii)(I).
(iv)

Treatment of certain radiation therapy services.—
Radiation treatment delivery and related imaging services identified under subsection (b)(11) shall not be considered as potentially misvalued services for purposes of this subparagraph and subparagraph (O) for 2017, 2018, and 2019.
(L)

Validating relative value units.—
(i)

In general.—
The Secretary shall establish a process to validate relative value units under the fee schedule under subsection (b).
(ii)

Components and elements of work.—
The process described in clause (i) may include validation of work elements (such as time, mental effort and professional judgment, technical skill and physical effort, and stress due to risk) involved with furnishing a service and may include validation of the pre-, post-, and intra-service components of work.
(iii)

Scope of codes.—
The validation of work relative value units shall include a sampling of codes for services that is the same as the codes listed under subparagraph (K)(ii).
(iv)

Methods.—
The Secretary may conduct the validation under this subparagraph using methods described in subclauses (I) through (V) of subparagraph (K)(iii) as the Secretary determines to be appropriate.
(v)

Adjustments.—
The Secretary shall make appropriate adjustments to the work relative value units under the fee schedule under subsection (b). The provisions of subparagraph (B)(ii)(II) shall apply to adjustments to relative value units made pursuant to this subparagraph in the same manner as such provisions apply to adjustments under subparagraph (B)(ii)(II).
(M)

Authority to collect and use information on physicians’ services in the determination of relative values.—
(i)

Collection of information.—
Notwithstanding any other provision of law, the Secretary may collect or obtain information on the resources directly or indirectly related to furnishing services for which payment is made under the fee schedule established under subsection (b). Such information may be collected or obtained from any eligible professional or any other source.
(ii)

Use of information.—
Notwithstanding any other provision of law, subject to clause (v), the Secretary may (as the Secretary determines appropriate) use information collected or obtained pursuant to clause (i) in the determination of relative values for services under this section.
(iii)

Types of information.—
The types of information described in clauses (i) and (ii) may, at the Secretary’s discretion, include any or all of the following:
(I)
Time involved in furnishing services.
(II)
Amounts and types of practice expense inputs involved with furnishing services.
(III)
Prices (net of any discounts) for practice expense inputs, which may include paid invoice prices or other documentation or records.
(IV)
Overhead and accounting information for practices of physicians and other suppliers.
(V)
Any other element that would improve the valuation of services under this section.
(iv)

Information collection mechanisms.—
Information may be collected or obtained pursuant to this subparagraph from any or all of the following:
(I)
Surveys of physicians, other suppliers, providers of services, manufacturers, and vendors.
(II)
Surgical logs, billing systems, or other practice or facility records.
(III)
Electronic health records.
(IV)
Any other mechanism determined appropriate by the Secretary.
(v)

Transparency of use of information.—
(I)

In general.—
Subject to subclauses (II) and (III), if the Secretary uses information collected or obtained under this subparagraph in the determination of relative values under this subsection, the Secretary shall disclose the information source and discuss the use of such information in such determination of relative values through notice and comment rulemaking.
(II)

Thresholds for use.—
The Secretary may establish thresholds in order to use such information, including the exclusion of information collected or obtained from eligible professionals who use very high resources (as determined by the Secretary) in furnishing a service.
(III)

Disclosure of information.—
The Secretary shall make aggregate information available under this subparagraph but shall not disclose information in a form or manner that identifies an eligible professional or a group practice, or information collected or obtained pursuant to a nondisclosure agreement.
(vi)

Incentive to participate.—
The Secretary may provide for such payments under this part to an eligible professional that submits such solicited information under this subparagraph as the Secretary determines appropriate in order to compensate such eligible professional for such submission. Such payments shall be provided in a form and manner specified by the Secretary.
(vii)

Administration.—
Chapter 35 of title 44, United States Code, shall not apply to information collected or obtained under this subparagraph.
(viii)

Definition of eligible professional.—
In this subparagraph, the term “eligible professional” has the meaning given such term in subsection (k)(3)(B).
(ix)

Funding.—
For purposes of carrying out this subparagraph, in addition to funds otherwise appropriated, the Secretary shall provide for the transfer, from the Federal Supplementary Medical Insurance Trust Fund under section 1841, of $2,000,000 to the Centers for Medicare & Medicaid Services Program Management Account for each fiscal year beginning with fiscal year 2014. Amounts transferred under the preceding sentence for a fiscal year shall be available until expended.
(N)

Authority for alternative approaches to establishing practice expense relative values.—
The Secretary may establish or adjust practice expense relative values under this subsection using cost, charge, or other data from suppliers or providers of services, including information collected or obtained under subparagraph (M).
(O)

Target for relative value adjustments for misvalued services.—
With respect to fee schedules established for each of 2016 through 2018, the following shall apply:
(i)

Determination of net reduction in expenditures.—
For each year, the Secretary shall determine the estimated net reduction in expenditures under the fee schedule under this section with respect to the year as a result of adjustments to the relative values established under this paragraph for misvalued codes.
(ii)

Budget neutral redistribution of funds if target met and counting overages towards the target for the succeeding year.—
If the estimated net reduction in expenditures determined under clause (i) for the year is equal to or greater than the target for the year—
(I)
reduced expenditures attributable to such adjustments shall be redistributed for the year in a budget neutral manner in accordance with subparagraph (B)(ii)(II); and
(II)
the amount by which such reduced expenditures exceeds the target for the year shall be treated as a reduction in expenditures described in clause (i) for the succeeding year, for purposes of determining whether the target has or has not been met under this subparagraph with respect to that year.
(iii)

Exemption from budget neutrality if target not met.—
If the estimated net reduction in expenditures determined under clause (i) for the year is less than the target for the year, reduced expenditures in an amount equal to the target recapture amount shall not be taken into account in applying subparagraph (B)(ii)(II) with respect to fee schedules beginning with 2016.
(iv)

Target recapture amount.—
For purposes of clause (iii), the target recapture amount is, with respect to a year, an amount equal to the difference between—
(I)
the target for the year; and
(II)
the estimated net reduction in expenditures determined under clause (i) for the year.
(v)

Target.—
For purposes of this subparagraph, with respect to a year, the target is calculated as 0.5 percent (or, for 2016, 1.0 percent) of the estimated amount of expenditures under the fee schedule under this section for the year.
(3)

Component percentages.—
For purposes of paragraph (2), the Secretary shall determine a work percentage, a practice expense percentage, and a malpractice percentage for each physician's service as follows:
(A)

Division of services by specialty.—
For each physician's service or class of physicians' services, the Secretary shall determine the average percentage of each such service or class of services that is performed, nationwide, under this part by physicians in each of the different physician specialties (as identified by the Secretary).
(B)

Division of specialty by component.—
The Secretary shall determine the average percentage division of resources, among the work component, the practice expense component, and the malpractice component, used by physicians in each of such specialties in furnishing physicians' services. Such percentages shall be based on national data that describe the elements of physician practice costs and revenues, by physician specialty. The Secretary may use extrapolation and other techniques to determine practice costs and revenues for specialties for which adequate data are not available.
(C)

Determination of component percentages.—
(i)

Work percentage.—
The work percentage for a service (or class of services) is equal to the sum (for all physician specialties) of—
(I)
the average percentage division for the work component for each physician specialty (determined under subparagraph (B)), multiplied by
(II)
the proportion (determined under subparagraph (A)) of such service (or services) performed by physicians in that specialty.
(ii)

Practice expense percentage.—
For years before 2002, the practice expense percentage for a service (or class of services) is equal to the sum (for all physician specialties) of—
(I)
the average percentage division for the practice expense component for each physician specialty (determined under subparagraph (B)), multiplied by
(II)
the proportion (determined under subparagraph (A)) of such service (or services) performed by physicians in that specialty.
(iii)

Malpractice percentage.—
For years before 1999, the malpractice percentage for a service (or class of services) is equal to the sum (for all physician specialties) of—
(I)
the average percentage division for the malpractice component for each physician specialty (determined under subparagraph (B)), multiplied by
(II)
the proportion (determined under subparagraph (A)) of such service (or services) performed by physicians in that specialty.
(D)

Periodic recomputation.—
The Secretary may, from time to time, provide for the recomputation of work percentages, practice expense percentages, and malpractice percentages determined under this paragraph.
(4)

Ancillary policies.—
The Secretary may establish ancillary policies (with respect to the use of modifiers, local codes, and other matters) as may be necessary to implement this section.
(5)

Coding.—
The Secretary shall establish a uniform procedure coding system for the coding of all physicians' services. The Secretary shall provide for an appropriate coding structure for visits and consultations. The Secretary may incorporate the use of time in the coding for visits and consultations. The Secretary, in establishing such coding system, shall consult with the Physician Payment Review Commission and other organizations representing physicians.
(6)

No variation for specialists.—
The Secretary may not vary the conversion factor or the number of relative value units for a physicians' service based on whether the physician furnishing the service is a specialist or based on the type of specialty of the physician.
(7)

Phase-in of significant relative value unit (rvu) reductions.—
Effective for fee schedules established beginning with 2016, for services that are not new or revised codes, if the total relative value units for a service for a year would otherwise be decreased by an estimated amount equal to or greater than 20 percent as compared to the total relative value units for the previous year, the applicable adjustments in work, practice expense, and malpractice relative value units shall be phased-in over a 2-year period.
(8)

Global surgical packages.—
(A)

Prohibition of implementation of rule regarding global surgical packages.—
(i)

In general.—
The Secretary shall not implement the policy established in the final rule published on November 13, 2014 (79 Fed. Reg. 67548 et seq.), that requires the transition of all 10-day and 90-day global surgery packages to 0-day global periods.
(ii)

Construction.—
Nothing in clause (i) shall be construed to prevent the Secretary from revaluing misvalued codes for specific surgical services or assigning values to new or revised codes for surgical services.
(B)

Collection of data on services included in global surgical packages.—
(i)

In general.—
Subject to clause (ii), the Secretary shall through rulemaking develop and implement a process to gather, from a representative sample of physicians, beginning not later than January 1, 2017, information needed to value surgical services. Such information shall include the number and level of medical visits furnished during the global period and other items and services related to the surgery and furnished during the global period, as appropriate. Such information shall be reported on claims at the end of the global period or in another manner specified by the Secretary. For purposes of carrying out this paragraph (other than clause (iii)), the Secretary shall transfer from the Federal Supplemental Medical Insurance Trust Fund under section 1841 $2,000,000 to the Center for Medicare & Medicaid Services Program Management Account for fiscal year 2015. Amounts transferred under the previous sentence shall remain available until expended.
(ii)

Reassessment and potential sunset.—
Every 4 years, the Secretary shall reassess the value of the information collected pursuant to clause (i). Based on such a reassessment and by regulation, the Secretary may discontinue the requirement for collection of information under such clause if the Secretary determines that the Secretary has adequate information from other sources, such as qualified clinical data registries, surgical logs, billing systems or other practice or facility records, and electronic health records, in order to accurately value global surgical services under this section.
(iii)

Inspector general audit.—
The Inspector General of the Department of Health and Human Services shall audit a sample of the information reported under clause (i) to verify the accuracy of the information so reported.
(C)

Improving accuracy of pricing for surgical services.—
For years beginning with 2019, the Secretary shall use the information reported under subparagraph (B)(i) as appropriate and other available data for the purpose of improving the accuracy of valuation of surgical services under the physician fee schedule under this section.
(d)

Conversion Factors.—
(1)

Establishment.—
(A)

In general.—
The conversion factor for each year shall be the conversion factor established under this subsection for the previous year (or, in the case of 1992, specified in subparagraph (B)) adjusted by the update (established under paragraph (3)) for the year involved (for years before 2001) and, for years beginning with 2001 and ending with 2025, multiplied by the update (established under paragraph (4) or a subsequent paragraph) for the year involved. There shall be two separate conversion factors for each year beginning with 2026, one for items and services furnished by a qualifying APM participant (as defined in section 1833(z)(2)) (referred to in this subsection as the “qualifying APM conversion factor”) and the other for other items and services (referred to in this subsection as the “nonqualifying APM conversion factor”), equal to the respective conversion factor for the previous year (or, in the case of 2026, equal to the single conversion factor for 2025) multiplied by the update established under paragraph (20) for such respective conversion factor for such year.
(B)

Special provision for 1992.—
For purposes of subparagraph (A), the conversion factor specified in this subparagraph is a conversion factor (determined by the Secretary) which, if this section were to apply during 1991 using such conversion factor, would result in the same aggregate amount of payments under this part for physicians' services as the estimated aggregate amount of the payments under this part for such services in 1991.
(C)

Special rules for 1998.—
Except as provided in subparagraph (D), the single conversion factor for 1998 under this subsection shall be the conversion factor for primary care services for 1997, increased by the Secretary's estimate of the weighted average of the three separate updates that would otherwise occur were it not for the enactment of chapter 1 of subtitle F of title IV of the Balanced Budget Act of 1997.
(D)

Special rules for anesthesia services.—
The separate conversion factor for anesthesia services for a year shall be equal to 46 percent of the single conversion factor (or, beginning with 2026, applicable conversion factor) established for other physicians' services, except as adjusted for changes in work, practice expense, or malpractice relative value units.
(E)

Publication and dissemination of information.—
The Secretary shall—
(i)
cause to have published in the Federal Register not later than November 1 of each year (beginning with 2000) the conversion factor which will apply to physicians' services for the succeeding year, the update determined under paragraph (4) for such succeeding year, and the allowed expenditures under such paragraph for such succeeding year; and
(ii)
make available to the Medicare Payment Advisory Commission and the public by March 1 of each year (beginning with 2000) an estimate of the sustainable growth rate and of the conversion factor which will apply to physicians' services for the succeeding year and data used in making such estimate.
[(2)
Repealed.]
(3)

Update for 1999 and 2000.—
(A)

In general.—
Unless otherwise provided by law, subject to subparagraph (D) and the budget-neutrality factor determined by the Secretary under subsection (c)(2)(B)(ii), the update to the single conversion factor established in paragraph (1)(C) for 1999 and 2000 is equal to the product of—
(i)
1 plus the Secretary's estimate of the percentage increase in the MEI (as defined 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 1 and multiplied by 100.
(B)

Update adjustment factor.—
For purposes of subparagraph (A)(ii), the “update adjustment factor” for a year is equal (as estimated by the Secretary) to—
(i)
the difference between (I) the sum of the allowed expenditures for physicians' services (as determined under subparagraph (C)) for the period beginning April 1, 1997, and ending on March 31 of the year involved, and (II) the amount of actual expenditures for physicians' services furnished during the period beginning April 1, 1997, and ending on March 31 of the preceding year; divided by
(ii)
the actual expenditures for physicians' services for the 12-month period ending on March 31 of the preceding year, increased by the sustainable growth rate under subsection (f) for the fiscal year which begins during such 12-month period.
(C)

Determination of allowed expenditures.—
For purposes of this paragraph and paragraph (4), the allowed expenditures for physicians' services for the 12-month period ending with March 31 of—
(i)
1997 is equal to the actual expenditures for physicians' services furnished during such 12-month period, as estimated by the Secretary; or
(ii)
a subsequent year is equal to the allowed expenditures for physicians' services for the previous year, increased by the sustainable growth rate under subsection (f) for the fiscal year which begins during such 12-month period.
(D)

Restriction on variation from medicare economic index.—
Notwithstanding the amount of the update adjustment factor determined under subparagraph (B) for a year, the update in the conversion factor under this paragraph for the year may not be—
(i)
greater than 100 times the following amount: (1.03 + (MEI percentage/100)) ^1; or
(ii)
less than 100 times the following amount: (0.93 + (MEI percentage/100)) ^1,
where “MEI percentage” means the Secretary's estimate of the percentage increase in the MEI (as defined in section 1842(i)(3)) for the year involved.
(4)

Update for years beginning with 2001 and ending with 2014.—
(A)

In general.—
Unless otherwise provided by law, subject to the budget-neutrality factor determined by the Secretary under subsection (c)(2)(B)(ii) and subject to adjustment under subparagraph (F), the update to the single conversion factor established in paragraph (1)(C) for a year beginning with 2001 and ending with 2014 is equal to the product of—
(i)
1 plus the Secretary's estimate of the percentage increase in the MEI (as defined in section 1842(i)(3)) for the year (divided by 100); and
(ii)
1 plus the Secretary's estimate of the update adjustment factor under subparagraph (B) for the year.
(B)

Update adjustment factor.—
For purposes of subparagraph (A)(ii), subject to subparagraph (D) and the succeeding paragraphs of this subsection, the “update adjustment factor” for a year is equal (as estimated by the Secretary) to the sum of the following:
(i)

Prior year adjustment component.—
An amount determined by—
(I)
computing the difference (which may be positive or negative) between the amount of the allowed expenditures for physicians' services for the prior year (as determined under subparagraph (C)) and the amount of the actual expenditures for such services for that year;
(II)
dividing that difference by the amount of the actual expenditures for such services for that year; and
(III)
multiplying that quotient by 0.75.
(ii)

Cumulative adjustment component.—
An amount determined by—
(I)
computing the difference (which may be positive or negative) between the amount of the allowed expenditures for physicians' services (as determined under subparagraph (C)) from April 1, 1996, through the end of the prior year and the amount of the actual expenditures for such services during that period;
(II)
dividing that difference by actual expenditures for such services for the prior year as increased by the sustainable growth rate under subsection (f) for the year for which the update adjustment factor is to be determined; and
(III)
multiplying that quotient by 0.33.
(C)

Determination of allowed expenditures.—
For purposes of this paragraph:
(i)

Period up to april 1, 1999.—
The allowed expenditures for physicians' services for a period before April 1, 1999, shall be the amount of the allowed expenditures for such period as determined under paragraph (3)(C).
(ii)

Transition to calendar year allowed expenditures.—
Subject to subparagraph (E), the allowed expenditures for—
(I)
the 9-month period beginning April 1, 1999, shall be the Secretary's estimate of the amount of the allowed expenditures that would be permitted under paragraph (3)(C) for such period; and
(II)
the year of 1999, shall be the Secretary's estimate of the amount of the allowed expenditures that would be permitted under paragraph (3)(C) for such year.
(iii)

Years beginning with 2000.—
The allowed expenditures for a year (beginning with 2000) is equal to the allowed expenditures for physicians' services for the previous year, increased by the sustainable growth rate under subsection (f) for the year involved.
(D)

Restriction on update adjustment factor.—
The update adjustment factor determined under subparagraph (B) for a year may not be less than ^0.07 or greater than 0.03.
(E)

Recalculation of allowed expenditures for updates beginning with 2001.—
For purposes of determining the update adjustment factor for a year beginning with 2001, the Secretary shall recompute the allowed expenditures for previous periods beginning on or after April 1, 1999, consistent with subsection (f)(3).
(F)

Transitional adjustment designed to provide for budget neutrality.—
Under this subparagraph the Secretary shall provide for an adjustment to the update under subparagraph (A)—
(i)
for each of 2001, 2002, 2003, and 2004, of ^0.2 percent; and
(ii)
for 2005 of +0.8 percent.
(5)

Update for 2004 and 2005.—
The update to the single conversion factor established in paragraph (1)(C) for each of 2004 and 2005 shall be not less than 1.5 percent.
(6)

Update for 2006.—
The update to the single conversion factor established in paragraph (1)(C) for 2006 shall be 0 percent.
(7)

Conversion factor for 2007.—
(A)

In general.—
The conversion factor that would otherwise be applicable under this subsection for 2007 shall be the amount of such conversion factor divided by the product of—
(i)
1 plus the Secretary's estimate of the percentage increase in the MEI (as defined in section 1842(i)(3)) for 2007 (divided by 100); and
(ii)
1 plus the Secretary's estimate of the update adjustment factor under paragraph (4)(B) for 2007.
(B)

No effect on computation of conversion factor for 2008.—
The conversion factor under this subsection shall be computed under paragraph (1)(A) for 2008 as if subparagraph (A) had never applied.
(8)

Update for 2008.—
(A)

In general.—
Subject to paragraph (7)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2008, the update to the single conversion factor shall be 0.5 percent.
(B)

No effect on computation of conversion factor for 2009.—
The conversion factor under this subsection shall be computed under paragraph (1)(A) for 2009 and subsequent years as if subparagraph (A) had never applied.
(9)

Update for 2009.—
(A)

In general.—
Subject to paragraphs (7)(B) and (8)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2009, the update to the single conversion factor shall be 1.1 percent.
(B)

No effect on computation of conversion factor for 2010 and subsequent years.—
The conversion factor under this subsection shall be computed under paragraph (1)(A) for 2010 and subsequent years as if subparagraph (A) had never applied.
(10)

Update for January 45 through may of 2010.—
^{45}
So in law. The word “January” in the heading for paragraph (10) probably should read “january”.
(A)

In general.—
Subject to paragraphs (7)(B), (8)(B), and (9)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2010 for the period beginning on January 1, 2010, and ending on May 31, 2010, the update to the single conversion factor shall be 0 percent for 2010.
(B)

No effect on computation of conversion factor for remaining portion of 2010 and subsequent years.—
The conversion factor under this subsection shall be computed under paragraph (1)(A) for the period beginning on June 1, 2010, and ending on December 31, 2010, and for 2011 and subsequent years as if subparagraph (A) had never applied.
(11)

Update for june through december of 2010.—
(A)

In general.—
Subject to paragraphs (7)(B), (8)(B), (9)(B), and (10)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2010 for the period beginning on June 1, 2010, and ending on December 31, 2010, the update to the single conversion factor shall be 2.2 percent.
(B)

No effect on computation of conversion factor for 2011 and subsequent years.—
The conversion factor under this subsection shall be computed under paragraph (1)(A) for 2011 and subsequent years as if subparagraph (A) had never applied.
(12)

Update for 2011.—
(A)

In general.—
Subject to paragraphs (7)(B), (8)(B), (9)(B), (10)(B), and (11)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2011, the update to the single conversion factor shall be 0 percent.
(B)

No effect on computation of conversion factor for 2012 and subsequent years.—
The conversion factor under this subsection shall be computed under paragraph (1)(A) for 2012 and subsequent years as if subparagraph (A) had never applied.
(13)

Update for 2012.—
(A)

In general.—
Subject to paragraphs (7)(B), (8)(B), (9)(B), (10)(B), (11)(B), and (12)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2012, the update to the single conversion factor shall be zero percent.
(B)

No effect on computation of conversion factor for 2013 and subsequent years.—
The conversion factor under this subsection shall be computed under paragraph (1)(A) for 2013 and subsequent years as if subparagraph (A) had never applied.
(14)

Update for 2013.—
(A)

In general.—
Subject to paragraphs (7)(B), (8)(B), (9)(B), (10)(B), (11)(B), (12)(B), and (13)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2013, the update to the single conversion factor for such year shall be zero percent.
(B)

No effect on computation of conversion factor for 2014 and subsequent years.—
The conversion factor under this subsection shall be computed under paragraph (1)(A) for 2014 and subsequent years as if subparagraph (A) had never applied.
(15)

Update for 2014.—
(A)

In general.—
Subject to paragraphs (7)(B), (8)(B), (9)(B), (10)(B), (11)(B), (12)(B), (13)(B), and (14)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2014 , the update to the single conversion factor shall be 0.5 percent.
(B)

No effect on computation of conversion factor for subsequent years.—
The conversion factor under this subsection shall be computed under paragraph (1)(A) for 2015 and subsequent years as if subparagraph (A) had never applied.
(16)

Update for january through june of 2015.—
Subject to paragraphs (7)(B), (8)(B), (9)(B), (10)(B), (11)(B), (12)(B), (13)(B), (14)(B), and (15)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2015 for the period beginning on January 1, 2015, and ending on June 30, 2015, the update to the single conversion factor shall be 0.0 percent.
(17)

Update for july through december of 2015.—
The update to the single conversion factor established in paragraph (1)(C) for the period beginning on July 1, 2015, and ending on December 31, 2015, shall be 0.5 percent.
(18)

Update for 2016 through 2019.—
The update to the single conversion factor established in paragraph (1)(C)—
(A)
for 2016 and each subsequent year through 2018 shall be 0.5 percent; and
(B)
for 2019 shall be 0.25 percent.
(19)

Update for 2020 through 2025.—
The update to the single conversion factor established in paragraph (1)(C) for 2020 and each subsequent year through 2025 shall be 0.0 percent.
(20)

Update for 2026 and subsequent years.—
For 2026 and each subsequent year, the update to the qualifying APM conversion factor established under paragraph (1)(A) is 0.75 percent, and the update to the nonqualifying APM conversion factor established under such paragraph is 0.25 percent.
(e)

Geographic Adjustment Factors.—
(1)

Establishment of geographic indices.—
(A)

In general.—
Subject to subparagraphs (B), (C), (E), (G), (H), and (I), the Secretary shall establish—
(i)
an index which reflects the relative costs of the mix of goods and services comprising practice expenses (other than malpractice expenses) in the different fee schedule areas compared to the national average of such costs,
(ii)
an index which reflects the relative costs of malpractice expenses in the different fee schedule areas compared to the national average of such costs, and
(iii)
an index which reflects ¼ of the difference between the relative value of physicians' work effort in each of the different fee schedule areas and the national average of such work effort.
(B)

Class-specific geographic cost-of-practice indices.—
The Secretary may establish more than one index under subparagraph (A)(i) in the case of classes of physicians' services, if, because of differences in the mix of goods and services comprising practice expenses for the different classes of services, the application of a single index under such clause to different classes of such services would be substantially inequitable.
(C)

Peridic review and adjustments in geographic adjustment factors.—
The Secretary, not less often than every 3 years, shall, in consultation with appropriate representatives of physicians, review the indices established under subparagraph (A) and the geographic index values applied under this subsection for all fee schedule areas. Based on such review, the Secretary may revise such index and adjust such index values, except that, if more than 1 year has elapsed since the date of the last previous adjustment, the adjustment to be applied in the first year of the next adjustment shall be ½ of the adjustment that otherwise would be made.
(D)

Use of recent data.—
In establishing indices and index values under this paragraph, the Secretary shall use the most recent data available relating to practice expenses, malpractice expenses, and physician work effort in different fee schedule areas.
(E)

Floor at 1.0 on work geographic index.—
After calculating the work geographic index in subparagraph (A)(iii), for purposes of payment for services furnished on or after January 1, 2004, and before January 31, 2026, the Secretary shall increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00.
(G)46

Floor for practice expense, malpractice, and work geographic indices for services furnished in alaska.—
For purposes of payment for services furnished in Alaska on or after January 1, 2004, and before January 1, 2006, after calculating the practice expense, malpractice, and work geographic indices in clauses (i), (ii), and (iii) of subparagraph (A) and in subparagraph (B), the Secretary shall increase any such index to 1.67 if such index would otherwise be less than 1.67. For purposes of payment for services furnished in the State described in the preceding sentence on or after January 1, 2009, after calculating the work geographic index in subparagraph (A)(iii), the Secretary shall increase the work geographic index to 1.5 if such index would otherwise be less than 1.547
^{46}
So in law. There is no subparagraph (F).
^{47}
So in law. There is no period in the last sentence of subparagraph (G). See amendment made by section 134(b) of Public Law 110–275.
(H)

Practice expense geographic adjustment for 2010 and subsequent years.—
(i)

For 2010.—
Subject to clause (iii), for services furnished during 2010, the employee wage and rent portions of the practice expense geographic index described in subparagraph (A)(i) shall reflect ½ of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national average of such employee wages and rents.
(ii)

For 2011.—
Subject to clause (iii), for services furnished during 2011, the employee wage and rent portions of the practice expense geographic index described in subparagraph (A)(i) shall reflect ½ of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national average of such employee wages and rents.
(iii)

Hold harmless.—
The practice expense portion of the geographic adjustment factor applied in a fee schedule area for services furnished in 2010 or 2011 shall not, as a result of the application of clause (i) or (ii), be reduced below the practice expense portion of the geographic adjustment factor under subparagraph (A)(i) (as calculated prior to the application of such clause (i) or (ii), respectively) for such area for such year.
(iv)

Analysis.—
The Secretary shall analyze current methods of establishing practice expense geographic adjustments under subparagraph (A)(i) and evaluate data that fairly and reliably establishes distinctions in the costs of operating a medical practice in the different fee schedule areas. Such analysis shall include an evaluation of the following:
(I)
The feasibility of using actual data or reliable survey data developed by medical organizations on the costs of operating a medical practice, including office rents and non-physician staff wages, in different fee schedule areas.
(II)
The office expense portion of the practice expense geographic adjustment described in subparagraph (A)(i), including the extent to which types of office expenses are determined in local markets instead of national markets.
(III)
The weights assigned to each of the categories within the practice expense geographic adjustment described in subparagraph (A)(i).
(v)

Revision for 2012 and subsequent years.—
As a result of the analysis described in clause (iv), the Secretary shall, not later than January 1, 2012, make appropriate adjustments to the practice expense geographic adjustment described in subparagraph (A)(i) to ensure accurate geographic adjustments across fee schedule areas, including—
(I)
basing the office rents component and its weight on office expenses that vary among fee schedule areas; and
(II)
considering a representative range of professional and non-professional personnel employed in a medical office based on the use of the American Community Survey data or other reliable data for wage adjustments.
Such adjustments shall be made without regard to adjustments made pursuant to clauses (i) and (ii) and shall be made in a budget neutral manner.
(I)

Floor for practice expense index for services furnished in frontier states.—
(i)

In general.—
Subject to clause (ii), for purposes of payment for services furnished in a frontier State (as defined in section 1886(d)(3)(E)(iii)(II)) on or after January 1, 2011, after calculating the practice expense index in subparagraph (A)(i), the Secretary shall increase any such index to 1.00 if such index would otherwise be less that 1.00. The preceding sentence shall not be applied in a budget neutral manner.
(ii)

Limitation.—
This subparagraph shall not apply to services furnished in a State that receives a non-labor related share adjustment under section 1886(d)(5)(H).
(2)

Computation of geographic adjustment factor.—
For purposes of subsection (b)(1)(C), for all physicians' services for each fee schedule area the Secretary shall establish a geographic adjustment factor equal to the sum of the geographic cost-of-practice adjustment factor (specified in paragraph (3)), the geographic malpractice adjustment factor (specified in paragraph (4)), and the geographic physician work adjustment factor (specified in paragraph (5)) for the service and the area.
(3)

Geographic cost-of-practice adjustment factor.—
For purposes of paragraph (2), the “geographic cost-of-practice adjustment factor”, for a service for a fee schedule area, is the product of—
(A)
the proportion of the total relative value for the service that reflects the relative value units for the practice expense component, and
(B)
the geographic cost-of-practice index value for the area for the service, based on the index established under paragraph (1)(A)(i) or (1)(B) (as the case may be).
(4)

Geographic malpractice adjustment factor.—
For purposes of paragraph (2), the “geographic malpractice adjustment factor”, for a service for a fee schedule area, is the product of—
(A)
the proportion of the total relative value for the service that reflects the relative value units for the malpractice component, and
(B)
the geographic malpractice index value for the area, based on the index established under paragraph (1)(A)(ii).
(5)

Geographic physician work adjustment factor.—
For purposes of paragraph (2), the “geographic physician work adjustment factor”, for a service for a fee schedule area, is the product of—
(A)
the proportion of the total relative value for the service that reflects the relative value units for the work component, and
(B)
the geographic physician work index value for the area, based on the index established under paragraph (1)(A)(iii).
(6)

Use of msas as fee schedule areas in california.—
(A)

In general.—
Subject to the succeeding provisions of this paragraph and notwithstanding the previous provisions of this subsection, for services furnished on or after January 1, 2017, the fee schedule areas used for payment under this section applicable to California shall be the following:
(i)
Each Metropolitan Statistical Area (each in this paragraph referred to as an “MSA”), as defined by the Director of the Office of Management and Budget as of December 31 of the previous year, shall be a fee schedule area.
(ii)
All areas not included in an MSA shall be treated as a single rest-of-State fee schedule area.
(B)

Transition for msas previously in rest-of-state payment locality or in locality 3.—
(i)

In general.—
For services furnished in California during a year beginning with 2017 and ending with 2021 in an MSA in a transition area (as defined in subparagraph (D)), subject to subparagraph (C), the geographic index values to be applied under this subsection for such year shall be equal to the sum of the following:
(I)

Current law component.—
The old weighting factor (described in clause (ii)) for such year multiplied by the geographic index values under this subsection for the fee schedule area that included such MSA that would have applied in such area (as estimated by the Secretary) if this paragraph did not apply.
(II)

MSA-based component.—
The MSA-based weighting factor (described in clause (iii)) for such year multiplied by the geographic index values computed for the fee schedule area under subparagraph (A) for the year (determined without regard to this subparagraph).
(ii)

Old weighting factor.—
The old weighting factor described in this clause—
(I)
for 2017, is ⅚; and
(II)
for each succeeding year, is the old weighting factor described in this clause for the previous year minus ⅙.
(iii)

MSA-based weighting factor.—
The MSA-based weighting factor described in this clause for a year is 1 minus the old weighting factor under clause (ii) for that year.
(C)

Hold harmless.—
For services furnished in a transition area in California during a year beginning with 2017, the geographic index values to be applied under this subsection for such year shall not be less than the corresponding geographic index values that would have applied in such transition area (as estimated by the Secretary) if this paragraph did not apply.
(D)

Transition area defined.—
In this paragraph, the term “transition area” means each of the following fee schedule areas for 2013:
(i)
The rest-of-State payment locality.
(ii)
Payment locality 3.
(E)

References to fee schedule areas.—
Effective for services furnished on or after January 1, 2017, for California, any reference in this section to a fee schedule area shall be deemed a reference to a fee schedule area established in accordance with this paragraph.
(f)

Sustainable Growth Rate.—
(1)

Publication.—
The Secretary shall cause to have published in the Federal Register not later than—
(A)
November 1, 2000, the sustainable growth rate for 2000 and 2001; and
(B)
November 1 of each succeeding year through 2014 the sustainable growth rate for such succeeding year and each of the preceding 2 years.
(2)

Specification of growth rate.—
The sustainable growth rate for all physicians' services for a fiscal year (beginning with fiscal year 1998 and ending with fiscal year 2000) and a year beginning with 2000 and ending with 2014 shall be equal to the product of—
(A)
1 plus the Secretary's estimate of the weighted average percentage increase (divided by 100) in the fees for all physicians' services in the applicable period involved,
(B)
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 Medicare+Choice plan enrollees) from the previous applicable period to the applicable period involved,
(C)
1 plus the Secretary's estimate of the annual average percentage growth in real gross domestic product per capita (divided by 100) during the 10-year period ending with the applicable period involved, and
(D)
1 plus the Secretary's estimate of the percentage change (divided by 100) in expenditures for all physicians' services in the applicable period (compared with the previous applicable period) which will result from changes in law and regulations, determined without taking into account estimated changes in expenditures resulting from the update adjustment factor determined under subsection (d)(3)(B) or (d)(4)(B), as the case may be,
minus 1 and multiplied by 100.
(3)

Data to be used.—
For purposes of determining the update adjustment factor under subsection (d)(4)(B) for a year beginning with 2001, the sustainable growth rates taken into consideration in the determination under paragraph (2) shall be determined as follows:
(A)

For 2001.—
For purposes of such calculations for 2001, the sustainable growth rates for fiscal year 2000 and the years 2000 and 2001 shall be determined on the basis of the best data available to the Secretary as of September 1, 2000.
(B)

For 2002.—
For purposes of such calculations for 2002, the sustainable growth rates for fiscal year 2000 and for years 2000, 2001, and 2002 shall be determined on the basis of the best data available to the Secretary as of September 1, 2001.
(C)

For 2003 and succeeding years.—
For purposes of such calculations for a year after 2002—
(i)
the sustainable growth rates for that year and the preceding 2 years shall be determined on the basis of the best data available to the Secretary as of September 1 of the year preceding the year for which the calculation is made; and
(ii)
the sustainable growth rate for any year before a year described in clause (i) shall be the rate as most recently determined for that year under this subsection.
Nothing in this paragraph shall be construed as affecting the sustainable growth rates established for fiscal year 1998 or fiscal year 1999.
(4)

Definitions.—
In this subsection:
(A)

Services included in physicians' services.—
The term “physicians' services” includes other items and services (such as clinical diagnostic laboratory tests 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 a Medicare+Choice plan enrollee.
(B)

Medicare+choice plan enrollee.—
The term “Medicare+Choice plan enrollee” means, with respect to a fiscal year, an individual enrolled under this part who has elected to receive benefits under this title for the fiscal year through a Medicare+Choice plan offered under part C, and also includes an individual who is receiving benefits under this part through enrollment with an eligible organization with a risk-sharing contract under section 1876.
(C)

Applicable period.—
The term “applicable period” means—
(i)
a fiscal year, in the case of fiscal year 1998, fiscal year 1999, and fiscal year 2000; or
(ii)
a calendar year with respect to a year beginning with 2000;
as the case may be.
(g)

Limitation on Beneficiary Liability.—
(1)

Limitation on actual charges.—
(A)

In general.—
In the case of a nonparticipating physician or nonparticipating supplier or other person (as defined in section 1842(i)(2)) who does not accept payment on an assignment-related basis for a physician's service furnished with respect to an individual enrolled under this part, the following rules apply:
(i)

Application of limiting charge.—
No person may bill or collect an actual charge for the service in excess of the limiting charge described in paragraph (2) for such service.
(ii)

No liability for excess charges.—
No person is liable for payment of any amounts billed for the service in excess of such limiting charge.
(iii)

Correction of excess charges.—
If such a physician, supplier, or other person bills, but does not collect, an actual charge for a service in violation of clause (i), the physician, supplier, or other person shall reduce on a timely basis the actual charge billed for the service to an amount not to exceed the limiting charge for the service.
(iv)

Refund of excess collections.—
If such a physician, supplier, or other person collects an actual charge for a service in violation of clause (i), the physician, supplier, or other person shall provide on a timely basis a refund to the individual charged in the amount by which the amount collected exceeded the limiting charge for the service. The amount of such a refund shall be reduced to the extent the individual has an outstanding balance owed by the individual to the physician.
(B)

Sanctions.—
If a physician, supplier, or other person—
(i)
knowingly and willfully bills or collects for services in violation of subparagraph (A)(i) on a repeated basis, or
(ii)
fails to comply with clause (iii) or (iv) of subparagraph (A) on a timely basis,
the Secretary may apply sanctions against the physician, supplier, or other person in accordance with paragraph (2) of section 1842(j). In applying this subparagraph, paragraph (4) of such section applies in the same manner as such paragraph applies to such section and any reference in such section to a physician is deemed also to include a reference to a supplier or other person under this subparagraph.
(C)

Timely basis.—
For purposes of this paragraph, a correction of a bill for an excess charge or refund of an amount with respect to a violation of subparagraph (A)(i) in the case of a service is considered to be provided “on a timely basis”, if the reduction or refund is made not later than 30 days after the date the physician, supplier, or other person is notified by the carrier under this part of such violation and of the requirements of subparagraph (A).
(2)

Limiting charge defined.—
(A)

For 1991.—
For physicians' services of a physician furnished during 1991, other than radiologist services subject to section 1834(b), the “limiting charge” shall be the same percentage (or, if less, 25 percent) above the recognized payment amount under this part with respect to the physician (as a nonparticipating physician) as the percentage by which—
(i)
the maximum allowable actual charge (as determined under section 1842(j)(1)(C) as of December 31, 1990, or, if less, the maximum actual charge otherwise permitted for the service under this part as of such date) for the service of the physician, exceeds
(ii)
the recognized payment amount for the service of the physician (as a nonparticipating physician) as of such date.
In the case of evaluation and management services (as specified in section 1842(b)(16)(B)(ii)), the preceding sentence shall be applied by substituting “40 percent” for “25 percent”.48
^{48}
Margin as in original.
(B)

For 1992.—
For physicians' services furnished during 1992, other than radiologist services subject to section 1834(b), the “limiting charge” shall be the same percentage (or, if less, 20 percent) above the recognized payment amount under this part for nonparticipating physicians as the percentage by which—
(i)
the limiting charge (as determined under subparagraph (A) as of December 31, 1991) for the service, exceeds
(ii)
the recognized payment amount for the service for nonparticipating physicians as of such date.
(C)

After 1992.—
For physicians' services furnished in a year after 1992, the “limiting charge” shall be 115 percent of the recognized payment amount under this part for nonparticipating physicians or for nonparticipating suppliers or other persons.
(D)

Recognized payment amount.—
In this section, the term “recognized payment amount” means, for services furnished on or after January 1, 1992, the fee schedule amount determined under subsection (a) (or, if payment under this part is made on a basis other than the fee schedule under this section, 95 percent of the other payment basis), and, for services furnished during 1991, the applicable percentage (as defined in section 1842(b)(4)(A)(iv)) of the prevailing charge (or fee schedule amount) for nonparticipating physicians for that year.
(3)

Limitation on charges for medicare beneficiaries eligible for medicaid benefits.—
(A)

In general.—
Payment for physicians' services furnished on or after April 1, 1990, to an individual who is enrolled under this part and eligible for any medical assistance (including as a qualified medicare beneficiary, as defined in section 1905(p)(1)) with respect to such services under a State plan approved under title XIX may only be made on an assignment-related basis and the provisions of section 1902(n)(3)(A) apply to further limit permissible charges under this section.
(B)

Penalty.—
A person may not bill for physicians' services subject to subparagraph (A) other than on an assignment-related basis. No person is liable for payment of any amounts billed for such a service in violation of the previous sentence. If a person knowingly and willfully bills for physicians' services in violation of the first sentence, the Secretary may apply sanctions against the person in accordance with section 1842(j)(2).
(4)

Physician submission of claims.—
(A)

In general.—
For services furnished on or after September 1, 1990, within 1 year after the date of providing a service for which payment is made under this part on a reasonable charge or fee schedule basis, a physician, supplier, or other person (or an employer or facility in the cases described in section 1842(b)(6)(A))—
(i)
shall complete and submit a claim for such service on a standard claim form specified by the Secretary to the carrier on behalf of a beneficiary, and
(ii)
may not impose any charge relating to completing and submitting such a form.
(B)

Penalty.—
(i)
With respect to an assigned claim wherever a physician, provider, supplier or other person (or an employer or facility in the cases described in section 1842(b)(6)(A)) fails to submit such a claim as required in subparagraph (A), the Secretary shall reduce by 10 percent the amount that would otherwise be paid for such claim under this part.
(ii)
If a physician, supplier, or other person (or an employer or facility in the cases described in section 1842(b)(6)(A)) fails to submit a claim required to be submitted under subparagraph (A) or imposes a charge in violation of such subparagraph, the Secretary shall apply the sanction with respect to such a violation in the same manner as a sanction may be imposed under section 1842(p)(3) for a violation of section 1842(p)(1).
(5)

Electronic billing; direct deposit.—
The Secretary shall encourage and develop a system providing for expedited payment for claims submitted electronically. The Secretary shall also encourage and provide incentives allowing for direct deposit as payments for services furnished by participating physicians. The Secretary shall provide physicians with such technical information as necessary to enable such physicians to submit claims electronically. The Secretary shall submit a plan to Congress on this paragraph by May 1, 1990.
(6)

Monitoring of charges.—
(A)

In general.—
The Secretary shall monitor—
(i)
the actual charges of nonparticipating physicians for physicians' services furnished on or after January 1, 1991, to individuals enrolled under this part, and
(ii)
changes (by specialty, type of service, and geographic area) in (I) the proportion of expenditures for physicians' services provided under this part by participating physicians, (II) the proportion of expenditures for such services for which payment is made under this part on an assignment-related basis, and (III) the amounts charged above the recognized payment amounts under this part.
(B)

Report.—
The Secretary shall, by not later than April 15 of each year (beginning in 1992), report to the Congress information on the extent to which actual charges exceed limiting charges, the number and types of services involved, and the average amount of excess charges and information regarding the changes described in subparagraph (A)(ii).
(C)

Plan.—
If the Secretary finds that there has been a significant decrease in the proportions described in subclauses (I) and (II) of subparagraph (A)(ii) or an increase in the amounts described in subclause (III) of that subparagraph, the Secretary shall develop a plan to address such a problem and transmit to Congress recommendations regarding the plan. The Medicare Payment Advisory Commission shall review the Secretary's plan and recommendations and transmit to Congress its comments regarding such plan and recommendations.
(7)

Monitoring of utilization and access.—
(A)

In general.—
The Secretary shall monitor—
(i)
changes in the utilization of and access to services furnished under this part within geographic, population, and service related categories,
(ii)
possible sources of inappropriate utilization of services furnished under this part which contribute to the overall level of expenditures under this part, and
(iii)
factors underlying these changes and their interrelationships.
(B)

Report.—
The Secretary shall by not later than April 15, of each year (beginning with 1991) report to the Congress on the changes described in subparagraph (A)(i) and shall include in the report an examination of the factors (including factors relating to different services and specific categories and groups of services and geographic and demographic variations in utilization) which may contribute to such changes.
(C)

Recommendations.—
The Secretary shall include in each annual report under subparagraph (B) recommendations—
(i)
addressing any identified patterns of inappropriate utilization,
(ii)
on utilization review,
(iii)
on physician education or patient education,
(iv)
addressing any problems of beneficiary access to care made evident by the monitoring process, and
(v)
on such other matters as the Secretary deems appropriate.
The Medicare Payment Advisory Commission shall comment on the Secretary's recommendations and in developing its comments, the Commission shall convene and consult a panel of physician experts to evaluate the implications of medical utilization patterns for the quality of and access to patient care.
(h)

Sending Information to Physicians.—
Before the beginning of each year (beginning with 1992), the Secretary shall send to each physician or nonparticipating supplier or other person furnishing physicians' services (as defined in section 1848(j)(3)) furnishing physicians' services under this part, for services commonly performed by the physician, supplier, or other person, information on fee schedule amounts that apply for the year in the fee schedule area for participating and non-participating physicians, and the maximum amount that may be charged consistent with subsection (g)(2). Such information shall be transmitted in conjunction with notices to physicians, suppliers, and other persons under section 1842(h) (relating to the participating physician program) for a year.
(i)

Miscellaneous Provisions.—
(1)

Restriction on administrative and judicial review.—
There shall be no administrative or judicial review under section 1869 or otherwise of—
(A)
the determination of the adjusted historical payment basis (as defined in subsection (a)(2)(D)(i)),
(B)
the determination of relative values and relative value units under subsection (c), including adjustments under subsections (c)(2)(F), (c)(2)(H), and (c)(2)(I) and section 13515(b) of the Omnibus Budget Reconciliation Act of 1993,
(C)
the determination of conversion factors under subsection (d), including without limitation a prospective redetermination of the sustainable growth rates for any or all previous fiscal years,
(D)
the establishment of geographic adjustment factors under subsection (e),
(E)
the establishment of the system for the coding of physicians' services under this section, and
(F)
the collection and use of information in the determination of relative values under subsection (c)(2)(M).
(2)

Assistants-at-surgery.—
(A)

In general.—
Subject to subparagraph (B), in the case of a surgical service furnished by a physician, if payment is made separately under this part for the services of a physician serving as an assistant-at-surgery, the fee schedule amount shall not exceed 16 percent of the fee schedule amount otherwise determined under this section for the global surgical service involved.
(B)

Denial of payment in certain cases.—
If the Secretary determines, based on the most recent data available, that for a surgical procedure (or class of surgical procedures) the national average percentage of such procedure performed under this part which involve the use of a physician as an assistant at surgery is less than 5 percent, no payment may be made under this part for services of an assistant at surgery involved in the procedure.
(3)

No comparability adjustment.—
For physicians' services for which payment under this part is determined under this section—
(A)
a carrier may not make any adjustment in the payment amount under section 1842(b)(3)(B) on the basis that the payment amount is higher than the charge applicable, for comparable services and under comparable circumstances, to the policyholders and subscribers of the carrier,
(B)
no payment adjustment may be made under section 1842(b)(8), and
(C)
section 1842(b)(9) shall not apply.
(j)

Definitions.—
In this section:
(1)

Category.—
For services furnished before January 1, 1998, the term “category” means, with respect to physicians' services, surgical services (as defined by the Secretary and including anesthesia services), primary care services (as defined in section 1842(i)(4)), and all other physicians' services. The Secretary shall define surgical services and publish such definitions in the Federal Register no later than May 1, 1990, after consultation with organizations representing physicians.
(2)

Fee schedule area.—
Except as provided in subsection (e)(6)(D), the term “fee schedule area” means a locality used under section 1842(b) for purposes of computing payment amounts for physicians' services.
(3)

Physicians' services.—
The term “physicians' services” includes items and services described in paragraphs (1), (2)(A), (2)(D), (2)(G), (2)(P) (with respect to services described in subparagraphs (A) and (C) of section 1861(oo)(2)), (2)(R) (with respect to services described in suparagraphs (B), (C), and (D) of section 1861(pp)(1)), (2)(S), (2)(W), (2)(AA), (2)(DD), (2)(EE), (2)(FF) (including administration of the health risk assessment) ,49 (3), (4), (13), (14) (with respect to services described in section 1861(nn)(2)), and (15) of section 1861(s) (other than clinical diagnostic laboratory tests and, except for purposes of subsection (a)(3), (g), and (h) such other items and services as the Secretary may specify).
^{49}
The space between “assessment)” and the comma that follows is so in law. See amendment made by section 4103(c)(2) of P.L. 111–148 (124 Stat. 556).
(4)

Practice expenses.—
The term “practice expenses” includes all expenses for furnishing physicians' services, excluding malpractice expenses, physician compensation, and other physician fringe benefits.
(k)

Quality Reporting System.—
(1)

In general.—
The Secretary shall implement a system for the reporting by eligible professionals of data on quality measures specified under paragraph (2). Such data shall be submitted in a form and manner specified by the Secretary (by program instruction or otherwise), which may include submission of such data on claims under this part.
(2)

Use of consensus-based quality measures.—
(A)

For 2007.—
(i)

In general.—
For purposes of applying this subsection for the reporting of data on quality measures for covered professional services furnished during the period beginning July 1, 2007, and ending December 31, 2007, the quality measures specified under this paragraph are the measures identified as 2007 physician quality measures under the Physician Voluntary Reporting Program as published on the public website of the Centers for Medicare & Medicaid Services as of the date of the enactment of this subsection, except as may be changed by the Secretary based on the results of a consensus-based process in January of 2007, if such change is published on such website by not later than April 1, 2007.
(ii)

Subsequent refinements in application permitted.—
The Secretary may, from time to time (but not later than July 1, 2007), publish on such website (without notice or opportunity for public comment) modifications or refinements (such as code additions, corrections, or revisions) for the application of quality measures previously published under clause (i), but may not, under this clause, change the quality measures under the reporting system.
(iii)

Implementation.—
Notwithstanding any other provision of law, the Secretary may implement by program instruction or otherwise this subsection for 2007.
(B)

For 2008 and 2009.—
(i)

In general.—
For purposes of reporting data on quality measures for covered professional services furnished during 2008 and 2009, the quality measures specified under this paragraph for covered professional services shall be measures that have been adopted or endorsed by a consensus organization (such as the National Quality Forum or AQA), that include measures that have been submitted by a physician specialty, and that the Secretary identifies as having used a consensus-based process for developing such measures. Such measures shall include structural measures, such as the use of electronic health records and electronic prescribing technology.
(ii)

Proposed set of measures.—
Not later than August 15 of each of 2007 and 2008, the Secretary shall publish in the Federal Register a proposed set of quality measures that the Secretary determines are described in clause (i) and would be appropriate for eligible professionals to use to submit data to the Secretary in 2008 or 2009, as applicable. The Secretary shall provide for a period of public comment on such set of measures.
(iii)

Final set of measures.—
Not later than November 15 of each of 2007 and 2008, the Secretary shall publish in the Federal Register a final set of quality measures that the Secretary determines are described in clause (i) and would be appropriate for eligible professionals to use to submit data to the Secretary in 2008 or 2009, as applicable.
(C)

For 2010 and subsequent years.—
(i)

In general.—
Subject to clause (ii), for purposes of reporting data on quality measures for covered professional services furnished during 2010 and each subsequent year, subject to subsection (m)(3)(C), the quality measures (including electronic prescribing quality measures) specified under this paragraph shall be such measures selected by the Secretary from measures that have been endorsed by the entity with a contract with the Secretary under section 1890(a).
(ii)

Exception.—
In the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a), the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary, such as the AQA alliance.
(D)

Opportunity to provide input on measures for 2009 and subsequent years.—
For each quality measure (including an electronic prescribing quality measure) adopted by the Secretary under subparagraph (B) (with respect to 2009) or subparagraph (C), the Secretary shall ensure that eligible professionals have the opportunity to provide input during the development, endorsement, or selection of measures applicable to services they furnish.
(3)

Covered professional services and eligible professionals defined.—
For purposes of this subsection:
(A)

Covered professional services.—
The term “covered professional services” means services for which payment is made under, or is based on, the fee schedule established under this section and which are furnished by an eligible professional.
(B)

Eligible professional.—
The term “eligible professional” means any of the following:
(i)
A physician.
(ii)
A practitioner described in section 1842(b)(18)(C).
(iii)
A physical or occupational therapist or a qualified speech-language pathologist.
(iv)
Beginning with 2009, a qualified audiologist (as defined in section 1861(ll)(3)(B)).
(4)

Use of registry-based reporting.—
As part of the publication of proposed and final quality measures for 2008 under clauses (ii) and (iii) of paragraph (2)(B), the Secretary shall address a mechanism whereby an eligible professional may provide data on quality measures through an appropriate medical registry (such as the Society of Thoracic Surgeons National Database) or through a Maintenance of Certification program operated by a specialty body of the American Board of Medical Specialties that meets the criteria for such a registry, as identified by the Secretary.
(5)

Identification units.—
For purposes of applying this subsection, the Secretary may identify eligible professionals through billing units, which may include the use of the Provider Identification Number, the unique physician identification number (described in section 1833(q)(1)), the taxpayer identification number, or the National Provider Identifier. For purposes of applying this subsection for 2007, the Secretary shall use the taxpayer identification number as the billing unit.
(6)

Education and outreach.—
The Secretary shall provide for education and outreach to eligible professionals on the operation of this subsection.
(7)

Limitations on review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of the development and implementation of the reporting system under paragraph (1), including identification of quality measures under paragraph (2) and the application of paragraphs (4) and (5).
(8)

Implementation.—
The Secretary shall carry out this subsection acting through the Administrator of the Centers for Medicare & Medicaid Services.
(9)

Continued application for purposes of mips and for certain professionals volunteering to report.—
The Secretary shall, in accordance with subsection (q)(1)(F), carry out the provisions of this subsection—
(A)
for purposes of subsection (q); and
(B)
for eligible professionals who are not MIPS eligible professionals (as defined in subsection (q)(1)(C)) for the year involved.
(l)

Physician Assistance and Quality Initiative Fund.—
(1)

Establishment.—
The Secretary shall establish under this subsection a Physician Assistance and Quality Initiative Fund (in this subsection referred to as the “Fund”) which shall be available to the Secretary for physician payment and quality improvement initiatives, which may include application of an adjustment to the update of the conversion factor under subsection (d).
(2)

Funding.—
(A)

Amount available.—
(i)

In general.—
Subject to clause (ii), there shall be available to the Fund the following amounts:
(I)
For expenditures during 2008, an amount equal to $150,500,000.
(II)
For expenditures during 2009, an amount equal to $24,500,000.
(ii)

Limitations on expenditures.—
(I)
2008.—The amount available for expenditures during 2008 shall be reduced as provided by subparagraph (A) of section 225(c)(1) and section 524 of the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2008 (division G of the Consolidated Appropriations Act, 2008).
(II)
2009.—The amount available for expenditures during 2009 shall be reduced as provided by subparagraph (B) of such section 225(c)(1).
(B)

Timely obligation of all available funds for services.—
The Secretary shall provide for expenditures from the Fund in a manner designed to provide (to the maximum extent feasible) for the obligation of the entire amount available for expenditures, after application of subparagraph (A)(ii), during—
(i)
2008 for payment with respect to physicians' services furnished during 2008; and
(ii)
2009 for payment with respect to physicians' services furnished during 2009.
(C)

Payment from trust fund.—
The amount specified in subparagraph (A) shall be available to the Fund, as expenditures are made from the Fund, from the Federal Supplementary Medical Insurance Trust Fund under section 1841.
(D)

Funding limitation.—
Amounts in the Fund shall be available in advance of appropriations in accordance with subparagraph (B) but only if the total amount obligated from the Fund does not exceed the amount available to the Fund under subparagraph (A). The Secretary may obligate funds from the Fund only if the Secretary determines (and the Chief Actuary of the Centers for Medicare & Medicaid Services and the appropriate budget officer certify) that there are available in the Fund sufficient amounts to cover all such obligations incurred consistent with the previous sentence.
(E)

Construction.—
In the case that expenditures from the Fund are applied to, or otherwise affect, a conversion factor under subsection (d) for a year, the conversion factor under such subsection shall be computed for a subsequent year as if such application or effect had never occurred.
(m)

Incentive Payments for Quality Reporting.—
(1)

Incentive payments.—
(A)

In general.—
For 2007 through 2014, with respect to covered professional services furnished during a reporting period by an eligible professional, if—
(i)
there are any quality measures that have been established under the physician reporting system that are applicable to any such services furnished by such professional for such reporting period;
(ii)
the eligible professional satisfactorily submits (as determined under this subsection) to the Secretary data on such quality measures in accordance with such reporting system for such reporting period,
in addition to the amount otherwise paid under this part, there also shall be paid to the eligible professional (or to an employer or facility in the cases described in clause (A) of section 1842(b)(6)) or, in the case of a group practice under paragraph (3)(C), to the group practice, from the Federal Supplementary Medical Insurance Trust Fund established under section 1841 an amount equal to the applicable quality percent of the Secretary's estimate (based on claims submitted not later than 2 months after the end of the reporting period) of the allowed charges under this part for all such covered professional services furnished by the eligible professional (or, in the case of a group practice under paragraph (3)(C), by the group practice) during the reporting period.
(B)

Applicable quality percent.—
For purposes of subparagraph (A), the term “applicable quality percent” means—
(i)
for 2007 and 2008, 1.5 percent; and
(ii)
for 2009 and 2010, 2.0 percent;
(iii)
for 2011, 1.0 percent; and
(iv)
for 2012, 2013, and 2014, 0.5 percent.
(2)

Incentive payments for electronic prescribing.—
(A)

In general.—
Subject to subparagraph (D), for 2009 through 2013, with respect to covered professional services furnished during a reporting period by an eligible professional, if the eligible professional is a successful electronic prescriber for such reporting period, in addition to the amount otherwise paid under this part, there also shall be paid to the eligible professional (or to an employer or facility in the cases described in clause (A) of section 1842(b)(6)) or, in the case of a group practice under paragraph (3)(C), to the group practice, from the Federal Supplementary Medical Insurance Trust Fund established under section 1841 an amount equal to the applicable electronic prescribing percent of the Secretary's estimate (based on claims submitted not later than 2 months after the end of the reporting period) of the allowed charges under this part for all such covered professional services furnished by the eligible professional (or, in the case of a group practice under paragraph (3)(C), by the group practice) during the reporting period.
(B)

Limitation with respect to electronic prescribing quality measures.—
The provisions of this paragraph and subsection (a)(5) shall not apply to an eligible professional (or, in the case of a group practice under paragraph (3)(C), to the group practice) if, for the reporting period (or, for purposes of subsection (a)(5), for the reporting period for a year)—
(i)
the allowed charges under this part for all covered professional services furnished by the eligible professional (or group, as applicable) for the codes to which the electronic prescribing quality measure applies (as identified by the Secretary and published on the Internet website of the Centers for Medicare & Medicaid Services as of January 1, 2008, and as subsequently modified by the Secretary) are less than 10 percent of the total of the allowed charges under this part for all such covered professional services furnished by the eligible professional (or the group, as applicable); or
(ii)
if determined appropriate by the Secretary, the eligible professional does not submit (including both electronically and nonelectronically) a sufficient number (as determined by the Secretary) of prescriptions under part D.
If the Secretary makes the determination to apply clause (ii) for a period, then clause (i) shall not apply for such period.
(C)

Applicable electronic prescribing percent.—
For purposes of subparagraph (A), the term “applicable electronic prescribing percent” means—
(i)
for 2009 and 2010, 2.0 percent;
(ii)
for 2011 and 2012, 1.0 percent; and
(iii)
for 2013, 0.5 percent.
(D)

Limitation with respect to ehr incentive payments.—
The provisions of this paragraph shall not apply to an eligible professional (or, in the case of a group practice under paragraph (3)(C), to the group practice) if, for the EHR reporting period the eligible professional (or group practice) receives an incentive payment under subsection (o)(1)(A) with respect to a certified EHR technology (as defined in subsection (o)(4)) that has the capability of electronic prescribing.
(3)

Satisfactory reporting and successful electronic prescriber and described.—
(A)

In general.—
For purposes of paragraph (1), an eligible professional shall be treated as satisfactorily submitting data on quality measures for covered professional services for a reporting period (or, for purposes of subsection (a)(8), for the quality reporting period for the year) if quality measures have been reported as follows:
(i)

Three or fewer quality measures applicable.—
If there are no more than 3 quality measures that are provided under the physician reporting system and that are applicable to such services of such professional furnished during the period, each such quality measure has been reported under such system in at least 80 percent of the cases in which such measure is reportable under the system.
(ii)

Four or more quality measures applicable.—
If there are 4 or more quality measures that are provided under the physician reporting system and that are applicable to such services of such professional furnishedduring the period, at least 3 such quality measures have been reported under such system in at least 80 percent of the cases in which the respective measure is reportable under the system.
For years after 2008, quality measures for purposes of this subparagraph shall not include electronic prescribing quality measures.
(B)

Successful electronic prescriber.—
(i)

In general.—
For purposes of paragraph (2) and subsection (a)(5), an eligible professional shall be treated as a successful electronic prescriber for a reporting period (or, for purposes of subsection (a)(5), for the reporting period for a year) if the eligible professional meets the requirement described in clause (ii), or, if the Secretary determines appropriate, the requirement described in clause (iii). If the Secretary makes the determination under the preceding sentence to apply the requirement described in clause (iii) for a period, then the requirement described in clause (ii) shall not apply for such period.
(ii)

Requirement for submitting data on electronic prescribing quality measures.—
The requirement described in this clause is that, with respect to covered professional services furnished by an eligible professional during a reporting period (or, for purposes of subsection (a)(5), for the reporting period for a year), if there are any electronic prescribing quality measures that have been established under the physician reporting system and are applicable to any such services furnished by such professional for the period, such professional reported each such measure under such system in at least 50 percent of the cases in which such measure is reportable by such professional under such system.
(iii)

Requirement for electronically prescribing under part d.—
The requirement described in this clause is that the eligible professional electronically submitted a sufficient number (as determined by the Secretary) of prescriptions under part D during the reporting period (or, for purposes of subsection (a)(5), for the reporting period for a year).
(iv)

Use of part d data.—
Notwithstanding sections 1860D-15(d)(2)(B) and 1860D-15(f)(2), the Secretary may use data regarding drug claims submitted for purposes of section 1860D-15 that are necessary for purposes of clause (iii), paragraph (2)(B)(ii), and paragraph (5)(G).
(v)

Standards for electronic prescribing.—
To the extent practicable, in determining whether eligible professionals meet the requirements under clauses (ii) and (iii) for purposes of clause (i), the Secretary shall ensure that eligible professionals utilize electronic prescribing systems in compliance with standards established for such systems pursuant to the Part D Electronic Prescribing Program under section 1860D–4(e).
(C)

Satisfactory reporting measures for group practices.—
(i)

In general.—
By January 1, 2010, the Secretary shall establish and have in place a process under which eligible professionals in a group practice (as defined by the Secretary) shall be treated as satisfactorily submitting data on quality measures under subparagraph (A) and as meeting the requirement described in subparagraph (B)(ii) for covered professional services for a reporting period (or, for purposes of subsection (a)(5), for a reporting period for a year, or, for purposes of subsection (a)(8), for a quality reporting period for the year) if, in lieu of reporting measures under subsection (k)(2)(C), the group practice reports measures determined appropriate by the Secretary, such as measures that target high-cost chronic conditions and preventive care, in a form and manner, and at a time, specified by the Secretary.
(ii)

Statistical sampling model.—
The process under clause (i) shall provide and, for 2016 and subsequent years, may provide for the use of a statistical sampling model to submit data on measures, such as the model used under the Physician Group Practice demonstration project under section 1866A.
(iii)

No double payments.—
Payments to a group practice under this subsection by reason of the process under clause (i) shall be in lieu of the payments that would otherwise be made under this subsection to eligible professionals in the group practice for satisfactorily submitting data on quality measures.
(D)

Satisfactory reporting measures through participation in a qualified clinical data registry.—
For 2014 and subsequent years, the Secretary shall treat an eligible professional as satisfactorily submitting data on quality measures under subparagraph (A) and, for 2016 and subsequent years, subparagraph (A) or (C) if, in lieu of reporting measures under subsection (k)(2)(C), the eligible professional is satisfactorily participating, as determined by the Secretary, in a qualified clinical data registry (as described in subparagraph (E)) for the year.
(E)

Qualified clinical data registry.—
(i)

In general.—
The Secretary shall establish requirements for an entity to be considered a qualified clinical data registry. Such requirements shall include a requirement that the entity provide the Secretary with such information, at such times, and in such manner, as the Secretary determines necessary to carry out this subsection.
(ii)

Considerations.—
In establishing the requirements under clause (i), the Secretary shall consider whether an entity—
(I)
has in place mechanisms for the transparency of data elements and specifications, risk models, and measures;
(II)
requires the submission of data from participants with respect to multiple payers;
(III)
provides timely performance reports to participants at the individual participant level; and
(IV)
supports quality improvement initiatives for participants.
(iii)

Measures.—
With respect to measures used by a qualified clinical data registry—
(I)
sections 1890(b)(7) and 1890A(a) shall not apply; and
(II)
measures endorsed by the entity with a contract with the Secretary under section 1890(a) may be used.
(iv)

Consultation.—
In carrying out this subparagraph, the Secretary shall consult with interested parties.
(v)

Determination.—
The Secretary shall establish a process to determine whether or not an entity meets the requirements established under clause (i). Such process may involve one or both of the following:
(I)
A determination by the Secretary.
(II)
A designation by the Secretary of one or more independent organizations to make such determination.
(F)

Authority to revise satisfactorily reporting data.—
For years after 2009, the Secretary, in consultation with stakeholders and experts, may revise the criteria under this subsection for satisfactorily submitting data on quality measures under subparagraph (A) and the criteria for submitting data on electronic prescribing quality measures under subparagraph (B)(ii).
(4)

Form of payment.—
The payment under this subsection shall be in the form of a single consolidated payment.
(5)

Application.—
(A)

Physician reporting system rules.—
Paragraphs (5), (6),and (8) of subsection (k) shall apply for purposes of this subsection in the same manner as they apply for purposes of such subsection.
(B)

Coordination with other bonus payments.—
The provisions of this subsection shall not be taken into account in applying subsections (m) and (u) of section 1833 and any payment under such subsections shall not be taken into account in computing allowable charges under this subsection.
(C)

Implementation.—
Notwithstanding any other provision of law, for 2007, 2008, and 2009, the Secretary may implement by program instruction or otherwise this subsection.
(D)

Validation.—
(i)

In general.—
Subject to the succeeding provisions of this subparagraph, for purposes of determining whether a measure is applicable to the covered professional services of an eligible professional under this subsection for 2007 and 288, the Secretary shall presume that if an eligible professional submits data for a measure, such measure is applicable to such professional.
(ii)

Method.—
The Secretary may establish procedures to validate (by sampling or other means as the Secretary determines to be appropriate) whether measures applicable to covered professional services of an eligible professional have been reported.
(iii)

Denial of payment authority.—
If the Secretary determines that an eligible professional (or, in the case of a group practice under paragraph (3)(C), the group practice) has not reported measures applicable to covered professional services of such professional, the Secretary shall not pay the incentive payment under this subsection. If such payments for such period have already been made, the Secretary shall recoup such payments from the eligible professional (or the group practice).
(E)

Limitations on review.—
Except as provided in subparagraph (I), there shall be no administrative or judicial review under 1869, section 1878, or otherwise of
(i)
the determination of measures applicable to services furnished by eligible professionals under this subsection;
(ii)
the determination of satisfactory reporting under this subsection;
(iii)
the determination of a successful electronic prescriber under paragraph (3), the limitation under paragraph (2)(B), and the exception under subsection (a)(5)(B); and
(iv)
the determination of any incentive payment under this subsection and the payment adjustment under paragraphs (5)(A) and (8)(A) of subsection (a).
(F)

Extension.—
For 2008 through reporting periods occurring in 2015, the Secretary shall establish and, for reporting periods occurring in 2016 and subsequent years, the Secretary may establish alternative criteria for satisfactorily reporting under this subsection and alternative reporting periods under paragraph (6)(C) for reporting groups of measures under subsection (k)(2)(B) and for reporting using the method specified in subsection (k)(4).
(G)

Posting on website.—
The Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services, in an easily understandable format, a list of the names of the following:
(i)
The eligible professionals (or, in the case of reporting under paragraph (3)(C), the group practices) who satisfactorily submitted data on quality measures under this subsection.
(ii)
The eligible professionals (or, in the case of reporting under paragraph (3)(C), the group practices) who are successful electronic prescribers.
(H)

Feedback.—
The Secretary shall provide timely feedback to eligible professionals on the performance of the eligible professional with respect to satisfactorily submitting data on quality measures under this subsection.
(I)

Informal appeals process.—
The Secretary shall, by not later than January 1, 2011, establish and have in place an informal process for eligible professionals to seek a review of the determination that an eligible professional did not satisfactorily submit data on quality measures under this subsection.
(6)

Definitions.—
For purposes of this subsection:
(A)

Eligible professional; covered professional services.—
The terms “eligible professional” and “covered professional services” have the meanings given such termsin subsection (k)(3).
(B)

Physician reporting system.—
The term “physician reporting system” means the system established under subsection (k).
(C)

Reporting period.—
(i)

In general.—
Subject to clauses (ii) and (iii), the term “reporting period” means—
(I)
for 2007, the period beginning on July 1, 2007, and ending on December 31, 2007; and
(II)
for 2008 and subsequent years, the entire year.
(ii)

Authority to revise reporting period.—
For years after 2009, the Secretary may revise the reporting period under clause (i) if the Secretary determines such revision is appropriate, produces valid results on measures reported, and is consistent with the goals of maximizing scientific validity and reducing administrative burden. If the Secretary revises such period pursuant to the preceding sentence, the term “reporting period” shall mean such revised period.
(iii)

Reference.—
Any reference in this subsection to a reporting period with respect to the application of subsection (a)(5) (a)(8) shall be deemed a reference to the reporting period under subsection (a)(5)(D)(iii) or the quality reporting period under subsection (a)(8)(D)(iii), respectively.
(7)

Integration of physician quality reporting and ehr reporting.—
Not later than January 1, 2012, the Secretary shall develop a plan to integrate reporting on quality measures under this subsection with reporting requirements under subsection (o) relating to the meaningful use of electronic health records. Such integration shall consist of the following:
(A)
The selection of measures, the reporting of which would both demonstrate—
(i)
meaningful use of an electronic health record for purposes of subsection (o); and
(ii)
quality of care furnished to an individual.
(B)
Such other activities as specified by the Secretary.
(8)

Additional incentive payment.—
(A)

In general.—
For 2011 through 2014, if an eligible professional meets the requirements described in subparagraph (B), the applicable quality percent for such year, as described in clauses (iii) and (iv) of paragraph (1)(B), shall be increased by 0.5 percentage points.
(B)

Requirements described.—
In order to qualify for the additional incentive payment described in subparagraph (A), an eligible professional shall meet the following requirements:
(i)
The eligible professional shall—
(I)
satisfactorily submit data on quality measures for purposes of paragraph (1) for a year; and
(II)
have such data submitted on their behalf through a Maintenance of Certification Program (as defined in subparagraph (C)(i)) that meets—
- (aa)
the criteria for a registry (as described in subsection (k)(4)); or
- (bb)
an alternative form and manner determined appropriate by the Secretary.
(ii)
The eligible professional, more frequently than is required to qualify for or maintain board certification status—
(I)
participates in such a Maintenance of Certification program for a year; and
(II)
successfully completes a qualified Maintenance of Certification Program practice assessment (as defined in subparagraph (C)(ii)) for such year.
(iii)
A Maintenance of Certification program submits to the Secretary, on behalf of the eligible professional, information—
(I)
in a form and manner specified by the Secretary, that the eligible professional has successfully met the requirements of clause (ii) (which may be in the form of a structural measure);
(II)
if requested by the Secretary, on the survey of patient experience with care (as described in subparagraph (C)(ii)(II)); and
(III)
as the Secretary may require, on the methods, measures, and data used under the Maintenance of Certification Program and the qualified Maintenance of Certification Program practice assessment.
(C)

Definitions.—
For purposes of this paragraph:
(i)
The term “Maintenance of Certification Program” means a continuous assessment program, such as qualified American Board of Medical Specialties Maintenance of Certification program or an equivalent program (as determined by the Secretary), that advances quality and the lifelong learning and self-assessment of board certified specialty physicians by focusing on the competencies of patient care, medical knowledge, practice-based learning, interpersonal and communication skills and professionalism. Such a program shall include the following:
(I)
The program requires the physician to maintain a valid, unrestricted medical license in the United States.
(II)
The program requires a physician to participate in educational and self-assessment programs that require an assessment of what was learned.
(III)
The program requires a physician to demonstrate, through a formalized, secure examination, that the physician has the fundamental diagnostic skills, medical knowledge, and clinical judgment to provide quality care in their respective specialty.
(IV)
The program requires successful completion of a qualified Maintenance of Certification Program practice assessment as described in clause (ii).
(ii)
The term “qualified Maintenance of Certification Program practice assessment” means an assessment of a physician's practice that—
(I)
includes an initial assessment of an eligible professional's practice that is designed to demonstrate the physician's use of evidence-based medicine;
(II)
includes a survey of patient experience with care; and
(III)
requires a physician to implement a quality improvement intervention to address a practice weakness identified in the initial assessment under subclause (I) and then to remeasure to assess performance improvement after such intervention.
(9)

Continued application for purposes of mips and for certain professionals volunteering to report.—
The Secretary shall, in accordance with subsection (q)(1)(F), carry out the processes under this subsection—
(A)
for purposes of subsection (q); and
(B)
for eligible professionals who are not MIPS eligible professionals (as defined in subsection (q)(1)(C)) for the year involved.
(n)

Physician Feedback Program.—
(1)

Establishment.—
(A)

In general.—
(i)

Establishment.—
The Secretary shall establish a Physician Feedback Program (in this subsection referred to as the “Program”).
(ii)

Reports on resources.—
The Secretary shall use claims data under this title (and may use other data) to provide confidential reports to physicians (and, as determined appropriate by the Secretary, to groups of physicians) that measure the resources involved in furnishing care to individuals under this title.
(iii)

Inclusion of certain information.—
If determined appropriate by the Secretary, the Secretary may include information on the quality of care furnished to individuals under this title by the physician (or group of physicians) in such reports.
(B)

Resource use.—
The resources described in subparagraph (A)(ii) may be measured—
(i)
on an episode basis;
(ii)
on a per capita basis; or
(iii)
on both an episode and a per capita basis.
(2)

Implementation.—
The Secretary shall implement the Program by not later than January 1, 2009.
(3)

Data for reports.—
To the extent practicable, reports under the Program shall be based on the most recent data available.
(4)

Authority to focus initial application.—
The Secretary may focus the initial application of the Program as appropriate, such as focusing the Program on—
(A)
physician specialties that account for a certain percentage of all spending for physicians' services under this title;
(B)
physicians who treat conditions that have a high cost or a high volume, or both, under this title;
(C)
physicians who use a high amount of resources compared to other physicians;
(D)
physicians practicing in certain geographic areas; or
(E)
physicians who treat a minimum number of individuals under this title.
(5)

Authority to exclude certain information if insufficient information.—
The Secretary may exclude certain information regarding a service from a report under the Program with respect to a physician (or group of physicians) if the Secretary determines that there is insufficient information relating to that service to provide a valid report on that service.
(6)

Adjustment of data.—
To the extent practicable, the Secretary shall make appropriate adjustments to the data used in preparing reports under the Program, such as adjustments to take into account variations in health status and other patient characteristics. For adjustments for reports on utilization under paragraph (9), see subparagraph (D) of such paragraph.
(7)

Education and outreach.—
The Secretary shall provide for education and outreach activities to physicians on the operation of, and methodologies employed under, the Program.
(8)

Disclosure exemption.—
Reports under the Program shall be exempt from disclosure under section 552 of title 5, United States Code.
(9)

Reports on utilization.—
(A)

Development of episode grouper.—
(i)

In general.—
The Secretary shall develop an episode grouper that combines separate but clinically related items and services into an episode of care for an individual, as appropriate.
(ii)

Timeline for development.—
The episode grouper described in subparagraph (A) shall be developed by not later than January 1, 2012.
(iii)

Public availability.—
The Secretary shall make the details of the episode grouper described in subparagraph (A) available to the public.
(iv)

Endorsement.—
The Secretary shall seek endorsement of the episode grouper described in subparagraph (A) by the entity with a contract under section 1890(a).
(B)

Reports on utilization.—
Effective beginning with 2012, the Secretary shall provide reports to physicians that compare, as determined appropriate by the Secretary, patterns of resource use of the individual physician to such patterns of other physicians.
(C)

Analysis of data.—
The Secretary shall, for purposes of preparing reports under this paragraph, establish methodologies as appropriate, such as to—
(i)
attribute episodes of care, in whole or in part, to physicians;
(ii)
identify appropriate physicians for purposes of comparison under subparagraph (B); and
(iii)
aggregate episodes of care attributed to a physician under clause (i) into a composite measure per individual.
(D)

Data adjustment.—
In preparing reports under this paragraph, the Secretary shall make appropriate adjustments, including adjustments—
(i)
to account for differences in socioeconomic and demographic characteristics, ethnicity, and health status of individuals (such as to recognize that less healthy individuals may require more intensive interventions); and
(ii)
to eliminate the effect of geographic adjustments in payment rates (as described in subsection (e)).
(E)

Public availability of methodology.—
The Secretary shall make available to the public—
(i)
the methodologies established under subparagraph (C);
(ii)
information regarding any adjustments made to data under subparagraph (D); and
(iii)
aggregate reports with respect to physicians.
(F)

Definition of physician.—
In this paragraph:
(i)

In general.—
The term “physician” has the meaning given that term in section 1861(r)(1).
(ii)

Treatment of groups.—
Such term includes, as the Secretary determines appropriate, a group of physicians.
(G)

Limitations on review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the establishment of the methodology under subparagraph (C), including the determination of an episode of care under such methodology.
(10)

Coordination with other value-based purchasing reforms.—
The Secretary shall coordinate the Program with the value-based payment modifier established under subsection (p) and, as the Secretary determines appropriate, other similar provisions of this title.
(11)

Reports ending with 2017.—
Reports under the Program shall not be provided after December 31, 2017. See subsection (q)(12) for reports under the eligible professionals Merit-based Incentive Payment System.
(o)

Incentives for Adoption and Meaningful Use of Certified EHR Technology.—
(1)

Incentive payments.—
(A)

In general.—
(i)

In general.—
Subject to the succeeding subparagraphs of this paragraph, with respect to covered professional services furnished by an eligible professional during a payment year (as defined in subparagraph (E)), if the eligible professional is a meaningful EHR user (as determined under paragraph (2)) for the EHR reporting period with respect to such year, in addition to the amount otherwise paid under this part, there also shall be paid to the eligible professional (or to an employer or facility in the cases described in clause (A) of section 1842(b)(6)), from the Federal Supplementary Medical Insurance Trust Fund established under section 1841 an amount equal to 75 percent of the Secretary's estimate (based on claims submitted not later than 2 months after the end of the payment year) of the allowed charges under this part for all such covered professional services furnished by the eligible professional during such year.
(ii)

No incentive payments with respect to years after 2016.—
No incentive payments may be made under this subsection with respect to a year after 2016.
(B)

Limitations on amounts of incentive payments.—
(i)

In general.—
In no case shall the amount of the incentive payment provided under this paragraph for an eligible professional for a payment year exceed the applicable amount specified under this subparagraph with respect to such eligible professional and such year.
(ii)

Amount.—
Subject to clauses (iii) through (v), the applicable amount specified in this subparagraph for an eligible professional is as follows:
(I)
For the first payment year for such professional, $15,000 (or, if the first payment year for such eligible professional is 2011 or 2012, $18,000).
(II)
For the second payment year for such professional, $12,000.
(III)
For the third payment year for such professional, $8,000.
(IV)
For the fourth payment year for such professional, $4,000.
(V)
For the fifth payment year for such professional, $2,000.
(VI)
For any succeeding payment year for such professional, $0.
(iii)

Phase down for eligible professionals first adopting ehr after 2013.—
If the first payment year for an eligible professional is after 2013, then the amount specified in this subparagraph for a payment year for such professional is the same as the amount specified in clause (ii) for such payment year for an eligible professional whose first payment year is 2013.
(iv)

Increase for certain eligible professionals.—
In the case of an eligible professional who predominantly furnishes services under this part in an area that is designated by the Secretary (under section 332(a)(1)(A) of the Public Health Service Act) as a health professional shortage area, the amount that would otherwise apply for a payment year for such professional under subclauses (I) through (V) of clause (ii) shall be increased by 10 percent. In implementing the preceding sentence, the Secretary may, as determined appropriate, apply provisions of subsections (m) and (u) of section 1833 in a similar manner as such provisions apply under such subsection.
(v)

No incentive payment if first adopting after 2014.—
If the first payment year for an eligible professional is after 2014 then the applicable amount specified in this subparagraph for such professional for such year and any subsequent year shall be $0.
(C)

Non-application to hospital-based eligible professionals.—
(i)

In general.—
No incentive payment may be made under this paragraph in the case of a hospital-based eligible professional.
(ii)

Hospital-based eligible professional.—
For purposes of clause (i), the term “hospital-based eligible professional” means, with respect to covered professional services furnished by an eligible professional during the EHR reporting period for a payment year, an eligible professional, such as a pathologist, anesthesiologist, or emergency physician, who furnishes substantially all of such services in a hospital inpatient or emergency room setting and through the use of the facilities and equipment, including qualified electronic health records, of the hospital. The determination of whether an eligible professional is a hospital-based eligible professional shall be made on the basis of the site of service (as defined by the Secretary) and without regard to any employment or billing arrangement between the eligible professional and any other provider.
(D)

Payment.—
(i)

Form of payment.—
The payment under this paragraph may be in the form of a single consolidated payment or in the form of such periodic installments as the Secretary may specify.
(ii)

Coordination of application of limitation for professionals in different practices.—
In the case of an eligible professional furnishing covered professional services in more than one practice (as specified by the Secretary), the Secretary shall establish rules to coordinate the incentive payments, including the application of the limitation on amounts of such incentive payments under this paragraph, among such practices.
(iii)

Coordination with medicaid.—
The Secretary shall seek, to the maximum extent practicable, to avoid duplicative requirements from Federal and State governments to demonstrate meaningful use of certified EHR technology under this title and title XIX. The Secretary may also adjust the reporting periods under such title and such subsections in order to carry out this clause.
(E)

Payment year defined.—
(i)

In general.—
For purposes of this subsection, the term “payment year” means a year beginning with 2011.
(ii)

First, second, etc. payment year.—
The term “first payment year” means, with respect to covered professional services furnished by an eligible professional, the first year for which an incentive payment is made for such services under this subsection. The terms “second payment year”, “third payment year”, “fourth payment year”, and “fifth payment year” mean, with respect to covered professional services furnished by such eligible professional, each successive year immediately following the first payment year for such professional.
(2)

Meaningful ehr user.—
(A)

In general.—
An eligible professional shall be treated as a meaningful EHR user for an EHR reporting period for a payment year (or, for purposes of subsection (a)(7), for an EHR reporting period under such subsection for a year, or pursuant to subparagraph (D) for purposes of subsection (q), for a performance period under such subsection for a year) if each of the following requirements is met:
(i)

Meaningful use of certified ehr technology.—
The eligible professional demonstrates to the satisfaction of the Secretary, in accordance with subparagraph (C)(i), that during such period the professional is using certified EHR technology in a meaningful manner, which shall include the use of electronic prescribing as determined to be appropriate by the Secretary.
(ii)

Information exchange.—
The eligible professional demonstrates to the satisfaction of the Secretary, in accordance with subparagraph (C)(i), that during such period such certified EHR technology is connected in a manner that provides, in accordance with law and standards applicable to the exchange of information, for the electronic exchange of health information to improve the quality of health care, such as promoting care coordination, and the professional demonstrates (through a process specified by the Secretary, such as the use of an attestation) that the professional has not knowingly and willfully taken action (such as to disable functionality) to limit or restrict the compatibility or interoperability of the certified EHR technology.
(iii)

Reporting on measures using ehr.—
Subject to subparagraph (B)(ii) and subsection (q)(5)(B)(ii)(II) and using such certified EHR technology, the eligible professional submits information for such period, in a form and manner specified by the Secretary, on such clinical quality measures and such other measures as selected by the Secretary under subparagraph (B)(i).
The Secretary may provide for the use of alternative means for meeting the requirements of clauses (i), (ii), and (iii) in the case of an eligible professional furnishing covered professional services in a group practice (as defined by the Secretary). The Secretary shall seek to improve the use of electronic health records and health care quality over time.
(B)

Reporting on measures.—
(i)

Selection.—
The Secretary shall select measures for purposes of subparagraph (A)(iii) but only consistent with the following:
(I)
The Secretary shall provide preference to clinical quality measures that have been endorsed by the entity with a contract with the Secretary under section 1890(a).
(II)
Prior to any measure being selected under this subparagraph, the Secretary shall publish in the Federal Register such measure and provide for a period of public comment on such measure.
(ii)

Limitation.—
The Secretary may not require the electronic reporting of information on clinical quality measures under subparagraph (A)(iii) unless the Secretary has the capacity to accept the information electronically, which may be on a pilot basis.
(iii)

Coordination of reporting of information.—
In selecting such measures, and in establishing the form and manner for reporting measures under subparagraph (A)(iii), the Secretary shall seek to avoid redundant or duplicative reporting otherwise required, including reporting under subsection (k)(2)(C).
(C)

Demonstration of meaningful use of certified ehr technology and information exchange.—
(i)

In general.—
A professional may satisfy the demonstration requirement of clauses (i) and (ii) of subparagraph (A) through means specified by the Secretary, which may include—
(I)
an attestation;
(II)
the submission of claims with appropriate coding (such as a code indicating that a patient encounter was documented using certified EHR technology);
(III)
a survey response;
(IV)
reporting under subparagraph (A)(iii); and
(V)
other means specified by the Secretary.
(ii)

Use of part d data.—
Notwithstanding sections 1860D–15(d)(2)(B) and 1860D–15(f)(2), the Secretary may use data regarding drug claims submitted for purposes of section 1860D–15 that are necessary for purposes of subparagraph (A).
(D)

Continued application for purposes of mips.—
With respect to 2019 and each subsequent payment year, the Secretary shall, for purposes of subsection (q) and in accordance with paragraph (1)(F) of such subsection, determine whether an eligible professional who is a MIPS eligible professional (as defined in subsection (q)(1)(C)) for such year is a meaningful EHR user under this paragraph for the performance period under subsection (q) for such year. The provisions of subparagraphs (B) and (D) of subsection (a)(7), shall apply to assessments of MIPS eligible professionals under subsection (q) with respect to the performance category described in subsection (q)(2)(A)(iv) in an appropriate manner which may be similar to the manner in which such provisions apply with respect to payment adjustments made under subsection (a)(7)(A).
(3)

Application.—
(A)

Physician reporting system rules.—
Paragraphs (5), (6), and (8) of subsection (k) shall apply for purposes of this subsection in the same manner as they apply for purposes of such subsection.
(B)

Coordination with other payments.—
The provisions of this subsection shall not be taken into account in applying the provisions of subsection (m) of this section and of section 1833(m) and any payment under such provisions shall not be taken into account in computing allowable charges under this subsection.
(C)

Limitations on review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of—
(i)
the methodology and standards for determining payment amounts under this subsection and payment adjustments under subsection (a)(7)(A), including the limitation under paragraph (1)(B) and coordination under clauses (ii) and (iii) of paragraph (1)(D);
(ii)
the methodology and standards for determining a meaningful EHR user under paragraph (2), including selection of measures under paragraph (2)(B), specification of the means of demonstrating meaningful EHR use under paragraph (2)(C), and the hardship exception under subsection (a)(7)(B);
(iii)
the methodology and standards for determining a hospital-based eligible professional under paragraph (1)(C); and
(iv)
the specification of reporting periods under paragraph (5) and the selection of the form of payment under paragraph (1)(D)(i).
(D)

Posting on website.—
The Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services, in an easily understandable format, a list of the names, business addresses, and business phone numbers of the eligible professionals who are meaningful EHR users and, as determined appropriate by the Secretary, of group practices receiving incentive payments under paragraph (1).
(4)

Certified ehr technology defined.—
For purposes of this section, the term “certified EHR technology” means a qualified electronic health record (as defined in section 3000(13) of the Public Health Service Act) that is certified pursuant to section 3001(c)(5) of such Act as meeting standards adopted under section 3004 of such Act that are applicable to the type of record involved (as determined by the Secretary, such as an ambulatory electronic health record for office-based physicians or an inpatient hospital electronic health record for hospitals).
(5)

Definitions.—
For purposes of this subsection:
(A)

Covered professional services.—
The term “covered professional services” has the meaning given such term in subsection (k)(3).
(B)

EHR reporting period.—
The term “EHR reporting period” means, with respect to a payment year, any period (or periods) as specified by the Secretary.
(C)

Eligible professional.—
The term “eligible professional” means a physician, as defined in section 1861(r).
(p)

Establishment of Value-based Payment Modifier.—
(1)

In general.—
The Secretary shall establish a payment modifier that provides for differential payment to a physician or a group of physicians under the fee schedule established under subsection (b) based upon the quality of care furnished compared to cost (as determined under paragraphs (2) and (3), respectively) during a performance period. Such payment modifier shall be separate from the geographic adjustment factors established under subsection (e).
(2)

Quality.—
(A)

In general.—
For purposes of paragraph (1), quality of care shall be evaluated, to the extent practicable, based on a composite of measures of the quality of care furnished (as established by the Secretary under subparagraph (B)).
(B)

Measures.—
(i)
The Secretary shall establish appropriate measures of the quality of care furnished by a physician or group of physicians to individuals enrolled under this part, such as measures that reflect health outcomes. Such measures shall be risk adjusted as determined appropriate by the Secretary.
(ii)
The Secretary shall seek endorsement of the measures established under this subparagraph by the entity with a contract under section 1890(a).
(C)

Continued application for purposes of mips.—
The Secretary shall, in accordance with subsection (q)(1)(F), carry out subparagraph (B) for purposes of subsection (q).
(3)

Costs.—
For purposes of paragraph (1), costs shall be evaluated, to the extent practicable, based on a composite of appropriate measures of costs established by the Secretary (such as the composite measure under the methodology established under subsection (n)(9)(C)(iii)) that eliminate the effect of geographic adjustments in payment rates (as described in subsection (e)), and take into account risk factors (such as socioeconomic and demographic characteristics, ethnicity, and health status of individuals (such as to recognize that less healthy individuals may require more intensive interventions) and other factors determined appropriate by the Secretary. With respect to 2019 and each subsequent year, the Secretary shall, in accordance with subsection (q)(1)(F), carry out this paragraph for purposes of subsection (q).
(4)

Implementation.—
(A)

Publication of measures, dates of implementation, performance period.—
Not later than January 1, 2012, the Secretary shall publish the following:
(i)
The measures of quality of care and costs established under paragraphs (2) and (3), respectively.
(ii)
The dates for implementation of the payment modifier (as determined under subparagraph (B)).
(iii)
The initial performance period (as specified under subparagraph (B)(ii)).
(B)

Deadlines for implementation.—
(i)

Initial implementation.—
Subject to the preceding provisions of this subparagraph, the Secretary shall begin implementing the payment modifier established under this subsection through the rulemaking process during 2013 for the physician fee schedule established under subsection (b).
(ii)

Initial performance period.—
(I)

In general.—
The Secretary shall specify an initial performance period for application of the payment modifier established under this subsection with respect to 2015.
(II)

Provision of information during initial performance period.—
During the initial performance period, the Secretary shall, to the extent practicable, provide information to physicians and groups of physicians about the quality of care furnished by the physician or group of physicians to individuals enrolled under this part compared to cost (as determined under paragraphs (2) and (3), respectively) with respect to the performance period.
(iii)

Application.—
The Secretary shall apply the payment modifier established under this subsection for items and services furnished on or after January 1, 2015, with respect to specific physicians and groups of physicians the Secretary determines appropriate, and for services furnished on or after January 1, 2017, with respect to all physicians and groups of physicians. Such payment modifier shall not be applied for items and services furnished on or after January 1, 2019.
(C)

Budget neutrality.—
The payment modifier established under this subsection shall be implemented in a budget neutral manner.
(5)

Systems-based care.—
The Secretary shall, as appropriate, apply the payment modifier established under this subsection in a manner that promotes systems-based care.
(6)

Consideration of special circumstances of certain providers.—
In applying the payment modifier under this subsection, the Secretary shall, as appropriate, take into account the special circumstances of physicians or groups of physicians in rural areas and other underserved communities.
(7)

Application.—
For purposes of the initial application of the payment modifier established under this subsection during the period beginning on January 1, 2015, and ending on December 31, 2016, the term “physician” has the meaning given such term in section 1861(r). On or after January 1, 2017, the Secretary may apply this subsection to eligible professionals (as defined in subsection (k)(3)(B)) as the Secretary determines appropriate.
(8)

Definitions.—
For purposes of this subsection:
(A)

Costs.—
The term “costs” means expenditures per individual as determined appropriate by the Secretary. In making the determination under the preceding sentence, the Secretary may take into account the amount of growth in expenditures per individual for a physician compared to the amount of such growth for other physicians.
(B)

Performance period.—
The term “performance period” means a period specified by the Secretary.
(9)

Coordination with other value-based purchasing reforms.—
The Secretary shall coordinate the value-based payment modifier established under this subsection with the Physician Feedback Program under subsection (n) and, as the Secretary determines appropriate, other similar provisions of this title.
(10)

Limitations on review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of—
(A)
the establishment of the value-based payment modifier under this subsection;
(B)
the evaluation of quality of care under paragraph (2), including the establishment of appropriate measures of the quality of care under paragraph (2)(B);
(C)
the evaluation of costs under paragraph (3), including the establishment of appropriate measures of costs under such paragraph;
(D)
the dates for implementation of the value-based payment modifier;
(E)
the specification of the initial performance period and any other performance period under paragraphs (4)(B)(ii) and (8)(B), respectively;
(F)
the application of the value-based payment modifier under paragraph (7); and
(G)
the determination of costs under paragraph (8)(A).
(q)

Merit-Based Incentive Payment System.—
(1)

Establishment.—
(A)

In general.—
Subject to the succeeding provisions of this subsection, the Secretary shall establish an eligible professional Merit-based Incentive Payment System (in this subsection referred to as the “MIPS”) under which the Secretary shall—
(i)
develop a methodology for assessing the total performance of each MIPS eligible professional according to performance standards under paragraph (3) for a performance period (as established under paragraph (4)) for a year;
(ii)
using such methodology, provide for a composite performance score in accordance with paragraph (5) for each such professional for each performance period; and
(iii)
use such composite performance score of the MIPS eligible professional for a performance period for a year to determine and apply a MIPS adjustment factor (and, as applicable, an additional MIPS adjustment factor) under paragraph (6) to the professional for the year.
Notwithstanding subparagraph (C)(ii), under the MIPS, the Secretary shall permit any eligible professional (as defined in subsection (k)(3)(B)) to report on applicable measures and activities described in paragraph (2)(B).
(B)

Program implementation.—
The MIPS shall apply to payments for covered professional services (as defined in subsection (k)(3)(A)) furnished on or after January 1, 2019.
(C)

MIPS eligible professional defined.—
(i)

In general.—
For purposes of this subsection, subject to clauses (ii) and (iv), the term “MIPS eligible professional” means—
(I)
for the first and second years for which the MIPS applies to payments (and for the performance period for such first and second year), a physician (as defined in section 1861(r)), a physician assistant, nurse practitioner, and clinical nurse specialist (as such terms are defined in section 1861(aa)(5)), a certified registered nurse anesthetist (as defined in section 1861(bb)(2)), and a group that includes such professionals; and
(II)
for the third year for which the MIPS applies to payments (and for the performance period for such third year) and for each succeeding year (and for the performance period for each such year), the professionals described in subclause (I), such other eligible professionals (as defined in subsection (k)(3)(B)) as specified by the Secretary, and a group that includes such professionals.
(ii)

Exclusions.—
For purposes of clause (i), the term “MIPS eligible professional” does not include, with respect to a year, an eligible professional (as defined in subsection (k)(3)(B)) who—
(I)
is a qualifying APM participant (as defined in section 1833(z)(2));
(II)
subject to clause (vii), is a partial qualifying APM participant (as defined in clause (iii)) for the most recent period for which data are available and who, for the performance period with respect to such year, does not report on applicable measures and activities described in paragraph (2)(B) that are required to be reported by such a professional under the MIPS; or
(III)
for the performance period with respect to such year, does not exceed the low-volume threshold measurement selected under clause (iv).
(iii)

Partial qualifying apm participant.—
For purposes of this subparagraph, the term “partial qualifying APM participant” means, with respect to a year, an eligible professional for whom the Secretary determines the minimum payment percentage (or percentages), as applicable, described in paragraph (2) of section 1833(z) for such year have not been satisfied, but who would be considered a qualifying APM participant (as defined in such paragraph) for such year if—
(I)
with respect to 2019 and 2020, the reference in subparagraph (A) of such paragraph to 25 percent was instead a reference to 20 percent;
(II)
with respect to each of 2021 through 2026—
- (aa)
the reference in subparagraph (B)(i) of such paragraph to 50 percent was instead a reference to 40 percent; and
- (bb)
the references in subparagraph (B)(ii) of such paragraph to 50 percent and 25 percent of such paragraph were instead references to 40 percent and 20 percent, respectively; and
(III)
with respect to 2027 and subsequent years—
- (aa)
the reference in subparagraph (C)(i) of such paragraph to 75 percent was instead a reference to 50 percent; and
- (bb)
the references in subparagraph (C)(ii) of such paragraph to 75 percent and 25 percent of such paragraph were instead references to 50 percent and 20 percent, respectively.
(iv)

Selection of low-volume threshold measurement.—
The Secretary shall select a low-volume threshold to apply for purposes of clause (ii)(III), which may include one or more or a combination of the following:
(I)
The minimum number (as determined by the Secretary) of—
- (aa)
for performance periods beginning before January 1, 2018, individuals enrolled under this part who are treated by the eligible professional for the performance period involved; and
- (bb)
for performance periods beginning on or after January 1, 2018, individuals enrolled under this part who are furnished covered professional services (as defined in subsection (k)(3)(A)) by the eligible professional for the performance period involved.
(II)
The minimum number (as determined by the Secretary) of covered professional services (as defined in subsection (k)(3)(A)) furnished to individuals enrolled under this part by such professional for such performance period.
(III)
The minimum amount (as determined by the Secretary) of—
- (aa)
for performance periods beginning before January 1, 2018, allowed charges billed by such professional under this part for such performance period; and
- (bb)
for performance periods beginning on or after January 1, 2018, allowed charges for covered professional services (as defined in subsection (k)(3)(A)) billed by such professional for such performance period.
(v)

Treatment of new medicare enrolled eligible professionals.—
In the case of a professional who first becomes a Medicare enrolled eligible professional during the performance period for a year (and had not previously submitted claims under this title such as a person, an entity, or a part of a physician group or under a different billing number or tax identifier), such professional shall not be treated under this subsection as a MIPS eligible professional until the subsequent year and performance period for such subsequent year.
(vi)

Clarification.—
In the case of items and services furnished during a year by an individual who is not a MIPS eligible professional (including pursuant to clauses (ii) and (v)) with respect to a year, in no case shall a MIPS adjustment factor (or additional MIPS adjustment factor) under paragraph (6) apply to such individual for such year.
(vii)

Partial qualifying apm participant clarifications.—
(I)

Treatment as mips eligible professional.—
In the case of an eligible professional who is a partial qualifying APM participant, with respect to a year, and who, for the performance period for such year, reports on applicable measures and activities described in paragraph (2)(B) that are required to be reported by such a professional under the MIPS, such eligible professional is considered to be a MIPS eligible professional with respect to such year.
(II)

Not eligible for qualifying apm participant payments.—
In no case shall an eligible professional who is a partial qualifying APM participant, with respect to a year, be considered a qualifying APM participant (as defined in paragraph (2) of section 1833(z)) for such year or be eligible for the additional payment under paragraph (1) of such section for such year.
(D)

Application to group practices.—
(i)

In general.—
Under the MIPS:
(I)

Quality performance category.—
The Secretary shall establish and apply a process that includes features of the provisions of subsection (m)(3)(C) for MIPS eligible professionals in a group practice with respect to assessing performance of such group with respect to the performance category described in clause (i) of paragraph (2)(A).
(II)

Other performance categories.—
The Secretary may establish and apply a process that includes features of the provisions of subsection (m)(3)(C) for MIPS eligible professionals in a group practice with respect to assessing the performance of such group with respect to the performance categories described in clauses (ii) through (iv) of such paragraph.
(ii)

Ensuring comprehensiveness of group practice assessment.—
The process established under clause (i) shall to the extent practicable reflect the range of items and services furnished by the MIPS eligible professionals in the group practice involved.
(E)

Use of registries.—
Under the MIPS, the Secretary shall encourage the use of qualified clinical data registries pursuant to subsection (m)(3)(E) in carrying out this subsection.
(F)

Application of certain provisions.—
In applying a provision of subsection (k), (m), (o), or (p) for purposes of this subsection, the Secretary shall—
(i)
adjust the application of such provision to ensure the provision is consistent with the provisions of this subsection; and
(ii)
not apply such provision to the extent that the provision is duplicative with a provision of this subsection.
(G)

Accounting for risk factors.—
(i)50

Risk factors.—
Taking into account the relevant studies conducted and recommendations made in reports under section 2(d) of the Improving Medicare Post-Acute Care Transformation Act of 2014, and, as appropriate, other information, including information collected before completion of such studies and recommendations, the Secretary, on an ongoing basis, shall, as the Secretary determines appropriate and based on an individual’s health status and other risk factors—
^{50}
So in law. There are no subsequent clauses in subparagraph (G).
(I)
assess appropriate adjustments to quality measures, resource use measures, and other measures used under the MIPS; and
(II)
assess and implement appropriate adjustments to payment adjustments, composite performance scores, scores for performance categories, or scores for measures or activities under the MIPS.
(2)

Measures and activities under performance categories.—
(A)

Performance categories.—
Under the MIPS, the Secretary shall use the following performance categories (each of which is referred to in this subsection as a performance category) in determining the composite performance score under paragraph (5):
(i)
Quality.
(ii)
Resource use.
(iii)
Clinical practice improvement activities.
(iv)
Meaningful use of certified EHR technology.
(B)

Measures and activities specified for each category.—
For purposes of paragraph (3)(A) and subject to subparagraph (C), measures and activities specified for a performance period (as established under paragraph (4)) for a year are as follows:
(i)

Quality.—
For the performance category described in subparagraph (A)(i), the quality measures included in the final measures list published under subparagraph (D)(i) for such year and the list of quality measures described in subparagraph (D)(vi) used by qualified clinical data registries under subsection (m)(3)(E).
(ii)

Resource use.—
For the performance category described in subparagraph (A)(ii), the measurement of resource use for such period under subsection (p)(3), using the methodology under subsection (r) as appropriate, and, as feasible and applicable, accounting for the cost of drugs under part D.
(iii)

Clinical practice improvement activities.—
For the performance category described in subparagraph (A)(iii), clinical practice improvement activities (as defined in subparagraph (C)(v)(III)) under subcategories specified by the Secretary for such period, which shall include at least the following:
(I)
The subcategory of expanded practice access, such as same day appointments for urgent needs and after hours access to clinician advice.
(II)
The subcategory of population management, such as monitoring health conditions of individuals to provide timely health care interventions or participation in a qualified clinical data registry.
(III)
The subcategory of care coordination, such as timely communication of test results, timely exchange of clinical information to patients and other providers, and use of remote monitoring or telehealth.
(IV)
The subcategory of beneficiary engagement, such as the establishment of care plans for individuals with complex care needs, beneficiary self-management assessment and training, and using shared decision-making mechanisms. This subcategory shall include as an activity, for performance periods beginning on or after January 1, 2022, use of a real-time benefit tool as described in section 1860D–4(o). The Secretary may establish this activity as a standalone or as a component of another activity.
(V)
The subcategory of patient safety and practice assessment, such as through use of clinical or surgical checklists and practice assessments related to maintaining certification.
(VI)
The subcategory of participation in an alternative payment model (as defined in section 1833(z)(3)(C)).
In establishing activities under this clause, the Secretary shall give consideration to the circumstances of small practices (consisting of 15 or fewer professionals) and practices located in rural areas and in health professional shortage areas (as designated under section 332(a)(1)(A) of the Public Health Service Act).
(iv)

Meaningful ehr use.—
For the performance category described in subparagraph (A)(iv), the requirements established for such period under subsection (o)(2) for determining whether an eligible professional is a meaningful EHR user.
(C)

Additional provisions.—
(i)

Emphasizing outcome measures under the quality performance category.—
In applying subparagraph (B)(i), the Secretary shall, as feasible, emphasize the application of outcome measures.
(ii)

Application of additional system measures.—
The Secretary may use measures used for a payment system other than for physicians, such as measures for inpatient hospitals, for purposes of the performance categories described in clauses (i) and (ii) of subparagraph (A). For purposes of the previous sentence, the Secretary may not use measures for hospital outpatient departments, except in the case of items and services furnished by emergency physicians, radiologists, and anesthesiologists.
(iii)

Global and population-based measures.—
The Secretary may use global measures, such as global outcome measures, and population-based measures for purposes of the performance category described in subparagraph (A)(i).
(iv)

Application of measures and activities to non-patient-facing professionals.—
In carrying out this paragraph, with respect to measures and activities specified in subparagraph (B) for performance categories described in subparagraph (A), the Secretary—
(I)
shall give consideration to the circumstances of professional types (or subcategories of those types determined by practice characteristics) who typically furnish services that do not involve face-to-face interaction with a patient; and
(II)
may, to the extent feasible and appropriate, take into account such circumstances and apply under this subsection with respect to MIPS eligible professionals of such professional types or subcategories, alternative measures or activities that fulfill the goals of the applicable performance category.
In carrying out the previous sentence, the Secretary shall consult with professionals of such professional types or subcategories.
(v)

Clinical practice improvement activities.—
(I)

Request for information.—
In initially applying subparagraph (B)(iii), the Secretary shall use a request for information to solicit recommendations from stakeholders to identify activities described in such subparagraph and specifying criteria for such activities.
(II)

Contract authority for clinical practice improvement activities performance category.—
In applying subparagraph (B)(iii), the Secretary may contract with entities to assist the Secretary in—
- (aa)
identifying activities described in subparagraph (B)(iii);
- (bb)
specifying criteria for such activities; and
- (cc)
determining whether a MIPS eligible professional meets such criteria.
(III)

Clinical practice improvement activities defined.—
For purposes of this subsection, the term “clinical practice improvement activity” means an activity that relevant eligible professional organizations and other relevant stakeholders identify as improving clinical practice or care delivery and that the Secretary determines, when effectively executed, is likely to result in improved outcomes.
(D)

Annual list of quality measures available for mips assessment.—
(i)

In general.—
Under the MIPS, the Secretary, through notice and comment rulemaking and subject to the succeeding clauses of this subparagraph, shall, with respect to the performance period for a year, establish an annual final list of quality measures from which MIPS eligible professionals may choose for purposes of assessment under this subsection for such performance period. Pursuant to the previous sentence, the Secretary shall—
(I)
not later than November 1 of the year prior to the first day of the first performance period under the MIPS, establish and publish in the Federal Register a final list of quality measures; and
(II)
not later than November 1 of the year prior to the first day of each subsequent performance period, update the final list of quality measures from the previous year (and publish such updated final list in the Federal Register), by—
- (aa)
removing from such list, as appropriate, quality measures, which may include the removal of measures that are no longer meaningful (such as measures that are topped out);
- (bb)
adding to such list, as appropriate, new quality measures; and
- (cc)
determining whether or not quality measures on such list that have undergone substantive changes should be included in the updated list.
(ii)

Call for quality measures.—
(I)

In general.—
Eligible professional organizations and other relevant stakeholders shall be requested to identify and submit quality measures to be considered for selection under this subparagraph in the annual list of quality measures published under clause (i) and to identify and submit updates to the measures on such list. For purposes of the previous sentence, measures may be submitted regardless of whether such measures were previously published in a proposed rule or endorsed by an entity with a contract under section 1890(a).
(II)

Eligible professional organization defined.—
In this subparagraph, the term “eligible professional organization” means a professional organization as defined by nationally recognized specialty boards of certification or equivalent certification boards.
(iii)

Requirements.—
In selecting quality measures for inclusion in the annual final list under clause (i), the Secretary shall—
(I)
provide that, to the extent practicable, all quality domains (as defined in subsection (s)(1)(B)) are addressed by such measures; and
(II)
ensure that such selection is consistent with the process for selection of measures under subsections (k), (m), and (p)(2).
(iv)

Peer review.—
Before including a new measure in the final list of measures published under clause (i) for a year, the Secretary shall submit for publication in applicable specialty-appropriate, peer-reviewed journals such measure and the method for developing and selecting such measure, including clinical and other data supporting such measure.
(v)

Measures for inclusion.—
The final list of quality measures published under clause (i) shall include, as applicable, measures under subsections (k), (m), and (p)(2), including quality measures from among—
(I)
measures endorsed by a consensus-based entity;
(II)
measures developed under subsection (s); and
(III)
measures submitted under clause (ii)(I).
Any measure selected for inclusion in such list that is not endorsed by a consensus-based entity shall have a focus that is evidence-based.
(vi)

Exception for qualified clinical data registry measures.—
Measures used by a qualified clinical data registry under subsection (m)(3)(E) shall not be subject to the requirements under clauses (i), (iv), and (v). The Secretary shall publish the list of measures used by such qualified clinical data registries on the Internet website of the Centers for Medicare & Medicaid Services.
(vii)

Exception for existing quality measures.—
Any quality measure specified by the Secretary under subsection (k) or (m), including under subsection (m)(3)(E), and any measure of quality of care established under subsection (p)(2) for the reporting period or performance period under the respective subsection beginning before the first performance period under the MIPS—
(I)
shall not be subject to the requirements under clause (i) (except under items (aa) and (cc) of subclause (II) of such clause) or to the requirement under clause (iv); and
(II)
shall be included in the final list of quality measures published under clause (i) unless removed under clause (i)(II)(aa).
(viii)

Consultation with relevant eligible professional organizations and other relevant stakeholders.—
Relevant eligible professional organizations and other relevant stakeholders, including State and national medical societies, shall be consulted in carrying out this subparagraph.
(ix)

Optional application.—
The process under section 1890A is not required to apply to the selection of measures under this subparagraph.
(3)

Performance standards.—
(A)

Establishment.—
Under the MIPS, the Secretary shall establish performance standards with respect to measures and activities specified under paragraph (2)(B) for a performance period (as established under paragraph (4)) for a year.
(B)

Considerations in establishing standards.—
In establishing such performance standards with respect to measures and activities specified under paragraph (2)(B), the Secretary shall consider the following:
(i)
Historical performance standards.
(ii)
Improvement.
(iii)
The opportunity for continued improvement.
(4)

Performance period.—
The Secretary shall establish a performance period (or periods) for a year (beginning with 2019). Such performance period (or periods) shall begin and end prior to the beginning of such year and be as close as possible to such year. In this subsection, such performance period (or periods) for a year shall be referred to as the performance period for the year.
(5)

Composite performance score.—
(A)

In general.—
Subject to the succeeding provisions of this paragraph and taking into account, as available and applicable, paragraph (1)(G), the Secretary shall develop a methodology for assessing the total performance of each MIPS eligible professional according to performance standards under paragraph (3) with respect to applicable measures and activities specified in paragraph (2)(B) with respect to each performance category applicable to such professional for a performance period (as established under paragraph (4)) for a year. Using such methodology, the Secretary shall provide for a composite assessment (using a scoring scale of 0 to 100) for each such professional for the performance period for such year. In this subsection such a composite assessment for such a professional with respect to a performance period shall be referred to as the “composite performance score” for such professional for such performance period.
(B)

Incentive to report; encouraging use of certified ehr technology for reporting quality measures.—
(i)

Incentive to report.—
Under the methodology established under subparagraph (A), the Secretary shall provide that in the case of a MIPS eligible professional who fails to report on an applicable measure or activity that is required to be reported by the professional, the professional shall be treated as achieving the lowest potential score applicable to such measure or activity.
(ii)

Encouraging use of certified ehr technology and qualified clinical data registries for reporting quality measures.—
Under the methodology established under subparagraph (A), the Secretary shall—
(I)
encourage MIPS eligible professionals to report on applicable measures with respect to the performance category described in paragraph (2)(A)(i) through the use of certified EHR technology and qualified clinical data registries; and
(II)
with respect to a performance period, with respect to a year, for which a MIPS eligible professional reports such measures through the use of such EHR technology, treat such professional as satisfying the clinical quality measures reporting requirement described in subsection (o)(2)(A)(iii) for such year.
(C)

Clinical practice improvement activities performance score.—
(i)

Rule for certification.—
A MIPS eligible professional who is in a practice that is certified as a patient-centered medical home or comparable specialty practice, as determined by the Secretary, with respect to a performance period shall be given the highest potential score for the performance category described in paragraph (2)(A)(iii) for such period.
(ii)

APM participation.—
Participation by a MIPS eligible professional in an alternative payment model (as defined in section 1833(z)(3)(C)) with respect to a performance period shall earn such eligible professional a minimum score of one-half of the highest potential score for the performance category described in paragraph (2)(A)(iii) for such performance period.
(iii)

Subcategories.—
A MIPS eligible professional shall not be required to perform activities in each subcategory under paragraph (2)(B)(iii) or participate in an alternative payment model in order to achieve the highest potential score for the performance category described in paragraph (2)(A)(iii).
(D)

Achievement and improvement.—
(i)

Taking into account improvement.—
Beginning with the second year to which the MIPS applies, in addition to the achievement of a MIPS eligible professional, if data sufficient to measure improvement is available, the methodology developed under subparagraph (A)—
(I)
in the case of the performance score for the performance category described in clauses (i) and (ii) of paragraph (2)(A), subject to clause (iii), shall take into account the improvement of the professional; and
(II)
in the case of performance scores for other performance categories, may take into account the improvement of the professional.
(ii)

Assigning higher weight for achievement.—
Subject to clause (i), under the methodology developed under subparagraph (A), the Secretary may assign a higher scoring weight under subparagraph (F) with respect to the achievement of a MIPS eligible professional than with respect to any improvement of such professional applied under clause (i) with respect to a measure, activity, or category described in paragraph (2).
(iii)

Transition years.—
For each of the second, third, fourth, and fifth years for which the MIPS applies to payments, the performance score for the performance category described in paragraph (2)(A)(ii) shall not take into account the improvement of the professional involved.
(E)

Weights for the performance categories.—
(i)

In general.—
Under the methodology developed under subparagraph (A), subject to subparagraph (F)(i) and clause (ii), the composite performance score shall be determined as follows:
(I)

Quality.—
- (aa)

In general.—
Subject to item (bb), thirty percent of such score shall be based on performance with respect to the category described in clause (i) of paragraph (2)(A). In applying the previous sentence, the Secretary shall, as feasible, encourage the application of outcome measures within such category.
- (bb)

First 5 years.—
For each of the first through fifth years for which the MIPS applies to payments, the percentage applicable under item (aa) shall be increased in a manner such that the total percentage points of the increase under this item for the respective year equals the total number of percentage points by which the percentage applied under subclause (II)(bb) for the respective year is less than 30 percent.
(II)

Resource use.—
- (aa)

In general.—
Subject to item (bb), thirty percent of such score shall be based on performance with respect to the category described in clause (ii) of paragraph (2)(A).
- (bb)

First 5 years.—
For the first year for which the MIPS applies to payments, not more than 10 percent of such score shall be based on performance with respect to the category described in clause (ii) of paragraph (2)(A). For each of the second, third, fourth, and fifth years for which the MIPS applies to payments, not less than 10 percent and not more than 30 percent of such score shall be based on performance with respect to the category described in clause (ii) of paragraph (2)(A). Nothing in the previous sentence shall be construed, with respect to a performance period for a year described in the previous sentence, as preventing the Secretary from basing 30 percent of such score for such year with respect to the category described in such clause (ii), if the Secretary determines, based on information posted under subsection (r)(2)(I) that sufficient resource use measures are ready for adoption for use under the performance category under paragraph (2)(A)(ii) for such performance period.
(III)

Clinical practice improvement activities.—
Fifteen percent of such score shall be based on performance with respect to the category described in clause (iii) of paragraph (2)(A).
(IV)

Meaningful use of certified ehr technology.—
Twenty-five percent of such score shall be based on performance with respect to the category described in clause (iv) of paragraph (2)(A).
(ii)

Authority to adjust percentages in case of high ehr meaningful use adoption.—
In any year in which the Secretary estimates that the proportion of eligible professionals (as defined in subsection (o)(5)) who are meaningful EHR users (as determined under subsection (o)(2)) is 75 percent or greater, the Secretary may reduce the percent applicable under clause (i)(IV), but not below 15 percent. If the Secretary makes such reduction for a year, subject to subclauses (I)(bb) and (II)(bb) of clause (i), the percentages applicable under one or more of subclauses (I), (II), and (III) of clause (i) for such year shall be increased in a manner such that the total percentage points of the increase under this clause for such year equals the total number of percentage points reduced under the preceding sentence for such year.
(F)

Certain flexibility for weighting performance categories, measures, and activities.—
Under the methodology under subparagraph (A), if there are not sufficient measures and activities (described in paragraph (2)(B)) applicable and available to each type of eligible professional involved, the Secretary shall assign different scoring weights (including a weight of 0)—
(i)
which may vary from the scoring weights specified in subparagraph (E), for each performance category based on the extent to which the category is applicable to the type of eligible professional involved; and
(ii)
for each measure and activity specified under paragraph (2)(B) with respect to each such category based on the extent to which the measure or activity is applicable and available to the type of eligible professional involved.
(G)

Resource use.—
Analysis of the performance category described in paragraph (2)(A)(ii) shall include results from the methodology described in subsection (r)(5), as appropriate.
(H)

Inclusion of quality measure data from other payers.—
In applying subsections (k), (m), and (p) with respect to measures described in paragraph (2)(B)(i), analysis of the performance category described in paragraph (2)(A)(i) may include data submitted by MIPS eligible professionals with respect to items and services furnished to individuals who are not individuals entitled to benefits under part A or enrolled under part B.
(I)

Use of voluntary virtual groups for certain assessment purposes.—
(i)

In general.—
In the case of MIPS eligible professionals electing to be a virtual group under clause (ii) with respect to a performance period for a year, for purposes of applying the methodology under subparagraph (A) with respect to the performance categories described in clauses (i) and (ii) of paragraph (2)(A)—
(I)
the assessment of performance provided under such methodology with respect to such performance categories that is to be applied to each such professional in such group for such performance period shall be with respect to the combined performance of all such professionals in such group for such period; and
(II)
with respect to the composite performance score provided under this paragraph for such performance period for each such MIPS eligible professional in such virtual group, the components of the composite performance score that assess performance with respect to such performance categories shall be based on the assessment of the combined performance under subclause (I) for such performance categories and performance period.
(ii)

Election of practices to be a virtual group.—
The Secretary shall, in accordance with the requirements under clause (iii), establish and have in place a process to allow an individual MIPS eligible professional or a group practice consisting of not more than 10 MIPS eligible professionals to elect, with respect to a performance period for a year to be a virtual group under this subparagraph with at least one other such individual MIPS eligible professional or group practice. Such a virtual group may be based on appropriate classifications of providers, such as by geographic areas or by provider specialties defined by nationally recognized specialty boards of certification or equivalent certification boards.
(iii)

Requirements.—
The requirements for the process under clause (ii) shall—
(I)
provide that an election under such clause, with respect to a performance period, shall be made before the beginning of such performance period and may not be changed during such performance period;
(II)
provide that an individual MIPS eligible professional and a group practice described in clause (ii) may elect to be in no more than one virtual group for a performance period and that, in the case of such a group practice that elects to be in such virtual group for such performance period, such election applies to all MIPS eligible professionals in such group practice;
(III)
provide that a virtual group be a combination of tax identification numbers;
(IV)
provide for formal written agreements among MIPS eligible professionals electing to be a virtual group under this subparagraph; and
(V)
include such other requirements as the Secretary determines appropriate.
(6)

MIPS payments.—
(A)

MIPS adjustment factor.—
Taking into account paragraph (1)(G), the Secretary shall specify a MIPS adjustment factor for each MIPS eligible professional for a year. Such MIPS adjustment factor for a MIPS eligible professional for a year shall be in the form of a percent and shall be determined—
(i)
by comparing the composite performance score of the eligible professional for such year to the performance threshold established under subparagraph (D)(i) for such year;
(ii)
in a manner such that the adjustment factors specified under this subparagraph for a year result in differential payments under this paragraph reflecting that—
(I)
MIPS eligible professionals with composite performance scores for such year at or above such performance threshold for such year receive zero or positive payment adjustment factors for such year in accordance with clause (iii), with such professionals having higher composite performance scores receiving higher adjustment factors; and
(II)
MIPS eligible professionals with composite performance scores for such year below such performance threshold for such year receive negative payment adjustment factors for such year in accordance with clause (iv), with such professionals having lower composite performance scores receiving lower adjustment factors;
(iii)
in a manner such that MIPS eligible professionals with composite scores described in clause (ii)(I) for such year, subject to clauses (i) and (ii) of subparagraph (F), receive a zero or positive adjustment factor on a linear sliding scale such that an adjustment factor of 0 percent is assigned for a score at the performance threshold and an adjustment factor of the applicable percent specified in subparagraph (B) is assigned for a score of 100; and
(iv)
in a manner such that—
(I)
subject to subclause (II), MIPS eligible professionals with composite performance scores described in clause (ii)(II) for such year receive a negative payment adjustment factor on a linear sliding scale such that an adjustment factor of 0 percent is assigned for a score at the performance threshold and an adjustment factor of the negative of the applicable percent specified in subparagraph (B) is assigned for a score of 0; and
(II)
MIPS eligible professionals with composite performance scores that are equal to or greater than 0, but not greater than ¼ of the performance threshold specified under subparagraph (D)(i) for such year, receive a negative payment adjustment factor that is equal to the negative of the applicable percent specified in subparagraph (B) for such year.
(B)

Applicable percent defined.—
For purposes of this paragraph, the term “applicable percent” means—
(i)
for 2019, 4 percent;
(ii)
for 2020, 5 percent;
(iii)
for 2021, 7 percent; and
(iv)
for 2022 and subsequent years, 9 percent.
(C)

Additional mips adjustment factors for exceptional performance.—
For 2019 and each subsequent year through 2024, in the case of a MIPS eligible professional with a composite performance score for a year at or above the additional performance threshold under subparagraph (D)(ii) for such year, in addition to the MIPS adjustment factor under subparagraph (A) for the eligible professional for such year, subject to subparagraph (F)(iv), the Secretary shall specify an additional positive MIPS adjustment factor for such professional and year. Such additional MIPS adjustment factors shall be in the form of a percent and determined by the Secretary in a manner such that professionals having higher composite performance scores above the additional performance threshold receive higher additional MIPS adjustment factors.
(D)

Establishment of performance thresholds.—
(i)

Performance threshold.—
For each year of the MIPS, the Secretary shall compute a performance threshold with respect to which the composite performance score of MIPS eligible professionals shall be compared for purposes of determining adjustment factors under subparagraph (A) that are positive, negative, and zero. Subject to clauses (iii) and (iv), such performance threshold for a year shall be the mean or median (as selected by the Secretary) of the composite performance scores for all MIPS eligible professionals with respect to a prior period specified by the Secretary. The Secretary may reassess the selection of the mean or median under the previous sentence every 3 years.
(ii)

Additional performance threshold for exceptional performance.—
In addition to the performance threshold under clause (i), for each year of the MIPS (beginning with 2019 and ending with 2024), the Secretary shall compute an additional performance threshold for purposes of determining the additional MIPS adjustment factors under subparagraph (C). For each such year, subject to clause (iii), the Secretary shall apply either of the following methods for computing such additional performance threshold for such a year:
(I)
The threshold shall be the score that is equal to the 25th percentile of the range of possible composite performance scores above the performance threshold determined under clause (i).
(II)
The threshold shall be the score that is equal to the 25th percentile of the actual composite performance scores for MIPS eligible professionals with composite performance scores at or above the performance threshold with respect to the prior period described in clause (i).
(iii)

Special rule for initial 5 years.—
With respect to each of the first five years to which the MIPS applies, the Secretary shall, prior to the performance period for such years, establish a performance threshold for purposes of determining MIPS adjustment factors under subparagraph (A) and a threshold for purposes of determining additional MIPS adjustment factors under subparagraph (C). Each such performance threshold shall—
(I)
be based on a period prior to such performance periods; and
(II)
take into account—
- (aa)
data available with respect to performance on measures and activities that may be used under the performance categories under subparagraph (2)(B); and
- (bb)
other factors determined appropriate by the Secretary.
(iv)

Additional special rule for third, fourth and fifth years of mips.—
For purposes of determining MIPS adjustment factors under subparagraph (A), in addition to the requirements specified in clause (iii), the Secretary shall increase the performance threshold with respect to each of the third, fourth, and fifth years to which the MIPS applies to ensure a gradual and incremental transition to the performance threshold described in clause (i) (as estimated by the Secretary) with respect to the sixth year to which the MIPS applies.
(E)

Application of mips adjustment factors.—
In the case of covered professional services (as defined in subsection (k)(3)(A)) furnished by a MIPS eligible professional during a year (beginning with 2019), the amount otherwise paid under this part with respect to such covered professional services and MIPS eligible professional for such year, shall be multiplied by—
(i)
1, plus
(ii)
the sum of—
(I)
the MIPS adjustment factor determined under subparagraph (A) divided by 100, and
(II)
as applicable, the additional MIPS adjustment factor determined under subparagraph (C) divided by 100.
(F)

Aggregate application of mips adjustment factors.—
(i)

Application of scaling factor.—
(I)

In general.—
With respect to positive MIPS adjustment factors under subparagraph (A)(ii)(I) for eligible professionals whose composite performance score is above the performance threshold under subparagraph (D)(i) for such year, subject to subclause (II), the Secretary shall increase or decrease such adjustment factors by a scaling factor in order to ensure that the budget neutrality requirement of clause (ii) is met.
(II)

Scaling factor limit.—
In no case may the scaling factor applied under this clause exceed 3.0.
(ii)

Budget neutrality requirement.—
(I)

In general.—
Subject to clause (iii), the Secretary shall ensure that the estimated amount described in subclause (II) for a year is equal to the estimated amount described in subclause (III) for such year.
(II)

Aggregate increases.—
The amount described in this subclause is the estimated increase in the aggregate allowed charges resulting from the application of positive MIPS adjustment factors under subparagraph (A) (after application of the scaling factor described in clause (i)) to MIPS eligible professionals whose composite performance score for a year is above the performance threshold under subparagraph (D)(i) for such year.
(III)

Aggregate decreases.—
The amount described in this subclause is the estimated decrease in the aggregate allowed charges resulting from the application of negative MIPS adjustment factors under subparagraph (A) to MIPS eligible professionals whose composite performance score for a year is below the performance threshold under subparagraph (D)(i) for such year.
(iii)

Exceptions.—
(I)
In the case that all MIPS eligible professionals receive composite performance scores for a year that are below the performance threshold under subparagraph (D)(i) for such year, the negative MIPS adjustment factors under subparagraph (A) shall apply with respect to such MIPS eligible professionals and the budget neutrality requirement of clause (ii) and the additional adjustment factors under clause (iv) shall not apply for such year.
(II)
In the case that, with respect to a year, the application of clause (i) results in a scaling factor equal to the maximum scaling factor specified in clause (i)(II), such scaling factor shall apply and the budget neutrality requirement of clause (ii) shall not apply for such year.
(iv)

Additional incentive payment adjustments.—
(I)

In general.—
Subject to subclause (II), in specifying the MIPS additional adjustment factors under subparagraph (C) for each applicable MIPS eligible professional for a year, the Secretary shall ensure that the estimated aggregate increase in payments under this part resulting from the application of such additional adjustment factors for MIPS eligible professionals in a year shall be equal (as estimated by the Secretary) to $500,000,000 for each year beginning with 2019 and ending with 2024.
(II)

Limitation on additional incentive payment adjustments.—
The MIPS additional adjustment factor under subparagraph (C) for a year for an applicable MIPS eligible professional whose composite performance score is above the additional performance threshold under subparagraph (D)(ii) for such year shall not exceed 10 percent. The application of the previous sentence may result in an aggregate amount of additional incentive payments that are less than the amount specified in subclause (I).
(7)

Announcement of result of adjustments.—
Under the MIPS, the Secretary shall, not later than 30 days prior to January 1 of the year involved, make available to MIPS eligible professionals the MIPS adjustment factor (and, as applicable, the additional MIPS adjustment factor) under paragraph (6) applicable to the eligible professional for covered professional services (as defined in subsection (k)(3)(A)) furnished by the professional for such year. The Secretary may include such information in the confidential feedback under paragraph (12).
(8)

No effect in subsequent years.—
The MIPS adjustment factors and additional MIPS adjustment factors under paragraph (6) shall apply only with respect to the year involved, and the Secretary shall not take into account such adjustment factors in making payments to a MIPS eligible professional under this part in a subsequent year.
(9)

Public reporting.—
(A)

In general.—
The Secretary shall, in an easily understandable format, make available on the Physician Compare Internet website of the Centers for Medicare & Medicaid Services the following:
(i)
Information regarding the performance of MIPS eligible professionals under the MIPS, which—
(I)
shall include the composite score for each such MIPS eligible professional and the performance of each such MIPS eligible professional with respect to each performance category; and
(II)
may include the performance of each such MIPS eligible professional with respect to each measure or activity specified in paragraph (2)(B).
(ii)
The names of eligible professionals in eligible alternative payment models (as defined in section 1833(z)(3)(D)) and, to the extent feasible, the names of such eligible alternative payment models and performance of such models.
(B)

Disclosure.—
The information made available under this paragraph shall indicate, where appropriate, that publicized information may not be representative of the eligible professional’s entire patient population, the variety of services furnished by the eligible professional, or the health conditions of individuals treated.
(C)

Opportunity to review and submit corrections.—
The Secretary shall provide for an opportunity for a professional described in subparagraph (A) to review, and submit corrections for, the information to be made public with respect to the professional under such subparagraph prior to such information being made public.
(D)

Aggregate information.—
The Secretary shall periodically post on the Physician Compare Internet website aggregate information on the MIPS, including the range of composite scores for all MIPS eligible professionals and the range of the performance of all MIPS eligible professionals with respect to each performance category.
(10)

Consultation.—
The Secretary shall consult with stakeholders in carrying out the MIPS, including for the identification of measures and activities under paragraph (2)(B) and the methodologies developed under paragraphs (5)(A) and (6) and regarding the use of qualified clinical data registries. Such consultation shall include the use of a request for information or other mechanisms determined appropriate.
(11)

Technical assistance to small practices and practices in health professional shortage areas.—
(A)

In general.—
The Secretary shall enter into contracts or agreements with appropriate entities (such as quality improvement organizations, regional extension centers (as described in section 3012(c) of the Public Health Service Act), or regional health collaboratives) to offer guidance and assistance to MIPS eligible professionals in practices of 15 or fewer professionals (with priority given to such practices located in rural areas, health professional shortage areas (as designated under in section 332(a)(1)(A) of such Act), and medically underserved areas, and practices with low composite scores) with respect to—
(i)
the performance categories described in clauses (i) through (iv) of paragraph (2)(A); or
(ii)
how to transition to the implementation of and participation in an alternative payment model as described in section 1833(z)(3)(C).
(B)

Funding for technical assistance.—
For purposes of implementing subparagraph (A), the Secretary shall provide for the transfer from the Federal Supplementary Medical Insurance Trust Fund established under section 1841 to the Centers for Medicare & Medicaid Services Program Management Account of $20,000,000 for each of fiscal years 2016 through 2020. Amounts transferred under this subparagraph for a fiscal year shall be available until expended.
(12)

Feedback and information to improve performance.—
(A)

Performance feedback.—
(i)

In general.—
Beginning July 1, 2017, the Secretary—
(I)
shall make available timely (such as quarterly) confidential feedback to MIPS eligible professionals on the performance of such professionals with respect to the performance categories under clauses (i) and (ii) of paragraph (2)(A); and
(II)
may make available confidential feedback to such professionals on the performance of such professionals with respect to the performance categories under clauses (iii) and (iv) of such paragraph.
(ii)

Mechanisms.—
The Secretary may use one or more mechanisms to make feedback available under clause (i), which may include use of a web-based portal or other mechanisms determined appropriate by the Secretary. With respect to the performance category described in paragraph (2)(A)(i), feedback under this subparagraph shall, to the extent an eligible professional chooses to participate in a data registry for purposes of this subsection (including registries under subsections (k) and (m)), be provided based on performance on quality measures reported through the use of such registries. With respect to any other performance category described in paragraph (2)(A), the Secretary shall encourage provision of feedback through qualified clinical data registries as described in subsection (m)(3)(E)).
(iii)

Use of data.—
For purposes of clause (i), the Secretary may use data, with respect to a MIPS eligible professional, from periods prior to the current performance period and may use rolling periods in order to make illustrative calculations about the performance of such professional.
(iv)

Disclosure exemption.—
Feedback made available under this subparagraph shall be exempt from disclosure under section 552 of title 5, United States Code.
(v)

Receipt of information.—
The Secretary may use the mechanisms established under clause (ii) to receive information from professionals, such as information with respect to this subsection.
(B)

Additional information.—
(i)

In general.—
Beginning July 1, 2018, the Secretary shall make available to MIPS eligible professionals information, with respect to individuals who are patients of such MIPS eligible professionals, about items and services for which payment is made under this title that are furnished to such individuals by other suppliers and providers of services, which may include information described in clause (ii). Such information may be made available under the previous sentence to such MIPS eligible professionals by mechanisms determined appropriate by the Secretary, which may include use of a web-based portal. Such information may be made available in accordance with the same or similar terms as data are made available to accountable care organizations participating in the shared savings program under section 1899.
(ii)

Type of information.—
For purposes of clause (i), the information described in this clause, is the following:
(I)
With respect to selected items and services (as determined appropriate by the Secretary) for which payment is made under this title and that are furnished to individuals, who are patients of a MIPS eligible professional, by another supplier or provider of services during the most recent period for which data are available (such as the most recent three-month period), such as the name of such providers furnishing such items and services to such patients during such period, the types of such items and services so furnished, and the dates such items and services were so furnished.
(II)
Historical data, such as averages and other measures of the distribution if appropriate, of the total, and components of, allowed charges (and other figures as determined appropriate by the Secretary).
(13)

Review.—
(A)

Targeted review.—
The Secretary shall establish a process under which a MIPS eligible professional may seek an informal review of the calculation of the MIPS adjustment factor (or factors) applicable to such eligible professional under this subsection for a year. The results of a review conducted pursuant to the previous sentence shall not be taken into account for purposes of paragraph (6) with respect to a year (other than with respect to the calculation of such eligible professional’s MIPS adjustment factor for such year or additional MIPS adjustment factor for such year) after the factors determined in subparagraph (A) and subparagraph (C) of such paragraph have been determined for such year.
(B)

Limitation.—
Except as provided for in subparagraph (A), there shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the following:
(i)
The methodology used to determine the amount of the MIPS adjustment factor under paragraph (6)(A) and the amount of the additional MIPS adjustment factor under paragraph (6)(C) and the determination of such amounts.
(ii)
The establishment of the performance standards under paragraph (3) and the performance period under paragraph (4).
(iii)
The identification of measures and activities specified under paragraph (2)(B) and information made public or posted on the Physician Compare Internet website of the Centers for Medicare & Medicaid Services under paragraph (9).
(iv)
The methodology developed under paragraph (5) that is used to calculate performance scores and the calculation of such scores, including the weighting of measures and activities under such methodology.
(r)

Collaborating With the Physician, Practitioner, and Other Stakeholder Communities To Improve Resource Use Measurement.—
(1)

In general.—
In order to involve the physician, practitioner, and other stakeholder communities in enhancing the infrastructure for resource use measurement, including for purposes of the Merit-based Incentive Payment System under subsection (q) and alternative payment models under section 1833(z), the Secretary shall undertake the steps described in the succeeding provisions of this subsection.
(2)

Development of care episode and patient condition groups and classification codes.—
(A)

In general.—
In order to classify similar patients into care episode groups and patient condition groups, the Secretary shall undertake the steps described in the succeeding provisions of this paragraph.
(B)

Public availability of existing efforts to design an episode grouper.—
Not later than 180 days after the date of the enactment of this subsection, the Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services a list of the episode groups developed pursuant to subsection (n)(9)(A) and related descriptive information.
(C)

Stakeholder input.—
The Secretary shall accept, through the date that is 120 days after the day the Secretary posts the list pursuant to subparagraph (B), suggestions from physician specialty societies, applicable practitioner organizations, and other stakeholders for episode groups in addition to those posted pursuant to such subparagraph, and specific clinical criteria and patient characteristics to classify patients into—
(i)
care episode groups; and
(ii)
patient condition groups.
(D)

Development of proposed classification codes.—
(i)

In general.—
Taking into account the information described in subparagraph (B) and the information received under subparagraph (C), the Secretary shall—
(I)
establish care episode groups and patient condition groups, which account for a target of an estimated ½ of expenditures under parts A and B (with such target increasing over time as appropriate); and
(II)
assign codes to such groups.
(ii)

Care episode groups.—
In establishing the care episode groups under clause (i), the Secretary shall take into account—
(I)
the patient’s clinical problems at the time items and services are furnished during an episode of care, such as the clinical conditions or diagnoses, whether or not inpatient hospitalization occurs, and the principal procedures or services furnished; and
(II)
other factors determined appropriate by the Secretary.
(iii)

Patient condition groups.—
In establishing the patient condition groups under clause (i), the Secretary shall take into account—
(I)
the patient’s clinical history at the time of a medical visit, such as the patient’s combination of chronic conditions, current health status, and recent significant history (such as hospitalization and major surgery during a previous period, such as 3 months); and
(II)
other factors determined appropriate by the Secretary, such as eligibility status under this title (including eligibility under section 226(a), 226(b), or 226A, and dual eligibility under this title and title XIX).
(E)

Draft care episode and patient condition groups and classification codes.—
Not later than 270 days after the end of the comment period described in subparagraph (C), the Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services a draft list of the care episode and patient condition codes established under subparagraph (D) (and the criteria and characteristics assigned to such code).
(F)

Solicitation of input.—
The Secretary shall seek, through the date that is 120 days after the Secretary posts the list pursuant to subparagraph (E), comments from physician specialty societies, applicable practitioner organizations, and other stakeholders, including representatives of individuals entitled to benefits under part A or enrolled under this part, regarding the care episode and patient condition groups (and codes) posted under subparagraph (E). In seeking such comments, the Secretary shall use one or more mechanisms (other than notice and comment rulemaking) that may include use of open door forums, town hall meetings, or other appropriate mechanisms.
(G)

Operational list of care episode and patient condition groups and codes.—
Not later than 270 days after the end of the comment period described in subparagraph (F), taking into account the comments received under such subparagraph, the Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services an operational list of care episode and patient condition codes (and the criteria and characteristics assigned to such code).
(H)

Subsequent revisions.—
Not later than November 1 of each year (beginning with 2018), the Secretary shall, through rulemaking, make revisions to the operational lists of care episode and patient condition codes as the Secretary determines may be appropriate. Such revisions may be based on experience, new information developed pursuant to subsection (n)(9)(A), and input from the physician specialty societies, applicable practitioner organizations, and other stakeholders, including representatives of individuals entitled to benefits under part A or enrolled under this part.
(I)

Information.—
The Secretary shall, not later than December 31st of each year (beginning with 2018), post on the Internet website of the Centers for Medicare & Medicaid Services information on resource use measures in use under subsection (q), resource use measures under development and the time-frame for such development, potential future resource use measure topics, a description of stakeholder engagement, and the percent of expenditures under part A and this part that are covered by resource use measures.
(3)

Attribution of patients to physicians or practitioners.—
(A)

In general.—
In order to facilitate the attribution of patients and episodes (in whole or in part) to one or more physicians or applicable practitioners furnishing items and services, the Secretary shall undertake the steps described in the succeeding provisions of this paragraph.
(B)

Development of patient relationship categories and codes.—
The Secretary shall develop patient relationship categories and codes that define and distinguish the relationship and responsibility of a physician or applicable practitioner with a patient at the time of furnishing an item or service. Such patient relationship categories shall include different relationships of the physician or applicable practitioner to the patient (and the codes may reflect combinations of such categories), such as a physician or applicable practitioner who—
(i)
considers themself to have the primary responsibility for the general and ongoing care for the patient over extended periods of time;
(ii)
considers themself to be the lead physician or practitioner and who furnishes items and services and coordinates care furnished by other physicians or practitioners for the patient during an acute episode;
(iii)
furnishes items and services to the patient on a continuing basis during an acute episode of care, but in a supportive rather than a lead role;
(iv)
furnishes items and services to the patient on an occasional basis, usually at the request of another physician or practitioner; or
(v)
furnishes items and services only as ordered by another physician or practitioner.
(C)

Draft list of patient relationship categories and codes.—
Not later than one year after the date of the enactment of this subsection, the Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services a draft list of the patient relationship categories and codes developed under subparagraph (B).
(D)

Stakeholder input.—
The Secretary shall seek, through the date that is 120 days after the Secretary posts the list pursuant to subparagraph (C), comments from physician specialty societies, applicable practitioner organizations, and other stakeholders, including representatives of individuals entitled to benefits under part A or enrolled under this part, regarding the patient relationship categories and codes posted under subparagraph (C). In seeking such comments, the Secretary shall use one or more mechanisms (other than notice and comment rulemaking) that may include open door forums, town hall meetings, web-based forums, or other appropriate mechanisms.
(E)

Operational list of patient relationship categories and codes.—
Not later than 240 days after the end of the comment period described in subparagraph (D), taking into account the comments received under such subparagraph, the Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services an operational list of patient relationship categories and codes.
(F)

Subsequent revisions.—
Not later than November 1 of each year (beginning with 2018), the Secretary shall, through rulemaking, make revisions to the operational list of patient relationship categories and codes as the Secretary determines appropriate. Such revisions may be based on experience, new information developed pursuant to subsection (n)(9)(A), and input from the physician specialty societies, applicable practitioner organizations, and other stakeholders, including representatives of individuals entitled to benefits under part A or enrolled under this part.
(4)

Reporting of information for resource use measurement.—
Claims submitted for items and services furnished by a physician or applicable practitioner on or after January 1, 2018, shall, as determined appropriate by the Secretary, include—
(A)
applicable codes established under paragraphs (2) and (3); and
(B)
the national provider identifier of the ordering physician or applicable practitioner (if different from the billing physician or applicable practitioner).
(5)

Methodology for resource use analysis.—
(A)

In general.—
In order to evaluate the resources used to treat patients (with respect to care episode and patient condition groups), the Secretary shall, as the Secretary determines appropriate—
(i)
use the patient relationship codes reported on claims pursuant to paragraph (4) to attribute patients (in whole or in part) to one or more physicians and applicable practitioners;
(ii)
use the care episode and patient condition codes reported on claims pursuant to paragraph (4) as a basis to compare similar patients and care episodes and patient condition groups; and
(iii)
conduct an analysis of resource use (with respect to care episodes and patient condition groups of such patients).
(B)

Analysis of patients of physicians and practitioners.—
In conducting the analysis described in subparagraph (A)(iii) with respect to patients attributed to physicians and applicable practitioners, the Secretary shall, as feasible—
(i)
use the claims data experience of such patients by patient condition codes during a common period, such as 12 months; and
(ii)
use the claims data experience of such patients by care episode codes—
(I)
in the case of episodes without a hospitalization, during periods of time (such as the number of days) determined appropriate by the Secretary; and
(II)
in the case of episodes with a hospitalization, during periods of time (such as the number of days) before, during, and after the hospitalization.
(C)

Measurement of resource use.—
In measuring such resource use, the Secretary—
(i)
shall use per patient total allowed charges for all services under part A and this part (and, if the Secretary determines appropriate, part D) for the analysis of patient resource use, by care episode codes and by patient condition codes; and
(ii)
may, as determined appropriate, use other measures of allowed charges (such as subtotals for categories of items and services) and measures of utilization of items and services (such as frequency of specific items and services and the ratio of specific items and services among attributed patients or episodes).
(D)

Stakeholder input.—
The Secretary shall seek comments from the physician specialty societies, applicable practitioner organizations, and other stakeholders, including representatives of individuals entitled to benefits under part A or enrolled under this part, regarding the resource use methodology established pursuant to this paragraph. In seeking comments the Secretary shall use one or more mechanisms (other than notice and comment rulemaking) that may include open door forums, town hall meetings, web-based forums, or other appropriate mechanisms.
(6)

Implementation.—
To the extent that the Secretary contracts with an entity to carry out any part of the provisions of this subsection, the Secretary may not contract with an entity or an entity with a subcontract if the entity or subcontracting entity currently makes recommendations to the Secretary on relative values for services under the fee schedule for physicians’ services under this section.
(7)

Limitation.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of—
(A)
care episode and patient condition groups and codes established under paragraph (2);
(B)
patient relationship categories and codes established under paragraph (3); and
(C)
measurement of, and analyses of resource use with respect to, care episode and patient condition codes and patient relationship codes pursuant to paragraph (5).
(8)

Administration.—
Chapter 35 of title 44, United States Code, shall not apply to this section.
(9)

Definitions.—
In this subsection:
(A)

Physician.—
The term “physician” has the meaning given such term in section 1861(r)(1).
(B)

Applicable practitioner.—
The term “applicable practitioner” means—
(i)
a physician assistant, nurse practitioner, and clinical nurse specialist (as such terms are defined in section 1861(aa)(5)), and a certified registered nurse anesthetist (as defined in section 1861(bb)(2)); and
(ii)
beginning January 1, 2019, such other eligible professionals (as defined in subsection (k)(3)(B)) as specified by the Secretary.
(10)

Clarification.—
The provisions of sections 1890(b)(7) and 1890A shall not apply to this subsection.
(s)

Priorities and Funding for Measure Development.—
(1)

Plan identifying measure development priorities and timelines.—
(A)

Draft measure development plan.—
Not later than January 1, 2016, the Secretary shall develop, and post on the Internet website of the Centers for Medicare & Medicaid Services, a draft plan for the development of quality measures for application under the applicable provisions (as defined in paragraph (5)). Under such plan the Secretary shall—
(i)
address how measures used by private payers and integrated delivery systems could be incorporated under title XVIII;
(ii)
describe how coordination, to the extent possible, will occur across organizations developing such measures; and
(iii)
take into account how clinical best practices and clinical practice guidelines should be used in the development of quality measures.
(B)

Quality domains.—
For purposes of this subsection, the term “quality domains” means at least the following domains:
(i)
Clinical care.
(ii)
Safety.
(iii)
Care coordination.
(iv)
Patient and caregiver experience.
(v)
Population health and prevention.
(C)

Consideration.—
In developing the draft plan under this paragraph, the Secretary shall consider—
(i)
gap analyses conducted by the entity with a contract under section 1890(a) or other contractors or entities;
(ii)
whether measures are applicable across health care settings;
(iii)
clinical practice improvement activities submitted under subsection (q)(2)(C)(iv) for identifying possible areas for future measure development and identifying existing gaps with respect to such measures; and
(iv)
the quality domains applied under this subsection.
(D)

Priorities.—
In developing the draft plan under this paragraph, the Secretary shall give priority to the following types of measures:
(i)
Outcome measures, including patient reported outcome and functional status measures.
(ii)
Patient experience measures.
(iii)
Care coordination measures.
(iv)
Measures of appropriate use of services, including measures of over use.
(E)

Stakeholder input.—
The Secretary shall accept through March 1, 2016, comments on the draft plan posted under paragraph (1)(A) from the public, including health care providers, payers, consumers, and other stakeholders.
(F)

Final measure development plan.—
Not later than May 1, 2016, taking into account the comments received under this subparagraph, the Secretary shall finalize the plan and post on the Internet website of the Centers for Medicare & Medicaid Services an operational plan for the development of quality measures for use under the applicable provisions. Such plan shall be updated as appropriate.
(2)

Contracts and other arrangements for quality measure development.—
(A)

In general.—
The Secretary shall enter into contracts or other arrangements with entities for the purpose of developing, improving, updating, or expanding in accordance with the plan under paragraph (1) quality measures for application under the applicable provisions. Such entities shall include organizations with quality measure development expertise.
(B)

Prioritization.—
(i)

In general.—
In entering into contracts or other arrangements under subparagraph (A), the Secretary shall give priority to the development of the types of measures described in paragraph (1)(D).
(ii)

Consideration.—
In selecting measures for development under this subsection, the Secretary shall consider—
(I)
whether such measures would be electronically specified; and
(II)
clinical practice guidelines to the extent that such guidelines exist.
(3)

Annual report by the secretary.—
(A)

In general.—
Not later than May 1, 2017, and annually thereafter, the Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services a report on the progress made in developing quality measures for application under the applicable provisions.
(B)

Requirements.—
Each report submitted pursuant to subparagraph (A) shall include the following:
(i)
A description of the Secretary’s efforts to implement this paragraph.
(ii)
With respect to the measures developed during the previous year—
(I)
a description of the total number of quality measures developed and the types of such measures, such as an outcome or patient experience measure;
(II)
the name of each measure developed;
(III)
the name of the developer and steward of each measure;
(IV)
with respect to each type of measure, an estimate of the total amount expended under this title to develop all measures of such type; and
(V)
whether the measure would be electronically specified.
(iii)
With respect to measures in development at the time of the report—
(I)
the information described in clause (ii), if available; and
(II)
a timeline for completion of the development of such measures.
(iv)
A description of any updates to the plan under paragraph (1) (including newly identified gaps and the status of previously identified gaps) and the inventory of measures applicable under the applicable provisions.
(v)
Other information the Secretary determines to be appropriate.
(4)

Stakeholder input.—
With respect to paragraph (1), the Secretary shall seek stakeholder input with respect to—
(A)
the identification of gaps where no quality measures exist, particularly with respect to the types of measures described in paragraph (1)(D);
(B)
prioritizing quality measure development to address such gaps; and
(C)
other areas related to quality measure development determined appropriate by the Secretary.
(5)

Definition of applicable provisions.—
In this subsection, the term “applicable provisions” means the following provisions:
(A)
Subsection (q)(2)(B)(i).
(B)
Section 1833(z)(3)(D)51.
^{51}
Section 51003(a)(3) of division E of Public Law 115–123 amends subsection (s)(5)(B), “
by striking‘
section 1833(z)(2)(C)
’and inserting‘
section 1833(z)(3)(D)
’
”. Such amendment probably should have been to strike “Section 1833(z)(2)(C)” and insert “Section 1833(z)(3)(D)”, which was executed here with the proper casing of the letter “S” in the word “Section” in order to reflect the probable intent of Congress.
(6)

Funding.—
For purposes of carrying out this subsection, the Secretary shall provide for the transfer, from the Federal Supplementary Medical Insurance Trust Fund under section 1841, of $15,000,000 to the Centers for Medicare & Medicaid Services Program Management Account for each of fiscal years 2015 through 2019. Amounts transferred under this paragraph shall remain available through the end of fiscal year 2022.
(7)

Administration.—
Chapter 35 of title 44, United States Code, shall not apply to the collection of information for the development of quality measures.
(t)

Supporting Physicians and Other Professionals in Adjusting to Medicare Payment Changes.—
(1)

In general.—
In order to support physicians and other professionals in adjusting to changes in payment for physicians’ services during 2021, 2022, 2023, 2024, and 2026, the Secretary shall increase fee schedules under subsection (b) that establish payment amounts for—
(A)
such services furnished on or after January 1, 2021, and before January 1, 2022, by 3.75 percent;
(B)
such services furnished on or after January 1, 2022, and before January 1, 2023, by 3.0 percent;
(C)
such services furnished on or after January 1, 2023, and before January 1, 2024, by 2.5 percent;
(D)
such services furnished on or after January, 1, 2024, and before March 9, 2024, by 1.25 percent;
(E)
such services furnished on or after March 9, 2024, and before January 1, 2025, by 2.93 percent; and
(F)
such services furnished on or after January 1, 2026, and before January 1, 2027, by 2.5 percent.
(2)

Implementation.—
(A)

Administration.—
Notwithstanding any other provision of law, the Secretary may implement this subsection by program instruction or otherwise.
(B)

Limitation.—
There shall be no administrative or judicial review under section 1869, 1878 or otherwise of the fee schedules that establish payment amounts calculated pursuant to this subsection.
(C)

Application only for 2021 through 2024 and 2026.—
The increase in fee schedules that establish payment amounts under this subsection for services furnished in 2021, 2022, 2023, 2024, or 2026 shall not be taken into account in determining such fee schedules that establish payment amounts for services furnished in years after 2021, 2022, 2023, 2024, or 2026, respectively.
(3)

Funding.—
For purposes of increasing the fee schedules that establish payment amounts pursuant to this subsection—
(A)
there shall be transferred from the General Fund of the Treasury to the Federal Supplementary Medical Insurance Trust Fund under section 1841, $3,000,000,000, to remain available until expended; and
(B)
in the event the Secretary determines additional amounts are necessary, such amounts shall be available from the Federal Supplementary Medical Insurance Trust Fund.
Part C—

Medicare+Choice Program 52
^{52}
All references in this part to “Medicare+Choice Program” is deemed under section 201(b) of MMA (viz., P.L. 108–173) to be a reference to “Medicare Advantage” and “MA”.

eligibility, election, and enrollment
Sec. 1851.
[42 U.S.C. 1395w–21]
(a)

Choice of Medicare Benefits Through Medicare+Choice Plans.—
(1)

In general.—
Subject to the provisions of this section, each Medicare+Choice eligible individual (as defined in paragraph (3)) is entitled to elect to receive benefits (other than qualified prescription drug benefits) under this title—
(A)
through the original medicare fee-for-service program under parts A and B, or
(B)
through enrollment in a Medicare+Choice plan under this part,
and may elect qualified prescription drug coverage in accordance with section 1860D–1.
(2)

Types of medicare+choice plans that may be available.—
A Medicare+Choice plan may be any of the following types of plans of health insurance:
(A)

Coordinated care plans (including regional plans).—
(i)

In general.—
Coordinated care plans which provide health care services, including but not limited to health maintenance organization plans (with or without point of service options), plans offered by provider-sponsored organizations (as defined in section 1855(d)), and regional or local preferred provider organization plans (including MA regional plans).
(ii)

Specialized ma plans for special needs individuals.—
Specialized MA plans for special needs individuals (as defined in section 1859(b)(6)) may be any type of coordinated care plan.
(B)

Combination of msa plan and contributions to medicare+choice msa.—
An MSA plan, as defined in section 1859(b)(3), and a contribution into a Medicare+Choice medical savings account (MSA).
(C)

Private fee-for-service plans.—
A Medicare+Choice private fee-for-service plan, as defined in section 1859(b)(2).
(3)

Medicare+choice eligible individual.—
In this title, the term “Medicare+Choice eligible individual” means an individual who is entitled to benefits under part A and enrolled under part B.
(b)

Special Rules.—
(1)

Residence requirement.—
(A)

In general.—
Except as the Secretary may otherwise provide and except as provided in subparagraph (C), an individual is eligible to elect a Medicare+Choice plan offered by a Medicare+Choice organization only if the plan serves the geographic area in which the individual resides.
(B)

Continuation of enrollment permitted.—
Pursuant to rules specified by the Secretary, the Secretary shall provide thatan MA local plan may offer to all individuals residing in a geographic area the option to continue enrollment in the plan, notwithstanding that the individual no longer resides in the service area of the plan, so long as the plan provides that individuals exercising this option have, as part of the benefits under the original medicare fee-for-service program option, reasonable access within that geographic area to the full range of basic benefits, subject to reasonable cost sharing liability in obtaining such benefits.
(C)

Continuation of enrollment permitted where service changed.—
Notwithstanding subparagraph (A) and in addition to subparagraph (B), if a Medicare+Choice organization eliminates from its service area a Medicare+Choice payment area that was previously within its service area, the organization may elect to offer individuals residing in all or portions of the affected area who would otherwise be ineligible to continue enrollment the option to continue enrollment in an MA local plan it offers so long as—
(i)
the enrollee agrees to receive the full range of basic benefits (excluding emergency and urgently needed care) exclusively at facilities designated by the organization within the plan service area; and
(ii)
there is no other Medicare+Choice plan offered in the area in which the enrollee resides at the time of the organization's election.
(2)

Special rule for certain individuals covered under fehbp or eligible for veterans or military health benefits, veterans.—
(A)

FEHBP.—
An individual who is enrolled in a health benefit plan under chapter 89 of title 5, United States Code, is not eligible to enroll in an MSA plan until such time as the Director of the Office of Management and Budget certifies to the Secretary that the Office of Personnel Management has adopted policies which will ensure that the enrollment of such individuals in such plans will not result in increased expenditures for the Federal Government for health benefit plans under such chapter.
(B)

VA and dod.—
The Secretary may apply rules similar to the rules described in subparagraph (A) in the case of individuals who are eligible for health care benefits under chapter 55 of title 10, United States Code, or under chapter 17 of title 38 of such Code.
(3)

Limitation on eligibility of qualified medicare beneficiaries and other medicaid beneficiaries to enroll in an msa plan.—
An individual who is a qualified medicare beneficiary (as defined in section 1905(p)(1)), a qualified disabled and working individual (described in section 1905(s)), an individual described in section 1902(a)(10)(E)(iii), or otherwise entitled to medicare cost-sharing under a State plan under title XIX is not eligible to enroll in an MSA plan.
(4)

Coverage under msa plans.—
(A)

In general.—
Under rules established by the Secretary, an individual is not eligible to enroll (or continue enrollment) in an MSA plan for a year unless the individual provides assurances satisfactory to the Secretary that the individual will reside in the United States for at least 183 days during the year.
(B)

Evaluation.—
The Secretary shall regularly evaluate the impact of permitting enrollment in MSA plans under this part on selection (including adverse selection), use of preventive care, access to care, and the financial status of the Trust Funds under this title.
(C)

Reports.—
The Secretary shall submit to Congress periodic reports on the numbers of individuals enrolled in such plans and on the evaluation being conducted under subparagraph (B).
(c)

Process for Exercising Choice.—
(1)

In general.—
The Secretary shall establish a process through which elections described in subsection (a) are made and changed, including the form and manner in which such elections are made and changed. Subject to paragraph (4), such elections shall be made or changed only during coverage election periods specified under subsection (e) and shall become effective as provided in subsection (f).
(2)

Coordination through medicare+choice organizations.—
(A)

Enrollment.—
Such process shall permit an individual who wishes to elect a Medicare+Choice plan offered by a Medicare+Choice organization to make such election through the filing of an appropriate election form with the organization.
(B)

Disenrollment.—
Such process shall permit an individual, who has elected a Medicare+Choice plan offered by a Medicare+Choice organization and who wishes to terminate such election, to terminate such election through the filing of an appropriate election form with the organization.
(3)

Default.—
(A)

Initial election.—
(i)

In general.—
Subject to clause (ii), an individual who fails to make an election during an initial election period under subsection (e)(1) is deemed to have chosen the original medicare fee-for-service program option.
(ii)

Seamless continuation of coverage.—
The Secretary may establish procedures under which an individual who is enrolled in a health plan (other than Medicare+Choice plan) offered by a Medicare+Choice organization at the time of the initial election period and who fails to elect to receive coverage other than through the organization is deemed to have elected the Medicare+Choice plan offered by the organization (or, if the organization offers more than one such plan, such plan or plans as the Secretary identifies under such procedures).
(B)

Continuing periods.—
An individual who has made (or is deemed to have made) an election under this section is considered to have continued to make such election until such time as—
(i)
the individual changes the election under this section, or
(ii)
the Medicare+Choice plan with respect to which such election is in effect is discontinued or, subject to subsection (b)(1)(B), no longer serves the area in which the individual resides.
(4)

Deemed enrollment relating to converted reasonable cost reimbursement contracts.—
(A)

In general.—
On the first day of the annual, coordinated election period under subsection (e)(3) for plan years beginning on or after January 1, 2017, an MA eligible individual described in clause (i) or (ii) of subparagraph (B) is deemed, unless the individual elects otherwise, to have elected to receive benefits under this title through an applicable MA plan (and shall be enrolled in such plan) beginning with such plan year, if—
(i)
the individual is enrolled in a reasonable cost reimbursement contract under section 1876(h) in the previous plan year;
(ii)
such reasonable cost reimbursement contract was extended or renewed for the last reasonable cost reimbursement contract year of the contract (as described in subclause (I) of section 1876(h)(5)(C)(iv)) pursuant to such section;
(iii)
the eligible organization that is offering such reasonable cost reimbursement contract provided the notice described in subclause (III) of such section that the contract was to be converted;
(iv)
the applicable MA plan—
(I)
is the plan that was converted from the reasonable cost reimbursement contract described in clause (iii);
(II)
is offered by the same entity (or an organization affiliated with such entity that has a common ownership interest of control) that entered into such contract; and
(III)
is offered in the service area where the individual resides;
(v)
in the case of reasonable cost reimbursement contracts that provide coverage under parts A and B (and, to the extent the Secretary determines it to be feasible, contracts that provide only part B coverage), the difference between the estimated individual costs (as determined applicable by the Secretary) for the applicable MA plan and such costs for the predecessor cost plan does not exceed a threshold established by the Secretary; and
(vi)
the applicable MA plan—
(I)
provides coverage for enrollees transitioning from the converted reasonable cost reimbursement contract to such plan to maintain current providers of services and suppliers and course of treatment at the time of enrollment for a period of at least 90 days after enrollment; and
(II)
during such period, pays such providers of services and suppliers for items and services furnished to the enrollee an amount that is not less than the amount of payment applicable for such items and services under the original Medicare fee-for-service program under parts A and B.
(B)

MA eligible individuals described.—
(i)

Without prescription drug coverage.—
An MA eligible individual described in this clause, with respect to a plan year, is an MA eligible individual who is enrolled in a reasonable cost reimbursement contract under section 1876(h) in the previous plan year and who is not, for such previous plan year, enrolled in a prescription drug plan under part D, including coverage under section 1860D–22.
(ii)

With prescription drug coverage.—
An MA eligible individual described in this clause, with respect to a plan year, is an MA eligible individual who is enrolled in a reasonable cost reimbursement contract under section 1876(h) in the previous plan year and who, for such previous plan year, is enrolled in a prescription drug plan under part D—
(I)
through such contract; or
(II)
through a prescription drug plan, if the sponsor of such plan is the same entity (or an organization affiliated with such entity) that entered into such contract.
(C)

Applicable ma plan defined.—
In this paragraph, the term “applicable MA plan” means, in the case of an individual described in—
(i)
subparagraph (B)(i), an MA plan that is not an MA–PD plan; and
(ii)
subparagraph (B)(ii), an MA–PD plan.
(D)

Identification and notification of deemed individuals.—
Not later than 45 days before the first day of the annual, coordinated election period under subsection (e)(3) for plan years beginning on or after January 1, 2017, the Secretary shall identify and notify the individuals who will be subject to deemed elections under subparagraph (A) on the first day of such period.
(d)

Providing Information To Promote Informed Choice.—
(1)

In general.—
The Secretary shall provide for activities under this subsection to broadly disseminate information to medicare beneficiaries (and prospective medicare beneficiaries) on the coverage options provided under this section in order to promote an active, informed selection among such options.
(2)

Provision of notice.—
(A)

Open season notification.—
At least 15 days before the beginning of each annual, coordinated election period (as defined in subsection (e)(3)(B)), the Secretary shall mail to each Medicare+Choice eligible individual residing in an area the following:
(i)

General information.—
The general information described in paragraph (3).
(ii)

List of plans and comparison of plan options.—
A list identifying the Medicare+Choice plans that are (or will be) available to residents of the area and information described in paragraph (4) concerning such plans. Such information shall be presented in a comparative form.
(iii)

Additional information.—
Any other information that the Secretary determines will assist the individual in making the election under this section.
The mailing of such information shall be coordinated, to the extent practicable, with the mailing of any annual notice under section 1804.
(B)53

Notification to newly eligible medicare+choice eligible individuals.—
To the extent practicable, the Secretary shall, not later than 30 days before the beginning of the initial Medicare+Choice enrollment period for an individual described in subsection (e)(1), mail to the individual the information described in subparagraph (A).
(ii)

Notification related to certain deemed elections.—
The Secretary shall require a Medicare Advantage organization that is offering a Medicare Advantage plan that has been converted from a reasonable cost reimbursement contract pursuant to section 1876(h)(5)(C)(iv) to mail, not later than 30 days prior to the first day of the annual, coordinated election period under subsection (e)(3) of a year, to any individual enrolled under such contract and identified by the Secretary under subsection (c)(4)(D) for such year—
(I)
a notification that such individual will, on such day, be deemed to have made an election with respect to such plan to receive benefits under this title through an MA plan or MA–PD plan (and shall be enrolled in such plan) for the next plan year under subsection (c)(4)(A), but that the individual may make a different election during the annual, coordinated election period for such year;
(II)
the information described in subparagraph (A);
(III)
a description of the differences between such MA plan or MA–PD plan and the reasonable cost reimbursement contract in which the individual was most recently enrolled with respect to benefits covered under such plans, including cost-sharing, premiums, drug coverage, and provider networks;
(IV)
information about the special period for elections under subsection (e)(2)(F); and
(V)
other information the Secretary may specify.
^{53}
Section 209(c)(1) of Public Law 114–10 attempts to amend the heading of subparagraph (B) by striking “Notification to newly eligible medicare advantage eligible individuals” and inserting “Notifications required.—”.
‘‘(i) Notification to newly eligible medicare advantage eligible individuals.—”.
Such amendment could not be carried out because the matter proposed to be struck does not appear in law.
(C)

Form.—
The information disseminated under this paragraph shall be written and formatted using language that is easily understandable by medicare beneficiaries.
(D)

Periodic updating.—
The information described in subparagraph (A) shall be updated on at least an annual basis to reflect changes in the availability of Medicare+Choice plans and the benefits and Medicare+Choice monthly basic and supplemental beneficiary premiums for such plans.
(3)

General information.—
General information under this paragraph, with respect to coverage under this part during a year, shall include the following:
(A)

Benefits under original medicare fee-for-service program option.—
A general description of the benefits covered under the original medicare fee-for-service program under parts A and B, including—
(i)
covered items and services,
(ii)
beneficiary cost sharing, such as deductibles, coinsurance, and copayment amounts, and
(iii)
any beneficiary liability for balance billing.
(B)

Election procedures.—
Information and instructions on how to exercise election options under this section.
(C)

Rights.—
A general description of procedural rights (including grievance and appeals procedures) of beneficiaries under the original medicare fee-for-service program and the Medicare+Choice program and the right to be protected against discrimination based on health status-related factors under section 1852(b).
(D)

Information on medigap and medicare select.—
A general description of the benefits, enrollment rights, and other requirements applicable to medicare supplemental policies under section 1882 and provisions relating to medicare select policies described in section 1882(t).
(E)

Potential for contract termination.—
The fact that a Medicare+Choice organization may terminate its contract, refuse to renew its contract, or reduce the service area included in its contract, under this part, and the effect of such a termination, nonrenewal, or service area reduction may have on individuals enrolled with the Medicare+Choice plan under this part.
(F)

Catastrophic coverage and single deductible.—
In the case of an MA regional plan, a description of the catastrophic coverage and single deductible applicable under the plan.
(4)

Information comparing plan options.—
Information under this paragraph, with respect to a Medicare+Choice plan for a year, shall include the following:
(A)

Benefits.—
The benefits covered under the plan, including the following:
(i)
Covered items and services beyond those provided under the original medicare fee-for-service program.
(ii)
Any beneficiary cost sharing, including information on the single deductible (if applicable) under section 1858(b)(1).
(iii)
Any maximum limitations on out-of-pocket expenses.
(iv)
In the case of an MSA plan, differences in cost sharing, premiums, and balance billing under such a plan compared to under other Medicare+Choice plans.
(v)
In the case of a Medicare+Choice private fee-for-service plan, differences in cost sharing, premiums, and balance billing under such a plan compared to under other Medicare+Choice plans.
(vi)
The extent to which an enrollee may obtain benefits through out-of-network health care providers.
(vii)
The extent to which an enrollee may select among in-network providers and the types of providers participating in the plan's network.
(viii)
The organization's coverage of emergency and urgently needed care.
(B)

Premiums.—
(i)

In general.—
The monthly amount of the premium charged to an individual.
(ii)

Reductions.—
The reduction in part B premiums, if any.
(C)

Service area.—
The service area of the plan.
(D)

Quality and performance.—
To the extent available, plan quality and performance indicators for the benefits under the plan (and how they compare to such indicators under the original medicare fee-for-service program under parts A and B in the area involved), including—
(i)
disenrollment rates for medicare enrollees electing to receive benefits through the plan for the previous 2 years (excluding disenrollment due to death or moving outside the plan's service area),
(ii)
information on medicare enrollee satisfaction,
(iii)
information on health outcomes, and
(iv)
the recent record regarding compliance of the plan with requirements of this part (as determined by the Secretary).
(E)

Supplemental benefits.—
Supplemental health care benefits, including any reductions in cost-sharing under section 1852(a)(3) and the terms and conditions (including premiums) for such benefits.
(5)

Maintaining a toll-free number and internet site.—
The Secretary shall maintain a toll-free number for inquiries regarding Medicare+Choice options and the operation of this part in all areas in which Medicare+Choice plans are offered and an Internet site through which individuals may electronically obtain information on such options and Medicare+Choice plans.
(6)

Use of non-federal entities.—
The Secretary may enter into contracts with non-Federal entities to carry out activities under this subsection.
(7)

Provision of information.—
A Medicare+Choice organization shall provide the Secretary with such information on the organization and each Medicare+Choice plan it offers as may be required for the preparation of the information referred to in paragraph (2)(A).
(e)

Coverage Election Periods.—
(1)

Initial choice upon eligibility to make election if medicare+choice plans available to individual.—
If, at the time an individual first becomes entitled to benefits under part A and enrolled under part B, there is one or more Medicare+Choice plans offered in the area in which the individual resides, the individual shall make the election under this section during a period specified by the Secretary such that if the individual elects a Medicare+Choice plan during the period, coverage under the plan becomes effective as of the first date on which the individual may receive such coverage. If any portion of an individual's initial enrollment period under part B occurs after the end of the annual, coordinated election period described in paragraph (3)(B)(iii), the initial enrollment period under this part shall further extend through the end of the individual's initial enrollment period under part B.
(2)

Open enrollment and disenrollment opportunities.—
Subject to paragraph (5)—
(A)

Continuous open enrollment and disenrollment through 2005.—
At any time during the period beginning January 1, 1998, and ending on December 31, 2005, a Medicare+Choice eligible individual may change the election under subsection (a)(1).
(B)

Continuous open enrollment and disenrollment for first 6 months during 2006.—
(i)

In general.—
Subject to clause (ii), subparagraph(C)(iii), and subparagraph (D), at any time during the first 6 months of 2006, or, if the individual first becomes a Medicare+Choice eligible individual during 2006, during the first 6 months during 2006 in which the individual is a Medicare+Choice eligible individual, a Medicare+Choice eligible individual may change the election under subsection (a)(1).
(ii)

Limitation of one change.—
An individual may exercise the right under clause (i) only once. The limitation under this clause shall not apply to changes in elections effected during an annual, coordinated election period under paragraph (3) or during a special enrollment period under the first sentence of paragraph (4).
(C)

Annual 45-day period from 2011 through 2018 for disenrollment from ma plans to elect to receive benefits under the original medicare fee-for-service program.—
Subject to subparagraph (D), at any time during the first 45 days of a year (beginning with 2011 and ending with 2018), an individual who is enrolled in a Medicare Advantage plan may change the election under subsection (a)(1), but only with respect to coverage under the original medicare fee-for-service program under parts A and B, and may elect qualified prescription drug coverage in accordance with section 1860D–1.
(D)

Continuous open enrollment for institutionalized individuals.—
At any time after 2005 in the case of a Medicare+Choice eligible individual who is institutionalized (as defined by the Secretary), the individual may elect under subsection (a)(1)—
(i)
to enroll in a Medicare+Choice plan; or
(ii)
to change the Medicare+Choice plan in which the individual is enrolled.
(E)

Limited continuous open enrollment of original fee-for-service enrollees in medicare advantage non-prescription drug plans.—
(i)

In general.—
On any date during the period beginning on January 1, 2007, and ending on July 31, 2007, on which a Medicare Advantage eligible individual is an unenrolled fee-for-service individual (as defined in clause (ii)), the individual may elect under subsection (a)(1) to enroll in a Medicare Advantage plan that is not an MA–PD plan.
(ii)

Unenrolled fee-for-service individual defined.—
In this subparagraph, the term “unenrolled fee-for-service individual” means, with respect to a date, a Medicare Advantage eligible individual who—
(I)
is receiving benefits under this title through enrollment in the original medicare fee-for-service program under parts A and B;
(II)
is not enrolled in an MA plan on such date; and
(III)
as of such date is not otherwise eligible to elect to enroll in an MA plan.
(iii)

Limitation of one change during the applicable period.—
An individual may exercise the right under clause (i) only once during the period described in such clause.
(iv)

No effect on coverage under a prescription drug plan.—
Nothing in this subparagraph shall be construed as permitting an individual exercising the right under clause (i)—
(I)
who is enrolled in a prescription drug plan under part D, to disenroll from such plan or to enroll in a different prescription drug plan; or
(II)
who is not enrolled in a prescription drug plan, to enroll in such a plan.
(F)

Special period for certain deemed elections.—
(i)

In general.—
At any time during the period beginning after the last day of the annual, coordinated election period under paragraph (3) in which an individual is deemed to have elected to enroll in an MA plan or MA–PD plan under subsection (c)(4) and ending on the last day of February of the first plan year for which the individual is enrolled in such plan, such individual may change the election under subsection (a)(1) (including changing the MA plan or MA–PD plan in which the individual is enrolled).
(ii)

Limitation of one change.—
An individual may exercise the right under clause (i) only once during the applicable period described in such clause. The limitation under this clause shall not apply to changes in elections effected during an annual, coordinated election period under paragraph (3) or during a special enrollment period under paragraph (4).
(G)

Continuous open enrollment and disenrollment for first 3 months in 2016 and subsequent years.—
(i)

In general.—
Subject to clause (ii) and subparagraph (D)—
(I)
in the case of an MA eligible individual who is enrolled in an MA plan, at any time during the first 3 months of a year (beginning with 2019); or
(II)
in the case of an individual who first becomes an MA eligible individual during a year (beginning with 2019) and enrolls in an MA plan, during the first 3 months during such year in which the individual is an MA eligible individual;
such MA eligible individual may change the election under subsection (a)(1).
(ii)

Limitation of one change during open enrollment period each year.—
An individual may change the election pursuant to clause (i) only once during the applicable 3-month period described in such clause in each year. The limitation under this clause shall not apply to changes in elections effected during an annual, coordinated election period under paragraph (3) or during a special enrollment period under paragraph (4).
(iii)

Limited application to part d.—
Clauses (i) and (ii) of this subparagraph shall only apply with respect to changes in enrollment in a prescription drug plan under part D in the case of an individual who, previous to such change in enrollment, is enrolled in a Medicare Advantage plan.
(iv)

Limitations on marketing.—
Pursuant to subsection (j), no unsolicited marketing or marketing materials may be sent to an individual described in clause (i) during the continuous open enrollment and disenrollment period established for the individual under such clause, notwithstanding marketing guidelines established by the Centers for Medicare & Medicaid Services.
(3)

Annual, coordinated election period.—
(A)

In general.—
Subject to paragraph (5), each individual who is eligible to make an election under this section may change such election during an annual, coordinated election period.
(B)

Annual, coordinated election period.—
For purposes of this section, the term “annual, coordinated election period” means—
(i)
with respect to a year before 2002, the month of November before such year;
(ii)
with respect to 2002, 2003, 2004, and 2005, the period beginning on November 15 and ending on December 31 of the year before such year;
(iii)
with respect to 2006, the period beginning on November 15, 2005, and ending on May 15, 2006;
(iv)
with respect to 2007, 2008, 2009, and 2010, the period beginning on November 15 and ending on December 31 of the year before such year; and
(v)
with respect to 2012 and succeeding years, the period beginning on October 15 and ending on December 7 of the year before such year.
(C)

Medicare+choice health information fairs.—
During the fall season of each year (beginning with 1999) and during the period described in subparagraph (B)(iii), in conjunction with the annual coordinated election period defined in subparagraph (B), the Secretary shall provide for a nationally coordinated educational and publicity campaign to inform Medicare+Choice eligible individuals about Medicare+Choice plans and the election process provided under this section.
(D)

Special information campaigns.—
During November 1998 the Secretary shall provide for an educational and publicity campaign to inform Medicare+Choice eligible individuals about the availability of Medicare+Choice plans, and eligible organizations with risk-sharing contracts under section 1876, offered in different areas and the election process provided under this section. During the period described in subparagraph (B)(iii), the Secretary shall provide for an educational and publicity campaign to inform MA eligible individuals about the availability of MA plans (including MA–PD plans) offered in different areas and the election process provided under this section.
(4)

Special election periods.—
Effective as of January 1, 2006, an individual may discontinue an election of a Medicare+Choice plan offered by a Medicare+Choice organization other than during an annual, coordinated election period and make a new election under this section if—
(A)
(i)
the certification of the organization or plan under this part has been terminated, or the organization or plan has notified the individual of an impending termination of such certification; or
(ii)
the organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides, or has notified the individual of an impending termination or discontinuation of such plan;
(B)
the individual is no longer eligible to elect the plan because of a change in the individual's place of residence or other change in circumstances (specified by the Secretary, but not including termination of the individual's enrollment on the basis described in clause (i) or (ii) of subsection (g)(3)(B));
(C)
the individual demonstrates (in accordance with guidelines established by the Secretary) that—
(i)
the organization offering the plan substantially violated a material provision of the organization's contract under this part in relation to the individual (including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide such covered care in accordance with applicable quality standards); or
(ii)
the organization (or an agent or other entity acting on the organization's behalf) materially misrepresented the plan's provisions in marketing the plan to the individual; or
(D)
the individual meets such other exceptional conditions as the Secretary may provide.
Effective as of January 1, 2006, an individual who, upon first becoming eligible for benefits under part A at age 65, enrolls in a Medicare+Choice plan under this part, the individual may discontinue the election of such plan, and elect coverage under the original fee-for-service plan, at any time during the 12-month period beginning on the effective date of such enrollment.
(5)

Special rules for msa plans.—
Notwithstanding the preceding provisions of this subsection, an individual—
(A)
may elect an MSA plan only during—
(i)
an initial open enrollment period described in paragraph (1), or
(ii)
an annual, coordinated election period described in paragraph (3)(B);
(B)
subject to subparagraph (C), may not discontinue an election of an MSA plan except during the periods described in clause (ii) or (iii) of subparagraph (A) and under the first sentence of paragraph (4); and
(C)
who elects an MSA plan during an annual, coordinated election period, and who never previously had elected such a plan, may revoke such election, in a manner determined by the Secretary, by not later than December 15 following the date of the election.
(6)

Open enrollment periods.—
Subject to paragraph (5), a Medicare+Choice organization—
(A)
shall accept elections or changes to elections during the initial enrollment periods described in paragraph (1), during the period described in paragraph (2)(F), during the month of November 1998 and during the annual, coordinated election period under paragraph (3) for each subsequent year, and during special election periods described in the first sentence of paragraph (4); and
(B)
may accept other changes to elections at such other times as the organization provides.
(f)

Effectiveness of Elections and Changes of Elections.—
(1)

During initial coverage election period.—
An election of coverage made during the initial coverage election period under subsection (e)(1) subsection (e)(1) shall take effect upon the date the individual becomes entitled to benefits under part A and enrolled under part B, except as the Secretary may provide (consistent with section 1838) in order to prevent retroactive coverage.
(2)

During continuous open enrollment periods.—
An election or change of coverage made under subsection (e)(2) shall take effect with the first day of the first calendar month following the date on which the election or change is made.
(3)

Annual, coordinated election period.—
An election or change of coverage made during an annual, coordinated election period (as defined in subsection (e)(3)(B), other than the period described in clause (iii) of such subsection) in a year shall take effect as of the first day of the following year.
(4)

Other periods.—
An election or change of coverage made during any other period under subsection (e)(4) shall take effect in such manner as the Secretary provides in a manner consistent (to the extent practicable) with protecting continuity of health benefit coverage.
(g)

Guaranteed Issue and Renewal.—
(1)

In general.—
Except as provided in this subsection, a Medicare+Choice organization shall provide that at any time during which elections are accepted under this section with respect to a Medicare+Choice plan offered by the organization, the organization will accept without restrictions individuals who are eligible to make such election.
(2)

Priority.—
If the Secretary determines that a Medicare+Choice organization, in relation to a Medicare+Choice plan it offers, has a capacity limit and the number of Medicare+Choice eligible individuals who elect the plan under this section exceeds the capacity limit, the organization may limit the election of individuals of the plan under this section but only if priority in election is provided—
(A)
first to such individuals as have elected the plan at the time of the determination, and
(B)
then to other such individuals in such a manner that does not discriminate, on a basis described in section 1852(b), among the individuals (who seek to elect the plan).
The preceding sentence shall not apply if it would result in the enrollment of enrollees substantially nonrepresentative, as determined in accordance with regulations of the Secretary, of the medicare population in the service area of the plan.
(3)

Limitation on termination of election.—
(A)

In general.—
Subject to subparagraph (B), a Medicare+Choice organization may not for any reason terminate the election of any individual under this section for a Medicare+Choice plan it offers.
(B)

Basis for termination of election.—
A Medicare+Choice organization may terminate an individual's election under this section with respect to a Medicare+Choice plan it offers if—
(i)
any Medicare+Choice monthly basic and supplemental beneficiary premiums required with respect to such plan are not paid on a timely basis (consistent with standards under section 1856 that provide for a grace period for late payment of such premiums),
(ii)
the individual has engaged in disruptive behavior (as specified in such standards), or
(iii)
the plan is terminated with respect to all individuals under this part in the area in which the individual resides.
(C)

Consequence of termination.—
(i)

Terminations for cause.—
Any individual whose election is terminated under clause (i) or (ii) of subparagraph (B) is deemed to have elected the original medicare fee-for-service program option described in subsection (a)(1)(A).
(ii)

Termination based on plan termination or service area reduction.—
Any individual whose election is terminated under subparagraph (B)(iii) shall have a special election period under subsection (e)(4)(A) in which to change coverage to coverage under another Medicare+Choice plan. Such an individual who fails to make an election during such period is deemed to have chosen to change coverage to the original medicare fee-for-service program option described in subsection (a)(1)(A).
(D)

Organization obligation with respect to election forms.—
Pursuant to a contract under section 1857, each Medicare+Choice organization receiving an election form under subsection (c)(2) shall transmit to the Secretary (at such time and in such manner as the Secretary may specify) a copy of such form or such other information respecting the election as the Secretary may specify.
(h)

Approval of Marketing Material and Application Forms.—
(1)

Submission.—
No marketing material or application form may be distributed by a Medicare+Choice organization to (or for the use of) Medicare+Choice eligible individuals unless—
(A)
at least 45 days (or 10 days in the case described in paragraph (5)) before the date of distribution the organization has submitted the material or form to the Secretary for review, and
(B)
the Secretary has not disapproved the distribution of such material or form.
(2)

Review.—
The standards established under section 1856 shall include guidelines for the review of any material or form submitted and under such guidelines the Secretary shall disapprove (or later require the correction of) such material or form if the material or form is materially inaccurate or misleading or otherwise makes a material misrepresentation.
(3)

Deemed approval (1-stop shopping).—
In the case of material or form that is submitted under paragraph (1)(A) to the Secretary or a regional office of the Department of Health and Human Services and the Secretary or the office has not disapproved the distribution of marketing material or form under paragraph (1)(B) with respect to a Medicare+Choice plan in an area, the Secretary is deemed not to have disapproved such distribution in all other areas covered by the plan and organization except with regard to that portion of such material or form that is specific only to an area involved.
(4)

Prohibition of certain marketing practices.—
Each Medicare+Choice organization shall conform to fair marketing standards, in relation to Medicare+Choice plans offered under this part, included in the standards established under section 1856. Such standards—
(A)
shall not permit a Medicare+Choice organization to provide for, subject to subsection (j)(2)(C), cash, gifts, prizes, or other monetary rebates as an inducement for enrollment or otherwise;
(B)
may include a prohibition against a Medicare+Choice organization (or agent of such an organization) completing any portion of any election form used to carry out elections under this section on behalf of any individual;
(C)
shall not permit a Medicare Advantage organization (or the agents, brokers, and other third parties representing such organization) to conduct the prohibited activities described in subsection (j)(1); and
(D)
shall only permit a Medicare Advantage organization (and the agents, brokers, and other third parties representing such organization) to conduct the activities described in subsection (j)(2) in accordance with the limitations established under such subsection.
(5)

Special treatment of marketing material following model marketing language.—
In the case of marketing material of an organization that uses, without modification, proposed model language specified by the Secretary, the period specified in paragraph (1)(A) shall be reduced from 45 days to 10 days.
(6)

Required inclusion of plan type in plan name.—
For plan years beginning on or after January 1, 2010, a Medicare Advantage organization must ensure that the name of each Medicare Advantage plan offered by the Medicare Advantage organization includes the plan type of the plan (using standard terminology developed by the Secretary).
(7)

Strengthening the ability of states to act in collaboration with the secretary to address fraudulent or inappropriate marketing practices.—
(A)

Appointment of agents and brokers.—
Each Medicare Advantage organization shall—
(i)
only use agents and brokers who have been licensed under State law to sell Medicare Advantage plans offered by the Medicare Advantage organization;
(ii)
in the case where a State has a State appointment law, abide by such law; and
(iii)
report to the applicable State the termination of any such agent or broker, including the reasons for such termination (as required under applicable State law).
(B)

Compliance with state information requests.—
Each Medicare Advantage organization shall comply in a timely manner with any request by a State for information regarding the performance of a licensed agent, broker, or other third party representing the Medicare Advantage organization as part of an investigation by the State into the conduct of the agent, broker, or other third party.
(i)

Effect of Election of Medicare+Choice Plan Option.—
(1)

Payments to organizations.—
Subject to sections 1852(a)(5), 1853(a)(4), 1853(g), 1853(h), 1886(d)(11), 1886(h)(3)(D), and 1853(m), payments under a contract with a Medicare+Choice organization under section 1853(a) with respect to an individual electing a Medicare+Choice plan offered by the organization shall be instead of the amounts which (in the absence of the contract) would otherwise be payable under parts A and B for items and services furnished to the individual.
(2)

Only organization entitled to payment.—
Subject to sections 1853(a)(4), 1853(e), 1853(g), 1853(h), 1857(f)(2), 1858(h), 1886(d)(11), and 1886(h)(3)(D), only the Medicare+Choice organization shall be entitled to receive payments from the Secretary under this title for services furnished to the individual.
(3)

FFS payment for expenses for kidney acquisitions.—
Paragraphs (1) and (2) shall not apply with respect to expenses for organ acquisitions for kidney transplants described in section 1852(a)(1)(B)(i).
(j)

Prohibited Activities Described and Limitations on the Conduct of Certain Other Activities.—
(1)

Prohibited activities described.—
The following prohibited activities are described in this paragraph:
(A)

Unsolicited means of direct contact.—
Any unsolicited means of direct contact of prospective enrollees, including soliciting door-to-door or any outbound telemarketing without the prospective enrollee initiating contact.
(B)

Cross-selling.—
The sale of other non-health related products (such as annuities and life insurance) during any sales or marketing activity or presentation conducted with respect to a Medicare Advantage plan.
(C)

Meals.—
The provision of meals of any sort, regardless of value, to prospective enrollees at promotional and sales activities.
(D)

Sales and marketing in health care settings and at educational events.—
Sales and marketing activities for the enrollment of individuals in Medicare Advantage plans that are conducted—
(i)
in health care settings in areas where health care is delivered to individuals (such as physician offices and pharmacies), except in the case where such activities are conducted in common areas in health care settings; and
(ii)
at educational events.
(2)

Limitations.—
The Secretary shall establish limitations with respect to at least the following:
(A)

Scope of marketing appointments.—
The scope of any appointment with respect to the marketing of a Medicare Advantage plan. Such limitation shall require advance agreement with a prospective enrollee on the scope of the marketing appointment and documentation of such agreement by the Medicare Advantage organization. In the case where the marketing appointment is in person, such documentation shall be in writing.
(B)

Co-branding.—
The use of the name or logo of a co-branded network provider on Medicare Advantage plan membership and marketing materials.
(C)

Limitation of gifts to nominal dollar value.—
The offering of gifts and other promotional items other than those that are of nominal value (as determined by the Secretary) to prospective enrollees at promotional activities.
(D)

Compensation.—
The use of compensation other than as provided under guidelines established by the Secretary. Such guidelines shall ensure that the use of compensation creates incentives for agents and brokers to enroll individuals in the Medicare Advantage plan that is intended to best meet their health care needs.
(E)

Required training, annual retraining, and testing of agents, brokers, and other third parties.—
The use by a Medicare Advantage organization of any individual as an agent, broker, or other third party representing the organization that has not completed an initial training and testing program and does not complete an annual retraining and testing program.

benefits and beneficiary protections
Sec. 1852.
[42 U.S.C. 1395w–22]
(a)

Basic Benefits.—
(1)

Requirement.—
(A)

In general.—
Except as provided in section 1859(b)(3) for MSA plans and except as provided in paragraph (6) for MA regional plans, each Medicare+Choice plan shall provide to members enrolled under this part, through providers and other persons that meet the applicable requirements of this title and part A of title XI, benefits under the original medicare fee-for-service program option (and, for plan years before 2006, additional benefits required under section 1854(f)(1)(A)).
(B)

Benefits under the original medicare fee-for-service program option defined.—
(i)

In general.—
For purposes of this part, the term “benefits under the original medicare fee-for-service program option” means, subject to subsection (m), those items and services (other than hospice care or coverage for organ acquisitions for kidney transplants, including as covered under section 1881(d)) for which benefits are available under parts A and B to individuals entitled to benefits under part A and enrolled under part B, with cost-sharing for those services as required under parts A and B or, subject to clause (iii), an actuarially equivalent level of cost-sharing as determined in this part.
(ii)

Special rule for regional plans.—
In the case of an MA regional plan in determining an actuarially equivalent level of cost-sharing with respect to benefits under the original medicare fee-for-service program option, there shall only be taken into account, with respect to the application of section 1858(b)(2), such expenses only with respect to subparagraph (A) of such section.
(iii)

Limitation on variation of cost sharing for certain benefits.—
Subject to clause (v), cost-sharing for services described in clause (iv) shall not exceed the cost-sharing required for those services under parts A and B.
(iv)

Services described.—
The following services are described in this clause:
(I)
Chemotherapy administration services.
(II)
Renal dialysis services (as defined in section 1881(b)(14)(B)).
(III)
Skilled nursing care.
(IV)
Clinical diagnostic laboratory test administered during any portion of the emergency period defined in paragraph (1)(B) of section 1135(g) beginning on or after the date of the enactment of the Families First Coronavirus Response Act for the detection of SARS–CoV–2 or the diagnosis of the virus that causes COVID–19 and the administration of such test.
(V)
Specified COVID–19 testing-related services (as described in section 1833(cc)(1)) for which payment would be payable under a specified outpatient payment provision described in section 1833(cc)(2).
(VI)
A COVID–19 vaccine and its administration described in section 1861(s)(10)(A).
(VII)
A drug or biological product that is a selected drug (as referred to in section 1192(c)).
(VIII)
Such other services that the Secretary determines appropriate (including services that the Secretary determines require a high level of predictability and transparency for beneficiaries).
(v)

Exception.—
In the case of services described in clause (iv), other than subclauses (IV), (V), and (VI) of such clause, for which there is no cost-sharing required under parts A and B, cost-sharing may be required for those services in accordance with clause (i).
(vi)

Prohibition of application of certain requirements for covid–19 testing.—
In the case of a product or service described in subclause (IV) or (V), respectively, of clause (iv) that is administered or furnished during any portion of the emergency period described in such subclause beginning on or after the date of the enactment of this clause, an MA plan may not impose any prior authorization or other utilization management requirements with respect to the coverage of such a product or service under such plan.
(2)

Satisfaction of requirement.—
(A)

In general.—
A Medicare+Choice plan (other than an MSA plan) offered by a Medicare+Choice organization satisfies paragraph (1)(A), with respect to benefits for items and services furnished other than through a provider or other person that has a contract with the organization offering the plan, if the plan provides payment in an amount so that—
(i)
the sum of such payment amount and any cost sharing provided for under the plan, is equal to at least
(ii)
the total dollar amount of payment for such items and services as would otherwise be authorized under parts A and B (including any balance billing permitted under such parts).
(B)

Reference to related provisions.—
For provision relating to—
(i)
limitations on balance billing against Medicare+Choice organizations for non-contract providers, see sections 1852(k) and 1866(a)(1)(O), and
(ii)
limiting actuarial value of enrollee liability for covered benefits, see section 1854(e).
(C)

Election of uniform coverage determination.—
In the case of a Medicare+Choice organization that offers a Medicare+Choice plan in an area in which more than one local coverage determination is applied with respect to different parts of the area, the organization may elect to have the local coverage determination for the part of the area that is most beneficial to Medicare+Choice enrollees (as identified by the Secretary) apply with respect to all Medicare+Choice enrollees enrolled in the plan.
(3)

Supplemental benefits.—
(A)

Benefits included subject to secretary's approval.—
Subject to subparagraph (D), each Medicare+Choice organization may provide to individuals enrolled under this part, other than under an MSA plan (without affording those individuals an option to decline the coverage), supplemental health care benefits that the Secretary may approve. The Secretary shall approve any such supplemental benefits unless the Secretary determines that including such supplemental benefits would substantially discourage enrollment by Medicare+Choice eligible individuals with the organization.
(B)

At enrollees' option.—
(i)

In general.—
Subject to clause (ii), a Medicare+Choice organization may provide to individuals enrolled under this part supplemental health care benefits that the individuals may elect, at their option, to have covered.
(ii)

Special rule for msa plans.—
A Medicare+Choice organization may not provide, under an MSA plan, supplemental health care benefits that cover the deductible described in section 1859(b)(2)(B). In applying the previous sentence, health benefits described in section 1882(u)(2)(B) shall not be treated as covering such deductible.
(C)

Application to Medicare+Choice private fee-for-service plans.—
Nothing in this paragraph shall be construed as preventing a Medicare+Choice private fee-for-service plan from offering supplemental benefits that include payment for some or all of the balance billing amounts permitted consistent with section 1852(k) and coverage of additional services that the plan finds to be medically necessary. Such benefits may include reductions in cost-sharing below the actuarial value specified in section 1854(e)(4)(B).54
^{54}
The last sentence in paragraph (3)(C) was added by section 222(a)(3) of Public Law 108-173. The amendment was executed to reflect probable intent of the amendment instruction to add the sentence at the end of the last subparagraph of paragraph (3), at the time of the amendment, rather than as flush matter at the end of paragraph (3) following subparagraph (C).
(D)

Expanding supplemental benefits to meet the needs of chronically ill enrollees.—
(i)

In general.—
For plan year 2020 and subsequent plan years, in addition to any supplemental health care benefits otherwise provided under this paragraph, an MA plan, including a specialized MA plan for special needs individuals (as defined in section 1859(b)(6)), may provide supplemental benefits described in clause (ii) to a chronically ill enrollee (as defined in clause (iii)).
(ii)

Supplemental benefits described.—
(I)

In general.—
Supplemental benefits described in this clause are supplemental benefits that, with respect to a chronically ill enrollee, have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee and may not be limited to being primarily health related benefits.
(II)

Authority to waive uniformity requirements.—
The Secretary may, only with respect to supplemental benefits provided to a chronically ill enrollee under this subparagraph, waive the uniformity requirements under this part, as determined appropriate by the Secretary.
(iii)

Chronically ill enrollee defined.—
In this subparagraph, the term “chronically ill enrollee” means an enrollee in an MA plan that the Secretary determines—
(I)
has one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits the overall health or function of the enrollee;
(II)
has a high risk of hospitalization or other adverse health outcomes; and
(III)
requires intensive care coordination.
(4)

Organization as secondary payer.—
Notwithstanding any other provision of law, a Medicare+Choice organization may (in the case of the provision of items and services to an individual under a Medicare+Choice plan under circumstances in which payment under this title is made secondary pursuant to section 1862(b)(2)) charge or authorize the provider of such services to charge, in accordance with the charges allowed under a law, plan, or policy described in such section—
(A)
the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or
(B)
such individual to the extent that the individual has been paid under such law, plan, or policy for such services.
(5)

National coverage determinations and legislative changes in benefits.—
If there is a national coverage determination or legislative change in benefits required to be provided under this part made in the period beginning on the date of an announcement under section 1853(b) and ending on the date of the next announcement under such section and the Secretary projects that the determination will result in a significant change in the costs to a Medicare+Choice organization of providing the benefits that are the subject of such national coverage determination and that such change in costs was not incorporated in the determination of the annual Medicare+Choice capitation rate under section 1853 included in the announcement made at the beginning of such period, then, unless otherwise required by law—
(A)
such determination or legislative change in benefits shall not apply to contracts under this part until the first contract year that begins after the end of such period, and
(B)
if such coverage determination or legislative change provides for coverage of additional benefits or coverage under additional circumstances, section 1851(i)(1) shall not apply to payment for such additional benefits or benefits provided under such additional circumstances until the first contract year that begins after the end of such period.
The projection under the previous sentence shall be based on an analysis by the Chief Actuary of the Centers for Medicare & Medicaid Services of the actuarial costs associated with the coverage determination or legislative change in benefits.
(6)

Special benefit rules for regional plans.—
In the case of an MA plan that is an MA regional plan, benefits under the plan shall include the benefits described in paragraphs (1) and (2) of section 1858(b).
(7)

Limitation on cost-sharing for dual eligibles and qualified medicare beneficiaries.—
In the case of an individual who is a full-benefit dual eligible individual (as defined in section 1935(c)(6)) or a qualified medicare beneficiary (as defined in section 1905(p)(1)) and who is enrolled in a specialized Medicare Advantage plan for special needs individuals described in section 1859(b)(6)(B)(ii), the plan may not impose cost-sharing that exceeds the amount of cost-sharing that would be permitted with respect to the individual under title XIX if the individual were not enrolled in such plan.
(b)

Antidiscrimination.—
(1)

Beneficiaries.—
A Medicare Advantage organization may not deny, limit, or condition the coverage or provision of benefits under this part, for individuals permitted to be enrolled with the organization under this part, based on any health status-related factor described in section 2702(a)(1) of the Public Health Service Act. The Secretary shall not approve a plan of an organization if the Secretary determines that the design of the plan and its benefits are likely to substantially discourage enrollment by certain MA eligible individuals with the organization.
(2)

Providers.—
A Medicare+Choice organization shall not discriminate with respect to participation, reimbursement, or indemnification as to any provider who is acting within the scope of the provider's license or certification under applicable State law, solely on the basis of such license or certification. This paragraph shall not be construed to prohibit a plan from including providers only to the extent necessary to meet the needs of the plan's enrollees or from establishing any measure designed to maintain quality and control costs consistent with the responsibilities of the plan.
(c)

Disclosure Requirements.—
(1)

Detailed description of plan provisions.—
A Medicare+Choice organization shall disclose, in clear, accurate, and standardized form to each enrollee with a Medicare+Choice plan offered by the organization under this part at the time of enrollment and at least annually thereafter, the following information regarding such plan:
(A)

Service area.—
The plan's service area.
(B)

Benefits.—
Benefits offered under the plan, including information described in section 1851(d)(3)(A) and exclusions from coverage and, if it is an MSA plan, a comparison of benefits under such a plan with benefits under other Medicare+Choice plans.
(C)

Access.—
The number, mix, and distribution of plan providers, out-of-network coverage (if any) provided by the plan, and any point-of-service option (including the supplemental premium for such option).
(D)

Out-of-area coverage.—
Out-of-area coverage provided by the plan.
(E)

Emergency coverage.—
Coverage of emergency services, including—
(i)
the appropriate use of emergency services, including use of the 911 telephone system or its local equivalent in emergency situations and an explanation of what constitutes an emergency situation;
(ii)
the process and procedures of the plan for obtaining emergency services; and
(iii)
the locations of (I) emergency departments, and (II) other settings, in which plan physicians and hospitals provide emergency services and post-stabilization care.
(F)

Supplemental benefits.—
Supplemental benefits available from the organization offering the plan, including—
(i)
whether the supplemental benefits are optional,
(ii)
the supplemental benefits covered, and
(iii)
the Medicare+Choice monthly supplemental beneficiary premium for the supplemental benefits.
(G)

Prior authorization rules.—
Rules regarding prior authorization or other review requirements that could result in nonpayment.
(H)

Plan grievance and appeals procedures.—
All plan appeal or grievance rights and procedures.
(I)

Quality improvement program.—
A description of the organization's quality improvement program under subsection (e).
(2)

Disclosure upon request.—
Upon request of a Medicare+Choice eligible individual, a Medicare+Choice organization must provide the following information to such individual:
(A)
The general coverage information and general comparative plan information made available under clauses (i) and (ii) of section 1851(d)(2)(A).
(B)
Information on procedures used by the organization to control utilization of services and expenditures.
(C)
Information on the number of grievances, redeterminations, and appeals and on the disposition in the aggregate of such matters.
(D)
An overall summary description as to the method of compensation of participating physicians.
(d)

Access to Services.—
(1)

In general.—
A Medicare+Choice organization offering a Medicare+Choice plan may select the providers from whom the benefits under the plan are provided so long as—
(A)
the organization makes such benefits available and accessible to each individual electing the plan within the plan service area with reasonable promptness and in a manner which assures continuity in the provision of benefits;
(B)
when medically necessary the organization makes such benefits available and accessible 24 hours a day and 7 days a week;
(C)
the plan provides for reimbursement with respect to services which are covered under subparagraphs (A) and (B) and which are provided to such an individual other than through the organization, if—
(i)
the services were not emergency services (as defined in paragraph (3)), but (I) the services were medically necessary and immediately required because of an unforeseen illness, injury, or condition, and (II) it was not reasonable given the circumstances to obtain the services through the organization,
(ii)
the services were renal dialysis services and were provided other than through the organization because the individual was temporarily out of the plan's service area, or
(iii)
the services are maintenance care or post-stabilization care covered under the guidelines established under paragraph (2);
(D)
the organization provides access to appropriate providers, including credentialed specialists, for medically necessary treatment and services; and
(E)
coverage is provided for emergency services (as defined in paragraph (3)) without regard to prior authorization or the emergency care provider's contractual relationship with the organization.
(2)

Guidelines respecting coordination of post-stabilization care.—
A Medicare+Choice plan shall comply with such guidelines as the Secretary may prescribe relating to promoting efficient and timely coordination of appropriate maintenance and post-stabilization care of an enrollee after the enrollee has been determined to be stable under section 1867.
(3)

Definition of emergency services.—
In this subsection—
(A)

In general.—
The term “emergency services” means, with respect to an individual enrolled with an organization, covered inpatient and outpatient services that—
(i)
are furnished by a provider that is qualified to furnish such services under this title, and
(ii)
are needed to evaluate or stabilize an emergency medical condition (as defined in subparagraph (B)).
(B)

Emergency medical condition based on prudent layperson.—
The term “emergency medical condition” means a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in—
(i)
placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy,
(ii)
serious impairment to bodily functions, or
(iii)
serious dysfunction of any bodily organ or part.
(4)

Assuring access to services in medicare+choice private fee-for-service plans.—
In addition to any other requirements under this part, in the case of a Medicare+Choice private fee-for-service plan, the organization offering the plan must demonstrate to the Secretary that the organization has sufficient number and range of health care professionals and providers willing to provide services under the terms of the plan. Subject to paragraphs (5) and (6), the Secretary shall find that an organization has met such requirement with respect to any category of health care professional or provider if, with respect to that category of provider—
(A)
the plan has established payment rates for covered services furnished by that category of provider that are not less than the payment rates provided for under part A, part B, or both, for such services, or
(B)
the plan has contracts or agreements (other than deemed contracts or agreements under subsection (j)(6)) with a sufficient number and range of providers within such category to meet the access standards in subparagraphs (A) through (E) of paragraph (1),
or a combination of both. The previous sentence shall not be construed as restricting the persons from whom enrollees under such a plan may obtain covered benefits, except that, if a plan entirely meets such requirement with respect to a category of health care professional or provider on the basis of subparagraph (B), it may provide for a higher beneficiary copayment in the case of health care professionals and providers of that category who do not have contracts or agreements (other than deemed contracts or agreements under subsection (j)(6)) to provide covered services under the terms of the plan.
(5)

Requirement of certain nonemployer medicare advantage private fee-for-service plans to use contracts with providers.—
(A)

In general.—
For plan year 2011 and subsequent plan years, in the case of a Medicare Advantage private fee-for-service plan not described in paragraph (1) or (2) of section 1857(i) operating in a network area (as defined in subparagraph (B)), the plan shall meet the access standards under paragraph (4) in that area only through entering into written contracts as provided for under subparagraph (B) of such paragraph and not, in whole or in part, through the establishment of payment rates meeting the requirements under subparagraph (A) of such paragraph.
(B)

Network area defined.—
For purposes of subparagraph (A), the term “network area” means, for a plan year, an area which the Secretary identifies (in the Secretary's announcement of the proposed payment rates for the previous plan year under section 1853(b)(1)(B)) as having at least 2 network-based plans (as defined in subparagraph (C)) with enrollment under this part as of the first day of the year in which such announcement is made.
(C)

Network-based plan defined.—
(i)

In general.—
For purposes of subparagraph (B), the term “network-based plan” means—
(I)
except as provided in clause (ii), a Medicare Advantage plan that is a coordinated care plan described in section 1851(a)(2)(A)(i);
(II)
a network-based MSA plan; and
(III)
a reasonable cost reimbursement plan under section 1876.
(ii)

Exclusion of non-network regional ppos.—
The term “network-based plan” shall not include an MA regional plan that, with respect to the area, meets access adequacy standards under this part substantially through the authority of section 422.112(a)(1)(ii) of title 42, Code of Federal Regulations, rather than through written contracts.
(6)

Requirement of all employer medicare advantage private fee-for-service plans to use contracts with providers.—
For plan year 2011 and subsequent plan years, in the case of a Medicare Advantage private fee-for-service plan that is described in paragraph (1) or (2) of section 1857(i), the plan shall meet the access standards under paragraph (4) only through entering into written contracts as provided for under subparagraph (B) of such paragraph and not, in whole or in part, through the establishment of payment rates meeting the requirements under subparagraph (A) of such paragraph.
(e)

Quality Improvement Program.—
(1)

In general.—
Each MA organization shall have an ongoing quality improvement program for the purpose of improving the quality of care provided to enrollees in each MA plan offered by such organization.
(2)

Chronic care improvement programs.—
As part of the quality improvement program under paragraph (1), each MA organization shall have a chronic care improvement program. Each chronic care improvement program shall have a method for monitoring and identifying enrollees with multiple or sufficiently severe chronic conditions that meet criteria established by the organization for participation under the program.
(3)

Data.—
(A)

Collection, analysis, and reporting.—
(i)

In general.—
Except as provided in clauses (ii) and (iii) with respect to plans described in such clauses and subject to subparagraph (B), as part of the quality improvement program under paragraph (1), each MA organization shall provide for the collection, analysis, and reporting of data that permits the measurement of health outcomes and other indices of quality. With respect to MA private fee-for-service plans and MSA plans, the requirements under the preceding sentence may not exceed the requirements under this subparagraph with respect to MA local plans that are preferred provider organization plans, except that, for plan year 2010, the limitation under clause (iii) shall not apply and such requirements shall apply only with respect to administrative claims data.
(ii)

Special requirements for specialized ma plans for special needs individuals.—
In addition to the data required to be collected, analyzed, and reported under clause (i) and notwithstanding the limitations under subparagraph (B), as part of the quality improvement program under paragraph (1), each MA organization offering a specialized Medicare Advantage plan for special needs individuals shall provide for the collection, analysis, and reporting of data that permits the measurement of health outcomes and other indices of quality with respect to the requirements described in paragraphs (2) through (5) of subsection (f). Such data may be based on claims data and shall be at the plan level.
(iii)

Application to local preferred provider organizations and MA regional plans.—
Clause (i) shall apply to MA organizations with respect to MA local plans that are preferred provider organization plans and to MA regional plans only insofar as services are furnished by providers or services, physicians, and other health care practitioners and suppliers that have contracts with such organization to furnish services under such plans.
(iv)

Definition of preferred provider organization plan.—
In this subparagraph, the term “preferred provider organization plan” means an MA plan that—
(I)
has a network of providers that have agreed to a contractually specified reimbursement for covered benefits with the organization offering the plan;
(II)
provides for reimbursement for all covered benefits regardless of whether such benefits are provided within such network of providers; and
(III)
is offered by an organization that is not licensed or organized under State law as a health maintenance organization.
(B)

Limitations.—
(i)

Types of data.—
The Secretary shall not collect under subparagraph (A) data on quality, outcomes, and beneficiary satisfaction to facilitate consumer choice and program administration other than the types of data that were collected by the Secretary as of November 1, 2003.
(ii)

Changes in types of data.—
Subject to subclause (iii), the Secretary may only change the types of data that are required to be submitted under subparagraph (A) after submitting to Congress a report on the reasons for such changes that was prepared in consultation with MA organizations and private accrediting bodies.
(iii)

Construction.—
Nothing in the subsection shall be construed as restricting the ability of the Secretary to carry out the duties under section 1851(d)(4)(D).
(4)

Treatment of accreditation.—
(A)

In general.—
The Secretary shall provide that a Medicare+Choice organization is deemed to meet all the requirements described in any specific clause of subparagraph (B) if the organization is accredited (and periodically reaccredited) by a private accrediting organization under a process that the Secretary has determined assures that the accrediting organization applies and enforces standards that meet or exceed the standards established under section 1856 to carry out the requirements in such clause.
(B)

Requirements described.—
The provisions described in this subparagraph are the following:
(i)
Paragraphs (1) through (3) of this subsection (relating to quality improvement programs).
(ii)
Subsection (b) (relating to antidiscrimination).
(iii)
Subsection (d) (relating to access to services).
(iv)
Subsection (h) (relating to confidentiality and accuracy of enrollee records).
(v)
Subsection (i) (relating to information on advance directives).
(vi)
Subsection (j) (relating to provider participation rules).
(vii)
The requirements described in section 1860D–4(j), to the extent such requirements apply under section 1860D–21(c).
(C)

Timely action on applications.—
The Secretary shall determine, within 210 days after the date the Secretary receives an application by a private accrediting organization and using the criteria specified in section 1865(a)(2), whether the process of the private accrediting organization meets the requirements with respect to any specific clause in subparagraph (B) with respect to which the application is made. The Secretary may not deny such an application on the basis that it seeks to meet the requirements with respect to only one, or more than one, such specific clause.
(D)

Construction.—
Nothing in this paragraph shall be construed as limiting the authority of the Secretary under section 1857, including the authority to terminate contracts with Medicare+Choice organizations under subsection (c)(2) of such section.
(f)

Grievance Mechanism.—
Each Medicare+Choice organization 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 enrollees with Medicare+Choice plans of the organization under this part.
(g)

Coverage Determinations, Reconsiderations, and Appeals.—
(1)

Determinations by organization.—
(A)

In general.—
A Medicare+Choice organization shall have a procedure for making determinations regarding whether an individual enrolled with the plan of the organization under this part is entitled to receive a health service under this section and the amount (if any) that the individual is required to pay with respect to such service. Subject to paragraph (3), such procedures shall provide for such determination to be made on a timely basis.
(B)

Explanation of determination.—
Such a determination that denies coverage, in whole or in part, shall be in writing and shall include a statement in understandable language of the reasons for the denial and a description of the reconsideration and appeals processes.
(2)

Reconsiderations.—
(A)

In general.—
The organization shall provide for reconsideration of a determination described in paragraph (1)(B) upon request by the enrollee involved. The reconsideration shall be within a time period specified by the Secretary, but shall be made, subject to paragraph (3), not later than 60 days after the date of the receipt of the request for reconsideration.
(B)

Physician decision on certain reconsiderations.—
A reconsideration relating to a determination to deny coverage based on a lack of medical necessity shall be made only by a physician with appropriate expertise in the field of medicine which necessitates treatment who is other than a physician involved in the initial determination.
(3)

Expedited determinations and reconsiderations.—
(A)

Receipt of requests.—
(i)

Enrollee requests.—
An enrollee in a Medicare+Choice plan may request, either in writing or orally, an expedited determination under paragraph (1) or an expedited reconsideration under paragraph (2) by the Medicare+Choice organization.
(ii)

Physician requests.—
A physician, regardless whether the physician is affiliated with the organization or not, may request, either in writing or orally, such an expedited determination or reconsideration.
(B)

Organization procedures.—
(i)

In general.—
The Medicare+Choice organization shall maintain procedures for expediting organization determinations and reconsiderations when, upon request of an enrollee, the organization determines that the application of the normal time frame for making a determination (or a reconsideration involving a determination) could seriously jeopardize the life or health of the enrollee or the enrollee's ability to regain maximum function.
(ii)

Expedition required for physician requests.—
In the case of a request for an expedited determination or reconsideration made under subparagraph (A)(ii), the organization shall expedite the determination or reconsideration if the request indicates that the application of the normal time frame for making a determination (or a reconsideration involving a determination) could seriously jeopardize the life or health of the enrollee or the enrollee's ability to regain maximum function.
(iii)

Timely response.—
In cases described in clauses (i) and (ii), the organization shall notify the enrollee (and the physician involved, as appropriate) of the determination or reconsideration under time limitations established by the Secretary, but not later than 72 hours of the time of receipt of the request for the determination or reconsideration (or receipt of the information necessary to make the determination or reconsideration), or such longer period as the Secretary may permit in specified cases.
(4)

Independent review of certain coverage denials.—
The Secretary shall contract with an independent, outside entity to review and resolve in a timely manner reconsiderations that affirm denial of coverage, in whole or in part. The provisions of section 1869(c)(5) shall apply to independent outside entities under contract with the Secretary under this paragraph.
(5)

Appeals.—
An enrollee with a Medicare+Choice plan of a Medicare+Choice organization under this part who is dissatisfied by reason of the enrollee's failure to receive any health service to which the enrollee believes the enrollee is entitled and at no greater charge than the enrollee believes the enrollee is required to pay 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 organization a party. If the amount in controversy is $1,000 or more, the individual or 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 organization shall be entitled to be parties to that judicial review. In applying subsections (b) and (g) of section 205 as provided in this paragraph, 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. The provisions of section 1869(b)(1)(E)(iii) shall apply with respect to dollar amounts specified in the first 2 sentences of this paragraph in the same manner as they apply to the dollar amounts specified in section 1869(b)(1)(E)(i).
(h)

Confidentiality and Accuracy of Enrollee Records.—
Insofar as a Medicare+Choice organization maintains medical records or other health information regarding enrollees under this part, the Medicare+Choice organization shall establish procedures—
(1)
to safeguard the privacy of any individually identifiable enrollee information;
(2)
to maintain such records and information in a manner that is accurate and timely; and
(3)
to assure timely access of enrollees to such records and information.
(i)

Information on Advance Directives.—
Each Medicare+Choice organization shall meet the requirement of section 1866(f) (relating to maintaining written policies and procedures respecting advance directives).
(j)

Rules Regarding Provider Participation.—
(1)

Procedures.—
Insofar as a Medicare+Choice organization offers benefits under a Medicare+Choice plan through agreements with physicians, the organization shall establish reasonable procedures relating to the participation (under an agreement between a physician and the organization) of physicians under such a plan. Such procedures shall include—
(A)
providing notice of the rules regarding participation,
(B)
providing written notice of participation decisions that are adverse to physicians, and
(C)
providing a process within the organization for appealing such adverse decisions, including the presentation of information and views of the physician regarding such decision.
(2)

Consultation in medical policies.—
A Medicare+Choice organization shall consult with physicians who have entered into participation agreements with the organization regarding the organization's medical policy, quality, and medical management procedures.
(3)

Prohibiting interference with provider advice to enrollees.—
(A)

In general.—
Subject to subparagraphs (B) and (C), a Medicare+Choice organization (in relation to an individual enrolled under a Medicare+Choice plan offered by the organization under this part) shall not prohibit or otherwise restrict a covered health care professional (as defined in subparagraph (D)) from advising such an individual who is a patient of the professional about the health status of the individual or medical care or treatment for the individual's condition or disease, regardless of whether benefits for such care or treatment are provided under the plan, if the professional is acting within the lawful scope of practice.
(B)

Conscience protection.—
Subparagraph (A) shall not be construed as requiring a Medicare+Choice plan to provide, reimburse for, or provide coverage of a counseling or referral service if the Medicare+Choice organization offering the plan—
(i)
objects to the provision of such service on moral or religious grounds; and
(ii)
in the manner and through the written instrumentalities such Medicare+Choice organization deems appropriate, makes available information on its policies regarding such service to prospective enrollees before or during enrollment and to enrollees within 90 days after the date that the organization or plan adopts a change in policy regarding such a counseling or referral service.
(C)

Construction.—
Nothing in subparagraph (B) shall be construed to affect disclosure requirements under State law or under the Employee Retirement Income Security Act of 1974.
(D)

Health care professional defined.—
For purposes of this paragraph, the term “health care professional” means a physician (as defined in section 1861(r)) or other health care professional if coverage for the professional's services is provided under the Medicare+Choice plan for the services of the professional. Such term includes a podiatrist, optometrist, chiropractor, psychologist, dentist, physician assistant, physical or occupational therapist and therapy assistant, speech-language pathologist, audiologist, registered or licensed practical nurse (including nurse practitioner, clinical nurse specialist, certified registered nurse anesthetist, and certified nurse-midwife), licensed certified social worker, registered respiratory therapist, and certified respiratory therapy technician.
(4)

Limitations on physician incentive plans.—
(A)

In general.—
No Medicare+Choice organization may operate any physician incentive plan (as defined in subparagraph (B)) unless the organization provides assurances satisfactory to the Secretary that the following requirements are met:
(i)
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.
(ii)
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 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 group.
(B)

Physician incentive plan defined.—
In this paragraph, the term “physician incentive plan” means any compensation arrangement between a Medicare+Choice 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 under this part.
(5)

Limitation on provider indemnification.—
A Medicare+Choice organization may not provide (directly or indirectly) for a health care professional, provider of services, or other entity providing health care services (or group of such professionals, providers, or entities) to indemnify the organization against any liability resulting from a civil action brought for any damage caused to an enrollee with a Medicare+Choice plan of the organization under this part by the organization's denial of medically necessary care.
(6)

Special rules for medicare+choice private fee-for-service plans.—
For purposes of applying this part (including subsection (k)(1)) and section 1866(a)(1)(O), a hospital (or other provider of services), a physician or other health care professional, or other entity furnishing health care services is treated as having an agreement or contract in effect with a Medicare+Choice organization (with respect to an individual enrolled in a Medicare+Choice private fee-for-service plan it offers), if—
(A)
the provider, professional, or other entity furnishes services that are covered under the plan to such an enrollee; and
(B)
before providing such services, the provider, professional, or other entity —
(i)
has been informed of the individual's enrollment under the plan, and
(ii)
either—
(I)
has been informed of the terms and conditions of payment for such services under the plan, or
(II)
is given a reasonable opportunity to obtain information concerning such terms and conditions,
in a manner reasonably designed to effect informed agreement by a provider.
The previous sentence shall only apply in the absence of an explicit agreement between such a provider, professional, or other entity and the Medicare+Choice organization.
(7)

Promotion of E-Prescribing by MA Plans.—
(A)

In general.—
An MA–PD plan may provide for a separate payment or otherwise provide for a differential payment for a participating physician that prescribes covered part D drugs in accordance with an electronic prescription drug program that meets standards established under section 1860D–4(e).
(B)

Considerations.—
Such payment may take into consideration the costs of the physician in implementing such a program and may also be increased for those participating physicians who significantly increase—
(i)
formulary compliance;
(ii)
lower cost, therapeutically equivalent alternatives;
(iii)
reductions in adverse drug interactions; and
(iv)
efficiencies in filing prescriptions through reduced administrative costs.
(C)

Structure.—
Additional or increased payments under this subsection may be structured in the same manner as medication therapy management fees are structured under section 1860D–4(c)(2)(E).
(k)

Treatment of Services Furnished by Certain Providers.—
(1)

In general.—
Except as provided in paragraph (2), 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 a Medicare+Choice organization described in section 1851(a)(2)(A) or with an organization offering an MSA plan shall accept as payment in full for covered services under this title that are furnished to such an individual the amounts that the physician or other entity could collect if the individual were not so enrolled. Any penalty or other provision of law that applies to such a payment with respect to an individual entitled to benefits under this title (but not enrolled with a Medicare+Choice organization under this part) also applies with respect to an individual so enrolled.
(2)

Application to medicare+choice private fee-for-service plans.—
(A)

Balance billing limits under medicare+choice private fee-for-service plans in case of contract providers.—
(i)

In general.—
In the case of an individual enrolled in a Medicare+Choice private fee-for-service plan under this part, a physician, provider of services, or other entity that has a contract (including through the operation of subsection (j)(6)) establishing a payment rate for services furnished to the enrollee shall accept as payment in full for covered services under this title that are furnished to such an individual an amount not to exceed (including any deductibles, coinsurance, copayments, or balance billing otherwise permitted under the plan) an amount equal to 115 percent of such payment rate.
(ii)

Procedures to enforce limits.—
The Medicare+Choice organization that offers such a plan shall establish procedures, similar to the procedures described in section 1848(g)(1)(A), in order to carry out the previous sentence.
(iii)

Assuring enforcement.—
If the Medicare+Choice organization fails to establish and enforce procedures required under clause (ii), the organization is subject to intermediate sanctions under section 1857(g).
(B)

Enrollee liability for noncontract providers.—
For provision—
(i)
establishing minimum payment rate in the case of noncontract providers under a Medicare+Choice private fee-for-service plan, see section 1852(a)(2); or
(ii)
limiting enrollee liability in the case of covered services furnished by such providers, see paragraph (1) and section 1866(a)(1)(O).
(C)

Information on beneficiary liability.—
(i)

In general.—
Each Medicare+Choice organization that offers a Medicare+Choice private fee-for-service plan shall provide that enrollees under the plan who are furnished services for which payment is sought under the plan are provided an appropriate explanation of benefits (consistent with that provided under parts A and B and, if applicable, under medicare supplemental policies) that includes a clear statement of the amount of the enrollee's liability (including any liability for balance billing consistent with this subsection) with respect to payments for such services.
(ii)

Advance notice before receipt of inpatient hospital services and certain other services.—
In addition, such organization shall, in its terms and conditions of payments to hospitals for inpatient hospital services and for other services identified by the Secretary for which the amount of the balance billing under subparagraph (A) could be substantial, require the hospital to provide to the enrollee, before furnishing such services and if the hospital imposes balance billing under subparagraph (A)—
(I)
notice of the fact that balance billing is permitted under such subparagraph for such services, and
(II)
a good faith estimate of the likely amount of such balance billing (if any), with respect to such services, based upon the presenting condition of the enrollee.
(l)

Return to Home Skilled Nursing Facilities for Covered Post-Hospital Extended Care Services.—
(1)

Ensuring return to home snf.—
(A)

In general.—
In providing coverage of post-hospital extended care services, a Medicare+Choice plan shall provide for such coverage through a home skilled nursing facility if the following conditions are met:
(i)

Enrollee election.—
The enrollee elects to receive such coverage through such facility.
(ii)

SNF agreement.—
The facility has a contract with the Medicare+Choice organization for the provision of such services, or the facility agrees to accept substantially similar payment under the same terms and conditions that apply to similarly situated skilled nursing facilities that are under contract with the Medicare+Choice organization for the provision of such services and through which the enrollee would otherwise receive such services.
(B)

Manner of payment to home snf.—
The organization shall provide payment to the home skilled nursing facility consistent with the contract or the agreement described in subparagraph (A)(ii), as the case may be.
(2)

No less favorable coverage.—
The coverage provided under paragraph (1) (including scope of services, cost-sharing, and other criteria of coverage) shall be no less favorable to the enrollee than the coverage that would be provided to the enrollee with respect to a skilled nursing facility the post-hospital extended care services of which are otherwise covered under the Medicare+Choice plan.
(3)

Rule of construction.—
Nothing in this subsection shall be construed to do the following:
(A)
To require coverage through a skilled nursing facility that is not otherwise qualified to provide benefits under part A for medicare beneficiaries not enrolled in a Medicare+Choice plan.
(B)
To prevent a skilled nursing facility from refusing to accept, or imposing conditions upon the acceptance of, an enrollee for the receipt of post-hospital extended care services.
(4)

Definitions.—
In this subsection:
(A)

Home skilled nursing facility.—
The term “home skilled nursing facility” means, with respect to an enrollee who is entitled to receive post-hospital extended care services under a Medicare+Choice plan, any of the following skilled nursing facilities:
(i)

SNF residence at time of admission.—
The skilled nursing facility in which the enrollee resided at the time of admission to the hospital preceding the receipt of such post-hospital extended care services.
(ii)

SNF in continuing care retirement community.—
A skilled nursing facility that is providing such services through a continuing care retirement community (as defined in subparagraph (B)) which provided residence to the enrollee at the time of such admission.
(iii)

SNF residence of spouse at time of discharge.—
The skilled nursing facility in which the spouse of the enrollee is residing at the time of discharge from such hospital.
(B)

Continuing care retirement community.—
The term “continuing care retirement community” means, with respect to an enrollee in a Medicare+Choice plan, an arrangement under which housing and health-related services are provided (or arranged) through an organization for the enrollee under an agreement that is effective for the life of the enrollee or for a specified period.
(m)

Provision of Additional Telehealth Benefits.—
(1)

MA plan option.—
For plan year 2020 and subsequent plan years, subject to the requirements of paragraph (3), an MA plan may provide additional telehealth benefits (as defined in paragraph (2)) to individuals enrolled under this part.
(2)

Additional telehealth benefits defined.—
(A)

In general.—
For purposes of this subsection and section 1854:
(i)

Definition.—
The term “additional telehealth benefits” means services—
(I)
for which benefits are available under part B, including services for which payment is not made under section 1834(m) due to the conditions for payment under such section; and
(II)
that are identified for such year as clinically appropriate to furnish using electronic information and telecommunications technology when a physician (as defined in section 1861(r)) or practitioner (described in section 1842(b)(18)(C)) providing the service is not at the same location as the plan enrollee.
(ii)

Exclusion of capital and infrastructure costs and investments.—
The term “additional telehealth benefits” does not include capital and infrastructure costs and investments relating to such benefits.
(B)

Public comment.—
Not later than November 30, 2018, the Secretary shall solicit comments on—
(i)
what types of items and services (including those provided through supplemental health care benefits, such as remote patient monitoring, secure messaging, store and forward technologies, and other non-face-to-face communication) should be considered to be additional telehealth benefits; and
(ii)
the requirements for the provision or furnishing of such benefits (such as training and coordination requirements).
(3)

Requirements for additional telehealth benefits.—
The Secretary shall specify requirements for the provision or furnishing of additional telehealth benefits, including with respect to the following:
(A)
Physician or practitioner qualifications (other than licensure) and other requirements such as specific training.
(B)
Factors necessary for the coordination of such benefits with other items and services including those furnished in-person.
(C)
Such other areas as determined by the Secretary.
(4)

Enrollee choice.—
If an MA plan provides a service as an additional telehealth benefit (as defined in paragraph (2))—
(A)
the MA plan shall also provide access to such benefit through an in-person visit (and not only as an additional telehealth benefit); and
(B)
an individual enrollee shall have discretion as to whether to receive such service through the in-person visit or as an additional telehealth benefit.
(5)

Treatment under ma.—
For purposes of this subsection and section 1854, if a plan provides additional telehealth benefits, such additional telehealth benefits shall be treated as if they were benefits under the original Medicare fee-for-service program option.
(6)

Construction.—
Nothing in this subsection shall be construed as affecting the requirement under subsection (a)(1) that MA plans provide enrollees with items and services (other than hospice care) for which benefits are available under parts A and B, including benefits available under section 1834(m).
(n)

Provision of Information Relating to the Safe Disposal of Certain Prescription Drugs.—
(1)

In general.—
In the case of an individual enrolled under an MA or MA–PD plan who is furnished an in-home health risk assessment on or after January 1, 2021, such plan shall ensure that such assessment includes information on the safe disposal of prescription drugs that are controlled substances that meets the criteria established under paragraph (2). Such information shall include information on drug takeback programs that meet such requirements determined appropriate by the Secretary and information on in-home disposal.
(2)

Criteria.—
The Secretary shall, through rulemaking, establish criteria the Secretary determines appropriate with respect to information provided to an individual to ensure that such information sufficiently educates such individual on the safe disposal of prescription drugs that are controlled substances.

payments to medicare+choice organizations
Sec. 1853.
[42 U.S.C. 1395w–23]
(a)

Payments to Organizations.—
(1)

Monthly payments.—
(A)

In general.—
Under a contract under section 1857 and subject to subsections (e), (g), (i), and (l) and section 1859(e)(4), the Secretary shall make monthly payments under this section in advance to each Medicare+Choice organization, with respect to coverage of an individual under this part in a Medicare+Choice payment area for a month, in an amount determined as follows:
(i)

Payment before 2006.—
For years before 2006, the payment amount shall be equal to 1⁄12 of the annual MA capitation rate (as calculated under subsection (c)(1)) with respect to that individual for that area, adjusted under subparagraph (C) and reduced by the amount of any reduction elected under section 1854(f)(1)(E).
(ii)

Payment for original fee-for-service benefits beginning with 2006.—
For years beginning with 2006, the amount specified in subparagraph (B).
(B)

Payment amount for original fee-for-service benefits beginning with 2006.—
(i)

Payment of bid for plans with bids below benchmark.—
In the case of a plan for which there are average per capita monthly savings described in section 1854(b)(3)(C) or 1854(b)(4)(C), as the case may be, the amount specified in this subparagraph is equal to the unadjusted MA statutory non-drug monthly bid amount, adjusted under subparagraph (C) and (if applicable) under subparagraphs (F) and (G), plus the amount (if any) of any rebate under subparagraph (E).
(ii)

Payment of benchmark for plans with bids at or above benchmark.—
In the case of a plan for which there are no average per capita monthly savings described in section 1854(b)(3)(C) or 1854(b)(4)(C), as the case may be, the amount specified in this subparagraph is equal to the MA area-specific non-drug monthly benchmark amount, adjusted under subparagraph (C) and (if applicable) under subparagraphs (F) and (G).
(iii)

Payment of benchmark for msa plans.—
Notwithstanding clauses (i) and (ii), in the case of an MSA plan, the amount specified in this subparagraph is equal to the MA area-specific non-drug monthly benchmark amount, adjusted under subparagraph (C).
(iv)

Authority to apply frailty adjustment under pace payment rules for certain specialized ma plans for special needs individuals.—
(I)

In general.—
Notwithstanding the preceding provisions of this paragraph, for plan year 2011 and subsequent plan years, in the case of a plan described in subclause (II), the Secretary may apply the payment rules under section 1894(d) (other than paragraph (3) of such section) rather than the payment rules that would otherwise apply under this part, but only to the extent necessary to reflect the costs of treating high concentrations of frail individuals.
(II)

Plan described.—
A plan described in this subclause is a specialized MA plan for special needs individuals described in section 1859(b)(6)(B)(ii) that is fully integrated with capitated contracts with States for Medicaid benefits, including long-term care, and that have similar average levels of frailty (as determined by the Secretary) as the PACE program.
(C)

Demographic adjustment, including adjustment for health status.—
(i)

In general.—
Subject to subparagraph (I), the Secretary shall adjust the payment amount under subparagraph (A)(i) and the amount specified under subparagraph (B)(i), (B)(ii), and (B)(iii) for such risk factors as age, disability status, gender, institutional status, and such other factors as the Secretary determines to be appropriate, including adjustment for health status under paragraph (3), so as to ensure actuarial equivalence. The Secretary may add to, modify, or substitute for such adjustment factors if such changes will improve the determination of actuarial equivalence.
(ii)

Application of coding adjustment 55.—
For 2006 and each subsequent year:
^{55}
The amendment to the heading of section 1853(a)(1)(C)(ii) by section 1102(e)(1) of Public Law 111–152 was carried out to reflect the probable intent of Congress. Such amendment struck language that included “phaseout” but the law in existence prior to such amendment read “phase-out”.
(I)
In applying the adjustment under clause (i) for health status to payment amounts, the Secretary shall ensure that such adjustment reflects changes in treatment and coding practices in the fee-for-service sector and reflects differences in coding patterns between Medicare Advantage plans and providers under part A and B to the extent that the Secretary has identified such differences.
(II)
In order to ensure payment accuracy, the Secretary shall annually conduct an analysis of the differences described in subclause (I). The Secretary shall complete such analysis by a date necessary to ensure that the results of such analysis are incorporated on a timely basis into the risk scores for 2008 and subsequent years. In conducting such analysis, the Secretary shall use data submitted with respect to 2004 and subsequent years, as available and updated as appropriate.
(III)
In calculating each year's adjustment, the adjustment factor shall be for 2014, not less than the adjustment factor applied for 2010, plus 1.5 percentage points; for each of years 2015 through 2018, not less than the adjustment factor applied for the previous year, plus 0.25 percentage point; and for 2019 and each subsequent year, not less than 5.9 percent.
(IV)
Such adjustment shall be applied to risk scores until the Secretary implements risk adjustment using Medicare Advantage diagnostic, cost, and use data.
(iii)

Improvements to risk adjustment for special needs individuals with chronic health conditions.—
(I)

In general.—
For 2011 and subsequent years, for purposes of the adjustment under clause (i) with respect to individuals described in subclause (II), the Secretary shall use a risk score that reflects the known underlying risk profile and chronic health status of similar individuals. Such risk score shall be used instead of the default risk score for new enrollees in Medicare Advantage plans that are not specialized MA plans for special needs individuals (as defined in section 1859(b)(6)).
(II)

Individuals described.—
An individual described in this subclause is a special needs individual described in subsection (b)(6)(B)(iii) who enrolls in a specialized MA plan for special needs individuals on or after January 1, 2011.
(III)

Evaluation.—
For 2011 and periodically thereafter, the Secretary shall evaluate and revise the risk adjustment system under this subparagraph in order to, as accurately as possible, account for higher medical and care coordination costs associated with frailty, individuals with multiple, comorbid chronic conditions, and individuals with a diagnosis of mental illness, and also to account for costs that may be associated with higher concentrations of beneficiaries with those conditions.
(IV)

Publication of evaluation and revisions.—
The Secretary shall publish, as part of an announcement under subsection (b), a description of any evaluation conducted under subclause (III) during the preceding year and any revisions made under such subclause as a result of such evaluation.
(D)

Separate payment for federal drug subsidies.—
In the case of an enrollee in an MA–PD plan, the MA organization offering such plan also receives—
(i)
subsidies under section 1860D–15 (other than under subsection (g)); and
(ii)
reimbursement for premium and cost-sharing reductions for low-income individuals under section 1860D–14(c)(1)(C).
(E)

Payment of rebate for plans with bids below benchmark.—
In the case of a plan for which there are average per capita monthly savings described in section 1854(b)(3)(C) or 1854(b)(4)(C), as the case may be, the amount specified in this subparagraph is the amount of the monthly rebate computed under section 1854(b)(1)(C)(i) for that plan and year (as reduced by the amount of any credit provided under section 1854(b)(1)(C)(iv)).
(F)

Adjustment for intra-area variations.—
(i)

Intra-regional variations.—
In the case of payment with respect to an MA regional plan for an MA region, the Secretary shall also adjust the amounts specified under subparagraphs (B)(i) and (B)(ii) in a manner to take into account variations in MA local payment rates under this part among the different MA local areas included in such region.
(ii)

Intra-service area variations.—
In the case of payment with respect to an MA local plan for a service area that covers more than one MA local area, the Secretary shall also adjust the amounts specified under subparagraphs (B)(i) and (B)(ii) in a manner to take into account variations in MA local payment rates under this part among the different MA local areas included in such service area.
(G)

Adjustment relating to risk adjustment.—
The Secretary shall adjust payments with respect to MA plans as necessary to ensure that—
(i)
the sum of—
(I)
the monthly payment made under subparagraph (A)(ii); and
(II)
the MA monthly basic beneficiary premium under section 1854(b)(2)(A); equals
(ii)
the unadjusted MA statutory non-drug monthly bid amount, adjusted in the manner described in subparagraph (C) and, for an MA regional plan, subparagraph (F).
(H)

Special rule for end-stage renal disease.—
The Secretary shall establish separate rates of payment to a Medicare+Choice organization with respect to classes of individuals determined to have end-stage renal disease and enrolled in a Medicare+Choice plan of the organization. Such rates of payment shall be actuarially equivalent to rates that would have been paid with respect to other enrollees in the MA payment area (or such other area as specified by the Secretary) under the provisions of this section as in effect before the date of the enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. In accordance with regulations, the Secretary shall provide for the application of the seventh sentence of section 1881(b)(7) to payments under this section covering the provision of renal dialysis treatment in the same manner as such sentence applies to composite rate payments described in such sentence. In establishing such rates, the Secretary shall provide for appropriate adjustments to increase each rate to reflect the demonstration rate (including the risk adjustment methodology associated with such rate) of the social health maintenance organization end-stage renal disease capitation demonstrations (established by section 2355 of the Deficit Reduction Act of 1984, as amended by section 13567(b) of the Omnibus Budget Reconciliation Act of 1993), and shall compute such rates by taking into account such factors as renal treatment modality, age, and the underlying cause of the end-stage renal disease. The Secretary may apply the competitive bidding methodology provided for in this section, with appropriate adjustments to account for the risk adjustment methodology applied to end stage renal disease payments.
(I)

Improvements to risk adjustment for 2019 and subsequent years.—
(i)

In general.—
In order to determine the appropriate adjustment for health status under subparagraph (C)(i), the following shall apply:
(I)

Taking into account total number of diseases or conditions.—
The Secretary shall take into account the total number of diseases or conditions of an individual enrolled in an MA plan. The Secretary shall make an additional adjustment under such subparagraph as the number of diseases or conditions of an individual increases.
(II)

Using at least 2 years of diagnostic data.—
The Secretary may use at least 2 years of diagnosis data.
(III)

Providing separate adjustments for dual eligible individuals.—
With respect to individuals who are dually eligible for benefits under this title and title XIX, the Secretary shall make separate adjustments for each of the following:
- (aa)
Full-benefit dual eligible individuals (as defined in section 1935(c)(6)).
- (bb)
Such individuals not described in item (aa).
(IV)

Evaluation of mental health and substance use disorders.—
The Secretary shall evaluate the impact of including additional diagnosis codes related to mental health and substance use disorders in the risk adjustment model.
(V)

Evaluation of chronic kidney disease.—
The Secretary shall evaluate the impact of including the severity of chronic kidney disease in the risk adjustment model.
(VI)

Evaluation of payment rates for end-stage renal disease.—
The Secretary shall evaluate whether other factors (in addition to those described in subparagraph (H)) should be taken into consideration when computing payment rates under such subparagraph.
(ii)

Phased-in implementation.—
The Secretary shall phase-in any changes to risk adjustment payment amounts under subparagraph (C)(i) under this subparagraph over a 3-year period, beginning with 2019, with such changes being fully implemented for 2022 and subsequent years.
(iii)

Opportunity for review and public comment.—
The Secretary shall provide an opportunity for review of the proposed changes to such risk adjustment payment amounts under this subparagraph and a public comment period of not less than 60 days before implementing such changes.
(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 difference 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 a Medicare+Choice 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 1852(c) at the time the individual enrolled with the organization.
(3)

Establishment of risk adjustment factors.—
(A)

Report.—
The Secretary shall develop, and submit to Congress by not later than March 1, 1999, a report on the method of risk adjustment of payment rates under this section, to be implemented under subparagraph (C), that accounts for variations in per capita costs based on health status. Such report shall include an evaluation of such method by an outside, independent actuary of the actuarial soundness of the proposal.
(B)

Data collection.—
In order to carry out this paragraph, the Secretary shall require Medicare+Choice organizations (and eligible organizations with risk-sharing contracts under section 1876) to submit data regarding inpatient hospital services for periods beginning on or after July 1, 1997, and data regarding other services and other information as the Secretary deems necessary for periods beginning on or after July 1, 1998. The Secretary may not require an organization to submit such data before January 1, 1998.
(C)

Initial implementation.—
(i)

In general.—
The Secretary shall first provide for implementation of a risk adjustment methodology that accounts for variations in per capita costs based on health status and other demographic factors for payments by no later than January 1, 2000.
(ii)

Phase-in.—
Except as provided in clause (iv), such risk adjustment methodology shall be implemented in a phased-in manner so that the methodology insofar as it makes adjustments to capitation rates for health status applies to—
(I)
10 percent of 1⁄12 of the annual Medicare+Choice capitation rate in 2000 and each succeeding year through 2003;
(II)
30 percent of such capitation rate in 2004;
(III)
50 percent of such capitation rate in 2005;
(IV)
75 percent of such capitation rate in 2006; and
(V)
100 percent of such capitation rate in 2007 and succeeding years.
(iii)

Data for risk adjustment methodology.—
Such risk adjustment methodology for 2004 and each succeeding year, shall be based on data from inpatient hospital and ambulatory settings.
(iv)

Full implementation of risk adjustment for congestive heart failure enrollees for 2001.—
(I)

Exemption from phase-in.—
Subject to subclause (II), the Secretary shall fully implement the risk adjustment methodology described in clause (i) with respect to each individual who has had a qualifying congestive heart failure inpatient diagnosis (as determined by the Secretary under such risk adjustment methodology) during the period beginning on July 1, 1999, and ending on June 30, 2000, and who is enrolled in a coordinated care plan that is the only coordinated care plan offered on January 1, 2001, in the service area of the individual.
(II)

Period of application.—
Subclause (I) shall only apply during the 1-year period beginning on January 1, 2001.
(D)

Uniform application to all types of plans.—
Subject to section 1859(e)(4), the methodology shall be applied uniformly without regard to the type of plan.
(4)

Payment rule for federally qualified health center services.—
If an individual who is enrolled with an MA plan under this part receives a service from a federally qualified health center that has a written agreement with the MA organization that offers such plan for providing such a service (including any agreement required under section 1857(e)(3))—
(A)
the Secretary shall pay the amount determined under section 1833(a)(3)(B) directly to the federally qualified health center not less frequently than quarterly; and
(B)
the Secretary shall not reduce the amount of the monthly payments under this subsection as a result of the application of subparagraph (A).
(b)

Annual Announcement of Payment Rates.—
(1)

Annual announcements.—
(A)

For 2005.—
The Secretary shall determine, and shall announce (in a manner intended to provide notice to interested parties), not later than the second Monday in May of 2004, with respect to each MA payment area, the following:
(i)

MA capitation rates.—
The annual MA capitation rate for each MA payment area for 2005.
(ii)

Adjustment factors.—
The risk and other factors to be used in adjusting such rates under subsection (a)(1)(C) for payments for months in 2005.
(B)

For 2006 and subsequent years.—
For a year after 2005—
(i)

Initial announcement.—
The Secretary shall determine, and shall announce (in a manner intended to provide notice to interested parties), not later than the first Monday in April before the calendar year concerned, with respect to each MA payment area, the following:
(I)

MA capitation rates; ma local area benchmark.—
The annual MA capitation rate for each MA payment area for the year.
(II)

Adjustment factors.—
The risk and other factors to be used in adjusting such rates under subsection (a)(1)(C) for payments for months in such year.
(ii)

Regional benchmark announcement.—
The Secretary shall determine, and shall announce (in a manner intended to provide notice to interested parties), on a timely basis before the calendar year concerned, with respect to each MA region and each MA regional plan for which a bid was submitted under section 1854, the MA region-specific non-drug monthly benchmark amount for that region for the year involved.
(iii)

Benchmark announcement for cca local areas.—
The Secretary shall determine, and shall announce (in a manner intended to provide notice to interested parties), on a timely basis before the calendar year concerned, with respect to each CCA area (as defined in section 1860C–1(b)(1)(A)), the CCA non-drug monthly benchmark amount under section 1860C–1(e)(1) for that area for the year involved.
(2)

Advance notice of methodological changes.—
At least 45 days (or, in 2017 and each subsequent year, at least 60 days) before making the announcement under paragraph (1) for a year, the Secretary shall provide for notice to Medicare+Choice 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 (in 2017 and each subsequent year, of no less than 30 days) to comment on such proposed changes.
(3)

Explanation of assumptions.—
In each announcement made under paragraph (1), the Secretary shall include an explanation of the assumptions and changes in methodology used in such announcement.
(4)

Continued computation and publication of county-specific per capita fee-for-service expenditure information.—
The Secretary, through the Chief Actuary of the Centers for Medicare & Medicaid Services, shall provide for the computation and publication, on an annual basis beginning with 2001 at the time of publication of the annual Medicare+Choice capitation rates under paragraph (1), of the following information for the original medicare fee-for-service program under parts A and B (exclusive of individuals eligible for coverage under section 226A) for each Medicare+Choice payment area for the second calendar year ending before the date of publication:
(A)
Total expenditures per capita per month, computed separately for part A and for part B.
(B)
The expenditures described in subparagraph (A) reduced by the best estimate of the expenditures (such as graduate medical education and disproportionate share hospital payments) not related to the payment of claims.
(C)
The average risk factor for the covered population based on diagnoses reported for medicare inpatient services, using the same methodology as is expected to be applied in making payments under subsection (a).
(D)
Such average risk factor based on diagnoses for inpatient and other sites of service, using the same methodology as is expected to be applied in making payments under subsection (a).
(c)

Calculation of Annual Medicare+Choice Capitation Rates.—
(1)

In general.—
For purposes of this part, subject to paragraphs (6)(C) and (7), each annual Medicare+Choice capitation rate, for a Medicare+Choice payment area that is an MA local area for a contract year consisting of a calendar year, is equal to the largest of the amounts specified in the following subparagraph (A), (B), (C), or (D):
(A)

Blended capitation rate.—
For a year before 2005, the sum of—
(i)
the area-specific percentage (as specified under paragraph (2) for the year) of the annual area-specific Medicare+Choice capitation rate for the Medicare+Choice payment area, as determined under paragraph (3) for the year, and
(ii)
the national percentage (as specified under paragraph (2) for the year) of the input-price-adjusted annual national Medicare+Choice capitation rate, as determined under paragraph (4) for the year,
multiplied (for a year other than 2004) by the budget neutrality adjustment factor determined under paragraph (5).
(B)

Minimum amount.—
12 multiplied by the following amount:
(i)
For 1998, $367 (but not to exceed, in the case of an area outside the 50 States and the District of Columbia, 150 percent of the annual per capita rate of payment for 1997 determined under section 1876(a)(1)(C) for the area).
(ii)
For 1999 and 2000, the minimum amount determined under clause (i) or this clause, respectively, for the preceding year, increased by the national per capita Medicare+Choice growth percentage described in paragraph (6)(A) applicable to 1999 or 2000, respectively.
(iii)
(I)
Subject to subclause (II), for 2001, for any area in a Metropolitan Statistical Area with a population of more than 250,000, $525, and for any other area $475.
(II)
In the case of an area outside the 50 States and the District of Columbia, the amount specified in this clause shall not exceed 120 percent of the amount determined under clause (ii) for such area for 2000.
(iv)
For 2002, 2003, and 2004, the minimum amount specified in this clause (or clause (iii)) for the preceding year increased by the national per capita Medicare+Choice growth percentage, described in paragraph (6)(A) for that succeeding year.
(C)

Minimum percentage increase.—
(i)
For 1998, 102 percent of the annual per capita rate of payment for 1997 determined under section 1876(a)(1)(C) for the Medicare+Choice payment area.
(ii)
For 1999 and 2000, 102 percent of the annual Medicare+Choice capitation rate under this paragraph for the area for the previous year.
(iii)
For 2001, 103 percent of the annual Medicare+Choice capitation rate under this paragraph for the area for 2000.
(iv)
For 2002 and 2003, 102 percent of the annual Medicare+Choice capitation rate under this paragraph for the area for the previous year.
(v)
For 2004 and each succeeding year, the greater of—
(I)
102 percent of the annual MA capitation rate under this paragraph for the area for the previous year; or
(II)
the annual MA capitation rate under this paragraph for the area for the previous year increased by the national per capita MA growth percentage, described in paragraph (6) for that succeeding year, but not taking into account any adjustment under paragraph (6)(C) for a year before 2004.
(D)

100 percent of fee-for-service costs.—
(i)

In general.—
For each year specified in clause (ii), the adjusted average per capita cost for the year involved, determined under section 1876(a)(4) and adjusted as appropriate for the purpose of risk adjustment, for the MA payment area for individuals who are not enrolled in an MA plan under this part for the year, but adjusted to exclude costs attributable to payments under sections, 1848(o), and 1886(n) and 1886(h).
(ii)

Periodic rebasing.—
The provisions of clause (i) shall apply for 2004 and for subsequent years as the Secretary shall specify (but not less than once every 3 years).
(iii)

Inclusion of costs of va and dod military facility services to medicare-eligible beneficiaries.—
In determining the adjusted average per capita cost under clause (i) for a year, such cost shall be adjusted to include the Secretary's estimate, on a per capita basis, of the amount of additional payments that would have been made in the area involved under this title if individuals entitled to benefits under this title had not received services from facilities of the Department of Defense or the Department of Veterans Affairs.
(2)

Area-specific and national percentages.—
For purposes of paragraph (1)(A)—
(A)
for 1998, the “area-specific percentage” is 90 percent and the “national percentage” is 10 percent,
(B)
for 1999, the “area-specific percentage” is 82 percent and the “national percentage” is 18 percent,
(C)
for 2000, the “area-specific percentage” is 74 percent and the “national percentage” is 26 percent,
(D)
for 2001, the “area-specific percentage” is 66 percent and the “national percentage” is 34 percent,
(E)
for 2002, the “area-specific percentage” is 58 percent and the “national percentage” is 42 percent, and
(F)
for a year after 2002, the “area-specific percentage” is 50 percent and the “national percentage” is 50 percent.
(3)

Annual area-specific medicare+choice capitation rate.—
(A)

In general.—
For purposes of paragraph (1)(A), subject to subparagraphs (B) and (E), the annual area-specific Medicare+Choice capitation rate for a Medicare+Choice payment area—
(i)
for 1998 is, subject to subparagraph (D), the annual per capita rate of payment for 1997 determined under section 1876(a)(1)(C) for the area, increased by the national per capita Medicare+Choice growth percentage for 1998 (described in paragraph (6)(A)); or
(ii)
for a subsequent year is the annual area-specific Medicare+Choice capitation rate for the previous year determined under this paragraph for the area, increased by the national per capita Medicare+Choice growth percentage for such subsequent year.
(B)

Removal of medical education from calculation of adjusted average per capita cost.—
(i)

In general.—
In determining the area-specific Medicare+Choice capitation rate under subparagraph (A) for a year (beginning with 1998), the annual per capita rate of payment for 1997 determined under section 1876(a)(1)(C) shall be adjusted to exclude from the rate the applicable percent (specified in clause (ii)) of the payment adjustments described in subparagraph (C).
(ii)

Applicable percent.—
For purposes of clause (i), the applicable percent for—
(I)
1998 is 20 percent,
(II)
1999 is 40 percent,
(III)
2000 is 60 percent,
(IV)
2001 is 80 percent, and
(V)
a succeeding year is 100 percent.
(C)

Payment adjustment.—
(i)

In general.—
Subject to clause (ii), the payment adjustments described in this subparagraph are payment adjustments which the Secretary estimates were payable during 1997—
(I)
for the indirect costs of medical education under section 1886(d)(5)(B), and
(II)
for direct graduate medical education costs under section 1886(h).
(ii)

Treatment of payments covered under state hospital reimbursement system.—
To the extent that the Secretary estimates that an annual per capita rate of payment for 1997 described in clause (i) reflects payments to hospitals reimbursed under section 1814(b)(3), the Secretary shall estimate a payment adjustment that is comparable to the payment adjustment that would have been made under clause (i) if the hospitals had not been reimbursed under such section.
(D)

Treatment of areas with highly variable payment rates.—
In the case of a Medicare+Choice payment area for which the annual per capita rate of payment determined under section 1876(a)(1)(C) for 1997 varies by more than 20 percent from such rate for 1996, for purposes of this subsection the Secretary may substitute for such rate for 1997 a rate that is more representative of the costs of the enrollees in the area.
(E)

Inclusion of costs of dod and va military facility services to medicare-eligible beneficiaries.—
In determining the area-specific MA capitation rate under subparagraph (A) for a year (beginning with 2004), the annual per capita rate of payment for 1997 determined under section 1876(a)(1)(C) shall be adjusted to include in the rate the Secretary's estimate, on a per capita basis, of the amount of additional payments that would have been made in the area involved under this title if individuals entitled to benefits under this title had not received services from facilities of the Department of Defense or the Department of Veterans Affairs.
(4)

Input-price-adjusted annual national medicare+choice capitation rate.—
(A)

In general.—
For purposes of paragraph (1)(A), the input-price-adjusted annual national Medicare+Choice capitation rate for a Medicare+Choice payment area for a year is equal to the sum, for all the types of medicare services (as classified by the Secretary), of the product (for each such type of service) of—
(i)
the national standardized annual Medicare+Choice 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 may, 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 medicare+choice capitation rate.—
In subparagraph (A)(i), the “national standardized annual Medicare+Choice capitation rate” for a year is equal to—
(i)
the sum (for all Medicare+Choice payment areas) of the product of—
(I)
the annual area-specific Medicare+Choice 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, multiplied by the average of the risk factor weights used to adjust payments under subsection (a)(1)(A) for such beneficiaries in such area; divided by
(ii)
the sum of the products described in clause (i)(II) for all areas for that year.
(C)

Special rules for 1998.—
In applying this paragraph for 1998—
(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)—
(I)
for part A services shall be the ratio (expressed as a percentage) of the national average annual per capita rate of payment for part A for 1997 to the total national average annual per capita rate of payment for parts A and B for 1997, and
(II)
for part B services shall be 100 percent minus the ratio described in subclause (I);
(iii)
for 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, 40 percent shall be adjusted by the index described in clause (iii); and
(v)
the index values shall be computed based only on the beneficiary population who are 65 years of age or older and 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 1999.
(5)

Payment adjustment budget neutrality factor.—
For purposes of paragraph (1)(A), for each year (other than 2004), the Secretary shall determine a budget neutrality adjustment factor so that the aggregate of the payments under this part (other than those attributable to subsections (a)(3)(C)(iv), (a)(4), and (i) shall equal the aggregate payments that would have been made under this part if payment were based entirely on area-specific capitation rates.
(6)

National per capita medicare+choice growth percentage defined.—
(A)

In general.—
In this part, the “national per capita Medicare+Choice growth percentage” for a year is the percentage determined by the Secretary, by March 1st before the beginning of the year involved, to reflect the Secretary's estimate of the projected per capita rate of growth in expenditures under this title for an individual entitled to benefits under part A and enrolled under part B, excluding expenditures attributable to subsections (a)(7) and (o) of section 1848 and subsections (b)(3)(B)(ix) and (n) of section 1886, reduced by the number of percentage points specified in subparagraph (B) for the year. Separate determinations may be made for aged enrollees, disabled enrollees, and enrollees with end-stage renal disease.
(B)

Adjustment.—
The number of percentage points specified in this subparagraph is—
(i)
for 1998, 0.8 percentage points,
(ii)
for 1999, 0.5 percentage points,
(iii)
for 2000, 0.5 percentage points,
(iv)
for 2001, 0.5 percentage points,
(v)
for 2002, 0.3 percentage points, and
(vi)
for a year after 2002, 0 percentage points.
(C)

Adjustment for over or under projection of national per capita medicare+choice growth percentage.—
Beginning with rates calculated for 1999, before computing rates for a year as described in paragraph (1), the Secretary shall adjust all area-specific and national Medicare+Choice capitation rates (and beginning in 2000, the minimum amount) for the previous year for the differences between the projections of the national per capita Medicare+Choice growth percentage for that year and previous years and the current estimate of such percentage for such years, except that for purposes of paragraph (1)(C)(v)(II), no such adjustment shall be made for a year before 2004.
(7)

Adjustment for national coverage determinations and legislative changes in benefits.—
If the Secretary makes a determination with respect to coverage under this title or there is a change in benefits required to be provided under this part that the Secretary projects will result in a significant increase in the costs to Medicare+Choice of providing benefits under contracts under this part (for periods after any period described in section 1852(a)(5)), the Secretary shall adjust appropriately the payments to such organizations under this part. Such projection and adjustment shall be based on an analysis by the Chief Actuary of the Centers for Medicare & Medicaid Services of the actuarial costs associated with the new benefits.
(d)

MA Payment Area; MA Local Area; MA Region Defined.—
(1)

MA payment area.—
In this part, except as provided in this subsection, the term “MA payment area” means—
(A)
with respect to an MA local plan, an MA local area (as defined in paragraph (2)); and
(B)
with respect to an MA regional plan, an MA region (as established under section 1858(a)(2)).
(2)

MA local area.—
The term “MA local area” means a county or equivalent area specified by the Secretary.
(3)

Rule for esrd beneficiaries.—
In the case of individuals who are determined to have end stage renal disease, the Medicare+Choice payment area shall be a State or such other payment area as the Secretary specifies.
(4)

Geographic adjustment.—
(A)

In general.—
Upon written request of the chief executive officer of a State for a contract year (beginning after 1998) made by not later than February 1 of the previous year, the Secretary shall make a geographic adjustment to a Medicare+Choice payment area in the State otherwise determined under paragraph (1) for MA local plans—
(i)
to a single statewide Medicare+Choice payment area,
(ii)
to the metropolitan based system described in subparagraph (C), or
(iii)
to consolidating into a single Medicare+Choice payment area noncontiguous counties (or equivalent areas described inparagraph (1)(A)) within a State.
Such adjustment shall be effective for payments for months beginning with January of the year following the year in which the request is received.
(B)

Budget neutrality adjustment.—
In the case of a State requesting an adjustment under this paragraph, the Secretary shall initially (and annually thereafter) adjust the payment rates otherwise established under this section with respect to MA local plans for Medicare+Choice payment areas in the State in a manner so that the aggregate of the payments under this section for such plans in the State shall not exceed the aggregate payments that would have been made under this section for such plans for Medicare+Choice payment areas in the State in the absence of the adjustment under this paragraph.
(C)

Metropolitan based system.—
The metropolitan based system described in this subparagraph is one in which—
(i)
all the portions of each metropolitan statistical area in the State or in the case of a consolidated metropolitan statistical area, all of the portions of each primary metropolitan statistical area within the consolidated area within the State, are treated as a single Medicare+Choice payment area, and
(ii)
all areas in the State that do not fall within a metropolitan statistical area are treated as a single Medicare+Choice payment area.
(D)

Areas.—
In subparagraph (C), the terms “metropolitan statistical area”, “consolidated metropolitan statistical area”, and “primary metropolitan statistical area” mean any area designated as such by the Secretary of Commerce.
(e)

Special Rules for Individuals Electing MSA Plans.—
(1)

In general.—
If the amount of the Medicare+Choice monthly MSA premium (as defined in section 1854(b)(2)(C)) for an MSA plan for a year is less than 1⁄12 of the annual Medicare+Choice capitation rate applied under this section for the area and year involved, the Secretary shall deposit an amount equal to 100 percent of such difference in a Medicare+Choice MSA established (and, if applicable, designated) by the individual under paragraph (2).
(2)

Establishment and designation of medicare+choice medical savings account as requirement for payment of contribution.—
In the case of an individual who has elected coverage under an MSA plan, no payment shall be made under paragraph (1) on behalf of an individual for a month unless the individual—
(A)
has established before the beginning of the month (or by such other deadline as the Secretary may specify) a Medicare+Choice MSA (as defined in section 138(b)(2) of the Internal Revenue Code of 1986), and
(B)
if the individual has established more than one such Medicare+Choice MSA, has designated one of such accounts as the individual's Medicare+Choice MSA for purposes of this part.
Under rules under this section, such an individual may change the designation of such account under subparagraph (B) for purposes of this part.
(3)

Lump-sum deposit of medical savings account contribution.—
In the case of an individual electing an MSA plan effective beginning with a month in a year, the amount of the contribution to the Medicare+Choice MSA on behalf of the individual for that month and all successive months in the year shall be deposited during that first month. In the case of a termination of such an election as of a month before the end of a year, the Secretary shall provide for a procedure for the recovery of deposits attributable to the remaining months in the year.
(f)

Payments From Trust Funds.—
The payment to a Medicare+Choice organization under this section for individuals enrolled under this part with the organization and for payments under subsection (l) and subsection (m) and payments to a Medicare+Choice MSA under subsection (e)(1) shall be made from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund in such proportion as the Secretary determines reflects the relative weight that benefits under part A and under part B represents of the actuarial value of the total benefits under this title. Payments to MA organizations for statutory drug benefits provided under this title are made from the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund. Monthly payments otherwise payable under this section for October 2000 shall be paid on the first business day of such month. Monthly payments otherwise payable under this section for October 2001 shall be paid on the last business day of September 2001. Monthly payments otherwise payable under this section for October 2006 shall be paid on the first business day of October 2006.
(g)

Special Rule for Certain Inpatient Hospital Stays.—
In the case of an individual who is receiving inpatient hospital services from a subsection (d) hospital (as defined in section 1886(d)(1)(B)), a rehabilitation hospital described in section 1886(d)(1)(B)(ii) or a distinct part rehabilitation unit described in the matter following clause (v) of section 1886(d)(1)(B), or a long-term care hospital (described in section 1886(d)(1)(B)(iv)) as of the effective date of the individual's—
(1)
election under this part of a Medicare+Choice plan offered by a Medicare+Choice organization—
(A)
payment for such services until the date of the individual's discharge shall be made under this title through the Medicare+Choice plan or the original medicare fee-for-service program option described in section 1851(a)(1)(A) (as the case may be) elected before the election with such organization,
(B)
the elected organization shall not be financially responsible for payment for such services until the date after the date of the individual's discharge, and
(C)
the organization shall nonetheless be paid the full amount otherwise payable to the organization under this part; or
(2)
termination of election with respect to a Medicare+Choice organization under this part—
(A)
the organization shall be financially responsible for payment for such services after such date and until the date of the individual's discharge,
(B)
payment for such services during the stay shall not be made under section 1886(d) or other payment provision under this title for inpatient services for the type of facility, hospital, or unit involved, described in the matter preceding paragraph (1), as the case may be, or by any succeeding Medicare+Choice organization, and
(C)
the terminated organization shall not receive any payment with respect to the individual under this part during the period the individual is not enrolled.
(h)

Special Rule for Hospice Care.—
(1)

Information.—
A contract under this part shall require the Medicare+Choice organization to inform each individual enrolled under this part with a Medicare+Choice plan offered by the organization about the availability of hospice care if—
(A)
a hospice program participating under this title is located within the organization's service area; or
(B)
it is common practice to refer patients to hospice programs outside such service area.
(2)

Payment.—
If an individual who is enrolled with a Medicare+Choice organization under this part makes an election under section 1812(d)(1) to receive hospice care from a particular hospice program—
(A)
payment for the hospice care furnished to the individual shall be made to the hospice program elected by the individual by the Secretary;
(B)
payment for other services for which the individual is eligible notwithstanding the individual's election of hospice care under section 1812(d)(1), including services not related to the individual's terminal illness, shall be made by the Secretary to the Medicare+Choice organization or the provider or supplier of the service instead of payments calculated under subsection (a); and
(C)
the Secretary shall continue to make monthly payments to the Medicare+Choice organization in an amount equal to the value of the additional benefits required under section 1854(f)(1)(A).
(i)

New Entry Bonus.—
(1)

In general.—
Subject to paragraphs (2) and (3), in the case of Medicare+Choice payment area in which a Medicare+Choice plan has not been offered since 1997 (or in which all organizations that offered a plan since such date have filed notice with the Secretary, as of October 13, 1999, that they will not be offering such a plan as of January 1, 2000, or filed notice with the Secretary as of October 3, 2000, that they will not be offering such a plan as of January 1, 2001), the amount of the monthly payment otherwise made under this section shall be increased—
(A)
only for the first 12 months in which any Medicare+Choice plan is offered in the area, by 5 percent of the total monthly payment otherwise computed for such payment area; and
(B)
only for the subsequent 12 months, by 3 percent of the total monthly payment otherwise computed for such payment area.
(2)

Period of application.—
Paragraph (1) shall only apply to payment for Medicare+Choice plans which are first offered in a Medicare+Choice payment area during the 2-year period beginning on January 1, 2000.
(3)

Limitation to organization offering first plan in an area.—
Paragraph (1) shall only apply to payment to the first Medicare+Choice organization that offers a Medicare+Choice plan in each Medicare+Choice payment area, except that if more than one such organization first offers such a plan in an area on the same date, paragraph (1) shall apply to payment for such organizations.
(4)

Construction.—
Nothing in paragraph (1) shall be construed as affecting the calculation of the annual Medicare+Choice capitation rate under subsection (c) for any payment area or as applying to payment for any period not described in such paragraph and paragraph (2).
(5)

Offered defined.—
In this subsection, the term “offered” means, with respect to a Medicare+Choice plan as of a date, that a Medicare+Choice eligible individual may enroll with the plan on that date, regardless of when the enrollment takes effect or when the individual obtains benefits under the plan.
(j)

Computation of Benchmark Amounts.—
For purposes of this part, subject to subsection (o), the term “MA area-specific non-drug monthly benchmark amount” means for a month in a year—
(1)
with respect to—
(A)
a service area that is entirely within an MA local area, subject to section 1860C–1(d)(2)(A), an amount equal to 1⁄12 of the annual MA capitation rate under section 1853(c)(1) for the area for the year (or, for 2007, 2008, 2009, and 2010, 1⁄12 of the applicable amount determined under subsection (k)(1) for the area for the year; for 2011, 1⁄12 of the applicable amount determined under subsection (k)(1) for the area for 2010; and, beginning with 2012, 1⁄12 of the blended benchmark amount determined under subsection (n)(1) for the area for the year), adjusted as appropriate (for years before 2007) for the purpose of risk adjustment; or
(B)
a service area that includes more than one MA local area, an amount equal to the average of the amounts described in subparagraph (A) for each such local MA area, weighted by the projected number of enrollees in the plan residing in the respective local MA areas (as used by the plan for purposes of the bid and disclosed to the Secretary under section 1854(a)(6)(A)(iii)), adjusted as appropriate (for years before 2007) for the purpose of risk adjustment; or
(2)
with respect to an MA region for a month in a year, the MA region-specific non-drug monthly benchmark amount, as defined in section 1858(f) for the region for the year.
(k)

Determination of Applicable Amount for Purposes of Calculating the Benchmark Amounts.—
(1)

Applicable amount defined.—
For purposes of subsection (j), subject to paragraphs (2), (4), and (5), the term “applicable amount” means for an area—
(A)
for 2007—
(i)
if such year is not specified under subsection (c)(1)(D)(ii), an amount equal to the amount specified in subsection (c)(1)(C) for the area for 2006—
(I)
first adjusted by the rescaling factor for 2006 for the area (as made available by the Secretary in the announcement of the rates on April 4, 2005, under subsection (b)(1), but excluding any national adjustment factors for coding intensity and risk adjustment budget neutrality that were included in such factor); and
(II)
then increased by the national per capita MA growth percentage, described in subsection (c)(6) for 2007, but not taking into account any adjustment under subparagraph (C) of such subsection for a year before 2004;
(ii)
if such year is specified under subsection (c)(1)(D)(ii), an amount equal to the greater of—
(I)
the amount determined under clause (i) for the area for the year; or
(II)
the amount specified in subsection (c)(1)(D) for the area for the year; and
(B)
for a subsequent year—
(i)
if such year is not specified under subsection (c)(1)(D)(ii), an amount equal to the amount determined under this paragraph for the area for the previous year (determined without regard to paragraphs (2), (4), and (5)), increased by the national per capita MA growth percentage, described in subsection (c)(6) for that succeeding year, but not taking into account any adjustment under subparagraph (C) of such subsection for a year before 2004; and
(ii)
if such year is specified under subsection (c)(1)(D)(ii), an amount equal to the greater of—
(I)
the amount determined under clause (i) for the area for the year; or
(II)
the amount specified in subsection (c)(1)(D) for the area for the year.
(2)

Phase-out of budget neutrality factor.—
(A)

In general.—
Except as provided in subparagraph (D), in the case of 2007 through 2010, the applicable amount determined under paragraph (1) shall be multiplied by a factor equal to 1 plus the product of—
(i)
the percent determined under subparagraph (B) for the year; and
(ii)
the applicable phase-out factor for the year under subparagraph (C).
(B)

Percent determined.—
(i)

In general.—
For purposes of subparagraph (A)(i), subject to clause (iv), the percent determined under this subparagraph for a year is a percent equal to a fraction the numerator of which is described in clause (ii) and the denominator of which is described in clause (iii).
(ii)

Numerator based on difference between demographic rate and risk rate.—
(I)

In general.—
The numerator described in this clause is an amount equal to the amount by which the demographic rate described in subclause (II) exceeds the risk rate described in subclause (III).
(II)

Demographic rate.—
The demographic rate described in this subclause is the Secretary's estimate of the total payments that would have been made under this part in the year if all the monthly payment amounts for all MA plans were equal to 1⁄12 of the annual MA capitation rate under subsection (c)(1) for the area and year, adjusted pursuant to subsection (a)(1)(C).
(III)

Risk rate.—
The risk rate described in this subclause is the Secretary's estimate of the total payments that would have been made under this part in the year if all the monthly payment amounts for all MA plans were equal to the amount described in subsection (j)(1)(A) (determined as if this paragraph had not applied) under subsection (j) for the area and year, adjusted pursuant to subsection (a)(1)(C).
(iii)

Denominator based on risk rate.—
The denominator described in this clause is equal to the total amount estimated for the year under clause (ii)(III).
(iv)

Requirements.—
In estimating the amounts under the previous clauses, the Secretary shall—
(I)
use a complete set of the most recent and representative Medicare Advantage risk scores under subsection (a)(3) that are available from the risk adjustment model announced for the year;
(II)
adjust the risk scores to reflect changes in treatment and coding practices in the fee-for-service sector;
(III)
adjust the risk scores for differences in coding patterns between Medicare Advantage plans and providers under the original Medicare fee-for-service program under parts A and B to the extent that the Secretary has identified such differences, as required in subsection (a)(1)(C);
(IV)
as necessary, adjust the risk scores for late data submitted by Medicare Advantage organizations;
(V)
as necessary, adjust the risk scores for lagged cohorts; and
(VI)
as necessary, adjust the risk scores for changes in enrollment in Medicare Advantage plans during the year.
(v)

Authority.—
In computing such amounts the Secretary may take into account the estimated health risk of enrollees in preferred provider organization plans (including MA regional plans) for the year.
(C)

Applicable phase-out factor.—
For purposes of subparagraph (A)(ii), the term “applicable phase-out factor” means—
(i)
for 2007, 0.55;
(ii)
for 2008, 0.40;
(iii)
for 2009, 0.25; and
(iv)
for 2010, 0.05.
(D)

Termination of application.—
Subparagraph (A) shall not apply in a year if the amount estimated under subparagraph (B)(ii)(III) for the year is equal to or greater than the amount estimated under subparagraph (B)(ii)(II) for the year.
(3)

No revision in percent.—
(A)

In general.—
The Secretary may not make any adjustment to the percent determined under paragraph (2)(B) for any year.
(B)

Rule of construction.—
Nothing in this subsection shall be construed to limit the authority of the Secretary to make adjustments to the applicable amounts determined under paragraph (1) as appropriate for purposes of updating data or for purposes of adopting an improved risk adjustment methodology.
(4)

Phase-out of the indirect costs of medical education from capitation rates.—
(A)

In general.—
After determining the applicable amount for an area for a year under paragraph (1) (beginning with 2010), the Secretary shall adjust such applicable amount to exclude from such applicable amount the phase-in percentage (as defined in subparagraph (B)(i)) for the year of the Secretary's estimate of the standardized costs for payments under section 1886(d)(5)(B) in the area for the year. Any adjustment under the preceding sentence shall be made prior to the application of paragraph (2).
(B)

Percentages defined.—
For purposes of this paragraph:
(i)

Phase-in percentage.—
The term “phase-in percentage” means, for an area for a year, the ratio (expressed as a percentage, but in no case greater than 100 percent) of—
(I)
the maximum cumulative adjustment percentage for the year (as defined in clause (ii)); to
(II)
the standardized IME cost percentage (as defined in clause (iii)) for the area and year.
(ii)

Maximum cumulative adjustment percentage.—
The term “maximum cumulative adjustment percentage” means, for—
(I)
2010, 0.60 percent; and
(II)
a subsequent year, the maximum cumulative adjustment percentage for the previous year increased by 0.60 percentage points.
(iii)

Standardized ime cost percentage.—
The term “standardized IME cost percentage” means, for an area for a year, the per capita costs for payments under section 1886(d)(5)(B) (expressed as a percentage of the fee-for-service amount specified in subparagraph (C)) for the area and the year.
(C)

Fee-for-service amount.—
The fee-for-service amount specified in this subparagraph for an area for a year is the amount specified under subsection (c)(1)(D) for the area and the year.
(5)

Exclusion of costs for kidney acquisitions from capitation rates.—
After determining the applicable amount for an area for a year under paragraph (1) (beginning with 2021), the Secretary shall adjust such applicable amount to exclude from such applicable amount the Secretary’s estimate of the standardized costs for payments for organ acquisitions for kidney transplants covered under this title (including expenses covered under section 1881(d)) in the area for the year.
(l)

Application of Eligible Professional Incentives for Certain MA Organizations for Adoption and Meaningful Use of Certified EHR Technology.—
(1)

In general.—
Subject to paragraphs (3) and (4), in the case of a qualifying MA organization, the provisions of sections 1848(o) and 1848(a)(7) shall apply with respect to eligible professionals described in paragraph (2) of the organization who the organization attests under paragraph (6) to be meaningful EHR users in a similar manner as they apply to eligible professionals under such sections. Incentive payments under paragraph (3) shall be made to and payment adjustments under paragraph (4) shall apply to such qualifying organizations.
(2)

Eligible professional described.—
With respect to a qualifying MA organization, an eligible professional described in this paragraph is an eligible professional (as defined for purposes of section 1848(o)) who—
(A)
(i)
is employed by the organization; or
(ii)
(I)
is employed by, or is a partner of, an entity that through contract with the organization furnishes at least 80 percent of the entity's Medicare patient care services to enrollees of such organization; and
(II)
furnishes at least 80 percent of the professional services of the eligible professional covered under this title to enrollees of the organization; and
(B)
furnishes, on average, at least 20 hours per week of patient care services.
(3)

Eligible professional incentive payments.—
(A)

In general.—
In applying section 1848(o) under paragraph (1), instead of the additional payment amount under section 1848(o)(1)(A) and subject to subparagraph (B), the Secretary may substitute an amount determined by the Secretary to the extent feasible and practical to be similar to the estimated amount in the aggregate that would be payable if payment for services furnished by such professionals was payable under part B instead of this part.
(B)

Avoiding duplication of payments.—
(i)

In general.—
In the case of an eligible professional described in paragraph (2)—
(I)
that is eligible for the maximum incentive payment under section 1848(o)(1)(A) for the same payment period, the payment incentive shall be made only under such section and not under this subsection; and
(II)
that is eligible for less than such maximum incentive payment for the same payment period, the payment incentive shall be made only under this subsection and not under section 1848(o)(1)(A).
(ii)

Methods.—
In the case of an eligible professional described in paragraph (2) who is eligible for an incentive payment under section 1848(o)(1)(A) but is not described in clause (i) for the same payment period, the Secretary shall develop a process—
(I)
to ensure that duplicate payments are not made with respect to an eligible professional both under this subsection and under section 1848(o)(1)(A); and
(II)
to collect data from Medicare Advantage organizations to ensure against such duplicate payments.
(C)

Fixed schedule for application of limitation on incentive payments for all eligible professionals.—
In applying section 1848(o)(1)(B)(ii) under subparagraph (A), in accordance with rules specified by the Secretary, a qualifying MA organization shall specify a year (not earlier than 2011) that shall be treated as the first payment year for all eligible professionals with respect to such organization.
(4)

Payment adjustment.—
(A)

In general.—
In applying section 1848(a)(7) under paragraph (1), instead of the payment adjustment being an applicable percent of the fee schedule amount for a year under such section, subject to subparagraph (D), the payment adjustment under paragraph (1) shall be equal to the percent specified in subparagraph (B) for such year of the payment amount otherwise provided under this section for such year.
(B)

Specified percent.—
The percent specified under this subparagraph for a year is 100 percent minus a number of percentage points equal to the product of—
(i)
the number of percentage points by which the applicable percent (under section 1848(a)(7)(A)(ii)) for the year is less than 100 percent; and
(ii)
the Medicare physician expenditure proportion specified in subparagraph (C) for the year.
(C)

Medicare physician expenditure proportion.—
The Medicare physician expenditure proportion under this subparagraph for a year is the Secretary's estimate of the proportion, of the expenditures under parts A and B that are not attributable to this part, that are attributable to expenditures for physicians' services.
(D)

Application of payment adjustment.—
In the case that a qualifying MA organization attests that not all eligible professionals of the organization are meaningful EHR users with respect to a year, the Secretary shall apply the payment adjustment under this paragraph based on the proportion of all such eligible professionals of the organization that are not meaningful EHR users for such year.
(5)

Qualifying ma organization defined.—
In this subsection and subsection (m), the term “qualifying MA organization” means a Medicare Advantage organization that is organized as a health maintenance organization (as defined in section 2791(b)(3) of the Public Health Service Act).
(6)

Meaningful ehr user attestation.—
For purposes of this subsection and subsection (m), a qualifying MA organization shall submit an attestation, in a form and manner specified by the Secretary which may include the submission of such attestation as part of submission of the initial bid under section 1854(a)(1)(A)(iv), identifying—
(A)
whether each eligible professional described in paragraph (2), with respect to such organization is a meaningful EHR user (as defined in section 1848(o)(2)) for a year specified by the Secretary; and
(B)
whether each eligible hospital described in subsection (m)(1), with respect to such organization, is a meaningful EHR user (as defined in section 1886(n)(3)) for an applicable period specified by the Secretary.
(7)

Posting on website.—
The Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services, in an easily understandable format, a list of the names, business addresses, and business phone numbers of—
(A)
each qualifying MA organization receiving an incentive payment under this subsection for eligible professionals of the organization; and
(B)
the eligible professionals of such organization for which such incentive payment is based.
(8)

Limitation on review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of—
(A)
the methodology and standards for determining payment amounts and payment adjustments under this subsection, including avoiding duplication of payments under paragraph (3)(B) and the specification of rules for the fixed schedule for application of limitation on incentive payments for all eligible professionals under paragraph (3)(C);
(B)
the methodology and standards for determining eligible professionals under paragraph (2); and
(C)
the methodology and standards for determining a meaningful EHR user under section 1848(o)(2), including specification of the means of demonstrating meaningful EHR use under section 1848(o)(3)(C) and selection of measures under section 1848(o)(3)(B).
(m)

Application of Eligible Hospital Incentives for Certain MA Organizations for Adoption and Meaningful Use of Certified EHR Technology.—
(1)

Application.—
Subject to paragraphs (3) and (4), in the case of a qualifying MA organization, the provisions of sections 1886(n) and 1886(b)(3)(B)(ix) shall apply with respect to eligible hospitals described in paragraph (2) of the organization which the organization attests under subsection (l)(6) to be meaningful EHR users in a similar manner as they apply to eligible hospitals under such sections. Incentive payments under paragraph (3) shall be made to and payment adjustments under paragraph (4) shall apply to such qualifying organizations.
(2)

Eligible hospital described.—
With respect to a qualifying MA organization, an eligible hospital described in this paragraph is an eligible hospital (as defined in section 1886(n)(6)(B)) that is under common corporate governance with such organization and serves individuals enrolled under an MA plan offered by such organization.
(3)

Eligible hospital incentive payments.—
(A)

In general.—
In applying section 1886(n)(2) under paragraph (1), instead of the additional payment amount under section 1886(n)(2), there shall be substituted an amount determined by the Secretary to be similar to the estimated amount in the aggregate that would be payable if payment for services furnished by such hospitals was payable under part A instead of this part. In implementing the previous sentence, the Secretary—
(i)
shall, insofar as data to determine the discharge related amount under section 1886(n)(2)(C) for an eligible hospital are not available to the Secretary, use such alternative data and methodology to estimate such discharge related amount as the Secretary determines appropriate; and
(ii)
shall, insofar as data to determine the medicare share described in section 1886(n)(2)(D) for an eligible hospital are not available to the Secretary, use such alternative data and methodology to estimate such share, which data and methodology may include use of the inpatient-bed-days (or discharges) with respect to an eligible hospital during the appropriate period which are attributable to both individuals for whom payment may be made under part A or individuals enrolled in an MA plan under a Medicare Advantage organization under this part as a proportion of the estimated total number of patient-bed-days (or discharges) with respect to such hospital during such period.
(B)

Avoiding duplication of payments.—
(i)

In general.—
In the case of a hospital that for a payment year is an eligible hospital described in paragraph (2) and for which at least one-third of their discharges (or bed-days) of Medicare patients for the year are covered under part A, payment for the payment year shall be made only under section 1886(n) and not under this subsection.
(ii)

Methods.—
In the case of a hospital that is an eligible hospital described in paragraph (2) and also is eligible for an incentive payment under section 1886(n) but is not described in clause (i) for the same payment period, the Secretary shall develop a process—
(I)
to ensure that duplicate payments are not made with respect to an eligible hospital both under this subsection and under section 1886(n); and
(II)
to collect data from Medicare Advantage organizations to ensure against such duplicate payments.
(4)

Payment adjustment.—
(A)
Subject to paragraph (3), in the case of a qualifying MA organization (as defined in section 1853(l)(5)), if, according to the attestation of the organization submitted under subsection (l)(6) for an applicable period, one or more eligible hospitals (as defined in section 1886(n)(6)(B)) that are under common corporate governance with such organization and that serve individuals enrolled under a plan offered by such organization are not meaningful EHR users (as defined in section 1886(n)(3)) with respect to a period, the payment amount payable under this section for such organization for such period shall be the percent specified in subparagraph (B) for such period of the payment amount otherwise provided under this section for such period.
(B)

Specified percent.—
The percent specified under this subparagraph for a year is 100 percent minus a number of percentage points equal to the product of—
(i)
the number of the percentage point reduction effected under section 1886(b)(3)(B)(ix)(I) for the period; and
(ii)
the Medicare hospital expenditure proportion specified in subparagraph (C) for the year.
(C)

Medicare hospital expenditure proportion.—
The Medicare hospital expenditure proportion under this subparagraph for a year is the Secretary's estimate of the proportion, of the expenditures under parts A and B that are not attributable to this part, that are attributable to expenditures for inpatient hospital services.
(D)

Application of payment adjustment.—
In the case that a qualifying MA organization attests that not all eligible hospitals are meaningful EHR users with respect to an applicable period, the Secretary shall apply the payment adjustment under this paragraph based on a methodology specified by the Secretary, taking into account the proportion of such eligible hospitals, or discharges from such hospitals, that are not meaningful EHR users for such period.
(5)

Posting on website.—
The Secretary shall post on the Internet website of the Centers for Medicare & Medicaid Services, in an easily understandable format—
(A)
a list of the names, business addresses, and business phone numbers of each qualifying MA organization receiving an incentive payment under this subsection for eligible hospitals described in paragraph (2); and
(B)
a list of the names of the eligible hospitals for which such incentive payment is based.
(6)

Limitations on review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of—
(A)
the methodology and standards for determining payment amounts and payment adjustments under this subsection, including avoiding duplication of payments under paragraph (3)(B);
(B)
the methodology and standards for determining eligible hospitals under paragraph (2); and
(C)
the methodology and standards for determining a meaningful EHR user under section 1886(n)(3), including specification of the means of demonstrating meaningful EHR use under subparagraph (C) of such section and selection of measures under subparagraph (B) of such section.
(n)

Determination of Blended Benchmark Amount.—
(1)

In general.—
For purposes of subsection (j), subject to paragraphs (3), (4), and (5), the term “blended benchmark amount” means for an area—
(A)
for 2012 the sum of—
(i)
½ of the applicable amount for the area and year; and
(ii)
½ of the amount specified in paragraph (2)(A) for the area and year; and
(B)
for a subsequent year the amount specified in paragraph (2)(A) for the area and year.
(2)

Specified amount.—
(A)

In general.—
The amount specified in this subparagraph for an area and year is the product of—
(i)
the base payment amount specified in subparagraph (E) for the area and year adjusted to take into account the phase-out in the indirect costs of medical education from capitation rates described in subsection (k)(4) and, for 2021 and subsequent years, the exclusion of payments for organ acquisitions for kidney transplants from the capitation rate as described in subsection (k)(5); and
(ii)
the applicable percentage for the area for the year specified under subparagraph (B).
(B)

Applicable percentage.—
Subject to subparagraph (D)56, the applicable percentage specified in this subparagraph for an area for a year in the case of an area that is ranked—
^{56}
Section 1102(c)(2) of Public Law 111–152 provides for an amendment as follows:
(2) in subsection (n)(2)(B), as added by subsection (b), by inserting “, subject to subsection (o)” after “as follows”; and
This amendment does not execute because the phrase “as follows” does not appear.
(i)
in the highest quartile under subparagraph (C) for the previous year is 95 percent;
(ii)
in the second highest quartile under such subparagraph for the previous year is 100 percent;
(iii)
in the third highest quartile under such subparagraph for the previous year is 107.5 percent; or
(iv)
in the lowest quartile under such subparagraph for the previous year is 115 percent.
(C)

Periodic ranking.—
For purposes of this paragraph in the case of an area located—
(i)
in 1 of the 50 States or the District of Columbia, the Secretary shall rank such area in each year specified under subsection (c)(1)(D)(ii) based upon the level of the amount specified in subparagraph (A)(i) for such areas; or
(ii)
in a territory, the Secretary shall rank such areas in each such year based upon the level of the amount specified in subparagraph (A)(i) for such area relative to quartile rankings computed under clause (i).
(D)

1-year transition for changes in applicable percentage.—
If, for a year after 2012, there is a change in the quartile in which an area is ranked compared to the previous year, the applicable percentage for the area in the year shall be the average of—
(i)
the applicable percentage for the area for the previous year; and
(ii)
the applicable percentage that would otherwise apply for the area for the year.
(E)

Base payment amount.—
Subject to subparagraphs (F) and (G), the base payment amount specified in this subparagraph—
(i)
for 2012 is the amount specified in subsection (c)(1)(D) for the area for the year; or
(ii)
for a subsequent year that—
(I)
is not specified under subsection (c)(1)(D)(ii), is the base amount specified in this subparagraph for the area for the previous year, increased by the national per capita MA growth percentage, described in subsection (c)(6) for that succeeding year, but not taking into account any adjustment under subparagraph (C) of such subsection for a year before 2004; and
(II)
is specified under subsection (c)(1)(D)(ii), is the amount specified in subsection (c)(1)(D) for the area for the year.
(F)

Application of indirect medical education phase-out.—
The base payment amount specified in subparagraph (E) for a year shall be adjusted in the same manner under paragraph (4) of subsection (k) as the applicable amount is adjusted under such subsection.
(G)

Application of kidney acquisitions adjustment.—
The base payment amount specified in subparagraph (E) for a year (beginning with 2021) shall be adjusted in the same manner under paragraph (5) of subsection (k) as the applicable amount is adjusted under such subsection.
(3)

Alternative phase-ins.—
(A)

4-year phase-in for certain areas.—
If the difference between the applicable amount (as defined in subsection (k)) for an area for 2010 and the projected 2010 benchmark amount (as defined in subparagraph (C)) for the area is at least $30 but less than $50, the blended benchmark amount for the area is—
(i)
for 2012 the sum of—
(I)
¾ of the applicable amount for the area and year; and
(II)
¼ of the amount specified in paragraph (2)(A) for the area and year;
(ii)
for 2013 the sum of—
(I)
½ of the applicable amount for the area and year; and
(II)
½ of the amount specified in paragraph (2)(A) for the area and year;
(iii)
for 2014 the sum of—
(I)
¼ of the applicable amount for the area and year; and
(II)
¾ of the amount specified in paragraph (2)(A) for the area and year; and
(iv)
for a subsequent year the amount specified in paragraph (2)(A) for the area and year.
(B)

6-year phase-in for certain areas.—
If the difference between the applicable amount (as defined in subsection (k)) for an area for 2010 and the projected 2010 benchmark amount (as defined in subparagraph (C)) for the area is at least $50, the blended benchmark amount for the area is—
(i)
for 2012 the sum of—
(I)
⅚ of the applicable amount for the area and year; and
(II)
⅙ of the amount specified in paragraph (2)(A) for the area and year;
(ii)
for 2013 the sum of—
(I)
⅔ of the applicable amount for the area and year; and
(II)
⅓ of the amount specified in paragraph (2)(A) for the area and year;
(iii)
for 2014 the sum of—
(I)
½ of the applicable amount for the area and year; and
(II)
½ of the amount specified in paragraph (2)(A) for the area and year;
(iv)
for 2015 the sum of—
(I)
⅓ of the applicable amount for the area and year; and
(II)
⅔ of the amount specified in paragraph (2)(A) for the area and year; and
(v)
for 2016 the sum of—
(I)
⅙ of the applicable amount for the area and year; and
(II)
⅚ of the amount specified in paragraph (2)(A) for the area and year; and
(vi)
for a subsequent year the amount specified in paragraph (2)(A) for the area and year.
(C)

Projected 2010 benchmark amount.—
The projected 2010 benchmark amount described in this subparagraph for an area is equal to the sum of—
(i)
½ of the applicable amount (as defined in subsection (k)) for the area for 2010; and
(ii)
½ of the amount specified in paragraph (2)(A) for the area for 2010 but determined as if there were substituted for the applicable percentage specified in clause (ii) of such paragraph the sum of—
(I)
the applicable percent that would be specified under subparagraph (B) of paragraph (2) (determined without regard to subparagraph (D) of such paragraph) for the area for 2010 if any reference in such paragraph to “the previous year” were deemed a reference to 2010; and
(II)
the applicable percentage increase that would apply to a qualifying plan in the area under subsection (o) as if any reference in such subsection to 2012 were deemed a reference to 2010 and as if the determination of a qualifying county under paragraph (3)(B) of such subsection were made for 2010.
(4)

Cap on benchmark amount.—
In no case shall the blended benchmark amount for an area for a year (determined taking into account subsection (o)) be greater than the applicable amount that would (but for the application of this subsection) be determined under subsection (k)(1) for the area for the year.
(5)57

Non-application to pace plans.—
This subsection shall not apply to payments to a PACE program under section 1894.
^{57}
The amendment made by section 3202(b)(2) of Public Law 111–148 which added a paragraph (6) was not executed in light of the repeal of section 3201 of Public Law 111–148 (and the amendments made by such section) by section 1102(a) of Public Law 111–152.
(o)

Applicable Percentage Quality Increases.—
(1)

In general.—
Subject to the succeeding paragraphs, in the case of a qualifying plan with respect to a year beginning with 2012, the applicable percentage under subsection (n)(2)(B) shall be increased on a plan or contract level, as determined by the Secretary—
(A)
for 2012, by 1.5 percentage points;
(B)
for 2013, by 3.0 percentage points; and
(C)
for 2014 or a subsequent year, by 5.0 percentage points.
(2)

Increase for qualifying plans in qualifying counties.—
The increase applied under paragraph (1) for a qualifying plan located in a qualifying county for a year shall be doubled.
(3)

Qualifying plans and qualifying county defined; application of increases to low enrollment and new plans.—
For purposes of this subsection:
(A)

Qualifying plan.—
(i)

In general.—
The term “qualifying plan” means, for a year and subject to paragraph (4), a plan that had a quality rating under paragraph (4) of 4 stars or higher based on the most recent data available for such year.
(ii)

Application of increases to low enrollment plans.—
(I)
2012.—For 2012, the term “qualifying plan” includes an MA plan that the Secretary determines is not able to have a quality rating under paragraph (4) because of low enrollment.
(II)

2013 and subsequent years.—
For 2013 and subsequent years, for purposes of determining whether an MA plan with low enrollment (as defined by the Secretary) is included as a qualifying plan, the Secretary shall establish a method to apply to MA plans with low enrollment (as defined by the Secretary) the computation of quality rating and the rating system under paragraph (4).
(iii)

Application of increases to new plans.—
(I)

In general.—
A new MA plan that meets criteria specified by the Secretary shall be treated as a qualifying plan, except that in applying paragraph (1), the applicable percentage under subsection (n)(2)(B) shall be increased—
- (aa)
for 2012, by 1.5 percentage points;
- (bb)
for 2013, by 2.5 percentage points; and
- (cc)
for 2014 or a subsequent year, by 3.5 percentage points.
(II)

New ma plan defined.—
The term “new MA plan” means, with respect to a year, a plan offered by an organization or sponsor that has not had a contract as a Medicare Advantage organization in the preceding 3-year period.
(B)

Qualifying county.—
The term “qualifying county” means, for a year, a county—
(i)
that has an MA capitation rate that, in 2004, was based on the amount specified in subsection (c)(1)(B) for a Metropolitan Statistical Area with a population of more than 250,000;
(ii)
for which, as of December 2009, of the Medicare Advantage eligible individuals residing in the county at least 25 percent of such individuals were enrolled in Medicare Advantage plans; and
(iii)
that has per capita fee-for-service spending that is lower than the national monthly per capita cost for expenditures for individuals enrolled under the original medicare fee-for-service program for the year.
(4)

Quality determinations for application of increase.—
(A)

Quality determination.—
The quality rating for a plan shall be determined according to a 5-star rating system (based on the data collected under section 1852(e)).
(B)

Plans that failed to report.—
An MA plan which does not report data that enables the Secretary to rate the plan for purposes of this paragraph shall be counted as having a rating of fewer than 3.5 stars.
(C)

Special rule for first 3 plan years for plans that were converted from a reasonable cost reimbursement contract.—
For purposes of applying paragraph (1) and section 1854(b)(1)(C) for the first 3 plan years under this part in the case of an MA plan to which deemed enrollment applies under section 1851(c)(4)—
(i)
such plan shall not be treated as a new MA plan (as defined in paragraph (3)(A)(iii)(II)); and
(ii)
in determining the star rating of the plan under subparagraph (A), to the extent that Medicare Advantage data for such plan is not available for a measure used to determine such star rating, the Secretary shall use data from the period in which such plan was a reasonable cost reimbursement contract.
(D)

Special rule to prevent the artificial inflation of star ratings after the consolidation of medicare advantage plans offered by a single organization.—
(i)

In general.—
If—
(I)
a Medicare Advantage organization has entered into more than one contract with the Secretary with respect to the offering of Medicare Advantage plans; and
(II)
on or after January 1, 2019, the Secretary approves a request from the organization to consolidate the plans under one or more contract (in this subparagraph referred to as a “closed contract”) with the plans offered under a separate contract (in this subparagraph referred to as the “continuing contract”);
with respect to the continuing contract, the Secretary shall adjust the quality rating under the 5-star rating system and any quality increase under this subsection and rebate amounts under section 1854 to reflect an enrollment-weighted average of scores or ratings for the continuing and closed contracts, as determined appropriate by the Secretary.
(ii)

Application.—
An adjustment under clause (i) shall apply for any year for which the quality rating of the continuing contract is based primarily on a measurement period that is prior to the first year in which a closed contract is no longer offered.
(5)

Exception for pace plans.—
This subsection shall not apply to payments to a PACE program under section 1894.
(6)

Quality measurement at the plan level for snps.—
(A)

In general.—
Subject to subparagraph (B), the Secretary may require reporting of data under section 1852(e) for, and apply under this subsection, quality measures at the plan level for specialized MA plans for special needs individuals instead of at the contract level.
(B)

Considerations.—
Prior to applying quality measurement at the plan level under this paragraph, the Secretary shall—
(i)
take into consideration the minimum number of enrollees in a specialized MA plan for special needs individuals in order to determine if a statistically significant or valid measurement of quality at the plan level is possible under this paragraph;
(ii)
take into consideration the impact of such application on plans that serve a disproportionate number of individuals dually eligible for benefits under this title and under title XIX;
(iii)
if quality measures are reported at the plan level, ensure that MA plans are not required to provide duplicative information; and
(iv)
ensure that such reporting does not interfere with the collection of encounter data submitted by MA organizations or the administration of any changes to the program under this part as a result of the collection of such data.
(C)

Application.—
If the Secretary applies quality measurement at the plan level under this paragraph—
(i)
such quality measurement may include Medicare Health Outcomes Survey (HOS), Healthcare Effectiveness Data and Information Set (HEDIS), Consumer Assessment of Healthcare Providers and Systems (CAHPS) measures and quality measures under part D; and
(ii)
the Secretary shall consider applying administrative actions, such as remedies described in section 1857(g)(2), at the plan level.
(7)

Determination of feasibility of quality measurement at the plan level for all ma plans.—
(A)

Determination of feasibility.—
The Secretary shall determine the feasibility of requiring reporting of data under section 1852(e) for, and applying under this subsection, quality measures at the plan level for all MA plans under this part.
(B)

Consideration of change.—
After making a determination under subparagraph (A), the Secretary shall consider requiring such reporting and applying such quality measures at the plan level as described in such subparagraph

premiums and bid amounts
Sec. 1854.
[42 U.S.C. 1395w–24]
(a)

Submission of Proposed Premiums, Bid Amounts, and Related Information.—
(1)

In general.—
(A)

Initial submission.—
Not later than the second Monday in September of 2002, 2003, and 2004 (or the first Monday in June of each subsequent year), each MA organization shall submit to the Secretary, in a form and manner specified by the Secretary and for each MA plan for the service area (or segment of such an area if permitted under subsection (h)) in which it intends to be offered in the following year the following:
(i)
The information described in paragraph (2), (3), (4), or (6)(A) for the type of plan and year involved.
(ii)
The plan type for each plan.
(iii)
The enrollment capacity (if any) in relation to the plan and area.
(B)

Beneficiary rebate information.—
In the case of a plan required to provide a monthly rebate under subsection (b)(1)(C) for a year, the MA organization offering the plan shall submit to the Secretary, in such form and manner and at such time as the Secretary specifies, information on—
(i)
the manner in which such rebate will be provided under clause (ii) of such subsection; and
(ii)
the MA monthly prescription drug beneficiary premium (if any) and the MA monthly supplemental beneficiary premium (if any).
(C)

Paperwork reduction for offering of ma regional plans nationally or in multi-region areas.—
The Secretary shall establish requirements for information submission under this subsection in a manner that promotes the offering of MA regional plans in more than one region (including all regions) through the filing of consolidated information.
(2)

Information required for coordinated care plans before 2006.—
For a Medicare+Choice plan described in section 1851(a)(2)(A), the information described in this paragraph is as follows:
(A)

Basic (and additional) benefits.—
For benefits described in section 1852(a)(1)(A) for a year before 2006—
(i)
the adjusted community rate (as defined in subsection (f)(3));
(ii)
the Medicare+Choice monthly basic beneficiary premium (as defined in subsection (b)(2)(A));
(iii)
a description of deductibles, coinsurance, and copayments applicable under the plan and the actuarial value of such deductibles, coinsurance, and copayments, described in subsection (e)(1)(A); and
(iv)
if required under subsection (f)(1), a description of the additional benefits to be provided pursuant to such subsection and the value determined for such proposed benefits under such subsection.
(B)

Supplemental benefits.—
For benefits described in section 1852(a)(3)—
(i)
the adjusted community rate (as defined in subsection (f)(3));
(ii)
the Medicare+Choice monthly supplemental beneficiary premium (as defined in subsection (b)(2)(B)); and
(iii)
a description of deductibles, coinsurance, and copayments applicable under the plan and the actuarial value of such deductibles, coinsurance, and copayments, described in subsection (e)(2).
(3)

Requirements for msa plans.—
For an MSA plan described, the information for any year in this paragraph is as follows:58
^{58}
The amendment to strike “described” and insert “for any year” in section 1854(a)(3) made by section 222(g)(1)(D) of P.L. 108–173 (117 Stat. 2203) was executed to the second ocurrence of the word “described” in order to reflect the probable intent of the Congress. Also, the first occurrence of the word “described” probably should not appear.
(A)

Basic (and additional) benefits.—
For benefits described in section 1852(a)(1)(A), the amount of the Medicare+Choice monthly MSA premium.
(B)

Supplemental benefits.—
For benefits described in section 1852(a)(3), the amount of the Medicare+Choice monthly supplementary beneficiary premium.
(4)

Requirements for private fee-for-service plans before 2006.—
For a Medicare+Choice plan described in section 1851(a)(2)(C) for benefits described in section 1852(a)(1)(A) for a year before 2006, the information described in this paragraph is as follows:
(A)

Basic (and additional) benefits.—
For benefits described in section 1852(a)(1)(A)—
(i)
the adjusted community rate (as defined in subsection (f)(3));
(ii)
the amount of the Medicare+Choice monthly basic beneficiary premium;
(iii)
a description of the deductibles, coinsurance, and copayments applicable under the plan, and the actuarial value of such deductibles, coinsurance, and copayments, as described in subsection (e)(4)(A); and
(iv)
if required under subsection (f)(1), a description of the additional benefits to be provided pursuant to such subsection and the value determined for such proposed benefits under such subsection.
(B)

Supplemental benefits.—
For benefits described in section 1852(a)(3), the amount of the Medicare+Choice monthly supplemental beneficiary premium (as defined in subsection (b)(2)(B)).
(5)

Review.—
(A)

In general.—
Subject to subparagraph (B), the Secretary shall review the adjusted community rates, the amounts of the basic and supplemental premiums, and values filed under paragraphs (2) and (4) of this subsection and shall approve or disapprove such rates, amounts, and values so submitted. The Chief Actuary of the Centers for Medicare & Medicaid Services shall review the actuarial assumptions and data used by the Medicare+Choice organization with respect to such rates, amounts, and values so submitted to determine the appropriateness of such assumptions and data.
(B)

Exception.—
The Secretary shall not review, approve, or disapprove the amounts submitted under paragraph (3) or, in the case of an MA private fee-for-service plan, subparagraphs (A)(ii) and (B) of paragraph (4).
(C)

Rejection of bids.—
(i)

In general.—
Nothing in this section shall be construed as requiring the Secretary to accept any or every bid submitted by an MA organization under this subsection.
(ii)

Authority to deny bids that propose significant increases in cost sharing or decreases in benefits.—
The Secretary may deny a bid submitted by an MA organization for an MA plan if it proposes significant increases in cost sharing or decreases in benefits offered under the plan.
(6)

Submission of bid amounts by ma organizations beginning in 2006.—
(A)

Information to be submitted.—
For an MA plan (other than an MSA plan) for a plan year beginning on or after January 1, 2006, the information described in this subparagraph is as follows:
(i)
The monthly aggregate bid amount for the provision of all items and services under the plan, which amount shall be based on average revenue requirements (as used for purposes of section 1302(8) of the Public Health Service Act) in the payment area for an enrollee with a national average risk profile for the factors described in section 1853(a)(1)(C) (as specified by the Secretary).
(ii)
The proportions of such bid amount that are attributable to—
(I)
the provision of benefits under the original medicare fee-for-service program option (as defined in section 1852(a)(1)(B)), including, for plan year 2020 and subsequent plan years, the provision of additional telehealth benefits as described in section 1852(m);
(II)
the provision of basic prescription drug coverage; and
(III)
the provision of supplemental health care benefits.
(iii)
The actuarial basis for determining the amount under clause (i) and the proportions described in clause (ii) and such additional information as the Secretary may require to verify such actuarial bases and the projected number of enrollees in each MA local area.
(iv)
A description of deductibles, coinsurance, and copayments applicable under the plan and the actuarial value of such deductibles, coinsurance, and copayments, described in subsection (e)(4)(A).
(v)
With respect to qualified prescription drug coverage, the information required under section 1860D–4, as incorporated under section 1860D–11(b)(2), with respect to such coverage.
In the case of a specialized MA plan for special needs individuals, the information described in this subparagraph is such information as the Secretary shall specify.
(B)

Acceptance and negotiation of bid amounts.—
(i)

Authority.—
Subject to clauses (iii) and (iv), the Secretary has the authority to negotiate regarding monthly bid amounts submitted under subparagraph (A) (and the proportions described in subparagraph (A)(ii)), including supplemental benefits provided under subsection (b)(1)(C)(ii)(I) and in exercising such authority the Secretary shall have authority similar to the authority of the Director of the Office of Personnel Management with respect to health benefits plans under chapter 89 of title 5, United States Code.
(ii)

Application of fehbp standard.—
Subject to clause (iv), the Secretary may only accept such a bid amount or proportion if the Secretary determines that such amount and proportions are supported by the actuarial bases provided under subparagraph (A) and reasonably and equitably reflects the revenue requirements (as used for purposes of section 1302(8) of the Public Health Service Act) of benefits provided under that plan.
(iii)

Noninterference.—
In order to promote competition under this part and part D and in carrying out such parts, the Secretary may not require any MA organization to contract with a particular hospital, physician, or other entity or individual to furnish items and services under this title or require a particular price structure for payment under such a contract to the extent consistent with the Secretary's authority under this part.
(iv)

Exception.—
In the case of a plan described in section 1851(a)(2)(C), the provisions of clauses (i) and (ii) shall not apply and the provisions of paragraph (5)(B), prohibiting the review, approval, or disapproval of amounts described in such paragraph, shall apply to the negotiation and rejection of the monthly bid amounts and the proportions referred to in subparagraph (A).
(b)

Monthly Premium Charged.—
(1)

In general.—
(A)

Rule for other than msa plans.—
Subject to the rebate under subparagraph (C), the monthly amount (if any) of the premium charged to an individual enrolled in a Medicare+Choice plan (other than an MSA plan) offered by a Medicare+Choice organization shall be equal to the sum of the Medicare+Choice monthly basic beneficiary premium, the Medicare+Choice monthly supplementary beneficiary premium (if any), and, if the plan provides qualified prescription drug coverage, the MA monthly prescription drug beneficiary premium.
(B)

MSA plans.—
The monthly amount of the premium charged to an individual enrolled in an MSA plan offered by a Medicare+Choice organization shall be equal to the Medicare+Choice monthly supplemental beneficiary premium (if any).
(C)

Beneficiary rebate rule.—
(i)

Requirement.—
The MA plan shall provide to the enrollee a monthly rebate equal to 75 percent (or the applicable rebate percentage specified in clause (iii) in the case of plan years beginning on or after January 1, 2012) of the average per capita savings (if any) described in paragraph (3)(C) or (4)(C), as applicable to the plan and year involved.
(ii)

Form of rebate for plan years before 2012.—
For plan years before 2012, a rebate required under this subparagraph shall be provided through the application of the amount of the rebate toward one or more of the following:
(I)

Provision of supplemental health care benefits and payment for premium for supplemental benefits.—
The provision of supplemental health care benefits described in section 1852(a)(3) in a manner specified under the plan, which may include the reduction of cost-sharing otherwise applicable as well as additional health care benefits which are not benefits under the original medicare fee-for-service program option, or crediting toward an MA monthly supplemental beneficiary premium (if any).
(II)

Payment for premium for prescription drug coverage.—
Crediting toward the MA monthly prescription drug beneficiary premium.
(III)

Payment toward part b premium.—
Crediting toward the premium imposed under part B (determined without regard to the application of subsections (b), (h), and (i) of section 1839).
(iii)

Applicable rebate percentage.—
The applicable rebate percentage specified in this clause for a plan for a year, based on the system under section 1853(o)(4)(A), is the sum of—
(I)
the product of the old phase-in proportion for the year under clause (iv) and 75 percent; and
(II)
the product of the new phase-in proportion for the year under clause (iv) and the final applicable rebate percentage under clause (v).
(iv)

Old and new phase-in proportions.—
For purposes of clause (iv)—
(I)
for 2012, the old phase-in proportion is ⅔ and the new phase-in proportion is ⅓;
(II)
for 2013, the old phase-in proportion is ⅓ and the new phase-in proportion is ⅔; and
(III)
for 2014 and any subsequent year, the old phase-in proportion is 0 and the new phase-in proportion is 1.
(v)

Final applicable rebate percentage.—
Subject to clause (vi), the final applicable rebate percentage under this clause is—
(I)
in the case of a plan with a quality rating under such system of at least 4.5 stars, 70 percent;
(II)
in the case of a plan with a quality rating under such system of at least 3.5 stars and less than 4.5 stars, 65 percent; and
(III)
in the case of a plan with a quality rating under such system of less than 3.5 stars, 50 percent.
(vi)

Treatment of low enrollment and new plans.—
For purposes of clause (v)—
(I)
for 2012, in the case of a plan described in subclause (I) of subsection (o)(3)(A)(ii), the plan shall be treated as having a rating of 4.5 stars; and
(II)
for 2012 or a subsequent year, in the case of a new MA plan (as defined under subclause (III) of subsection (o)(3)(A)(iii)) that is treated as a qualifying plan pursuant to subclause (I) of such subsection, the plan shall be treated as having a rating of 3.5 stars.
(vii)

Disclosure relating to rebates.—
The plan shall disclose to the Secretary information on the form and amount of the rebate provided under this subparagraph or the actuarial value in the case of supplemental health care benefits.
(viii)

Application of part b premium reduction.—
Insofar as an MA organization elects to provide a rebate under this subparagraph under a plan as a credit toward the part B premium under clause (ii)(III), the Secretary shall apply such credit to reduce the premium under section 1839 of each enrollee in such plan as provided in section 1840(i).
(2)

Premium and bid terminology defined.—
For purposes of this part:
(A)

MA monthly basic beneficiary premium.—
The term “MA monthly basic beneficiary premium” means, with respect to an MA plan—
(i)
described in section 1853(a)(1)(B)(i) (relating to plans providing rebates), zero; or
(ii)
described in section 1853(a)(1)(B)(ii), the amount (if any) by which the unadjusted MA statutory non-drug monthly bid amount (as defined in subparagraph (E)) exceeds the applicable unadjusted MA area-specific non-drug monthly benchmark amount (as defined in section 1853(j)).
(B)

MA monthly prescription drug beneficiary premium.—
The term “MA monthly prescription drug beneficiary premium” means, with respect to an MA plan, the base beneficiary premium (as determined under paragraph (2) or (8) (as applicable) of section 1860D–13(a) and as adjusted under section 1860D–13(a)(1)(B)), less the amount of rebate credited toward such amount under section 1854(b)(1)(C)(ii)(II).
(C)

MA monthly supplemental beneficiary premium.—
(i)

In general.—
The term “MA monthly supplemental beneficiary premium” means, with respect to an MA plan, the portion of the aggregate monthly bid amount submitted under clause (i) of subsection (a)(6)(A) for the year that is attributable under clause (ii)(III) of such subsection to the provision of supplemental health care benefits, less the amount of rebate credited toward such portion under section 1854(b)(1)(C)(ii)(I).
(ii)

Application of ma monthly supplementary beneficiary premium.—
For plan years beginning on or after January 1, 2012, any MA monthly supplementary beneficiary premium charged to an individual enrolled in an MA plan shall be used for the purposes, and in the priority order, described in subclauses (I) through (III) of paragraph (1)(C)(iii).
(D)

Medicare+Choice monthly MSA premium.—
The term “Medicare+Choice monthly MSA premium” means, with respect to a Medicare+Choice plan, the amount of such premium filed under subsection (a)(3)(A) for the plan.
(E)

Unadjusted ma statutory non-drug monthly bid amount.—
The term “unadjusted MA statutory non-drug monthly bid amount” means the portion of the bid amount submitted under clause (i) of subsection (a)(6)(A) for the year that is attributable under clause (ii)(I) of such subsection to the provision of benefits under the original medicare fee-for-service program option (as defined in section 1852(a)(1)(B)).
(3)

Computation of average per capita monthly savings for local plans.—
For purposes of paragraph (1)(C)(i), the average per capita monthly savings referred to in such paragraph for an MA local plan and year is computed as follows:
(A)

Determination of statewide average risk adjustment for local plans.—
(i)

In general.—
Subject to clause (iii), the Secretary shall determine, at the same time rates are promulgated under section 1853(b)(1) (beginning with 2006) for each State, the average of the risk adjustment factors to be applied under section 1853(a)(1)(C) to payment for enrollees in that State for MA local plans.
(ii)

Treatment of states for first year in which local plan offered.—
In the case of a State in which no MA local plan was offered in the previous year, the Secretary shall estimate such average. In making such estimate, the Secretary may use average risk adjustment factors applied to comparable States or applied on a national basis.
(iii)

Authority to determine risk adjustment for areas other than states.—
The Secretary may provide for the determination and application of risk adjustment factors under this subparagraph on the basis of areas other than States or on a plan-specific basis.
(B)

Determination of risk adjusted benchmark and risk-adjusted bid for local plans.—
For each MA plan offered in a local area in a State, the Secretary shall—
(i)
adjust the applicable MA area-specific non-drug monthly benchmark amount (as defined in section 1853(j)(1)) for the area by the average risk adjustment factor computed under subparagraph (A); and
(ii)
adjust the unadjusted MA statutory non-drug monthly bid amount by such applicable average risk adjustment factor.
(C)

Determination of average per capita monthly savings.—
The average per capita monthly savings described in this subparagraph for an MA local plan is equal to the amount (if any) by which—
(i)
the risk-adjusted benchmark amount computed under subparagraph (B)(i); exceeds
(ii)
the risk-adjusted bid computed under subparagraph (B)(ii).
(4)

Computation of average per capita monthly savings for regional plans.—
For purposes of paragraph (1)(C)(i), the average per capita monthly savings referred to in such paragraph for an MA regional plan and year is computed as follows:
(A)

Determination of regionwide average risk adjustment for regional plans.—
(i)

In general.—
The Secretary shall determine, at the same time rates are promulgated under section 1853(b)(1) (beginning with 2006) for each MA region the average of the risk adjustment factors to be applied under section 1853(a)(1)(C) to payment for enrollees in that region for MA regional plans.
(ii)

Treatment of regions for first year in which regional plan offered.—
In the case of an MA region in which no MA regional plan was offered in the previous year, the Secretary shall estimate such average. In making such estimate, the Secretary may use average risk adjustment factors applied to comparable regions or applied on a national basis.
(iii)

Authority to determine risk adjustment for areas other than regions.—
The Secretary may provide for the determination and application of risk adjustment factors under this subparagraph on the basis of areas other than MA regions or on a plan-specific basis.
(B)

Determination of risk-adjusted benchmark and risk-adjusted bid for regional plans.—
For each MA regional plan offered in a region, the Secretary shall—
(i)
adjust the applicable MA area-specific non-drug monthly benchmark amount (as defined in section 1853(j)(2)) for the region by the average risk adjustment factor computed under subparagraph (A); and
(ii)
adjust the unadjusted MA statutory non-drug monthly bid amount by such applicable average risk adjustment factor.
(C)

Determination of average per capita monthly savings.—
The average per capita monthly savings described in this subparagraph for an MA regional plan is equal to the amount (if any) by which—
(i)
the risk-adjusted benchmark amount computed under subparagraph (B)(i); exceeds
(ii)
the risk-adjusted bid computed under subparagraph (B)(ii).
(c)

Uniform Premium and Bid Amounts.—
Except as permitted under section 1857(i), the MA monthly bid amount submitted under subsection (a)(6), the amounts of the MA monthly basic, prescription drug, and supplemental beneficiary premiums, and the MA monthly MSA premium charged under subsection (b) of an MA organization under this part may not vary among individuals enrolled in the plan.
(d)

Terms and Conditions of Imposing Premiums.—
(1)

In general.—
Each Medicare+Choice organization shall permit the payment of Medicare+Choice monthly basic, prescription drug, and supplemental beneficiary premiums on a monthly basis, may terminate election of individuals for a Medicare+Choice plan for failure to make premium payments only in accordance with section 1851(g)(3)(B)(i), and may not provide for cash or other monetary rebates as an inducement for enrollment or otherwise.
(2)

Beneficiary's option of payment through withholding from social security payment or use of electronic funds transfer mechanism.—
In accordance with regulations, an MA organization shall permit each enrollee, at the enrollee's option, to make payment of premiums (if any) under this part to the organization through—
(A)
withholding from benefit payments in the manner provided under section 1840 with respect to monthly premiums under section 1839;
(B)
an electronic funds transfer mechanism (such as automatic charges of an account at a financial institution or a credit or debit card account); or
(C)
such other means as the Secretary may specify, including payment by an employer or under employment-based retiree health coverage (as defined in section 1860D–22(c)(1)) on behalf of an employee or former employee (or dependent).
All premium payments that are withheld under subparagraph (A) shall be credited to the appropriate Trust Fund (or Account thereof), as specified by the Secretary, under this title and shall be paid to the MA organization involved. No charge may be imposed under an MA plan with respect to the election of the payment option described in subparagraph (A). The Secretary shall consult with the Commissioner of Social Security and the Secretary of the Treasury regarding methods for allocating premiums withheld under subparagraph (A) among the appropriate Trust Funds and Account.
(3)

Information necessary for collection.—
In order to carry out paragraph (2)(A) with respect to an enrollee who has elected such paragraph to apply, the Secretary shall transmit to the Commissioner of Social Security—
(A)
by the beginning of each year, the name, social security account number, consolidated monthly beneficiary premium described in paragraph (4) owed by such enrollee for each month during the year, and other information determined appropriate by the Secretary, in consultation with the Commissioner of Social Security; and
(B)
periodically throughout the year, information to update the information previously transmitted under this paragraph for the year.
(4)

Consolidated monthly beneficiary premium.—
In the case of an enrollee in an MA plan, the Secretary shall provide a mechanism for the consolidation of—
(A)
the MA monthly basic beneficiary premium (if any);
(B)
the MA monthly supplemental beneficiary premium (if any); and
(C)
the MA monthly prescription drug beneficiary premium (if any).
(e)

Limitation on Enrollee Liability.—
(1)

For basic and additional benefits before 2006.—
For periods before 2006, in no event may—
(A)
the Medicare+Choice monthly basic beneficiary premium (multiplied by 12) and the actuarial value of the deductibles, coinsurance, and copayments applicable on average to individuals enrolled under this part with a Medicare+Choice plan described in section 1851(a)(2)(A) of an organization with respect to required benefits described in section 1852(a)(1)(A) and additional benefits (if any) required under subsection (f)(1)(A) for a year, exceed
(B)
the actuarial value of the deductibles, coinsurance, and copayments that would be applicable on average to individuals entitled to benefits under part A and enrolled under part B if they were not members of a Medicare+Choice organization for the year.
(2)

For supplemental benefits before 2006.—
For periods before 2006, if the Medicare+Choice organization provides to its members enrolled under this part in a Medicare+Choice plan described in section 1851(a)(2)(A) with respect to supplemental benefits described in section 1852(a)(3), the sum of the Medicare+Choice monthly supplemental beneficiary premium (multiplied by 12) charged and the actuarial value of its deductibles, coinsurance, and copayments charged with respect to such benefits may not exceed the adjusted community rate for such benefits (as defined in subsection (f)(3)).
(3)

Determination on other basis.—
If the Secretary determines that adequate data are not available to determine the actuarial value under paragraph (1)(A), (2), or (4) the Secretary may determine such amount with respect to all individuals in same geographic area, the State, or in the United States, eligible to enroll in the Medicare+Choice plan involved under this part or on the basis of other appropriate data.
(4)

Special rule for private fee-for-service plans and for basic benefits beginning in 2006.—
With respect to a Medicare+Choice private fee-for-service plan (other than a plan that is an MSA plan) and for periods beginning with 2006, with respect to an MA plan described in section 1851(a)(2)(A), in no event may—
(A)
the actuarial value of the deductibles, coinsurance, and copayments applicable on average to individuals enrolled under this part with such a plan of an organization with respect to benefits under the original medicare fee-for-service program option, exceed
(B)
the actuarial value of the deductibles, coinsurance, and copayments that would be applicable with respect to such benefits on average to individuals entitled to benefits under part A and enrolled under part B if they were not members of a Medicare+Choice organization for the year.
(f)

Requirement for Additional Benefits Before 2006.—
(1)

Requirement.—
(A)

In general.—
For years before 2006, each Medicare+Choice organization (in relation to a Medicare+Choice plan, other than an MSA plan, it offers) shall provide that if there is an excess amount (as defined in subparagraph (B)) for the plan for a contract year, subject to the succeeding provisions of this subsection, the organization shall provide to individuals such additional benefits (as the organization may specify) in a value which the Secretary determines is at least equal to the adjusted excess amount (as defined in subparagraph (C)).
(B)

Excess amount.—
For purposes of this paragraph, the “excess amount”, for an organization for a plan, is the amount (if any) by which—
(i)
the average of the capitation payments made to the organization under section 1853 for the plan at the beginning of contract year, exceeds
(ii)
the actuarial value of the required benefits described in section 1852(a)(1)(A) under the plan for individuals under this part, as determined based upon an adjusted community rate described in paragraph (3) (as reduced for the actuarial value of the coinsurance, copayments, and deductibles under parts A and B).
(C)

Adjusted excess amount.—
For purposes of this paragraph, the “adjusted excess amount”, for an organization for a plan, is the excess amount reduced to reflect any amount withheld and reserved for the organization for the year under paragraph (2).
(D)

Uniform application.—
This paragraph shall be applied uniformly for all enrollees for a plan.
(E)

Premium reductions.—
(i)

In general.—
Subject to clause (ii), as part of providing any additional benefits required under subparagraph (A), a Medicare+Choice organization may elect a reduction in its payments under section 1853(a)(1)(A) with respect to a Medicare+Choice plan and the Secretary shall apply such reduction to reduce the premium under section 1839 of each enrollee in such plan as provided in section 1840(i).
(ii)

Amount of reduction.—
The amount of the reduction under clause (i) with respect to any enrollee in a Medicare+Choice plan—
(I)
may not exceed 125 percent of the premium described under section 1839(a)(3); and
(II)
shall apply uniformly to each enrollee of the Medicare+Choice plan to which such reduction applies.
(F)

Construction.—
Nothing in this subsection shall be construed as preventing a Medicare+Choice organization from providing supplemental benefits (described in section 1852(a)(3)) that are in addition to the health care benefits otherwise required to be provided under this paragraph and from imposing a premium for such supplemental benefits.
(2)

Stabilization fund.—
A Medicare+Choice organization may provide that a part of the value of an excess amount described in 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 such paragraph. Any of such value of the amount reserved which is not provided as additional benefits described in paragraph (1)(A) to individuals electing the Medicare+Choice plan of the organization in accordance with such paragraph prior to the end of such periods, shall revert for the use of such trust funds.
(3)

Adjusted community rate.—
For purposes of this subsection, subject to paragraph (4), the term “adjusted community rate” for a service or services means, at the election of a Medicare+Choice organization, either—
(A)
the rate of payment for that service or services which the Secretary annually determines would apply to an individual electing a Medicare+Choice plan under this part 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 such an individual, as the Secretary annually estimates is attributable to that service or services,
but adjusted for differences between the utilization characteristics of the individuals electing coverage under this part and the utilization characteristics of the other enrollees with the plan (or, if the Secretary finds that adequate data are not available to adjust for those differences, the differences between the utilization characteristics of individuals selecting other Medicare+Choice coverage, or Medicare+Choice eligible individuals in the area, in the State, or in the United States, eligible to elect Medicare+Choice coverage under this part and the utilization characteristics of the rest of the population in the area, in the State, or in the United States, respectively).
(4)

Determination based on insufficient data.—
For purposes of this subsection, if the Secretary finds that there is insufficient enrollment experience to determine an average of the capitation payments to be made under this part at the beginning of a contract period or to determine (in the case of a newly operated provider-sponsored organization or other new organization) the adjusted community rate for the organization, the Secretary may determine such an average based on the enrollment experience of other contracts entered into under this part and may determine such a rate using data in the general commercial marketplace.
(g)

Prohibition of State Imposition of Premium Taxes.—
No State may impose a premium tax or similar tax with respect to payments to Medicare+Choice organizations under section 1853 or premiums paid to such organizations under this part.
(h)

Permitting Use of Segments of Service Areas.—
The Secretary shall permit a Medicare+Choice organization to elect to apply the provisions of this section uniformly to separate segments of a service area (rather than uniformly to an entire service area) as long as such segments are composed of one or more Medicare+Choice payment areas.

organizational and financial requirements for medicare+choice organizations; provider-sponsored organizations
Sec. 1855.
[42 U.S.C. 1395w–25]
(a)

Organized and Licensed Under State Law.—
(1)

In general.—
Subject to paragraphs (2) and (3), a Medicare+Choice organization shall be organized and licensed under State law as a risk-bearing entity eligible to offer health insurance or health benefits coverage in each State in which it offers a Medicare+Choice plan.
(2)

Special exception for provider-sponsored organizations.—
(A)

In general.—
In the case of a provider-sponsored organization that seeks to offer a Medicare+Choice plan in a State, the Secretary shall waive the requirement of paragraph (1) that the organization be licensed in that State if—
(i)
the organization files an application for such waiver with the Secretary by not later than November 1, 2002, and
(ii)
the Secretary determines, based on the application and other evidence presented to the Secretary, that any of the grounds for approval of the application described in subparagraph (B), (C), or (D) has been met.
(B)

Failure to act on licensure application on a timely basis.—
The ground for approval of such a waiver application described in this subparagraph is that the State has failed to complete action on a licensing application of the organization within 90 days of the date of the State's receipt of a substantially complete application. No period before the date of the enactment of this section shall be included in determining such 90-day period.
(C)

Denial of application based on discriminatory treatment.—
The ground for approval of such a waiver application described in this subparagraph is that the State has denied such a licensing application and—
(i)
the standards or review process imposed by the State as a condition of approval of the license imposes any material requirements, procedures, or standards (other than solvency requirements) to such organizations that are not generally applicable to other entities engaged in a substantially similar business, or
(ii)
the State requires the organization, as a condition of licensure, to offer any product or plan other than a Medicare+Choice plan.
(D)

Denial of application based on application of solvency requirements.—
With respect to waiver applications filed on or after the date of publication of solvency standards under section 1856(a), the ground for approval of such a waiver application described in this subparagraph is that the State has denied such a licensing application based (in whole or in part) on the organization's failure to meet applicable solvency requirements and—
(i)
such requirements are not the same as the solvency standards established under section 1856(a); or
(ii)
the State has imposed as a condition of approval of the license documentation or information requirements relating to solvency or other material requirements, procedures, or standards relating to solvency that are different from the requirements, procedures, and standards applied by the Secretary under subsection (d)(2).
For purposes of this paragraph, the term “solvency requirements” means requirements relating to solvency and other matters covered under the standards established under section 1856(a).
(E)

Treatment of waiver.—
In the case of a waiver granted under this paragraph for a provider-sponsored organization with respect to a State—
(i)

Limitation to state.—
The waiver shall be effective only with respect to that State and does not apply to any other State.
(ii)

Limitation to 36-month period.—
The waiver shall be effective only for a 36-month period and may not be renewed.
(iii)

Conditioned on compliance with consumer protection and quality standards.—
The continuation of the waiver is conditioned upon the organization's compliance with the requirements described in subparagraph (G).
(iv)

Preemption of state law.—
Any provisions of law of that State which relate to the licensing of the organization and which prohibit the organization from providing coverage pursuant to a contract under this part shall be superseded.
(F)

Prompt action on application.—
The Secretary shall grant or deny such a waiver application within 60 days after the date the Secretary determines that a substantially complete waiver application has been filed. Nothing in this section shall be construed as preventing an organization which has had such a waiver application denied from submitting a subsequent waiver application.
(G)

Application and enforcement of state consumer protection and quality standards.—
(i)

In general.—
A waiver granted under this paragraph to an organization with respect to licensing under State law is conditioned upon the organization's compliance with all consumer protection and quality standards insofar as such standards—
(I)
would apply in the State to the organization if it were licensed under State law;
(II)
are generally applicable to other Medicare+Choice organizations and plans in the State; and
(III)
are consistent with the standards established under this part.
Such standards shall not include any standard preempted under section 1856(b)(3)(B).
(ii)

Incorporation into contract.—
In the case of such a waiver granted to an organization with respect to a State, the Secretary shall incorporate the requirement that the organization (and Medicare+Choice plans it offers) comply with standards under clause (i) as part of the contract between the Secretary and the organization under section 1857.
(iii)

Enforcement.—
In the case of such a waiver granted to an organization with respect to a State, the Secretary may enter into an agreement with the State under which the State agrees to provide for monitoring and enforcement activities with respect to compliance of such an organization and its Medicare+Choice plans with such standards. Such monitoring and enforcement shall be conducted by the State in the same manner as the State enforces such standards with respect to other Medicare+Choice organizations and plans, without discrimination based on the type of organization to which the standards apply. Such an agreement shall specify or establish mechanisms by which compliance activities are undertaken, while not lengthening the time required to review and process applications for waivers under this paragraph.
(H)

Report.—
By not later than December 31, 2001, the Secretary shall submit to the Committee on Ways and Means and the Committee on Commerce of the House of Representatives and the Committee on Finance of the Senate a report regarding whether the waiver process under this paragraph should be continued after December 31, 2002. In making such recommendation, the Secretary shall consider, among other factors, the impact of such process on beneficiaries and on the long-term solvency of the program under this title.
(3)

Licensure does not substitute for or constitute certification.—
The fact that an organization is licensed in accordance with paragraph (1) does not deem the organization to meet other requirements imposed under this part.
(b)

Assumption of Full Financial Risk.—
The Medicare+Choice organization shall assume full financial risk on a prospective basis for the provision of the health care services for which benefits are required to be provided under section 1852(a)(1), except that the organization—
(1)
may obtain insurance or make other arrangements for the cost of providing to any enrolled member such services the aggregate value of which exceeds such aggregate level as the Secretary specifies from time to time,
(2)
may obtain insurance or make other arrangements for the cost of such services provided to its enrolled members other than through the organization because medical necessity required their provision before they could be secured through the organization,
(3)
may 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
(4)
may make arrangements with physicians or other health care 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.
(c)

Certification of Provision Against Risk of Insolvency for Unlicensed PSOs.—
(1)

In general.—
Each Medicare+Choice organization that is a provider-sponsored organization, that is not licensed by a State under subsection (a), and for which a waiver application has been approved under subsection (a)(2), shall meet standards established under section 1856(a) relating to the financial solvency and capital adequacy of the organization.
(2)

Certification process for solvency standards for psos.—
The Secretary shall establish a process for the receipt and approval of applications of a provider-sponsored organization described in paragraph (1) for certification (and periodic recertification) of the organization as meeting such solvency standards. Under such process, the Secretary shall act upon such a certification application not later than 60 days after the date the application has been received.
(d)

Provider-Sponsored Organization Defined.—
(1)

In general.—
In this part, the term “provider-sponsored organization” means a public or private entity—
(A)
that is established or organized, and operated, by a health care provider, or group of affiliated health care providers,
(B)
that provides a substantial proportion (as defined by the Secretary in accordance with paragraph (2)) of the health care items and services under the contract under this part directly through the provider or affiliated group of providers, and
(C)
with respect to which the affiliated providers share, directly or indirectly, substantial financial risk with respect to the provision of such items and services and have at least a majority financial interest in the entity.
(2)

Substantial proportion.—
In defining what is a “substantial proportion” for purposes of paragraph (1)(B), the Secretary—
(A)
shall take into account the need for such an organization to assume responsibility for providing—
(i)
significantly more than the majority of the items and services under the contract under this section through its own affiliated providers; and
(ii)
most of the remainder of the items and services under the contract through providers with which the organization has an agreement to provide such items and services,
in order to assure financial stability and to address the practical considerations involved in integrating the delivery of a wide range of service providers;
(B)
shall take into account the need for such an organization to provide a limited proportion of the items and services under the contract through providers that are neither affiliated with nor have an agreement with the organization; and
(C)
may allow for variation in the definition of substantial proportion among such organizations based on relevant differences among the organizations, such as their location in an urban or rural area.
(3)

Affiliation.—
For purposes of this subsection, a provider is “affiliated” with another provider if, through contract, ownership, or otherwise—
(A)
one provider, directly or indirectly, controls, is controlled by, or is under common control with the other,
(B)
both providers are part of a controlled group of corporations under section 1563 of the Internal Revenue Code of 1986,
(C)
each provider is a participant in a lawful combination under which each provider shares substantial financial risk in connection with the organization's operations, or
(D)
both providers are part of an affiliated service group under section 414 of such Code.
(4)

Control.—
For purposes of paragraph (3), control is presumed to exist if one party, directly or indirectly, owns, controls, or holds the power to vote, or proxies for, not less than 51 percent of the voting rights or governance rights of another.
(5)

Health care provider defined.—
In this subsection, the term “health care provider” means—
(A)
any individual who is engaged in the delivery of health care services in a State and who is required by State law or regulation to be licensed or certified by the State to engage in the delivery of such services in the State, and
(B)
any entity that is engaged in the delivery of health care services in a State and that, if it is required by State law or regulation to be licensed or certified by the State to engage in the delivery of such services in the State, is so licensed.
(6)

Regulations.—
The Secretary shall issue regulations to carry out this subsection.

establishment of standards
Sec. 1856.
[42 U.S.C. 1395w–26]
(a)

Establishment of Solvency Standards for Provider-Sponsored Organizations.—
(1)

Establishment.—
(A)

In general.—
The Secretary shall establish, on an expedited basis and using a negotiated rulemaking process under subchapter III of chapter 5 of title 5, United States Code, standards described in section 1855(c)(1) (relating to the financial solvency and capital adequacy of the organization) that entities must meet to qualify as provider-sponsored organizations under this part.
(B)

Factors to consider for solvency standards.—
In establishing solvency standards under subparagraph (A) for provider-sponsored organizations, the Secretary shall consult with interested parties and shall take into account—
(i)
the delivery system assets of such an organization and ability of such an organization to provide services directly to enrollees through affiliated providers,
(ii)
alternative means of protecting against insolvency, including reinsurance, unrestricted surplus, letters of credit, guarantees, organizational insurance coverage, partnerships with other licensed entities, and valuation attributable to the ability of such an organization to meet its service obligations through direct delivery of care, and
(iii)
any standards developed by the National Association of Insurance Commissioners specifically for risk-based health care delivery organizations.
(C)

Enrollee protection against insolvency.—
Such standards shall include provisions to prevent enrollees from being held liable to any person or entity for the Medicare+Choice organization's debts in the event of the organization's insolvency.
(2)

Publication of notice.—
In carrying out the rulemaking process under this subsection, the Secretary, after consultation with the National Association of Insurance Commissioners, the American Academy of Actuaries, organizations representative of medicare beneficiaries, and other interested parties, shall publish the notice provided for under section 564(a) of title 5, United States Code, by not later than 45 days after the date of the enactment of this section.
(3)

Target date for publication of rule.—
As part of the notice under paragraph (2), and for purposes of this subsection, the “target date for publication” (referred to in section 564(a)(5) of such title) shall be April 1, 1998.
(4)

Abbreviated period for submission of comments.—
In applying section 564(c) of such title under this subsection, “15 days” shall be substituted for “30 days”.
(5)

Appointment of negotiated rulemaking committee and facilitator.—
The Secretary shall provide for—
(A)
the appointment of a negotiated rulemaking committee under section 565(a) of such title by not later than 30 days after the end of the comment period provided for under section 564(c) of such title (as shortened under paragraph (4)), and
(B)
the nomination of a facilitator under section 566(c) of such title by not later than 10 days after the date of appointment of the committee.
(6)

Preliminary committee report.—
The negotiated rulemaking committee appointed under paragraph (5) shall report to the Secretary, by not later than January 1, 1998, regarding the committee's progress on achieving a consensus with regard to the rulemaking proceeding and whether such consensus is likely to occur before 1 month before the target date for publication of the rule. If the committee reports that the committee has failed to make significant progress towards such consensus or is unlikely to reach such consensus by the target date, the Secretary may terminate such process and provide for the publication of a rule under this subsection through such other methods as the Secretary may provide.
(7)

Final committee report.—
If the committee is not terminated under paragraph (6), the rulemaking committee shall submit a report containing a proposed rule by not later than 1 month before the target date of publication.
(8)

Interim, final effect.—
The Secretary shall publish a rule under this subsection in the Federal Register by not later than the target date of publication. Such rule shall be effective and final immediately on an interim basis, but is subject to change and revision after public notice and opportunity for a period (of not less than 60 days) for public comment. In connection with such rule, the Secretary shall specify the process for the timely review and approval of applications of entities to be certified as provider-sponsored organizations pursuant to such rules and consistent with this subsection.
(9)

Publication of rule after public comment.—
The Secretary shall provide for consideration of such comments and republication of such rule by not later than 1 year after the target date of publication.
(b)

Establishment of Other Standards.—
(1)

In general.—
The Secretary shall establish by regulation other standards (not described in subsection (a)) for Medicare+Choice organizations and plans consistent with, and to carry out, this part. The Secretary shall publish such regulations by June 1, 1998. In order to carry out this requirement in a timely manner, the Secretary may promulgate regulations that take effect on an interim basis, after notice and pending opportunity for public comment.
(2)

Use of current standards.—
Consistent with the requirements of this part, standards established under this subsection shall be based on standards established under section 1876 to carry out analogous provisions of such section.
(3)

Relation to state laws.—
The standards established under this part shall supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to MA plans which are offered by MA organizations under this part.
(4)

Prohibition of midyear implementation of significant new regulatory requirements.—
The Secretary may not implement, other than at the beginning of a calendar year, regulations under this section that impose new, significant regulatory requirements on a Medicare+Choice organization or plan.

contracts with medicare+choice organizations
Sec. 1857.
[42 U.S.C. 1395w–27]
(a)

In General.—
The Secretary shall not permit the election under section 1851 of a Medicare+Choice plan offered by a Medicare+Choice organization under this part, and no payment shall be made under section 1853 to an organization, unless the Secretary has entered into a contract under this section with the organization with respect to the offering of such plan. Such a contract with an organization may cover more than 1 Medicare+Choice plan. Such contract shall provide that the organization agrees to comply with the applicable requirements and standards of this part and the terms and conditions of payment as provided for in this part.
(b)

Minimum Enrollment Requirements.—
(1)

In general.—
Subject to paragraph (2), the Secretary may not enter into a contract under this section with a Medicare+Choice organization unless the organization has—
(A)
at least 5,000 individuals (or 1,500 individuals in the case of an organization that is a provider-sponsored organization) who are receiving health benefits through the organization, or
(B)
at least 1,500 individuals (or 500 individuals in the case of an organization that is a provider-sponsored organization) who are receiving health benefits through the organization if the organization primarily serves individuals residing outside of urbanized areas.
(2)

Application to msa plans.—
In applying paragraph (1) in the case of a Medicare+Choice organization that is offering an MSA plan, paragraph (1) shall be applied by substituting covered lives for individuals.
(3)

Allowing transition.—
The Secretary may waive the requirement of paragraph (1) during the first 3 contract years with respect to an organization.
(c)

Contract Period and Effectiveness.—
(1)

Period.—
Each contract under this section shall be for a term of at least 1 year, as determined by the Secretary, and may be made automatically renewable from term to term in the absence of notice by either party of intention to terminate at the end of the current term.
(2)

Termination authority.—
In accordance with procedures established under subsection (h), the Secretary may at any time terminate any such contract if the Secretary determines that the organization—
(A)
has failed substantially to carry out the contract;
(B)
is carrying out the contract in a manner inconsistent with the efficient and effective administration of this part; or
(C)
no longer substantially meets the applicable conditions of this part.
(3)

Effective date of contracts.—
The effective date of any contract executed pursuant to this section shall be specified in the contract, except that in no case shall a contract under this section which provides for coverage under an MSA plan be effective before January 1999 with respect to such coverage.
(4)

Previous terminations.—
(A)

In general.—
The Secretary may not enter into a contract with a Medicare+Choice organization if a previous contract with that organization under this section was terminated at the request of the organization within the preceding 2-year period, except as provided in subparagraph (B) and except in such other circumstances which warrant special consideration, as determined by the Secretary.
(B)

Earlier re-entry permitted where change in payment policy.—
Subparagraph (A) shall not apply with respect to the offering by a Medicare+Choice organization of a Medicare+Choice plan in a Medicare+Choice payment area if during the 6-month period beginning on the date the organization notified the Secretary of the intention to terminate the most recent previous contract, there was a legislative change enacted (or a regulatory change adopted) that has the effect of increasing payment amounts under section 1853 for that Medicare+Choice payment area.
(5)

Contracting authority.—
The authority vested in the Secretary by this part may be performed without regard to such provisions of law or regulations relating to the making, performance, amendment, or modification of contracts of the United States as the Secretary may determine to be inconsistent with the furtherance of the purpose of this title.
(d)

Protections Against Fraud and Beneficiary Protections.—
(1)

Periodic auditing.—
The Secretary shall provide for the annual auditing of the financial records (including data relating to medicare utilization and costs, including allowable costs under section 1858(c)) of at least one-third of the Medicare+Choice organizations offering Medicare+Choice plans under this part. The Comptroller General shall monitor auditing activities conducted under this subsection.
(2)

Inspection and audit.—
Each contract under this section shall provide that the Secretary, or any person or organization designated by the Secretary—
(A)
shall have the right to timely inspect or otherwise evaluate (i) the quality, appropriateness, and timeliness of services performed under the contract, and (ii) the facilities of the organization when there is reasonable evidence of some need for such inspection, and
(B)
shall have the right to timely audit and inspect any books and records of the Medicare+Choice organization that pertain (i) to the ability of the organization to bear the risk of potential financial losses, or (ii) to services performed or determinations of amounts payable under the contract.
(3)

Enrollee notice at time of termination.—
Each contract under this section shall require the organization to provide (and pay for) written notice in advance of the contract's termination, as well as a description of alternatives for obtaining benefits under this title, to each individual enrolled with the organization under this part.
(4)

Disclosure.—
(A)

In general.—
Each Medicare+Choice organization shall, in accordance with regulations of the Secretary, report to the Secretary financial information which shall include the following:
(i)
Such information as the Secretary may require demonstrating that the organization has a fiscally sound operation.
(ii)
A copy of the report, if any, filed with the Secretary containing the information required to be reported under section 1124 by disclosing entities.
(iii)
A description of transactions, as specified by the Secretary, between the organization and a party in interest. Such transactions shall include—
(I)
any sale or exchange, or leasing of any property between the organization and a party in interest;
(II)
any furnishing for consideration of goods, services (including management services), or facilities between the organization and a party in interest, but not including salaries paid to employees for services provided in the normal course of their employment and health services provided to members by hospitals and other providers and by staff, medical group (or groups), individual practice association (or associations), or any combination thereof; and
(III)
any lending of money or other extension of credit between an organization and a party in interest.
The Secretary may require that information reported respecting an organization which controls, is controlled by, or is under common control with, another entity be in the form of a consolidated financial statement for the organization and such entity.
(B)

Party in interest defined.—
For the purposes of this paragraph, the term “party in interest” means—
(i)
any director, officer, partner, or employee responsible for management or administration of a Medicare+Choice organization, any person who is directly or indirectly the beneficial owner of more than 5 percent of the equity of the organization, any person who is the beneficial owner of a mortgage, deed of trust, note, or other interest secured by, and valuing more than 5 percent of the organization, and, in the case of a Medicare+Choice organization organized as a nonprofit corporation, an incorporator or member of such corporation under applicable State corporation law;
(ii)
any entity in which a person described in clause (i)—
(I)
is an officer or director;
(II)
is a partner (if such entity is organized as a partnership);
(III)
has directly or indirectly a beneficial interest of more than 5 percent of the equity; or
(IV)
has a mortgage, deed of trust, note, or other interest valuing more than 5 percent of the assets of such entity;
(iii)
any person directly or indirectly controlling, controlled by, or under common control with an organization; and
(iv)
any spouse, child, or parent of an individual described in clause (i).
(C)

Access to information.—
Each Medicare+Choice organization shall make the information reported pursuant to subparagraph (A) available to its enrollees upon reasonable request.
(5)

Loan information.—
The contract shall require the organization to notify the Secretary of loans and other special financial arrangements which are made between the organization and subcontractors, affiliates, and related parties.
(6)

Review to ensure compliance with care management requirements for specialized medicare advantage plans for special needs individuals.—
In conjunction with the periodic audit of a specialized Medicare Advantage plan for special needs individuals under paragraph (1), the Secretary shall conduct a review to ensure that such organization offering the plan meets the requirements described in section 1859(f)(5).
(e)

Additional Contract Terms.—
(1)

In general.—
The contract shall contain such other terms and conditions not inconsistent with this part (including requiring the organization to provide the Secretary with such information) as the Secretary may find necessary and appropriate.
(2)

Cost-sharing in enrollment-related costs.—
(A)

In general.—
A Medicare+Choice organization and a PDP sponsor under part D shall pay the fee established by the Secretary under subparagraph (B).
(B)

Authorization.—
The Secretary is authorized to charge a fee to each Medicare+Choice organization with a contract under this part and each PDP sponsor with a contract under part D that is equal to the organization' or sponsor's pro rata share (as determined by the Secretary) of the aggregate amount of fees which the Secretary is directed to collect in a fiscal year. Any amounts collected shall be available without further appropriation to the Secretary for the purpose of carrying out section 1851 (relating to enrollment and dissemination of information), section 1860D-1(c), and section 4360 of the Omnibus Budget Reconciliation Act of 1990 (relating to the health insurance counseling and assistance program).
(C)

Authorization of appropriations.—
There are authorized to be appropriated for the purposes described in subparagraph (B) for each fiscal year beginning with fiscal year 2001 and ending with fiscal year 2005 an amount equal to $100,000,000, and for each fiscal year beginning with fiscal year 2006 an amount equal to $200,000,000, reduced by the amount of fees authorized to be collected under this paragraph and section 1860D–12(b)(3)(D) for the fiscal year.
(D)

Limitation.—
In any fiscal year the fees collected by the Secretary under subparagraph (B) shall not exceed the lesser of—
(i)
the estimated costs to be incurred by the Secretary in the fiscal year in carrying out the activities described in section 1851 and section 1860D–1(c) and section 4360 of the Omnibus Budget Reconciliation Act of 1990; or
(ii)
(I)
$200,000,000 in fiscal year 1998;
(II)
$150,000,000 in fiscal year 1999;
(III)
$100,000,000 in fiscal year 2000;
(IV)
the Medicare+Choice portion (as defined in subparagraph (E)) of $100,000,000 in fiscal year 2001 and each succeeding fiscal year before fiscal year 2006; and
(V)
the applicable portion (as defined in subparagraph (F)) of $200,000,000 in fiscal year 2006 and each succeeding fiscal year.
(E)

Medicare+choice portion defined.—
In this paragraph, the term “Medicare+Choice portion” means, for a fiscal year, the ratio, as estimated by the Secretary, of—
(i)
the average number of individuals enrolled in Medicare+Choice plans during the fiscal year, to
(ii)
the average number of individuals entitled to benefits under part A, and enrolled under part B, during the fiscal year.
(F)

Applicable portion defined.—
In this paragraph, the term “applicable portion” means, for a fiscal year—
(i)
with respect to MA organizations, the Secretary's estimate of the total proportion of expenditures under this title that are attributable to expenditures made under this part (including payments under part D that are made to such organizations); or
(ii)
with respect to PDP sponsors, the Secretary's estimate of the total proportion of expenditures under this title that are attributable to expenditures made to such sponsors under part D.
(3)

Agreements with federally qualified health centers.—
(A)

Payment levels and amounts.—
A contract under this section with an MA organization shall require the organization to provide, in any written agreement described in section 1853(a)(4) between the organization and a federally qualified health center, for a level and amount of payment to the federally qualified health center for services provided by such health center that is not less than the level and amount of payment that the plan would make for such services if the services had been furnished by a entity providing similar services that was not a federally qualified health center.
(B)

Cost-sharing.—
Under the written agreement referred to in subparagraph (A), a federally qualified health center must accept the payment amount referred to in such subparagraph plus the Federal payment provided for in section 1833(a)(3)(B) as payment in full for services covered by the agreement, except that such a health center may collect any amount of cost-sharing permitted under the contract under this section, so long as the amounts of any deductible, coinsurance, or copayment comply with the requirements under section 1854(e).
(4)

Requirement for minimum medical loss ratio.—
If the Secretary determines for a contract year (beginning with 2014) that an MA plan has failed to have a medical loss ratio of at least .85—
(A)
the MA plan shall remit to the Secretary an amount equal to the product of—
(i)
the total revenue of the MA plan under this part for the contract year; and
(ii)
the difference between .85 and the medical loss ratio;
(B)
for 3 consecutive contract years, the Secretary shall not permit the enrollment of new enrollees under the plan for coverage during the second succeeding contract year; and
(C)
the Secretary shall terminate the plan contract if the plan fails to have such a medical loss ratio for 5 consecutive contract years.
(5)

Communicating plan corrective actions against opioids over-prescribers.—
(A)

In general.—
Beginning with plan years beginning on or after January 1, 2021, a contract under this section with an MA organization shall require the organization to submit to the Secretary, through the process established under subparagraph (B), information on the investigations, credible evidence of suspicious activities of a provider of services (including a prescriber) or supplier related to fraud, and other actions taken by such plans related to inappropriate prescribing of opioids.
(B)

Process.—
Not later than January 1, 2021, the Secretary shall, in consultation with stakeholders, establish a process under which MA plans and prescription drug plans shall submit to the Secretary information described in subparagraph (A).
(C)

Regulations.—
For purposes of this paragraph, including as applied under section 1860D–12(b)(3)(D), the Secretary shall, pursuant to rulemaking—
(i)
specify a definition for the term “inappropriate prescribing” and a method for determining if a provider of services prescribes inappropriate prescribing; and
(ii)
establish the process described in subparagraph (B) and the types of information that shall be submitted through such process.
(f)

Prompt Payment by Medicare+Choice Organization.—
(1)

Requirement.—
A contract under this part shall require a Medicare+Choice organization to provide prompt payment (consistent with the provisions of sections 1816(c)(2) and 1842(c)(2)) of claims submitted for services and supplies furnished to enrollees pursuant to the contract, if the services or supplies are not furnished under a contract between the organization and the provider or supplier (or in the case of a Medicare+Choice private fee-for-service plan, if a claim is submitted to such organization by an enrollee).
(2)

Secretary's option to bypass noncomplying organization.—
In the case of a Medicare+Choice eligible organization which the Secretary determines, after notice and opportunity for a hearing, has failed to make payments of amounts in compliance with paragraph (1), the Secretary may provide for direct payment of the amounts owed to providers and suppliers (or, in the case of a Medicare+Choice private fee-for-service plan, amounts owed to the enrollees) for covered services and supplies furnished to individuals enrolled under this part under the contract. If the Secretary provides for the direct payments, the Secretary shall provide for an appropriate reduction in the amount of payments otherwise made to the organization under this part to reflect the amount of the Secretary's payments (and the Secretary's costs in making the payments).
(3)

Incorporation of certain prescription drug plan contract requirements.—
The following provisions shall apply to contracts with a Medicare Advantage organization offering an MA–PD plan in the same manner as they apply to contracts with a PDP sponsor offering a prescription drug plan under part D:
(A)

Prompt payment.—
Section 1860D–12(b)(4).
(B)

Submission of claims by pharmacies located in or contracting with long-term care facilities.—
Section 1860D–12(b)(5).
(C)

Regular update of prescription drug pricing standard.—
Section 1860D–12(b)(6).
(D)

Suspension of payments pending investigation of credible allegations of fraud by pharmacies.—
Section 1860D–12(b)(7).
(E)

Provision of information related to maximum fair prices.—
Section 1860D–12(b)(8).
(g)

Intermediate Sanctions.—
(1)

In general.—
If the Secretary determines that a Medicare+Choice organization with a contract under this section—
(A)
fails 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;
(B)
imposes premiums on individuals enrolled under this part in excess of the amount of the Medicare+Choice monthly basic and supplemental beneficiary premiums permitted under section 1854;
(C)
acts to expel or to refuse to re-enroll an individual in violation of the provisions of this part;
(D)
engages 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;
(E)
misrepresents or falsifies information that is furnished—
(i)
to the Secretary under this part, or
(ii)
to an individual or to any other entity under this part;
(F)
fails to comply with the applicable requirements of section 1852(j)(3) or 1852(k)(2)(A)(ii);
(G)
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 employs or contracts with any entity for the provision (directly or indirectly) through such an excluded individual or entity of such services;
(H)
except as provided under subparagraph (C) or (D) of section 1860D–1(b)(1), enrolls an individual in any plan under this part without the prior consent of the individual or the designee of the individual;
(I)
transfers an individual enrolled under this part from one plan to another without the prior consent of the individual or the designee of the individual or solely for the purpose of earning a commission;
(J)
fails to comply with marketing restrictions described in subsections (h) and (j) of section 1851 or applicable implementing regulations or guidance; or
(K)
employs or contracts with any individual or entity who engages in the conduct described in subparagraphs (A) through (J) of this paragraph;
the Secretary may provide, in addition to any other remedies authorized by law, for any of the remedies described in paragraph (2). The Secretary may provide, in addition to any other remedies authorized by law, for any of the remedies described in paragraph (2), if the Secretary determines that any employee or agent of such organization, or any provider or supplier who contracts with such organization, has engaged in any conduct described in subparagraphs (A) through (K) of this paragraph.
(2)

Remedies.—
The remedies described in this paragraph are—
(A)
civil money penalties of not more than $25,000 for each determination under paragraph (1) or, with respect to a determination under subparagraph (D) or (E)(i) of such paragraph, of not more than $100,000 for each such determination, except with respect to a determination under subparagraph (E), an assessment of not more than the amount claimed by such plan or plan sponsor based upon the misrepresentation or falsified information involved, plus, with respect to a determination under paragraph (1)(B), double the excess amount charged in violation of such paragraph (and the excess amount charged shall be deducted from the penalty and returned to the individual concerned), and plus, with respect to a determination under paragraph (1)(D), $15,000 for each individual not enrolled as a result of the practice involved,
(B)
suspension of enrollment of individuals under this part after the date the Secretary notifies the organization of a determination under paragraph (1) and until the Secretary is satisfied that the basis for such determination has been corrected and is not likely to recur, or
(C)
suspension of payment to the organization under this part for individuals enrolled after the date the Secretary notifies the organization of a determination under paragraph (1) and until the Secretary is satisfied that the basis for such determination has been corrected and is not likely to recur.
(3)

Other intermediate sanctions.—
In the case of a Medicare+Choice organization for which the Secretary makes a determination under subsection (c)(2) the basis of which is not described in paragraph (1), the Secretary may apply the following intermediate sanctions:
(A)
Civil money penalties of not more than $25,000 for each determination under subsection (c)(2) if the deficiency that is the basis of the determination has directly adversely affected (or has the substantial likelihood of adversely affecting) an individual covered under the organization's contract.
(B)
Civil money penalties of not more than $10,000 for each week beginning after the initiation of civil money penalty procedures by the Secretary during which the deficiency that is the basis of a determination under subsection (c)(2) exists.
(C)
Suspension of enrollment of individuals under this part after the date the Secretary notifies the organization of a determination under subsection (c)(2) and until the Secretary is satisfied that the deficiency that is the basis for the determination has been corrected and is not likely to recur.
(D)
Civil monetary penalties of not more than $100,000, or such higher amount as the Secretary may establish by regulation, where the finding under subsection (c)(2)(A) is based on the organization's termination of its contract under this section other than at a time and in a manner provided for under subsection (a).
(4)

Civil money penalties.—
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under paragraph (2) or (3) in the same manner as they apply to a civil money penalty or proceeding under section 1128A(a).
(h)

Procedures for Termination.—
(1)

In general.—
The Secretary may terminate a contract with a Medicare+Choice organization under this section in accordance with formal investigation and compliance procedures established by the Secretary under which—
(A)
the Secretary provides the organization with the reasonable opportunity to develop and implement a corrective action plan to correct the deficiencies that were the basis of the Secretary's determination under subsection (c)(2); and
(B)
the Secretary provides the organization with reasonable notice and opportunity for hearing (including the right to appeal an initial decision) before terminating the contract.
(2)

Exception for imminent and serious risk to health.—
Paragraph (1) shall not apply if the Secretary determines that a delay in termination, resulting from compliance with the procedures specified in such paragraph prior to termination, would pose an imminent and serious risk to the health of individuals enrolled under this part with the organization.
(3)

Delay in contract termination authority for plans failing to achieve minimum quality rating.—
During the period beginning on the date of the enactment of this paragraph and through the end of plan year 2018, the Secretary may not terminate a contract under this section with respect to the offering of an MA plan by a Medicare Advantage organization solely because the MA plan has failed to achieve a minimum quality rating under the 5-star rating system under section 1853(o)(4).
(i)

Medicare+Choice Program Compatibility With Employer or Union Group Health Plans.—
(1)

Contracts with ma organizations.—
To facilitate the offering of Medicare+Choice plans under contracts between Medicare+Choice organizations and employers, labor organizations, or the trustees of a fund established by one or more employers or labor organizations (or combination thereof) to furnish benefits to the entity's employees, former employees (or combination thereof) or members or former members (or combination thereof) of the labor organizations, the Secretary may waive or modify requirements that hinder the design of, the offering of, or the enrollment in such Medicare+Choice plans.
(2)

Employer sponsored ma plans.—
To facilitate the offering of MA plans by employers, labor organizations, or the trustees of a fund established by one or more employers or labor organizations (or combination thereof) to furnish benefits to the entity's employees, former employees (or combination thereof) or members or former members (or combination thereof) of the labor organizations, the Secretary may waive or modify requirements that hinder the design of, the offering of, or the enrollment in such MA plans. Notwithstanding section 1851(g), an MA plan described in the previous sentence may restrict the enrollment of individuals under this part to individuals who are beneficiaries and participants in such plan.

special rules for ma regional plans
Sec. 1858.
[42 U.S.C. 1395w–27a]
(a)

Regional Service Area; Establishment of MA Regions.—
(1)

Coverage of entire ma region.—
The service area for an MA regional plan shall consist of an entire MA region established under paragraph (2) and the provisions of section 1854(h) shall not apply to such a plan.
(2)

Establishment of ma regions.—
(A)

MA region.—
For purposes of this title, the term “MA region” means such a region within the 50 States and the District of Columbia as established by the Secretary under this paragraph.
(B)

Establishment.—
(i)

Initial establishment.—
Not later than January 1, 2005, the Secretary shall first establish and publish MA regions.
(ii)

Periodic review and revision of service areas.—
The Secretary may periodically review MA regions under this paragraph and, based on such review, may revise such regions if the Secretary determines such revision to be appropriate.
(C)

Requirements for ma regions.—
The Secretary shall establish, and may revise, MA regions under this paragraph in a manner consistent with the following:
(i)

Number of regions.—
There shall be no fewer than 10 regions, and no more than 50 regions.
(ii)

Maximizing availability of plans.—
The regions shall maximize the availability of MA regional plans to all MA eligible individuals without regard to health status, especially those residing in rural areas.
(D)

Market survey and analysis.—
Before establishing MA regions, the Secretary shall conduct a market survey and analysis, including an examination of current insurance markets, to determine how the regions should be established.
(3)

National plan.—
Nothing in this subsection shall be construed as preventing an MA regional plan from being offered in more than one MA region (including all regions).
(b)

Application of Single Deductible and Catastrophic Limit on Out-of-Pocket Expenses.—
An MA regional plan shall include the following:
(1)

Single deductible.—
Any deductible for benefits under the original medicare fee-for-service program option shall be a single deductible (instead of a separate inpatient hospital deductible and a part B deductible) and may be applied differentially for in-network services and may be waived for preventive or other items and services.
(2)

Catastrophic limit.—
(A)

In-network.—
A catastrophic limit on out-of-pocket expenditures for in-network benefits under the original medicare fee-for-service program option.
(B)

Total.—
A catastrophic limit on out-of-pocket expenditures for all benefits under the original medicare fee-for-service program option.
(c)

Portion of Total Payments to an Organization Subject to Risk for 2006 and 2007.—
(1)

Application of risk corridors.—
(A)

In general.—
This subsection shall only apply to MA regional plans offered during 2006 or 2007.
(B)

Notification of allowable costs under the plan.—
In the case of an MA organization that offers an MA regional plan in an MA region in 2006 or 2007, the organization shall notify the Secretary, before such date in the succeeding year as the Secretary specifies, of—
(i)
its total amount of costs that the organization incurred in providing benefits covered under the original medicare fee-for-service program option for all enrollees under the plan in the region in the year and the portion of such costs that is attributable to administrative expenses described in subparagraph (C); and
(ii)
its total amount of costs that the organization incurred in providing rebatable integrated benefits (as defined in subparagraph (D)) and with respect to such benefits the portion of such costs that is attributable to administrative expenses described in subparagraph (C) and not described in clause (i) of this subparagraph.
(C)

Allowable costs defined.—
For purposes of this subsection, the term “allowable costs” means, with respect to an MA regional plan for a year, the total amount of costs described in subparagraph (B) for the plan and year, reduced by the portion of such costs attributable to administrative expenses incurred in providing the benefits described in such subparagraph.
(D)

Rebatable integrated benefits.—
For purposes of this subsection, the term “rebatable integrated benefits” means such non-drug supplemental benefits under subclause (I) of section 1854(b)(1)(C)(ii) pursuant to a rebate under such section that the Secretary determines are integrated with the benefits described in subparagraph (B)(i).
(2)

Adjustment of payment.—
(A)

No adjustment if allowable costs within 3 percent of target amount.—
If the allowable costs for the plan for the year are at least 97 percent, but do not exceed 103 percent, of the target amount for the plan and year, there shall be no payment adjustment under this subsection for the plan and year.
(B)

Increase in payment if allowable costs above 103 percent of target amount.—
(i)

Costs between 103 and 108 percent of target amount.—
If the allowable costs for the plan for the year are greater than 103 percent, but not greater than 108 percent, of the target amount for the plan and year, the Secretary shall increase the total of the monthly payments made to the organization offering the plan for the year under section 1853(a) by an amount equal to 50 percent of the difference between such allowable costs and 103 percent of such target amount.
(ii)

Costs above 108 percent of target amount.—
If the allowable costs for the plan for the year are greater than 108 percent of the target amount for the plan and year, the Secretary shall increase the total of the monthly payments made to the organization offering the plan for the year under section 1853(a) by an amount equal to the sum of—
(I)
2.5 percent of such target amount; and
(II)
80 percent of the difference between such allowable costs and 108 percent of such target amount.
(C)

Reduction in payment if allowable costs below 97 percent of target amount.—
(i)

Costs between 92 and 97 percent of target amount.—
If the allowable costs for the plan for the year are less than 97 percent, but greater than or equal to 92 percent, of the target amount for the plan and year, the Secretary shall reduce the total of the monthly payments made to the organization offering the plan for the year under section 1853(a) by an amount (or otherwise recover from the plan an amount) equal to 50 percent of the difference between 97 percent of the target amount and such allowable costs.
(ii)

Costs below 92 percent of target amount.—
If the allowable costs for the plan for the year are less than 92 percent of the target amount for the plan and year, the Secretary shall reduce the total of the monthly payments made to the organization offering the plan for the year under section 1853(a) by an amount (or otherwise recover from the plan an amount) equal to the sum of—
(I)
2.5 percent of such target amount; and
(II)
80 percent of the difference between 92 percent of such target amount and such allowable costs.
(D)

Target amount described.—
For purposes of this paragraph, the term “target amount” means, with respect to an MA regional plan offered by an organization in a year, an amount equal to—
(i)
the sum of—
(I)
the total monthly payments made to the organization for enrollees in the plan for the year that are attributable to benefits under the original medicare fee-for-service program option (as defined in section 1852(a)(1)(B));
(II)
the total of the MA monthly basic beneficiary premium collectable for such enrollees for the year; and
(III)
the total amount of the rebates under section 1854(b)(1)(C)(ii) that are attributable to rebatable integrated benefits; reduced by
(ii)
the amount of administrative expenses assumed in the bid insofar as the bid is attributable to benefits described in clause (i)(I) or (i)(III).
(3)

Disclosure of information.—
(A)

In general.—
Each contract under this part shall provide—
(i)
that an MA organization offering an MA regional plan shall provide the Secretary with such information as the Secretary determines is necessary to carry out this subsection; and
(ii)
that, pursuant to section 1857(d)(2)(B), the Secretary has the right to inspect and audit any books and records of the organization that pertain to the information regarding costs provided to the Secretary under paragraph (1)(B).
(B)

Restriction on use of information.—
Information disclosed or obtained pursuant to the provisions of this subsection may be used by officers, employees, and contractors of the Department of Health and Human Services only for the purposes of, and to the extent necessary in, carrying out this subsection.
(d)

Organizational and Financial Requirements.—
(1)

In general.—
In the case of an MA organization that is offering an MA regional plan in an MA region and—
(A)
meets the requirements of section 1855(a)(1) with respect to at least one such State in such region; and
(B)
with respect to each other State in such region in which it does not meet requirements, it demonstrates to the satisfaction of the Secretary that it has filed the necessary application to meet such requirements,
the Secretary may waive such requirement with respect to each State described in subparagraph (B) for such period of time as the Secretary determines appropriate for the timely processing of such an application by the State (and, if such application is denied, through the end of such plan year as the Secretary determines appropriate to provide for a transition).
(2)

Selection of appropriate state.—
In applying paragraph (1) in the case of an MA organization that meets the requirements of section 1855(a)(1) with respect to more than one State in a region, the organization shall select, in a manner specified by the Secretary among such States, one State the rules of which shall apply in the case of the States described in paragraph (1)(B).
(f)59

Computation of Applicable MA Region-Specific Non-Drug Monthly Benchmark Amounts.—
^{59}
So in law. Subsection (e) was repealed by section 10327(c)(1) of Public Law 111–148.
(1)

Computation for regions.—
For purposes of section 1853(j)(2) and this section, subject to subsection (e), the term “MA region-specific non-drug monthly benchmark amount” means, with respect to an MA region for a month in a year, the sum of the 2 components described in paragraph (2) for the region and year. The Secretary shall compute such benchmark amount for each MA region before the beginning of each annual, coordinated election period under section 1851(e)(3)(B) for each year (beginning with 2006).
(2)

2 components.—
For purposes of paragraph (1), the 2 components described in this paragraph for an MA region and a year are the following:
(A)

Statutory component.—
The product of the following:
(i)

Statutory region-specific non-drug amount.—
The statutory region-specific non-drug amount (as defined in paragraph (3)) for the region and year.
(ii)

Statutory national market share.—
The statutory national market share percentage, determined under paragraph (4) for the year.
(B)

Plan-bid component.—
The product of the following:
(i)

Weighted average of ma plan bids in region.—
The weighted average of the plan bids for the region and year (as determined under paragraph (5)(A)).
(ii)

Non-statutory market share.—
1 minus the statutory national market share percentage, determined under paragraph (4) for the year.
(3)

Statutory region-specific non-drug amount.—
For purposes of paragraph (2)(A)(i), the term “statutory region-specific non-drug amount” means, for an MA region and year, an amount equal the sum (for each MA local area within the region) of the product of—
(A)
MA area-specific non-drug monthly benchmark amount under section 1853(j)(1)(A) for that area and year; and
(B)
the number of MA eligible individuals residing in the local area, divided by the total number of MA eligible individuals residing in the region.
(4)

Computation of statutory market share percentage.—
(A)

In general.—
The Secretary shall determine for each year a statutory national market share percentage that is equal to the proportion of MA eligible individuals nationally who were not enrolled in an MA plan during the reference month.
(B)

Reference month defined.—
For purposes of this part, the term “reference month” means, with respect to a year, the most recent month during the previous year for which the Secretary determines that data are available to compute the percentage specified in subparagraph (A) and other relevant percentages under this part.
(5)

Determination of weighted average ma bids for a region.—
(A)

In general.—
For purposes of paragraph (2)(B)(i), the weighted average of plan bids for an MA region and a year is the sum, for MA regional plans described in subparagraph (D) in the region and year, of the products (for each such plan) of the following:
(i)

Monthly ma statutory non-drug bid amount.—
The unadjusted MA statutory non-drug monthly bid amount for the plan.
(ii)

Plan's share of ma enrollment in region.—
The factor described in subparagraph (B) for the plan.
(B)

Plan's share of ma enrollment in region.—
(i)

In general.—
Subject to the succeeding provisions of this subparagraph, the factor described in this subparagraph for a plan is equal to the number of individuals described in subparagraph (C) for such plan, divided by the total number of such individuals for all MA regional plans described in subparagraph (D) for that region and year.
(ii)

Single plan rule.—
In the case of an MA region in which only a single MA regional plan is being offered, the factor described in this subparagraph shall be equal to 1.
(iii)

Equal division among multiple plans in year in which plans are first available.—
In the case of an MA region in the first year in which any MA regional plan is offered, if more than one MA regional plan is offered in such year, the factor described in this subparagraph for a plan shall (as specified by the Secretary) be equal to—
(I)
1 divided by the number of such plans offered in such year; or
(II)
a factor for such plan that is based upon the organization's estimate of projected enrollment, as reviewed and adjusted by the Secretary to ensure reasonableness and as is certified by the Chief Actuary of the Centers for Medicare & Medicaid Services.
(C)

Counting of individuals.—
For purposes of subparagraph (B)(i), the Secretary shall count for each MA regional plan described in subparagraph (D) for an MA region and year, the number of individuals who reside in the region and who were enrolled under such plan under this part during the reference month.
(D)

Plans covered.—
For an MA region and year, an MA regional plan described in this subparagraph is an MA regional plan that is offered in the region and year and was offered in the region in the reference month.
(g)

Election of Uniform Coverage Determination.—
Instead of applying section 1852(a)(2)(C) with respect to an MA regional plan, the organization offering the plan may elect to have a local coverage determination for the entire MA region be the local coverage determination applied for any part of such region (as selected by the organization).
(h)

Assuring Network Adequacy.—
(1)

In general.—
For purposes of enabling MA organizations that offer MA regional plans to meet applicable provider access requirements under section 1852 with respect to such plans, the Secretary may provide for payment under this section to an essential hospital that provides inpatient hospital services to enrollees in such a plan where the MA organization offering the plan certifies to the Secretary that the organization was unable to reach an agreement between the hospital and the organization regarding provision of such services under the plan. Such payment shall be available only if—
(A)
the organization provides assurances satisfactory to the Secretary that the organization will make payment to the hospital for inpatient hospital services of an amount that is not less than the amount that would be payable to the hospital under section 1886 with respect to such services; and
(B)
with respect to specific inpatient hospital services provided to an enrollee, the hospital demonstrates to the satisfaction of the Secretary that the hospital's costs of such services exceed the payment amount described in subparagraph (A).
(2)

Payment amounts.—
The payment amount under this subsection for inpatient hospital services provided by a subsection (d) hospital to an enrollee in an MA regional plan shall be, subject to the limitation of funds under paragraph (3), the amount (if any) by which—
(A)
the amount of payment that would have been paid for such services under this title if the enrollees were covered under the original medicare fee-for-service program option and the hospital were a critical access hospital; exceeds
(B)
the amount of payment made for such services under paragraph (1)(A).
(3)

Available amounts.—
There shall be available for payments under this subsection—
(A)
in 2006, $25,000,000; and
(B)
in each succeeding year the amount specified in this paragraph for the preceding year increased by the market basket percentage increase (as defined in section 1886(b)(3)(B)(iii)) for the fiscal year ending in such succeeding year.
Payments under this subsection shall be made from the Federal Hospital Insurance Trust Fund.
(4)

Essential hospital.—
In this subsection, the term “essential hospital” means, with respect to an MA regional plan offered by an MA organization, a subsection (d) hospital (as defined in section 1886(d)) that the Secretary determines, based upon an application filed by the organization with the Secretary, is necessary to meet the requirements referred to in paragraph (1) for such plan.

definitions; miscellaneous provisions
Sec. 1859.
[42 U.S.C. 1395w–28]
(a)

Definitions Relating to Medicare+Choice Organizations.—
In this part—
(1)

Medicare+choice organization.—
The term “Medicare+Choice organization” means a public or private entity that is certified under section 1856 as meeting the requirements and standards of this part for such an organization.
(2)

Provider-sponsored organization.—
The term “provider-sponsored organization” is defined in section 1855(d)(1).
(b)

Definitions Relating to Medicare+Choice Plans.—
(1)

Medicare+choice plan.—
The term “Medicare+Choice plan” means health benefits coverage offered under a policy, contract, or plan by a Medicare+Choice organization pursuant to and in accordance with a contract under section 1857.
(2)

Medicare+Choice private fee-for-service plan.—
The term “Medicare+Choice private fee-for-service plan” means a Medicare+Choice plan that—
(A)
reimburses hospitals, physicians, and other providers at a rate determined by the plan on a fee-for-service basis without placing the provider at financial risk;
(B)
does not vary such rates for such a provider based on utilization relating to such provider; and
(C)
does not restrict the selection of providers among those who are lawfully authorized to provide the covered services and agree to accept the terms and conditions of payment established by the plan.
Nothing in subparagraph (B) shall be construed to preclude a plan from varying rates for such a provider based on the specialty of the provider, the location of the provider, or other factors related to such provider that are not related to utilization, or to preclude a plan from increasing rates for such a provider based on increased utilization of specified preventive or screening services.
(3)

MSA plan.—
(A)

In general.—
The term “MSA plan” means a Medicare+Choice plan that—
(i)
provides reimbursement for at least the items and services described in section 1852(a)(1) in a year but only after the enrollee incurs countable expenses (as specified under the plan) equal to the amount of an annual deductible (described in subparagraph (B));
(ii)
counts as such expenses (for purposes of such deductible) at least all amounts that would have been payable under parts A and B, and that would have been payable by the enrollee as deductibles, coinsurance, or copayments, if the enrollee had elected to receive benefits through the provisions of such parts; and
(iii)
provides, after such deductible is met for a year and for all subsequent expenses for items and services referred to in clause (i) in the year, for a level of reimbursement that is not less than—
(I)
100 percent of such expenses, or
(II)
100 percent of the amounts that would have been paid (without regard to any deductibles or coinsurance) under parts A and B with respect to such expenses,
whichever is less.
(B)

Deductible.—
The amount of annual deductible under an MSA plan—
(i)
for contract year 1999 shall be not more than $6,000; and
(ii)
for a subsequent contract year shall be not more than the maximum amount of such deductible for the previous contract year under this subparagraph increased by the national per capita Medicare+Choice growth percentage under section 1853(c)(6) for the year.
If the amount of the deductible under clause (ii) is not a multiple of $50, the amount shall be rounded to the nearest multiple of $50.
(4)

MA regional plan.—
The term “MA regional plan” means an MA plan described in section 1851(a)(2)(A)(i)—
(A)
that has a network of providers that have agreed to a contractually specified reimbursement for covered benefits with the organization offering the plan;
(B)
that provides for reimbursement for all covered benefits regardless of whether such benefits are provided within such network of providers; and
(C)
the service area of which is one or more entire MA regions.
(5)

MA local plan.—
The term “MA local plan” means an MA plan that is not an MA regional plan.
(6)

Specialized ma plans for special needs individuals.—
(A)

In general.—
The term “specialized MA plan for special needs individuals” means an MA plan that exclusively serves special needs individuals (as defined in subparagraph (B)) and that, as of January 1, 2010, meets the applicable requirements of paragraph (2), (3), or (4) of subsection (f), as the case may be.
(B)

Special needs individual.—
The term “special needs individual” means an MA eligible individual who—
(i)
is institutionalized (as defined by the Secretary);
(ii)
is entitled to medical assistance under a State plan under title XIX; or
(iii)
meets such requirements as the Secretary may determine would benefit from enrollment in such a specialized MA plan described in subparagraph (A) for individuals with severe or disabling chronic conditions who—
(I)
before January 1, 2022, have one or more comorbid and medically complex chronic conditions that are substantially disabling or life threatening, have a high risk of hospitalization or other significant adverse health outcomes, and require specialized delivery systems across domains of care; and
(II)60
on or after January 1, 2022, have one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits overall health or function, have a high risk of hospitalization or other adverse health outcomes, and require intensive care coordination and that is listed under subsection (f)(9)(A).
^{60}
The placement of subclause (II) (as added by section 50311(c)(2)(A)(iii) of division E of Public Law 115–123) reflects the probable intent of Congress. The amendment that added this subclauses probably should have been to insert such new subclause after subclause (I) rather than to the end of subparagraph (B).
The Secretary may apply rules similar to the rules of section 1894(c)(4) for continued eligibility of special needs individuals.
(c)

Other References to Other Terms.—
(1)

Medicare+choice eligible individual.—
The term “Medicare+Choice eligible individual” is defined in section 1851(a)(3).
(2)

Medicare+choice payment area.—
The term “Medicare+Choice payment area” is defined in section 1853(d).
(3)

National per capita medicare+choice growth percentage.—
The “national per capita Medicare+Choice growth percentage” is defined in section 1853(c)(6).
(4)

Medicare+choice monthly basic beneficiary premium; medicare+choice monthly supplemental beneficiary premium.—
The terms “Medicare+Choice monthly basic beneficiary premium” and “Medicare+Choice monthly supplemental beneficiary premium” are defined in section 1854(a)(2).
(5)

MA local area.—
The term “MA local area” is defined in section 1853(d)(2).
(d)

Coordinated Acute and Long-Term Care Benefits Under a Medicare+Choice Plan.—
Nothing in this part shall be construed as preventing a State from coordinating benefits under a medicaid plan under title XIX with those provided under a Medicare+Choice plan in a manner that assures continuity of a full-range of acute care and long-term care services to poor elderly or disabled individuals eligible for benefits under this title and under such plan.
(e)

Restriction on Enrollment for Certain Medicare+Choice Plans.—
(1)

In general.—
In the case of a Medicare+Choice religious fraternal benefit society plan described in paragraph (2), notwithstanding any other provision of this part to the contrary and in accordance with regulations of the Secretary, the society offering the plan may restrict the enrollment of individuals under this part to individuals who are members of the church, convention, or group described in paragraph (3)(B) with which the society is affiliated.
(2)

Medicare+choice religious fraternal benefit society plan described.—
For purposes of this subsection, a Medicare+Choice religious fraternal benefit society plan described in this paragraph is a Medicare+Choice plan described in section 1851(a)(2) that—
(A)
is offered by a religious fraternal benefit society described in paragraph (3) only to members of the church, convention, or group described in paragraph (3)(B); and
(B)
permits all such members to enroll under the plan without regard to health status-related factors.
Nothing in this subsection shall be construed as waiving any plan requirements relating to financial solvency.
(3)

Religious fraternal benefit society defined.—
For purposes of paragraph (2)(A), a “religious fraternal benefit society” described in this section is an organization that—
(A)
is described in section 501(c)(8) of the Internal Revenue Code of 1986 and is exempt from taxation under section 501(a) of such Act;
(B)
is affiliated with, carries out the tenets of, and shares a religious bond with, a church or convention or association of churches or an affiliated group of churches;
(C)
offers, in addition to a Medicare+Choice religious fraternal benefit society plan, health coverage to individuals not entitled to benefits under this title who are members of such church, convention, or group; and
(D)
does not impose any limitation on membership in the society based on any health status-related factor.
(4)

Payment adjustment.—
Under regulations of the Secretary, in the case of individuals enrolled under this part under a Medicare+Choice religious fraternal benefit society plan described in paragraph (2), the Secretary shall provide for such adjustment to the payment amounts otherwise established under section 1854 as may be appropriate to assure an appropriate payment level, taking into account the actuarial characteristics and experience of such individuals.
(f)

Requirements Regarding Enrollment in Specialized MA Plans for Special Needs Individuals.—
(1)

Requirements for enrollment.—
In the case of a specialized MA plan for special needs individuals (as defined in subsection (b)(6)), notwithstanding any other provision of this part and in accordance with regulations of the Secretary, the plan may restrict the enrollment of individuals under the plan to individuals who are within one or more classes of special needs individuals.
(2)

Additional requirements for institutional snps.—
In the case of a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(i), the applicable requirements described in this paragraph are as follows:
(A)
Each individual that enrolls in the plan on or after January 1, 2010, is a special needs individuals described in subsection (b)(6)(B)(i). In the case of an individual who is living in the community but requires an institutional level of care, such individual shall not be considered a special needs individual described in subsection (b)(6)(B)(i) unless the determination that the individual requires an institutional level of care was made—
(i)
using a State assessment tool of the State in which the individual resides; and
(ii)
by an entity other than the organization offering the plan.
(B)
The plan meets the requirements described in paragraph (5).
(C)
If applicable, the plan meets the requirement described in paragraph (7).
(3)

Additional requirements for dual snps.—
In the case of a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(ii), the applicable requirements described in this paragraph are as follows:
(A)
Each individual that enrolls in the plan on or after January 1, 2010, is a special needs individuals described in subsection (b)(6)(B)(ii).
(B)
The plan meets the requirements described in paragraph (5).
(C)
The plan provides each prospective enrollee, prior to enrollment, with a comprehensive written statement (using standardized content and format established by the Secretary) that describes—
(i)
the benefits and cost-sharing protections that the individual is entitled to under the State Medicaid program under title XIX; and
(ii)
which of such benefits and cost-sharing protections are covered under the plan.
Such statement shall be included with any description of benefits offered by the plan.
(D)
The plan has a contract with the State Medicaid agency to provide benefits, or arrange for benefits to be provided, for which such individual is entitled to receive as medical assistance under title XIX. Such benefits may include long-term care services consistent with State policy.
(E)
If applicable, the plan meets the requirement described in paragraph (7).
(F)
The plan meets the requirements applicable under paragraph (8).
(4)

Additional requirements for severe or disabling chronic condition snps.—
In the case of a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(iii), the applicable requirements described in this paragraph are as follows:
(A)
Each individual that enrolls in the plan on or after January 1, 2010, is a special needs individual described in subsection (b)(6)(B)(iii).
(B)
The plan meets the requirements described in paragraph (5).
(C)
If applicable, the plan meets the requirement described in paragraph (7).
(5)

Care management requirements for all snps.—
(A)

In general.—
Subject to subparagraph (B), the requirements described in this paragraph are that the organization offering a specialized MA plan for special needs individuals—
(i)
have in place an evidenced-based model of care with appropriate networks of providers and specialists; and
(ii)
with respect to each individual enrolled in the plan—
(I)
conduct an initial assessment and an annual reassessment of the individual's physical, psychosocial, and functional needs;
(II)
develop a plan, in consultation with the individual as feasible, that identifies goals and objectives, including measurable outcomes as well as specific services and benefits to be provided; and
(III)
use an interdisciplinary team in the management of care.
(B)

Improvements to care management requirements for severe or disabling chronic condition snps.—
For 2020 and subsequent years, in the case of a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(iii), the requirements described in this paragraph include the following:
(i)
The interdisciplinary team under subparagraph (A)(ii)(III) includes a team of providers with demonstrated expertise, including training in an applicable specialty, in treating individuals similar to the targeted population of the plan.
(ii)
Requirements developed by the Secretary to provide face-to-face encounters with individuals enrolled in the plan not less frequently than on an annual basis.
(III)
As part of the model of care under clause (i) of subparagraph (A), the results of the initial assessment and annual reassessment under clause (ii)(I) of such subparagraph of each individual enrolled in the plan are addressed in the individual’s individualized care plan under clause (ii)(II) of such subparagraph.
(iv)
As part of the annual evaluation and approval of such model of care, the Secretary shall take into account whether the plan fulfilled the previous year’s goals (as required under the model of care).
(v)
The Secretary shall establish a minimum benchmark for each element of the model of care of a plan. The Secretary shall only approve a plan’s model of care under this paragraph if each element of the model of care meets the minimum benchmark applicable under the preceding sentence.
(6)

Transition and exception regarding restriction on enrollment.—
(A)

In general.—
Subject to subparagraph (C), the Secretary shall establish procedures for the transition of applicable individuals to—
(i)
a Medicare Advantage plan that is not a specialized MA plan for special needs individuals (as defined in subsection (b)(6)); or
(ii)
the original medicare fee-for-service program under parts A and B.
(B)

Applicable individuals.—
For purposes of clause (i), the term “applicable individual” means an individual who—
(i)
is enrolled under a specialized MA plan for special needs individuals (as defined in subsection (b)(6)); and
(ii)
is not within the 1 or more of the classes of special needs individuals to which enrollment under the plan is restricted to.
(C)

Exception.—
The Secretary shall provide for an exception to the transition described in subparagraph (A) for a limited period of time for individuals enrolled under a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(ii) who are no longer eligible for medical assistance under title XIX.
(D)

Timeline for initial transition.—
The Secretary shall ensure that applicable individuals enrolled in a specialized MA plan for special needs individuals (as defined in subsection (b)(6)) prior to January 1, 2010, are transitioned to a plan or the program described in subparagraph (A) by not later than January 1, 2013.
(7)

Authority to require special needs plans be ncqa approved.—
For 2012 and subsequent years, the Secretary shall require that a Medicare Advantage organization offering a specialized MA plan for special needs individuals be approved by the National Committee for Quality Assurance (based on standards established by the Secretary).
(8)

Increased integration of dual snps.—
(A)

Designated contact.—
The Secretary, acting through the Federal Coordinated Health Care Office established under section 2602 of Public Law 111–148, shall serve as a dedicated point of contact for States to address misalignments that arise with the integration of specialized MA plans for special needs individuals described in subsection (b)(6)(B)(ii) under this paragraph and, consistent with such role, shall establish—
(i)
a uniform process for disseminating to State Medicaid agencies information under this title impacting contracts between such agencies and such plans under this subsection; and
(ii)
basic resources for States interested in exploring such plans as a platform for integration, such as a model contract or other tools to achieve those goals.
(B)

Unified grievances and appeals process.—
(i)

In general.—
Not later than April 1, 2020, the Secretary shall establish procedures, to the extent feasible as determined by the Secretary, unifying grievances and appeals procedures under sections 1852(f), 1852(g), 1902(a)(3), 1902(a)(5), and 1932(b)(4) for items and services provided by specialized MA plans for special needs individuals described in subsection (b)(6)(B)(ii) under this title and title XIX. With respect to items and services described in the preceding sentence, procedures established under this clause shall apply in place of otherwise applicable grievances and appeals procedures. The Secretary shall solicit comment in developing such procedures from States, plans, beneficiaries and their representatives, and other relevant stakeholders.
(ii)

Procedures.—
The procedures established under clause (i) shall be included in the plan contract under paragraph (3)(D) and shall—
(I)
adopt the provisions for the enrollee that are most protective for the enrollee and, to the extent feasible as determined by the Secretary, are compatible with unified timeframes and consolidated access to external review under an integrated process;
(II)
take into account differences in State plans under title XIX to the extent necessary;
(III)
be easily navigable by an enrollee; and
(IV)
include the elements described in clause (iii), as applicable.
(iii)

Elements described.—
Both unified appeals and unified grievance procedures shall include, as applicable, the following elements described in this clause:
(I)
Single written notification of all applicable grievances and appeal rights under this title and title XIX. For purposes of this subparagraph, the Secretary may waive the requirements under section 1852(g)(1)(B) when the specialized MA plan covers items or services under this part or under title XIX.
(II)
Single pathways for resolution of any grievance or appeal related to a particular item or service provided by specialized MA plans for special needs individuals described in subsection (b)(6)(B)(ii) under this title and title XIX.
(III)
Notices written in plain language and available in a language and format that is accessible to the enrollee, including in non-English languages that are prevalent in the service area of the specialized MA plan.
(IV)
Unified timeframes for grievances and appeals processes, such as an individual’s filing of a grievance or appeal, a plan’s acknowledgment and resolution of a grievance or appeal, and notification of decisions with respect to a grievance or appeal.
(V)
Requirements for how the plan must process, track, and resolve grievances and appeals, to ensure beneficiaries are notified on a timely basis of decisions that are made throughout the grievance or appeals process and are able to easily determine the status of a grievance or appeal.
(iv)

Continuation of benefits pending appeal.—
The unified procedures under clause (i) shall, with respect to all benefits under parts A and B and title XIX subject to appeal under such procedures, incorporate provisions under current law and implementing regulations that provide continuation of benefits pending appeal under this title and title XIX.
(C)

Requirement for unified grievances and appeals.—
For 2021 and subsequent years, the contract of a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(ii) with a State Medicaid agency under paragraph (3)(D) shall require the use of unified grievances and appeals procedures as described in subparagraph (B).
(D)

Requirements for integration.—
(i)

In general.—
For 2021 and subsequent years, a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(ii) shall meet one or more of the following requirements, to the extent permitted under State law, for integration of benefits under this title and title XIX:
(I)
The specialized MA plan must meet the requirements of contracting with the State Medicaid agency described in paragraph (3)(D) in addition to coordinating long-term services and supports or behavioral health services, or both, by meeting an additional minimum set of requirements determined by the Secretary through the Federal Coordinated Health Care Office established under section 2602 of the Patient Protection and Affordable Care Act based on input from stakeholders, such as notifying the State in a timely manner of hospitalizations, emergency room visits, and hospital or nursing home discharges of enrollees, assigning one primary care provider for each enrollee, or sharing data that would benefit the coordination of items and services under this title and the State plan under title XIX. Such minimum set of requirements must be included in the contract of the specialized MA plan with the State Medicaid agency under such paragraph.
(II)
The specialized MA plan must meet the requirements of a fully integrated plan described in section 1853(a)(1)(B)(iv)(II) (other than the requirement that the plan have similar average levels of frailty, as determined by the Secretary, as the PACE program), or enter into a capitated contract with the State Medicaid agency to provide long-term services and supports or behavioral health services, or both.
(III)
In the case of a specialized MA plan that is offered by a parent organization that is also the parent organization of a Medicaid managed care organization providing long term services and supports or behavioral services under a contract under section 1903(m), the parent organization must assume clinical and financial responsibility for benefits provided under this title and title XIX with respect to any individual who is enrolled in both the specialized MA plan and the Medicaid managed care organization.
(ii)

Suspension of enrollment for failure to meet requirements during initial period.—
During the period of plan years 2021 through 2025, if the Secretary determines that a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(ii) has failed to comply with clause (i), the Secretary may provide for the application against the Medicare Advantage organization offering the plan of the remedy described in section 1857(g)(2)(B) in the same manner as the Secretary may apply such remedy, and in accordance with the same procedures as would apply, in the case of an MA organization determined by the Secretary to have engaged in conduct described in section 1857(g)(1). If the Secretary applies such remedy to a Medicare Advantage organization under the preceding sentence, the organization shall submit to the Secretary (at a time, and in a form and manner, specified by the Secretary) information describing how the plan will come into compliance with clause (i).
(E)

Study and report to congress.—
(i)

In general.—
Not later than March 15, 2022, and, subject to clause (iii), biennially thereafter through 2032, the Medicare Payment Advisory Commission established under section 1805, in consultation with the Medicaid and CHIP Payment and Access Commission established under section 1900, shall conduct (and submit to the Secretary and the Committees on Ways and Means and Energy and Commerce of the House of Representatives and the Committee on Finance of the Senate a report on) a study to determine how specialized MA plans for special needs individuals described in subsection (b)(6)(B)(ii) perform among each other based on data from Healthcare Effectiveness Data and Information Set (HEDIS) quality measures, reported on the plan level, as required under section 1852(e)(3) (or such other measures or data sources that are available and appropriate, such as encounter data and Consumer Assessment of Healthcare Providers and Systems data, as specified by such Commissions as enabling an accurate evaluation under this subparagraph). Such study shall include, as feasible, the following comparison groups of specialized MA plans for special needs individuals described in subsection (b)(6)(B)(ii):
(I)
A comparison group of such plans that are described in subparagraph (D)(i)(I).
(II)
A comparison group of such plans that are described in subparagraph (D)(i)(II).
(III)
A comparison group of such plans operating within the Financial Alignment Initiative demonstration for the period for which such plan is so operating and the demonstration is in effect, and, in the case that an integration option that is not with respect to specialized MA plans for special needs individuals is established after the conclusion of the demonstration involved.
(IV)
A comparison group of such plans that are described in subparagraph (D)(i)(III).
(V)
A comparison group of MA plans, as feasible, not described in a previous subclause of this clause, with respect to the performance of such plans for enrollees who are special needs individuals described in subsection (b)(6)(B)(ii).
(ii)

Additional reports.—
Beginning with 2033 and every five years thereafter, the Medicare Payment Advisory Commission, in consultation with the Medicaid and CHIP Payment and Access Commission, shall conduct a study described in clause (i).
(9)

List of conditions for clarification of the definition of a severe or disabling chronic conditions specialized needs individual.—
(A)

In general.—
Not later than December 31, 2020, and every 5 years thereafter, subject to subparagraphs (B) and (C), the Secretary shall convene a panel of clinical advisors to establish and update a list of conditions that meet each of the following criteria:
(i)
Conditions that meet the definition of a severe or disabling chronic condition under subsection (b)(6)(B)(iii) on or after January 1, 2022.
(ii)
Conditions that require prescription drugs, providers, and models of care that are unique to the specific population of enrollees in a specialized MA plan for special needs individuals described in such subsection on or after such date and—
(I)
as a result of access to, and enrollment in, such a specialized MA plan for special needs individuals, individuals with such condition would have a reasonable expectation of slowing or halting the progression of the disease, improving health outcomes and decreasing overall costs for individuals diagnosed with such condition compared to available options of care other than through such a specialized MA plan for special needs individuals; or
(II)
have a low prevalence in the general population of beneficiaries under this title or a disproportionally high per-beneficiary cost under this title.
(B)

Inclusion of certain conditions.—
The conditions listed under subparagraph (A) shall include HIV/AIDS, end stage renal disease, and chronic and disabling mental illness.
(C)

Requirement.—
In establishing and updating the list under subparagraph (A), the panel shall take into account the availability of varied benefits, cost-sharing, and supplemental benefits under the model described in paragraph (2) of section 1859(h), including the expansion under paragraph (1) of such section.
(g)

Special Rules for Senior Housing Facility Plans.—
(1)

In general.—
In the case of a Medicare Advantage senior housing facility plan described in paragraph (2), notwithstanding any other provision of this part to the contrary and in accordance with regulations of the Secretary, the service area of such plan may be limited to a senior housing facility in a geographic area.
(2)

Medicare advantage senior housing facility plan described.—
For purposes of this subsection, a Medicare Advantage senior housing facility plan is a Medicare Advantage plan that—
(A)
restricts enrollment of individuals under this part to individuals who reside in a continuing care retirement community (as defined in section 1852(l)(4)(B));
(B)
provides primary care services onsite and has a ratio of accessible physicians to beneficiaries that the Secretary determines is adequate;
(C)
provides transportation services for beneficiaries to specialty providers outside of the facility; and
(D)
has participated (as of December 31, 2009) in a demonstration project established by the Secretary under which such a plan was offered for not less than 1 year.
(h)

National Testing of Medicare Advantage Value-Based Insurance Design Model.—
(1)

In general.—
In implementing the Medicare Advantage Value-Based Insurance Design model that is being tested under section 1115A(b), the Secretary shall revise the testing of the model under such section to cover, effective not later than January 1, 2020, all States.
(2)

Termination and modification provision not applicable until january 1, 2022.—
The provisions of section 1115A(b)(3)(B) shall apply to the Medicare Advantage Value-Based Insurance Design model, including such model as revised under paragraph (1), beginning January 1, 2022, but shall not apply to such model, as so revised, prior to such date.
(3)

Funding.—
The Secretary shall allocate funds made available under section 1115A(f)(1) to design, implement, and evaluate the Medicare Advantage Value-Based Insurance Design model, as revised under paragraph (1).
(i)

Program Integrity Transparency Measures.—
(1)

Program integrity portal.—
(A)

In general.—
Not later than 2 years after the date of the enactment of this subsection, the Secretary shall, after consultation with stakeholders, establish a secure internet website portal (or other successor technology) that would allow a secure path for communication between the Secretary, MA plans under this part, prescription drug plans under part D, and an eligible entity with a contract under section 1893 (such as a Medicare drug integrity contractor or an entity responsible for carrying out program integrity activities under this part and part D) for the purpose of enabling through such portal (or other successor technology)—
(i)
the referral by such plans of substantiated or suspicious activities, as defined by the Secretary, of a provider of services (including a prescriber) or supplier related to fraud, waste, and abuse for initiating or assisting investigations conducted by the eligible entity; and
(ii)
data sharing among such MA plans, prescription drug plans, and the Secretary.
(B)

Required uses of portal.—
The Secretary shall disseminate the following information to MA plans under this part and prescription drug plans under part D through the secure internet website portal (or other successor technology) established under subparagraph (A):
(i)
Providers of services and suppliers that have been referred pursuant to subparagraph (A)(i) during the previous 12-month period.
(ii)
Providers of services and suppliers who are the subject of an active exclusion under section 1128 or who are subject to a suspension of payment under this title pursuant to section 1862(o) or otherwise.
(iii)
Providers of services and suppliers who are the subject of an active revocation of participation under this title, including for not satisfying conditions of participation.
(iv)
In the case of such a plan that makes a referral under subparagraph (A)(i) through the portal (or other successor technology) with respect to activities of substantiated or suspicious activities of fraud, waste, or abuse of a provider of services (including a prescriber) or supplier, if such provider (including a prescriber) or supplier has been the subject of an administrative action under this title or title XI with respect to similar activities, a notification to such plan of such action so taken.
(C)

Rulemaking.—
For purposes of this paragraph, the Secretary shall, through rulemaking, specify what constitutes substantiated or suspicious activities of fraud, waste, and abuse, using guidance such as what is provided in the Medicare Program Integrity Manual 4.8. In carrying out this subsection, a fraud hotline tip (as defined by the Secretary) without further evidence shall not be treated as sufficient evidence for substantiated fraud, waste, or abuse.
(D)

HIPAA compliant information only.—
For purposes of this subsection, communications may only occur if the communications are permitted under the Federal regulations (concerning the privacy of individually identifiable health information) promulgated under section 264(c) of the Health Insurance Portability and Accountability Act of 1996.
(2)

Quarterly reports.—
Beginning not later than 2 years after the date of the enactment of this subsection, the Secretary shall make available to MA plans under this part and prescription drug plans under part D in a timely manner (but no less frequently than quarterly) and using information submitted to an entity described in paragraph (1) through the portal (or other successor technology) described in such paragraph or pursuant to section 1893, information on fraud, waste, and abuse schemes and trends in identifying suspicious activity. Information included in each such report shall—
(A)
include administrative actions, pertinent information related to opioid overprescribing, and other data determined appropriate by the Secretary in consultation with stakeholders; and
(B)
be anonymized information submitted by plans without identifying the source of such information.
(3)

Clarification.—
Nothing in this subsection shall preclude or otherwise affect referrals to the Inspector General of the Department of Health and Human Services or other law enforcement entities.
Part D—

Voluntary Prescription Drug Benefit Program
Subpart 1—

Part D Eligible Individuals and Prescription Drug Benefits

eligibility, enrollment, and information
Sec. 1860D–1.
[42 U.S.C. 1395w–101]
(a)

Provision of Qualified Prescription Drug Coverage Through Enrollment in Plans.—
(1)

In general.—
Subject to the succeeding provisions of this part, each part D eligible individual (as defined in paragraph (3)(A)) is entitled to obtain qualified prescription drug coverage (described in section 1860D–2(a)) as follows:
(A)

Fee-for-service enrollees may receive coverage through a prescription drug plan.—
A part D eligible individual who is not enrolled in an MA plan may obtain qualified prescription drug coverage through enrollment in a prescription drug plan (as defined in section 1860D–41(a)(14)).
(B)

Medicare advantage enrollees.—
(i)

Enrollees in a plan providing qualified prescription drug coverage receive coverage through the plan.—
A part D eligible individual who is enrolled in an MA–PD plan obtains such coverage through such plan.
(ii)

Limitation on enrollment of ma plan enrollees in prescription drug plans.—
Except as provided in clauses (iii) and (iv), a part D eligible individual who is enrolled in an MA plan may not enroll in a prescription drug plan under this part.
(iii)

Private fee-for-service enrollees in ma plans not providing qualified prescription drug coverage permitted to enroll in a prescription drug plan.—
A part D eligible individual who is enrolled in an MA private fee-for-service plan (as defined in section 1859(b)(2)) that does not provide qualified prescription drug coverage may obtain qualified prescription drug coverage through enrollment in a prescription drug plan.
(iv)

Enrollees in msa plans permitted to enroll in a prescription drug plan.—
A part D eligible individual who is enrolled in an MSA plan (as defined in section 1859(b)(3)) may obtain qualified prescription drug coverage through enrollment in a prescription drug plan.
(2)

Coverage first effective january 1, 2006.—
Coverage under prescription drug plans and MA–PD plans shall first be effective on January 1, 2006.
(3)

Definitions.—
For purposes of this part:
(A)

Part d eligible individual.—
The term “part D eligible individual” means an individual who is entitled to benefits under part A or enrolled under part B (but not including an individual enrolled solely for coverage of immunosuppressive drugs under section 1836(b)).
(B)

MA plan.—
The term “MA plan” has the meaning given such term in section 1859(b)(1).
(C)

MA–PD plan.—
The term “MA–PD plan” means an MA plan that provides qualified prescription drug coverage.
(b)

Enrollment Process for Prescription Drug Plans.—
(1)

Establishment of process.—
(A)

In general.—
The Secretary shall establish a process for the enrollment, disenrollment, termination, and change of enrollment of part D eligible individuals in prescription drug plans consistent with this subsection.
(B)

Application of ma rules.—
In establishing such process, the Secretary shall use rules similar to (and coordinated with) the rules for enrollment, disenrollment, termination, and change of enrollment with an MA–PD plan under the following provisions of section 1851:
(i)

Residence requirements.—
Section 1851(b)(1)(A), relating to residence requirements.
(ii)

Exercise of choice.—
Section 1851(c) (other than paragraph (3)(A) and paragraph (4) of such section), relating to exercise of choice.
(iii)

Coverage election periods.—
Subject to paragraphs (2) and (3) of this subsection, section 1851(e) (other than subparagraphs (B), (C), (E), and (F) of paragraph (2) and the second sentence of paragraph (4) of such section), relating to coverage election periods, including initial periods, annual coordinated election periods, special election periods, and election periods for exceptional circumstances.
(iv)

Coverage periods.—
Section 1851(f), relating to effectiveness of elections and changes of elections.
(v)

Guaranteed issue and renewal.—
Section 1851(g) (other than paragraph (2) of such section and clause (i) and the second sentence of clause (ii) of paragraph (3)(C) of such section), relating to guaranteed issue and renewal.
(vi)

Marketing material and application forms.—
Section 1851(h), relating to approval of marketing material and application forms.
In applying clauses (ii), (iv), and (v) of this subparagraph, any reference to section 1851(e) shall be treated as a reference to such section as applied pursuant to clause (iii) of this subparagraph.
(C)

Special rule.—
The process established under subparagraph (A) shall include, except as provided in subparagraph (D), in the case of a part D eligible individual who is a full-benefit dual eligible individual (as defined in section 1935(c)(6)) who has failed to enroll in a prescription drug plan or an MA–PD plan, for the enrollment in a prescription drug plan that has a monthly beneficiary premium that does not exceed the premium assistance available under section 1860D–14(a)(1)(A)). If there is more than one such plan available, the Secretary shall enroll such an individual on a random basis among all such plans in the PDP region. Nothing in the previous sentence shall prevent such an individual from declining or changing such enrollment.
(D)

Special rule for plans that waive de minimis premiums.—
The process established under subparagraph (A) may include, in the case of a part D eligible individual who is a subsidy eligible individual (as defined in section 1860D–14(a)(3)) who has failed to enroll in a prescription drug plan or an MA–PD plan, for the enrollment in a prescription drug plan or MA–PD plan that has waived the monthly beneficiary premium for such subsidy eligible individual under section 1860D–14(a)(5). If there is more than one such plan available, the Secretary shall enroll such an individual under the preceding sentence on a random basis among all such plans in the PDP region. Nothing in the previous sentence shall prevent such an individual from declining or changing such enrollment.
(2)

Initial enrollment period.—
(A)

Program initiation.—
In the case of an individual who is a part D eligible individual as of November 15, 2005, there shall be an initial enrollment period that shall be the same as the annual, coordinated open election period described in section 1851(e)(3)(B)(iii), as applied under paragraph (1)(B)(iii).
(B)

Continuing periods.—
In the case of an individual who becomes a part D eligible individual after November 15, 2005, there shall be an initial enrollment period which is the period under section 1851(e)(1), as applied under paragraph (1)(B)(iii) of this section, as if “entitled to benefits under part A or enrolled under part B” were substituted for “entitled to benefits under part A and enrolled under part B”, but in no case shall such period end before the period described in subparagraph (A).
(3)

Additional special enrollment periods.—
The Secretary shall establish special enrollment periods, including the following:
(A)

Involuntary loss of creditable prescription drug coverage.—
(i)

In general.—
In the case of a part D eligible individual who involuntarily loses creditable prescription drug coverage (as defined in section 1860D–13(b)(4)).
(ii)

Notice.—
In establishing special enrollment periods under clause (i), the Secretary shall take into account when the part D eligible individuals are provided notice of the loss of creditable prescription drug coverage.
(iii)

Failure to pay premium.—
For purposes of clause (i), a loss of coverage shall be treated as voluntary if the coverage is terminated because of failure to pay a required beneficiary premium.
(iv)

Reduction in coverage.—
For purposes of clause (i), a reduction in coverage so that the coverage no longer meets the requirements under section 1860D–13(b)(5) (relating to actuarial equivalence) shall be treated as an involuntary loss of coverage.
(B)

Errors in enrollment.—
In the case described in section 1837(h) (relating to errors in enrollment), in the same manner as such section applies to part B.
(C)

Exceptional circumstances.—
In the case of part D eligible individuals who meet such exceptional conditions (in addition to those conditions applied under paragraph (1)(B)(iii)) as the Secretary may provide.
(D)

Medicaid coverage.—
In the case of an individual (as determined by the Secretary, subject to such limits as the Secretary may establish for individuals identified pursuant to section 1860D–4(c)(5)) who is a full-benefit dual eligible individual (as defined in section 1935(c)(6)).
(E)

Discontinuance of ma–pd election during first year of eligibility.—
In the case of a part D eligible individual who discontinues enrollment in an MA–PD plan under the second sentence of section 1851(e)(4) at the time of the election of coverage under such sentence under the original medicare fee-for-service program.
(4)

Information to facilitate enrollment.—
(A)

In general.—
Notwithstanding any other provision of law but subject to subparagraph (B), the Secretary may provide to each PDP sponsor and MA organization such identifying information about part D eligible individuals as the Secretary determines to be necessary to facilitate efficient marketing of prescription drug plans and MA–PD plans to such individuals and enrollment of such individuals in such plans.
(B)

Limitation.—
(i)

Provision of information.—
The Secretary may provide the information under subparagraph (A) only to the extent necessary to carry out such subparagraph.
(ii)

Use of information.—
Such information provided by the Secretary to a PDP sponsor or an MA organization may be used by such sponsor or organization only to facilitate marketing of, and enrollment of part D eligible individuals in, prescription drug plans and MA–PD plans.
(5)

Reference to enrollment procedures for ma–pd plans.—
For rules applicable to enrollment, disenrollment, termination, and change of enrollment of part D eligible individuals in MA–PD plans, see section 1851.
(6)

Reference to penalties for late enrollment.—
Section 1860D–13(b) imposes a late enrollment penalty for part D eligible individuals who—
(A)
enroll in a prescription drug plan or an MA–PD plan after the initial enrollment period described in paragraph (2); and
(B)
fail to maintain continuous creditable prescription drug coverage during the period of non-enrollment.
(c)

Providing Information to Beneficiaries.—
(1)

Activities.—
The Secretary shall conduct activities that are designed to broadly disseminate information to part D eligible individuals (and prospective part D eligible individuals) regarding the coverage provided under this part. Such activities shall ensure that such information is first made available at least 30 days prior to the initial enrollment period described in subsection (b)(2)(A).
(2)

Requirements.—
The activities described in paragraph (1) shall—
(A)
be similar to the activities performed by the Secretary under section 1851(d), including dissemination (including through the toll-free telephone number 1–800–MEDICARE) of comparative information for prescription drug plans and MA–PD plans; and
(B)
be coordinated with the activities performed by the Secretary under such section and under section 1804.
(3)

Comparative information.—
(A)

In general.—
Subject to subparagraph (B), the comparative information referred to in paragraph (2)(A) shall include a comparison of the following with respect to qualified prescription drug coverage:
(i)

Benefits.—
The benefits provided under the plan.
(ii)

Monthly beneficiary premium.—
The monthly beneficiary premium under the plan.
(iii)

Quality and performance.—
The quality and performance under the plan.
(iv)

Beneficiary cost-sharing.—
The cost-sharing required of part D eligible individuals under the plan.
(v)

Consumer satisfaction surveys.—
The results of consumer satisfaction surveys regarding the plan conducted pursuant to section 1860D–4(d).
(B)

Exception for unavailability of information.—
The Secretary is not required to provide comparative information under clauses (iii) and (v) of subparagraph (A) with respect to a plan—
(i)
for the first plan year in which it is offered; and
(ii)
for the next plan year if it is impracticable or the information is otherwise unavailable.
(4)

Information on late enrollment penalty.—
The information disseminated under paragraph (1) shall include information concerning the methodology for determining the late enrollment penalty under section 1860D–13(b).

prescription drug benefits
Sec. 1860D–2.
[42 U.S.C. 1395w–102]
(a)

Requirements.—
(1)

In general.—
For purposes of this part and part C, the term “qualified prescription drug coverage” means either of the following:
(A)

Standard prescription drug coverage with access to negotiated prices.—
Standard prescription drug coverage (as defined in subsection (b)) and access to negotiated prices under subsection (d).
(B)

Alternative prescription drug coverage with at least actuarially equivalent benefits and access to negotiated prices.—
Coverage of covered part D drugs which meets the alternative prescription drug coverage requirements of subsection (c) and access to negotiated prices under subsection (d), but only if the benefit design of such coverage is approved by the Secretary, as provided under subsection (c).
(2)

Permitting supplemental prescription drug coverage.—
(A)

In general.—
Subject to subparagraph (B), qualified prescription drug coverage may include supplemental prescription drug coverage consisting of either or both of the following:
(i)

Certain reductions in cost-sharing.—
(I)

In general.—
A reduction in the annual deductible, a reduction in the coinsurance percentage or, for a year preceding 2025, an increase in the initial coverage limit with respect to covered part D drugs, or any combination thereof, insofar as such a reduction or increase increases the actuarial value of benefits above the actuarial value of basic prescription drug coverage.
(II)

Construction.—
Nothing in this paragraph shall be construed as affecting the application of subsection (c)(3).
(ii)

Optional drugs.—
Coverage of any product that would be a covered part D drug but for the application of subsection (e)(2)(A).
(B)

Requirement.—
A PDP sponsor may not offer a prescription drug plan that provides supplemental prescription drug coverage pursuant to subparagraph (A) in an area unless the sponsor also offers a prescription drug plan in the area that only provides basic prescription drug coverage.
(3)

Basic prescription drug coverage.—
For purposes of this part and part C, the term “basic prescription drug coverage” means either of the following:
(A)
Coverage that meets the requirements of paragraph (1)(A).
(B)
Coverage that meets the requirements of paragraph (1)(B) but does not have any supplemental prescription drug coverage described in paragraph (2)(A).
(4)

Application of secondary payor provisions.—
The provisions of section 1852(a)(4) shall apply under this part in the same manner as they apply under part C.
(5)

Construction.—
Nothing in this subsection shall be construed as changing the computation of incurred costs under subsection (b)(4).
(b)

Standard Prescription Drug Coverage.—
For purposes of this part and part C, the term “standard prescription drug coverage” means coverage of covered part D drugs that meets the following requirements:
(1)

Deductible.—
(A)

In general.—
Subject to paragraphs (8) and (9), the coverage has an annual deductible—
(i)
for 2006, that is equal to $250; or
(ii)
for a subsequent year, that is equal to the amount specified under this paragraph for the previous year increased by the percentage specified in paragraph (6) for the year involved.
(B)

Rounding.—
Any amount determined under subparagraph (A)(ii) that is not a multiple of $5 shall be rounded to the nearest multiple of $5.
(2)

Benefit structure.—
(A)

25 percent coinsurance.—
Subject to subparagraphs (C), (D), and (E) and paragraphs (8) and (9), the coverage has coinsurance (for costs above the annual deductible specified in paragraph (1) and up to the initial coverage limit under paragraph (3) for a year preceding 2025 and for costs above the annual deductible specified in paragraph (1) and up to the annual out-of-pocket threshold specified in paragraph (4)(B) for 2025 and each subsequent year) that is—
(i)
equal to 25 percent; or
(ii)
actuarially equivalent (using processes and methods established under section 1860D–11(c)) to an average expected payment of 25 percent of such costs.
(B)

Use of tiers.—
Nothing in this part shall be construed as preventing a PDP sponsor or an MA organization from applying tiered copayments under a plan, so long as such tiered copayments are consistent with subparagraphs (A)(ii), (C), and (D).
(C)

Coverage for generic drugs in coverage gap.—
(i)

In general.—
Except as provided in paragraphs (4), (8), and (9), for a year preceding 2025, the coverage for an applicable beneficiary (as defined in section 1860D–14A(g)(1)) has coinsurance (for costs above the initial coverage limit under paragraph (3) and below the out-of-pocket threshold) for covered part D drugs that are not applicable drugs under section 1860D–14A(g)(2) that is—
(I)
equal to the generic-gap coinsurance percentage (specified in clause (ii)) for the year; or
(II)
actuarially equivalent (using processes and methods established under section 1860D–11(c)) to an average expected payment of such percentage of such costs for covered part D drugs that are not applicable drugs under section 1860D–14A(g)(2).
(ii)

Generic-gap coinsurance percentage.—
The generic-gap coinsurance percentage specified in this clause for—
(I)
2011 is 93 percent;
(II)
2012 and each succeeding year before 2020 is the generic-gap coinsurance percentage under this clause for the previous year decreased by 7 percentage points; and
(III)
2020 through 2024 is 25 percent.
(D)

Coverage for applicable drugs in coverage gap.—
(i)

In general.—
Except as provided in paragraphs (4), (8), and (9), for a year preceding 2025, the coverage for an applicable beneficiary (as defined in section 1860D–14A(g)(1)) has coinsurance (for costs above the initial coverage limit under paragraph (3) and below the out-of-pocket threshold) for the negotiated price (as defined in section 1860D–14A(g)(6)) of covered part D drugs that are applicable drugs under section 1860D–14A(g)(2) that is—
(I)
equal to the difference between—
- (aa)
the applicable gap percentage (specified in clause (ii) for the year); and
- (bb)
the discount percentage specified in section 1860D–14A(g)(4)(A) for such applicable drugs (or, in the case of each of years 2019 through 2024, 50 percent); or
(II)
actuarially equivalent (using processes and methods established under section 1860D–11(c)) to an average expected payment of such percentage of such costs, for covered part D drugs that are applicable drugs under section 1860D–14A(g)(2).
(ii)

Applicable gap percentage.—
The applicable gap percentage specified in this clause for—
(I)
2013 and 2014 is 97.5 percent;
(II)
2015 and 2016 is 95 percent;
(III)
2017 is 90 percent;
(IV)
2018 is 85 percent; and
(V)
each of years 2019 through 2024 is 75 percent.
(E)

Maximum monthly cap on cost-sharing payments.—
(i)

In general.—
For plan years beginning on or after January 1, 2025, each PDP sponsor offering a prescription drug plan and each MA organization offering an MA–PD plan shall provide to any enrollee of such plan, including an enrollee who is a subsidy eligible individual (as defined in paragraph (3) of section 1860D–14(a)), the option to elect with respect to a plan year to pay cost-sharing under the plan in monthly amounts that are capped in accordance with this subparagraph.
(ii)

Determination of maximum monthly cap.—
For each month in the plan year for which an enrollee in a prescription drug plan or an MA–PD plan has made an election pursuant to clause (i), the PDP sponsor or MA organization shall determine a maximum monthly cap (as defined in clause (iv)) for such enrollee.
(iii)

Beneficiary monthly payments.—
With respect to an enrollee who has made an election pursuant to clause (i), for each month described in clause (ii), the PDP sponsor or MA organization shall bill such enrollee an amount (not to exceed the maximum monthly cap) for the out-of-pocket costs of such enrollee in such month.
(iv)

Maximum monthly cap defined.—
In this subparagraph, the term “maximum monthly cap” means, with respect to an enrollee—
(I)
for the first month for which the enrollee has made an election pursuant to clause (i), an amount determined by calculating—
- (aa)
the annual out-of-pocket threshold specified in paragraph (4)(B) minus the incurred costs of the enrollee as described in paragraph (4)(C); divided by
- (bb)
the number of months remaining in the plan year; and
(II)
for a subsequent month, an amount determined by calculating—
- (aa)
the sum of any remaining out-of-pocket costs owed by the enrollee from a previous month that have not yet been billed to the enrollee and any additional out-of-pocket costs incurred by the enrollee; divided by
- (bb)
the number of months remaining in the plan year.
(v)

Additional requirements.—
The following requirements shall apply with respect to the option to make an election pursuant to clause (i) under this subparagraph:
(I)

Secretarial responsibilities.—
The Secretary shall provide information to part D eligible individuals on the option to make such election through educational materials, including through the notices provided under section 1804(a).
(II)

Timing of election.—
An enrollee in a prescription drug plan or an MA–PD plan may make such an election—
- (aa)
prior to the beginning of the plan year; or
- (bb)
in any month during the plan year.
(III)

Pdp sponsor and ma organization responsibilities.—
Each PDP sponsor offering a prescription drug plan or MA organization offering an MA–PD plan—
- (aa)
may not limit the option for an enrollee to make such an election to certain covered part D drugs;
- (bb)
shall, prior to the plan year, notify prospective enrollees of the option to make such an election in promotional materials;
- (cc)
shall include information on such option in enrollee educational materials;
- (dd)
shall have in place a mechanism to notify a pharmacy during the plan year when an enrollee incurs out-of-pocket costs with respect to covered part D drugs that make it likely the enrollee may benefit from making such an election;
- (ee)
shall provide that a pharmacy, after receiving a notification described in item (dd) with respect to an enrollee, informs the enrollee of such notification;
- (ff)
shall ensure that such an election by an enrollee has no effect on the amount paid to pharmacies (or the timing of such payments) with respect to covered part D drugs dispensed to the enrollee; and
- (gg)
shall have in place a financial reconciliation process to correct inaccuracies in payments made by an enrollee under this subparagraph with respect to covered part D drugs during the plan year.
(IV)

Failure to pay amount billed.—
If an enrollee fails to pay the amount billed for a month as required under this subparagraph—
- (aa)
the election of the enrollee pursuant to clause (i) shall be terminated and the enrollee shall pay the cost-sharing otherwise applicable for any covered part D drugs subsequently dispensed to the enrollee up to the annual out-of-pocket threshold specified in paragraph (4)(B); and
- (bb)
the PDP sponsor or MA organization may preclude the enrollee from making an election pursuant to clause (i) in a subsequent plan year.
(V)

Clarification regarding past due amounts.—
Nothing in this subparagraph shall be construed as prohibiting a PDP sponsor or an MA organization from billing an enrollee for an amount owed under this subparagraph.
(VI)

Treatment of unsettled balances.—
Any unsettled balances with respect to amounts owed under this subparagraph shall be treated as plan losses and the Secretary shall not be liable for any such balances outside of those assumed as losses estimated in plan bids.
(3)

Initial coverage limit.—
(A)

In general.—
Except as provided in paragraphs (2)(C), (2)(D), (4), (8), and (9), for a year preceding 2025, the coverage has an initial coverage limit on the maximum costs that may be recognized for payment purposes (including the annual deductible)—
(i)
for 2006, that is equal to $2,250; or
(ii)
for each of years 2007 through 2024, that is equal to the amount specified in this paragraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved.
(B)

Rounding.—
Any amount determined under subparagraph (A)(ii) that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
(4)

Protection against high out-of-pocket expenditures.—
(A)

In general.—
(i)

In general.—
Subject to paragraphs (8) and (9), the coverage provides benefits, after the part D eligible individual has incurred costs (as described in subparagraph (C)) for covered part D drugs in a year equal to the annual out-of-pocket threshold specified in subparagraph (B), with cost-sharing that is equal to—
(I)
for a year preceding 2024, the greater of—
- (aa)
a copayment of $2 for a generic drug or a preferred drug that is a multiple source drug (as defined in section 1927(k)(7)(A)(i)) and $5 for any other drug; or
- (bb)
coinsurance that is equal to 5 percent; and
(II)
for 2024 and each succeeding year, $0.
(ii)

Adjustment of amount.—
For a year after 2006, the dollar amounts specified in clause (i)(I)(aa) shall be equal to the dollar amounts specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved. Any amount established under this clause that is not a multiple of a 5 cents shall be rounded to the nearest multiple of 5 cents. The Secretary shall continue to calculate the dollar amounts specified in clause (i)(I)(aa), including with the adjustment under this clause, after 2023 for purposes of section 1860D–14(a)(1)(D)(iii).
(B)

Annual out-of-pocket threshold.—
(i)

In general.—
For purposes of this part, the “annual out-of-pocket threshold” specified in this subparagraph—
(I)
for 2006, is equal to $3,600;
(II)
for each of years 2007 through 2013, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved;
(III)
for 2014 and 2015, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved, minus 0.25 percentage point;
(IV)
for each of years 2016 through 2019, is equal to the amount specified in this subparagraph for the previous year, increased by the lesser of—
- (aa)
the annual percentage increase described in paragraph (7) for the year involved, plus 2 percentage points; or
- (bb)
the annual percentage increase described in paragraph (6) for the year;
(V)
for 2020, is equal to the amount that would have been applied under this subparagraph for 2020 if the amendments made by section 1101(d)(1) of the Health Care and Education Reconciliation Act of 2010 had not been enacted;
(VI)
for each of years 2021 through 2024, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved;
(VII)
for 2025, is equal to $2,000; or
(VIII)
for a subsequent year, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved.
(ii)

Rounding.—
Any amount determined under clause (i) that is not a multiple of $50 shall be rounded to the nearest multiple of $50.
(C)

Application.—
Except as provided in subparagraph (E) or subparagraph (F), in applying subparagraph (A)—
(i)
incurred costs shall only include costs incurred with respect to covered part D drugs for the annual deductible described in paragraph (1), for cost-sharing described in paragraph (2), and, for a year preceding 2025, for amounts for which benefits are not provided because of the application of the initial coverage limit described in paragraph (3), but does not include any costs incurred for covered part D drugs which are not included (or treated as being included) in the plan's formulary;
(ii)
subject to clause (iii), such costs shall be treated as incurred only if they are paid by the part D eligible individual (or by another person, such as a family member, on behalf of the individual) and the part D eligible individual (or other person) is not reimbursed through insurance or otherwise, a group health plan, or other third-party payment arrangement (other than under such section or such a Program) for such costs; and
(iii)
such costs shall be treated as incurred and shall not be considered to be reimbursed under clause (ii) if such costs—
(I)
are borne or paid——61
^{61}
The double em dashes are so in law.
- (aa)
under section 1860D–14;
- (bb)
under a State Pharmaceutical Assistance Program;
- (cc)
by the Indian Health Service, an Indian tribe or tribal organization, or an urban Indian organization (as defined in section 4 of the Indian Health Care Improvement Act);
- (dd)
under an AIDS Drug Assistance Program under part B of title XXVI of the Public Health Service Act; or
- (dd)62
under section 1860D–15(h); or
^{62}
Two items designated as (dd) so in law.
(II)
for 2025 and subsequent years, are reimbursed through insurance, a group health plan, or certain other third party payment arrangements, but not including the coverage provided by a prescription drug plan or an MA–PD plan that is basic prescription drug coverage (as defined in subsection (a)(3)) or any payments by a manufacturer under the manufacturer discount program under section 1860D–14C.
(D)

Information regarding third-party reimbursement.—
(i)

Procedures for exchanging information.—
In order to accurately apply the requirements of subparagraph (C)(ii), the Secretary is authorized to establish procedures, in coordination with the Secretary of the Treasury and the Secretary of Labor—
(I)
for determining whether costs for part D eligible individuals are being reimbursed through insurance or otherwise, a group health plan, or other third-party payment arrangement; and
(II)
for alerting the PDP sponsors and MA organizations that offer the prescription drug plans and MA–PD plans in which such individuals are enrolled about such reimbursement arrangements.
(ii)

Authority to request information from enrollees.—
A PDP sponsor or an MA organization may periodically ask part D eligible individuals enrolled in a prescription drug plan or an MA–PD plan offered by the sponsor or organization whether such individuals have or expect to receive such third-party reimbursement. A material misrepresentation of the information described in the preceding sentence by an individual (as defined in standards set by the Secretary and determined through a process established by the Secretary) shall constitute grounds for termination of enrollment in any plan under section 1851(g)(3)(B) (and as applied under this part under section 1860D–1(b)(1)(B)(v)) for a period specified by the Secretary.
(E)

Inclusion of costs of applicable drugs under medicare coverage gap discount program.—
For each of years 2011 through 2024, in applying subparagraph (A), incurred costs shall include the negotiated price (as defined in paragraph (6) of section 1860D–14A(g)) of an applicable drug (as defined in paragraph (2) of such section) of a manufacturer that is furnished to an applicable beneficiary (as defined in paragraph (1) of such section) under the Medicare coverage gap discount program under section 1860D–14A, regardless of whether part of such costs were paid by a manufacturer under such program, except that incurred costs shall not include the portion of the negotiated price that represents the reduction in coinsurance resulting from the application of paragraph (2)(D).
(F)

Inclusion of costs paid under maximum monthly cap option.—
In applying subparagraph (A), with respect to an enrollee who has made an election pursuant to clause (i) of paragraph (2)(E), costs shall be treated as incurred if such costs are paid by a PDP sponsor or an MA organization under the option provided under such paragraph.
(5)

Construction.—
Nothing in this part shall be construed as preventing a PDP sponsor or an MA organization offering an MA–PD plan from reducing to zero the cost-sharing otherwise applicable to preferred or generic drugs.
(6)

Annual percentage increase.—
The annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in average per capita aggregate expenditures for covered part D drugs in the United States for part D eligible individuals, as determined by the Secretary for the 12-month period ending in July of the previous year using such methods as the Secretary shall specify.
(7)

Additional annual percentage increase.—
The annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending in July of the previous year.
(8)

Treatment of cost-sharing for adult vaccines recommended by the advisory committee on immunization practices consistent with treatment of vaccines under part b.—
(A)

In general.—
For plan years beginning on or after January 1, 2023, with respect to an adult vaccine recommended by the Advisory Committee on Immunization Practices (as defined in subparagraph (B))—
(i)
the deductible under paragraph (1) shall not apply; and
(ii)
there shall be no coinsurance or other cost-sharing under this part with respect to such vaccine.
(B)

Adult vaccines recommended by the advisory committee on immunization practices.—
For purposes of this paragraph, the term “adult vaccine recommended by the Advisory Committee on Immunization Practices” means a covered part D drug that is a vaccine licensed under section 351 of the Public Health Service Act for use by adult populations and administered in accordance with recommendations of the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention.
(9)

Treatment of cost-sharing for covered insulin products.—
(A)

No application of deductible.—
For plan year 2023 and subsequent plan years, the deductible under paragraph (1) shall not apply with respect to any covered insulin product.
(B)

Application of cost-sharing.—
(i)

Plan years 2023 and 2024.—
For plan years 2023 and 2024, the coverage provides benefits for any covered insulin product, regardless of whether an individual has reached the initial coverage limit under paragraph (3) or the out-of-pocket threshold under paragraph (4), with cost-sharing for a month’s supply that does not exceed the applicable copayment amount.
(ii)

Plan year 2025 and subsequent plan years.—
For a plan year beginning on or after January 1, 2025, the coverage provides benefits for any covered insulin product, prior to an individual reaching the out-of-pocket threshold under paragraph (4), with cost-sharing for a month’s supply that does not exceed the applicable copayment amount.
(C)

Covered insulin product.—
In this paragraph, the term “covered insulin product” means an insulin product that is a covered part D drug covered under the prescription drug plan or MA–PD plan that is approved under section 505 of the Federal Food, Drug, and Cosmetic Act or licensed under section 351 of the Public Health Service Act and marketed pursuant to such approval or licensure, including any covered insulin product that has been deemed to be licensed under section 351 of the Public Health Service Act pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009 and marketed pursuant to such section.
(D)

Applicable copayment amount.—
In this paragraph, the term “applicable copayment amount” means, with respect to a covered insulin product under a prescription drug plan or an MA–PD plan dispensed—
(i)
during plan years 2023, 2024, and 2025, $35; and
(ii)
during plan year 2026 and each subsequent plan year, the lesser of—
(I)
$35;
(II)
an amount equal to 25 percent of the maximum fair price established for the covered insulin product in accordance with part E of title XI; or
(III)
an amount equal to 25 percent of the negotiated price of the covered insulin product under the prescription drug plan or MA–PD plan.
(E)

Special rule for first 3 months of 2023.—
With respect to a month’s supply of a covered insulin product dispensed during the period beginning on January 1, 2023, and ending on March 31, 2023, a PDP sponsor offering a prescription drug plan or an MA organization offering an MA–PD plan shall reimburse an enrollee within 30 days for any cost-sharing paid by such enrollee that exceeds the cost-sharing applied by the prescription drug plan or MA–PD plan under subparagraph (B)(i) at the point-of-sale for such month’s supply.
(c)

Alternative Prescription Drug Coverage Requirements.—
A prescription drug plan or an MA–PD plan may provide a different prescription drug benefit design from standard prescription drug coverage so long as the Secretary determines (consistent with section 1860D–11(c)) that the following requirements are met and the plan applies for, and receives, the approval of the Secretary for such benefit design:
(1)

Assuring at least actuarially equivalent coverage.—
(A)

Assuring equivalent value of total coverage.—
The actuarial value of the total coverage is at least equal to the actuarial value of standard prescription drug coverage.
(B)

Assuring equivalent unsubsidized value of coverage.—
The unsubsidized value of the coverage is at least equal to the unsubsidized value of standard prescription drug coverage. For purposes of this subparagraph, the unsubsidized value of coverage is the amount by which the actuarial value of the coverage exceeds the actuarial value of the subsidy payments under section 1860D–15 with respect to such coverage.
(C)

Assuring standard payment for costs .—
The coverage is designed, based upon an actuarially representative pattern of utilization, to provide for the payment, with respect to costs incurred that are equal to the initial coverage limit under subsection (b)(3) for the year for a year preceding 2025 or the annual out-of-pocket threshold specified in subsection (b)(4)(B) for the year for 2025 and each subsequent year, of an amount equal to at least the product of—
(i)
the amount by which the initial coverage limit described in subsection (b)(3) for the year for a year preceding 2025 or the annual out-of-pocket threshold specified in subsection (b)(4)(B) for the year for 2025 and each subsequent year exceeds the deductible described in subsection (b)(1) for the year; and
(ii)
100 percent minus the coinsurance percentage specified in subsection (b)(2)(A)(i).
(2)

Maximum required deductible.—
The deductible under the coverage shall not exceed the deductible amount specified under subsection (b)(1) for the year.
(3)

Same protection against high out-of-pocket expenditures.—
The coverage provides the coverage required under subsection (b)(4).
(4)

Same maximum monthly cap on cost-sharing.—
The maximum monthly cap on cost-sharing payments shall apply to coverage with respect to an enrollee who has made an election pursuant to clause (i) of subsection (b)(2)(E) under the option provided under such subsection.
(5)

Treatment of cost-sharing for adult vaccines recommended by the advisory committee on immunization practices.—
The coverage is in accordance with subsection (b)(8).
(6)

Treatment of cost-sharing for covered insulin products.—
The coverage is provided in accordance with subsection (b)(9).
(d)

Access to Negotiated Prices.—
(1)

Access.—
(A)

In general.—
Under qualified prescription drug coverage offered by a PDP sponsor offering a prescription drug plan or an MA organization offering an MA–PD plan, the sponsor or organization shall provide enrollees with access to negotiated prices used for payment for covered part D drugs, regardless of the fact that no benefits may be payable under the coverage with respect to such drugs because of the application of a deductible or other cost-sharing or, for a year preceding 2025, an initial coverage limit (described in subsection (b)(3)).
(B)

Negotiated prices.—
For purposes of this part, negotiated prices, subject to subparagraph (D), shall take into account negotiated price concessions, such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, for covered part D drugs, and include any dispensing fees for such drugs.
(C)

Medicaid-related provisions.—
The prices negotiated by a prescription drug plan, by an MA–PD plan with respect to covered part D drugs, or by a qualified retiree prescription drug plan (as defined in section 1860D–22(a)(2)) with respect to such drugs on behalf of part D eligible individuals, shall (notwithstanding any other provision of law) not be taken into account for the purposes of establishing the best price under section 1927(c)(1)(C).
(D)

Application of maximum fair price for selected drugs.—
In applying this section, in the case of a covered part D drug that is a selected drug (as referred to in section 1192(c)), with respect to a price applicability period (as defined in section 1191(b)(2)), the negotiated prices used for payment (as described in this subsection) shall be no greater than the maximum fair price (as defined in section 1191(c)(3)) for such drug and for each year during such period plus any dispensing fees for such drug.
(2)

Disclosure.—
A PDP sponsor offering a prescription drug plan or an MA organization offering an MA–PD plan shall disclose to the Secretary (in a manner specified by the Secretary) the aggregate negotiated price concessions described in paragraph (1)(B) made available to the sponsor or organization by a manufacturer which are passed through in the form of lower subsidies, lower monthly beneficiary prescription drug premiums, and lower prices through pharmacies and other dispensers. The provisions of section 1927(b)(3)(D) apply to information disclosed to the Secretary under this paragraph.
(3)

Audits.—
To protect against fraud and abuse and to ensure proper disclosures and accounting under this part and in accordance with section 1857(d)(2)(B) (as applied under section 1860D–12(b)(3)(C)), the Secretary may conduct periodic audits, directly or through contracts, of the financial statements and records of PDP sponsors with respect to prescription drug plans and MA organizations with respect to MA–PD plans.
(e)

Covered Part D Drug Defined.—
(1)

In general.—
Except as provided in this subsection, for purposes of this part, the term “covered part D drug” means—
(A)
a drug that may be dispensed only upon a prescription and that is described in subparagraph (A)(i), (A)(ii), or (A)(iii) of section 1927(k)(2);
(B)
a biological product described in clauses (i) through (iii) of subparagraph (B) of such section or insulin described in subparagraph (C) of such section and medical supplies associated with the injection of insulin (as defined in regulations of the Secretary); or
(C)
for the period beginning on the date of the enactment of this subparagraph and ending on January 30, 2026, an oral antiviral drug that may be dispensed only upon a prescription and is authorized under section 564 of the Federal Food, Drug, and Cosmetic Act, on the basis of the declaration published in the Federal Register by the Secretary of Health and Human Services on April 1, 2020 (85 Fed. Reg. 18250 et seq.),
and such term includes a vaccine licensed under section 351 of the Public Health Service Act (and, for vaccines administered on or after January 1, 2008, its administration) and any use of a covered part D drug for a medically accepted indication (as defined in paragraph (4)).
(2)

Exclusions.—
(A)

In general.—
Such term does not include drugs or classes of drugs, or their medical uses, which may be excluded from coverage or otherwise restricted under section 1927(d)(2), other than subparagraph (E) of such section (relating to smoking cessation agents), other than subparagraph (I) of such section (relating to barbiturates) if the barbiturate is used in the treatment of epilepsy, cancer, or a chronic mental health disorder, and other than subparagraph (J) of such section (relating to benzodiazepines), or under section 1927(d)(3), as such sections were in effect on the date of the enactment of this part. Such term also does not include a drug when used for the treatment of sexual or erectile dysfunction, unless such drug were used to treat a condition, other than sexual or erectile dysfunction, for which the drug has been approved by the Food and Drug Administration.
(B)

Medicare covered drugs.—
A drug prescribed for a part D eligible individual that would otherwise be a covered part D drug under this part shall not be so considered if payment for such drug as so prescribed and dispensed or administered with respect to that individual is available (or would be available but for the application of a deductible) under part A or B for that individual.
(3)

Application of general exclusion provisions.—
A prescription drug plan or an MA–PD plan may exclude from qualified prescription drug coverage any covered part D drug—
(A)
for which payment would not be made if section 1862(a) applied to this part; or
(B)
which is not prescribed in accordance with the plan or this part.
Such exclusions are determinations subject to reconsideration and appeal pursuant to subsections (g) and (h), respectively, of section 1860D–4.
(4)63

Medically accepted indication defined.—
^{63}
The placement of paragraph (4) was made to reflect the probable intent of Congress. The amendment made by section 182(a)(1) of Public Law 110–275 inserts paragraph (4) at the end of subsection (e)(1).
(A)

In general.—
For purposes of paragraph (1), the term “medically accepted indication” has the meaning given that term—
(i)
in the case of a covered part D drug used in an anticancer chemotherapeutic regimen, in section 1861(t)(2)(B), except that in applying such section—
(I)
“prescription drug plan or MA–PD plan” shall be substituted for “carrier” each place it appears; and
(II)
subject to subparagraph (B), the compendia described in section 1927(g)(1)(B)(i)(III) shall be included in the list of compendia described in clause (ii)(I) section 1861(t)(2)(B); and
(ii)
in the case of any other covered part D drug, in section 1927(k)(6).
(B)

Conflict of interest.—
On and after January 1, 2010, subparagraph (A)(i)(II) shall not apply unless the compendia described in section 1927(g)(1)(B)(i)(III) meets the requirement in the third sentence of section 1861(t)(2)(B).
(C)

Update.—
For purposes of applying subparagraph (A)(ii), the Secretary shall revise the list of compendia described in section 1927(g)(1)(B)(i) as is appropriate for identifying medically accepted indications for drugs. Any such revision shall be done in a manner consistent with the process for revising compendia under section 1861(t)(2)(B).

access to a choice of qualified prescription drug coverage
Sec. 1860D–3.
[42 U.S.C. 1395w–103]
(a)

Assuring Access to a Choice of Coverage.—
(1)

Choice of at least two plans in each area.—
The Secretary shall ensure that each part D eligible individual has available, consistent with paragraph (2), a choice of enrollment in at least 2 qualifying plans (as defined in paragraph (3)) in the area in which the individual resides, at least one of which is a prescription drug plan. In any such case in which such plans are not available, the part D eligible individual shall be given the opportunity to enroll in a fallback prescription drug plan.
(2)

Requirement for different plan sponsors.—
The requirement in paragraph (1) is not satisfied with respect to an area if only one entity offers all the qualifying plans in the area.
(3)

Qualifying plan defined.—
For purposes of this section, the term “qualifying plan” means—
(A)
a prescription drug plan; or
(B)
an MA–PD plan described in section 1851(a)(2)(A)(i) that provides—
(i)
basic prescription drug coverage; or
(ii)
qualified prescription drug coverage that provides supplemental prescription drug coverage so long as there is no MA monthly supplemental beneficiary premium applied under the plan, due to the application of a credit against such premium of a rebate under section 1854(b)(1)(C).
(b)

Flexibility in Risk Assumed and Application of Fallback Plan.—
In order to ensure access pursuant to subsection (a) in an area—
(1)
the Secretary may approve limited risk plans under section 1860D–11(f) for the area; and
(2)
only if such access is still not provided in the area after applying paragraph (1), the Secretary shall provide for the offering of a fallback prescription drug plan for that area under section 1860D–11(g).

beneficiary protections for qualified prescription drug coverage
Sec. 1860D–4.
[42 U.S.C. 1395w–104]
(a)

Dissemination of Information.—
(1)

General information.—
(A)

Application of ma information.—
A PDP sponsor shall disclose, in a clear, accurate, and standardized form to each enrollee with a prescription drug plan offered by the sponsor under this part at the time of enrollment and at least annually thereafter, the information described in section 1852(c)(1) relating to such plan, insofar as the Secretary determines appropriate with respect to benefits provided under this part, and, subject to subparagraph (C), including the information described in subparagraph (B).
(B)

Drug specific information.—
The information described in this subparagraph is information concerning the following:
(i)
Access to specific covered part D drugs, including access through pharmacy networks.
(ii)
How any formulary (including any tiered formulary structure) used by the sponsor functions, including a description of how a part D eligible individual may obtain information on the formulary consistent with paragraph (3).
(iii)
Beneficiary cost-sharing requirements and how a part D eligible individual may obtain information on such requirements, including tiered or other copayment level applicable to each drug (or class of drugs), consistent with paragraph (3).
(iv)
The medication therapy management program required under subsection (c).
(v)
The drug management program for at-risk beneficiaries under subsection (c)(5).
(vi)
For plan year 2021 and each subsequent plan year, subject to subparagraph (C), with respect to the treatment of pain—
(I)
the risks associated with prolonged opioid use; and
(II)
coverage of nonpharmacological therapies, devices, and nonopioid medications—
- (aa)
in the case of an MA–PD plan under part C, under such plan; and
- (bb)
in the case of a prescription drug plan, under such plan and under parts A and B.
(C)

Targeted provision of information.—
A PDP sponsor of a prescription drug plan may, in lieu of disclosing the information described in subparagraph (B)(vi) to each enrollee under the plan, disclose such information through mail or electronic communications to a subset of enrollees under the plan, such as enrollees who have been prescribed an opioid in the previous 2-year period.
(2)

Disclosure upon request of general coverage, utilization, and grievance information.—
Upon request of a part D eligible individual who is eligible to enroll in a prescription drug plan, the PDP sponsor offering such plan shall provide information similar (as determined by the Secretary) to the information described in subparagraphs (A), (B), and (C) of section 1852(c)(2) to such individual.
(3)

Provision of specific information.—
(A)

Response to beneficiary questions.—
Each PDP sponsor offering a prescription drug plan shall have a mechanism for providing specific information on a timely basis to enrollees upon request. Such mechanism shall include access to information through the use of a toll-free telephone number and, upon request, the provision of such information in writing.
(B)

Availability of information on changes in formulary through the internet.—
A PDP sponsor offering a prescription drug plan shall make available on a timely basis through an Internet website information on specific changes in the formulary under the plan (including changes to tiered or preferred status of covered part D drugs).
(4)

Claims information.—
A PDP sponsor offering a prescription drug plan must furnish to each enrollee in a form easily understandable to such enrollees—
(A)
an explanation of benefits (in accordance with section 1806(a) or in a comparable manner); and
(B)
when prescription drug benefits are provided under this part, a notice of the benefits in relation to—
(i)
for a year preceding 2025, the initial coverage limit for the current year; and
(ii)
the annual out-of-pocket threshold for the current year.
Notices under subparagraph (B) need not be provided more often than as specified by the Secretary and notices under subparagraph (B)(ii) shall take into account the application of section 1860D–2(b)(4)(C) to the extent practicable, as specified by the Secretary.
(b)

Access to Covered Part D Drugs.—
(1)

Assuring pharmacy access.—
(A)

Participation of any willing pharmacy.—
A prescription drug plan shall permit the participation of any pharmacy that meets the terms and conditions under the plan.
(B)

Discounts allowed for network pharmacies.—
For covered part D drugs dispensed through in-network pharmacies, a prescription drug plan may, notwithstanding subparagraph (A), reduce coinsurance or copayments for part D eligible individuals enrolled in the plan below the level otherwise required. In no case shall such a reduction result in an increase in payments made by the Secretary under section 1860D–15 to a plan.
(C)

Convenient access for network pharmacies.—
(i)

In general.—
The PDP sponsor of the prescription drug plan shall secure the participation in its network of a sufficient number of pharmacies that dispense (other than by mail order) drugs directly to patients to ensure convenient access (consistent with rules established by the Secretary).
(ii)

Application of tricare standards.—
The Secretary shall establish rules for convenient access to in-network pharmacies under this subparagraph that are no less favorable to enrollees than the rules for convenient access to pharmacies included in the statement of work of solicitation (#MDA906–03–R–0002) of the Department of Defense under the TRICARE Retail Pharmacy (TRRx) as of March 13, 2003.
(iii)

Adequate emergency access.—
Such rules shall include adequate emergency access for enrollees.
(iv)

Convenient access in long-term care facilities.—
Such rules may include standards with respect to access for enrollees who are residing in long-term care facilities and for pharmacies operated by the Indian Health Service, Indian tribes and tribal organizations, and urban Indian organizations (as defined in section 4 of the Indian Health Care Improvement Act).
(D)

Level playing field.—
Such a sponsor shall permit enrollees to receive benefits (which may include a 90-day supply of drugs or biologicals) through a pharmacy (other than a mail order pharmacy), with any differential in charge paid by such enrollees.
(E)

Not required to accept insurance risk.—
The terms and conditions under subparagraph (A) may not require participating pharmacies to accept insurance risk as a condition of participation.
(2)

Use of standardized technology.—
(A)

In general.—
The PDP sponsor of a prescription drug plan shall issue (and reissue, as appropriate) such a card (or other technology) that may be used by an enrollee to assure access to negotiated prices under section 1860D–2(d).
(B)

Standards.—
(i)

In general.—
The Secretary shall provide for the development, adoption, or recognition of standards relating to a standardized format for the card or other technology required under subparagraph (A). Such standards shall be compatible with part C of title XI and may be based on standards developed by an appropriate standard setting organization.
(ii)

Consultation.—
In developing the standards under clause (i), the Secretary shall consult with the National Council for Prescription Drug Programs and other standard setting organizations determined appropriate by the Secretary.
(iii)

Implementation.—
The Secretary shall develop, adopt, or recognize the standards under clause (i) by such date as the Secretary determines shall be sufficient to ensure that PDP sponsors utilize such standards beginning January 1, 2006.
(3)

Requirements on development and application of formularies.—
If a PDP sponsor of a prescription drug plan uses a formulary (including the use of tiered cost-sharing), the following requirements must be met:
(A)

Development and revision by a pharmacy and therapeutic (p&t) committee.—
(i)

In general.—
The formulary must be developed and reviewed by a pharmacy and therapeutic committee. A majority of the members of such committee shall consist of individuals who are practicing physicians or practicing pharmacists (or both).
(ii)

Inclusion of independent experts.—
Such committee shall include at least one practicing physician and at least one practicing pharmacist, each of whom—
(I)
is independent and free of conflict with respect to the sponsor and plan; and
(II)
has expertise in the care of elderly or disabled persons.
(B)

Formulary development.—
In developing and reviewing the formulary, the committee shall—
(i)
base clinical decisions on the strength of scientific evidence and standards of practice, including assessing peer-reviewed medical literature, such as randomized clinical trials, pharmacoeconomic studies, outcomes research data, and on such other information as the committee determines to be appropriate; and
(ii)
take into account whether including in the formulary (or in a tier in such formulary) particular covered part D drugs has therapeutic advantages in terms of safety and efficacy.
(C)

Inclusion of drugs in all therapeutic categories and classes.—
(i)

In general.—
Subject to subparagraph (G), the formulary must include drugs within each therapeutic category and class of covered part D drugs, although not necessarily all drugs within such categories and classes.
(ii)

Model guidelines.—
The Secretary shall request the United States Pharmacopeia to develop, in consultation with pharmaceutical benefit managers and other interested parties, a list of categories and classes that may be used by prescription drug plans under this paragraph and to revise such classification from time to time to reflect changes in therapeutic uses of covered part D drugs and the additions of new covered part D drugs.
(iii)

Limitation on changes in therapeutic classification.—
The PDP sponsor of a prescription drug plan may not change the therapeutic categories and classes in a formulary other than at the beginning of each plan year except as the Secretary may permit to take into account new therapeutic uses and newly approved covered part D drugs.
(D)

Provider and patient education.—
The PDP sponsor shall establish policies and procedures to educate and inform health care providers and enrollees concerning the formulary.
(E)

Notice before removing drug from formulary or changing preferred or tier status of drug.—
Any removal of a covered part D drug from a formulary and any change in the preferred or tiered cost-sharing status of such a drug shall take effect only after appropriate notice is made available (such as under subsection (a)(3)) to the Secretary, affected enrollees, physicians, pharmacies, and pharmacists.
(F)

Periodic evaluation of protocols.—
In connection with the formulary, the sponsor of a prescription drug plan shall provide for the periodic evaluation and analysis of treatment protocols and procedures.
(G)

Required inclusion of drugs in certain categories and classes.—
(i)

Formulary requirements.—
(I)

In general.—
Subject to subclause (II), a PDP sponsor offering a prescription drug plan shall be required to include all covered part D drugs in the categories and classes identified by the Secretary under clause (ii)(I).
(II)

Exceptions.—
The Secretary may establish exceptions that permit a PDP sponsor offering a prescription drug plan to exclude from its formulary a particular covered part D drug in a category or class that is otherwise required to be included in the formulary under subclause (I) (or to otherwise limit access to such a drug, including through prior authorization or utilization management).
(ii)

Identification of drugs in certain categories and classes.—
(I)

In general.—
Subject to clause (iv), the Secretary shall identify, as appropriate, categories and classes of drugs for which the Secretary determines are of clinical concern.
(II)

Criteria.—
The Secretary shall use criteria established by the Secretary in making any determination under subclause (I).
(iii)

Implementation.—
The Secretary shall establish the criteria under clause (ii)(II) and any exceptions under clause (i)(II) through the promulgation of a regulation which includes a public notice and comment period.
(iv)

Requirement for certain categories and classes until criteria established.—
Until such time as the Secretary establishes the criteria under clause (ii)(II) the following categories and classes of drugs shall be identified under clause (ii)(I):
(I)
Anticonvulsants.
(II)
Antidepressants.
(III)
Antineoplastics.
(IV)
Antipsychotics.
(V)
Antiretrovirals.
(VI)
Immunosuppressants for the treatment of transplant rejection.
(H)

Use of single, uniform exceptions and appeals process.—
Notwithstanding any other provision of this part, each PDP sponsor of a prescription drug plan shall—
(i)
use a single, uniform exceptions and appeals process (including, to the extent the Secretary determines feasible, a single, uniform model form for use under such process) with respect to the determination of prescription drug coverage for an enrollee under the plan; and
(ii)
provide instant access to such process by enrollees through a toll-free telephone number and an Internet website.
(I)

Required inclusion of selected drugs.—
(i)

In general.—
For 2026 and each subsequent year, the PDP sponsor offering a prescription drug plan shall include each covered part D drug that is a selected drug under section 1192 for which a maximum fair price (as defined in section 1191(c)(3)) is in effect with respect to the year.
(ii)

Clarification.—
Nothing in clause (i) shall be construed as prohibiting a PDP sponsor from removing such a selected drug from a formulary if such removal would be permitted under section 423.120(b)(5)(iv) of title 42, Code of Federal Regulations (or any successor regulation).
(4)

Ensuring access during covid–19 public health emergency period.—
(A)

In general.—
During the emergency period described in section 1135(g)(1)(B), subject to subparagraph (B), a prescription drug plan or MA–PD plan shall, notwithstanding any cost and utilization management, medication therapy management, or other such programs under this part, permit a part D eligible individual enrolled in such plan to obtain in a single fill or refill, at the option of such individual, the total day supply (not to exceed a 90-day supply) prescribed for such individual for a covered part D drug.
(B)

Safety edit exception.—
A prescription drug plan or MA–PD plan may not permit a part D eligible individual to obtain a single fill or refill inconsistent with an applicable safety edit.
(c)

Cost and Utilization Management; Quality Assurance; Medication Therapy Management Program.—
(1)

In general.—
The PDP sponsor shall have in place, directly or through appropriate arrangements, with respect to covered part D drugs, the following:
(A)
A cost-effective drug utilization management program, including incentives to reduce costs when medically appropriate, such as through the use of multiple source drugs (as defined in section 1927(k)(7)(A)(i)).
(B)
Quality assurance measures and systems to reduce medication errors and adverse drug interactions and improve medication use.
(C)
A medication therapy management program described in paragraph (2).
(D)
A program to control fraud, abuse, and waste.
(E)
A utilization management tool to prevent drug abuse (as described in paragraph (6)(A)).
(F)
With respect to plan years beginning on or after January 1, 2022, a drug management program for at-risk beneficiaries described in paragraph (5).
Nothing in this section shall be construed as impairing a PDP sponsor from utilizing cost management tools (including differential payments) under all methods of operation.
(2)

Medication therapy management program.—
(A)

Description.—
(i)

In general.—
A medication therapy management program described in this paragraph is a program of drug therapy management that may be furnished by a pharmacist and that is designed to assure, with respect to targeted beneficiaries described in clause (ii), that covered part D drugs under the prescription drug plan are appropriately used to optimize therapeutic outcomes through improved medication use, and to reduce the risk of adverse events, including adverse drug interactions. Such a program may distinguish between services in ambulatory and institutional settings.
(ii)

Targeted beneficiaries described.—
Targeted beneficiaries described in this clause are the following:
(I)
Part D eligible individuals who—
- (aa)
have multiple chronic diseases (such as diabetes, asthma, hypertension, hyperlipidemia, and congestive heart failure);
- (bb)
are taking multiple covered part D drugs; and
- (cc)
are identified as likely to incur annual costs for covered part D drugs that exceed a level specified by the Secretary.
(II)
Beginning January 1, 2021, at-risk beneficiaries for prescription drug abuse (as defined in paragraph (5)(C)).
(B)

Elements.—
Such program—
(i)
may include elements that promote—
(I)
enhanced enrollee understanding to promote the appropriate use of medications by enrollees and to reduce the risk of potential adverse events associated with medications, through beneficiary education, counseling, and other appropriate means;
(II)
increased enrollee adherence with prescription medication regimens through medication refill reminders, special packaging, and other compliance programs and other appropriate means; and
(III)
detection of adverse drug events and patterns of overuse and underuse of prescription drugs; and
(ii)
with respect to plan years beginning on or after January 1, 2021, shall provide for—
(I)
the provision of information to the enrollee on the safe disposal of prescription drugs that are controlled substances that meets the criteria established under section 1852(n)(2), including information on drug takeback programs that meet such requirements determined appropriate by the Secretary and information on in-home disposal; and
(II)
cost-effective means by which an enrollee may so safely dispose of such drugs.
(C)

Required interventions.—
For plan years beginning on or after the date that is 2 years after the date of the enactment of the Patient Protection and Affordable Care Act, prescription drug plan sponsors shall offer medication therapy management services to targeted beneficiaries described in subparagraph (A)(ii) that include, at a minimum, the following to increase adherence to prescription medications or other goals deemed necessary by the Secretary:
(i)
An annual comprehensive medication review furnished person-to-person or using telehealth technologies (as defined by the Secretary) by a licensed pharmacist or other qualified provider. The comprehensive medication review—
(I)
shall include a review of the individual's medications and may result in the creation of a recommended medication action plan or other actions in consultation with the individual and with input from the prescriber to the extent necessary and practicable; and
(II)
shall include providing the individual with a written or printed summary of the results of the review.
The Secretary, in consultation with relevant stakeholders, shall develop a standardized format for the action plan under subclause (I) and the summary under subclause (II).
(ii)
Follow-up interventions as warranted based on the findings of the annual medication review or the targeted medication enrollment and which may be provided person-to-person or using telehealth technologies (as defined by the Secretary).
(D)

Assessment.—
The prescription drug plan sponsor shall have in place a process to assess, at least on a quarterly basis, the medication use of individuals who are at risk but not enrolled in the medication therapy management program, including individuals who have experienced a transition in care, if the prescription drug plan sponsor has access to that information.
(E)

Automatic enrollment with ability to opt-out.—
The prescription drug plan sponsor shall have in place a process to—
(i)
subject to clause (ii), automatically enroll targeted beneficiaries described in subparagraph (A)(ii), including beneficiaries identified under subparagraph (D), in the medication therapy management program required under this subsection; and
(ii)
permit such beneficiaries to opt-out of enrollment in such program.
(E)64

Development of program in cooperation with licensed pharmacists.—
Such program shall be developed in cooperation with licensed and practicing pharmacists and physicians.
^{64}
Two subparagraph (E)'s so in law. See amendments made by section 10328(a) of Public Law 111–148.
(F)

Coordination with care management plans.—
The Secretary shall establish guidelines for the coordination of any medication therapy management program under this paragraph with respect to a targeted beneficiary with any care management plan established with respect to such beneficiary under a chronic care improvement program under section 1807.
(G)

Considerations in pharmacy fees.—
The PDP sponsor of a prescription drug plan shall take into account, in establishing fees for pharmacists and others providing services under such plan, the resources used, and time required to, implement the medication therapy management program under this paragraph. Each such sponsor shall disclose to the Secretary upon request the amount of any such management or dispensing fees. The provisions of section 1927(b)(3)(D) apply to information disclosed under this subparagraph.
(3)

Reducing wasteful dispensing of outpatient prescription drugs in long-term care facilities.—
The Secretary shall require PDP sponsors of prescription drug plans to utilize specific, uniform dispensing techniques, as determined by the Secretary, in consultation with relevant stakeholders (including representatives of nursing facilities, residents of nursing facilities, pharmacists, the pharmacy industry (including retail and long-term care pharmacy), prescription drug plans, MA–PD plans, and any other stakeholders the Secretary determines appropriate), such as weekly, daily, or automated dose dispensing, when dispensing covered part D drugs to enrollees who reside in a long-term care facility in order to reduce waste associated with 30-day fills.
(4)

Requiring valid prescriber national provider identifiers on pharmacy claims.—
(A)

In general.—
For plan year 2016 and subsequent plan years, the Secretary shall require a claim for a covered part D drug for a part D eligible individual enrolled in a prescription drug plan under this part or an MA–PD plan under part C to include a prescriber National Provider Identifier that is determined to be valid under the procedures established under subparagraph (B)(i).
(B)

Procedures.—
(i)

Validity of prescriber national provider identifiers.—
The Secretary, in consultation with appropriate stakeholders, shall establish procedures for determining the validity of prescriber National Provider Identifiers under subparagraph (A).
(ii)

Informing beneficiaries of reason for denial.—
The Secretary shall establish procedures to ensure that, in the case that a claim for a covered part D drug of an individual described in subparagraph (A) is denied because the claim does not meet the requirements of this paragraph, the individual is properly informed at the point of service of the reason for the denial.
(C)

Report.—
Not later than January 1, 2018, the Inspector General of the Department of Health and Human Services shall submit to Congress a report on the effectiveness of the procedures established under subparagraph (B)(i).
(D)

Notification and additional requirements with respect to outlier prescribers of opioids.—
(i)

Notification.—
Not later than January 1, 2021, the Secretary shall, in the case of a prescriber identified by the Secretary under clause (ii) to be an outlier prescriber of opioids, provide, subject to clause (iv), an annual notification to such prescriber that such prescriber has been so identified and that includes resources on proper prescribing methods and other information as specified in accordance with clause (iii).
(ii)

Identification of outlier prescribers of opioids.—
(I)

In general.—
The Secretary shall, subject to subclause (III), using the valid prescriber National Provider Identifiers included pursuant to subparagraph (A) on claims for covered part D drugs for part D eligible individuals enrolled in prescription drug plans under this part or MA–PD plans under part C and based on the thresholds established under subclause (II), identify prescribers that are outlier opioids prescribers for a period of time specified by the Secretary.
(II)

Establishment of thresholds.—
For purposes of subclause (I) and subject to subclause (III), the Secretary shall, after consultation with stakeholders, establish thresholds, based on prescriber specialty and geographic area, for identifying whether a prescriber in a specialty and geographic area is an outlier prescriber of opioids as compared to other prescribers of opioids within such specialty and area.
(III)

Exclusions.—
The following shall not be included in the analysis for identifying outlier prescribers of opioids under this clause:
- (aa)
Claims for covered part D drugs for part D eligible individuals who are receiving hospice care under this title.
- (bb)
Claims for covered part D drugs for part D eligible individuals who are receiving oncology services under this title.
- (cc)
Prescribers who are the subject of an investigation by the Centers for Medicare & Medicaid Services or the Inspector General of the Department of Health and Human Services.
(iii)

Contents of notification.—
The Secretary shall include the following information in the notifications provided under clause (i):
(I)
Information on how such prescriber compares to other prescribers within the same specialty and geographic area.
(II)
Information on opioid prescribing guidelines, based on input from stakeholders, that may include the Centers for Disease Control and Prevention guidelines for prescribing opioids for chronic pain and guidelines developed by physician organizations.
(III)
Other information determined appropriate by the Secretary.
(iv)

Modifications and expansions.—
(I)

Frequency.—
Beginning 5 years after the date of the enactment of this subparagraph, the Secretary may change the frequency of the notifications described in clause (i) based on stakeholder input and changes in opioid prescribing utilization and trends.
(II)

Expansion to other prescriptions.—
The Secretary may expand notifications under this subparagraph to include identifications and notifications with respect to concurrent prescriptions of covered Part D drugs used in combination with opioids that are considered to have adverse side effects when so used in such combination, as determined by the Secretary.
(v)

Additional requirements for persistent outlier prescribers.—
In the case of a prescriber who the Secretary determines is persistently identified under clause (ii) as an outlier prescriber of opioids, the following shall apply:
(I)
Such prescriber may be required to enroll in the program under this title under section 1866(j) if such prescriber is not otherwise required to enroll, but only after other appropriate remedies have been provided, such as the provision of education funded through section 6052 of the SUPPORT for Patients and Communities Act, for a period determined by the Secretary as sufficient to correct the prescribing patterns that lead to identification of such prescriber as a persistent outlier prescriber of opioids. The Secretary shall determine the length of the period for which such prescriber is required to maintain such enrollment, which shall be the minimum period necessary to correct such prescribing patterns.
(II)
Not less frequently than annually (and in a form and manner determined appropriate by the Secretary), the Secretary, consistent with clause(iv)(I), shall communicate information on such prescribers to sponsors of a prescription drug plan and Medicare Advantage organizations offering an MA–PD plan.
(vi)

Public availability of information.—
The Secretary shall make aggregate information under this subparagraph available on the internet website of the Centers for Medicare & Medicaid Services. Such information shall be in a form and manner determined appropriate by the Secretary and shall not identify any specific prescriber. In carrying out this clause, the Secretary shall consult with interested stakeholders.
(vii)

Opioids defined.—
For purposes of this subparagraph, the term “opioids” has such meaning as specified by the Secretary.
(viii)

Other activities.—
Nothing in this subparagraph shall preclude the Secretary from conducting activities that provide prescribers with information as to how they compare to other prescribers that are in addition to the activities under this subparagraph, including activities that were being conducted as of the date of the enactment of this subparagraph.
(5)

Drug management program for at-risk beneficiaries.—
(A)

Authority to establish.—
A PDP sponsor may (and for plan years beginning on or after January 1, 2022, a PDP sponsor shall) establish a drug management program for at-risk beneficiaries under which, subject to subparagraph (B), the PDP sponsor may, in the case of an at-risk beneficiary for prescription drug abuse who is an enrollee in a prescription drug plan of such PDP sponsor, limit such beneficiary’s access to coverage for frequently abused drugs under such plan to frequently abused drugs that are prescribed for such beneficiary by one or more prescribers selected under subparagraph (D), and dispensed for such beneficiary by one or more pharmacies selected under such subparagraph.
(B)

Requirement for notices.—
(i)

In general.—
A PDP sponsor may not limit the access of an at-risk beneficiary for prescription drug abuse to coverage for frequently abused drugs under a prescription drug plan until such sponsor—
(I)
provides to the beneficiary an initial notice described in clause (ii) and a second notice described in clause (iii); and
(II)
verifies with the providers of the beneficiary that the beneficiary is an at-risk beneficiary for prescription drug abuse.
(ii)

Initial notice.—
An initial notice described in this clause is a notice that provides to the beneficiary—
(I)
notice that the PDP sponsor has identified the beneficiary as potentially being an at-risk beneficiary for prescription drug abuse;
(II)
information describing all State and Federal public health resources that are designed to address prescription drug abuse to which the beneficiary has access, including mental health services and other counseling services;
(III)
notice of, and information about, the right of the beneficiary to appeal such identification under subsection (h), including notice that if on reconsideration a PDP sponsor affirms its denial, in whole or in part, the case shall be automatically forwarded to the independent, outside entity contracted with the Secretary for review and resolution;
(IV)
a request for the beneficiary to submit to the PDP sponsor preferences for which prescribers and pharmacies the beneficiary would prefer the PDP sponsor to select under subparagraph (D) in the case that the beneficiary is identified as an at-risk beneficiary for prescription drug abuse as described in clause (iii)(I);
(V)
an explanation of the meaning and consequences of the identification of the beneficiary as potentially being an at-risk beneficiary for prescription drug abuse, including an explanation of the drug management program established by the PDP sponsor pursuant to subparagraph (A);
(VI)
clear instructions that explain how the beneficiary can contact the PDP sponsor in order to submit to the PDP sponsor the preferences described in subclause (IV) and any other communications relating to the drug management program for at-risk beneficiaries established by the PDP sponsor; and
(VII)
contact information for other organizations that can provide the beneficiary with assistance regarding such drug management program (similar to the information provided by the Secretary in other standardized notices provided to part D eligible individuals enrolled in prescription drug plans under this part).
(iii)

Second notice.—
A second notice described in this clause is a notice that provides to the beneficiary notice—
(I)
that the PDP sponsor has identified the beneficiary as an at-risk beneficiary for prescription drug abuse;
(II)
that such beneficiary is subject to the requirements of the drug management program for at-risk beneficiaries established by such PDP sponsor for such plan;
(III)
of the prescriber (or prescribers) and pharmacy (or pharmacies) selected for such individual under subparagraph (D);
(IV)
of, and information about, the beneficiary’s right to appeal such identification under subsection (h), including notice that if on reconsideration a PDP sponsor affirms its denial, in whole or in part, the case shall be automatically forwarded to the independent, outside entity contracted with the Secretary for review and resolution;
(V)
that the beneficiary can, in the case that the beneficiary has not previously submitted to the PDP sponsor preferences for which prescribers and pharmacies the beneficiary would prefer the PDP sponsor select under subparagraph (D), submit such preferences to the PDP sponsor; and
(VI)
that includes clear instructions that explain how the beneficiary can contact the PDP sponsor.
(iv)

Timing of notices.—
(I)

In general.—
Subject to subclause (II), a second notice described in clause (iii) shall be provided to the beneficiary on a date that is not less than 30 days after an initial notice described in clause (ii) is provided to the beneficiary.
(II)

Exception.—
In the case that the PDP sponsor, in conjunction with the Secretary, determines that concerns identified through rulemaking by the Secretary regarding the health or safety of the beneficiary or regarding significant drug diversion activities require the PDP sponsor to provide a second notice described in clause (iii) to the beneficiary on a date that is earlier than the date described in subclause (I), the PDP sponsor may provide such second notice on such earlier date.
(C)

At-risk beneficiary for prescription drug abuse.—
(i)

In general.—
Except as provided in clause (v), for purposes of this paragraph, the term “at-risk beneficiary for prescription drug abuse” means a part D eligible individual who is not an exempted individual described in clause (ii) and—
(I)
who is identified as such an at-risk beneficiary through the use of clinical guidelines that indicate misuse or abuse of prescription drugs described in subparagraph (G) and that are developed by the Secretary in consultation with PDP sponsors and other stakeholders, including individuals entitled to benefits under part A or enrolled under part B, advocacy groups representing such individuals, physicians, pharmacists, and other clinicians, retail pharmacies, plan sponsors, entities delegated by plan sponsors, and biopharmaceutical manufacturers; or
(II)
with respect to whom the PDP sponsor of a prescription drug plan, upon enrolling such individual in such plan, received notice from the Secretary that such individual was identified under this paragraph to be an at-risk beneficiary for prescription drug abuse under the prescription drug plan in which such individual was most recently previously enrolled and such identification has not been terminated under subparagraph (F).
(ii)

Exempted individual described.—
An exempted individual described in this clause is an individual who—
(I)
receives hospice care under this title;
(II)
is a resident of a long-term care facility, of a facility described in section 1905(d), or of another facility for which frequently abused drugs are dispensed for residents through a contract with a single pharmacy; or
(III)
the Secretary elects to treat as an exempted individual for purposes of clause (i).
(iii)

Program size.—
The Secretary shall establish policies, including the guidelines developed under clause (i)(I) and the exemptions under clause (ii)(III), to ensure that the population of enrollees in a drug management program for at-risk beneficiaries operated by a prescription drug plan can be effectively managed by such plans.
(iv)

Clinical contact.—
With respect to each at-risk beneficiary for prescription drug abuse enrolled in a prescription drug plan offered by a PDP sponsor, the PDP sponsor shall contact the beneficiary’s providers who have prescribed frequently abused drugs regarding whether prescribed medications are appropriate for such beneficiary’s medical conditions.
(v)

Treatment of enrollees with a history of opioid-related overdose.—
(I)

In general.—
For plan years beginning not later than January 1, 2021, a part D eligible individual who is not an exempted individual described in clause (ii) and who is identified under this clause as a part D eligible individual with a history of opioid-related overdose (as defined by the Secretary) shall be included as a potentially at-risk beneficiary for prescription drug abuse under the drug management program under this paragraph.
(II)

Identification and notice.—
For purposes of this clause, the Secretary shall—
- (aa)
identify part D eligible individuals with a history of opioid-related overdose (as so defined); and
- (bb)
notify the PDP sponsor of the prescription drug plan in which such an individual is enrolled of such identification.
(D)

Selection of prescribers and pharmacies.—
(i)

In general.—
With respect to each at-risk beneficiary for prescription drug abuse enrolled in a prescription drug plan offered by such sponsor, a PDP sponsor shall, based on the preferences submitted to the PDP sponsor by the beneficiary pursuant to clauses (ii)(IV) and (iii)(V) of subparagraph (B) (except as otherwise provided in this subparagraph) select—
(I)
one, or, if the PDP sponsor reasonably determines it necessary to provide the beneficiary with reasonable access under clause (ii), more than one, individual who is authorized to prescribe frequently abused drugs (referred to in this paragraph as a “prescriber”) who may write prescriptions for such drugs for such beneficiary; and
(II)
one, or, if the PDP sponsor reasonably determines it necessary to provide the beneficiary with reasonable access under clause (ii), more than one, pharmacy that may dispense such drugs to such beneficiary.
For purposes of subclause (II), in the case of a pharmacy that has multiple locations that share real-time electronic data, all such locations of the pharmacy shall collectively be treated as one pharmacy.
(ii)

Reasonable access.—
In making the selections under this subparagraph—
(I)
a PDP sponsor shall ensure that the beneficiary continues to have reasonable access to frequently abused drugs (as defined in subparagraph (G)), taking into account geographic location, beneficiary preference, impact on costsharing, and reasonable travel time; and
(II)
a PDP sponsor shall ensure such access (including access to prescribers and pharmacies with respect to frequently abused drugs) in the case of individuals with multiple residences, in the case of natural disasters and similar situations, and in the case of the provision of emergency services.
(iii)

Beneficiary preferences.—
If an at-risk beneficiary for prescription drug abuse submits preferences for which in-network prescribers and pharmacies the beneficiary would prefer the PDP sponsor select in response to a notice under subparagraph (B), the PDP sponsor shall—
(I)
review such preferences;
(II)
select or change the selection of prescribers and pharmacies for the beneficiary based on such preferences; and
(III)
inform the beneficiary of such selection or change of selection.
(iv)

Exception regarding beneficiary preferences.—
In the case that the PDP sponsor determines that a change to the selection of prescriber or pharmacy under clause (iii)(II) by the PDP sponsor is contributing or would contribute to prescription drug abuse or drug diversion by the beneficiary, the PDP sponsor may change the selection of prescriber or pharmacy for the beneficiary without regard to the preferences of the beneficiary described in clause (iii). If the PDP sponsor changes the selection pursuant to the preceding sentence, the PDP sponsor shall provide the beneficiary with—
(I)
at least 30 days written notice of the change of selection; and
(II)
a rationale for the change.
(v)

Confirmation.—
Before selecting a prescriber or pharmacy under this subparagraph, a PDP sponsor must notify the prescriber and pharmacy that the beneficiary involved has been identified for inclusion in the drug management program for at-risk beneficiaries and that the prescriber and pharmacy has been selected as the beneficiary’s designated prescriber and pharmacy.
(E)

Terminations and appeals.—
The identification of an individual as an at-risk beneficiary for prescription drug abuse under this paragraph, a coverage determination made under a drug management program for at-risk beneficiaries, the selection of prescriber or pharmacy under subparagraph (D), and information to be shared under subparagraph (I), with respect to such individual, shall be subject to reconsideration and appeal under subsection (h) and if on reconsideration a PDP sponsor affirms its denial, in whole or in part, the case shall be automatically forwarded to the independent, outside entity contracted with the Secretary for review and resolution.
(F)

Termination of identification.—
(i)

In general.—
The Secretary shall develop standards for the termination of identification of an individual as an at-risk beneficiary for prescription drug abuse under this paragraph. Under such standards such identification shall terminate as of the earlier of—
(I)
the date the individual demonstrates that the individual is no longer likely, in the absence of the restrictions under this paragraph, to be an at-risk beneficiary for prescription drug abuse described in subparagraph (C)(i); and
(II)
the end of such maximum period of identification as the Secretary may specify.
(ii)

Rule of construction.—
Nothing in clause (i) shall be construed as preventing a plan from identifying an individual as an at-risk beneficiary for prescription drug abuse under subparagraph (C)(i) after such termination on the basis of additional information on drug use occurring after the date of notice of such termination.
(G)

Frequently abused drug.—
For purposes of this subsection, the term “frequently abused drug” means a drug that is a controlled substance that the Secretary determines to be frequently abused or diverted.
(H)

Data disclosure.—
(i)

Data on decision to impose limitation.—
In the case of an at-risk beneficiary for prescription drug abuse (or an individual who is a potentially at-risk beneficiary for prescription drug abuse) whose access to coverage for frequently abused drugs under a prescription drug plan has been limited by a PDP sponsor under this paragraph, the Secretary shall establish rules and procedures to require the PDP sponsor to disclose data, including any necessary individually identifiable health information, in a form and manner specified by the Secretary, about the decision to impose such limitations and the limitations imposed by the sponsor under this part.
(ii)

Data to reduce fraud, abuse, and waste.—
The Secretary shall establish rules and procedures to require PDP sponsors operating a drug management program for at-risk beneficiaries under this paragraph to provide the Secretary with such data as the Secretary determines appropriate for purposes of identifying patterns of prescription drug utilization for plan enrollees that are outside normal patterns and that may indicate fraudulent, medically unnecessary, or unsafe use.
(I)

Sharing of information for subsequent plan enrollments.—
The Secretary shall establish procedures under which PDP sponsors who offer prescription drug plans shall share information with respect to individuals who are at-risk beneficiaries for prescription drug abuse (or individuals who are potentially at-risk beneficiaries for prescription drug abuse) and enrolled in a prescription drug plan and who subsequently disenroll from such plan and enroll in another prescription drug plan offered by another PDP sponsor.
(J)

Privacy issues.—
Prior to the implementation of the rules and procedures under this paragraph, the Secretary shall clarify privacy requirements, including requirements under the regulations promulgated pursuant to section 264(c) of the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. 1320d–2 note), related to the sharing of data under subparagraphs (H) and (I) by PDP sponsors. Such clarification shall provide that the sharing of such data shall be considered to be protected health information in accordance with the requirements of the regulations promulgated pursuant to such section 264(c).
(K)

Education.—
The Secretary shall provide education to enrollees in prescription drug plans of PDP sponsors and providers regarding the drug management program for at-risk beneficiaries described in this paragraph, including education—
(i)
provided by Medicare administrative contractors through the improper payment outreach and education program described in section 1874A(h); and
(ii)
through current education efforts (such as State health insurance assistance programs described in subsection (a)(1)(A) of section 119 of the Medicare Improvements for Patients and Providers Act of 2008 (42 U.S.C. 1395b–3 note)) and materials directed toward such enrollees.
(L)

Application under ma–pd plans.—
Pursuant to section 1860D–21(c)(1), the provisions of this paragraph apply under part D to MA organizations offering MA–PD plans to MA eligible individuals in the same manner as such provisions apply under this part to a PDP sponsor offering a prescription drug plan to a part D eligible individual.
(M)

CMS compliance review.—
The Secretary shall ensure that existing plan sponsor compliance reviews and audit processes include the drug management programs for at-risk beneficiaries under this paragraph, including appeals processes under such programs.
(6)

Utilization management tool to prevent drug abuse.—
(A)

In general.—
A tool described in this paragraph is any of the following:
(i)
A utilization tool designed to prevent the abuse of frequently abused drugs by individuals and to prevent the diversion of such drugs at pharmacies.
(ii)
Retrospective utilization review to identify—
(I)
individuals that receive frequently abused drugs at a frequency or in amounts that are not clinically appropriate; and
(II)
providers of services or suppliers that may facilitate the abuse or diversion of frequently abused drugs by beneficiaries.
(iii)
Consultation with the contractor described in subparagraph (B) to verify if an individual enrolling in a prescription drug plan offered by a PDP sponsor has been previously identified by another PDP sponsor as an individual described in clause (ii)(I).
(B)

Reporting.—
A PDP sponsor offering a prescription drug plan (and an MA organization offering an MA–PD plan) in a State shall submit to the Secretary and the Medicare drug integrity contractor with which the Secretary has entered into a contract under section 1893 with respect to such State a report, on a monthly basis, containing information on—
(i)
any provider of services or supplier described in subparagraph (A)(ii)(II) that is identified by such plan sponsor (or organization) during the 30-day period before such report is submitted; and
(ii)
the name and prescription records of individuals described in paragraph (5)(C).
(C)

CMS compliance review.—
The Secretary shall ensure that plan sponsor compliance reviews and program audits biennially include a certification that utilization management tools under this paragraph are in compliance with the requirements for such tools.
(6)65

Providing prescription drug plans with parts a and b claims data to promote the appropriate use of medications and improve health outcomes.—
(A)

Process.—
Subject to subparagraph (B), the Secretary shall establish a process under which a PDP sponsor of a prescription drug plan may submit a request for the Secretary to provide the sponsor, on a periodic basis and in an electronic format, beginning in plan year 2020, data described in subparagraph (D) with respect to enrollees in such plan. Such data shall be provided without regard to whether such enrollees are described in clause (ii) of paragraph (2)(A).
(B)

Purposes.—
A PDP sponsor may use the data provided to the sponsor pursuant to subparagraph (A) for any of the following purposes:
(i)
To optimize therapeutic outcomes through improved medication use, as such phrase is used in clause (i) of paragraph (2)(A).
(ii)
To improving care coordination so as to prevent adverse health outcomes, such as preventable emergency department visits and hospital readmissions.
(iii)
For any other purpose determined appropriate by the Secretary.
(C)

Limitations on data use.—
A PDP sponsor shall not use data provided to the sponsor pursuant to subparagraph (A) for any of the following purposes:
(i)
To inform coverage determinations under this part.
(ii)
To conduct retroactive reviews of medically accepted indications determinations.
(iii)
To facilitate enrollment changes to a different prescription drug plan or an MA–PD plan offered by the same parent organization.
(iv)
To inform marketing of benefits.
(v)
For any other purpose that the Secretary determines is necessary to include in order to protect the identity of individuals entitled to, or enrolled for, benefits under this title and to protect the security of personal health information.
(D)

Data described.—
The data described in this clause are standardized extracts (as determined by the Secretary) of claims data under parts A and B for items and services furnished under such parts for time periods specified by the Secretary. Such data shall include data as current as practicable.
^{65}
In subsection (c), there are two paragraph (6)s’ so in law.
(d)

Consumer Satisfaction Surveys.—
In order to provide for comparative information under section 1860D–1(c)(3)(A)(v), the Secretary shall conduct consumer satisfaction surveys with respect to PDP sponsors and prescription drug plans in a manner similar to the manner such surveys are conducted for MA organizations and MA plans under part C.
(e)

Electronic Prescription Program.—
(1)

Application of standards.—
As of such date as the Secretary may specify, but not later than 1 year after the date of promulgation of final standards under paragraph (4)(D), prescriptions and other information described in paragraph (2)(A) for covered part D drugs prescribed for part D eligible individuals that are transmitted electronically shall be transmitted only in accordance with such standards under an electronic prescription drug program that meets the requirements of paragraph (2).
(2)

Program requirements.—
Consistent with uniform standards established under paragraph (3)—
(A)

Provision of information to prescribing health care professional and dispensing pharmacies and pharmacists.—
An electronic prescription drug program shall provide for the electronic transmittal to the prescribing health care professional and to the dispensing pharmacy and pharmacist of the prescription and information on eligibility and benefits (including the drugs included in the applicable formulary, any tiered formulary structure, and any requirements for prior authorization) and of the following information with respect to the prescribing and dispensing of a covered part D drug:
(i)
Information on the drug being prescribed or dispensed and other drugs listed on the medication history, including information on drug-drug interactions, warnings or cautions, and, when indicated, dosage adjustments.
(ii)
Information on the availability of lower cost, therapeutically appropriate alternatives (if any) for the drug prescribed.
(B)

Application to medical history information.—
Effective on and after such date as the Secretary specifies and after the establishment of appropriate standards to carry out this subparagraph, the program shall provide for the electronic transmittal in a manner similar to the manner under subparagraph (A) of information that relates to the medical history concerning the individual and related to a covered part D drug being prescribed or dispensed, upon request of the professional or pharmacist involved.
(C)

Limitations.—
Information shall only be disclosed under subparagraph (A) or (B) if the disclosure of such information is permitted under the Federal regulations (concerning the privacy of individually identifiable health information) promulgated under section 264(c) of the Health Insurance Portability and Accountability Act of 1996.
(D)

Timing.—
To the extent feasible, the information exchanged under this paragraph shall be on an interactive, real-time basis.
(E)

Electronic prior authorization.—
(i)

In general.—
Not later than January 1, 2021, the program shall provide for the secure electronic transmission of—
(I)
a prior authorization request from the prescribing health care professional for coverage of a covered part D drug for a part D eligible individual enrolled in a part D plan (as defined in section 1860D–23(a)(5)) to the PDP sponsor or Medicare Advantage organization offering such plan; and
(II)
a response, in accordance with this subparagraph, from such PDP sponsor or Medicare Advantage organization, respectively, to such professional.
(ii)

Electronic transmission.—
(I)

Exclusions.—
For purposes of this subparagraph, a facsimile, a proprietary payer portal that does not meet standards specified by the Secretary, or an electronic form shall not be treated as an electronic transmission described in clause (i).
(II)

Standards.—
In order to be treated, for purposes of this subparagraph, as an electronic transmission described in clause (i), such transmission shall comply with technical standards adopted by the Secretary in consultation with the National Council for Prescription Drug Programs, other standard setting organizations determined appropriate by the Secretary, and stakeholders including PDP sponsors, Medicare Advantage organizations, health care professionals, and health information technology software vendors.
(III)

Application.—
Notwithstanding any other provision of law, for purposes of this subparagraph, the Secretary may require the use of such standards adopted under subclause (II) in lieu of any other applicable standards for an electronic transmission described in clause (i) for a covered part D drug for a part D eligible individual.
(3)

Standards.—
(A)

In general.—
The Secretary shall provide consistent with this subsection for the promulgation of uniform standards relating to the requirements for electronic prescription drug programs under paragraph (2).
(B)

Objectives.—
Such standards shall be consistent with the objectives of improving—
(i)
patient safety;
(ii)
the quality of care provided to patients; and
(iii)
efficiencies, including cost savings, in the delivery of care.
(C)

Design criteria.—
Such standards shall—
(i)
be designed so that, to the extent practicable, the standards do not impose an undue administrative burden on prescribing health care professionals and dispensing pharmacies and pharmacists;
(ii)
be compatible with standards established under part C of title XI, standards established under subsection (b)(2)(B)(i), and with general health information technology standards; and
(iii)
be designed so that they permit electronic exchange of drug labeling and drug listing information maintained by the Food and Drug Administration and the National Library of Medicine.
(D)

Permitting use of appropriate messaging.—
Such standards shall allow for the messaging of information only if it relates to the appropriate prescribing of drugs, including quality assurance measures and systems referred to in subsection (c)(1)(B).
(E)

Permitting patient designation of dispensing pharmacy.—
(i)

In general.—
Consistent with clause (ii), such standards shall permit a part D eligible individual to designate a particular pharmacy to dispense a prescribed drug.
(ii)

No change in benefits.—
Clause (i) shall not be construed as affecting—
(I)
the access required to be provided to pharmacies by a prescription drug plan; or
(II)
the application of any differences in benefits or payments under such a plan based on the pharmacy dispensing a covered part D drug.
(4)

Development, promulgation, and modification of standards.—
(A)

Initial standards.—
Not later than September 1, 2005, the Secretary shall develop, adopt, recognize, or modify initial uniform standards relating to the requirements for electronic prescription drug programs described in paragraph (2) taking into consideration the recommendations (if any) from the National Committee on Vital and Health Statistics (as established under section 306(k) of the Public Health Service Act (42 U.S.C. 242k(k))) under subparagraph (B).
(B)

Role of ncvhs.—
The National Committee on Vital and Health Statistics shall develop recommendations for uniform standards relating to such requirements in consultation with the following:
(i)
Standard setting organizations (as defined in section 1171(8))
(ii)
Practicing physicians.
(iii)
Hospitals.
(iv)
Pharmacies.
(v)
Practicing pharmacists.
(vi)
Pharmacy benefit managers.
(vii)
State boards of pharmacy.
(viii)
State boards of medicine.
(ix)
Experts on electronic prescribing.
(x)
Other appropriate Federal agencies.
(C)

Pilot project to test initial standards.—
(i)

In general.—
During the 1-year period that begins on January 1, 2006, the Secretary shall conduct a pilot project to test the initial standards developed under subparagraph (A) prior to the promulgation of the final uniform standards under subparagraph (D) in order to provide for the efficient implementation of the requirements described in paragraph (2).
(ii)

Exception.—
Pilot testing of standards is not required under clause (i) where there already is adequate industry experience with such standards, as determined by the Secretary after consultation with effected standard setting organizations and industry users.
(iii)

Voluntary participation of physicians and pharmacies.—
In order to conduct the pilot project under clause (i), the Secretary shall enter into agreements with physicians, physician groups, pharmacies, hospitals, PDP sponsors, MA organizations, and other appropriate entities under which health care professionals electronically transmit prescriptions to dispensing pharmacies and pharmacists in accordance with such standards.
(iv)

Evaluation and report.—
(I)

Evaluation.—
The Secretary shall conduct an evaluation of the pilot project conducted under clause (i).
(II)

Report to congress.—
Not later than April 1, 2007, the Secretary shall submit to Congress a report on the evaluation conducted under subclause (I).
(D)

Final standards.—
Based upon the evaluation of the pilot project under subparagraph (C)(iv)(I) and not later than April 1, 2008, the Secretary shall promulgate uniform standards relating to the requirements described in paragraph (2).
(5)

Relation to state laws.—
The standards promulgated under this subsection shall supersede any State law or regulation that—
(A)
is contrary to the standards or restricts the ability to carry out this part; and
(B)
pertains to the electronic transmission of medication history and of information on eligibility, benefits, and prescriptions with respect to covered part D drugs under this part.
(6)

Establishment of safe harbor.—
The Secretary, in consultation with the Attorney General, shall promulgate regulations that provide for a safe harbor from sanctions under paragraphs (1) and (2) of section 1128B(b) and an exception to the prohibition under subsection (a)(1) of section 1877 with respect to the provision of nonmonetary remuneration (in the form of hardware, software, or information technology and training services) necessary and used solely to receive and transmit electronic prescription information in accordance with the standards promulgated under this subsection—
(A)
in the case of a hospital, by the hospital to members of its medical staff;
(B)
in the case of a group practice (as defined in section 1877(h)(4)), by the practice to prescribing health care professionals who are members of such practice; and
(C)
in the case of a PDP sponsor or MA organization, by the sponsor or organization to pharmacists and pharmacies participating in the network of such sponsor or organization, and to prescribing health care professionals.
(7)

Requirement of e-prescribing for controlled substances.—
(A)

In general.—
Subject to subparagraph (B), a prescription for a covered part D drug under a prescription drug plan (or under an MA–PD plan) for a schedule II, III, IV, or V controlled substance shall be transmitted by a health care practitioner electronically in accordance with an electronic prescription drug program that meets the requirements of paragraph (2).
(B)

Exception for certain circumstances.—
The Secretary shall, through rulemaking, specify circumstances and processes by which the Secretary may waive the requirement under subparagraph (A), with respect to a covered part D drug, including in the case of—
(i)
a prescription issued when the practitioner and dispensing pharmacy are the same entity;
(ii)
a prescription issued that cannot be transmitted electronically under the most recently implemented version of the National Council for Prescription Drug Programs SCRIPT Standard;
(iii)
a prescription issued by a practitioner who received a waiver or a renewal thereof for a period of time as determined by the Secretary, not to exceed one year, from the requirement to use electronic prescribing due to demonstrated economic hardship, technological limitations that are not reasonably within the control of the practitioner, or other exceptional circumstance demonstrated by the practitioner;
(iv)
a prescription issued by a practitioner under circumstances in which, notwithstanding the practitioner’s ability to submit a prescription electronically as required by this subsection, such practitioner reasonably determines that it would be impractical for the individual involved to obtain substances prescribed by electronic prescription in a timely manner, and such delay would adversely impact the individual’s medical condition involved;
(v)
a prescription issued by a practitioner prescribing a drug under a research protocol;
(vi)
a prescription issued by a practitioner for a drug for which the Food and Drug Administration requires a prescription to contain elements that are not able to be included in electronic prescribing, such as a drug with risk evaluation and mitigation strategies that include elements to assure safe use;
(vii)
a prescription issued by a practitioner—
(I)
for an individual who receives hospice care under this title; and
(II)
that is not covered under the hospice benefit under this title; and
(viii)
a prescription issued by a practitioner for an individual who is—
(I)
a resident of a nursing facility (as defined in section 1919(a)); and
(II)
dually eligible for benefits under this title and title XIX.
(C)

Dispensing.—
(i)
Nothing in this paragraph shall be construed as requiring a sponsor of a prescription drug plan under this part, MA organization offering an MA–PD plan under part C, or a pharmacist to verify that a practitioner, with respect to a prescription for a covered part D drug, has a waiver (or is otherwise exempt) under subparagraph (B) from the requirement under subparagraph (A).
(ii)
Nothing in this paragraph shall be construed as affecting the ability of the plan to cover or the pharmacists’ ability to continue to dispense covered part D drugs from otherwise valid written, oral, or fax prescriptions that are consistent with laws and regulations.
(iii)
Nothing in this paragraph shall be construed as affecting the ability of an individual who is being prescribed a covered part D drug to designate a particular pharmacy to dispense the covered part D drug to the extent consistent with the requirements under subsection (b)(1) and under this paragraph.
(D)

Enforcement.—
The Secretary shall, through rulemaking, have authority to enforce and specify appropriate penalties for non-compliance with the requirement under subparagraph (A).
(f)

Grievance Mechanism.—
Each PDP sponsor shall provide meaningful procedures for hearing and resolving grievances between the sponsor (including any entity or individual through which the sponsor provides covered benefits) and enrollees with prescription drug plans of the sponsor under this part in accordance with section 1852(f).
(g)

Coverage Determinations and Reconsiderations.—
(1)

Application of coverage determination and reconsideration provisions.—
A PDP sponsor shall meet the requirements of paragraphs (1) through (3) of section 1852(g) with respect to covered benefits under the prescription drug plan it offers under this part in the same manner as such requirements apply to an MA organization with respect to benefits it offers under an MA plan under part C.
(2)

Request for a determination for the treatment of tiered formulary drug.—
In the case of a prescription drug plan offered by a PDP sponsor that provides for tiered cost-sharing for drugs included within a formulary and provides lower cost-sharing for preferred drugs included within the formulary, a part D eligible individual who is enrolled in the plan may request an exception to the tiered cost-sharing structure. Under such an exception, a nonpreferred drug could be covered under the terms applicable for preferred drugs if the prescribing physician determines that the preferred drug for treatment of the same condition either would not be as effective for the individual or would have adverse effects for the individual or both. A PDP sponsor shall have an exceptions process under this paragraph consistent with guidelines established by the Secretary for making a determination with respect to such a request. Denial of such an exception shall be treated as a coverage denial for purposes of applying subsection (h).
(h)

Appeals.—
(1)

In general.—
Subject to paragraph (2), a PDP sponsor shall meet the requirements of paragraphs (4) and (5) of section 1852(g) with respect to benefits (including a determination related to the application of tiered cost-sharing described in subsection (g)(2)) in a manner similar (as determined by the Secretary) to the manner such requirements apply to an MA organization with respect to benefits under the original medicare fee-for-service program option it offers under an MA plan under part C. In applying this paragraph only the part D eligible individual shall be entitled to bring such an appeal.
(2)

Limitation in cases on nonformulary determinations.—
A part D eligible individual who is enrolled in a prescription drug plan offered by a PDP sponsor may appeal under paragraph (1) a determination not to provide for coverage of a covered part D drug that is not on the formulary under the plan only if the prescribing physician determines that all covered part D drugs on any tier of the formulary for treatment of the same condition would not be as effective for the individual as the nonformulary drug, would have adverse effects for the individual, or both.
(3)

Treatment of nonformulary determinations.—
If a PDP sponsor determines that a plan provides coverage for a covered part D drug that is not on the formulary of the plan, the drug shall be treated as being included on the formulary for purposes of section 1860D–2(b)(4)(C)(i).
(i)

Privacy, Confidentiality, and Accuracy of Enrollee Records.—
The provisions of section 1852(h) shall apply to a PDP sponsor and prescription drug plan in the same manner as it applies to an MA organization and an MA plan.
(j)

Treatment of Accreditation.—
Subparagraph (A) of section 1852(e)(4) (relating to treatment of accreditation) shall apply to a PDP sponsor under this part with respect to the following requirements, in the same manner as it applies to an MA organization with respect to the requirements in subparagraph (B) (other than clause (vii) thereof) of such section:
(1)
Subsection (b) of this section (relating to access to covered part D drugs).
(2)
Subsection (c) of this section (including quality assurance and medication therapy management).
(3)
Subsection (i) of this section (relating to confidentiality and accuracy of enrollee records).
(k)

Public Disclosure of Pharmaceutical Prices for Equivalent Drugs.—
(1)

In general.—
A PDP sponsor offering a prescription drug plan shall provide that each pharmacy that dispenses a covered part D drug shall inform an enrollee of any differential between the price of the drug to the enrollee and the price of the lowest priced generic covered part D drug under the plan that is therapeutically equivalent and bioequivalent and available at such pharmacy.
(2)

Timing of notice.—
(A)

In general.—
Subject to subparagraph (B), the information under paragraph (1) shall be provided at the time of purchase of the drug involved, or, in the case of dispensing by mail order, at the time of delivery of such drug.
(B)

Waiver.—
The Secretary may waive subparagraph (A) in such circumstances as the Secretary may specify.
(l)

Requirements with Respect to Sales and Marketing Activities.—
The following provisions shall apply to a PDP sponsor (and the agents, brokers, and other third parties representing such sponsor) in the same manner as such provisions apply to a Medicare Advantage organization (and the agents, brokers, and other third parties representing such organization):
(1)
The prohibition under section 1851(h)(4)(C) on conducting activities described in section 1851(j)(1).
(2)
The requirement under section 1851(h)(4)(D) to conduct activities described in section 1851(j)(2) in accordance with the limitations established under such subsection.
(3)
The inclusion of the plan type in the plan name under section 1851(h)(6).
(4)
The requirements regarding the appointment of agents and brokers and compliance with State information requests under subparagraphs (A) and (B), respectively, of section 1851(h)(7).
(m)

Prohibition on Limiting Certain Information on Drug Prices.—
A PDP sponsor and a Medicare Advantage organization shall ensure that each prescription drug plan or MA–PD plan offered by the sponsor or organization does not restrict a pharmacy that dispenses a prescription drug or biological from informing, nor penalize such pharmacy for informing, an enrollee in such plan of any differential between the negotiated price of, or copayment or coinsurance for, the drug or biological to the enrollee under the plan and a lower price the individual would pay for the drug or biological if the enrollee obtained the drug without using any health insurance coverage.
(n)

Program Integrity Transparency Measures.—
For program integrity transparency measures applied with respect to prescription drug plan and MA plans, see section 1859(i).
(o)

Real-Time Benefit Information.—
(1)

In general.—
After the Secretary has adopted a standard under paragraph (3) for electronic real-time benefit tools, and at a time determined appropriate by the Secretary, a PDP sponsor of a prescription drug plan shall implement one or more of such tools that meet the requirements described in paragraph (2).
(2)

Requirements.—
For purposes of paragraph (1), the requirements described in this paragraph, with respect to an electronic real-time benefit tool, are that the tool is capable of—
(A)
integrating with electronic prescribing and electronic health record systems of prescribing health care professionals for the transmission of formulary and benefit information in real time to such professionals; and
(B)
with respect to a covered part D drug, transmitting such information specific to an individual enrolled in a prescription drug plan, including the following:
(i)
A list of any clinically-appropriate alternatives to such drug included in the formulary of such plan.
(ii)
Cost-sharing information and the negotiated price for such drug and such alternatives at multiple pharmacy options, including the individual’s preferred pharmacy and, as applicable, other retail pharmacies and a mail order pharmacy.
(iii)
The formulary status of such drug and such alternatives and any prior authorization or other utilization management requirements applicable to such drug and such alternatives included in the formulary of such plan.
(3)

Standards.—
In order to be treated (for purposes of this subsection) as an electronic real-time benefit tool described in paragraph (1), such tool shall comply with technical standards adopted by the Secretary in consultation with the National Coordinator for Health Information Technology through notice and comment rulemaking. Such technical standards adopted by the Secretary shall be developed by a standards development organization, such as the National Council for Prescription Drug Programs, that consults with stakeholders such as PDP sponsors, Medicare Advantage organizations, beneficiary advocates, health care professionals, and health information technology software vendors.
(4)

Rules of construction.—
Nothing in this subsection shall be construed—
(A)
to prohibit the application of paragraph (b)(7) of section 423.160 of title 42, Code of Federal Regulations, as is to be added to such section pursuant to the final rule published in the Federal Register on May 23, 2019, and titled “Modernizing Part D and Medicare Advantage To Lower Drug Prices and Reduce Out-of-Pocket Expenses” (84 Fed. Reg. 23832 through 23884); or
(B)
to allow a PDP sponsor to use a real-time benefit tool to steer an individual, without the consent of the individual, to a particular pharmacy or pharmacy type over their preferred pharmacy or pharmacy type nor prohibit the designation of an individual’s preferred pharmacy under such tool.
Subpart 2—

Prescription Drug Plans; PDP Sponsors; Financing

pdp regions; submission of bids; plan approval
Sec. 1860D–11.
[42 U.S.C. 1395w–111]
(a)

Establishment of PDP Regions; Service Areas.—
(1)

Coverage of entire pdp region.—
The service area for a prescription drug plan shall consist of an entire PDP region established under paragraph (2).
(2)

Establishment of pdp regions.—
(A)

In general.—
The Secretary shall establish, and may revise, PDP regions in a manner that is consistent with the requirements for the establishment and revision of MA regions under subparagraphs (B) and (C) of section 1858(a)(2).
(B)

Relation to ma regions.—
To the extent practicable, PDP regions shall be the same as MA regions under section 1858(a)(2). The Secretary may establish PDP regions which are not the same as MA regions if the Secretary determines that the establishment of different regions under this part would improve access to benefits under this part.
(C)

Authority for territories.—
The Secretary shall establish, and may revise, PDP regions for areas in States that are not within the 50 States or the District of Columbia.
(3)

National plan.—
Nothing in this subsection shall be construed as preventing a prescription drug plan from being offered in more than one PDP region (including all PDP regions).
(b)

Submission of Bids, Premiums, and Related Information.—
(1)

In general.—
A PDP sponsor shall submit to the Secretary information described in paragraph (2) with respect to each prescription drug plan it offers. Such information shall be submitted at the same time and in a similar manner to the manner in which information described in paragraph (6) of section 1854(a) is submitted by an MA organization under paragraph (1) of such section.
(2)

Information described.—
The information described in this paragraph is information on the following:
(A)

Coverage provided.—
The prescription drug coverage provided under the plan, including the deductible and other cost-sharing.
(B)

Actuarial value.—
The actuarial value of the qualified prescription drug coverage in the region for a part D eligible individual with a national average risk profile for the factors described in section 1860D–15(c)(1)(A) (as specified by the Secretary).
(C)

Bid.—
Information on the bid, including an actuarial certification of—
(i)
the basis for the actuarial value described in subparagraph (B) assumed in such bid;
(ii)
the portion of such bid attributable to basic prescription drug coverage and, if applicable, the portion of such bid attributable to supplemental benefits;
(iii)
assumptions regarding the reinsurance subsidy payments provided under section 1860D–15(b) subtracted from the actuarial value to produce such bid; and
(iv)
administrative expenses assumed in the bid.
(D)

Service area.—
The service area for the plan.
(E)

Level of risk assumed.—
(i)

In general.—
Whether the PDP sponsor requires a modification of risk level under clause (ii) and, if so, the extent of such modification. Any such modification shall apply with respect to all prescription drug plans offered by a PDP sponsor in a PDP region. This subparagraph shall not apply to an MA–PD plan.
(ii)

Risk levels described.—
A modification of risk level under this clause may consist of one or more of the following:
(I)

Increase in federal percentage assumed in initial risk corridor.—
An equal percentage point increase in the percents applied under subparagraphs (B)(i), (B)(ii)(I), (C)(i), and (C)(ii)(I) of section 1860D–15(e)(2). In no case shall the application of previous sentence prevent the application of a higher percentage under section 1869D–15(e)(2)(B)(iii).
(II)

Increase in federal percentage assumed in second risk corridor.—
An equal percentage point increase in the percents applied under subparagraphs (B)(ii)(II) and (C)(ii)(II) of section 1860D–15(e)(2).
(III)

Decrease in size of risk corridors.—
A decrease in the threshold risk percentages specified in section 1860D–15(e)(3)(C).
(F)

Additional information.—
Such other information as the Secretary may require to carry out this part.
(3)

Paperwork reduction for offering of prescription drug plans nationally or in multi-region areas.—
The Secretary shall establish requirements for information submission under this subsection in a manner that promotes the offering of such plans in more than one PDP region (including all regions) through the filing of consolidated information.
(c)

Actuarial Valuation.—
(1)

Processes.—
For purposes of this part, the Secretary shall establish processes and methods for determining the actuarial valuation of prescription drug coverage, including—
(A)
an actuarial valuation of standard prescription drug coverage under section 1860D–2(b);
(B)
actuarial valuations relating to alternative prescription drug coverage under section 1860D–2(c)(1);
(C)
an actuarial valuation of the reinsurance subsidy payments under section 1860D–15(b);
(D)
the use of generally accepted actuarial principles and methodologies; and
(E)
applying the same methodology for determinations of actuarial valuations under subparagraphs (A) and (B).
(2)

Accounting for drug utilization.—
Such processes and methods for determining actuarial valuation shall take into account the effect that providing alternative prescription drug coverage (rather than standard prescription drug coverage) has on drug utilization.
(3)

Responsibilities.—
(A)

Plan responsibilities.—
PDP sponsors and MA organizations are responsible for the preparation and submission of actuarial valuations required under this part for prescription drug plans and MA–PD plans they offer.
(B)

Use of outside actuaries.—
Under the processes and methods established under paragraph (1), PDP sponsors offering prescription drug plans and MA organizations offering MA–PD plans may use actuarial opinions certified by independent, qualified actuaries to establish actuarial values.
(d)

Review of Information and Negotiation.—
(1)

Review of information.—
The Secretary shall review the information filed under subsection (b) for the purpose of conducting negotiations under paragraph (2).
(2)

Negotiation regarding terms and conditions.—
Subject to subsection (i), in exercising the authority under paragraph (1), the Secretary—
(A)
has the authority to negotiate the terms and conditions of the proposed bid submitted and other terms and conditions of a proposed plan; and
(B)
has authority similar to the authority of the Director of the Office of Personnel Management with respect to health benefits plans under chapter 89 of title 5, United States Code.
(3)

Rejection of bids.—
Paragraph (5)(C) of section 1854(a) shall apply with respect to bids submitted by a PDP sponsor under subsection (b) in the same manner as such paragraph applies to bids submitted by an MA organization under such section 1854(a).
(e)

Approval of Proposed Plans.—
(1)

In general.—
After review and negotiation under subsection (d), the Secretary shall approve or disapprove the prescription drug plan.
(2)

Requirements for approval.—
The Secretary may approve a prescription drug plan only if the following requirements are met:
(A)

Compliance with requirements.—
The plan and the PDP sponsor offering the plan comply with the requirements under this part, including the provision of qualified prescription drug coverage.
(B)

Actuarial determinations.—
The Secretary determines that the plan and PDP sponsor meet the requirements under this part relating to actuarial determinations, including such requirements under section 1860D–2(c).
(C)

Application of fehbp standard.—
(i)

In general.—
The Secretary determines that the portion of the bid submitted under subsection (b) that is attributable to basic prescription drug coverage is supported by the actuarial bases provided under such subsection and reasonably and equitably reflects the revenue requirements (as used for purposes of section 1302(8)(C) of the Public Health Service Act) for benefits provided under that plan, less the sum (determined on a monthly per capita basis) of the actuarial value of the reinsurance payments under section 1860D–15(b).
(ii)

Supplemental coverage.—
The Secretary determines that the portion of the bid submitted under subsection (b) that is attributable to supplemental prescription drug coverage pursuant to section 1860D–2(a)(2) is supported by the actuarial bases provided under such subsection and reasonably and equitably reflects the revenue requirements (as used for purposes of section 1302(8)(C) of the Public Health Service Act) for such coverage under the plan.
(D)

Plan design.—
(i)

In general.—
The Secretary does not find that the design of the plan and its benefits (including any formulary and tiered formulary structure) are likely to substantially discourage enrollment by certain part D eligible individuals under the plan.
(ii)

Use of categories and classes in formularies.—
The Secretary may not find that the design of categories and classes within a formulary violates clause (i) if such categories and classes are consistent with guidelines (if any) for such categories and classes established by the United States Pharmacopeia.
(f)

Application of Limited Risk Plans.—
(1)

Conditions for approval of limited risk plans.—
The Secretary may only approve a limited risk plan (as defined in paragraph (4)(A)) for a PDP region if the access requirements under section 1860D–3(a) would not be met for the region but for the approval of such a plan (or a fallback prescription drug plan under subsection (g)).
(2)

Rules.—
The following rules shall apply with respect to the approval of a limited risk plan in a PDP region:
(A)

Limited exercise of authority.—
Only the minimum number of such plans may be approved in order to meet the access requirements under section 1860D–3(a).
(B)

Maximizing assumption of risk.—
The Secretary shall provide priority in approval for those plans bearing the highest level of risk (as computed by the Secretary), but the Secretary may take into account the level of the bids submitted by such plans.
(C)

No full underwriting for limited risk plans.—
In no case may the Secretary approve a limited risk plan under which the modification of risk level provides for no (or a de minimis) level of financial risk.
(3)

Acceptance of all full risk contracts.—
There shall be no limit on the number of full risk plans that are approved under subsection (e).
(4)

Risk-plans defined.—
For purposes of this subsection:
(A)

Limited risk plan.—
The term “limited risk plan” means a prescription drug plan that provides basic prescription drug coverage and for which the PDP sponsor includes a modification of risk level described in subparagraph (E) of subsection (b)(2) in its bid submitted for the plan under such subsection. Such term does not include a fallback prescription drug plan.
(B)

Full risk plan.—
The term “full risk plan” means a prescription drug plan that is not a limited risk plan or a fallback prescription drug plan.
(g)

Guaranteeing Access to Coverage.—
(1)

Solicitation of bids.—
(A)

In general.—
Separate from the bidding process under subsection (b), the Secretary shall provide for a process for the solicitation of bids from eligible fallback entities (as defined in paragraph (2)) for the offering in all fallback service areas (as defined in paragraph (3)) in one or more PDP regions of a fallback prescription drug plan (as defined in paragraph (4)) during the contract period specified in paragraph (5).
(B)

Acceptance of bids.—
(i)

In general.—
Except as provided in this subparagraph, the provisions of subsection (e) shall apply with respect to the approval or disapproval of fallback prescription drug plans. The Secretary shall enter into contracts under this subsection with eligible fallback entities for the offering of fallback prescription drug plans so approved in fallback service areas.
(ii)

Limitation of 1 plan for all fallback service areas in a pdp region.—
With respect to all fallback service areas in any PDP region for a contract period, the Secretary shall approve the offering of only 1 fallback prescription drug plan.
(iii)

Competitive procedures.—
Competitive procedures (as defined in section 4(5) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(5))) shall be used to enter into a contract under this subsection. The provisions of subsection (d) of section 1874A shall apply to a contract under this section in the same manner as they apply to a contract under such section.
(iv)

Timing.—
The Secretary shall approve a fallback prescription drug plan for a PDP region in a manner so that, if there are any fallback service areas in the region for a year, the fallback prescription drug plan is offered at the same time as prescription drug plans would otherwise be offered.
(V)

No national fallback plan.—
The Secretary shall not enter into a contract with a single fallback entity for the offering of fallback plans throughout the United States.
(2)

Eligible fallback entity.—
For purposes of this section, the term “eligible fallback entity” means, with respect to all fallback service areas in a PDP region for a contract period, an entity that—
(A)
meets the requirements to be a PDP sponsor (or would meet such requirements but for the fact that the entity is not a risk-bearing entity); and
(B)
does not submit a bid under section 1860D–11(b) for any prescription drug plan for any PDP region for the first year of such contract period.
For purposes of subparagraph (B), an entity shall be treated as submitting a bid with respect to a prescription drug plan if the entity is acting as a subcontractor of a PDP sponsor that is offering such a plan. The previous sentence shall not apply to entities that are subcontractors of an MA organization except insofar as such organization is acting as a PDP sponsor with respect to a prescription drug plan.
(3)

Fallback service area.—
For purposes of this subsection, the term “fallback service area” means, for a PDP region with respect to a year, any area within such region for which the Secretary determines before the beginning of the year that the access requirements of the first sentence of section 1860D–3(a) will not be met for part D eligible individuals residing in the area for the year.
(4)

Fallback prescription drug plan.—
For purposes of this part, the term “fallback prescription drug plan” means a prescription drug plan that—
(A)
only offers the standard prescription drug coverage and access to negotiated prices described in section 1860D–2(a)(1)(A) and does not include any supplemental prescription drug coverage; and
(B)
meets such other requirements as the Secretary may specify.
(5)

Payments under the contract.—
(A)

In general.—
A contract entered into under this subsection shall provide for—
(i)
payment for the actual costs (taking into account negotiated price concessions described in section 1860D–2(d)(1)(B)) of covered part D drugs provided to part D eligible individuals enrolled in a fallback prescription drug plan offered by the entity; and
(ii)
payment of management fees that are tied to performance measures established by the Secretary for the management, administration, and delivery of the benefits under the contract.
(B)

Performance measures.—
The performance measures established by the Secretary pursuant to subparagraph (A)(ii) shall include at least measures for each of the following:
(i)

Costs.—
The entity contains costs to the Medicare Prescription Drug Account and to part D eligible individuals enrolled in a fallback prescription drug plan offered by the entity through mechanisms such as generic substitution and price discounts.
(ii)

Quality programs.—
The entity provides such enrollees with quality programs that avoid adverse drug reactions and overutilization and reduce medical errors.
(iii)

Customer service.—
The entity provides timely and accurate delivery of services and pharmacy and beneficiary support services.
(iv)

Benefit administration and claims adjudication.—
The entity provides efficient and effective benefit administration and claims adjudication.
(6)

Monthly beneficiary premium.—
Except as provided in section 1860D–13(b) (relating to late enrollment penalty) and subject to section 1860D–14 (relating to low-income assistance), the monthly beneficiary premium to be charged under a fallback prescription drug plan offered in all fallback service areas in a PDP region shall be uniform and shall be equal to 25.5 percent (or, for 2030 and each subsequent year, the percent specified under section 1860D–13(a)(9)) of an amount equal to the Secretary's estimate of the average monthly per capita actuarial cost, including administrative expenses, under the fallback prescription drug plan of providing coverage in the region, as calculated by the Chief Actuary of the Centers for Medicare & Medicaid Services. In calculating such administrative expenses, the Chief Actuary shall use a factor that is based on similar expenses of prescription drug plans that are not fallback prescription drug plans.
(7)

General contract terms and conditions.—
(A)

In general.—
Except as may be appropriate to carry out this section, the terms and conditions of contracts with eligible fallback entities offering fallback prescription drug plans under this subsection shall be the same as the terms and conditions of contracts under this part for prescription drug plans.
(B)

Period of contract.—
(i)

In general.—
Subject to clause (ii), a contract approved for a fallback prescription drug plan for fallback service areas for a PDP region under this section shall be for a period of 3 years (except as may be renewed after a subsequent bidding process).
(ii)

Limitation.—
A fallback prescription drug plan may be offered under a contract in an area for a year only if that area is a fallback service area for that year.
(C)

Entity not permitted to market or brand fallback prescription drug plans.—
An eligible fallback entity with a contract under this subsection may not engage in any marketing or branding of a fallback prescription drug plan.
(h)

Annual Report on Use of Limited Risk Plans and Fallback Plans.—
The Secretary shall submit to Congress an annual report that describes instances in which limited risk plans and fallback prescription drug plans were offered under subsections (f) and (g). The Secretary shall include in such report such recommendations as may be appropriate to limit the need for the provision of such plans and to maximize the assumption of financial risk under section subsection (f).
(i)

Noninterference.—
In order to promote competition under this part and in carrying out this part, the Secretary—
(1)
may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors;
(2)
may not require a particular formulary, except as provided under section 1860D–4(b)(3)(l); and
(3)
may not institute a price structure for the reimbursement of covered part D drugs, except as provided under part E of title XI.
(j)

Coordination of Benefits.—
A PDP sponsor offering a prescription drug plan shall permit State Pharmaceutical Assistance Programs and Rx plans under sections 1860D–23 and 1860D–24 to coordinate benefits with the plan and, in connection with such coordination with such a Program, not to impose fees that are unrelated to the cost of coordination.

requirements for and contracts with prescription drug plan (pdp) sponsors
Sec. 1860D–12.
[42 U.S.C. 1395w–112]
(a)

General Requirements.—
Each PDP sponsor of a prescription drug plan shall meet the following requirements:
(1)

Licensure.—
Subject to subsection (c), the sponsor is organized and licensed under State law as a risk-bearing entity eligible to offer health insurance or health benefits coverage in each State in which it offers a prescription drug plan.
(2)

Assumption of financial risk for unsubsidized coverage.—
(A)

In general.—
Subject to subparagraph (B), to the extent that the entity is at risk the entity assumes financial risk on a prospective basis for benefits that it offers under a prescription drug plan and that is not covered under section 1860D–15(b).
(B)

Reinsurance permitted.—
The plan sponsor may obtain insurance or make other arrangements for the cost of coverage provided to any enrollee to the extent that the sponsor is at risk for providing such coverage.
(3)

Solvency for unlicensed sponsors.—
In the case of a PDP sponsor that is not described in paragraph (1) and for which a waiver has been approved under subsection (c), such sponsor shall meet solvency standards established by the Secretary under subsection (d).
(b)

Contract Requirements.—
(1)

In general.—
The Secretary shall not permit the enrollment under section 1860D–1 in a prescription drug plan offered by a PDP sponsor under this part, and the sponsor shall not be eligible for payments under section 1860D–14 or 1860D–15, unless the Secretary has entered into a contract under this subsection with the sponsor with respect to the offering of such plan. Such a contract with a sponsor may cover more than one prescription drug plan. Such contract shall provide that the sponsor agrees to comply with the applicable requirements and standards of this part and the terms and conditions of payment as provided for in this part.
(2)

Limitation on entities offering fallback prescription drug plans.—
The Secretary shall not enter into a contract with a PDP sponsor for the offering of a prescription drug plan (other than a fallback prescription drug plan) in a PDP region for a year if the sponsor—
(A)
submitted a bid under section 1860D–11(g) for such year (as the first year of a contract period under such section) to offer a fallback prescription drug plan in any PDP region;
(B)
offers a fallback prescription drug plan in any PDP region during the year; or
(C)
offered a fallback prescription drug plan in that PDP region during the previous year.
For purposes of this paragraph, an entity shall be treated as submitting a bid with respect to a prescription drug plan or offering a fallback prescription drug plan if the entity is acting as a subcontractor of a PDP sponsor that is offering such a plan. The previous sentence shall not apply to entities that are subcontractors of an MA organization except insofar as such organization is acting as a PDP sponsor with respect to a prescription drug plan.
(3)

Incorporation of certain medicare advantage contract requirements.—
Except as otherwise provided, the following provisions of section 1857 shall apply to contracts under this section in the same manner as they apply to contracts under section 1857(a):
(A)

Minimum enrollment.—
Paragraphs (1) and (3) of section 1857(b), except that—
(i)
the Secretary may increase the minimum number of enrollees required under such paragraph (1) as the Secretary determines appropriate; and
(ii)
the requirement of such paragraph (1) shall be waived during the first contract year with respect to an organization in a region.
(B)

Contract period and effectiveness.—
Section 1857(c), except that in applying paragraph (4)(B) of such section any reference to payment amounts under section 1853 shall be deemed payment amounts under section 1860D–15.
(C)

Protections against fraud and beneficiary protections.—
Section 1857(d).
(D)

Additional contract terms.—
Section 1857(e); except that section 1857(e)(2) shall apply as specified to PDP sponsors and payments under this part to an MA–PD plan shall be treated as expenditures made under part D. Notwithstanding any other provision of law, information provided to the Secretary under the application of section 1857(e)(1) to contracts under this section under the preceding sentence—
(i)
may be used for the purposes of carrying out this part, improving public health through research on the utilization, safety, effectiveness, quality, and efficiency of health care services (as the Secretary determines appropriate), or carrying out part E of title XI; and
(ii)
shall be made available to Congressional support agencies (in accordance with their obligations to support Congress as set out in their authorizing statutes) for the purposes of conducting Congressional oversight, monitoring, making recommendations, and analysis of the program under this title.
(E)

Intermediate sanctions.—
Section 1857(g) (other than paragraph (1)(F) of such section), except that in applying such section the reference in section 1857(g)(1)(B) to section 1854 is deemed a reference to this part.
(F)

Procedures for termination.—
Section 1857(h).
(4)

Prompt payment of clean claims.—
(A)

Prompt payment.—
(i)

In general.—
Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that payment shall be issued, mailed, or otherwise transmitted with respect to all clean claims submitted by pharmacies (other than pharmacies that dispense drugs by mail order only or are located in, or contract with, a long-term care facility) under this part within the applicable number of calendar days after the date on which the claim is received.
(ii)

Clean claim defined.—
In this paragraph, the term “clean claim” means a claim that has no defect or impropriety (including any lack of any required substantiating documentation) or particular circumstance requiring special treatment that prevents timely payment from being made on the claim under this part.
(iii)

Date of receipt of claim.—
In this paragraph, a claim is considered to have been received—
(I)
with respect to claims submitted electronically, on the date on which the claim is transferred; and
(II)
with respect to claims submitted otherwise, on the 5th day after the postmark date of the claim or the date specified in the time stamp of the transmission.
(B)

Applicable number of calendar days defined.—
In this paragraph, the term “applicable number of calendar days” means—
(i)
with respect to claims submitted electronically, 14 days; and
(ii)
with respect to claims submitted otherwise, 30 days.
(C)

Interest payment.—
(i)

In general.—
Subject to clause (ii), if payment is not issued, mailed, or otherwise transmitted within the applicable number of calendar days (as defined in subparagraph (B)) after a clean claim is received, the PDP sponsor shall pay interest to the pharmacy that submitted the claim at a rate equal to the weighted average of interest on 3-month marketable Treasury securities determined for such period, increased by 0.1 percentage point for the period beginning on the day after the required payment date and ending on the date on which payment is made (as determined under subparagraph (D)(iv)). Interest amounts paid under this subparagraph shall not be counted against the administrative costs of a prescription drug plan or treated as allowable risk corridor costs under section 1860D–15(e).
(ii)

Authority not to charge interest.—
The Secretary may provide that a PDP sponsor is not charged interest under clause (i) in the case where there are exigent circumstances, including natural disasters and other unique and unexpected events, that prevent the timely processing of claims.
(D)

Procedures involving claims.—
(i)

Claim deemed to be clean.—
A claim is deemed to be a clean claim if the PDP sponsor involved does not provide notice to the claimant of any deficiency in the claim—
(I)
with respect to claims submitted electronically, within 10 days after the date on which the claim is received; and
(II)
with respect to claims submitted otherwise, within 15 days after the date on which the claim is received.
(ii)

Claim determined to not be a clean claim.—
(I)

In general.—
If a PDP sponsor determines that a submitted claim is not a clean claim, the PDP sponsor shall, not later than the end of the period described in clause (i), notify the claimant of such determination. Such notification shall specify all defects or improprieties in the claim and shall list all additional information or documents necessary for the proper processing and payment of the claim.
(II)

Determination after submission of additional information.—
A claim is deemed to be a clean claim under this paragraph if the PDP sponsor involved does not provide notice to the claimant of any defect or impropriety in the claim within 10 days of the date on which additional information is received under subclause (I).
(iii)

Obligation to pay.—
A claim submitted to a PDP sponsor that is not paid or contested by the sponsor within the applicable number of days (as defined in subparagraph (B)) after the date on which the claim is received shall be deemed to be a clean claim and shall be paid by the PDP sponsor in accordance with subparagraph (A).
(iv)

Date of payment of claim.—
Payment of a clean claim under such subparagraph is considered to have been made on the date on which—
(I)
with respect to claims paid electronically, the payment is transferred; and
(II)
with respect to claims paid otherwise, the payment is submitted to the United States Postal Service or common carrier for delivery.
(E)

Electronic transfer of funds.—
A PDP sponsor shall pay all clean claims submitted electronically by electronic transfer of funds if the pharmacy so requests or has so requested previously. In the case where such payment is made electronically, remittance may be made by the PDP sponsor electronically as well.
(F)

Protecting the rights of claimants.—
(i)

In general.—
Nothing in this paragraph shall be construed to prohibit or limit a claim or action not covered by the subject matter of this section that any individual or organization has against a provider or a PDP sponsor.
(ii)

Anti-retaliation.—
Consistent with applicable Federal or State law, a PDP sponsor shall not retaliate against an individual or provider for exercising a right of action under this subparagraph.
(G)

Rule of construction.—
A determination under this paragraph that a claim submitted by a pharmacy is a clean claim shall not be construed as a positive determination regarding eligibility for payment under this title, nor is it an indication of government approval of, or acquiescence regarding, the claim submitted. The determination shall not relieve any party of civil or criminal liability with respect to the claim, nor does it offer a defense to any administrative, civil, or criminal action with respect to the claim.
(5)

Submission of claims by pharmacies located in or contracting with long-term care facilities.—
Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that a pharmacy located in, or having a contract with, a long-term care facility shall have not less than 30 days (but not more than 90 days) to submit claims to the sponsor for reimbursement under the plan.
(6)

Regular update of prescription drug pricing standard.—
If the PDP sponsor of a prescription drug plan uses a standard for reimbursement of pharmacies based on the cost of a drug, each contract entered into with such sponsor under this part with respect to the plan shall provide that the sponsor shall update such standard not less frequently than once every 7 days, beginning with an initial update on January 1 of each year, to accurately reflect the market price of acquiring the drug.
(7)

Suspension of payments pending investigation of credible allegations of fraud by pharmacies.—
(A)

In general.—
Section 1862(o)(1) shall apply with respect to a PDP sponsor with a contract under this part, a pharmacy, and payments to such pharmacy under this part in the same manner as such section applies with respect to the Secretary, a provider of services or supplier, and payments to such provider of services or supplier under this title. A PDP sponsor shall notify the Secretary regarding the imposition of any payment suspension pursuant to the previous sentence, such as through the secure internet website portal (or other successor technology) established under section 1859(i).
(B)

Rule of construction.—
Nothing in this paragraph shall be construed as limiting the authority of a PDP sponsor to conduct postpayment review.
(8)

Provision of information related to maximum fair prices.—
Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall require the sponsor to provide information to the Secretary as requested by the Secretary for purposes of carrying out section 1194.
(c)

Waiver of Certain Requirements To Expand Choice.—
(1)

Authorizing waiver.—
(A)

In general.—
In the case of an entity that seeks to offer a prescription drug plan in a State, the Secretary shall waive the requirement of subsection (a)(1) that the entity be licensed in that State if the Secretary determines, based on the application and other evidence presented to the Secretary, that any of the grounds for approval of the application described in paragraph (2) have been met.
(B)

Application of regional plan waiver rule.—
In addition to the waiver available under subparagraph (A), the provisions of section 1858(d) shall apply to PDP sponsors under this part in a manner similar to the manner in which such provisions apply to MA organizations under part C, except that no application shall be required under paragraph (1)(B) of such section in the case of a State that does not provide a licensing process for such a sponsor.
(2)

Grounds for approval.—
(A)

In general.—
The grounds for approval under this paragraph are—
(i)
subject to subparagraph (B), the grounds for approval described in subparagraphs (B), (C), and (D) of section 1855(a)(2); and
(ii)
the application by a State of any grounds other than those required under Federal law.
(B)

Special rules.—
In applying subparagraph (A)(i)—
(i)
the ground of approval described in section 1855(a)(2)(B) is deemed to have been met if the State does not have a licensing process in effect with respect to the PDP sponsor; and
(ii)
for plan years beginning before January 1, 2008, if the State does have such a licensing process in effect, such ground for approval described in such section is deemed to have been met upon submission of an application described in such section.
(3)

Application of waiver procedures.—
With respect to an application for a waiver (or a waiver granted) under paragraph (1)(A) of this subsection, the provisions of subparagraphs (E), (F), and (G) of section 1855(a)(2) shall apply, except that clauses (i) and (ii) of such subparagraph (E) shall not apply in the case of a State that does not have a licensing process described in paragraph (2)(B)(i) in effect.
(4)

References to certain provisions.—
In applying provisions of section 1855(a)(2) under paragraphs (2) and (3) of this subsection to prescription drug plans and PDP sponsors—
(A)
any reference to a waiver application under section 1855 shall be treated as a reference to a waiver application under paragraph (1)(A) of this subsection; and
(B)
any reference to solvency standards shall be treated as a reference to solvency standards established under subsection (d) of this section.
(d)

Solvency Standards for Non-Licensed Entities.—
(1)

Establishment and publication.—
The Secretary, in consultation with the National Association of Insurance Commissioners, shall establish and publish, by not later than January 1, 2005, financial solvency and capital adequacy standards for entities described in paragraph (2).
(2)

Compliance with standards.—
A PDP sponsor that is not licensed by a State under subsection (a)(1) and for which a waiver application has been approved under subsection (c) shall meet solvency and capital adequacy standards established under paragraph (1). The Secretary shall establish certification procedures for such sponsors with respect to such solvency standards in the manner described in section 1855(c)(2).
(e)

Licensure Does Not Substitute for or Constitute Certification.—
The fact that a PDP sponsor is licensed in accordance with subsection (a)(1) or has a waiver application approved under subsection (c) does not deem the sponsor to meet other requirements imposed under this part for a sponsor.
(f)

Periodic Review and Revision of Standards.—
(1)

In general.—
Subject to paragraph (2), the Secretary may periodically review the standards established under this section and, based on such review, may revise such standards if the Secretary determines such revision to be appropriate.
(2)

Prohibition of midyear implementation of significant new regulatory requirements.—
The Secretary may not implement, other than at the beginning of a calendar year, regulations under this section that impose new, significant regulatory requirements on a PDP sponsor or a prescription drug plan.
(g)

Prohibition of State Imposition of Premium Taxes; Relation to State Laws.—
The provisions of sections 1854(g) and 1856(b)(3) shall apply with respect to PDP sponsors and prescription drug plans under this part in the same manner as such sections apply to MA organizations and MA plans under part C.

premiums; late enrollment penalty
Sec. 1860D–13.
[42 U.S.C. 1395w–113]
(a)

Monthly Beneficiary Premium.—
(1)

Computation.—
(A)

In general.—
The monthly beneficiary premium for a prescription drug plan is the base beneficiary premium computed under paragraph (2) or (8) (as applicable) as adjusted under this paragraph.
(B)

Adjustment to reflect difference between bid and national average bid.—
(i)

Above average bid.—
If for a month the amount of the standardized bid amount (as defined in paragraph (5)) exceeds the amount of the adjusted national average monthly bid amount (as defined in clause (iii)), the base beneficiary premium for the month shall be increased by the amount of such excess.
(ii)

Below average bid.—
If for a month the amount of the adjusted national average monthly bid amount for the month exceeds the standardized bid amount, the base beneficiary premium for the month shall be decreased by the amount of such excess.
(iii)

Adjusted national average monthly bid amount defined.—
For purposes of this subparagraph, the term “adjusted national average monthly bid amount” means the national average monthly bid amount computed under paragraph (4), as adjusted under section 1860D–15(c)(2).
(C)

Increase for supplemental prescription drug benefits.—
The base beneficiary premium shall be increased by the portion of the PDP approved bid that is attributable to supplemental prescription drug benefits.
(D)

Increase for late enrollment penalty.—
The base beneficiary premium shall be increased by the amount of any late enrollment penalty under subsection (b).
(E)

Decrease for low-income assistance.—
The monthly beneficiary premium is subject to decrease in the case of a subsidy eligible individual under section 1860D–14.
(F)

Increase based on income.—
The monthly beneficiary premium shall be increased pursuant to paragraph (7).
(G)

Uniform premium.—
Except as provided in subparagraphs (D), (E), and (F), the monthly beneficiary premium for a prescription drug plan in a PDP region is the same for all part D eligible individuals enrolled in the plan.
(2)

Base beneficiary premium.—
Subject to paragraph (8), the base beneficiary premium under this paragraph for a prescription drug plan for a month is equal to the product—
(A)
the beneficiary premium percentage (as specified in paragraph (3)); and
(B)
the national average monthly bid amount (computed under paragraph (4)) for the month.
(3)

Beneficiary premium percentage.—
For purposes of this subsection, the beneficiary premium percentage for any year is the percentage equal to a fraction—
(A)
the numerator of which is 25.5 percent (or, for 2030 and each subsequent year, the percent specified under paragraph (9)); and
(B)
the denominator of which is 100 percent minus a percentage equal to—
(i)
the total reinsurance payments which the Secretary estimates are payable under section 1860D–15(b) with respect to the coverage year; divided by
(ii)
the sum of—
(I)
the amount estimated under clause (i) for the year; and
(II)
the total payments which the Secretary estimates will be paid to prescription drug plans and MA–PD plans that are attributable to the standardized bid amount during the year, taking into account amounts paid by the Secretary and enrollees.
(4)

Computation of national average monthly bid amount.—
(A)

In general.—
For each year (beginning with 2006) the Secretary shall compute a national average monthly bid amount equal to the average of the standardized bid amounts (as defined in paragraph (5)) for each prescription drug plan and for each MA–PD plan described in section 1851(a)(2)(A)(i). Such average does not take into account the bids submitted for MSA plans, MA private fee-for-service plan, and specialized MA plans for special needs individuals, PACE programs under section 1894 (pursuant to section 1860D–21(f)), and under reasonable cost reimbursement contracts under section 1876(h) (pursuant to section 1860D–21(e)).
(B)

Weighted average.—
(i)

In general.—
The monthly national average monthly bid amount computed under subparagraph (A) for a year shall be a weighted average, with the weight for each plan being equal to the average number of part D eligible individuals enrolled in such plan in the reference month (as defined in section 1858(f)(4)).
(ii)

Special rule for 2006.—
For purposes of applying this paragraph for 2006, the Secretary shall establish procedures for determining the weighted average under clause (i) for 2005.
(5)

Standardized bid amount defined.—
For purposes of this subsection, the term “standardized bid amount” means the following:
(A)

Prescription drug plans.—
(i)

Basic coverage.—
In the case of a prescription drug plan that provides basic prescription drug coverage, the PDP approved bid (as defined in paragraph (6)).
(ii)

Supplemental coverage.—
In the case of a prescription drug plan that provides supplemental prescription drug coverage, the portion of the PDP approved bid that is attributable to basic prescription drug coverage.
(B)

MA–PD plans.—
In the case of an MA–PD plan, the portion of the accepted bid amount that is attributable to basic prescription drug coverage.
(6)

PDP approved bid defined.—
For purposes of this part, the term “PDP approved bid” means, with respect to a prescription drug plan, the bid amount approved for the plan under this part.
(7)

Increase in base beneficiary premium based on income.—
(A)

In general.—
In the case of an individual whose modified adjusted gross income exceeds the threshold amount applicable under paragraph (2) of section 1839(i) (including application of paragraph (5) of such section) for the calendar year, the monthly amount of the beneficiary premium applicable under this section for a month after December 2010 shall be increased by the monthly adjustment amount specified in subparagraph (B).
(B)

Monthly adjustment amount.—
The monthly adjustment amount specified in this subparagraph for an individual for a month in a year is equal to the product of—
(i)
the quotient obtained by dividing—
(I)
the applicable percentage determined under paragraph (3)(C) of section 1839(i) (including application of paragraph (5) of such section) for the individual for the calendar year reduced by 25.5 percent (or, for 2030 and each subsequent year, the percent specified under paragraph (9)); by
(II)
25.5 percent (or, for 2030 and each subsequent year, the percent specified under paragraph (9)); and
(ii)
the base beneficiary premium (as computed under paragraph (2) or (8) (as applicable)).
(C)

Modified adjusted gross income.—
For purposes of this paragraph, the term “modified adjusted gross income” has the meaning given such term in subparagraph (A) of section 1839(i)(4), determined for the taxable year applicable under subparagraphs (B) and (C) of such section.
(D)

Determination by commissioner of social security.—
The Commissioner of Social Security shall make any determination necessary to carry out the income-related increase in the base beneficiary premium under this paragraph.
(E)

Procedures to assure correct income-related increase in base beneficiary premium.—
(i)

Disclosure of base beneficiary premium.—
Not later than September 15 of each year beginning with 2010, the Secretary shall disclose to the Commissioner of Social Security the amount of the base beneficiary premium (as computed under paragraph (2) or (8) (as applicable)) for the purpose of carrying out the income-related increase in the base beneficiary premium under this paragraph with respect to the following year.
(ii)

Additional disclosure.—
Not later than October 15 of each year beginning with 2010, the Secretary shall disclose to the Commissioner of Social Security the following information for the purpose of carrying out the income-related increase in the base beneficiary premium under this paragraph with respect to the following year:
(I)
The modified adjusted gross income threshold applicable under paragraph (2) of section 1839(i) (including application of paragraph (5) of such section).
(II)
The applicable percentage determined under paragraph (3)(C) of section 1839(i) (including application of paragraph (5) of such section).
(III)
The monthly adjustment amount specified in subparagraph (B).
(IV)
Any other information the Commissioner of Social Security determines necessary to carry out the income-related increase in the base beneficiary premium under this paragraph.
(F)

Rule of construction.—
The formula used to determine the monthly adjustment amount specified under subparagraph (B) shall only be used for the purpose of determining such monthly adjustment amount under such subparagraph.
(8)

Premium stabilization.—
(A)

In general.—
The base beneficiary premium under this paragraph for a prescription drug plan for a month in 2024 through 2029 shall be computed as follows:
(i)

2024.—
The base beneficiary premium for a month in 2024 shall be equal to the lesser of—
(I)
the base beneficiary premium computed under paragraph (2) for a month in 2023 increased by 6 percent; or
(II)
the base beneficiary premium computed under paragraph (2) for a month in 2024 that would have applied if this paragraph had not been enacted.
(ii)

2025.—
The base beneficiary premium for a month in 2025 shall be equal to the lesser of—
(I)
the base beneficiary premium computed under clause (i) for a month in 2024 increased by 6 percent; or
(II)
the base beneficiary premium computed under paragraph (2) for a month in 2025 that would have applied if this paragraph had not been enacted.
(iii)

2026.—
The base beneficiary premium for a month in 2026 shall be equal to the lesser of—
(I)
the base beneficiary premium computed under clause (ii) for a month in 2025 increased by 6 percent; or
(II)
the base beneficiary premium computed under paragraph (2) for a month in 2026 that would have applied if this paragraph had not been enacted.
(iv)

2027.—
The base beneficiary premium for a month in 2027 shall be equal to the lesser of—
(I)
the base beneficiary premium computed under clause (iii) for a month in 2026 increased by 6 percent; or
(II)
the base beneficiary premium computed under paragraph (2) for a month in 2027 that would have applied if this paragraph had not been enacted.
(v)

2028.—
The base beneficiary premium for a month in 2028 shall be equal to the lesser of—
(I)
the base beneficiary premium computed under clause (iv) for a month in 2027 increased by 6 percent; or
(II)
the base beneficiary premium computed under paragraph (2) for a month in 2028 that would have applied if this paragraph had not been enacted.
(vi)

2029.—
The base beneficiary premium for a month in 2029 shall be equal to the lesser of—
(I)
the base beneficiary premium computed under clause (v) for a month in 2028 increased by 6 percent; or
(II)
the base beneficiary premium computed under paragraph (2) for a month in 2029 that would have applied if this paragraph had not been enacted.
(B)

Clarification regarding 2030 and subsequent years.—
The base beneficiary premium for a month in 2030 or a subsequent year shall be computed under paragraph (2) without regard to this paragraph.
(9)

Percent specified.—
(A)

In general.—
Subject to subparagraph (B), for purposes of paragraph (3)(A), the percent specified under this paragraph for 2030 and each subsequent year is the percent that the Secretary determines is necessary to ensure that the base beneficiary premium computed under paragraph (2) for a month in 2030 is equal to the lesser of—
(i)
the base beneficiary premium computed under paragraph (8)(A)(vi) for a month in 2029 increased by 6 percent; or
(ii)
the base beneficiary premium computed under paragraph (2) for a month in 2030 that would have applied if this paragraph had not been enacted.
(B)

Floor.—
The percent specified under subparagraph (A) may not be less than 20 percent.
(b)

Late Enrollment Penalty.—
(1)

In general.—
Subject to the succeeding provisions of this subsection, in the case of a part D eligible individual described in paragraph (2) with respect to a continuous period of eligibility, there shall be an increase in the monthly beneficiary premium established under subsection (a) in an amount determined under paragraph (3).
(2)

Individuals subject to penalty.—
A part D eligible individual described in this paragraph is, with respect to a continuous period of eligibility, an individual for whom there is a continuous period of 63 days or longer (all of which in such continuous period of eligibility) beginning on the day after the last date of the individual's initial enrollment period under section 1860D–1(b)(2) and ending on the date of enrollment under a prescription drug plan or MA–PD plan during all of which the individual was not covered under any creditable prescription drug coverage.
(3)

Amount of penalty.—
(A)

In general.—
The amount determined under this paragraph for a part D eligible individual for a continuous period of eligibility is the greater of—
(i)
an amount that the Secretary determines is actuarially sound for each uncovered month (as defined in subparagraph (B)) in the same continuous period of eligibility; or
(ii)
1 percent of the base beneficiary premium (computed under paragraph (2) or (8) of subsection (a) (as applicable)) for each such uncovered month in such period.
(B)

Uncovered month defined.—
For purposes of this subsection, the term “uncovered month” means, with respect to a part D eligible individual, any month beginning after the end of the initial enrollment period under section 1860D–1(b)(2) unless the individual can demonstrate that the individual had creditable prescription drug coverage (as defined in paragraph (4)) for any portion of such month.
(4)

Creditable prescription drug coverage defined.—
For purposes of this part, the term “creditable prescription drug coverage” means any of the following coverage, but only if the coverage meets the requirement of paragraph (5):
(A)

Coverage under prescription drug plan or ma–pd plan.—
Coverage under a prescription drug plan or under an MA–PD plan.
(B)

Medicaid.—
Coverage under a medicaid plan under title XIX or under a waiver under section 1115.
(C)

Group health plan.—
Coverage under a group health plan, including a health benefits plan under chapter 89 of title 5, United States Code (commonly known as the Federal employees health benefits program), and a qualified retiree prescription drug plan (as defined in section 1860D–22(a)(2)).
(D)

State pharmaceutical assistance program.—
Coverage under a State pharmaceutical assistance program described in section 1860D–23(b)(1).
(E)

Veterans' coverage of prescription drugs.—
Coverage for veterans, and survivors and dependents of veterans, under chapter 17 of title 38, United States Code.
(F)

Prescription drug coverage under medigap policies.—
Coverage under a medicare supplemental policy under section 1882 that provides benefits for prescription drugs (whether or not such coverage conforms to the standards for packages of benefits under section 1882(p)(1)).
(G)

Military coverage (including tricare).—
Coverage under chapter 55 of title 10, United States Code.
(H)

Other coverage.—
Such other coverage as the Secretary determines appropriate.
(5)

Actuarial equivalence requirement.—
Coverage meets the requirement of this paragraph only if the coverage is determined (in a manner specified by the Secretary) to provide coverage of the cost of prescription drugs the actuarial value of which (as defined by the Secretary) to the individual equals or exceeds the actuarial value of standard prescription drug coverage (as determined under section 1860D–11(c)).
(6)

Procedures to document creditable prescription drug coverage.—
(A)

In general.—
The Secretary shall establish procedures (including the form, manner, and time) for the documentation of creditable prescription drug coverage, including procedures to assist in determining whether coverage meets the requirement of paragraph (5).
(B)

Disclosure by entities offering creditable prescription drug coverage.—
(i)

In general.—
Each entity that offers prescription drug coverage of the type described in subparagraphs (B) through (H) of paragraph (4) shall provide for disclosure, in a form, manner, and time consistent with standards established by the Secretary, to the Secretary and part D eligible individuals of whether the coverage meets the requirement of paragraph (5) or whether such coverage is changed so it no longer meets such requirement.
(ii)

Disclosure of non-creditable coverage.—
In the case of such coverage that does not meet such requirement, the disclosure to part D eligible individuals under this subparagraph shall include information regarding the fact that because such coverage does not meet such requirement there are limitations on the periods in a year in which the individuals may enroll under a prescription drug plan or an MA–PD plan and that any such enrollment is subject to a late enrollment penalty under this subsection.
(C)

Waiver of requirement.—
In the case of a part D eligible individual who was enrolled in prescription drug coverage of the type described in subparagraphs (B) through (H) of paragraph (4) which is not creditable prescription drug coverage because it does not meet the requirement of paragraph (5), the individual may apply to the Secretary to have such coverage treated as creditable prescription drug coverage if the individual establishes that the individual was not adequately informed that such coverage did not meet such requirement.
(7)

Continuous period of eligibility.—
(A)

In general.—
Subject to subparagraph (B), for purposes of this subsection, the term “continuous period of eligibility” means, with respect to a part D eligible individual, the period that begins with the first day on which the individual is eligible to enroll in a prescription drug plan under this part and ends with the individual's death.
(B)

Separate period.—
Any period during all of which a part D eligible individual is entitled to hospital insurance benefits under part A and—
(i)
which terminated in or before the month preceding the month in which the individual attained age 65; or
(ii)
for which the basis for eligibility for such entitlement changed between section 226(b) and section 226(a), between 226(b) and section 226A, or between section 226A and section 226(a),
shall be a separate continuous period of eligibility with respect to the individual (and each such period which terminates shall be deemed not to have existed for purposes of subsequently applying this paragraph).
(8)

Waiver of penalty for subsidy-eligible individuals.—
In no case shall a part D eligible individual who is determined to be a subsidy eligible individual (as defined in section 1860D–14(a)(3)) be subject to an increase in the monthly beneficiary premium established under subsection (a).
(c)

Collection of Monthly Beneficiary Premiums.—
(1)

In general.—
Subject to paragraphs (2), (3), and (4), the provisions of section 1854(d) shall apply to PDP sponsors and premiums (and any late enrollment penalty) under this part in the same manner as they apply to MA organizations and beneficiary premiums under part C, except that any reference to a Trust Fund is deemed for this purpose a reference to the Medicare Prescription Drug Account.
(2)

Crediting of late enrollment penalty.—
(A)

Portion attributable to increased actuarial costs.—
With respect to late enrollment penalties imposed under subsection (b), the Secretary shall specify the portion of such a penalty that the Secretary estimates is attributable to increased actuarial costs assumed by the PDP sponsor or MA organization (and not taken into account through risk adjustment provided under section 1860D–15(c)(1) or through reinsurance payments under section 1860D–15(b)) as a result of such late enrollment.
(B)

Collection through withholding.—
In the case of a late enrollment penalty that is collected from a part D eligible individual in the manner described in section 1854(d)(2)(A), the Secretary shall provide that only the portion of such penalty estimated under subparagraph (A) shall be paid to the PDP sponsor or MA organization offering the part D plan in which the individual is enrolled.
(C)

Collection by plan.—
In the case of a late enrollment penalty that is collected from a part D eligible individual in a manner other than the manner described in section 1854(d)(2)(A), the Secretary shall establish procedures for reducing payments otherwise made to the PDP sponsor or MA organization by an amount equal to the amount of such penalty less the portion of such penalty estimated under subparagraph (A).
(3)

Fallback plans.—
In applying this subsection in the case of a fallback prescription drug plan, paragraph (2) shall not apply and the monthly beneficiary premium shall be collected in the manner specified in section 1854(d)(2)(A) (or such other manner as may be provided under section 1840 in the case of monthly premiums under section 1839).
(4)

Collection of monthly adjustment amount.—
(A)

In general.—
Notwithstanding any provision of this subsection or section 1854(d)(2), subject to subparagraph (B), the amount of the income-related increase in the base beneficiary premium for an individual for a month (as determined under subsection (a)(7)) shall be paid through withholding from benefit payments in the manner provided under section 1840.
(B)

Agreements.—
In the case where the monthly benefit payments of an individual that are withheld under subparagraph (A) are insufficient to pay the amount described in such subparagraph, the Commissioner of Social Security shall enter into agreements with the Secretary, the Director of the Office of Personnel Management, and the Railroad Retirement Board as necessary in order to allow other agencies to collect the amount described in subparagraph (A) that was not withheld under such subparagraph.

premium and cost-sharing subsidies for low-income individuals
Sec. 1860D–14.
[42 U.S.C. 1395w–114]
(a)

Income-Related Subsidies for Certain Individuals.—
(1)

Individuals with certain low incomes.—
In the case of a subsidy eligible individual (as defined in paragraph (3)) who is determined to have income that is below 135 percent (or, with respect to a plan year beginning on or after January 1, 2024, 150 percent) of the poverty line applicable to a family of the size involved and who meets the resources requirement described in paragraph (3)(D) (or, with respect to a plan year beginning on or after January 1, 2024, paragraph (3)(E)) or who is covered under this paragraph under paragraph (3)(B)(i), the individual is entitled under this section to the following:
(A)

Full premium subsidy.—
An income-related premium subsidy equal to 100 percent of the amount described in subsection (b)(1), but not to exceed the premium amount specified in subsection (b)(2)(B).
(B)

Elimination of deductible.—
A reduction in the annual deductible applicable under section 1860D–2(b)(1) to $0.
(C)

Continuation of coverage above the initial coverage limit.—
For a year preceding 2025, the continuation of coverage from the initial coverage limit (under paragraph (3) of section 1860D–2(b)) for expenditures incurred through the total amount of expenditures at which benefits are available under paragraph (4) of such section, subject to the reduced cost-sharing described in subparagraph (D).
(D)

Reduction in cost-sharing below out-of-pocket threshold.—
(i)

Institutionalized individuals.—
In the case of an individual who is a full-benefit dual eligible individual and who is an institutionalized individual or couple (as defined in section 1902(q)(1)(B)) or, effective on a date specified by the Secretary (but in no case earlier than January 1, 2012), who would be such an institutionalized individual or couple, if the full-benefit dual eligible individual were not receiving services under a home and community-based waiver authorized for a State under section 1115 or subsection (c) or (d) of section 1915 or under a State plan amendment under subsection (i) of such section or services provided through enrollment in a medicaid managed care organization with a contract under section 1903(m) or under section 1932, the elimination of any beneficiary coinsurance described in section 1860D–2(b)(2) (for all amounts through the total amount of expenditures at which benefits are available under section 1860D–2(b)(4)).
(ii)

Lowest income dual eligible individuals.—
Subject to paragraph (6), in the case of an individual not described in clause (i) who is a full-benefit dual eligible individual and whose income does not exceed 100 percent of the poverty line applicable to a family of the size involved, the substitution for the beneficiary coinsurance described in section 1860D–2(b)(2) (for all amounts through the total amount of expenditures at which benefits are available under section 1860D–2(b)(4)) of a copayment amount that does not exceed $1 for a generic drug or a preferred drug that is a multiple source drug (as defined in section 1927(k)(7)(A)(i)) and $3 for any other drug, or, if less, the copayment amount applicable to an individual under clause (iii).
(iii)

Other individuals.—
Subject to paragraph (6), in the case of an individual not described in clause (i) or (ii), the substitution for the beneficiary coinsurance described in section 1860D–2(b)(2) (for all amounts through the total amount of expenditures at which benefits are available under section 1860D–2(b)(4)) of a copayment amount that does not exceed the copayment amount specified under section 1860D–2(b)(4)(A)(i)(I)(aa) for the drug and year involved. For plan year 2023 and subsequent plan years, the copayment amount applicable under the preceding sentence to a month’s supply of a covered insulin product (as defined in section 1860D–2(b)(9)(C)) dispensed to the individual may not exceed the applicable copayment amount for the product under the prescription drug plan or MA–PD plan in which the individual is enrolled.
(E)

Elimination of cost-sharing above annual out-of-pocket threshold.—
For a year preceding 2024, the elimination of any cost-sharing imposed under section 1860D–2(b)(4)(A). or under section 1860D–2(b)(9) in the case of a covered insulin product (as defined in subparagraph (C) of such section).
(2)

Other low-income individuals.—
With respect to a plan year beginning before January 1, 2024, in the case of a subsidy eligible individual who is not described in paragraph (1), the individual is entitled under this section to the following:
(A)

Sliding scale premium subsidy.—
An income-related premium subsidy determined on a linear sliding scale ranging from 100 percent of the amount described in paragraph (1)(A) for individuals with incomes at or below 135 percent of such level to 0 percent of such amount for individuals with incomes at 150 percent of such level.
(B)

Reduction of deductible.—
Subject to paragraphs (8) and (9) of section 1860D–2(b), a reduction in the annual deductible applicable under section 1860D–2(b)(1) to $50.
(C)

Continuation of coverage above the initial coverage limit.—
The continuation of coverage from the initial coverage limit (under paragraph (3) of section 1860D–2(b)) for expenditures incurred through the total amount of expenditures at which benefits are available under paragraph (4) of such section, subject to the reduced coinsurance described in subparagraph (D).
(D)

Reduction in cost-sharing below out-of-pocket threshold.—
Subject to paragraph (6), the substitution for the beneficiary coinsurance described in section 1860D–2(b)(2) (for all amounts above the deductible under subparagraph (B) through the total amount of expenditures at which benefits are available under section 1860D–2(b)(4)) of coinsurance of “15 percent” instead of coinsurance of “25 percent” in section 1860D–2(b)(2). For plan year 2023, the amount of the coinsurance applicable under the preceding sentence to a month’s supply of a covered insulin product (as defined in section 1860D–2(b)(9)(C)) dispensed to the individual may not exceed the applicable copayment amount for the product under the prescription drug plan or MA–PD plan in which the individual is enrolled.
(E)

Reduction of cost-sharing above annual out-of-pocket threshold.—
Subject to paragraph (6) of this subsection and subsection (c), the substitution for the cost-sharing imposed under section 1860D–2(b)(4)(A) of a copayment or coinsurance not to exceed the copayment or coinsurance amount specified under section 1860D–2(b)(4)(A)(i)(I)(aa) for the drug and year involved. For plan year 2023, the amount of the copayment or coinsurance applicable under the preceding sentence to a month’s supply of a covered insulin product (as defined in section 1860D–2(b)(9)(C)) dispensed to the individual may not exceed the applicable copayment amount for the product under the prescription drug plan or MA–PD plan in which the individual is enrolled.
(3)

Determination of eligibility.—
(A)

Subsidy eligible individual defined.—
For purposes of this part, subject to subparagraph (F), the term “subsidy eligible individual” means a part D eligible individual who—
(i)
is enrolled in a prescription drug plan or MA–PD plan;
(ii)
has income below 150 percent of the poverty line applicable to a family of the size involved; and
(iii)
meets the resources requirement described in subparagraph (D) or (E).
(B)

Determinations.—
(i)

In general.—
The determination of whether a part D eligible individual residing in a State is a subsidy eligible individual and whether the individual is described in paragraph (1) shall be determined under the State plan under title XIX for the State under section 1935(a) or by the Commissioner of Social Security. There are authorized to be appropriated to the Social Security Administration such sums as may be necessary for the determination of eligibility under this subparagraph.
(ii)

Effective period.—
Determinations under this subparagraph shall be effective beginning with the month in which the individual applies for a determination that the individual is a subsidy eligible individual and shall remain in effect for a period specified by the Secretary, but not to exceed 1 year.
(iii)

Redeterminations and appeals through medicaid.—
Redeterminations and appeals, with respect to eligibility determinations under clause (i) made under a State plan under title XIX, shall be made in accordance with the frequency of, and manner in which, redeterminations and appeals of eligibility are made under such plan for purposes of medical assistance under such title.
(iv)

Redeterminations and appeals through commissioner.—
With respect to eligibility determinations under clause (i) made by the Commissioner of Social Security—
(I)
redeterminations shall be made at such time or times as may be provided by the Commissioner;
(II)
the Commissioner shall establish procedures for appeals of such determinations that are similar to the procedures described in the third sentence of section 1631(c)(1)(A); and
(III)
judicial review of the final decision of the Commissioner made after a hearing shall be available to the same extent, and with the same limitations, as provided in subsections (g) and (h) of section 205.
(v)

Treatment of medicaid beneficiaries.—
Subject to subparagraph (F), the Secretary—
(I)
shall provide that part D eligible individuals who are full-benefit dual eligible individuals (as defined in section 1935(c)(6)) or who are recipients of supplemental security income benefits under title XVI shall be treated as subsidy eligible individuals described in paragraph (1); and
(II)
may provide that part D eligible individuals not described in subclause (I) who are determined for purposes of the State plan under title XIX to be eligible for medical assistance under clause (i), (iii), or (iv) of section 1902(a)(10)(E) are treated as being determined to be subsidy eligible individuals described in paragraph (1).
Insofar as the Secretary determines that the eligibility requirements under the State plan for medical assistance referred to in subclause (II) are substantially the same as the requirements for being treated as a subsidy eligible individual described in paragraph (1), the Secretary shall provide for the treatment described in such subclause.
(vi)

Special rule for widows and widowers.—
Notwithstanding the preceding provisions of this subparagraph, in the case of an individual whose spouse dies during the effective period for a determination or redetermination that has been made under this subparagraph, such effective period shall be extended through the date that is 1 year after the date on which the determination or redetermination would (but for the application of this clause) otherwise cease to be effective.
(C)

Income determinations.—
For purposes of applying this section—
(i)
in the case of a part D eligible individual who is not treated as a subsidy eligible individual under subparagraph (B)(v), income shall be determined in the manner described in section 1905(p)(1)(B), without regard to the application of section 1902(r)(2) and except that support and maintenance furnished in kind shall not be counted as income; and
(ii)
the term “poverty line” has the meaning given such term in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)), including any revision required by such section.
Nothing in clause (i) shall be construed to affect the application of section 1902(r)(2) for the determination of eligibility for medical assistance under title XIX.
(D)

Resource standard applied to full low-income subsidy to be based on three times ssi resource standard.—
The resources requirement of this subparagraph is that an individual's resources (as determined under section 1613 for purposes of the supplemental security income program subject to the life insurance policy exclusion provided under subparagraph (G)) do not exceed—
(i)
for 2006 three times the maximum amount of resources that an individual may have and obtain benefits under that program; and
(ii)
for a subsequent year the resource limitation established under this clause for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year.
Any resource limitation established under clause (ii) that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
(E)

Alternative resource standard.—
(i)

In general.—
The resources requirement of this subparagraph is that an individual's resources (as determined under section 1613 for purposes of the supplemental security income program subject to the life insurance policy exclusion provided under subparagraph (G)) do not exceed—
(I)
for 2006, $10,000 (or $20,000 in the case of the combined value of the individual's assets or resources and the assets or resources of the individual's spouse); and
(II)
for a subsequent year the dollar amounts specified in this subclause (or subclause (I)) for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year.
Any dollar amount established under subclause (II) that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
(ii)

Use of simplified application form and process.—
The Secretary, jointly with the Commissioner of Social Security, shall—
(I)
develop a model, simplified application form and process consistent with clause (iii) for the determination and verification of a part D eligible individual's assets or resources under this subparagraph; and
(II)
provide such form to States.
(iii)

Documentation and safeguards.—
Under such process—
(I)
the application form shall consist of an attestation under penalty of perjury regarding the level of assets or resources (or combined assets and resources in the case of a married part D eligible individual) and valuations of general classes of assets or resources;
(II)
such form shall be accompanied by copies of recent statements (if any) from financial institutions in support of the application; and
(III)
matters attested to in the application shall be subject to appropriate methods of verification.
(iv)

Methodology flexibility.—
The Secretary may permit a State in making eligibility determinations for premium and cost-sharing subsidies under this section to use the same asset or resource methodologies that are used with respect to eligibility for medical assistance for medicare cost-sharing described in section 1905(p) so long as the Secretary determines that the use of such methodologies will not result in any significant differences in the number of individuals determined to be subsidy eligible individuals.
(F)

Treatment of territorial residents.—
In the case of a part D eligible individual who is not a resident of the 50 States or the District of Columbia, the individual is not eligible to be a subsidy eligible individual under this section but may be eligible for financial assistance with prescription drug expenses under section 1935(e).
(G)

Life insurance policy exclusion.—
In determining the resources of an individual (and the eligible spouse of the individual, if any) under section 1613 for purposes of subparagraphs (D) and (E) no part of the value of any life insurance policy shall be taken into account.
(4)

Indexing dollar amounts.—
(A)

Copayment for lowest income dual eligible individuals.—
The dollar amounts applied under paragraph (1)(D)(ii)—
(i)
for 2007 shall be the dollar amounts specified in such paragraph increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year; or
(ii)
for a subsequent year shall be the dollar amounts specified in this clause (or clause (i)) for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year.
Any amount established under clause (i) or (ii), that is based on an increase of $1 or $3, that is not a multiple of 5 cents or 10 cents, respectively, shall be rounded to the nearest multiple of 5 cents or 10 cents, respectively.
(B)

Reduced deductible.—
The dollar amount applied under paragraph (2)(B)—
(i)
for 2007 shall be the dollar amount specified in such paragraph increased by the annual percentage increase described in section 1860D–2(b)(6) for 2007; or
(ii)
for a subsequent year shall be the dollar amount specified in this clause (or clause (i)) for the previous year increased by the annual percentage increase described in section 1860D–2(b)(6) for the year involved.
Any amount established under clause (i) or (ii) that is not a multiple of $1 shall be rounded to the nearest multiple of $1.
(5)

Waiver of de minimis premiums.—
The Secretary shall, under procedures established by the Secretary, permit a prescription drug plan or an MA–PD plan to waive the monthly beneficiary premium for a subsidy eligible individual if the amount of such premium is de minimis. If such premium is waived under the plan, the Secretary shall not reassign subsidy eligible individuals enrolled in the plan to other plans based on the fact that the monthly beneficiary premium under the plan was greater than the low-income benchmark premium amount.
(6)

No application of cost-sharing or deductible for adult vaccines recommended by the advisory committee on immunization practices.—
For plan years beginning on or after January 1, 2023, with respect to an adult vaccine recommended by the Advisory Committee on Immunization Practices (as defined in section 1860D–2(b)(8)(B))—
(A)
the deductible under section 1860D–2(b)(1) shall not apply; and
(B)
there shall be no cost-sharing under this section with respect to such vaccine.
(b)

Premium Subsidy Amount.—
(1)

In general.—
The premium subsidy amount described in this subsection for a subsidy eligible individual residing in a PDP region and enrolled in a prescription drug plan or MA–PD plan is the low-income benchmark premium amount (as defined in paragraph (2)) for the PDP region in which the individual resides or, if greater, the amount specified in paragraph (3).
(2)

Low-income benchmark premium amount defined.—
(A)

In general.—
For purposes of this subsection, the term “low-income benchmark premium amount” means, with respect to a PDP region in which—
(i)
all prescription drug plans are offered by the same PDP sponsor, the weighted average of the amounts described in subparagraph (B)(i) for such plans; or
(ii)
there are prescription drug plans offered by more than one PDP sponsor, the weighted average of amounts described in subparagraph (B) for prescription drug plans and MA–PD plans described in section 1851(a)(2)(A)(i) offered in such region.
(B)

Premium amounts described.—
The premium amounts described in this subparagraph are, in the case of—
(i)
a prescription drug plan that is a basic prescription drug plan, the monthly beneficiary premium for such plan;
(ii)
a prescription drug plan that provides alternative prescription drug coverage the actuarial value of which is greater than that of standard prescription drug coverage, the portion of the monthly beneficiary premium that is attributable to basic prescription drug coverage; and
(iii)
an MA–PD plan, the portion of the MA monthly prescription drug beneficiary premium that is attributable to basic prescription drug benefits (described in section 1852(a)(6)(B)(ii)) and determined before the application of the monthly rebate computed under section 1854(b)(1)(C)(i) for that plan and year involved and, in the case of a qualifying plan, before the application of the increase under section 1853(o) for that plan and year involved.
The premium amounts described in this subparagraph do not include any amounts attributable to late enrollment penalties under section 1860D–13(b).
(3)

Access to 0 premium plan.—
In no case shall the premium subsidy amount under this subsection for a PDP region be less than the lowest monthly beneficiary premium for a prescription drug plan that offers basic prescription drug coverage in the region.
(c)

Administration of Subsidy Program.—
(1)

In general.—
The Secretary shall provide a process whereby, in the case of a part D eligible individual who is determined to be a subsidy eligible individual and who is enrolled in a prescription drug plan or is enrolled in an MA–PD plan—
(A)
the Secretary provides for a notification of the PDP sponsor or the MA organization offering the plan involved that the individual is eligible for a subsidy and the amount of the subsidy under subsection (a);
(B)
the sponsor or organization involved reduces the premiums or cost-sharing otherwise imposed by the amount of the applicable subsidy and submits to the Secretary information on the amount of such reduction;
(C)
the Secretary periodically and on a timely basis reimburses the sponsor or organization for the amount of such reductions; and
(D)
the Secretary ensures the confidentiality of individually identifiable information.
In applying subparagraph (C), the Secretary shall compute reductions based upon imposition under subsections (a)(1)(D) and (a)(2)(E) of unreduced copayment amounts applied under such subsections.
(2)

Use of capitated form of payment.—
The reimbursement under this section with respect to cost-sharing subsidies may be computed on a capitated basis, taking into account the actuarial value of the subsidies and with appropriate adjustments to reflect differences in the risks actually involved.
(d)

Facilitation of Reassignments.—
Beginning not later than January 1, 2011, the Secretary shall, in the case of a subsidy eligible individual who is enrolled in one prescription drug plan and is subsequently reassigned by the Secretary to a new prescription drug plan, provide the individual, within 30 days of such reassignment, with—
(1)
information on formulary differences between the individual's former plan and the plan to which the individual is reassigned with respect to the individual's drug regimens; and
(2)
a description of the individual's right to request a coverage determination, exception, or reconsideration under section 1860D–4(g), bring an appeal under section 1860D–4(h), or resolve a grievance under section 1860D–4(f).
(e)

Limited Income Newly Eligible Transition Program.—
(1)

In general.—
Beginning not later than January 1, 2024, the Secretary shall carry out a program to provide transitional coverage for covered part D drugs for LI NET eligible individuals in accordance with this subsection.
(2)

LI net eligible individual defined.—
For purposes of this subsection, the term “LI NET eligible individual” means a part D eligible individual who—
(A)
meets the requirements of clauses (ii) and (iii) of subsection (a)(3)(A); and
(B)
has not yet enrolled in a prescription drug plan or an MA–PD plan, or, who has so enrolled, but with respect to whom coverage under such plan has not yet taken effect.
(3)

Transitional coverage.—
For purposes of this subsection, the term “transitional coverage” means with respect to an LI NET eligible individual—
(A)
immediate access to covered part D drugs at the point of sale during the period that begins on the first day of the month such individual is determined to meet the requirements of clauses (ii) and (iii) of subsection (a)(3)(A) and ends on the date that coverage under a prescription drug plan or MA–PD plan takes effect with respect to such individual; and
(B)
in the case of an LI NET eligible individual who is a full-benefit dual eligible individual (as defined in section 1935(c)(6)) or a recipient of supplemental security income benefits under title XVI, retroactive coverage (in the form of reimbursement of the amounts that would have been paid under this part had such individual been enrolled in a prescription drug plan or MA–PD plan) of covered part D drugs purchased by such individual during the period that begins on the date that is the later of—
(i)
the date that such individual was first eligible for a low-income subsidy under this part; or
(ii)
the date that is 36 months prior to the date such individual enrolls in a prescription drug plan or MA–PD plan,
and ends on the date that coverage under such plan takes effect.
(4)

Program administration.—
(A)

Point of contact.—
The Secretary shall, as determined appropriate by the Secretary, administer the program under this subsection through a contract with a single program administrator.
(B)

Benefit design.—
The Secretary shall ensure that the transitional coverage provided to LI NET eligible individuals under this subsection—
(i)
provides access to all covered part D drugs under an open formulary;
(ii)
permits all pharmacies determined by the Secretary to be in good standing to process claims under the program;
(iii)
is consistent with such requirements as the Secretary considers necessary to improve patient safety and ensure appropriate dispensing of medication; and
(iv)
meets such other requirements as the Secretary may establish.
(5)

Relationship to other provisions of this title; waiver authority.—
(A)

In general.—
The following provisions shall not apply with respect to the program under this subsection:
(i)
Paragraphs (1) and (3)(B) of section 1860D–4(a) (relating to dissemination of general information; availability of information on changes in formulary through the internet).
(ii)
Subparagraphs (A) and (B) of section 1860D–4(b)(3) (relating to requirements on development and application of formularies; formulary development).
(iii)
Paragraphs (1)(C) and (2) of section 1860D–4(c) (relating to medication therapy management program).
(B)

Waiver authority.—
The Secretary may waive such other requirements of title XI and this title as may be necessary to carry out the purposes of the program established under this subsection.
(6)

Contracting authority.—
The authority vested in the Secretary by this subsection may be performed without regard to such provisions of law or regulations relating to the making, performance, amendment, or modification of contracts of the United States as the Secretary may determine to be inconsistent with the furtherance of the purpose of this title.
(f)

Relation to Medicaid Program.—
For special provisions under the medicaid program relating to medicare prescription drug benefits, see section 1935.

medicare coverage gap discount program
Sec. 1860D–14A.
[42 U.S.C. 1395w–114a]
(a)

Establishment.—
Subject to subsection (h), the Secretary shall establish a Medicare coverage gap discount program (in this section referred to as the “program”) by not later than January 1, 2011. Under the program, the Secretary shall enter into agreements described in subsection (b) with manufacturers and provide for the performance of the duties described in subsection (c)(1). The Secretary shall establish a model agreement for use under the program by not later than 180 days after the date of the enactment of this section, in consultation with manufacturers, and allow for comment on such model agreement.
(b)

Terms of Agreement.—
(1)

In general.—
(A)

Agreement.—
An agreement under this section shall require the manufacturer to provide applicable beneficiaries access to discounted prices for applicable drugs of the manufacturer.
(B)

Provision of discounted prices at the point-of-sale.—
Except as provided in subsection (c)(1)(A)(iii), such discounted prices shall be provided to the applicable beneficiary at the pharmacy or by the mail order service at the point-of-sale of an applicable drug.
(C)

Timing of agreement.—
(i)

Special rule for 2011.—
In order for an agreement with a manufacturer to be in effect under this section with respect to the period beginning on January 1, 2011, and ending on December 31, 2011, the manufacturer shall enter into such agreement not later than not later than 66 30 days after the date of the establishment of a model agreement under subsection (a).
^{66}
So in law. See amendment made by section 1101(b)(2)(B)(iii) of Public Law 111–152.
(ii)

2012 and subsequent years.—
In order for an agreement with a manufacturer to be in effect under this section with respect to plan year 2012 or a subsequent plan year, the manufacturer shall enter into such agreement (or such agreement shall be renewed under paragraph (4)(A)) not later than January 30 of the preceding year.
(2)

Provision of appropriate data.—
Each manufacturer with an agreement in effect under this section shall collect and have available appropriate data, as determined by the Secretary, to ensure that it can demonstrate to the Secretary compliance with the requirements under the program.
(3)

Compliance with requirements for administration of program.—
Each manufacturer with an agreement in effect under this section shall comply with requirements imposed by the Secretary or a third party with a contract under subsection (d)(3), as applicable, for purposes of administering the program, including any determination under clause (i) of subsection (c)(1)(A) or procedures established under such subsection (c)(1)(A).
(4)

Length of agreement.—
(A)

In general.—
An agreement under this section shall be effective for an initial period of not less than 18 months and shall be automatically renewed for a period of not less than 1 year unless terminated under subparagraph (B).
(B)

Termination.—
(i)

By the secretary.—
The Secretary may provide for termination of an agreement under this section for a knowing and willful violation of the requirements of the agreement or other good cause shown. Such termination shall not be effective earlier than 30 days after the date of notice to the manufacturer of such termination. The Secretary shall provide, upon request, a manufacturer with a hearing concerning such a termination, and such hearing shall take place prior to the effective date of the termination with sufficient time for such effective date to be repealed if the Secretary determines appropriate.
(ii)

By a manufacturer.—
A manufacturer may terminate an agreement under this section for any reason. Any such termination shall be effective, with respect to a plan year—
(I)
if the termination occurs before January 30 of a plan year, as of the day after the end of the plan year; and
(II)
if the termination occurs on or after January 30 of a plan year, as of the day after the end of the succeeding plan year.
(iii)

Effectiveness of termination.—
Any termination under this subparagraph shall not affect discounts for applicable drugs of the manufacturer that are due under the agreement before the effective date of its termination.
(iv)

Notice to third party.—
The Secretary shall provide notice of such termination to a third party with a contract under subsection (d)(3) within not less than 30 days before the effective date of such termination.
(c)

Duties Described and Special Rule for Supplemental Benefits.—
(1)

Duties described.—
The duties described in this subsection are the following:
(A)

Administration of program.—
Administering the program, including—
(i)
the determination of the amount of the discounted price of an applicable drug of a manufacturer;
(ii)
except as provided in clause (iii), the establishment of procedures under which discounted prices are provided to applicable beneficiaries at pharmacies or by mail order service at the point-of-sale of an applicable drug;
(iii)
in the case where, during the period beginning on January 1, 2011, and ending on December 31, 2011, it is not practicable to provide such discounted prices at the point-of-sale (as described in clause (ii)), the establishment of procedures to provide such discounted prices as soon as practicable after the point-of-sale;
(iv)
the establishment of procedures to ensure that, not later than the applicable number of calendar days after the dispensing of an applicable drug by a pharmacy or mail order service, the pharmacy or mail order service is reimbursed for an amount equal to the difference between—
(I)
the negotiated price of the applicable drug; and
(II)
the discounted price of the applicable drug;
(v)
the establishment of procedures to ensure that the discounted price for an applicable drug under this section is applied before any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of applicable beneficiaries as the Secretary may specify;
(vi)
the establishment of procedures to implement the special rule for supplemental benefits under paragraph (2); and
(vii)
providing a reasonable dispute resolution mechanism to resolve disagreements between manufacturers, applicable beneficiaries, and the third party with a contract under subsection (d)(3).
(B)

Monitoring compliance.—
(i)

In general.—
The Secretary shall monitor compliance by a manufacturer with the terms of an agreement under this section.
(ii)

Notification.—
If a third party with a contract under subsection (d)(3) determines that the manufacturer is not in compliance with such agreement, the third party shall notify the Secretary of such noncompliance for appropriate enforcement under subsection (e).
(C)

Collection of data from prescription drug plans and ma–pd plans.—
The Secretary may collect appropriate data from prescription drug plans and MA–PD plans in a timeframe that allows for discounted prices to be provided for applicable drugs under this section.
(2)

Special rule for supplemental benefits.—
For plan year 2011 and each subsequent plan year, in the case where an applicable beneficiary has supplemental benefits with respect to applicable drugs under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in, the applicable beneficiary shall not be provided a discounted price for an applicable drug under this section until after such supplemental benefits have been applied with respect to the applicable drug.
(d)

Administration.—
(1)

In general.—
Subject to paragraph (2), the Secretary shall provide for the implementation of this section, including the performance of the duties described in subsection (c)(1).
(2)

Limitation.—
(A)

In general.—
Subject to subparagraph (B), in providing for such implementation, the Secretary shall not receive or distribute any funds of a manufacturer under the program.
(B)

Exception.—
The limitation under subparagraph (A) shall not apply to the Secretary with respect to drugs dispensed during the period beginning on January 1, 2011, and ending on December 31, 2011, but only if the Secretary determines that the exception to such limitation under this subparagraph is necessary in order for the Secretary to begin implementation of this section and provide applicable beneficiaries timely access to discounted prices during such period.
(3)

Contract with third parties.—
The Secretary shall enter into a contract with 1 or more third parties to administer the requirements established by the Secretary in order to carry out this section. At a minimum, the contract with a third party under the preceding sentence shall require that the third party—
(A)
receive and transmit information between the Secretary, manufacturers, and other individuals or entities the Secretary determines appropriate;
(B)
receive, distribute, or facilitate the distribution of funds of manufacturers to appropriate individuals or entities in order to meet the obligations of manufacturers under agreements under this section;
(C)
provide adequate and timely information to manufacturers, consistent with the agreement with the manufacturer under this section, as necessary for the manufacturer to fulfill its obligations under this section; and
(D)
permit manufacturers to conduct periodic audits, directly or through contracts, of the data and information used by the third party to determine discounts for applicable drugs of the manufacturer under the program.
(4)

Performance requirements.—
The Secretary shall establish performance requirements for a third party with a contract under paragraph (3) and safeguards to protect the independence and integrity of the activities carried out by the third party under the program under this section.
(5)

Implementation.—
The Secretary may implement the program under this section by program instruction or otherwise.
(6)

Administration.—
Chapter 35 of title 44, United States Code, shall not apply to the program under this section.
(e)

Enforcement.—
(1)

Audits.—
Each manufacturer with an agreement in effect under this section shall be subject to periodic audit by the Secretary.
(2)

Civil money penalty.—
(A)

In general.—
The Secretary shall impose a civil money penalty on a manufacturer that fails to provide applicable beneficiaries discounts for applicable drugs of the manufacturer in accordance with such agreement for each such failure in an amount the Secretary determines is commensurate with the sum of—
(i)
the amount that the manufacturer would have paid with respect to such discounts under the agreement, which will then be used to pay the discounts which the manufacturer had failed to provide; and
(ii)
25 percent of such amount.
(B)

Application.—
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this paragraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(f)

Clarification Regarding Availability of Other Covered Part D Drugs.—
Nothing in this section shall prevent an applicable beneficiary from purchasing a covered part D drug that is not an applicable drug (including a generic drug or a drug that is not on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in).
(g)

Definitions.—
In this section:
(1)

Applicable beneficiary.—
The term “applicable beneficiary” means an individual who, on the date of dispensing a covered part D drug—
(A)
is enrolled in a prescription drug plan or an MA–PD plan;
(B)
is not enrolled in a qualified retiree prescription drug plan;
(C)
is not entitled to an income-related subsidy under section 1860D–14(a); and
(D)
who—
(i)
has reached or exceeded the initial coverage limit under section 1860D–2(b)(3) during the year; and
(ii)
has not incurred costs for covered part D drugs in the year equal to the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B).
(2)

Applicable drug.—
The term “applicable drug” means, with respect to an applicable beneficiary, a covered part D drug—
(A)
approved under a new drug application under section 505(b) of the Federal Food, Drug, and Cosmetic Act or, in the case of a biologic product, licensed under section 351 of the Public Health Service Act (other than, with respect to a plan year before 2019, a product licensed under subsection (k) of such section 351); and
(B)
(i)
if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan uses a formulary, which is on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in;
(ii)
if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan does not use a formulary, for which benefits are available under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in; or
(iii)
is provided through an exception or appeal.
(3)

Applicable number of calendar days.—
The term “applicable number of calendar days” means—
(A)
with respect to claims for reimbursement submitted electronically, 14 days; and
(B)
with respect to claims for reimbursement submitted otherwise, 30 days.
(4)

Discounted price.—
(A)

In general.—
The term “discounted price” means 50 percent (or, with respect to a plan year after plan year 2018, 30 percent) of the negotiated price of the applicable drug of a manufacturer.
(B)

Clarification.—
Nothing in this section shall be construed as affecting the responsibility of an applicable beneficiary for payment of a dispensing fee for an applicable drug.
(C)

Special case for certain claims.—
In the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall at or above the initial coverage limit under section 1860D–2(b)(3) and below the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B) for the year, the manufacturer of the applicable drug shall provide the discounted price under this section on only the portion of the negotiated price of the applicable drug that falls at or above such initial coverage limit and below such annual out-of-pocket threshold.
(5)

Manufacturer.—
The term “manufacturer” means any entity which is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. Such term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law.
(6)

Negotiated price.—
The term “negotiated price” has the meaning given such term in section 423.100 of title 42, Code of Federal Regulations (as in effect on the date of enactment of this section), except that such negotiated price shall not include any dispensing fee for the applicable drug.
(7)

Qualified retiree prescription drug plan.—
The term “qualified retiree prescription drug plan” has the meaning given such term in section 1860D–22(a)(2).
(h)

Sunset of Program.—
(1)

In general.—
The program shall not apply with respect to applicable drugs dispensed on or after January 1, 2025, and, subject to paragraph (2), agreements under this section shall be terminated as of such date.
(2)

Continued application for applicable drugs dispensed prior to sunset.—
The provisions of this section (including all responsibilities and duties) shall continue to apply on and after January 1, 2025, with respect to applicable drugs dispensed prior to such date.
SEC. 1860D–14B.
[42 U.S.C. 1395w–114b]

MANUFACTURER REBATE FOR CERTAIN DRUGS WITH PRICES INCREASING FASTER THAN INFLATION.
(a)

Requirements.—
(1)

Secretarial provision of information.—
Not later than 9 months after the end of each applicable period (as defined in subsection (g)(7)), subject to paragraph (3), the Secretary shall, for each part D rebatable drug, report to each manufacturer of such part D rebatable drug the following for such period:
(A)
The amount (if any) of the excess annual manufacturer price increase described in subsection (b)(1)(A)(ii) for each dosage form and strength with respect to such drug and period.
(B)
The rebate amount specified under subsection (b) for each dosage form and strength with respect to such drug and period.
(2)

Manufacturer requirements.—
For each applicable period, the manufacturer of a part D rebatable drug, for each dosage form and strength with respect to such drug, not later than 30 days after the date of receipt from the Secretary of the information described in paragraph (1) for such period, shall provide to the Secretary a rebate that is equal to the amount specified in subsection (b) for such dosage form and strength with respect to such drug for such period.
(3)

Transition rule for reporting.—
The Secretary may, for each rebatable covered part D drug, delay the timeframe for reporting the information and rebate amount described in subparagraphs (A) and (B) of such paragraph for the applicable periods beginning October 1, 2022, and October 1, 2023, until not later than December 31, 2025.
(b)

Rebate Amount.—
(1)

In general.—
(A)

Calculation.—
For purposes of this section, the amount specified in this subsection for a dosage form and strength with respect to a part D rebatable drug and applicable period is, subject to subparagraph (C), paragraph (5)(B), and paragraph (6), the estimated amount equal to the product of—
(i)
subject to subparagraph (B) of this paragraph, the total number of units of such dosage form and strength for each rebatable covered part D drug dispensed under this part during the applicable period; and
(ii)
the amount (if any) by which—
(I)
the annual manufacturer price (as determined in paragraph (2)) paid for such dosage form and strength with respect to such part D rebatable drug for the period; exceeds
(II)
the inflation-adjusted payment amount determined under paragraph (3) for such dosage form and strength with respect to such part D rebatable drug for the period.
(B)

Excluded units.—
For purposes of subparagraph (A)(i), beginning with plan year 2026, the Secretary shall exclude from the total number of units for a dosage form and strength with respect to a part D rebatable drug, with respect to an applicable period, units of each dosage form and strength of such part D rebatable drug for which the manufacturer provides a discount under the program under section 340B of the Public Health Service Act.
(C)

Reduction or waiver for shortages and severe supply chain disruptions.—
The Secretary shall reduce or waive the amount under subparagraph (A) with respect to a part D rebatable drug and an applicable period—
(i)
in the case of a part D rebatable drug that is described as currently in shortage on the shortage list in effect under section 506E of the Federal Food, Drug, and Cosmetic Act at any point during the applicable period;
(ii)
in the case of a generic part D rebatable drug (described in subsection (g)(1)(C)(ii)) or a biosimilar (defined as a biological product licensed under section 351(k) of the Public Health Service Act), when the Secretary determines there is a severe supply chain disruption during the applicable period, such as that caused by a natural disaster or other unique or unexpected event; and
(iii)
in the case of a generic Part D rebatable drug (as so described), if the Secretary determines that without such reduction or waiver, the drug is likely to be described as in shortage on such shortage list during a subsequent applicable period.
(2)

Determination of annual manufacturer price.—
The annual manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable period, is the sum of the products of—
(A)
the average manufacturer price (as defined in subsection (g)(6)) of such dosage form and strength, as calculated for a unit of such drug, with respect to each of the calendar quarters of such period; and
(B)
the ratio of—
(i)
the total number of units of such dosage form and strength reported under section 1927 with respect to each such calendar quarter of such period; to
(ii)
the total number of units of such dosage form and strength reported under section 1927 with respect to such period, as determined by the Secretary.
(3)

Determination of inflation-adjusted payment amount.—
The inflation-adjusted payment amount determined under this paragraph for a dosage form and strength with respect to a part D rebatable drug for an applicable period, subject to paragraph (5), is—
(A)
the benchmark period manufacturer price determined under paragraph (4) for such dosage form and strength with respect to such drug and period; increased by
(B)
the percentage by which the applicable period CPI–U (as defined in subsection (g)(5)) for the period exceeds the benchmark period CPI–U (as defined in subsection (g)(4)).
(4)

Determination of benchmark period manufacturer price.—
The benchmark period manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable period, is the sum of the products of—
(A)
the average manufacturer price (as defined in subsection (g)(6)) of such dosage form and strength, as calculated for a unit of such drug, with respect to each of the calendar quarters of the payment amount benchmark period (as defined in subsection (g)(3)); and
(B)
the ratio of—
(i)
the total number of units reported under section 1927 of such dosage form and strength with respect to each such calendar quarter of such payment amount benchmark period; to
(ii)
the total number of units reported under section 1927 of such dosage form and strength with respect to such payment amount benchmark period.
(5)

Special treatment of certain drugs and exemption.—
(A)

Subsequently approved drugs.—
In the case of a part D rebatable drug first approved or licensed by the Food and Drug Administration after October 1, 2021, subparagraphs (A) and (B) of paragraph (4) shall be applied as if the term “payment amount benchmark period” were defined under subsection (g)(3) as the first calendar year beginning after the day on which the drug was first marketed and subparagraph (B) of paragraph (3) shall be applied as if the term “benchmark period CPI–U” were defined under subsection (g)(4) as if the reference to “January 2021” under such subsection were a reference to “January of the first year beginning after the date on which the drug was first marketed”.
(B)

Treatment of new formulations.—
(i)

In general.—
In the case of a part D rebatable drug that is a line extension of a part D rebatable drug that is an oral solid dosage form, the Secretary shall establish a formula for determining the rebate amount under paragraph (1) and the inflation adjusted payment amount under paragraph (3) with respect to such part D rebatable drug and an applicable period, consistent with the formula applied under subsection (c)(2)(C) of section 1927 for determining a rebate obligation for a rebate period under such section.
(ii)

Line extension defined.—
In this subparagraph, the term “line extension” means, with respect to a part D rebatable drug, a new formulation of the drug, such as an extended release formulation, but does not include an abuse-deterrent formulation of the drug (as determined by the Secretary), regardless of whether such abuse-deterrent formulation is an extended release formulation.
(C)

Selected drugs.—
In the case of a part D rebatable drug that is a selected drug (as defined in section 1192(c)) with respect to a price applicability period (as defined in section 1191(b)(2)), in the case such drug is no longer considered to be a selected drug under section 1192(c), for each applicable period (as defined under subsection (g)(7)) beginning after the price applicability period with respect to such drug, subparagraphs (A) and (B) of paragraph (4) shall be applied as if the term “payment amount benchmark period” were defined under subsection (g)(3) as the last year beginning during such price applicability period with respect to such selected drug and subparagraph (B) of paragraph (3) shall be applied as if the term “benchmark period CPI–U” were defined under subsection (g)(4) as if the reference to “January 2021” under such subsection were a reference to “January of the last year beginning during such price applicability period with respect to such drug”.
(6)

Reconciliation in case of revised information.—
The Secretary shall provide for a method and process under which, in the case where a PDP sponsor of a prescription drug plan or an MA organization offering an MA–PD plan submits revisions to the number of units of a rebatable covered part D drug dispensed, the Secretary determines, pursuant to such revisions, adjustments, if any, to the calculation of the amount specified in this subsection for a dosage form and strength with respect to such part D rebatable drug and an applicable period and reconciles any overpayments or underpayments in amounts paid as rebates under this subsection. Any identified underpayment shall be rectified by the manufacturer not later than 30 days after the date of receipt from the Secretary of information on such underpayment.
(c)

Rebate deposits.—
Amounts paid as rebates under subsection (b) shall be deposited into the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund established under section 1841.
(d)

Information.—
For purposes of carrying out this section, the Secretary shall use information submitted by—
(1)
manufacturers under section 1927(b)(3);
(2)
States under section 1927(b)(2)(A); and
(3)
PDP sponsors of prescription drug plans and MA organization offering MA–PD plans under this part.
(e)

Civil Money Penalty.—
If a manufacturer of a part D rebatable drug has failed to comply with the requirement under subsection (a)(2) with respect to such drug for an applicable period, the manufacturer shall be subject to a civil money penalty in an amount equal to 125 percent of the amount specified in subsection (b) for such drug for such period. The provisions of section 1128A (other than subsections (a) (with respect to amounts of penalties or additional assessments) and (b)) shall apply to a civil money penalty under this subsection in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(f)

Limitation on Administrative or Judicial Review.—
There shall be no administrative or judicial review of any of the following:
(1)
The determination of units under this section.
(2)
The determination of whether a drug is a part D rebatable drug under this section.
(3)
The calculation of the rebate amount under this section.
(g)

Definitions.—
In this section:
(1)

Part d rebatable drug.—
(A)

In general.—
Except as provided in subparagraph (B), the term “part D rebatable drug” means, with respect to an applicable period, a drug or biological described in subparagraph (C) that is a covered part D drug (as such term is defined under section 1860D–2(e)).
(B)

Exclusion.—
(i)

In general.—
Such term shall, with respect to an applicable period, not include a drug or biological if the average annual total cost under this part for such period per individual who uses such a drug or biological, as determined by the Secretary, is less than, subject to clause (ii), $100, as determined by the Secretary using the most recent data available or, if data is not available, as estimated by the Secretary.
(ii)

Increase.—
The dollar amount applied under clause (i)—
(I)
for the applicable period beginning October 1, 2023, shall be the dollar amount specified under such clause for the applicable period beginning October 1, 2022, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with October of 2023; and
(II)
for a subsequent applicable period, shall be the dollar amount specified in this clause for the previous applicable period, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with October of the previous period.
Any dollar amount specified under this clause that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
(C)

Drug or biological described.—
A drug or biological described in this subparagraph is a drug or biological that, as of the first day of the applicable period involved, is—
(i)
a drug approved under a new drug application under section 505(c) of the Federal Food, Drug, and Cosmetic Act;
(ii)
a drug approved under an abbreviated new drug application under section 505(j) of the Federal Food, Drug, and Cosmetic Act, in the case where—
(I)
the reference listed drug approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act, including any “authorized generic drug” (as that term is defined in section 505(t)(3) of the Federal Food, Drug, and Cosmetic Act), is not being marketed, as identified in the Food and Drug Administration’s National Drug Code Directory;
(II)
there is no other drug approved under section 505(j) of the Federal Food, Drug, and Cosmetic Act that is rated as therapeutically equivalent (under the Food and Drug Administration’s most recent publication of “Approved Drug Products with Therapeutic Equivalence Evaluations”) and that is being marketed, as identified in the Food and Drug Administration’s National Drug Code Directory;
(III)
the manufacturer is not a “first applicant” during the “180-day exclusivity period”, as those terms are defined in section 505(j)(5)(B)(iv) of the Federal Food, Drug, and Cosmetic Act; and
(IV)
the manufacturer is not a “first approved applicant” for a competitive generic therapy, as that term is defined in section 505(j)(5)(B)(v) of the Federal Food, Drug, and Cosmetic Act; or
(iii)
a biological licensed under section 351 of the Public Health Service Act.
(2)

Unit.—
The term “unit” means, with respect to a part D rebatable drug, the lowest dispensable amount (such as a capsule or tablet, milligram of molecules, or grams) of the part D rebatable drug, as reported under section 1927.
(3)

Payment amount benchmark period.—
The term “payment amount benchmark period” means the period beginning January 1, 2021, and ending in the month immediately prior to October 1, 2021.
(4)

Benchmark period CPI–U.—
The term “benchmark period CPI–U” means the consumer price index for all urban consumers (United States city average) for January 2021.
(5)

Applicable period CPI–U.—
The term “applicable period CPI–U” means, with respect to an applicable period, the consumer price index for all urban consumers (United States city average) for the first month of such applicable period.
(6)

Average manufacturer price.—
The term “average manufacturer price” has the meaning, with respect to a part D rebatable drug of a manufacturer, given such term in section 1927(k)(1), with respect to a covered outpatient drug of a manufacturer for a rebate period under section 1927.
(7)

Applicable period.—
The term “applicable period” means a 12-month period beginning with October 1 of a year (beginning with October 1, 2022).
(h)

Implementation for 2022, 2023, and 2024.—
The Secretary shall implement this section for 2022, 2023, and 2024 by program instruction or other forms of program guidance.
SEC. 1860D–14C.
[42 U.S.C. 1395w–114c]

MANUFACTURER DISCOUNT PROGRAM.
(a)

Establishment.—
The Secretary shall establish a manufacturer discount program (in this section referred to as the “program”). Under the program, the Secretary shall enter into agreements described in subsection (b) with manufacturers and provide for the performance of the duties described in subsection (c).
(b)

Terms of Agreement.—
(1)

In general.—
(A)

Agreement.—
An agreement under this section shall require the manufacturer to provide, in accordance with this section, discounted prices for applicable drugs of the manufacturer that are dispensed to applicable beneficiaries on or after January 1, 2025.
(B)

Clarification.—
Nothing in this section shall be construed as affecting—
(i)
the application of a coinsurance of 25 percent of the negotiated price, as applied under paragraph (2)(A) of section 1860D–2(b), for costs described in such paragraph; or
(ii)
the application of the copayment amount described in paragraph (4)(A) of such section, with respect to costs described in such paragraph.
(C)

Timing of agreement.—
(i)

Special rule for 2025.—
In order for an agreement with a manufacturer to be in effect under this section with respect to the period beginning on January 1, 2025, and ending on December 31, 2025, the manufacturer shall enter into such agreement not later than March 1, 2024.
(ii)

2026 and subsequent years.—
In order for an agreement with a manufacturer to be in effect under this section with respect to plan year 2026 or a subsequent plan year, the manufacturer shall enter into such agreement not later than a calendar quarter or semi-annual deadline established by the Secretary.
(2)

Provision of appropriate data.—
Each manufacturer with an agreement in effect under this section shall collect and have available appropriate data, as determined by the Secretary, to ensure that it can demonstrate to the Secretary compliance with the requirements under the program.
(3)

Compliance with requirements for administration of program.—
Each manufacturer with an agreement in effect under this section shall comply with requirements imposed by the Secretary, as applicable, for purposes of administering the program, including any determination under subparagraph (A) of subsection (c)(1) or procedures established under such subsection (c)(1).
(4)

Length of agreement.—
(A)

In general.—
An agreement under this section shall be effective for an initial period of not less than 12 months and shall be automatically renewed for a period of not less than 1 year unless terminated under subparagraph (B).
(B)

Termination.—
(i)

By the Secretary.—
The Secretary shall provide for termination of an agreement under this section for a knowing and willful violation of the requirements of the agreement or other good cause shown. Such termination shall not be effective earlier than 30 days after the date of notice to the manufacturer of such termination. The Secretary shall provide, upon request, a manufacturer with a hearing concerning such a termination, and such hearing shall take place prior to the effective date of the termination with sufficient time for such effective date to be repealed if the Secretary determines appropriate.
(ii)

By a manufacturer.—
A manufacturer may terminate an agreement under this section for any reason. Any such termination shall be effective, with respect to a plan year—
(I)
if the termination occurs before January 31 of a plan year, as of the day after the end of the plan year; and
(II)
if the termination occurs on or after January 31 of a plan year, as of the day after the end of the succeeding plan year.
(iii)

Effectiveness of termination.—
Any termination under this subparagraph shall not affect discounts for applicable drugs of the manufacturer that are due under the agreement before the effective date of its termination.
(5)

Effective date of agreement.—
An agreement under this section shall take effect at the start of a calendar quarter or another date specified by the Secretary.
(c)

Duties Described.—
The duties described in this subsection are the following:
(1)

Administration of program.—
Administering the program, including—
(A)
the determination of the amount of the discounted price of an applicable drug of a manufacturer;
(B)
the establishment of procedures to ensure that, not later than the applicable number of calendar days after the dispensing of an applicable drug by a pharmacy or mail order service, the pharmacy or mail order service is reimbursed for an amount equal to the difference between—
(i)
the negotiated price of the applicable drug; and
(ii)
the discounted price of the applicable drug;
(C)
the establishment of procedures to ensure that the discounted price for an applicable drug under this section is applied before any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of applicable beneficiaries as specified by the Secretary; and
(D)
providing a reasonable dispute resolution mechanism to resolve disagreements between manufacturers, prescription drug plans and MA–PD plans, and the Secretary.
(2)

Monitoring compliance.—
The Secretary shall monitor compliance by a manufacturer with the terms of an agreement under this section.
(3)

Collection of data from prescription drug plans and MA–PD plans.—
The Secretary may collect appropriate data from prescription drug plans and MA–PD plans in a timeframe that allows for discounted prices to be provided for applicable drugs under this section.
(d)

Administration.—
(1)

In general.—
Subject to paragraph (2), the Secretary shall provide for the implementation of this section, including the performance of the duties described in subsection (c).
(2)

Limitation.—
In providing for the implementation of this section, the Secretary shall not receive or distribute any funds of a manufacturer under the program.
(e)

Civil Money Penalty.—
(1)

In general.—
A manufacturer that fails to provide discounted prices for applicable drugs of the manufacturer dispensed to applicable beneficiaries in accordance with an agreement in effect under this section shall be subject to a civil money penalty for each such failure in an amount the Secretary determines is equal to the sum of—
(A)
the amount that the manufacturer would have paid with respect to such discounts under the agreement, which will then be used to pay the discounts which the manufacturer had failed to provide; and
(B)
25 percent of such amount.
(2)

Application.—
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this subsection in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(f)

Clarification Regarding Availability of Other Covered Part D Drugs.—
Nothing in this section shall prevent an applicable beneficiary from purchasing a covered part D drug that is not an applicable drug (including a generic drug or a drug that is not on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in).
(g)

Definitions.—
In this section:
(1)

Applicable beneficiary.—
The term “applicable beneficiary” means an individual who, on the date of dispensing a covered part D drug—
(A)
is enrolled in a prescription drug plan or an MA–PD plan;
(B)
is not enrolled in a qualified retiree prescription drug plan; and
(C)
has incurred costs, as determined in accordance with section 1860D–2(b)(4)(C), for covered part D drugs in the year that exceed the annual deductible specified in section 1860D–2(b)(1).
(2)

Applicable drug.—
The term “applicable drug”, with respect to an applicable beneficiary—
(A)
means a covered part D drug—
(i)
approved under a new drug application under section 505(c) of the Federal Food, Drug, and Cosmetic Act or, in the case of a biologic product, licensed under section 351 of the Public Health Service Act; and
(ii)
(I)
if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan uses a formulary, which is on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in;
(II)
if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan does not use a formulary, for which benefits are available under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in; or
(III)
is provided through an exception or appeal; and
(B)
does not include a selected drug (as referred to under section 1192(c)) during a price applicability period (as defined in section 1191(b)(2)) with respect to such drug.
(3)

Applicable number of calendar days.—
The term “applicable number of calendar days” means—
(A)
with respect to claims for reimbursement submitted electronically, 14 days; and
(B)
with respect to claims for reimbursement submitted otherwise, 30 days.
(4)

Discounted price.—
(A)

In general.—
The term “discounted price” means, subject to subparagraphs (B) and (C), with respect to an applicable drug of a manufacturer dispensed during a year to an applicable beneficiary—
(i)
who has not incurred costs, as determined in accordance with section 1860D–2(b)(4)(C), for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year, 90 percent of the negotiated price of such drug; and
(ii)
who has incurred such costs, as so determined, in the year that are equal to or exceed such threshold for the year, 80 percent of the negotiated price of such drug.
(B)

Phase-in for certain drugs dispensed to LIS beneficiaries.—
(i)

In general.—
In the case of an applicable drug of a specified manufacturer (as defined in clause (ii)) that is marketed as of the date of enactment of this subparagraph and dispensed for an applicable beneficiary who is a subsidy eligible individual (as defined in section 1860D–14(a)(3)), the term “discounted price” means the specified LIS percent (as defined in clause (iii)) of the negotiated price of the applicable drug of the manufacturer.
(ii)

Specified manufacturer.—
(I)

In general.—
In this subparagraph, subject to subclause (II), the term “specified manufacturer” means a manufacturer of an applicable drug for which, in 2021—
- (aa)
the manufacturer had a coverage gap discount agreement under section 1860D–14A;
- (bb)
the total expenditures for all of the specified drugs of the manufacturer covered by such agreement or agreements for such year and covered under this part during such year represented less than 1.0 percent of the total expenditures under this part for all covered Part D drugs during such year; and
- (cc)
the total expenditures for all of the specified drugs of the manufacturer that are single source drugs and biological products for which payment may be made under part B during such year represented less than 1.0 percent of the total expenditures under part B for all drugs or biological products for which payment may be made under such part during such year.
(II)

Specified drugs.—
- (aa)

In general.—
For purposes of this clause, the term “specified drug” means, with respect to a specified manufacturer, for 2021, an applicable drug that is produced, prepared, propagated, compounded, converted, or processed by the manufacturer.
- (bb)

Aggregation rule.—
All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one manufacturer for purposes of this subparagraph. For purposes of making a determination pursuant to the previous sentence, an agreement under this section shall require that a manufacturer provide and attest to such information as specified by the Secretary as necessary.
(III)

Limitation.—
The term “specified manufacturer” shall not include a manufacturer described in subclause (I) if such manufacturer is acquired after 2021 by another manufacturer that is not a specified manufacturer, effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2025, effective January 1, 2025.
(iii)

Specified LIS percent.—
In this subparagraph, the “specified LIS percent” means, with respect to a year—
(I)
for an applicable drug dispensed for an applicable beneficiary described in clause (i) who has not incurred costs, as determined in accordance with section 1860D–2(b)(4)(C), for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year—
- (aa)
for 2025, 99 percent;
- (bb)
for 2026, 98 percent;
- (cc)
for 2027, 95 percent;
- (dd)
for 2028, 92 percent; and
- (ee)
for 2029 and each subsequent year, 90 percent; and
(II)
for an applicable drug dispensed for an applicable beneficiary described in clause (i) who has incurred costs, as determined in accordance with section 1860D–2(b)(4)(C), for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year—
- (aa)
for 2025, 99 percent;
- (bb)
for 2026, 98 percent;
- (cc)
for 2027, 95 percent;
- (dd)
for 2028, 92 percent;
- (ee)
for 2029, 90 percent;
- (ff)
for 2030, 85 percent; and
- (gg)
for 2031 and each subsequent year, 80 percent.
(C)

Phase-in for specified small manufacturers.—
(i)

In general.—
In the case of an applicable drug of a specified small manufacturer (as defined in clause (ii)) that is marketed as of the date of enactment of this subparagraph and dispensed for an applicable beneficiary, the term “discounted price” means the specified small manufacturer percent (as defined in clause (iii)) of the negotiated price of the applicable drug of the manufacturer.
(ii)

Specified small manufacturer.—
(I)

In general.—
In this subparagraph, subject to subclause (III), the term ‘specified small manufacturer’ means a manufacturer of an applicable drug for which, in 2021—
- (aa)
the manufacturer is a specified manufacturer (as defined in subparagraph (B)(ii)); and
- (bb)
the total expenditures under part D for any one of the specified small manufacturer drugs of the manufacturer that are covered by the agreement or agreements under section 1860D–14A of such manufacturer for such year and covered under this part during such year are equal to or more than 80 percent of the total expenditures under this part for all specified small manufacturer drugs of the manufacturer that are covered by such agreement or agreements for such year and covered under this part during such year.
(II)

Specified small manufacturer drugs.—
- (aa)

In general.—
For purposes of this clause, the term “specified small manufacturer drugs” means, with respect to a specified small manufacturer, for 2021, an applicable drug that is produced, prepared, propagated, compounded, converted, or processed by the manufacturer.
- (bb)

Aggregation rule.—
All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one manufacturer for purposes of this subparagraph. For purposes of making a determination pursuant to the previous sentence, an agreement under this section shall require that a manufacturer provide and attest to such information as specified by the Secretary as necessary.
(III)

Limitation.—
The term “specified small manufacturer” shall not include a manufacturer described in subclause (I) if such manufacturer is acquired after 2021 by another manufacturer that is not a specified small manufacturer, effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2025, effective January 1, 2025.
(iii)

Specified small manufacturer percent.—
In this subparagraph, the term “specified small manufacturer percent” means, with respect to a year—
(I)
for an applicable drug dispensed for an applicable beneficiary who has not incurred costs, as determined in accordance with section 1860D–2(b)(4)(C), for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year—
- (aa)
for 2025, 99 percent;
- (bb)
for 2026, 98 percent;
- (cc)
for 2027, 95 percent;
- (dd)
for 2028, 92 percent; and
- (ee)
for 2029 and each subsequent year, 90 percent; and
(II)
for an applicable drug dispensed for an applicable beneficiary who has incurred costs, as determined in accordance with section 1860D–2(b)(4)(C), for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year—
- (aa)
for 2025, 99 percent;
- (bb)
for 2026, 98 percent;
- (cc)
for 2027, 95 percent;
- (dd)
for 2028, 92 percent;
- (ee)
for 2029, 90 percent;
- (ff)
for 2030, 85 percent; and
- (gg)
for 2031 and each subsequent year, 80 percent.
(D)

Total expenditures.—
For purposes of this paragraph, the term “total expenditures” includes, in the case of expenditures with respect to part D, the total gross covered prescription drug costs as defined in section 1860D–15(b)(3). The term “total expenditures” excludes, in the case of expenditures with respect to part B, expenditures for a drug or biological that are bundled or packaged into the payment for another service.
(E)

Special case for certain claims.—
(i)

Claims spanning deductible.—
In the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall above the annual deductible specified in section 1860D–2(b)(1) for the year, the manufacturer of the applicable drug shall provide the discounted price under this section on only the portion of the negotiated price of the applicable drug that falls above such annual deductible.
(ii)

Claims spanning out-of-pocket threshold.—
In the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall entirely below or entirely above the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year, the manufacturer of the applicable drug shall provide the discounted price—
(I)
in accordance with subparagraph (A)(i) on the portion of the negotiated price of the applicable drug that falls below such threshold; and
(II)
in accordance with subparagraph (A)(ii) on the portion of such price of such drug that falls at or above such threshold.
(5)

Manufacturer.—
The term “manufacturer” means any entity which is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. Such term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law.
(6)

Negotiated price.—
The term “negotiated price” has the meaning given such term for purposes of section 1860D–2(d)(1)(B), and, with respect to an applicable drug, such negotiated price shall include any dispensing fee and, if applicable, any vaccine administration fee for the applicable drug.
(7)

Qualified retiree prescription drug plan.—
The term “qualified retiree prescription drug plan” has the meaning given such term in section 1860D–22(a)(2).
SEC. 1860D–14D.
[42 U.S.C. 1395w–114d]

SELECTED DRUG SUBSIDY PROGRAM.
With respect to covered part D drugs that would be applicable drugs (as defined in section 1860D–14C(g)(2)) but for the application of subparagraph (B) of such section, the Secretary shall provide a process whereby, in the case of an applicable beneficiary (as defined in section 1860D–14C(g)(1)) who, with respect to a year, is enrolled in a prescription drug plan or is enrolled in an MA–PD plan, has not incurred costs that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i), and is dispensed such a drug, the Secretary (periodically and on a timely basis) provides the PDP sponsor or the MA organization offering the plan, a subsidy with respect to such drug that is equal to 10 percent of the negotiated price (as defined in section 1860D–14C(g)(6)) of such drug.

subsidies for part d eligible individuals for qualified prescription drug coverage
Sec. 1860D–15.
[42 U.S.C. 1395w–115]
(a)

Subsidy Payment.—
In order to reduce premium levels applicable to qualified prescription drug coverage for part D eligible individuals consistent with an overall subsidy level of 74.5 percent (or, for each of 2024 through 2029, the percent applicable as a result of the application of section 1860D–13(a)(8), or, for 2030 and each subsequent year, 100 percent minus the percent specified under section 1860D–13(a)(9)) for basic prescription drug coverage, to reduce adverse selection among prescription drug plans and MA–PD plans, and to promote the participation of PDP sponsors under this part and MA organizations under part C, the Secretary shall provide for payment to a PDP sponsor that offers a prescription drug plan and an MA organization that offers an MA–PD plan of the following subsidies in accordance with this section:
(1)

Direct subsidy.—
A direct subsidy for each part D eligible individual enrolled in a prescription drug plan or MA–PD plan for a month equal to—
(A)
the amount of the plan's standardized bid amount (as defined in section 1860D–13(a)(5)), adjusted under subsection (c)(1), reduced by
(B)
the base beneficiary premium (as computed under paragraph (2) or (8) of section 1860D–13(a) (as applicable) and as adjusted under paragraph (1)(B) of such section).
(2)

Subsidy through reinsurance.—
The reinsurance payment amount (as defined in subsection (b)).
This section constitutes budget authority in advance of appropriations Acts and represents the obligation of the Secretary to provide for the payment of amounts provided under this section.
(b)

Reinsurance Payment Amount.—
(1)

In general.—
The reinsurance payment amount under this subsection for a part D eligible individual enrolled in a prescription drug plan or MA–PD plan for a coverage year is an amount equal to—
(A)
for a year preceding 2025, 80 percent of the allowable reinsurance costs (as specified in paragraph (2)) attributable to that portion of gross covered prescription drug costs as specified in paragraph (3) incurred in the coverage year after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B); and
(B)
for 2025 and each subsequent year, the sum of—
(i)
with respect to applicable drugs (as defined in section 1860D–14C(g)(2)), an amount equal to 20 percent of such allowable reinsurance costs attributable to that portion of gross covered prescription drug costs as specified in paragraph (3) incurred in the coverage year after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B); and
(ii)
with respect to covered part D drugs that are not applicable drugs (as so defined), an amount equal to 40 percent of such allowable reinsurance costs attributable to that portion of gross covered prescription drug costs as specified in paragraph (3) incurred in the coverage year after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B).
(2)

Allowable reinsurance costs.—
(A)

In general.—
Subject to subparagraph (B), for purposes of this section, the term “allowable reinsurance costs” means, with respect to gross covered prescription drug costs under a prescription drug plan offered by a PDP sponsor or an MA–PD plan offered by an MA organization, the part of such costs that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the sponsor or organization or by (or on behalf of) an enrollee under the plan, but in no case more than the part of such costs that would have been paid under the plan if the prescription drug coverage under the plan were basic prescription drug coverage, or, in the case of a plan providing supplemental prescription drug coverage, if such coverage were standard prescription drug coverage.
(B)

Inclusion of manufacturer discounts on applicable drugs.—
For purposes of applying subparagraph (A), the term ‘allowable reinsurance costs’ shall include the portion of the negotiated price (as defined in section 1860D–14C(g)(6)) of an applicable drug (as defined in section 1860D–14C(g)(2)) that was paid by a manufacturer under the manufacturer discount program under section 1860D–14C.
(3)

Gross covered prescription drug costs.—
Subject to paragraph (2)(B), for purposes of this section, the term “gross covered prescription drug costs” means, with respect to a part D eligible individual enrolled in a prescription drug plan or MA–PD plan during a coverage year, the costs incurred under the plan, not including administrative costs, but including costs directly related to the dispensing of covered part D drugs during the year and costs relating to the deductible. Such costs shall be determined whether they are paid by the individual or under the plan (or, with respect to 2025 and subsequent years, in the case of an applicable drug, as defined in section 1860D–14C(g)(2), by a manufacturer), regardless of whether the coverage under the plan exceeds basic prescription drug coverage.
(4)

Coverage year defined.—
For purposes of this section, the term “coverage year” means a calendar year in which covered part D drugs are dispensed if the claim for such drugs (and payment on such claim) is made not later than such period after the end of such year as the Secretary specifies.
(c)

Adjustments Relating to Bids.—
(1)

Health status risk adjustment.—
(A)

Establishment of risk adjustors.—
The Secretary shall establish an appropriate methodology for adjusting the standardized bid amount under subsection (a)(1)(A) to take into account variation in costs for basic prescription drug coverage among prescription drug plans and MA–PD plans based on the differences in actuarial risk of different enrollees being served. Any such risk adjustment shall be designed in a manner so as not to result in a change in the aggregate amounts payable to such plans under subsection (a)(1) and through that portion of the monthly beneficiary prescription drug premiums described in subsection (a)(1)(B) and MA monthly prescription drug beneficiary premiums.
(B)

Considerations.—
In establishing the methodology under subparagraph (A), the Secretary may take into account the similar methodologies used under section 1853(a)(3) to adjust payments to MA organizations for benefits under the original medicare fee-for-service program option.
(C)

Data collection.—
In order to carry out this paragraph, the Secretary shall require—
(i)
PDP sponsors to submit data regarding drug claims that can be linked at the individual level to part A and part B data and such other information as the Secretary determines necessary; and
(ii)
MA organizations that offer MA–PD plans to submit data regarding drug claims that can be linked at the individual level to other data that such organizations are required to submit to the Secretary and such other information as the Secretary determines necessary.
(D)

Publication.—
At the time of publication of risk adjustment factors under section 1853(b)(1)(B)(i)(II), the Secretary shall publish the risk adjusters established under this paragraph for the succeeding year.
(2)

Geographic adjustment.—
(A)

In general.—
Subject to subparagraph (B), for purposes of section 1860D–13(a)(1)(B)(iii), the Secretary shall establish an appropriate methodology for adjusting the national average monthly bid amount (computed under section 1860D–13(a)(4)) to take into account differences in prices for covered part D drugs among PDP regions.
(B)

De minimis rule.—
If the Secretary determines that the price variations described in subparagraph (A) among PDP regions are de minimis, the Secretary shall not provide for adjustment under this paragraph.
(C)

Budget neutral adjustment.—
Any adjustment under this paragraph shall be applied in a manner so as to not result in a change in the aggregate payments made under this part that would have been made if the Secretary had not applied such adjustment.
(d)

Payment Methods.—
(1)

In general.—
Payments under this section shall be based on such a method as the Secretary determines. The Secretary may establish a payment method by which interim payments of amounts under this section are made during a year based on the Secretary's best estimate of amounts that will be payable after obtaining all of the information.
(2)

Requirement for provision of information.—
(A)

Requirement.—
Payments under this section to a PDP sponsor or MA organization are conditioned upon the furnishing to the Secretary, in a form and manner specified by the Secretary, of such information as may be required to carry out this section.
(B)

Restriction on use of information.—
Information disclosed or obtained pursuant to subparagraph (A) may be used by officers, employees, and contractors of the Department of Health and Human Services only for the purposes of, and to the extent necessary in, carrying out this section.
(3)

Source of payments.—
Payments under this section shall be made from the Medicare Prescription Drug Account.
(4)

Application of enrollee adjustment.—
The provisions of section 1853(a)(2) shall apply to payments to PDP sponsors under this section in the same manner as they apply to payments to MA organizations under section 1853(a).
(e)

Portion of Total Payments to a Sponsor or Organization Subject to Risk (Application of Risk Corridors).—
(1)

Computation of adjusted allowable risk corridor costs.—
(A)

In general.—
For purposes of this subsection, the term “adjusted allowable risk corridor costs” means, for a plan for a coverage year (as defined in subsection (b)(4))—
(i)
the allowable risk corridor costs (as defined in subparagraph (B)) for the plan for the year, reduced by
(ii)
the sum of (I) the total reinsurance payments made under subsection (b) to the sponsor of the plan for the year, and (II) the total subsidy payments made under section 1860D–14 to the sponsor of the plan for the year.
(B)

Allowable risk corridor costs.—
For purposes of this subsection, the term “allowable risk corridor costs” means, with respect to a prescription drug plan offered by a PDP sponsor or an MA–PD plan offered by an MA organization, the part of costs (not including administrative costs, but including costs directly related to the dispensing of covered part D drugs during the year) incurred by the sponsor or organization under the plan that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the sponsor or organization under the plan, but in no case more than the part of such costs that would have been paid under the plan if the prescription drug coverage under the plan were basic prescription drug coverage, or, in the case of a plan providing supplemental prescription drug coverage, if such coverage were basic prescription drug coverage taking into account the adjustment under section 1860D–11(c)(2). In computing allowable costs under this paragraph, the Secretary shall compute such costs based upon imposition under paragraphs (1)(D) and (2)(E) of section 1860D–14(a) of the maximum amount of copayments permitted under such paragraphs.
(2)

Adjustment of payment.—
(A)

No adjustment if adjusted allowable risk corridor costs within risk corridor.—
If the adjusted allowable risk corridor costs (as defined in paragraph (1)) for the plan for the year are at least equal to the first threshold lower limit of the risk corridor (specified in paragraph (3)(A)(i)), but not greater than the first threshold upper limit of the risk corridor (specified in paragraph (3)(A)(iii)) for the plan for the year, then no payment adjustment shall be made under this subsection.
(B)

Increase in payment if adjusted allowable risk corridor costs above upper limit of risk corridor.—
(i)

Costs between first and second threshold upper limits.—
If the adjusted allowable risk corridor costs for the plan for the year are greater than the first threshold upper limit, but not greater than the second threshold upper limit, of the risk corridor for the plan for the year, the Secretary shall increase the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount equal to 50 percent (or, for 2006 and 2007, 75 percent or 90 percent if the conditions described in clause (iii) are met for the year) of the difference between such adjusted allowable risk corridor costs and the first threshold upper limit of the risk corridor.
(ii)

Costs above second threshold upper limits.—
If the adjusted allowable risk corridor costs for the plan for the year are greater than the second threshold upper limit of the risk corridor for the plan for the year, the Secretary shall increase the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount equal to the sum of—
(I)
50 percent (or, for 2006 and 2007, 75 percent or 90 percent if the conditions described in clause (iii) are met for the year) of the difference between the second threshold upper limit and the first threshold upper limit; and
(II)
80 percent of the difference between such adjusted allowable risk corridor costs and the second threshold upper limit of the risk corridor.
(iii)

Conditions for application of higher percentage for 2006 and 2007.—
The conditions described in this clause are met for 2006 or 2007 if the Secretary determines with respect to such year that—
(I)
at least 60 percent of prescription drug plans and MA–PD plans to which this subsection applies have adjusted allowable risk corridor costs for the plan for the year that are more than the first threshold upper limit of the risk corridor for the plan for the year; and
(II)
such plans represent at least 60 percent of part D eligible individuals enrolled in any prescription drug plan or MA–PD plan.
(C)

Reduction in payment if adjusted allowable risk corridor costs below lower limit of risk corridor.—
(i)

Costs between first and second threshold lower limits.—
If the adjusted allowable risk corridor costs for the plan for the year are less than the first threshold lower limit, but not less than the second threshold lower limit, of the risk corridor for the plan for the year, the Secretary shall reduce the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount (or otherwise recover from the sponsor or organization an amount) equal to 50 percent (or, for 2006 and 2007, 75 percent) of the difference between the first threshold lower limit of the risk corridor and such adjusted allowable risk corridor costs.
(ii)

Costs below second threshold lower limit.—
If the adjusted allowable risk corridor costs for the plan for the year are less the second threshold lower limit of the risk corridor for the plan for the year, the Secretary shall reduce the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount (or otherwise recover from the sponsor or organization an amount) equal to the sum of—
(I)
50 percent (or, for 2006 and 2007, 75 percent) of the difference between the first threshold lower limit and the second threshold lower limit; and
(II)
80 percent of the difference between the second threshold upper limit of the risk corridor and such adjusted allowable risk corridor costs.
(3)

Establishment of risk corridors.—
(A)

In general.—
For each plan year the Secretary shall establish a risk corridor for each prescription drug plan and each MA–PD plan. The risk corridor for a plan for a year shall be equal to a range as follows:
(i)

First threshold lower limit.—
The first threshold lower limit of such corridor shall be equal to—
(I)
the target amount described in subparagraph (B) for the plan; minus
(II)
an amount equal to the first threshold risk percentage for the plan (as determined under subparagraph (C)(i)) of such target amount.
(ii)

Second threshold lower limit.—
The second threshold lower limit of such corridor shall be equal to—
(I)
the target amount described in subparagraph (B) for the plan; minus
(II)
an amount equal to the second threshold risk percentage for the plan (as determined under subparagraph (C)(ii)) of such target amount.
(iii)

First threshold upper limit.—
The first threshold upper limit of such corridor shall be equal to the sum of—
(I)
such target amount; and
(II)
the amount described in clause (i)(II).
(iv)

Second threshold upper limit.—
The second threshold upper limit of such corridor shall be equal to the sum of—
(I)
such target amount; and
(II)
the amount described in clause (ii)(II).
(B)

Target amount described.—
The target amount described in this paragraph is, with respect to a prescription drug plan or an MA–PD plan in a year, the total amount of payments paid to the PDP sponsor or MA–PD organization for the plan for the year, taking into account amounts paid by the Secretary and enrollees, based upon the standardized bid amount (as defined in section 1860D–13(a)(5) and as risk adjusted under subsection (c)(1)), reduced by the total amount of administrative expenses for the year assumed in such standardized bid.
(C)

First and second threshold risk percentage defined.—
(i)

First threshold risk percentage.—
Subject to clause (iii), for purposes of this section, the first threshold risk percentage is—
(I)
for 2006 and 2007, and 2.5 percent;
(II)
for 2008 through 2011, 5 percent; and
(III)
for 2012 and subsequent years, a percentage established by the Secretary, but in no case less than 5 percent.
(ii)

Second threshold risk percentage.—
Subject to clause (iii), for purposes of this section, the second threshold risk percentage is—
(I)
for 2006 and 2007, 5 percent;
(II)
for 2008 through 2011, 10 percent; and
(III)
for 2012 and subsequent years, a percentage established by the Secretary that is greater than the percent established for the year under clause (i)(III), but in no case less than 10 percent.
(iii)

Reduction of risk percentage to ensure 2 plans in an area.—
Pursuant to section 1860D–11(b)(2)(E)(ii), a PDP sponsor may submit a bid that requests a decrease in the applicable first or second threshold risk percentages or an increase in the percents applied under paragraph (2).
(4)

Plans at risk for entire amount of supplemental prescription drug coverage.—
A PDP sponsor and MA organization that offers a plan that provides supplemental prescription drug benefits shall be at full financial risk for the provision of such supplemental benefits.
(5)

No effect on monthly premium.—
No adjustment in payments made by reason of this subsection shall affect the monthly beneficiary premium or the MA monthly prescription drug beneficiary premium.
(f)

Disclosure of Information.—
(1)

In general.—
Each contract under this part and under part C shall provide that—
(A)
the PDP sponsor offering a prescription drug plan or an MA organization offering an MA–PD plan shall provide the Secretary with such information as the Secretary determines is necessary to carry out this section; and
(B)
the Secretary shall have the right in accordance with section 1857(d)(2)(B) (as applied under section 1860D–12(b)(3)(C)) to inspect and audit any books and records of a PDP sponsor or MA organization that pertain to the information regarding costs provided to the Secretary under subparagraph (A).
(2)

Restriction on use of information.—
Information disclosed or obtained pursuant to the provisions of this section may be used—
(A)
by officers, employees, and contractors of the Department of Health and Human Services for the purposes of, and to the extent necessary in—
(i)
carrying out this section or part E of title XI; and
(ii)
conducting oversight, evaluation, and enforcement under this title;
(B)
by the Attorney General and the Comptroller General of the United States for the purposes of, and to the extent necessary in, carrying out health oversight activities;
(C)
by the Executive Director of the Medicare Payment Advisory Commission for purposes of monitoring, making recommendations for, and analysis of the program under this title and by the Executive Director of the Medicaid and CHIP Payment and Access Commission for purposes of monitoring, making recommendations for, and analysis of the Medicaid program established under title XIX and the Children’s Health Insurance Program under title XXI; and
(D)
by the Director of the Congressional Budget Office for the purposes of analysis of programs authorized under the Social Security Act, as applicable, and the fulfilment of such Director’s duties under the Congressional Budget and Impoundment Control Act of 1974.
(3)

Additional restrictions on disclosure of information.—
(A)

In general.—
The Executive Directors described in paragraph (2)(C) shall not disclose any of the following information disclosed to such Executive Directors or obtained by such Executive Directors pursuant to such paragraph, with respect to a prescription drug plan offered by a PDP sponsor or an MA–PD plan offered by an MA organization:
(i)
The specific amounts or the identity of the source of any rebates, discounts, price concessions, or other forms of direct or indirect remuneration under such prescription drug plan or such MA–PD plan.
(ii)
Information submitted with the bid submitted under section 1860D–11(b) by such PDP sponsor or under section 1854(a) by such MA organization.
(iii)
In the case of such information from prescription drug event records, information in a form that would not be permitted under section 423.505(m) of title 42, Code of Federal Regulations, or any successor regulation, if released by the Centers for Medicare & Medicaid Services.
(B)

Clarification.—
The restrictions on disclosures described in subparagraph (A) shall also apply to disclosures to individual Commissioners of the Medicare Payment Advisory Commission or of the Medicaid and CHIP Payment and Access Commission.
(g)

Payment for Fallback Prescription Drug Plans.—
In lieu of the amounts otherwise payable under this section to a PDP sponsor offering a fallback prescription drug plan (as defined in section 1860D–3(c)(4)), the amount payable shall be the amounts determined under the contract for such plan pursuant to section 1860D–11(g)(5).
(h)

Temporary Retrospective Subsidy for Reduction in Cost-sharing and Deductible for Adult Vaccines Recommended by the Advisory Committee on Immunization Practices and Insulin During 2023.—
(1)

In general.—
In addition to amounts otherwise payable under this section to a PDP sponsor of a prescription drug plan or an MA organization offering an MA–PD plan, for plan year 2023, the Secretary shall provide the PDP sponsor or MA organization offering the plan subsidies in an amount equal to the aggregate reduction in cost-sharing and deductible by reason of the application of paragraph (8) or (9) of section 1860D–2(b) for individuals under the plan during the year.
(2)

Timing.—
The Secretary shall provide a subsidy under paragraph (1), as applicable, not later than 18 months following the end of the applicable plan year.

medicare prescription drug account in the federal supplementary medical insurance trust fund
Sec. 1860D–16.
[42 U.S.C. 1395w–116]
(a)

Establishment and Operation of Account.—
(1)

Establishment.—
There is created within the Federal Supplementary Medical Insurance Trust Fund established by section 1841 an account to be known as the “Medicare Prescription Drug Account” (in this section referred to as the “Account”).
(2)

Funding.—
The Account shall consist of such gifts and bequests as may be made as provided in section 201(i)(1), accrued interest on balances in the Account, and such amounts as may be deposited in, or appropriated to, such Account as provided in this part.
(3)

Separate from rest of trust fund.—
Funds provided under this part to the Account shall be kept separate from all other funds within the Federal Supplementary Medical Insurance Trust Fund, but shall be invested, and such investments redeemed, in the same manner as all other funds and investments within such Trust Fund.
(b)

Payments From Account.—
(1)

In general.—
The Managing Trustee shall pay from time to time from the Account such amounts as the Secretary certifies are necessary to make payments to operate the program under this part, including—
(A)
payments under section 1860D–14 (relating to low-income subsidy payments);
(B)
payments under section 1860D–15 (relating to subsidy payments and payments for fallback plans);
(C)
payments to sponsors of qualified retiree prescription drug plans under section 1860D–22(a);
(D)
payments with respect to administrative expenses under this part in accordance with section 201(g); and
(E)
payments under section 1860D–14D (relating to selected drug subsidy payments).
(2)

Transfers to medicaid account for increased administrative costs.—
The Managing Trustee shall transfer from time to time from the Account to the Grants to States for Medicaid account amounts the Secretary certifies are attributable to increases in payment resulting from the application of section 1935(b).
(3)

Payments of premiums withheld.—
The Managing Trustee shall make payment to the PDP sponsor or MA organization involved of the premiums (and the portion of late enrollment penalties) that are collected in the manner described in section 1854(d)(2)(A) and that are payable under a prescription drug plan or MA–PD plan offered by such sponsor or organization.
(4)

Treatment in relation to part b premium.—
Amounts payable from the Account shall not be taken into account in computing actuarial rates or premium amounts under section 1839.
(c)

Deposits Into Account.—
(1)

Low-income transfer.—
Amounts paid under section 1935(c) (and any amounts collected or offset under paragraph (1)(C) of such section) are deposited into the Account.
(2)

Amounts withheld.—
Pursuant to sections 1860D–13(c) and 1854(d) (as applied under this part), amounts that are withheld (and allocated) to the Account are deposited into the Account.
(3)

Appropriations to cover government contributions.—
There are authorized to be appropriated from time to time, out of any moneys in the Treasury not otherwise appropriated, to the Account, an amount equivalent to the amount of payments made from the Account under subsection (b) plus such amounts as the Managing Trustee certifies is necessary to maintain an appropriate contingency margin, reduced by the amounts deposited under paragraph (1) or subsection (a)(2).
(4)

Initial funding and reserve.—
In order to assure prompt payment of benefits provided under this part and the administrative expenses thereunder during the early months of the program established by this part and to provide an initial contingency reserve, there are authorized to be appropriated to the Account, out of any moneys in the Treasury not otherwise appropriated, such amount as the Secretary certifies are required, but not to exceed 10 percent of the estimated total expenditures from such Account in 2006.
(5)

Transfer of any remaining balance from transitional assistance account.—
Any balance in the Transitional Assistance Account that is transferred under section 1860D–31(k)(5) shall be deposited into the Account.
Subpart 3—

Application to Medicare Advantage Program and Treatment of Employer-Sponsored Programs and Other Prescription Drug Plans

application to medicare advantage program and related managed care programs
Sec. 1860D–21.
[42 U.S.C. 1395w–131]
(a)

Special Rules Relating to Offering of Qualified Prescription Drug Coverage.—
(1)

In general.—
An MA organization on and after January 1, 2006—
(A)
may not offer an MA plan described in section 1851(a)(2)(A) in an area unless either that plan (or another MA plan offered by the organization in that same service area) includes required prescription drug coverage (as defined in paragraph (2)); and
(B)
may not offer prescription drug coverage (other than that required under parts A and B) to an enrollee—
(i)
under an MSA plan; or
(ii)
under another MA plan unless such drug coverage under such other plan provides qualified prescription drug coverage and unless the requirements of this section with respect to such coverage are met.
(2)

Qualifying coverage.—
For purposes of paragraph (1)(A), the term “required coverage” means with respect to an MA–PD plan—
(A)
basic prescription drug coverage; or
(B)
qualified prescription drug coverage that provides supplemental prescription drug coverage, so long as there is no MA monthly supplemental beneficiary premium applied under the plan (due to the application of a credit against such premium of a rebate under section 1854(b)(1)(C)).
(b)

Application of Default Enrollment Rules.—
(1)

Seamless continuation.—
In applying section 1851(c)(3)(A)(ii), an individual who is enrolled in a health benefits plan shall not be considered to have been deemed to make an election into an MA–PD plan unless such health benefits plan provides any prescription drug coverage.
(2)

MA continuation.—
In applying section 1851(c)(3)(B), an individual who is enrolled in an MA plan shall not be considered to have been deemed to make an election into an MA–PD plan unless—
(A)
for purposes of the election as of January 1, 2006, the MA plan provided as of December 31, 2005, any prescription drug coverage; or
(B)
for periods after January 1, 2006, such MA plan is an MA–PD plan.
(3)

Discontinuance of ma–pd election during first year of eligibility.—
In applying the second sentence of section 1851(e)(4) in the case of an individual who is electing to discontinue enrollment in an MA–PD plan, the individual shall be permitted to enroll in a prescription drug plan under part D at the time of the election of coverage under the original medicare fee-for-service program.
(4)

Rules regarding enrollees in ma plans not providing qualified prescription drug coverage.—
In the case of an individual who is enrolled in an MA plan (other than an MSA plan) that does not provide qualified prescription drug coverage, if the organization offering such coverage discontinues the offering with respect to the individual of all MA plans that do not provide such coverage—
(i)
the individual is deemed to have elected the original medicare fee-for-service program option, unless the individual affirmatively elects to enroll in an MA–PD plan; and
(ii)
in the case of such a deemed election, the disenrollment shall be treated as an involuntary termination of the MA plan described in subparagraph (B)(ii) of section 1882(s)(3) for purposes of applying such section.
The information disclosed under section 1852(c)(1) for individuals who are enrolled in such an MA plan shall include information regarding such rules.
(c)

Application of Part D Rules for Prescription Drug Coverage.—
With respect to the offering of qualified prescription drug coverage by an MA organization under this part on and after January 1, 2006—
(1)

In general.—
Except as otherwise provided, the provisions of this part shall apply under part C with respect to prescription drug coverage provided under MA–PD plans in lieu of the other provisions of part C that would apply to such coverage under such plans.
(2)

Waiver.—
The Secretary shall waive the provisions referred to in paragraph (1) to the extent the Secretary determines that such provisions duplicate, or are in conflict with, provisions otherwise applicable to the organization or plan under part C or as may be necessary in order to improve coordination of this part with the benefits under this part.
(3)

Treatment of ma owned and operated pharmacies.—
The Secretary may waive the requirement of section 1860D–4(b)(1)(C) in the case of an MA–PD plan that provides access (other than mail order) to qualified prescription drug coverage through pharmacies owned and operated by the MA organization, if the Secretary determines that the organization's pharmacy network is sufficient to provide comparable access for enrollees under the plan.
(d)

Special Rules for Private Fee-for-Service Plans That Offer Prescription Drug Coverage.—
With respect to an MA plan described in section 1851(a)(2)(C) that offers qualified prescription drug coverage, on and after January 1, 2006, the following rules apply:
(1)

Requirements regarding negotiated prices.—
Subsections (a)(1) and (d)(1) of section 1860D–2 and section 1860D–4(b)(2)(A) shall not be construed to require the plan to provide negotiated prices (described in subsection (d)(1)(B) of such section), but shall apply to the extent the plan does so.
(2)

Modification of pharmacy access standard and disclosure requirement.—
If the plan provides coverage for drugs purchased from all pharmacies, without charging additional cost-sharing, and without regard to whether they are participating pharmacies in a network or have entered into contracts or agreements with pharmacies to provide drugs to enrollees covered by the plan, subsections (b)(1)(C) and (k) of section 1860D–4 shall not apply to the plan.
(3)

Drug utilization management program and medication therapy management program not required.—
The requirements of subparagraphs (A) and (C) of section 1860D–4(c)(1) shall not apply to the plan.
(4)

Application of reinsurance.—
The Secretary shall determine the amount of reinsurance payments under section 1860D–15(b) using a methodology that—
(A)
bases such amount on the Secretary's estimate of the amount of such payments that would be payable if the plan were an MA–PD plan described in section 1851(a)(2)(A)(i) and the previous provisions of this subsection did not apply; and
(B)
takes into account the average reinsurance payments made under section 1860D–15(b) for populations of similar risk under MA–PD plans described in such section.
(5)

Exemption from risk corridor provisions.—
The provisions of section 1860D–15(e) shall not apply.
(6)

Exemption from negotiations.—
Subsections (d) and (e)(2)(C) of section 1860D–11 shall not apply and the provisions of section 1854(a)(5)(B) prohibiting the review, approval, or disapproval of amounts described in such section shall apply to the proposed bid and terms and conditions described in section 1860D–11(d).
(7)

Treatment of incurred costs without regard to formulary.—
The exclusion of costs incurred for covered part D drugs which are not included (or treated as being included) in a plan's formulary under section 1860D–2(b)(4)(C)(i) shall not apply insofar as the plan does not utilize a formulary.
(e)

Application to Reasonable Cost Reimbursement Contractors.—
(1)

In general.—
Subject to paragraphs (2) and (3) and rules established by the Secretary, in the case of an organization that is providing benefits under a reasonable cost reimbursement contract under section 1876(h) and that elects to provide qualified prescription drug coverage to a part D eligible individual who is enrolled under such a contract, the provisions of this part (and related provisions of part C) shall apply to the provision of such coverage to such enrollee in the same manner as such provisions apply to the provision of such coverage under an MA–PD local plan described in section 1851(a)(2)(A)(i) and coverage under such a contract that so provides qualified prescription drug coverage shall be deemed to be an MA–PD local plan.
(2)

Limitation on enrollment.—
In applying paragraph (1), the organization may not enroll part D eligible individuals who are not enrolled under the reasonable cost reimbursement contract involved.
(3)

Bids not included in determining national average monthly bid amount.—
The bid of an organization offering prescription drug coverage under this subsection shall not be taken into account in computing the national average monthly bid amount and low-income benchmark premium amount under this part.
(f)

Application to PACE.—
(1)

In general.—
Subject to paragraphs (2) and (3) and rules established by the Secretary, in the case of a PACE program under section 1894 that elects to provide qualified prescription drug coverage to a part D eligible individual who is enrolled under such program, the provisions of this part (and related provisions of part C) shall apply to the provision of such coverage to such enrollee in a manner that is similar to the manner in which such provisions apply to the provision of such coverage under an MA–PD local plan described in section 1851(a)(2)(A)(ii) and a PACE program that so provides such coverage may be deemed to be an MA–PD local plan.
(2)

Limitation on enrollment.—
In applying paragraph (1), the organization may not enroll part D eligible individuals who are not enrolled under the PACE program involved.
(3)

Bids not included in determining standardized bid amount.—
The bid of an organization offering prescription drug coverage under this subsection is not be taken into account in computing any average benchmark bid amount and low-income benchmark premium amount under this part.

special rules for employer-sponsored programs
Sec. 1860D–22.
[42 U.S.C. 1395w–132]
(a)

Subsidy Payment.—
(1)

In general.—
The Secretary shall provide in accordance with this subsection for payment to the sponsor of a qualified retiree prescription drug plan (as defined in paragraph (2)) of a special subsidy payment equal to the amount specified in paragraph (3) for each qualified covered retiree under the plan (as defined in paragraph (4)). This subsection constitutes budget authority in advance of appropriations Acts and represents the obligation of the Secretary to provide for the payment of amounts provided under this section.
(2)

Qualified retiree prescription drug plan defined.—
For purposes of this subsection, the term “qualified retiree prescription drug plan” means employment-based retiree health coverage (as defined in subsection (c)(1)) if, with respect to a part D eligible individual who is a participant or beneficiary under such coverage, the following requirements are met:
(A)

Attestation of actuarial equivalence to standard coverage.—
The sponsor of the plan provides the Secretary, annually or at such other time as the Secretary may require, with an attestation that the actuarial value of prescription drug coverage under the plan (as determined using the processes and methods described in section 1860D–11(c)) is at least equal to the actuarial value of standard prescription drug coverage, not taking into account the value of—
(i)
for years prior to 2025, any discount or coverage provided during the gap in prescription drug coverage that occurs between the initial coverage limit under section 1860D–2(b)(3) during the year and the out-of-pocket threshold specified in section 1860D–2(b)(4)(B); and
(ii)
for 2025 and each subsequent year, any discount provided pursuant to section 1860D–14C.
(B)

Audits.—
The sponsor of the plan, or an administrator of the plan designated by the sponsor, shall maintain (and afford the Secretary access to) such records as the Secretary may require for purposes of audits and other oversight activities necessary to ensure the adequacy of prescription drug coverage and the accuracy of payments made under this section. The provisions of section 1860D–2(d)(3) shall apply to such information under this section (including such actuarial value and attestation) in a manner similar to the manner in which they apply to financial records of PDP sponsors and MA organizations.
(C)

Provision of disclosure regarding prescription drug coverage.—
The sponsor of the plan shall provide for disclosure of information regarding prescription drug coverage in accordance with section 1860D–13(b)(6)(B).
(3)

Employer and union special subsidy amounts.—
(A)

In general.—
For purposes of this subsection, the special subsidy payment amount under this paragraph for a qualifying covered retiree for a coverage year enrolled with the sponsor of a qualified retiree prescription drug plan is, for the portion of the retiree's gross covered retiree plan-related prescription drug costs (as defined in subparagraph (C)(ii)) for such year that exceeds the cost threshold amount specified in subparagraph (B) and does not exceed the cost limit under such subparagraph, an amount equal to 28 percent of the allowable retiree costs (as defined in subparagraph (C)(i)) attributable to such gross covered prescription drug costs.
(B)

Cost threshold and cost limit applicable.—
(i)

In general.—
Subject to clause (ii)—
(I)
the cost threshold under this subparagraph is equal to $250 for plan years that end in 2006; and
(II)
the cost limit under this subparagraph is equal to $5,000 for plan years that end in 2006.
(ii)

Indexing.—
The cost threshold and cost limit amounts specified in subclauses (I) and (II) of clause (i) for a plan year that ends after 2006 shall be adjusted in the same manner as the annual deductible and the annual out-of-pocket threshold, respectively, are annually adjusted under paragraphs (1) and (4)(B) of section 1860D–2(b).
(C)

Definitions.—
For purposes of this paragraph:
(i)

Allowable retiree costs.—
The term “allowable retiree costs” means, with respect to gross covered prescription drug costs under a qualified retiree prescription drug plan by a plan sponsor, the part of such costs that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the sponsor or by or on behalf of a qualifying covered retiree under the plan.
(ii)

Gross covered retiree plan-related prescription drug costs.—
For purposes of this section, the term “gross covered retiree plan-related prescription drug costs” means, with respect to a qualifying covered retiree enrolled in a qualified retiree prescription drug plan during a coverage year, the costs incurred under the plan, not including administrative costs, but including costs directly related to the dispensing of covered part D drugs during the year. Such costs shall be determined whether they are paid by the retiree or under the plan.
(iii)

Coverage year.—
The term “coverage year” has the meaning given such term in section 1860D–15(b)(4).
(4)

Qualifying covered retiree defined.—
For purposes of this subsection, the term “qualifying covered retiree” means a part D eligible individual who is not enrolled in a prescription drug plan or an MA–PD plan but is covered under a qualified retiree prescription drug plan.
(5)

Payment methods, including provision of necessary information.—
The provisions of section 1860D–15(d) (including paragraph (2), relating to requirement for provision of information) shall apply to payments under this subsection in a manner similar to the manner in which they apply to payment under section 1860D–15(b).
(6)

Construction.—
Nothing in this subsection shall be construed as—
(A)
precluding a part D eligible individual who is covered under employment-based retiree health coverage from enrolling in a prescription drug plan or in an MA–PD plan;
(B)
precluding such employment-based retiree health coverage or an employer or other person from paying all or any portion of any premium required for coverage under a prescription drug plan or MA–PD plan on behalf of such an individual;
(C)
preventing such employment-based retiree health coverage from providing coverage—
(i)
that is better than standard prescription drug coverage to retirees who are covered under a qualified retiree prescription drug plan; or
(ii)
that is supplemental to the benefits provided under a prescription drug plan or an MA–PD plan, including benefits to retirees who are not covered under a qualified retiree prescription drug plan but who are enrolled in such a prescription drug plan or MA–PD plan; or
(D)
preventing employers to provide for flexibility in benefit design and pharmacy access provisions, without regard to the requirements for basic prescription drug coverage, so long as the actuarial equivalence requirement of paragraph (2)(A) is met.
(b)

Application of MA Waiver Authority.—
The provisions of section 1857(i) shall apply with respect to prescription drug plans in relation to employment-based retiree health coverage in a manner similar to the manner in which they apply to an MA plan in relation to employers, including authorizing the establishment of separate premium amounts for enrollees in a prescription drug plan by reason of such coverage and limitations on enrollment to part D eligible individuals enrolled under such coverage, and shall be applied in a manner to facilitate the offering of prescription drug benefits under a Program plan under section 8903c of title 5, United States Code, as required under subsection (h)(2) of such section, through employment-based retiree health coverage through—
(1)
a prescription drug plan; or
(2)
contracts between such a Program plan and the PDP sponsor of such a prescription drug plan..67
^{67}
Two periods at the end of paragraph (2) are so in law. See amendment made by section 101(b)(4) of Public Law 117–108.
(c)

Definitions.—
For purposes of this section:
(1)

Employment-based retiree health coverage.—
The term “employment-based retiree health coverage” means health insurance or other coverage of health care costs (whether provided by voluntary insurance coverage or pursuant to statutory or contractual obligation) for part D eligible individuals (or for such individuals and their spouses and dependents) under a group health plan based on their status as retired participants in such plan.
(2)

Sponsor.—
The term “sponsor” means a plan sponsor, as defined in section 3(16)(B) of the Employee Retirement Income Security Act of 1974, in relation to a group health plan, except that, in the case of a plan maintained jointly by one employer and an employee organization and with respect to which the employer is the primary source of financing, such term means such employer.
(3)

Group health plan.—
The term “group health plan” includes such a plan as defined in section 607(1) of the Employee Retirement Income Security Act of 1974 and also includes the following:
(A)

Federal and state governmental plans.—
Such a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing, including a health benefits plan offered under chapter 89 of title 5, United States Code.
(B)

Collectively bargained plans.—
Such a plan established or maintained under or pursuant to one or more collective bargaining agreements.
(C)

Church plans.—
Such a plan established and maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches which is exempt from tax under section 501 of the Internal Revenue Code of 1986.

state pharmaceutical assistance programs
Sec. 1860D–23.
[42 U.S.C. 1395w–133]
(a)

Requirements for Benefit Coordination.—
(1)

In general.—
Before July 1, 2005, the Secretary shall establish consistent with this section requirements for prescription drug plans to ensure the effective coordination between a part D plan (as defined in paragraph (5)) and a State Pharmaceutical Assistance Program (as defined in subsection (b)) with respect to—
(A)
payment of premiums and coverage; and
(B)
payment for supplemental prescription drug benefits,
for part D eligible individuals enrolled under both types of plans.
(2)

Coordination elements.—
The requirements under paragraph (1) shall include requirements relating to coordination of each of the following:
(A)
Enrollment file sharing.
(B)
The processing of claims, including electronic processing.
(C)
Claims payment.
(D)
Claims reconciliation reports.
(E)
Application of the protection against high out-of-pocket expenditures under section 1860D–2(b)(4).
(F)
Other administrative processes specified by the Secretary.
Such requirements shall be consistent with applicable law to safeguard the privacy of any individually identifiable beneficiary information.
(3)

Use of lump sum per capita method.—
Such requirements shall include a method for the application by a part D plan of specified funding amounts from a State Pharmaceutical Assistance Program for enrolled individuals for supplemental prescription drug benefits.
(4)

Consultation.—
In establishing requirements under this subsection, the Secretary shall consult with State Pharmaceutical Assistance Programs, MA organizations, States, pharmaceutical benefit managers, employers, representatives of part D eligible individuals, the data processing experts, pharmacists, pharmaceutical manufacturers, and other experts.
(5)

Part d plan defined.—
For purposes of this section and section 1860D–24, the term “part D plan” means a prescription drug plan and an MA–PD plan.
(b)

State Pharmaceutical Assistance Program.—
For purposes of this part, the term “State Pharmaceutical Assistance Program” means a State program—
(1)
which provides financial assistance for the purchase or provision of supplemental prescription drug coverage or benefits on behalf of part D eligible individuals;
(2)
which, in determining eligibility and the amount of assistance to part D eligible individuals under the Program, provides assistance to such individuals in all part D plans and does not discriminate based upon the part D plan in which the individual is enrolled; and
(3)
which satisfies the requirements of subsections (a) and (c).
(c)

Relation to Other Provisions.—
(1)

Medicare as primary payor.—
The requirements of this section shall not change or affect the primary payor status of a part D plan.
(2)

Use of a single card.—
A card that is issued under section 1860D–4(b)(2)(A) for use under a part D plan may also be used in connection with coverage of benefits provided under a State Pharmaceutical Assistance Program and, in such case, may contain an emblem or symbol indicating such connection.
(3)

Other provisions.—
The provisions of section 1860D–24(c) shall apply to the requirements under this section.
(4)

Special treatment under out-of-pocket rule.—
In applying section 1860D–2(b)(4)(C)(ii), expenses incurred under a State Pharmaceutical Assistance Program may be counted toward the annual out-of-pocket threshold.
(5)

Construction.—
Nothing in this section shall be construed as requiring a State Pharmaceutical Assistance Program to coordinate or provide financial assistance with respect to any part D plan.
(d)

Facilitation of Transition and Coordination With State Pharmaceutical Assistance Programs.—
(1)

Transitional grant program.—
The Secretary shall provide payments to State Pharmaceutical Assistance Programs with an application approved under this subsection.
(2)

Use of funds.—
Payments under this section may be used by a Program for any of the following:
(A)
Educating part D eligible individuals enrolled in the Program about the prescription drug coverage available through part D plans under this part.
(B)
Providing technical assistance, phone support, and counseling for such enrollees to facilitate selection and enrollment in such plans.
(C)
Other activities designed to promote the effective coordination of enrollment, coverage, and payment between such Program and such plans.
(3)

Allocation of funds.—
Of the amount appropriated to carry out this subsection for a fiscal year, the Secretary shall allocate payments among Programs that have applications approved under paragraph (4) for such fiscal year in proportion to the number of enrollees enrolled in each such Program as of October 1, 2003.
(4)

Application.—
No payments may be made under this subsection except pursuant to an application that is submitted and approved in a time, manner, and form specified by the Secretary.
(5)

Funding.—
Out of any funds in the Treasury not otherwise appropriated, there are appropriated for each of fiscal years 2005 and 2006, $62,500,000 to carry out this subsection.

coordination requirements for plans providing prescription drug coverage
Sec. 1860D–24.
[42 U.S.C. 1395w–134]
(a)

Application of Benefit Coordination Requirements to Additional Plans.—
(1)

In general.—
The Secretary shall apply the coordination requirements established under section 1860D–23(a) to Rx plans described in subsection (b) in the same manner as such requirements apply to a State Pharmaceutical Assistance Program.
(2)

Application to treatment of certain out-of-pocket expenditures.—
To the extent specified by the Secretary, the requirements referred to in paragraph (1) shall apply to procedures established under section 1860D–2(b)(4)(D).
(3)

User fees.—
(A)

In general.—
The Secretary may impose user fees for the transmittal of information necessary for benefit coordination under section 1860D–2(b)(4)(D) in a manner similar to the manner in which user fees are imposed under section 1842(h)(3)(B), except that the Secretary may retain a portion of such fees to defray the Secretary's costs in carrying out procedures under section 1860D–2(b)(4)(D).
(B)

Application.—
A user fee may not be imposed under subparagraph (A) with respect to a State Pharmaceutical Assistance Program.
(b)

Rx Plan.—
An Rx plan described in this subsection is any of the following:
(1)

Medicaid programs.—
A State plan under title XIX, including such a plan operating under a waiver under section 1115, if it meets the requirements of section 1860D–23(b)(2).
(2)

Group health plans.—
An employer group health plan.
(3)

FEHBP.—
The Federal employees health benefits plan under chapter 89 of title 5, United States Code.
(4)

Military coverage (including tricare).—
Coverage under chapter 55 of title 10, United States Code.
(5)

Other prescription drug coverage.—
Such other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of part D eligible individuals as the Secretary may specify.
(c)

Relation to Other Provisions.—
(1)

Use of cost management tools.—
The requirements of this section shall not impair or prevent a PDP sponsor or MA organization from applying cost management tools (including differential payments) under all methods of operation.
(2)

No affect on treatment of certain out-of-pocket expenditures.—
The requirements of this section shall not affect the application of the procedures established under section 1860D–2(b)(4)(D).
Subpart 4—

Medicare Prescription Drug Discount Card and Transitional Assistance Program

medicare prescription drug discount card and transitional assistance program
Sec. 1860D–31.
[42 U.S.C. 1395w–141]
(a)

Establishment of Program.—
(1)

In general.—
The Secretary shall establish a program under this section—
(A)
to endorse prescription drug discount card programs that meet the requirements of this section in order to provide access to prescription drug discounts through prescription drug card sponsors for discount card eligible individuals throughout the United States; and
(B)
to provide for transitional assistance for transitional assistance eligible individuals enrolled in such endorsed programs.
(2)

Period of operation.—
(A)

Implementation deadline.—
The Secretary shall implement the program under this section so that discount cards and transitional assistance are first available by not later than 6 months after the date of the enactment of this section.
(B)

Expediting implementation.—
The Secretary shall promulgate regulations to carry out the program under this section which may be effective and final immediately on an interim basis as of the date of publication of the interim final regulation. If the Secretary provides for an interim final regulation, the Secretary shall provide for a period of public comments on such regulation after the date of publication. The Secretary may change or revise such regulation after completion of the period of public comment.
(C)

Termination and transition.—
(i)

In general.—
Subject to clause (ii)—
(I)
the program under this section shall not apply to covered discount card drugs dispensed after December 31, 2005; and
(II)
transitional assistance shall be available after such date to the extent the assistance relates to drugs dispensed on or before such date.
(ii)

Transition.—
In the case of an individual who is enrolled in an endorsed discount card program as of December 31, 2005, during the individual's transition period (if any) under clause (iii), in accordance with transition rules specified by the Secretary—
(I)
such endorsed program may continue to apply to covered discount card drugs dispensed to the individual under the program during such transition period;
(II)
no annual enrollment fee shall be applicable during the transition period;
(III)
during such period the individual may not change the endorsed program plan in which the individual is enrolled; and
(IV)
the balance of any transitional assistance remaining on January 1, 2006, shall remain available for drugs dispensed during the individual's transition period.
(iii)

Transition period.—
The transition period under this clause for an individual is the period beginning on January 1, 2006, and ending in the case of an individual who—
(I)
is enrolled in a prescription drug plan or an MA–PD plan before the last date of the initial enrollment period under section 1860D–1(b)(2)(A), on the effective date of the individual's coverage under such part; or
(II)
is not so enrolled, on the last day of such initial period.
(3)

Voluntary nature of program.—
Nothing in this section shall be construed as requiring a discount card eligible individual to enroll in an endorsed discount card program under this section.
(4)

Glossary and definitions of terms.—
For purposes of this section:
(A)

Covered discount card drug.—
The term “covered discount card drug” has the meaning given the term “covered part D drug” in section 1860D–2(e).
(B)

Discount card eligible individual.—
The term “discount card eligible individual” is defined in subsection (b)(1)(A).
(C)

Endorsed discount card program; endorsed program.—
The terms “endorsed discount card program” and “endorsed program” mean a prescription drug discount card program that is endorsed (and for which the sponsor has a contract with the Secretary) under this section.
(D)

Negotiated price.—
Negotiated prices are described in subsection (e)(1)(A)(ii).
(E)

Prescription drug card sponsor; sponsor.—
The terms “prescription drug card sponsor” and “sponsor” are defined in subsection (h)(1)(A).
(F)

State.—
The term “State” has the meaning given such term for purposes of title XIX.
(G)

Transitional assistance eligible individual.—
The term “transitional assistance eligible individual” is defined in subsection (b)(2).
(b)

Eligibility for Discount Card and for Transitional Assistance.—
For purposes of this section:
(1)

Discount card eligible individual.—
(A)

In general.—
The term “discount card eligible individual” means an individual who—
(i)
is entitled to benefits, or enrolled, under part A or enrolled under part B; and
(ii)
subject to paragraph (4), is not an individual described in subparagraph (B).
(B)

Individual described.—
An individual described in this subparagraph is an individual described in subparagraph (A)(i) who is enrolled under title XIX (or under a waiver under section 1115 of the requirements of such title) and is entitled to any medical assistance for outpatient prescribed drugs described in section 1905(a)(12).
(2)

Transitional assistance eligible individual.—
(A)

In general.—
Subject to subparagraph (B), the term “transitional assistance eligible individual” means a discount card eligible individual who resides in one of the 50 States or the District of Columbia and whose income (as determined under subsection (f)(1)(B)) is not more than 135 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) applicable to the family size involved (as determined under subsection (f)(1)(B)).
(B)

Exclusion of individuals with certain prescription drug coverage.—
Such term does not include an individual who has coverage of, or assistance for, covered discount card drugs under any of the following:
(i)
A group health plan or health insurance coverage (as such terms are defined in section 2791 of the Public Health Service Act), other than coverage under a plan under part C and other than coverage consisting only of excepted benefits (as defined in such section).
(ii)
Chapter 55 of title 10, United States Code (relating to medical and dental care for members of the uniformed services).
(iii)
A plan under chapter 89 of title 5, United States Code (relating to the Federal employees' health benefits program).
(3)

Special transitional assistance eligible individual.—
The term “special transitional assistance eligible individual” means a transitional assistance eligible individual whose income (as determined under subsection (f)(1)(B)) is not more than 100 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) applicable to the family size involved (as determined under subsection (f)(1)(B)).
(4)

Treatment of medicaid medically needy.—
For purposes of this section, the Secretary shall provide for appropriate rules for the treatment of medically needy individuals described in section 1902(a)(10)(C) as discount card eligible individuals and as transitional assistance eligible individuals.
(c)

Enrollment and Enrollment Fees.—
(1)

Enrollment process.—
The Secretary shall establish a process through which a discount card eligible individual is enrolled and disenrolled in an endorsed discount card program under this section consistent with the following:
(A)

Continuous open enrollment.—
Subject to the succeeding provisions of this paragraph and subsection (h)(9), a discount card eligible individual who is not enrolled in an endorsed discount card program and is residing in a State may enroll in any such endorsed program—
(i)
that serves residents of the State; and
(ii)
at any time beginning on the initial enrollment date, specified by the Secretary, and before January 1, 2006.
(B)

Use of standard enrollment form.—
An enrollment in an endorsed program shall only be effected through completion of a standard enrollment form specified by the Secretary. Each sponsor of an endorsed program shall transmit to the Secretary (in a form and manner specified by the Secretary) information on individuals who complete such enrollment forms and, to the extent provided under subsection (f), information regarding certification as a transitional assistance eligible individual.
(C)

Enrollment only in one program.—
(i)

In general.—
Subject to clauses (ii) and (iii), a discount card eligible individual may be enrolled in only one endorsed discount card program under this section.
(ii)

Change in endorsed program permitted for 2005.—
The Secretary shall establish a process, similar to (and coordinated with) the process for annual, coordinated elections under section 1851(e)(3) during 2004, under which an individual enrolled in an endorsed discount card program may change the endorsed program in which the individual is enrolled for 2005.
(iii)

Additional exceptions.—
The Secretary shall permit an individual to change the endorsed discount card program in which the individual is enrolled in the case of an individual who changes residence to be outside the service area of such program and in such other exceptional cases as the Secretary may provide (taking into account the circumstances for special election periods under section 1851(e)(4)). Under the previous sentence, the Secretary may consider a change in residential setting (such as placement in a nursing facility) or enrollment in or disenrollment from a plan under part C through which the individual was enrolled in an endorsed program to be an exceptional circumstance.
(D)

Disenrollment.—
(i)

Voluntary.—
An individual may voluntarily disenroll from an endorsed discount card program at any time. In the case of such a voluntary disenrollment, the individual may not enroll in another endorsed program, except under such exceptional circumstances as the Secretary may recognize under subparagraph (C)(iii) or during the annual coordinated enrollment period provided under subparagraph (C)(ii).
(ii)

Involuntary.—
An individual who is enrolled in an endorsed discount card program and not a transitional assistance eligible individual may be disenrolled by the sponsor of the program if the individual fails to pay any annual enrollment fee required under the program.
(E)

Application to certain enrollees.—
In the case of a discount card eligible individual who is enrolled in a plan described in section 1851(a)(2)(A) or under a reasonable cost reimbursement contract under section 1876(h) that is offered by an organization that also is a prescription discount card sponsor that offers an endorsed discount card program under which the individual may be enrolled and that has made an election to apply the special rules under subsection (h)(9)(B) for such an endorsed program, the individual may only enroll in such an endorsed discount card program offered by that sponsor.
(2)

Enrollment fees.—
(A)

In general.—
Subject to the succeeding provisions of this paragraph, a prescription drug card sponsor may charge an annual enrollment fee for each discount card eligible individual enrolled in an endorsed discount card program offered by such sponsor. The annual enrollment fee for either 2004 or 2005 shall not be prorated for portions of a year. There shall be no annual enrollment fee for a year after 2005.
(B)

Amount.—
No annual enrollment fee charged under subparagraph (A) may exceed $30.
(C)

Uniform enrollment fee.—
A prescription drug card sponsor shall ensure that the annual enrollment fee (if any) for an endorsed discount card program is the same for all discount card eligible individuals enrolled in the program and residing in the State.
(D)

Collection.—
The annual enrollment fee (if any) charged for enrollment in an endorsed program shall be collected by the sponsor of the program.
(E)

Payment of fee for transitional assistance eligible individuals.—
Under subsection (g)(1)(A), the annual enrollment fee (if any) otherwise charged under this paragraph with respect to a transitional assistance eligible individual shall be paid by the Secretary on behalf of such individual.
(F)

Optional payment of fee by state.—
(i)

In general.—
The Secretary shall establish an arrangement under which a State may provide for payment of some or all of the enrollment fee for some or all enrollees who are not transitional assistance eligible individuals in the State, as specified by the State under the arrangement. Insofar as such a payment arrangement is made with respect to an enrollee, the amount of the enrollment fee shall be paid directly by the State to the sponsor.
(ii)

No federal matching available under medicaid or schip.—
Expenditures made by a State for enrollment fees described in clause (i) shall not be treated as State expenditures for purposes of Federal matching payments under title XIX or XXI.
(G)

Rules in case of changes in program enrollment during a year.—
The Secretary shall provide special rules in the case of payment of an annual enrollment fee for a discount card eligible individual who changes the endorsed program in which the individual is enrolled during a year.
(3)

Issuance of discount card.—
Each prescription drug card sponsor of an endorsed discount card program shall issue, in a standard format specified by the Secretary, to each discount card eligible individual enrolled in such program a card that establishes proof of enrollment and that can be used in a coordinated manner to identify the sponsor, program, and individual for purposes of the program under this section.
(4)

Period of access.—
In the case of a discount card eligible individual who enrolls in an endorsed program, access to negotiated prices and transitional assistance, if any, under such endorsed program shall take effect on such date as the Secretary shall specify.
(d)

Provision of Information on Enrollment and Program Features.—
(1)

Secretarial responsibilities.—
(A)

In general.—
The Secretary shall provide for activities under this subsection to broadly disseminate information to discount card eligible individuals (and prospective eligible individuals) regarding—
(i)
enrollment in endorsed discount card programs; and
(ii)
the features of the program under this section, including the availability of transitional assistance.
(B)

Promotion of informed choice.—
In order to promote informed choice among endorsed prescription drug discount card programs, the Secretary shall provide for the dissemination of information which—
(i)
compares the annual enrollment fee and other features of such programs, which may include comparative prices for covered discount card drugs; and
(ii)
includes educational materials on the variability of discounts on prices of covered discount card drugs under an endorsed program.
The dissemination of information under clause (i) shall, to the extent practicable, be coordinated with the dissemination of educational information on other medicare options.
(C)

Special rule for initial enrollment date under the program.—
To the extent practicable, the Secretary shall ensure, through the activities described in subparagraphs (A) and (B), that discount card eligible individuals are provided with such information at least 30 days prior to the initial enrollment date specified under subsection (c)(1)(A)(ii).
(D)

Use of medicare toll-free number.—
The Secretary shall provide through the toll-free telephone number 1–800–MEDICARE for the receipt and response to inquiries and complaints concerning the program under this section and endorsed programs.
(2)

Prescription drug card sponsor responsibilities.—
(A)

In general.—
Each prescription drug card sponsor that offers an endorsed discount card program shall make available to discount card eligible individuals (through the Internet and otherwise) information that the Secretary identifies as being necessary to promote informed choice among endorsed discount card programs by such individuals, including information on enrollment fees and negotiated prices for covered discount card drugs charged to such individuals.
(B)

Response to enrollee questions.—
Each sponsor offering an endorsed discount card program shall have a mechanism (including a toll-free telephone number) for providing upon request specific information (such as negotiated prices and the amount of transitional assistance remaining available through the program) to discount card eligible individuals enrolled in the program. The sponsor shall inform transitional assistance eligible individuals enrolled in the program of the availability of such toll-free telephone number to provide information on the amount of available transitional assistance.
(C)

Information on balance of transitional assistance available at point-of-sale.—
Each sponsor offering an endorsed discount card program shall have a mechanism so that information on the amount of transitional assistance remaining under subsection (g)(1)(B) is available (electronically or by telephone) at the point-of-sale of covered discount card drugs.
(3)

Public disclosure of pharmaceutical prices for equivalent drugs.—
(A)

In general.—
A prescription drug card sponsor offering an endorsed discount card program shall provide that each pharmacy that dispenses a covered discount card drug shall inform a discount card eligible individual enrolled in the program of any differential between the price of the drug to the enrollee and the price of the lowest priced generic covered discount card drug under the program that is therapeutically equivalent and bioequivalent and available at such pharmacy.
(B)

Timing of notice.—
(i)

In general.—
Subject to clause (ii), the information under subparagraph (A) shall be provided at the time of purchase of the drug involved, or, in the case of dispensing by mail order, at the time of delivery of such drug.
(ii)

Waiver.—
The Secretary may waive clause (i) in such circumstances as the Secretary may specify.
(e)

Discount Card Features.—
(1)

Savings to enrollees through negotiated prices.—
(A)

Access to negotiated prices.—
(i)

In general.—
Each prescription drug card sponsor that offers an endorsed discount card program shall provide each discount card eligible individual enrolled in the program with access to negotiated prices.
(ii)

Negotiated prices.—
For purposes of this section, negotiated prices shall take into account negotiated price concessions, such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, for covered discount card drugs, and include any dispensing fees for such drugs.
(B)

Ensuring pharmacy access.—
Each prescription drug card sponsor offering an endorsed discount card program shall secure the participation in its network of a sufficient number of pharmacies that dispense (other than solely by mail order) drugs directly to enrollees to ensure convenient access to covered discount card drugs at negotiated prices (consistent with rules established by the Secretary). The Secretary shall establish convenient access rules under this clause that are no less favorable to enrollees than the standards for convenient access to pharmacies included in the statement of work of solicitation (#MDA906–03–R–0002) of the Department of Defense under the TRICARE Retail Pharmacy (TRRx) as of March 13, 2003.
(C)

Prohibition on charges for required services.—
(i)

In general.—
Subject to clause (ii), a prescription drug card sponsor (and any pharmacy contracting with such sponsor for the provision of covered discount card drugs to individuals enrolled in such sponsor's endorsed discount card program) may not charge an enrollee any amount for any items and services required to be provided by the sponsor under this section.
(ii)

Construction.—
Nothing in clause (i) shall be construed to prevent—
(I)
the sponsor from charging the annual enrollment fee (except in the case of a transitional assistance eligible individual); and
(II)
the pharmacy dispensing the covered discount card drug, from imposing a charge (consistent with the negotiated price) for the covered discount card drug dispensed, reduced by the amount of any transitional assistance made available.
(D)

Inapplicability of medicaid best price rules.—
The prices negotiated from drug manufacturers for covered discount card drugs under an endorsed discount card program under this section shall (notwithstanding any other provision of law) not be taken into account for the purposes of establishing the best price under section 1927(c)(1)(C).
(2)

Reduction of medication errors and adverse drug interactions.—
Each endorsed discount card program shall implement a system to reduce the likelihood of medication errors and adverse drug interactions and to improve medication use.
(f)

Eligibility Procedures for Endorsed Programs and Transitional Assistance.—
(1)

Determinations.—
(A)

Procedures.—
The determination of whether an individual is a discount card eligible individual or a transitional assistance eligible individual or a special transitional assistance eligible individual (as defined in subsection (b)) shall be determined under procedures specified by the Secretary consistent with this subsection.
(B)

Income and family size determinations.—
For purposes of this section, the Secretary shall define the terms “income” and “family size” and shall specify the methods and period for which they are determined. If under such methods income or family size is determined based on the income or family size for prior periods of time, the Secretary shall permit (whether through a process of reconsideration or otherwise) an individual whose income or family size has changed to elect to have eligibility for transitional assistance determined based on income or family size for a more recent period.
(2)

Use of self-certification for transitional assistance.—
(A)

In general.—
Under the procedures specified under paragraph (1)(A) an individual who wishes to be treated as a transitional assistance eligible individual or a special transitional assistance eligible individual under this section (or another qualified person on such individual's behalf) shall certify on the enrollment form under subsection (c)(1)(B) (or similar form specified by the Secretary), through a simplified means specified by the Secretary and under penalty of perjury or similar sanction for false statements, as to the amount of the individual's income, family size, and individual's prescription drug coverage (if any) insofar as they relate to eligibility to be a transitional assistance eligible individual or a special transitional assistance eligible individual. Such certification shall be deemed as consent to verification of respective eligibility under paragraph (3). A certification under this paragraph may be provided before, on, or after the time of enrollment under an endorsed program.
(B)

Treatment of self-certification.—
The Secretary shall treat a certification under subparagraph (A) that is verified under paragraph (3) as a determination that the individual involved is a transitional assistance eligible individual or special transitional assistance eligible individual (as the case may be) for the entire period of the enrollment of the individual in any endorsed program.
(3)

Verification.—
(A)

In general.—
The Secretary shall establish methods (which may include the use of sampling and the use of information described in subparagraph (B)) to verify eligibility for individuals who seek to enroll in an endorsed program and for individuals who provide a certification under paragraph (2).
(B)

Information described.—
The information described in this subparagraph is as follows:
(i)

Medicaid-related information.—
Information on eligibility under title XIX and provided to the Secretary under arrangements between the Secretary and States in order to verify the eligibility of individuals who seek to enroll in an endorsed program and of individuals who provide certification under paragraph (2).
(ii)

Social security information.—
Financial information made available to the Secretary under arrangements between the Secretary and the Commissioner of Social Security in order to verify the eligibility of individuals who provide such certification.
(iii)

Information from secretary of the treasury.—
Financial information made available to the Secretary under section 6103(l)(19) of the Internal Revenue Code of 1986 in order to verify the eligibility of individuals who provide such certification.
(C)

Verification in cases of medicaid enrollees.—
(i)

In general.—
Nothing in this section shall be construed as preventing the Secretary from finding that a discount card eligible individual meets the income requirements under subsection (b)(2)(A) if the individual is within a category of discount card eligible individuals who are enrolled under title XIX (such as qualified medicare beneficiaries (QMBs), specified low-income medicare beneficiaries (SLMBs), and certain qualified individuals (QI–1s)).
(ii)

Availability of information for verification purposes.—
As a condition of provision of Federal financial participation to a State that is one of the 50 States or the District of Columbia under title XIX, for purposes of carrying out this section, the State shall provide the information it submits to the Secretary relating to such title in a manner specified by the Secretary that permits the Secretary to identify individuals who are described in subsection (b)(1)(B) or are transitional assistance eligible individuals or special transitional assistance eligible individuals.
(4)

Reconsideration.—
(A)

In general.—
The Secretary shall establish a process under which a discount card eligible individual, who is determined through the certification and verification methods under paragraphs (2) and (3) not to be a transitional assistance eligible individual or a special transitional assistance eligible individual, may request a reconsideration of the determination.
(B)

Contract authority.—
The Secretary may enter into a contract to perform the reconsiderations requested under subparagraph (A).
(C)

Communication of results.—
Under the process under subparagraph (A) the results of such reconsideration shall be communicated to the individual and the prescription drug card sponsor involved.
(g)

Transitional Assistance.—
(1)

Provision of transitional assistance.—
An individual who is a transitional assistance eligible individual (as determined under this section) and who is enrolled with an endorsed program is entitled—
(A)
to have payment made of any annual enrollment fee charged under subsection (c)(2) for enrollment under the program; and
(B)
to have payment made, up to the amount specified in paragraph (2), under such endorsed program of 90 percent (or 95 percent in the case of a special transitional assistance eligible individual) of the costs incurred for covered discount card drugs obtained through the program taking into account the negotiated price (if any) for the drug under the program.
(2)

Limitation on dollar amount.—
(A)

In general.—
Subject to subparagraph (B), the amount specified in this paragraph for a transitional assistance eligible individual—
(i)
for costs incurred during 2004, is $600; or
(ii)
for costs incurred during 2005, is—
(I)
$600, plus
(II)
except as provided in subparagraph (E), the amount by which the amount available under this paragraph for 2004 for that individual exceeds the amount of payment made under paragraph (1)(B) for that individual for costs incurred during 2004.
(B)

Proration.—
(i)

In general.—
In the case of an individual not described in clause (ii) with respect to a year, the Secretary may prorate the amount specified in subparagraph (A) for the balance of the year involved in a manner specified by the Secretary.
(ii)

Individual described.—
An individual described in this clause is a transitional assistance eligible individual who—
(I)
with respect to 2004, enrolls in an endorsed program, and provides a certification under subsection (f)(2), before the initial implementation date of the program under this section; and
(II)
with respect to 2005, is enrolled in an endorsed program, and has provided such a certification, before February 1, 2005.
(C)

Accounting for available balances in cases of changes in program enrollment.—
In the case of a transitional assistance eligible individual who changes the endorsed discount card program in which the individual is enrolled under this section, the Secretary shall provide a process under which the Secretary provides to the sponsor of the endorsed program in which the individual enrolls information concerning the balance of amounts available on behalf of the individual under this paragraph.
(D)

Limitation on use of funds.—
Pursuant to subsection (a)(2)(C), no assistance shall be provided under paragraph (1)(B) with respect to covered discount card drugs dispensed after December 31, 2005.
(E)

No rollover permitted in case of voluntary disenrollment.—
Except in such exceptional cases as the Secretary may provide, in the case of a transitional assistance eligible individual who voluntarily disenrolls from an endorsed plan, the provisions of subclause (II) of subparagraph (A)(ii) shall not apply.
(3)

Payment.—
The Secretary shall provide a method for the reimbursement of prescription drug card sponsors for assistance provided under this subsection.
(4)

Coverage of coinsurance.—
(A)

Waiver permitted by pharmacy.—
Nothing in this section shall be construed as precluding a pharmacy from reducing or waiving the application of coinsurance imposed under paragraph (1)(B) in accordance with section 1128B(b)(3)(G).
(B)

Optional payment of coinsurance by state.—
(i)

In general.—
The Secretary shall establish an arrangement under which a State may provide for payment of some or all of the coinsurance under paragraph (1)(B) for some or all enrollees in the State, as specified by the State under the arrangement. Insofar as such a payment arrangement is made with respect to an enrollee, the amount of the coinsurance shall be paid directly by the State to the pharmacy involved.
(ii)

No federal matching available under medicaid or schip.—
Expenditures made by a State for coinsurance described in clause (i) shall not be treated as State expenditures for purposes of Federal matching payments under title XIX or XXI.
(iii)

Not treated as medicare cost-sharing.—
Coinsurance described in paragraph (1)(B) shall not be treated as coinsurance under this title for purposes of section 1905(p)(3)(B).
(C)

Treatment of coinsurance.—
The amount of any coinsurance imposed under paragraph (1)(B), whether paid or waived under this paragraph, shall not be taken into account in applying the limitation in dollar amount under paragraph (2).
(5)

Ensuring access to transitional assistance for qualified residents of long-term care facilities and american indians.—
(A)

Residents of long-term care facilities.—
The Secretary shall establish procedures and may waive requirements of this section as necessary to negotiate arrangements with sponsors to provide arrangements with pharmacies that support long-term care facilities in order to ensure access to transitional assistance for transitional assistance eligible individuals who reside in long-term care facilities.
(B)

American indians.—
The Secretary shall establish procedures and may waive requirements of this section to ensure that, for purposes of providing transitional assistance, pharmacies operated by the Indian Health Service, Indian tribes and tribal organizations, and urban Indian organizations (as defined in section 4 of the Indian Health Care Improvement Act) have the opportunity to participate in the pharmacy networks of at least two endorsed programs in each of the 50 States and the District of Columbia where such a pharmacy operates.
(6)

No impact on benefits under other programs.—
The availability of negotiated prices or transitional assistance under this section shall not be treated as benefits or otherwise taken into account in determining an individual's eligibility for, or the amount of benefits under, any other Federal program.
(7)

Disregard for purposes of part c.—
Nonuniformity of benefits resulting from the implementation of this section (including the provision or nonprovision of transitional assistance and the payment or waiver of any enrollment fee under this section) shall not be taken into account in applying section 1854(f).
(h)

Qualification of Prescription Drug Card Sponsors and Endorsement of Discount Card Programs; Beneficiary Protections.—
(1)

Prescription drug card sponsor and qualifications.—
(A)

Prescription drug card sponsor and sponsor defined.—
For purposes of this section, the terms “prescription drug card sponsor” and “sponsor” mean any nongovernmental entity that the Secretary determines to be appropriate to offer an endorsed discount card program under this section, which may include—
(i)
a pharmaceutical benefit management company;
(ii)
a wholesale or retail pharmacy delivery system;
(iii)
an insurer (including an insurer that offers medicare supplemental policies under section 1882);
(iv)
an organization offering a plan under part C; or
(v)
any combination of the entities described in clauses (i) through (iv).
(B)

Administrative qualifications.—
Each endorsed discount card program shall be operated directly, or through arrangements with an affiliated organization (or organizations), by one or more entities that have demonstrated experience and expertise in operating such a program or a similar program and that meets such business stability and integrity requirements as the Secretary may specify.
(C)

Accounting for transitional assistance.—
The sponsor of an endorsed discount card program shall have arrangements satisfactory to the Secretary to account for the assistance provided under subsection (g) on behalf of transitional assistance eligible individuals.
(2)

Applications for program endorsement.—
(A)

Submission.—
Each prescription drug card sponsor that seeks endorsement of a prescription drug discount card program under this section shall submit to the Secretary, at such time and in such manner as the Secretary may specify, an application containing such information as the Secretary may require.
(B)

Approval; compliance with applicable requirements.—
The Secretary shall review the application submitted under subparagraph (A) and shall determine whether to endorse the prescription drug discount card program. The Secretary may not endorse such a program unless—
(i)
the program and prescription drug card sponsor offering the program comply with the applicable requirements under this section; and
(ii)
the sponsor has entered into a contract with the Secretary to carry out such requirements.
(C)

Termination of endorsement and contracts.—
An endorsement of an endorsed program and a contract under subparagraph (B) shall be for the duration of the program under this section (including any transition applicable under subsection (a)(2)(C)(ii)), except that the Secretary may, with notice and for cause (as defined by the Secretary), terminate such endorsement and contract.
(D)

Ensuring choice of programs.—
(i)

In general.—
The Secretary shall ensure that there is available to each discount card eligible individual a choice of at least 2 endorsed programs (each offered by a different sponsor).
(ii)

Limitation on number.—
The Secretary may limit (but not below 2) the number of sponsors in a State that are awarded contracts under this paragraph.
(3)

Service area encompassing entire states.—
Except as provided in paragraph (9), if a prescription drug card sponsor that offers an endorsed program enrolls in the program individuals residing in any part of a State, the sponsor must permit any discount card eligible individual residing in any portion of the State to enroll in the program.
(4)

Savings to medicare beneficiaries.—
Each prescription drug card sponsor that offers an endorsed discount card program shall pass on to discount card eligible individuals enrolled in the program negotiated prices on covered discount card drugs, including discounts negotiated with pharmacies and manufacturers, to the extent disclosed under subsection (i)(1).
(5)

Grievance mechanism.—
Each prescription drug card sponsor shall provide meaningful procedures for hearing and resolving grievances between the sponsor (including any entity or individual through which the sponsor carries out the endorsed discount card program) and enrollees in endorsed discount card programs of the sponsor under this section in a manner similar to that required under section 1852(f).
(6)

Confidentiality of enrollee records.—
(A)

In general.—
For purposes of the program under this section, the operations of an endorsed program are covered functions and a prescription drug card sponsor is a covered entity for purposes of applying part C of title XI and all regulatory provisions promulgated thereunder, including regulations (relating to privacy) adopted pursuant to the authority of the Secretary under section 264(c) of the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. 1320d–2 note).
(B)

Waiver authority.—
In order to promote participation of sponsors in the program under this section, the Secretary may waive such relevant portions of regulations relating to privacy referred to in subparagraph (A), for such appropriate, limited period of time, as the Secretary specifies.
(7)

Limitation on provision and marketing of products and services.—
The sponsor of an endorsed discount card program—
(A)
may provide under the program—
(i)
a product or service only if the product or service is directly related to a covered discount card drug; or
(ii)
a discount price for nonprescription drugs; and
(B)
may, to the extent otherwise permitted under paragraph (6) (relating to application of HIPAA requirements), market a product or service under the program only if the product or service is directly related to—
(i)
a covered discount card drug; or
(ii)
a drug described in subparagraph (A)(ii) and the marketing consists of information on the discounted price made available for the drug involved.
(8)

Additional protections.—
Each endorsed discount card program shall meet such additional requirements as the Secretary identifies to protect and promote the interest of discount card eligible individuals, including requirements that ensure that discount card eligible individuals enrolled in endorsed discount card programs are not charged more than the lower of the price based on negotiated prices or the usual and customary price.
(9)

Special rules for certain organizations.—
(A)

In general.—
In the case of an organization that is offering a plan under part C or enrollment under a reasonable cost reimbursement contract under section 1876(h) that is seeking to be a prescription drug card sponsor under this section, the organization may elect to apply the special rules under subparagraph (B) with respect to enrollees in any plan described in section 1851(a)(2)(A) that it offers or under such contract and an endorsed discount card program it offers, but only if it limits enrollment under such program to individuals enrolled in such plan or under such contract.
(B)

Special rules.—
The special rules under this subparagraph are as follows:
(i)

Limitation on enrollment.—
The sponsor limits enrollment under this section under the endorsed discount card program to discount card eligible individuals who are enrolled in the part C plan involved or under the reasonable cost reimbursement contract involved and is not required nor permitted to enroll other individuals under such program.
(ii)

Pharmacy access.—
Pharmacy access requirements under subsection (e)(1)(B) are deemed to be met if the access is made available through a pharmacy network (and not only through mail order) and the network used by the sponsor is approved by the Secretary.
(iii)

Sponsor requirements.—
The Secretary may waive the application of such requirements for a sponsor as the Secretary determines to be duplicative or to conflict with a requirement of the organization under part C or section 1876 (as the case may be) or to be necessary in order to improve coordination of this section with the benefits under such part or section.
(i)

Disclosure and Oversight.—
(1)

Disclosure.—
Each prescription drug card sponsor offering an endorsed discount card program shall disclose to the Secretary (in a manner specified by the Secretary) information relating to program performance, use of prescription drugs by discount card eligible individuals enrolled in the program, the extent to which negotiated price concessions described in subsection (e)(1)(A)(ii) made available to the entity by a manufacturer are passed through to enrollees through pharmacies or otherwise, and such other information as the Secretary may specify. The provisions of section 1927(b)(3)(D) shall apply to drug pricing data reported under the previous sentence (other than data in aggregate form).
(2)

Oversight; audit and inspection authority.—
The Secretary shall provide appropriate oversight to ensure compliance of endorsed discount card programs and their sponsors with the requirements of this section. The Secretary shall have the right to audit and inspect any books and records of a prescription discount card sponsor (and of any affiliated organization referred to in subsection (h)(1)(B)) that pertain to the endorsed discount card program under this section, including amounts payable to the sponsor under this section.
(3)

Sanctions for abusive practices.—
The Secretary may implement intermediate sanctions or may revoke the endorsement of a program offered by a sponsor under this section if the Secretary determines that the sponsor or the program no longer meets the applicable requirements of this section or that the sponsor has engaged in false or misleading marketing practices. The Secretary may impose a civil money penalty in an amount not to exceed $10,000 for conduct that a party knows or should know is a violation of this section. The provisions of section 1128A (other than subsections (a) and (b) and the second sentence of subsection (f)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(j)

Treatment of Territories.—
(1)

In general.—
The Secretary may waive any provision of this section (including subsection (h)(2)(D)) in the case of a resident of a State (other than the 50 States and the District of Columbia) insofar as the Secretary determines it is necessary to secure access to negotiated prices for discount card eligible individuals (or, at the option of the Secretary, individuals described in subsection (b)(1)(A)(i)).
(2)

Transitional assistance.—
(A)

In general.—
In the case of a State, other than the 50 States and the District of Columbia, if the State establishes a plan described in subparagraph (B) (for providing transitional assistance with respect to the provision of prescription drugs to some or all individuals residing in the State who are described in subparagraph (B)(i)), the Secretary shall pay to the State for the entire period of the operation of this section an amount equal to the amount allotted to the State under subparagraph (C).
(B)

Plan.—
The plan described in this subparagraph is a plan that—
(i)
provides transitional assistance with respect to the provision of covered discount card drugs to some or all individuals who are entitled to benefits under part A or enrolled under part B, who reside in the State, and who have income below 135 percent of the poverty line; and
(ii)
assures that amounts received by the State under this paragraph are used only for such assistance.
(C)

Allotment limit.—
The amount described in this subparagraph for a State is equal to $35,000,000 multiplied by the ratio (as estimated by the Secretary) of—
(i)
the number of individuals who are entitled to benefits under part A or enrolled under part B and who reside in the State (as determined by the Secretary as of July 1, 2003), to
(ii)
the sum of such numbers for all States to which this paragraph applies.
(D)

Continued availability of funds.—
Amounts made available to a State under this paragraph which are not used under this paragraph shall be added to the amount available to that State for purposes of carrying out section 1935(e).
(k)

Funding.—
(1)

Establishment of transitional assistance account.—
(A)

In general.—
There is created within the Federal Supplementary Medical Insurance Trust Fund established by section 1841 an account to be known as the “Transitional Assistance Account” (in this subsection referred to as the “Account”).
(B)

Funds.—
The Account shall consist of such gifts and bequests as may be made as provided in section 201(i)(1), accrued interest on balances in the Account, and such amounts as may be deposited in, or appropriated to, the Account as provided in this subsection.
(C)

Separate from rest of trust fund.—
Funds provided under this subsection to the Account shall be kept separate from all other funds within the Federal Supplementary Medical Insurance Trust Fund, but shall be invested, and such investments redeemed, in the same manner as all other funds and investments within such Trust Fund.
(2)

Payments from account.—
(A)

In general.—
The Managing Trustee shall pay from time to time from the Account such amounts as the Secretary certifies are necessary to make payments for transitional assistance provided under subsections (g) and (j)(2).
(B)

Treatment in relation to part b premium.—
Amounts payable from the Account shall not be taken into account in computing actuarial rates or premium amounts under section 1839.
(3)

Appropriations to cover benefits.—
There are appropriated to the Account in a fiscal year, out of any moneys in the Treasury not otherwise appropriated, an amount equal to the payments made from the Account in the year.
(4)

For administrative expenses.—
There are authorized to be appropriated to the Secretary such sums as may be necessary to carry out the Secretary's responsibilities under this section.
(5)

Transfer of any remaining balance to medicare prescription drug account.—
Any balance remaining in the Account after the Secretary determines that funds in the Account are no longer necessary to carry out the program under this section shall be transferred and deposited into the Medicare Prescription Drug Account under section 1860D–16.
(6)

Construction.—
Nothing in this section shall be construed as authorizing the Secretary to provide for payment (other than payment of an enrollment fee on behalf of a transitional assistance eligible individual under subsection (g)(1)(A)) to a sponsor for administrative expenses incurred by the sponsor in carrying out this section (including in administering the transitional assistance provisions of subsections (f) and (g)).
Subpart 5—

Definitions and Miscellaneous Provisions

definitions; treatment of references to provisions in part c
Sec. 1860D–41.
[42 U.S.C. 1395w–151]
(a)

Definitions.—
For purposes of this part:
(1)

Basic prescription drug coverage.—
The term “basic prescription drug coverage” is defined in section 1860D–2(a)(3).
(2)

Covered part d drug.—
The term “covered part D drug” is defined in section 1860D–2(e).
(3)

Creditable prescription drug coverage.—
The term “creditable prescription drug coverage” has the meaning given such term in section 1860D–13(b)(4).
(4)

Part d eligible individual.—
The term “part D eligible individual” has the meaning given such term in section 1860D–1(a)(4)(A).
(5)

Fallback prescription drug plan.—
The term “fallback prescription drug plan” has the meaning given such term in section 1860D–11(g)(4).
(6)

Initial coverage limit.—
The term “initial coverage limit” means such limit as established under section 1860D–2(b)(3) for a year before 2025, or, in the case of coverage that is not standard prescription drug coverage, the comparable limit (if any) established under the coverage for such year.
(7)

Insurance risk.—
The term “insurance risk” means, with respect to a participating pharmacy, risk of the type commonly assumed only by insurers licensed by a State and does not include payment variations designed to reflect performance-based measures of activities within the control of the pharmacy, such as formulary compliance and generic drug substitution.
(8)

MA plan.—
The term “MA plan” has the meaning given such term in section 1860D–1(a)(4)(B).
(9)

MA–PD plan.—
The term “MA–PD plan” has the meaning given such term in section 1860D–1(a)(4)(C).
(10)

Medicare prescription drug account.—
The term “Medicare Prescription Drug Account” means the Account created under section 1860D–16(a).
(11)

PDP approved bid.—
The term “PDP approved bid” has the meaning given such term in section 1860D–13(a)(6).
(12)

PDP region.—
The term “PDP region” means such a region as provided under section 1860D–11(a)(2).
(13)

PDP sponsor.—
The term “PDP sponsor” means a nongovernmental entity that is certified under this part as meeting the requirements and standards of this part for such a sponsor.
(14)

Prescription drug plan.—
The term “prescription drug plan” means prescription drug coverage that is offered—
(A)
under a policy, contract, or plan that has been approved under section 1860D–11(e); and
(B)
by a PDP sponsor pursuant to, and in accordance with, a contract between the Secretary and the sponsor under section 1860D–12(b).
(15)

Qualified prescription drug coverage.—
The term “qualified prescription drug coverage” is defined in section 1860D–2(a)(1).
(16)

Standard prescription drug coverage.—
The term “standard prescription drug coverage” is defined in section 1860D–2(b).
(17)

State pharmaceutical assistance program.—
The term “State Pharmaceutical Assistance Program” has the meaning given such term in section 1860D–23(b).
(18)

Subsidy eligible individual.—
The term “subsidy eligible individual” has the meaning given such term in section 1860D–14(a)(3)(A).
(b)

Application of Part C Provisions Under This Part.—
For purposes of applying provisions of part C under this part with respect to a prescription drug plan and a PDP sponsor, unless otherwise provided in this part such provisions shall be applied as if—
(1)
any reference to an MA plan included a reference to a prescription drug plan;
(2)
any reference to an MA organization or a provider-sponsored organization included a reference to a PDP sponsor;
(3)
any reference to a contract under section 1857 included a reference to a contract under section 1860D–12(b);
(4)
any reference to part C included a reference to this part; and
(5)
any reference to an election period under section 1851 were a reference to an enrollment period under section 1860D–1.

miscellaneous provisions
Sec. 1860D–42.
[42 U.S.C. 1395w–152]
(a)

Access to Coverage in Territories.—
The Secretary may waive such requirements of this part, including section 1860D–3(a)(1), insofar as the Secretary determines it is necessary to secure access to qualified prescription drug coverage for part D eligible individuals residing in a State (other than the 50 States and the District of Columbia).
(b)

Application of Demonstration Authority.—
The provisions of section 402 of the Social Security Amendments of 1967 (Public Law 90–248) shall apply with respect to this part and part C in the same manner it applies with respect to parts A and B, except that any reference with respect to a Trust Fund in relation to an experiment or demonstration project relating to prescription drug coverage under this part shall be deemed a reference to the Medicare Prescription Drug Account within the Federal Supplementary Medical Insurance Trust Fund.
(c)

Coverage Gap Rebate for 2010.—
(1)

In general.—
In the case of an individual described in subparagraphs (A) through (D) of section 1860D–14A(g)(1) who as of the last day of a calendar quarter in 2010 has incurred costs for covered part D drugs so that the individual has exceeded the initial coverage limit under section 1860D–2(b)(3) for 2010, the Secretary shall provide for payment from the Medicare Prescription Drug Account of $250 to the individual by not later than the 15th day of the third month following the end of such quarter.
(2)

Limitation.—
The Secretary shall provide only 1 payment under this subsection with respect to any individual.
(d)

Treatment of Certain Complaints for Purposes of Quality or Performance Assessment.—
In conducting a quality or performance assessment of a PDP sponsor, the Secretary shall develop or utilize existing screening methods for reviewing and considering complaints that are received from enrollees in a prescription drug plan offered by such PDP sponsor and that are complaints regarding the lack of access by the individual to prescription drugs due to a drug management program for at-risk beneficiaries.

condition for coverage of drugs under this part
Sec. 1860D–43.
[42 U.S.C. 1395w–153]
(a)

In General.—
In order for coverage to be available under this part for covered part D drugs (as defined in section 1860D–2(e)) of a manufacturer, the manufacturer must—
(1)
participate in—
(A)
for 2011 through 2024, the Medicare coverage gap discount program under section 1860D–14A; and
(B)
for 2025 and each subsequent year, the manufacturer discount program under section 1860D–14C;
(2)
have entered into and have in effect—
(A)
for 2011 through 2024, an agreement described in subsection (b) of section 1860D–14A with the Secretary; and
(B)
for 2025 and each subsequent year, an agreement described in subsection (b) of section 1860D–14C with the Secretary; and
(3)
have entered into and have in effect, under terms and conditions specified by the Secretary, a contract with a third party that the Secretary has entered into a contract with under subsection (d)(3) of section 1860D–14A.
(b)

Effective Date.—
Paragraphs (1)(A), (2)(A), and (3) of subsection (a) shall apply to covered part D drugs dispensed under this part on or after January 1, 2011, and before January 1, 2025, and paragraphs (1)(B) and (2)(B) of such subsection shall apply to covered part D drugs dispensed under this part on or after January 1, 2025.
(c)

Authorizing Coverage for Drugs Not Covered Under Agreements.—
(1)

In general.—
Subject to paragraph (2), subsection (a) shall not apply to the dispensing of a covered part D drug if—
(A)68
the Secretary has made a determination that the availability of the drug is essential to the health of beneficiaries under this part; or
^{68}
The margins for subparagraphs (A) and (B) of subsection (c)(1) are so in law. Probably should moved 2ems to the right.
(B)
the Secretary determines that in the period beginning on January 1, 2011, and December 31, 2011, there were extenuating circumstances.
(2)

Exception.—
Paragraph (1)(A) shall not apply to a covered part D drug of a manufacturer for any period described in section 5000D(c)(1) of the Internal Revenue Code of 1986 with respect to the manufacturer.
(d)

Definition of Manufacturer.—
In this section, the term “manufacturer” has the meaning given such term in section 1860D–14A(g)(5).
Part E—

Miscellaneous Provisions

definitions of services, institutions, etc.
Sec. 1861.
[42 U.S.C. 1395x]
For purposes of this title—
(a)

Spell of Illness
The term “spell of illness” with respect to any individual means a period of consecutive days—
(1)
beginning with the first day (not included in a previous spell of illness) (A) on which such individual is furnished inpatient hospital services, inpatient critical access hospital services or extended care services, and (B) which occurs in a month for which he is entitled to benefits under part A, and
(2)
ending with the close of the first period of 60 consecutive days thereafter on each of which he is neither an inpatient of a hospital or critical access hospital nor an inpatient of a facility described in section 1819(a)(1) or subsection (y)(1).
(b)

Inpatient Hospital Services
The term “inpatient hospital services” means the following items and services furnished to an inpatient of a hospital and (except as provided in paragraph (3)) by the hospital—
(1)
bed and board;
(2)
such nursing services and other related services, such use of hospital facilities, and such medical social services as are ordinarily furnished by the hospital for the care and treatment of inpatients, and such drugs, biologicals, supplies, appliances, and equipment, for use in the hospital, as are ordinarily furnished by such hospital for the care and treatment of inpatients; and
(3)
such other diagnostic or therapeutic items or services, furnished by the hospital or by others under arrangements with them made by the hospital, as are ordinarily furnished to inpatients either by such hospital or by others under such arrangements;
excluding, however—
(4)
medical or surgical services provided by a physician, resident, or intern, services described by subsection (s)(2)(K), certified nurse-midwife services, qualified psychologist services, and services of a certified registered nurse anesthetist; and
(5)
the services of a private-duty nurse or other private-duty attendant.
Paragraph (4) shall not apply to services provided in a hospital by—
(6)
an intern or a resident-in-training under a teaching program approved by the Council on Medical Education of the American Medical Association or, in the case of an osteopathic hospital, approved by the Committee on Hospitals of the Bureau of Professional Education of the American Osteopathic Association, or, in the case of services in a hospital or osteopathic hospital by an intern or resident-in-training in the field of dentistry, approved by the Council on Dental Education of the American Dental Association, or in the case of services in a hospital or osteopathic hospital by an intern or resident-in-training in the field of podiatry, approved by the Council on Podiatric Medical Education of the American Podiatric Medical Association; or
(7)
a physician where the hospital has a teaching program approved as specified in paragraph (6), if (A) the hospital elects to receive any payment due under this title for reasonable costs of such services, and (B) all physicians in such hospital agree not to bill charges for professional services rendered in such hospital to individuals covered under the insurance program established by this title.
(c)

Inpatient Psychiatric Hospital Services
The term “inpatient psychiatric hospital services” means inpatient hospital services furnished to an inpatient of a psychiatric hospital.
(d)

Supplier
The term “supplier” means, unless the context otherwise requires, a physician or other practitioner, a facility, or other entity (other than a provider of services) that furnishes items or services under this title.
(e)

Hospital
The term “hospital” (except for purposes of sections 1814(d), 1814(f), and 1835(b), subsection (a)(2) of this section, paragraph (7) of this subsection, and subsection (i) of this section) means an institution which—
(1)
is primarily engaged in providing, by or under the supervision of physicians, to inpatients (A) diagnostic services and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, or sick persons, or (B) rehabilitation services for the rehabilitation of injured, disabled, or sick persons;
(2)
maintains clinical records on all patients;
(3)
has bylaws in effect with respect to its staff of physicians;
(4)
has a requirement that every patient with respect to whom payment may be made under this title must be under the care of a physician, except that a patient receiving qualified psychologist services (as defined in subsection (ii)) may be under the care of a clinical psychologist with respect to such services to the extent permitted under State law;
(5)
provides 24-hour nursing service rendered or supervised by a registered professional nurse, and has a licensed practical nurse or registered professional nurse on duty at all times; except that until January 1, 1979, the Secretary is authorized to waive the requirement of this paragraph for any one-year period with respect to any institution, insofar as such requirement relates to the provision of twenty-four-hour nursing service rendered or supervised by a registered professional nurse (except that in any event a registered professional nurse must be present on the premises to render or supervise the nursing service provided, during at least the regular daytime shift), where immediately preceding such one-year period he finds that—
(A)
such institution is located in a rural area and the supply of hospital services in such area is not sufficient to meet the needs of individuals residing therein,
(B)
the failure of such institution to qualify as a hospital would seriously reduce the availability of such services to such individuals, and
(C)
such institution has made and continues to make a good faith effort to comply with this paragraph, but such compliance is impeded by the lack of qualified nursing personnel in such area;
(6)
(A)
has in effect a hospital utilization review plan which meets the requirements of subsection (k) and (B) has in place a discharge planning process that meets the requirements of subsection (ee);
(7)
in the case of an institution in any State in which State or applicable local law provides for the licensing of hospitals, (A) is licensed pursuant to such law or (B) is approved, by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing;
(8)
has in effect an overall plan and budget that meets the requirements of subsection (z); and
(9)
meets such other requirements as the Secretary finds necessary in the interest of the health and safety of individuals who are furnished services in the institution.
For purposes of subsection (a)(2), such term includes any institution which meets the requirements of paragraph (1) of this subsection. For purposes of sections 1814(d) and 1835(b) (including determination of whether an individual received inpatient hospital services or diagnostic services for purposes of such sections), section 1814(f)(2), and subsection (i) of this section, such term includes any institution which (i) meets the requirements of paragraphs (5) and (7) of this subsection, (ii) is not primarily engaged in providing the services described in section 1861(j)(1)(A) and (iii) is primarily engaged in providing, by or under the supervision of individuals referred to in paragraph (1) of section 1861(r), to inpatients diagnostic services and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, or sick persons, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons. For purposes of section 1814(f)(1), such term includes an institution which (i) is a hospital for purposes of sections 1814(d), 1814(f)(2), and 1835(b) and (ii) is accredited by a national accreditation body recognized by the Secretary under section 1865(a), or is accredited by or approved by a program of the country in which such institution is located if the Secretary finds the accreditation or comparable approval standards of such program to be essentially equivalent to those of such a national accreditation body..69 Notwithstanding the preceding provisions of this subsection, such term shall not, except for purposes of subsection (a)(2), include any institution which is primarily for the care and treatment of mental diseases unless it is a psychiatric hospital (as defined in subsection (f)). The term “hospital” also includes a religious nonmedical health care institution (as defined in subsection (ss)(1)), but only with respect to items and services ordinarily furnished by such institution to inpatients, and payment may be made with respect to services provided by or in such an institution only to such extent and under such conditions, limitations, and requirements (in addition to or in lieu of the conditions, limitations, and requirements otherwise applicable) as may be provided in regulations consistent with section 1821. For provisions deeming certain requirements of this subsection to be met in the case of accredited institutions, see section 1865. The term “hospital” also includes a facility of fifty beds or less which is located in an area determined by the Secretary to meet the definition relating to a rural area described in subparagraph (A) of paragraph (5) of this subsection and which meets the other requirements of this subsection, except that—
^{69}
Two periods so in law. See amendment made by section 125(b)(2) of Public Law 110–275.
(A)
with respect to the requirements for nursing services applicable after December 31, 1978, such requirements shall provide for temporary waiver of the requirements, for such period as the Secretary deems appropriate, where (i) the facility's failure to fully comply with the requirements is attributable to a temporary shortage of qualified nursing personnel in the area in which the facility is located, (ii) a registered professional nurse is present on the premises to render or supervise the nursing service provided during at least the regular daytime shift, and (iii) the Secretary determines that the employment of such nursing personnel as are available to the facility during such temporary period will not adversely affect the health and safety of patients;
(B)
with respect to the health and safety requirements promulgated under paragraph (9), such requirements shall be applied by the Secretary to a facility herein defined in such manner as to assure that personnel requirements take into account the availability of technical personnel and the educational opportunities for technical personnel in the area in which such facility is located, and the scope of services rendered by such facility; and the Secretary, by regulations, shall provide for the continued participation of such a facility where such personnel requirements are not fully met, for such period as the Secretary determines that (i) the facility is making good faith efforts to fully comply with the personnel requirements, (ii) the employment by the facility of such personnel as are available to the facility will not adversely affect the health and safety of patients, and (iii) if the Secretary has determined that because of the facility's waiver under this subparagraph the facility should limit its scope of services in order not to adversely affect the health and safety of the facility's patients, the facility is so limiting the scope of services it provides; and
(C)
with respect to the fire and safety requirements promulgated under paragraph (9), the Secretary (i) may waive, for such period as he deems appropriate, specific provisions of such requirements which if rigidly applied would result in unreasonable hardship for such a facility and which, if not applied, would not jeopardize the health and safety of patients, and (ii) may accept a facility's compliance with all applicable State codes relating to fire and safety in lieu of compliance with the fire and safety requirements promulgated under paragraph (9), if he determines that such State has in effect fire and safety codes, imposed by State law, which adequately protect patients.
The term “hospital” does not include, unless the context otherwise requires, a critical access hospital (as defined in section 1861(mm)(1)) or a rural emergency hospital (as defined in subsection (kkk)(2)).
(f)

Psychiatric Hospital
The term “psychiatric hospital” means an institution which—
(1)
is primarily engaged in providing, by or under the supervision of a physician, psychiatric services for the diagnosis and treatment of mentally ill persons;
(2)
satisfies the requirements of paragraphs (3) through (9) of subsection (e);
(3)
maintains clinical records on all patients and maintains such records as the Secretary finds to be necessary to determine the degree and intensity of the treatment provided to individuals entitled to hospital insurance benefits under part A; and
(4)
meets such staffing requirements as the Secretary finds necessary for the institution to carry out an active program of treatment for individuals who are furnished services in the institution.
In the case of an institution which satisfies paragraphs (1) and (2) of the preceding sentence and which contains a distinct part which also satisfies paragraphs (3) and (4) of such sentence, such distinct part shall be considered to be a “psychiatric hospital”.
(g)

Outpatient Occupational Therapy Services
The term “outpatient occupational therapy services” has the meaning given the term “outpatient physical therapy services” in subsection (p), except that “occupational” shall be substituted for “physical” each place it appears therein.
(h)

Extended Care Services
The term “extended care services” means the following items and services furnished to an inpatient of a skilled nursing facility and (except as provided in paragraphs (3), (6) and (7)) by such skilled nursing facility—
(1)
nursing care provided by or under the supervision of a registered professional nurse;
(2)
bed and board in connection with the furnishing of such nursing care;
(3)
physical or occupational therapy or speech-language pathology services furnished by the skilled nursing facility or by others under arrangements with them made by the facility;
(4)
medical social services;
(5)
such drugs, biologicals, supplies, appliances, and equipment, furnished for use in the skilled nursing facility, as are ordinarily furnished by such facility for the care and treatment of inpatients;
(6)
medical services provided by an intern or resident-in- training of a hospital with which the facility has in effect a transfer agreement (meeting the requirements of subsection (l)), under a teaching program of such hospital approved as provided in the last sentence of subsection (b), and other diagnostic or therapeutic services provided by a hospital with which the facility has such an agreement in effect; and
(7)
such other services necessary to the health of the patients as are generally provided by skilled nursing facilities, or by others under arrangements with them made by the facility;
excluding, however, any item or service if it would not be included under subsection (b) if furnished to an inpatient of a hospital.
(i)

Post-Hospital Extended Care Services
The term “post-hospital extended care services” means extended care services furnished an individual after transfer from a hospital in which he was an inpatient for not less than 3 consecutive days before his discharge from the hospital in connection with such transfer. For purposes of the preceding sentence, items and services shall be deemed to have been furnished to an individual after transfer from a hospital, and he shall be deemed to have been an inpatient in the hospital immediately before transfer therefrom, if he is admitted to the skilled nursing facility (A) within 30 days after discharge from such hospital, or (B) within such time as it would be medically appropriate to begin an active course of treatment, in the case of an individual whose condition is such that skilled nursing facility care would not be medically appropriate within 30 days after discharge from a hospital; and an individual shall be deemed not to have been discharged from a skilled nursing facility if, within 30 days after discharge therefrom, he is admitted to such facility or any other skilled nursing facility.
(j)

Skilled Nursing Facility
The term “skilled nursing facility” has the meaning given such term in section 1819(a).
(k)

Utilization Review
A utilization review plan of a hospital or skilled nursing facility shall be considered sufficient if it is applicable to services furnished by the institution to individuals entitled to insurance benefits under this title and if it provides—
(1)
for the review, on a sample or other basis, of admissions to the institution, the duration of stays therein, and the professional services (including drugs and biologicals) furnished, (A) with respect to the medical necessity of the services, and (B) for the purpose of promoting the most efficient use of available health facilities and services;
(2)
for such review to be made by either (A) a staff committee of the institution composed of two or more physicians (of which at least two must be physicians described in subsection (r)(1) of this section), with or without participation of other professional personnel, or (B) a group outside the institution which is similarly composed and (i) which is established by the local medical society and some or all of the hospitals and skilled nursing facilities in the locality, or (ii) if (and for as long as) there has not been established such a group which serves such institution, which is established in such other manner as may be approved by the Secretary;
(3)
for such review, in each case of inpatient hospital services or extended care services furnished to such an individual during a continuous period of extended duration, as of such days of such period (which may differ for different classes of cases) as may be specified in regulations, with such review to be made as promptly as possible, after each day so specified, and in no event later than one week following such day; and
(4)
for prompt notification to the institution, the individual, and his attending physician of any finding (made after opportunity for consultation to such attending physician) by the physician members of such committee or group that any further stay in the institution is not medically necessary.
The review committee must be composed as provided in clause (B) of paragraph (2) rather than as provided in clause (A) of such paragraph in the case of any hospital or skilled nursing facility where, because of the small size of the institution, or (in the case of a skilled nursing facility) because of lack of an organized medical staff, or for such other reason or reasons as may be included in regulations, it is impracticable for the institution to have a properly functioning staff committee for the purposes of this subsection. If the Secretary determines that the utilization review procedures established pursuant to title XIX are superior in their effectiveness to the procedures required under this section, he may, to the extent that he deems it appropriate, require for purposes of this title that the procedures established pursuant to title XIX be utilized instead of the procedures required by this section.
(l)

Agreements for Transfer Between Skilled Nursing Facilities and Hospitals
A hospital and a skilled nursing facility shall be considered to have a transfer agreement in effect if, by reason of a written agreement between them or (in case the two institutions are under common control) by reason of a written undertaking by the person or body which controls them, there is reasonable assurance that—
(1)
transfer of patients will be effected between the hospital and the skilled nursing facility whenever such transfer is medically appropriate as determined by the attending physician; and
(2)
there will be interchange of medical and other information necessary or useful in the care and treatment of individuals transferred between the institutions, or in determining whether such individuals can be adequately cared for otherwise than in either of such institutions.
Any skilled nursing facility which does not have such an agreement in effect, but which is found by a State agency (of the State in which such facility is situated) with which an agreement under section 1864 is in effect (or, in the case of a State in which no such agency has an agreement under section 1864, by the Secretary) to have attempted in good faith to enter into such an agreement with a hospital sufficiently close to the facility to make feasible the transfer between them of patients and the information referred to in paragraph (2), shall be considered to have such an agreement in effect if and for so long as such agency (or the Secretary, as the case may be) finds that to do so is in the public interest and essential to assuring extended care services for persons in the community who are eligible for payments with respect to such services under this title.
(m)

Home Health Services
The term “home health services” means the following items and services furnished to an individual, who is under the care of a physician, a nurse practitioner or a clinical nurse specialist (as those terms are defined in subsection (aa)(5)), or a physician assistant (as defined in subsection (aa)(5)), by a home health agency or by others under arrangements with them made by such agency, under a plan (for furnishing such items and services to such individual) established and periodically reviewed by a physician, a nurse practitioner, a clinical nurse specialist, or a physician assistant, which items and services are, except as provided in paragraph (7), provided on a visiting basis in a place of residence used as such individual's home—
(1)
part-time or intermittent nursing care provided by or under the supervision of a registered professional nurse;
(2)
physical or occupational therapy or speech-language pathology services;
(3)
medical social services under the direction of a physician, a nurse practitioner, a clinical nurse specialist, or a physician assistant;
(4)
to the extent permitted in regulations, part-time or intermittent services of a home health aide who has successfully completed a training program approved by the Secretary;
(5)
medical supplies (including catheters, catheter supplies, ostomy bags, and supplies related to ostomy care, and a covered osteoporosis drug (as defined in subsection (kk)), but excluding other drugs and biologicals) and durable medical equipment and applicable disposable devices (as defined in section 1834(s)(2)) while under such a plan;
(6)
in the case of a home health agency which is affiliated or under common control with a hospital, medical services provided by an intern or resident-in-training of such hospital, under a teaching program of such hospital approved as provided in the last sentence of subsection (b); and
(7)
any of the foregoing items and services which are provided on an outpatient basis, under arrangements made by the home health agency, at a hospital or skilled nursing facility, or at a rehabilitation center which meets such standards as may be prescribed in regulations, and—
(A)
the furnishing of which involves the use of equipment of such a nature that the items and services cannot readily be made available to the individual in such place of residence, or
(B)
which are furnished at such facility while he is there to receive any such item or service described in clause (A),
but not including transportation of the individual in connection with any such item or service;
excluding, however, any item or service if it would not be included under subsection (b) if furnished to an inpatient of a hospital and home infusion therapy (as defined in subsection (iii)(i)). 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 fewer 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 fewer 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 of each day for periods of 21 days or less (with extensions in exceptional circumstances when the need for additional care is finite and predictable).
(n)

Durable Medical Equipment
The term “durable medical equipment” includes iron lungs, oxygen tents, hospital beds, and wheelchairs (which may include a power-operated vehicle that may be appropriately used as a wheelchair, but only where the use of such a vehicle is determined to be necessary on the basis of the individual's medical and physical condition and the vehicle meets such safety requirements as the Secretary may prescribe) used in the patient's home (including an institution used as his home other than an institution that meets the requirements of subsection (e)(1) of this section or section 1819(a)(1)), whether furnished on a rental basis or purchased, and includes blood-testing strips and blood glucose monitors for individuals with diabetes without regard to whether the individual has Type I or Type II diabetes or to the individual's use of insulin (as determined under standards established by the Secretary in consultation with the appropriate organizations) and eye tracking and gaze interaction accessories for speech generating devices furnished to individuals with a demonstrated medical need for such accessories; except that such term does not include such equipment furnished by a supplier who has used, for the demonstration and use of specific equipment, an individual who has not met such minimum training standards as the Secretary may establish with respect to the demonstration and use of such specific equipment. With respect to a seat-lift chair, such term includes only the seat-lift mechanism and does not include the chair.
(o)

Home Health Agency
The term “home health agency” means a public agency or private organization, or a subdivision of such an agency or organization, which—
(1)
is primarily engaged in providing skilled nursing services and other therapeutic services;
(2)
has policies, established by a group of professional personnel (associated with the agency or organization), including one or more physicians, nurse practitioners or clinical nurse specialists (as those terms are defined in subsection (aa)(5)), certified nurse-midwives (as defined in subsection (gg)), or physician, nurse practitioner, clinical nurse specialist, certified nurse-midwife, physician assistant, assistants (as defined in subsection (aa)(5)) and one or more registered professional nurses, to govern the services (referred to in paragraph (1)) which it provides, and provides for supervision of such services by a physician, nurse practitioner, clinical nurse specialist, certified nurse-midwife, physician assistant, or registered professional nurse;
(3)
maintains clinical records on all patients;
(4)
in the case of an agency or organization in any State in which State or applicable local law provides for the licensing of agencies or organizations of this nature, (A) is licensed pursuant to such law, or (B) is approved, by the agency of such State or locality responsible for licensing agencies or organizations of this nature, as meeting the standards established for such licensing;
(5)
has in effect an overall plan and budget that meets the requirements of subsection (z);
(6)
meets the conditions of participation specified in section 1891(a) and such other conditions of participation as the Secretary may find necessary in the interest of the health and safety of individuals who are furnished services by such agency or organization;
(7)
provides the Secretary with a surety bond—
(A)
in a form specified by the Secretary and in an amount that is not less than the minimum of $50,000; and
(B)
that the Secretary determines is commensurate with the volume of payments to the home health agency; and
(8)
meets such additional requirements (including conditions relating to bonding or establishing of escrow accounts as the Secretary finds necessary for the financial security of the program) as the Secretary finds necessary for the effective and efficient operation of the program;
except that for purposes of part A such term shall not include any agency or organization which is primarily for the care and treatment of mental diseases. The Secretary may waive the requirement of a surety bond under paragraph (7) in the case of an agency or organization that provides a comparable surety bond under State law.
(p)

Outpatient Physical Therapy Services
The term “outpatient physical therapy services” means physical therapy services furnished by a provider of services, a clinic, rehabilitation agency, or a public health agency, or by others under an arrangement with, and under the supervision of, such provider, clinic, rehabilitation agency, or public health agency to an individual as an outpatient—
(1)
who is under the care of a physician (as defined in paragraph (1), (3), or (4) of section 1861(r)), and
(2)
with respect to whom a plan prescribing the type, amount, and duration of physical therapy services that are to be furnished such individual has been established by a physician (as so defined) or by a qualified physical therapist and is periodically reviewed by a physician (as so defined);
excluding, however—
(3)
any item or service if it would not be included under subsection (b) if furnished to an inpatient of a hospital; and
(4)
any such service—
(A)
if furnished by a clinic or rehabilitation agency, or by others under arrangements with such clinic or agency, unless such clinic or rehabilitation agency—
(i)
provides an adequate program of physical therapy services for outpatients and has the facilities and personnel required for such program or required for the supervision of such a program, in accordance with such requirements as the Secretary may specify,
(ii)
has policies, established by a group of professional personnel, including one or more physicians (associated with the clinic or rehabilitation agency) and one or more qualified physical therapists, to govern the services (referred to in clause (i)) it provides,
(iii)
maintains clinical records on all patients,
(iv)
if such clinic or agency is situated in a State in which State or applicable local law provides for the licensing of institutions of this nature, (I) is licensed pursuant to such law, or (II) is approved by the agency of such State or locality responsible for licensing institutions of this nature, as meeting the standards established for such licensing; and
(v)
meets such other conditions relating to the health and safety of individuals who are furnished services by such clinic or agency on an outpatient basis, as the Secretary may find necessary, and provides the Secretary on a continuing basis with a surety bond in a form specified by the Secretary and in an amount that is not less than $50,000, or
(B)
if furnished by a public health agency, unless such agency meets such other conditions relating to health and safety of individuals who are furnished services by such agency on an outpatient basis, as the Secretary may find necessary.
The term “outpatient physical therapy services” also includes physical therapy services furnished an individual by a physical therapist (in his office or in such individual's home) who meets licensing and other standards prescribed by the Secretary in regulations, otherwise than under an arrangement with and under the supervision of a provider of services, clinic, rehabilitation agency, or public health agency, if the furnishing of such services meets such conditions relating to health and safety as the Secretary may find necessary. In addition, such term includes physical therapy services which meet the requirements of the first sentence of this subsection except that they are furnished to an individual as an inpatient of a hospital or extended care facility. Nothing in this subsection shall be construed as requiring, with respect to outpatients who are not entitled to benefits under this title, a physical therapist to provide outpatient physical therapy services only to outpatients who are under the care of a physician or pursuant to a plan of care established by a physician. The Secretary may waive the requirement of a surety bond under paragraph (4)(A)(v) in the case of a clinic or agency that provides a comparable surety bond under State law.
(q)

Physicians' Services
The term “physicians' services” means professional services performed by physicians, including surgery, consultation, and home, office, and institutional calls (but not including services described in subsection (b)(6)).
(r)

Physician
The term “physician”, when used in connection with the performance of any function or action, means (1) a doctor of medicine or osteopathy legally authorized to practice medicine and surgery by the State in which he performs such function or action (including a physician within the meaning of section 1101(a)(7)), (2) a doctor of dental surgery or of dental medicine who is legally authorized to practice dentistry by the State in which he performs such function and who is acting within the scope of his license when he performs such functions, (3) a doctor of podiatric medicine for the purposes of subsections (k), (m), (p)(1), and (s) of this section and sections 1814(a), 1832(a)(2)(F)(ii), and 1835 but only with respect to functions which he is legally authorized to perform as such by the State in which he performs them, (4) a doctor of optometry, but only for purposes of subsection (p)(1) and with respect to the provision of items or services described in subsection (s) which he is legally authorized to perform as a doctor of optometry by the State in which he performs them, or (5) a chiropractor who is licensed as such by the State (or in a State which does not license chiropractors as such, is legally authorized to perform the services of a chiropractor in the jurisdiction in which he performs such services), and who meets uniform minimum standards promulgated by the Secretary, but only for the purpose of sections 1861(s)(1) and 1861(s)(2)(A) and only with respect to treatment by means of manual manipulation of the spine (to correct a subluxation) which he is legally authorized to perform by the State or jurisdiction in which such treatment is provided. For the purposes of section 1862(a)(4) and subject to the limitations and conditions provided in the previous sentence, such term includes a doctor of one of the arts, specified in such previous sentence, legally authorized to practice such art in the country in which the inpatient hospital services (referred to in such section 1862(a)(4)) are furnished.
(s)

Medical and Other Health Services
The term “medical and other health services” means any of the following items or services:
(1)
physicians' services;
(2)
(A)
services and supplies (including drugs and biologicals which are not usually self-administered by the patient) furnished as an incident to a physician's professional service, of kinds which are commonly furnished in physicians' offices and are commonly either rendered without charge or included in the physicians' bills (or would have been so included but for the application of section 1847B);
(B)70
hospital services (including drugs and biologicals which are not usually self-administered by the patient) incident to physicians' services rendered to outpatients and partial hospitalization services or intensive outpatient services incident to such services;
^{70}
Subparagraph (B) reflects the amendment made by section 4124(b)(1)(B) of division FF of Public Law 117–328 even though such amendment did not reference the “Social Security Act”.
(C)
diagnostic services which are—
(i)
furnished to an individual as an outpatient by a hospital or by others under arrangements with them made by a hospital, and
(ii)
ordinarily furnished by such hospital (or by others under such arrangements) to its outpatients for the purpose of diagnostic study;
(D)
outpatient physical therapy services, outpatient speech-language pathology services, and outpatient occupational therapy services;
(E)
rural health clinic services and Federally qualified health center services;
(F)
home dialysis supplies and equipment, self-care home dialysis support services, and institutional dialysis services and supplies, and, for items and services furnished on or after January 1, 2011, renal dialysis services (as defined in section 1881(b)(14)(B)), including such renal dialysis services furnished on or after January 1, 2017, by a renal dialysis facility or provider of services paid under section 1881(b)(14) to an individual with acute kidney injury (as defined in section 1834(r)(2));
(G)
antigens (subject to quantity limitations prescribed in regulations by the Secretary) prepared by a physician, as defined in section 1861(r)(1), for a particular patient, including antigens so prepared which are forwarded to another qualified person (including a rural health clinic) for administration to such patient, from time to time, by or under the supervision of another such physician;
(H)
(i)
services furnished pursuant to a contract under section 1876 to a member of an eligible organization by a physician assistant or by a nurse practitioner (as defined in subsection (aa)(5)) and such services and supplies furnished as an incident to his service to such a member as would otherwise be covered under this part if furnished by a physician or as an incident to a physician's service; and
(ii)
services furnished pursuant to a risk-sharing contract under section 1876(g) to a member of an eligible organization by a clinical psychologist (as defined by the Secretary) or by a clinical social worker (as defined in subsection (hh)(2)), and such services and supplies furnished as an incident to such clinical psychologist's services or clinical social worker's services to such a member as would otherwise be covered under this part if furnished by a physician or as an incident to a physician's service;
(I)
blood clotting factors, for hemophilia patients competent to use such factors to control bleeding without medical or other supervision, and items related to the administration of such factors, subject to utilization controls deemed necessary by the Secretary for the efficient use of such factors;
(J)
prescription drugs used in immunosuppressive therapy furnished, to an individual who receives an organ transplant for which payment is made under this title;
(K)
(i)
services which would be physicians' services and services described in subsections (ww)(1) and (hhh) if furnished by a physician (as defined in subsection (r)(1)) and which are performed by a physician assistant (as defined in subsection (aa)(5)) under the supervision of a physician (as so defined) and which the physician assistant is legally authorized to perform by the State in which the services are performed, and such services and supplies furnished as incident to such services as would be covered under subparagraph (A) if furnished incident to a physician's professional service, but only if no facility or other provider charges or is paid any amounts with respect to the furnishing of such services,
(ii)
services which would be physicians' services and services described in subsections (ww)(1) and (hhh) if furnished by a physician (as defined in subsection (r)(1)) and which are performed by a nurse practitioner or clinical nurse specialist (as defined in subsection (aa)(5)) working in collaboration (as defined in subsection (aa)(6)) with a physician (as defined in subsection (r)(1)) which the nurse practitioner or clinical nurse specialist is legally authorized to perform by the State in which the services are performed, and such services and supplies furnished as an incident to such services as would be covered under subparagraph (A) if furnished incident to a physician's professional service, but only if no facility or other provider charges or is paid any amounts with respect to the furnishing of such services;
(L)
certified nurse-midwife services;
(M)
qualified psychologist services;
(N)
clinical social worker services (as defined in subsection (hh)(2));
(O)
erythropoietin for dialysis patients competent to use such drug without medical or other supervision with respect to the administration of such drug, subject to methods and standards established by the Secretary by regulation for the safe and effective use of such drug, and items related to the administration of such drug;
(P)
prostate cancer screening tests (as defined in subsection (oo));
(Q)
an oral drug (which is approved by the Federal Food and Drug Administration) prescribed for use as an anticancer chemotherapeutic agent for a given indication, and containing an active ingredient (or ingredients), which is the same indication and active ingredient (or ingredients) as a drug which the carrier determines would be covered pursuant to subparagraph (A) or (B) if the drug could not be self-administered;
(R)
colorectal cancer screening tests (as defined in subsection (pp));
(S)
diabetes outpatient self-management training services (as defined in subsection (qq));
(T)
an oral drug (which is approved by the Federal Food and Drug Administration) prescribed for use as an acute anti-emetic used as part of an anticancer chemotherapeutic regimen if the drug is administered by a physician (or as prescribed by a physician)—
(i)
for use immediately before, at, or within 48 hours after the time of the administration of the anticancer chemotherapeutic agent; and
(ii)
as a full replacement for the anti-emetic therapy which would otherwise be administered intravenously;
(U)
screening for glaucoma (as defined in subsection (uu)) for individuals determined to be at high risk for glaucoma, individuals with a family history of glaucoma and individuals with diabetes;
(V)
medical nutrition therapy services (as defined in subsection (vv)(1)) in the case of a beneficiary with diabetes or a renal disease who—
(i)
has not received diabetes outpatient self-management training services within a time period determined by the Secretary;
(ii)
is not receiving maintenance dialysis for which payment is made under section 1881; and
(iii)
meets such other criteria determined by the Secretary after consideration of protocols established by dietitian or nutrition professional organizations;
(W)
an initial preventive physical examination (as defined in subsection (ww));
(X)
cardiovascular screening blood tests (as defined in subsection (xx)(1));
(Y)
diabetes screening tests (as defined in subsection (yy));
(Z)
intravenous immune globulin, and items and services furnished on or after January 1, 2024, related to the administration of intravenous immune globulin, for the treatment of primary immune deficiency diseases in the home (as defined in subsection (zz));
(AA)
ultrasound screening for abdominal aortic aneurysm (as defined in subsection (bbb)) for an individual—
(i)
who receives a referral for such an ultrasound screening as a result of an initial preventive physical examination (as defined in section 1861(ww)(1));
(ii)
who has not been previously furnished such an ultrasound screening under this title; and
(iii)
who—
(I)
has a family history of abdominal aortic aneurysm; or
(II)
manifests risk factors included in a beneficiary category recommended for screening by the United States Preventive Services Task Force regarding abdominal aortic aneurysms;
(BB)
additional preventive services (described in subsection (ddd)(1));
(CC)71
items and services furnished under a cardiac rehabilitation program (as defined in subsection (eee)(1)) or under a pulmonary rehabilitation program (as defined in subsection (fff)(1));
^{71}
Margins for subparagraphs (CC) and (DD) are so in law.
(DD)
items and services furnished under an intensive cardiac rehabilitation program (as defined in subsection (eee)(4));
(EE)
kidney disease education services (as defined in subsection (ggg));
(FF)
personalized prevention plan services (as defined in subsection (hhh));
(GG)
home infusion therapy (as defined in subsection (iii)(1));
(HH)
opioid use disorder treatment services (as defined in subsection (jjj));72
^{72}
Probably should read “; and”.
(II)
marriage and family therapist services (as defined in subsection (lll)(1)) and mental health counselor services (as defined in subsection (lll)(3));
(JJ)
lymphedema compression treatment items (as defined in subsection (mmm));
(3)
diagnostic X-ray tests (including tests under the supervision of a physician, furnished in a place of residence used as the patient's home, if the performance of such tests meets such conditions relating to health and safety as the Secretary may find necessary and 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), diagnostic laboratory tests, and other diagnostic tests;
(4)
X-ray, radium, and radioactive isotope therapy, including materials and services of technicians;
(5)
surgical dressings, and splints, casts, and other devices used for reduction of fractures and dislocations;
(6)
durable medical equipment;
(7)
ambulance service where the use of other methods of transportation is contraindicated by the individual's condition, but, subject to section 1834(l)(14), only to the extent provided in regulations;
(8)
prosthetic devices (other than dental) which replace all or part of an internal body organ (including colostomy bags and supplies directly related to colostomy care), including replacement of such devices, and including one pair of conventional eyeglasses or contact lenses furnished subsequent to each cataract surgery with insertion of an intraocular lens;
(9)
leg, arm, back, and neck braces, and artificial legs, arms, and eyes, including replacements if required because of a change in the patient's physical condition;
(10)
(A)
pneumococcal vaccine and its administration and, subject to section 4071(b) of the Omnibus Budget Reconciliation Act of 1987, influenza vaccine and its administration, and COVID–19 vaccine and its administration; and
(B)
hepatitis B vaccine and its administration, furnished to an individual who is at high or intermediate risk of contracting hepatitis B (as determined by the Secretary under regulations);
(11)
services of a certified registered nurse anesthetist (as defined in subsection (bb));
(12)
subject to section 4072(e) of the Omnibus Budget Reconciliation Act of 1987, extra-depth shoes with inserts or custom molded shoes with inserts for an individual with diabetes, if—
(A)
the physician who is managing the individual's diabetic condition (i) documents that the individual has peripheral neuropathy with evidence of callus formation, a history of pre-ulcerative calluses, a history of previous ulceration, foot deformity, or previous amputation, or poor circulation, and (ii) certifies that the individual needs such shoes under a comprehensive plan of care related to the individual's diabetic condition;
(B)
the particular type of shoes are prescribed by a podiatrist or other qualified physician (as established by the Secretary); and
(C)
the shoes are fitted and furnished by a podiatrist or other qualified individual (such as a pedorthist or orthotist, as established by the Secretary) who is not the physician described in subparagraph (A) (unless the Secretary finds that the physician is the only such qualified individual in the area);
(13)
screening mammography (as defined in subsection (jj));
(14)
screening pap smear and screening pelvic exam; and
(15)
bone mass measurement (as defined in subsection (rr)).
No diagnostic tests performed in any laboratory, including a laboratory that is part of a rural health clinic, or a hospital (which, for purposes of this sentence, means an institution considered a hospital for purposes of section 1814(d)) shall be included within paragraph (3) unless such laboratory—
(16)
if situated in any State in which State or applicable local law provides for licensing of establishments of this nature, (A) is licensed pursuant to such law, or (B) is approved, by the agency of such State or locality responsible for licensing establishments of this nature, as meeting the standards established for such licensing; and
(17)
(A)
meets the certification requirements under section 353 of the Public Health Service Act; and
(B)
meets such other conditions relating to the health and safety of individuals with respect to whom such tests are performed as the Secretary may find necessary.
There shall be excluded from the diagnostic services specified in paragraph (2)(C) any item or service (except services referred to in paragraph (1)) which would not be included under subsection (b) if it were furnished to an inpatient of a hospital. None of the items and services referred to in the preceding paragraphs (other than paragraphs (1) and (2)(A)) of this subsection which are furnished to a patient of an institution which meets the definition of a hospital for purposes of section 1814(d) shall be included unless such other conditions are met as the Secretary may find necessary relating to health and safety of individuals with respect to whom such items and services are furnished.
(t)

Drugs and Biologicals
(1)
The term “drugs” and the term “biologicals”, except for purposes of subsection (m)(5) and paragraph (2), include only such drugs (including contrast agents) and biologicals, respectively, as are included (or approved for inclusion) in the United States Pharmacopoeia, the National Formulary, or the United States Homeopathic Pharmacopoeia, or in New Drugs or Accepted Dental Remedies (except for any drugs and biologicals unfavorably evaluated therein), or as are approved by the pharmacy and drug therapeutics committee (or equivalent committee) of the medical staff of the hospital furnishing such drugs and biologicals for use in such hospital.
(2)
(A)
For purposes of paragraph (1), the term “drugs” also includes any drugs or biologicals used in an anticancer chemotherapeutic regimen for a medically accepted indication (as described in subparagraph (B)).
(B)
In subparagraph (A), the term “medically accepted indication”, with respect to the use of a drug, includes any use which has been approved by the Food and Drug Administration for the drug, and includes another use of the drug if—
(i)
the drug has been approved by the Food and Drug Administration; and
(ii)
(I)
such use is supported by one or more citations which are included (or approved for inclusion) in one or more of the following compendia: the American Hospital Formulary Service-Drug Information, the American Medical Association Drug Evaluations, the United States Pharmacopoeia-Drug Information (or its successor publications), and other authoritative compendia as identified by the Secretary, unless the Secretary has determined that the use is not medically appropriate or the use is identified as not indicated in one or more such compendia, or
(II)
the carrier involved determines, based upon guidance provided by the Secretary to carriers for determining accepted uses of drugs, that such use is medically accepted based on supportive clinical evidence in peer reviewed medical literature appearing in publications which have been identified for purposes of this subclause by the Secretary.
The Secretary may revise the list of compendia in clause (ii)(I) as is appropriate for identifying medically accepted indications for drugs. On and after January 1, 2010, no compendia may be included on the list of compendia under this subparagraph unless the compendia has a publicly transparent process for evaluating therapies and for identifying potential conflicts of interests.
(u)

Provider of Services
The term “provider of services” means a hospital, critical access hospital, rural emergency hospital, skilled nursing facility, comprehensive outpatient rehabilitation facility, home health agency, hospice program, or, for purposes of section 1814(g) and section 1835(e), a fund.
(v)

Reasonable Cost
(1)
(A)
The reasonable cost of any services shall be the cost actually incurred, excluding therefrom any part of incurred cost found to be unnecessary in the efficient delivery of needed health services, and shall be determined in accordance with regulations establishing the method or methods to be used, and the items to be included, in determining such costs for various types or classes of institutions, agencies, and services; except that in any case to which paragraph (2) or (3) applies, the amount of the payment determined under such paragraph with respect to the services involved shall be considered the reasonable cost of such services. In prescribing the regulations referred to in the preceding sentence, the Secretary shall consider, among other things, the principles generally applied by national organizations or established prepayment organizations (which have developed such principles) in computing the amount of payment, to be made by persons other than the recipients of services, to providers of services on account of services furnished to such recipients by such providers. Such regulations may provide for determination of the costs of services on a per diem, per unit, per capita, or other basis, may provide for using different methods in different circumstances, may provide for the use of estimates of costs of particular items or services, may provide for the establishment of limits on the direct or indirect overall incurred costs or incurred costs of specific items or services or groups of items or services to be recognized as reasonable based on estimates of the costs necessary in the efficient delivery of needed health services to individuals covered by the insurance programs established under this title, and may provide for the use of charges or a percentage of charges where this method reasonably reflects the costs. Such regulations shall (i) take into account both direct and indirect costs of providers of services (excluding therefrom any such costs, including standby costs, which are determined in accordance with regulations to be unnecessary in the efficient delivery of services covered by the insurance programs established under this title) in order that, under the methods of determining costs, the necessary costs of efficiently delivering covered services to individuals covered by the insurance programs established by this title will not be borne by individuals not so covered, and the costs with respect to individuals not so covered will not be borne by such insurance programs, and (ii) provide for the making of suitable retroactive corrective adjustments where, for a provider of services for any fiscal period, the aggregate reimbursement produced by the methods of determining costs proves to be either inadequate or excessive.
(B)
In the case of extended care services, the regulations under subparagraph (A) shall not include provision for specific recognition of a return on equity capital.
(C)
Where a hospital has an arrangement with a medical school under which the faculty of such school provides services at such hospital, an amount not in excess of the reasonable cost of such services to the medical school shall be included in determining the reasonable cost to the hospital of furnishing services—
(i)
for which payment may be made under part A, but only if—
(I)
payment for such services as furnished under such arrangement would be made under part A to the hospital had such services been furnished by the hospital, and
(II)
such hospital pays to the medical school at least the reasonable cost of such services to the medical school, or
(ii)
for which payment may be made under part B, but only if such hospital pays to the medical school at least the reasonable cost of such services to the medical school.
(D)
Where (i) physicians furnish services which are either inpatient hospital services (including services in conjunction with the teaching programs of such hospital) by reason of paragraph (7) of subsection (b) or for which entitlement exists by reason of clause (II) of section 1832(a)(2)(B)(i), and (ii) such hospital (or medical school under arrangement with such hospital) incurs no actual cost in the furnishing of such services, the reasonable cost of such services shall (under regulations of the Secretary) be deemed to be the cost such hospital or medical school would have incurred had it paid a salary to such physicians rendering such services approximately equivalent to the average salary paid to all physicians employed by such hospital (or if such employment does not exist, or is minimal in such hospital, by similar hospitals in a geographic area of sufficient size to assure reasonable inclusion of sufficient physicians in development of such average salary).
(E)
Such regulations may, in the case of skilled nursing facilities in any State, provide for the use of rates, developed by the State in which such facilities are located, for the payment of the cost of skilled nursing facility services furnished under the State's plan approved under title XIX (and such rates may be increased by the Secretary on a class or size of institution or on a geographical basis by a percentage factor not in excess of 10 percent to take into account determinable items or services or other requirements under this title not otherwise included in the computation of such State rates), if the Secretary finds that such rates are reasonably related to (but not necessarily limited to) analyses undertaken by such State of costs of care in comparable facilities in such State. Notwithstanding the previous sentence, such regulations with respect to skilled nursing facilities shall take into account (in a manner consistent with subparagraph (A) and based on patient-days of services furnished) the costs (including the costs of services required to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident eligible for benefits under this title) of such facilities complying with the requirements of subsections (b), (c), and (d) of section 1819 (including the costs of conducting nurse aide training and competency evaluation programs and competency evaluation programs).
(F)
Such regulations shall require each provider of services (other than a fund) to make reports to the Secretary of information described in section 1121(a) in accordance with the uniform reporting system (established under such section) for that type of provider.
(G)
(i)
In any case in which a hospital provides inpatient services to an individual that would constitute post-hospital extended care services if provided by a skilled nursing facility and a quality improvement organization (or, in the absence of such a qualified organization, the Secretary or such agent as the Secretary may designate) determines that inpatient hospital services for the individual are not medically necessary but post-hospital extended care services for the individual are medically necessary and such extended care services are not otherwise available to the individual (as determined in accordance with criteria established by the Secretary) at the time of such determination, payment for such services provided to the individual shall continue to be made under this title at the payment rate described in clause (ii) during the period in which—
(I)
such post-hospital extended care services for the individual are medically necessary and not otherwise available to the individual (as so determined),
(II)
inpatient hospital services for the individual are not medically necessary, and
(III)
the individual is entitled to have payment made for post-hospital extended care services under this title,
except that if the Secretary determines that there is not an excess of hospital beds in such hospital and (subject to clause (iv)) there is not an excess of hospital beds in the area of such hospital, such payment shall be made (during such period) on the basis of the amount otherwise payable under part A with respect to inpatient hospital services.
(ii)
(I)
Except as provided in subclause (II), the payment rate referred to in clause (i) is a rate equal to the estimated adjusted State-wide average rate per patient-day paid for services provided in skilled nursing facilities under the State plan approved under title XIX for the State in which such hospital is located, or, if the State in which the hospital is located does not have a State plan approved under title XIX, the estimated adjusted State-wide average allowable costs per patient-day for extended care services under this title in that State.
(II)
If a hospital has a unit which is a skilled nursing facility, the payment rate referred to in clause (i) for the hospital is a rate equal to the lesser of the rate described in subclause (I) or the allowable costs in effect under this title for extended care services provided to patients of such unit.
(iii)
Any day on which an individual receives inpatient services for which payment is made under this subparagraph shall, for purposes of this Act (other than this subparagraph), be deemed to be a day on which the individual received inpatient hospital services.
(iv)
In determining under clause (i), in the case of a public hospital, whether or not there is an excess of hospital beds in the area of such hospital, such determination shall be made on the basis of only the public hospitals (including the hospital) which are in the area of the hospital and which are under common ownership with that hospital.
(H)
In determining such reasonable cost with respect to home health agencies, the Secretary may not include—
(i)
any costs incurred in connection with bonding or establishing an escrow account by any such agency as a result of the surety bond requirement described in subsection (o)(7) and the financial security requirement described in subsection (o)(8);
(ii)
in the case of home health agencies to which the surety bond requirement described in subsection (o)(7) and the financial security requirement described in subsection (o)(8) apply, any costs attributed to interest charged such an agency in connection with amounts borrowed by the agency to repay overpayments made under this title to the agency, except that such costs may be included in reasonable cost if the Secretary determines that the agency was acting in good faith in borrowing the amounts;
(iii)
in the case of contracts entered into by a home health agency after the date of the enactment of this subparagraph for the purpose of having services furnished for or on behalf of such agency, any cost incurred by such agency pursuant to any such contract which is entered into for a period exceeding five years; and
(iv)
in the case of contracts entered into by a home health agency before the date of the enactment of this subparagraph for the purpose of having services furnished for or on behalf of such agency, any cost incurred by such agency pursuant to any such contract, which determines the amount payable by the home health agency on the basis of a percentage of the agency's reimbursement or claim for reimbursement for services furnished by the agency, to the extent that such cost exceeds the reasonable value of the services furnished on behalf of such agency.
(I)
In determining such reasonable cost, the Secretary may not include any costs incurred by a provider with respect to any services furnished in connection with matters for which payment may be made under this title and furnished pursuant to a contract between the provider and any of its subcontractors which is entered into after the date of the enactment of this subparagraph and the value or cost of which is $10,000 or more over a twelve-month period unless the contract contains a clause to the effect that—
(i)
until the expiration of four years after the furnishing of such services pursuant to such contract, the subcontractor shall make available, upon written request by the Secretary, or upon request by the Comptroller General, or any of their duly authorized representatives, the contract, and books, documents and records of such subcontractor that are necessary to certify the nature and extent of such costs, and
(ii)
if the subcontractor carries out any of the duties of the contract through a subcontract, with a value or cost of $10,000 or more over a twelve-month period, with a related organization, such subcontract shall contain a clause to the effect that until the expiration of four years after the furnishing of such services pursuant to such subcontract, the related organization shall make available, upon written request by the Secretary, or upon request by the Comptroller General, or any of their duly authorized representatives, the subcontract, and books, documents and records of such organization that are necessary to verify the nature and extent of such costs.
The Secretary shall prescribe in regulation criteria and procedures which the Secretary shall use in obtaining access to books, documents, and records under clauses required in contracts and subcontracts under this subparagraph.
(J)
Such regulations may not provide for any inpatient routine salary cost differential as a reimbursable cost for hospitals and skilled nursing facilities.
(K)
(i)
The Secretary shall issue regulations that provide, to the extent feasible, for the establishment of limitations on the amount of any costs or charges that shall be considered reasonable with respect to services provided on an outpatient basis by hospitals (other than bona fide emergency services as defined in clause (ii)) or clinics (other than rural health clinics), which are reimbursed on a cost basis or on the basis of cost related charges, and by physicians utilizing such outpatient facilities. Such limitations shall be reasonably related to the charges in the same area for similar services provided in physicians' offices. Such regulations shall provide for exceptions to such limitations in cases where similar services are not generally available in physicians' offices in the area to individuals entitled to benefits under this title.
(ii)
For purposes of clause (i), the term “bona fide emergency services” means services provided in a hospital emergency room after the sudden onset of a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in—
(I)
placing the patient's health in serious jeopardy;
(II)
serious impairment to bodily functions; or
(III)
serious dysfunction of any bodily organ or part.
(L)
(i)
The Secretary, in determining the amount of the payments that may be made under this title with respect to services furnished by home health agencies, may not recognize as reasonable (in the efficient delivery of such services) costs for the provision of such services by an agency to the extent these costs exceed (on the aggregate for the agency) for cost reporting periods beginning on or after—
(I)
July 1, 1985, and before July 1, 1986, 120 percent of the mean of the labor-related and nonlabor per visit costs for freestanding home health agencies,
(II)
July 1, 1986, and before July 1, 1987, 115 percent of such mean,
(III)
July 1, 1987, and before October 1, 1997, 112 percent of such mean,
(IV)
October 1, 1997, and before October 1, 1998, 105 percent of the median of the labor-related and nonlabor per visit costs for freestanding home health agencies, or
(V)
October 1, 1998, 106 percent of such median.
(ii)
Effective for cost reporting periods beginning on or after July 1, 1986, such limitations shall be applied on an aggregate basis for the agency, rather than on a discipline specific basis. The Secretary may provide for such exemptions and exceptions to such limitation as he deems appropriate.
(iii)
Not later than July 1, 1991, and annually thereafter (but not for cost reporting periods beginning on or after July 1, 1994, and before July 1, 1996, or on or after July 1, 1997, and before October 1, 1997), the Secretary shall establish limits under this subparagraph for cost reporting periods beginning on or after such date by utilizing the area wage index applicable under section 1886(d)(3)(E) and determined using the survey of the most recent available wages and wage-related costs of hospitals located in the geographic area in which the home health service is furnished (determined without regard to whether such hospitals have been reclassified to a new geographic area pursuant to section 1886(d)(8)(B), a decision of the Medicare Geographic Classification Review Board under section 1886(d)(10), or a decision of the Secretary).
(iv)
In establishing limits under this subparagraph for cost reporting periods beginning after September 30, 1997, the Secretary shall not take into account any changes in the home health market basket, as determined by the Secretary, with respect to cost reporting periods which began on or after July 1, 1994, and before July 1, 1996.
(v)
For services furnished by home health agencies for cost reporting periods beginning on or after October 1, 1997, subject to clause (viii)(I), the Secretary shall provide for an interim system of limits. Payment shall not exceed the costs determined under the preceding provisions of this subparagraph or, if lower, the product of—
(I)
an agency-specific per beneficiary annual limitation calculated based 75 percent on 98 percent of the reasonable costs (including nonroutine medical supplies) for the agency's 12-month cost reporting period ending during fiscal year 1994, and based 25 percent on 98 percent of the standardized regional average of such costs for the agency's census division, as applied to such agency, for cost reporting periods ending during fiscal year 1994, such costs updated by the home health market basket index; and
(II)
the agency's unduplicated census count of patients (entitled to benefits under this title) for the cost reporting period subject to the limitation.
(vi)
For services furnished by home health agencies for cost reporting periods beginning on or after October 1, 1997, the following rules apply:
(I)
For new providers and those providers without a 12-month cost reporting period ending in fiscal year 1994 subject to clauses (viii)(II) and (viii)(III), the per beneficiary limitation shall be equal to the median of these limits (or the Secretary's best estimates thereof) applied to other home health agencies as determined by the Secretary. A home health agency that has altered its corporate structure or name shall not be considered a new provider for this purpose.
(II)
For beneficiaries who use services furnished by more than one home health agency, the per beneficiary limitations shall be prorated among the agencies.
(vii)
(I)
Not later than January 1, 1998, the Secretary shall establish per visit limits applicable for fiscal year 1998, and not later than April 1, 1998, the Secretary shall establish per beneficiary limits under clause (v)(I) for fiscal year 1998.
(II)
Not later than August 1 of each year (beginning in 1998) the Secretary shall establish the limits applicable under this subparagraph for services furnished during the fiscal year beginning October 1 of the year.
(viii)
(I)
In the case of a provider with a 12-month cost reporting period ending in fiscal year 1994, if the limit imposed under clause (v) (determined without regard to this subclause) for a cost reporting period beginning during or after fiscal year 1999 is less than the median described in clause (vi)(I) (but determined as if any reference in clause (v) to “98 percent” were a reference to “100 percent”), the limit otherwise imposed under clause (v) for such provider and period shall be increased by ⅓ of such difference.
(II)
Subject to subclause (IV), for new providers and those providers without a 12-month cost reporting period ending in fiscal year 1994, but for which the first cost reporting period begins before fiscal year 1999, for cost reporting periods beginning during or after fiscal year 1999, the per beneficiary limitation described in clause (vi)(I) shall be equal to the median described in such clause (determined as if any reference in clause (v) to “98 percent” were a reference to “100 percent”).
(III)
Subject to subclause (IV), in the case of a new provider for which the first cost reporting period begins during or after fiscal year 1999, the limitation applied under clause (vi)(I) (but only with respect to such provider) shall be equal to 75 percent of the median described in clause (vi)(I).
(IV)
In the case of a new provider or a provider without a 12-month cost reporting period ending in fiscal year 1994, subclause (II) shall apply, instead of subclause (III), to a home health agency which filed an application for home health agency provider status under this title before September 15, 1998, or which was approved as a branch of its parent agency before such date and becomes a subunit of the parent agency or a separate agency on or after such date.
(V)
Each of the amounts specified in subclauses (I) through (III) are such amounts as adjusted under clause (iii) to reflect variations in wages among different areas.
(ix)
Notwithstanding the per beneficiary limit under clause (viii), if the limit imposed under clause (v) (determined without regard to this clause) for a cost reporting period beginning during or after fiscal year 2000 is less than the median described in clause (vi)(I) (but determined as if any reference in clause (v) to “98 percent” were a reference to “100 percent”), the limit otherwise imposed under clause (v) for such provider and period shall be increased by 2 percent.
(x)
Notwithstanding any other provision of this subparagraph, in updating any limit under this subparagraph by a home health market basket index for cost reporting periods beginning during each of fiscal years 2000, 2002, and 2003, the update otherwise provided shall be reduced by 1.1 percentage points. With respect to cost reporting periods beginning during fiscal year 2001, the update to any limit under this subparagraph shall be the home health market basket index.
(M)
Such regulations shall provide that costs respecting care provided by a provider of services, pursuant to an assurance under title VI or XVI of the Public Health Service Act that the provider will make available a reasonable volume of services to persons unable to pay therefor, shall not be allowable as reasonable costs.
(N)
In determining such reasonable costs, costs incurred for activities directly related to influencing employees respecting unionization may not be included.
(O)
(i)
In establishing an appropriate allowance for depreciation and for interest on capital indebtedness with respect to an asset of a provider of services which has undergone a change of ownership, such regulations shall provide, except as provided in clause (iii), that the valuation of the asset after such change of ownership shall be the historical cost of the asset, as recognized under this title, less depreciation allowed, to the owner of record as of the date of enactment of the Balanced Budget Act of 1997 (or, in the case of an asset not in existence as of that date, the first owner of record of the asset after that date).
(ii)
Such regulations shall not recognize, as reasonable in the provision of health care services, costs (including legal fees, accounting and administrative costs, travel costs, and the costs of feasibility studies) attributable to the negotiation or settlement of the sale or purchase of any capital asset (by acquisition or merger) for which any payment has previously been made under this title.
(iii)
In the case of the transfer of a hospital from ownership by a State to ownership by a nonprofit corporation without monetary consideration, the basis for capital allowances to the new owner shall be the book value of the hospital to the State at the time of the transfer.
(P)
If such regulations provide for the payment for a return on equity capital (other than with respect to costs of inpatient hospital services), the rate of return to be recognized, for determining the reasonable cost of services furnished in a cost reporting period, shall be equal to the average of the rates of interest, for each of the months any part of which is included in the period, on obligations issued for purchase by the Federal Hospital Insurance Trust Fund.
(Q)
Except as otherwise explicitly authorized, the Secretary is not authorized to limit the rate of increase on allowable costs of approved medical educational activities.
(R)
In determining such reasonable cost, costs incurred by a provider of services representing a beneficiary in an unsuccessful appeal of a determination described in section 1869(b) shall not be allowable as reasonable costs.
(S)
(i)
Such regulations shall not include provision for specific recognition of any return on equity capital with respect to hospital outpatient departments.
(ii)
(I)
Such regulations shall provide that, in determining the amount of the payments that may be made under this title with respect to all the capital-related costs of outpatient hospital services, the Secretary shall reduce the amounts of such payments otherwise established under this title by 15 percent for payments attributable to portions of cost reporting periods occurring during fiscal year 1990, by 15 percent for payments attributable to portions of cost reporting periods occurring during fiscal year 1991, and by 10 percent for payments attributable to portions of cost reporting periods occurring during fiscal years 1992 through 1999 and until the first date that the prospective payment system under section 1833(t) is implemented.
(II)
The Secretary shall reduce the reasonable cost of outpatient hospital services (other than the capital-related costs of such services) otherwise determined pursuant to section 1833(a)(2)(B)(i)(I) by 5.8 percent for payments attributable to portions of cost reporting periods occurring during fiscal years 1991 through 1999 and until the first date that the prospective payment system under section 1833(t) is implemented.
(III)
Subclauses (I) and (II) shall not apply to payments with respect to the costs of hospital outpatient services provided by any hospital that is a sole community hospital (as defined in section 1886(d)(5)(D)(iii)) or a critical access hospital (as defined in section 1861(mm)(1)).
(IV)
In applying subclauses (I) and (II) to services for which payment is made on the basis of a blend amount under section 1833(i)(3)(A)(ii) or 1833(n)(1)(A)(ii), the costs reflected in the amounts described in sections 1833(i)(3)(B)(i)(I) and 1833(n)(1)(B)(i)(I), respectively, shall be reduced in accordance with such subclause.
(T)
In determining such reasonable costs for hospitals, no reduction in copayments under section 1833(t)(8)(B) shall be treated as a bad debt and the amount of bad debts otherwise treated as allowable costs which are attributable to the deductibles and coinsurance amounts under this title shall be reduced—
(i)
for cost reporting periods beginning during fiscal year 1998, by 25 percent of such amount otherwise allowable,
(ii)
for cost reporting periods beginning during fiscal year 1999, by 40 percent of such amount otherwise allowable,
(iii)
for cost reporting periods beginning during fiscal year 2000, by 45 percent of such amount otherwise allowable,
(iv)
for cost reporting periods beginning during fiscal years 2001 through 2012, by 30 percent of such amount otherwise allowable, and
(v)
for cost reporting periods beginning during fiscal year 2013 or a subsequent fiscal year, by 35 percent of such amount otherwise allowable.
(U)
In determining the reasonable cost of ambulance services (as described in subsection (s)(7)) provided during fiscal year 1998, during fiscal year 1999, and during so much of fiscal year 2000 as precedes January 1, 2000, the Secretary shall not recognize the costs per trip in excess of costs recognized as reasonable for ambulance services provided on a per trip basis during the previous fiscal year (after application of this subparagraph), increased 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 fiscal year involved reduced by 1.0 percentage point. For ambulance services provided after June 30, 1998, the Secretary may provide that claims for such services must include a code (or codes) under a uniform coding system specified by the Secretary that identifies the services furnished.
(V)
In determining such reasonable costs for skilled nursing facilities and (beginning with respect to cost reporting periods beginning during fiscal year 2013) for covered skilled nursing services described in section 1888(e)(2)(A) furnished by hospital providers of extended care services (as described in section 1883), the amount of bad debts otherwise treated as allowed costs which are attributable to the coinsurance amounts under this title for individuals who are entitled to benefits under part A and—
(i)
are not described in section 1935(c)(6)(A)(ii) shall be reduced by—
(I)73
for cost reporting periods beginning on or after October 1, 2005, but before fiscal year 2013, 30 percent of such amount otherwise allowable; and
^{73}
The margins for subclauses of clauses (i) and (ii) are so in law.
(II)73
for cost reporting periods beginning during fiscal year 2013 or a subsequent fiscal year, by 35 percent of such amount otherwise allowable.
(ii)
are described in such section—
(I)73
for cost reporting periods beginning on or after October 1, 2005, but before fiscal year 2013, shall not be reduced;
(II)73
for cost reporting periods beginning during fiscal year 2013, shall be reduced by 12 percent of such amount otherwise allowable;
(III)73
for cost reporting periods beginning during fiscal year 2014, shall be reduced by 24 percent of such amount otherwise allowable; and
(IV)73
for cost reporting periods beginning during a subsequent fiscal year, shall be reduced by 35 percent of such amount otherwise allowable.
(W)
(i)
In determining such reasonable costs for providers described in clause (ii), the amount of bad debts otherwise treated as allowable costs which are attributable to deductibles and coinsurance amounts under this title shall be reduced—
(I)
for cost reporting periods beginning during fiscal year 2013, by 12 percent of such amount otherwise allowable;
(II)
for cost reporting periods beginning during fiscal year 2014, by 24 percent of such amount otherwise allowable; and
(III)
for cost reporting periods beginning during a subsequent fiscal year, by 35 percent of such amount otherwise allowable.
(ii)
A provider described in this clause is a provider of services not described in subparagraph (T) or (V), a supplier, or any other type of entity that receives payment for bad debts under the authority under subparagraph (A).
(2)
(A)
If the bed and board furnished as part of inpatient hospital services (including inpatient tuberculosis hospital services and inpatient psychiatric hospital services) or post-hospital extended care services is in accommodations more expensive than semi-private accommodations, the amount taken into account for purposes of payment under this title with respect to such services may not exceed the amount that would be taken into account with respect to such services if furnished in such semi-private accommodations unless the more expensive accommodations were required for medical reasons.
(B)
Where a provider of services which has an agreement in effect under this title furnishes to an individual items or services which are in excess of or more expensive than the items or services with respect to which payment may be made under part A or part B, as the case may be, the Secretary shall take into account for purposes of payment to such provider of services only the items or services with respect to which such payment may be made.
(3)
If the bed and board furnished as part of inpatient hospital services (including inpatient tuberculosis hospital services and inpatient psychiatric hospital services) or post-hospital extended care services is in accommodations other than, but not more expensive than, semi-private accommodations and the use of such other accommodations rather than semi-private accommodations was neither at the request of the patient nor for a reason which the Secretary determines is consistent with the purposes of this title, the amount of the payment with respect to such bed and board under part A shall be the amount otherwise payable under this title for such bed and board furnished in semi-private accommodations minus the difference between the charge customarily made by the hospital or skilled nursing facility for bed and board in semi-private accommodations and the charge customarily made by it for bed and board in the accommodations furnished.
(4)
If a provider of services furnishes items or services to an individual which are in excess of or more expensive than the items or services determined to be necessary in the efficient delivery of needed health services and charges are imposed for such more expensive items or services under the authority granted in section 1866(a)(2)(B)(ii), the amount of payment with respect to such items or services otherwise due such provider in any fiscal period shall be reduced to the extent that such payment plus such charges exceed the cost actually incurred for such items or services in the fiscal period in which such charges are imposed.
(5)
(A)
Where physical therapy services, occupational therapy services, speech therapy services, or other therapy services or services of other health-related personnel (other than physicians) are furnished under an arrangement with a provider of services or other organization, specified in the first sentence of subsection (p) (including through the operation of subsection (g)) the amount included in any payment to such provider or other organization under this title as the reasonable cost of such services (as furnished under such arrangements) shall not exceed an amount equal to the salary which would reasonably have been paid for such services (together with any additional costs that would have been incurred by the provider or other organization) to the person performing them if they had been performed in an employment relationship with such provider or other organization (rather than under such arrangement) plus the cost of such other expenses (including a reasonable allowance for traveltime and other reasonable types of expense related to any differences in acceptable methods of organization for the provision of such therapy) incurred by such person, as the Secretary may in regulations determine to be appropriate.
(B)
Notwithstanding the provisions of subparagraph (A), if a provider of services or other organization specified in the first sentence of section 1861(p) requires the services of a therapist on a limited part-time basis, or only to perform intermittent services, the Secretary may make payment on the basis of a reasonable rate per unit of service, even though such rate is greater per unit of time than salary related amounts, where he finds that such greater payment is, in the aggregate, less than the amount that would have been paid if such organization had employed a therapist on a full- or part-time salary basis.
(6)
For purposes of this subsection, the term “semi-private accommodations” means two-bed, three-bed, or four-bed accommodations.
(7)
(A)
For limitation on Federal participation for capital expenditures which are out of conformity with a comprehensive plan of a State or areawide planning agency, see section 1122.
(B)
For further limitations on reasonable cost and determination of payment amounts for operating costs of inpatient hospital services and waivers for certain States, see section 1886.
(C)
For provisions restricting payment for provider-based physicians' services and for payments under certain percentage arrangements, see section 1887.
(D)
For further limitations on reasonable cost and determination of payment amounts for routine service costs of skilled nursing facilities, see subsections (a) through (c) of section 1888.
(8)

Items unrelated to patient care.—
Reasonable costs do not include costs for the following—
(i)
entertainment, including tickets to sporting and other entertainment events;
(ii)
gifts or donations;
(iii)
personal use of motor vehicles;
(iv)
costs for fines and penalties resulting from violations of Federal, State, or local laws; and
(v)
education expenses for spouses or other dependents of providers of services, their employees or contractors.
(w)

Arrangements for Certain Services
(1)
The term “arrangements” is limited to arrangements under which receipt of payment by the hospital, critical access hospital, skilled nursing facility, home health agency, or hospice program (whether in its own right or as agent), with respect to services for which an individual is entitled to have payment made under this title, discharges the liability of such individual or any other person to pay for the services.
(2)
Utilization review activities conducted, in accordance with the requirements of the program established under part B of title XI of the Social Security Act with respect to services furnished by a hospital or critical access hospital to patients insured under part A of this title or entitled to have payment made for such services under part B of this title or under a State plan approved under title XIX, by a quality improvement organization designated for the area in which such hospital or critical access hospital is located shall be deemed to have been conducted pursuant to arrangements between such hospital or critical access hospital and such organization under which such hospital or critical access hospital is obligated to pay to such organization, as a condition of receiving payment for hospital or critical access hospital services so furnished under this part or under such a State plan, such amount as is reasonably incurred and requested (as determined under regulations of the Secretary) by such organization in conducting such review activities with respect to services furnished by such hospital or critical access hospital to such patients.
(x)

State and United States
The terms “State” and “United States” have the meaning given to them by subsections (h) and (i), respectively, of section 210.
(y)

Extended Care in Religious Nonmedical Health Care Institutions
(1)
The term “skilled nursing facility” also includes a religious nonmedical health care institution (as defined in subsection (ss)(1)), but only (except for purposes of subsection (a)(2)) with respect to items and services ordinarily furnished by such an institution to inpatients, and payment may be made with respect to services provided by or in such an institution only to such extent and under such conditions, limitations, and requirements (in addition to or in lieu of the conditions, limitations, and requirements otherwise applicable) as may be provided in regulations consistent with section 1821.
(2)
Notwithstanding any other provision of this title, payment under part A may not be made for services furnished an individual in a skilled nursing facility to which paragraph (1) applies unless such individual elects, in accordance with regulations, for a spell of illness to have such services treated as post-hospital extended care services for purposes of such part; and payment under part A may not be made for post-hospital extended care services—
(A)
furnished an individual during such spell of illness in a skilled nursing facility to which paragraph (1) applies after—
(i)
such services have been furnished to him in such a facility for 30 days during such spell, or
(ii)
such services have been furnished to him during such spell in a skilled nursing facility to which such paragraph does not apply; or
(B)
furnished an individual during such spell of illness in a skilled nursing facility to which paragraph (1) does not apply after such services have been furnished to him during such spell in a skilled nursing facility to which such paragraph applies.
(3)
The amount payable under part A for post-hospital extended care services furnished an individual during any spell of illness in a skilled nursing facility to which paragraph (1) applies shall be reduced by a coinsurance amount equal to one-eighth of the inpatient hospital deductible for each day before the 31st day on which he is furnished such services in such a facility during such spell (and the reduction under this paragraph shall be in lieu of any reduction under section 1813(a)(3)).
(4)
For purposes of subsection (i), the determination of whether services furnished by or in an institution described in paragraph (1) constitute post-hospital extended care services shall be made in accordance with and subject to such conditions, limitations, and requirements as may be provided in regulations.
(z)

Institutional Planning
An overall plan and budget of a hospital, skilled nursing facility, comprehensive outpatient rehabilitation facility, or home health agency shall be considered sufficient if it—
(1)
provides for an annual operating budget which includes all anticipated income and expenses related to items which would, under generally accepted accounting principles, be considered income and expense items (except that nothing in this paragraph shall require that there be prepared, in connection with any budget, an item-by-item identification of the components of each type of anticipated expenditure or income);
(2)
(A)
provides for a capital expenditures plan for at least a 3-year period (including the year to which the operating budget described in paragraph (1) is applicable) which includes and identifies in detail the anticipated sources of financing for, and the objectives of, each anticipated expenditure in excess of $600,000 (or such lesser amount as may be established by the State under section 1122(g)(1) in which the hospital is located) related to the acquisition of land, the improvement of land, buildings, and equipment, and the replacement, modernization, and expansion of the buildings and equipment which would, under generally accepted accounting principles, be considered capital items;
(B)
provides that such plan is submitted to the agency designated under section 1122(b), or if no such agency is designated, to the appropriate health planning agency in the State (but this subparagraph shall not apply in the case of a facility exempt from review under section 1122 by reason of section 1122(j));
(3)
provides for review and updating at least annually; and
(4)
is prepared, under the direction of the governing body of the institution or agency, by a committee consisting of representatives of the governing body, the administrative staff, and the medical staff (if any) of the institution or agency.
(aa)

Rural Health Clinic Services and Federally Qualified Health Center Services
(1)
The term “rural health clinic services” means —
(A)
physicians' services and such services and supplies as are covered under section 1861(s)(2)(A) if furnished as an incident to a physician's professional service and items and services described in section 1861(s)(10),
(B)
such services furnished by a physician assistant or a nurse practitioner (as defined in paragraph (5)), by a clinical psychologist (as defined by the Secretary), by a clinical social worker (as defined in subsection (hh)(1)), by a marriage and family therapist (as defined in subsection (lll)(2)), or by a mental health counselor (as defined in subsection (lll)(4)), and such services and supplies furnished as an incident to his service as would otherwise be covered if furnished by a physician or as an incident to a physician's service,
(C)
in the case of a rural health clinic located in an area in which there exists a shortage of home health agencies, part-time or intermittent nursing care and related medical supplies (other than drugs and biologicals) furnished by a registered professional nurse or licensed practical nurse to a homebound individual under a written plan of treatment (i) established and periodically reviewed by a physician described in paragraph (2)(B), or (ii) established by a nurse practitioner or physician assistant and periodically reviewed and approved by a physician described in paragraph (2)(B), and
(D)
intensive outpatient services (as defined in section 1861(ff)(4)),
when furnished to an individual as an outpatient of a rural health clinic.
(2)
The term “rural health clinic” means a facility which —
(A)
is primarily engaged in furnishing to outpatients services described in subparagraphs (A) and (B) of paragraph (1);
(B)
in the case of a facility which is not a physician-directed clinic, has an arrangement (consistent with the provisions of State and local law relative to the practice, performance, and delivery of health services) with one or more physicians (as defined in subsection (r)(1)) under which provision is made for the periodic review by such physicians of covered services furnished by physician assistants and nurse practitioners, the supervision and guidance by such physicians of physician assistants and nurse practitioners, the preparation by such physicians of such medical orders for care and treatment of clinic patients as may be necessary, and the availability of such physicians for such referral of and consultation for patients as is necessary and for advice and assistance in the management of medical emergencies; and, in the case of a physician-directed clinic, has one or more of its staff physicians perform the activities accomplished through such an arrangement;
(C)
maintains clinical records on all patients;
(D)
has arrangements with one or more hospitals, having agreements in effect under section 1866, for the referral and admission of patients requiring inpatient services or such diagnostic or other specialized services as are not available at the clinic;
(E)
has written policies, which are developed with the advice of (and with provision for review of such policies from time to time by) a group of professional personnel, including one or more physicians and one or more physician assistants or nurse practitioners, to govern those services described in paragraph (1) which it furnishes;
(F)
has a physician, physician assistant, or nurse practitioner responsible for the execution of policies described in subparagraph (E) and relating to the provision of the clinic's services;
(G)
directly provides routine diagnostic services, including clinical laboratory services, as prescribed in regulations by the Secretary, and has prompt access to additional diagnostic services from facilities meeting requirements under this title;
(H)
in compliance with State and Federal law, has available for administering to patients of the clinic at least such drugs and biologicals as are determined by the Secretary to be necessary for the treatment of emergency cases (as defined in regulations) and has appropriate procedures or arrangements for storing, administering, and dispensing any drugs and biologicals;
(I)
has a quality assessment and performance improvement program, and appropriate procedures for review of utilization of clinic services, as the Secretary may specify;
(J)
has a nurse practitioner, a physician assistant, or a certified nurse-midwife (as defined in subsection (gg)) available to furnish patient care services not less than 50 percent of the time the clinic operates; and
(K)
meets such other requirements as the Secretary may find necessary in the interest of the health and safety of the individuals who are furnished services by the clinic.
For the purposes of this title, such term includes only a facility which (i) is located in an area that is not an urbanized area (as defined by the Bureau of the Census) and in which there are insufficient numbers of needed health care practitioners (as determined by the Secretary), and that, within the previous 4-year period, has been designated by the chief executive officer of the State and certified by the Secretary as an area with a shortage of personal health services or designated by the Secretary either (I) as an area with a shortage of personal health services under section 330(b)(3) or 1302(7) of the Public Health Service Act, (II) as a health professional shortage area described in section 332(a)(1)(A) of that Act because of its shortage of primary medical care manpower, (III) as a high impact area described in section 329(a)(5)74 of that Act, of (IV) as an area which includes a population group which the Secretary determines has a health manpower shortage under section 332(a)(1)(B) of that Act, (ii) has filed an agreement with the Secretary by which it agrees not to charge any individual or other person for items or services for which such individual is entitled to have payment made under this title, except for the amount of any deductible or coinsurance amount imposed with respect to such items or services (not in excess of the amount customarily charged for such items and services by such clinic), pursuant to subsections (a) and (b) of section 1833, (iii) employs a physician assistant or nurse practitioner, and (iv) is not a rehabilitation agency or a facility which is primarily for the care and treatment of mental diseases. A facility that is in operation and qualifies as a rural health clinic under this title or title XIX and that subsequently fails to satisfy the requirement of clause (i) shall be considered, for purposes of this title and title XIX, as still satisfying the requirement of such clause if it is determined, in accordance with criteria established by the Secretary in regulations, to be essential to the delivery of primary care services that would otherwise be unavailable in the geographic area served by the clinic. If a State agency has determined under section 1864(a) that a facility is a rural health clinic and the facility has applied to the Secretary for approval as such a clinic, the Secretary shall notify the facility of the Secretary's approval or disapproval not later than 60 days after the date of the State agency determination or the application (whichever is later).
^{74}
So in law. Sections 2 and 3 of Public Law 104–299 (110 Stat. 3626, 3642) redesignated sections 329 and 330 as sections 330 and 330A.
(3)
The term “Federally qualified health center services” means—
(A)
services of the type described in subparagraphs (A) through (D) of paragraph (1) and preventive services (as defined in section 1861(ddd)(3)); and
(B)
preventive primary health services that a center is required to provide under section 330 of the Public Health Service Act,
when furnished to an individual as an outpatient of a Federally qualified health center by the center or by a health care professional under contract with the center and, for this purpose, any reference to a rural health clinic or a physician described in paragraph (2)(B) is deemed a reference to a Federally qualified health center or a physician at the center, respectively.
(4)
The term “Federally qualified health center” means an entity which—
(A)
(i)
is receiving a grant under section 33075 of the Public Health Service Act, or
^{75}
So in law. Sections 2 and 3 of Public Law 104–299 (110 Stat. 3626, 3642) redesignated sections 329 and 330 as sections 330 and 330A.
(ii)
(I)
is receiving funding from such a grant under a contract with the recipient of such a grant, and (II) meets the requirements to receive a grant under section 33076 of such Act;
^{76}
So in law. Sections 3 of Public Law 104–299 (110 Stat. 3642) redesignated section 330 as section 330A.
(B)
based on the recommendation of the Health Resources and Services Administration within the Public Health Service, is determined by the Secretary to meet the requirements for receiving such a grant;
(C)
was treated by the Secretary, for purposes of part B, as a comprehensive Federally funded health center as of January 1, 1990; or
(D)
is an outpatient health program or facility operated by a tribe or tribal organization under the Indian Self-Determination Act or by an urban Indian organization receiving funds under title V of the Indian Health Care Improvement Act.
(5)
(A)
The term “physician assistant” and the term “nurse practitioner” mean, for purposes of this title, a physician assistant or nurse practitioner who performs such services as such individual is legally authorized to perform (in the State in which the individual performs such services) in accordance with State law (or the State regulatory mechanism provided by State law), and who meets such training, education, and experience requirements (or any combination thereof) as the Secretary may prescribe in regulations.
(B)
The term “clinical nurse specialist” means, for purposes of this title, an individual who—
(i)
is a registered nurse and is licensed to practice nursing in the State in which the clinical nurse specialist services are performed; and
(ii)
holds a master's degree in a defined clinical area of nursing from an accredited educational institution.
(6)
The term “collaboration” means a process in which a nurse practitioner works with a physician to deliver health care services within the scope of the practitioner's professional expertise, with medical direction and appropriate supervision as provided for in jointly developed guidelines or other mechanisms as defined by the law of the State in which the services are performed.
(7)
(A)
The Secretary shall waive for a 1-year period the requirements of paragraph (2) that a rural health clinic employ a physician assistant, nurse practitioner or certified nurse midwife or that such clinic require such providers to furnish services at least 50 percent of the time that the clinic operates for any facility that requests such waiver if the facility demonstrates that the facility has been unable, despite reasonable efforts, to hire a physician assistant, nurse practitioner, or certified nurse-midwife in the previous 90-day period.
(B)
The Secretary may not grant such a waiver under subparagraph (A) to a facility if the request for the waiver is made less than 6 months after the date of the expiration of any previous such waiver for the facility, or if the facility has not yet been determined to meet the requirements (including subparagraph (J) of the first sentence of paragraph (2)) of a rural health clinic.
(C)
A waiver which is requested under this paragraph shall be deemed granted unless such request is denied by the Secretary within 60 days after the date such request is received.
(bb)

Services of a Certified Registered Nurse Anesthetist
(1)
The term “services of a certified registered nurse anesthetist” means anesthesia services and related care furnished by a certified registered nurse anesthetist (as defined in paragraph (2)) which the nurse anesthetist is legally authorized to perform as such by the State in which the services are furnished.
(2)
The term “certified registered nurse anesthetist” means a certified registered nurse anesthetist licensed by the State who meets such education, training, and other requirements relating to anesthesia services and related care as the Secretary may prescribe. In prescribing such requirements the Secretary may use the same requirements as those established by a national organization for the certification of nurse anesthetists. Such term also includes, as prescribed by the Secretary, an anesthesiologist assistant.
(cc)

Comprehensive Outpatient Rehabilitation Facility Services
(1)
The term “comprehensive outpatient rehabilitation facility services” means the following items and services furnished by a physician or other qualified professional personnel (as defined in regulations by the Secretary) to an individual who is an outpatient of a comprehensive outpatient rehabilitation facility under a plan (for furnishing such items and services to such individual) established and periodically reviewed by a physician—
(A)
physicians' services;
(B)
physical therapy, occupational therapy, speech-language pathology services, and respiratory therapy;
(C)
prosthetic and orthotic devices, including testing, fitting, or training in the use of prosthetic and orthotic devices;
(D)
social and psychological services;
(E)
nursing care provided by or under the supervision of a registered professional nurse;
(F)
drugs and biologicals which cannot, as determined in accordance with regulations, be self-administered;
(G)
supplies and durable medical equipment; and
(H)
such other items and services as are medically necessary for the rehabilitation of the patient and are ordinarily furnished by comprehensive outpatient rehabilitation facilities,
excluding, however, any item or service if it would not be included under subsection (b) if furnished to an inpatient of a hospital. In the case of physical therapy, occupational therapy, and speech pathology services, there shall be no requirement that the item or service be furnished at any single fixed location if the item or service is furnished pursuant to such plan and payments are not otherwise made for the item or service under this title.
(2)
The term “comprehensive outpatient rehabilitation facility” means a facility which—
(A)
is primarily engaged in providing (by or under the supervision of physicians) diagnostic, therapeutic, and restorative services to outpatients for the rehabilitation of injured, disabled, or sick persons;
(B)
provides at least the following comprehensive outpatient rehabilitation services: (i) physicians' services (rendered by physicians, as defined in section 1861(r)(1), who are available at the facility on a full- or part-time basis); (ii) physical therapy; and (iii) social or psychological services;
(C)
maintains clinical records on all patients;
(D)
has policies established by a group of professional personnel (associated with the facility), including one or more physicians defined in subsection (r)(1) to govern the comprehensive outpatient rehabilitation services it furnishes, and provides for the carrying out of such policies by a full- or part-time physician referred to in subparagraph (B)(i);
(E)
has a requirement that every patient must be under the care of a physician;
(F)
in the case of a facility in any State in which State or applicable local law provides for the licensing of facilities of this nature (i) is licensed pursuant to such law, or (ii) is approved by the agency of such State or locality, responsible for licensing facilities of this nature, as meeting the standards established for such licensing;
(G)
has in effect a utilization review plan in accordance with regulations prescribed by the Secretary;
(H)
has in effect an overall plan and budget that meets the requirements of subsection (z);
(I)
provides the Secretary on a continuing basis with a surety bond in a form specified by the Secretary and in an amount that is not less than $50,000; and
(J)
meets such other conditions of participation as the Secretary may find necessary in the interest of the health and safety of individuals who are furnished services by such facility, including conditions concerning qualifications of personnel in these facilities.
The Secretary may waive the requirement of a surety bond under subparagraph (I) in the case of a facility that provides a comparable surety bond under State law.
(dd)

Hospice Care; Hospice Program
(1)
The term “hospice care” means the following items and services provided to a terminally ill individual by, or by others under arrangements made by, a hospice program under a written plan (for providing such care to such individual) established and periodically reviewed by the individual's attending physician and by the medical director (and by the interdisciplinary group described in paragraph (2)(B)) of the program—
(A)
nursing care provided by or under the supervision of a registered professional nurse,
(B)
physical or occupational therapy, or speech-language pathology services,
(C)
medical social services under the direction of a physician,
(D)
(i)
services of a home health aide who has successfully completed a training program approved by the Secretary and (ii) homemaker services,
(E)
medical supplies (including drugs and biologicals) and the use of medical appliances, while under such a plan,
(F)
physicians' services,
(G)
short-term inpatient care (including both respite care and procedures necessary for pain control and acute and chronic symptom management) in an inpatient facility meeting such conditions as the Secretary determines to be appropriate to provide such care, but such respite care may be provided only on an intermittent, nonroutine, and occasional basis and may not be provided consecutively over longer than five days,
(H)
counseling (including dietary counseling) with respect to care of the terminally ill individual and adjustment to his death, and
(I)
any other item or service which is specified in the plan and for which payment may otherwise be made under this title.
The care and services described in subparagraphs (A) and (D) may be provided on a 24-hour, continuous basis only during periods of crisis (meeting criteria established by the Secretary) and only as necessary to maintain the terminally ill individual at home.
(2)
The term “hospice program” means a public agency or private organization (or a subdivision thereof) which—
(A)
(i)
is primarily engaged in providing the care and services described in paragraph (1) and makes such services available (as needed) on a 24-hour basis and which also provides bereavement counseling for the immediate family of terminally ill individuals and services described in section 1812(a)(5),
(ii)
provides for such care and services in individuals' homes, on an outpatient basis, and on a short-term inpatient basis, directly or under arrangements made by the agency or organization, except that—
(I)
the agency or organization must routinely provide directly substantially all of each of the services described in subparagraphs (A), (C), and (H) of paragraph (1), except as otherwise provided in paragraph (5), and
(II)
in the case of other services described in paragraph (1) which are not provided directly by the agency or organization, the agency or organization must maintain professional management responsibility for all such services furnished to an individual, regardless of the location or facility in which such services are furnished; and
(iii)
provides assurances satisfactory to the Secretary that the aggregate number of days of inpatient care described in paragraph (1)(G) provided in any 12-month period to individuals who have an election in effect under section 1812(d) with respect to that agency or organization does not exceed 20 percent of the aggregate number of days during that period on which such elections for such individuals are in effect;
(B)
has an interdisciplinary group of personnel which—
(i)
includes at least—
(I)
one physician (as defined in subsection (r)(1)),
(II)
one registered professional nurse, and
(III)
one social worker, marriage and family therapist, or mental health counselor,
employed by or, in the case of a physician described in subclause (I), under contract with the agency or organization, and also includes at least one pastoral or other counselor,
(ii)
provides (or supervises the provision of) the care and services described in paragraph (1), and
(iii)
establishes the policies governing the provision of such care and services;
(C)
maintains central clinical records on all patients;
(D)
does not discontinue the hospice care it provides with respect to a patient because of the inability of the patient to pay for such care;
(E)
(i)
utilizes volunteers in its provision of care and services in accordance with standards set by the Secretary, which standards shall ensure a continuing level of effort to utilize such volunteers, and (ii) maintains records on the use of these volunteers and the cost savings and expansion of care and services achieved through the use of these volunteers;
(F)
in the case of an agency or organization in any State in which State or applicable local law provides for the licensing of agencies or organizations of this nature, is licensed pursuant to such law; and
(G)
meets such other requirements as the Secretary may find necessary in the interest of the health and safety of the individuals who are provided care and services by such agency or organization.
(3)
(A)
An individual is considered to be “terminally ill” if the individual has a medical prognosis that the individual's life expectancy is 6 months or less.
(B)
The term “attending physician” means, with respect to an individual, the physician (as defined in subsection (r)(1)) , the nurse practitioner (as defined in subsection (aa)(5)), or the physician assistant (as defined in such subsection), who may be employed by a hospice program, whom the individual identifies as having the most significant role in the determination and delivery of medical care to the individual at the time the individual makes an election to receive hospice care.
(4)
(A)
An entity which is certified as a provider of services other than a hospice program shall be considered, for purposes of certification as a hospice program, to have met any requirements under paragraph (2) which are also the same requirements for certification as such other type of provider. The Secretary shall coordinate surveys for determining certification under this title so as to provide, to the extent feasible, for simultaneous surveys of an entity which seeks to be certified as a hospice program and as a provider of services of another type.
(B)
Any entity which is certified as a hospice program and as a provider of another type shall have separate provider agreements under section 1866 and shall file separate cost reports with respect to costs incurred in providing hospice care and in providing other services and items under this title.
(5)
(A)
The Secretary may waive the requirements of paragraph (2)(A)(ii)(I) for an agency or organization with respect to all or part of the nursing care described in paragraph (1)(A) if such agency or organization—
(i)
is located in an area which is not an urbanized area (as defined by the Bureau of the Census);
(ii)
was in operation on or before January 1, 1983; and
(iii)
has demonstrated a good faith effort (as determined by the Secretary) to hire a sufficient number of nurses to provide such nursing care directly.
(B)
Any waiver, which is in such form and containing such information as the Secretary may require and which is requested by an agency or organization under subparagraph (A) or (C), shall be deemed to be granted unless such request is denied by the Secretary within 60 days after the date such request is received by the Secretary. The granting of a waiver under subparagraph (A) or (C) shall not preclude the granting of any subsequent waiver request should such a waiver again become necessary.
(C)
The Secretary may waive the requirements of paragraph (2)(A)(i) and (2)(A)(ii) for an agency or organization with respect to the services described in paragraph (1)(B) and, with respect to dietary counseling, paragraph (1)(H), if such agency or organization—
(i)
is located in an area which is not an urbanized area (as defined by the Bureau of Census), and
(ii)
demonstrates to the satisfaction of the Secretary that the agency or organization has been unable, despite diligent efforts, to recruit appropriate personnel.
(D)
In extraordinary, exigent, or other non-routine circumstances, such as unanticipated periods of high patient loads, staffing shortages due to illness or other events, or temporary travel of a patient outside a hospice program's service area, a hospice program may enter into arrangements with another hospice program for the provision by that other program of services described in paragraph (2)(A)(ii)(I). The provisions of paragraph (2)(A)(ii)(II) shall apply with respect to the services provided under such arrangements.
(E)
A hospice program may provide services described in paragraph (1)(A) other than directly by the program if the services are highly specialized services of a registered professional nurse and are provided non-routinely and so infrequently so that the provision of such services directly would be impracticable and prohibitively expensive.
(ee)

Discharge Planning Process
(1)
A discharge planning process of a hospital shall be considered sufficient if it is applicable to services furnished by the hospital to individuals entitled to benefits under this title and if it meets the guidelines and standards established by the Secretary under paragraph (2).
(2)
The Secretary shall develop guidelines and standards for the discharge planning process in order to ensure a timely and smooth transition to the most appropriate type of and setting for post-hospital or rehabilitative care. The guidelines and standards shall include the following:
(A)
The hospital must identify, at an early stage of hospitalization, those patients who are likely to suffer adverse health consequences upon discharge in the absence of adequate discharge planning.
(B)
Hospitals must provide a discharge planning evaluation for patients identified under subparagraph (A) and for other patients upon the request of the patient, patient's representative, or patient's physician.
(C)
Any discharge planning evaluation must be made on a timely basis to ensure that appropriate arrangements for post-hospital care will be made before discharge and to avoid unnecessary delays in discharge.
(D)
A discharge planning evaluation must include an evaluation of a patient's likely need for appropriate post-hospital services, including hospice care and post-hospital extended care services, and the availability of those services, including the availability of home health services through individuals and entities that participate in the program under this title and that serve the area in which the patient resides and that request to be listed by the hospital as available and, in the case of individuals who are likely to need post-hospital extended care services, the availability of such services through facilities that participate in the program under this title and that serve the area in which the patient resides.
(E)
The discharge planning evaluation must be included in the patient's medical record for use in establishing an appropriate discharge plan and the results of the evaluation must be discussed with the patient (or the patient's representative).
(F)
Upon the request of a patient's physician, the hospital must arrange for the development and initial implementation of a discharge plan for the patient.
(G)
Any discharge planning evaluation or discharge plan required under this paragraph must be developed by, or under the supervision of, a registered professional nurse, social worker, or other appropriately qualified personnel.
(H)
Consistent with section 1802, the discharge plan shall—
(i)
not specify or otherwise limit the qualified provider which may provide post-hospital home health services, and
(ii)
identify (in a form and manner specified by the Secretary) any entity to whom the individual is referred in which the hospital has a disclosable financial interest (as specified by the Secretary consistent with section 1866(a)(1)(S)) or which has such an interest in the hospital.
(3)
With respect to a discharge plan for an individual who is enrolled with a Medicare+Choice organization under a Medicare+Choice plan and is furnished inpatient hospital services by a hospital under a contract with the organization—
(A)
the discharge planning evaluation under paragraph (2)(D) is not required to include information on the availability of home health services through individuals and entities which do not have a contract with the organization; and
(B)
notwithstanding subparagraph (H)(i), the plan may specify or limit the provider (or providers) of post-hospital home health services or other post-hospital services under the plan.
(ff)

Partial Hospitalization Services; Intensive Outpatient Services
(1)
The term “partial hospitalization services” means the items and services described in paragraph (2) prescribed by a physician for an individual determined (not less frequently than monthly) by a physician to have a need for such services for a minimum of 20 hours per week and provided under a program described in paragraph (3) under the supervision of a physician pursuant to an individualized, written plan of treatment established and periodically reviewed by a physician (in consultation with appropriate staff participating in such program), which plan sets forth the physician's diagnosis, the type, amount, frequency, and duration of the items and services provided under the plan, and the goals for treatment under the plan.
(2)
The items and services described in this paragraph are—
(A)
individual and group therapy with physicians or psychologists (or other mental health professionals to the extent authorized under State law),
(B)
occupational therapy requiring the skills of a qualified occupational therapist,
(C)
services of social workers, trained psychiatric nurses, and other staff trained to work with psychiatric patients,
(D)
drugs and biologicals furnished for therapeutic purposes (which cannot, as determined in accordance with regulations, be self-administered),
(E)
individualized activity therapies that are not primarily recreational or diversionary,
(F)
family counseling (the primary purpose of which is treatment of the individual's condition),
(G)
patient training and education (to the extent that training and educational activities are closely and clearly related to individual's care and treatment),
(H)
diagnostic services, and
(I)
such other items and services as the Secretary may provide (but in no event to include meals and transportation);
that are reasonable and necessary for the diagnosis or active treatment of the individual's condition, reasonably expected to improve or maintain the individual's condition and functional level and to prevent relapse or hospitalization, and furnished pursuant to such guidelines relating to frequency and duration of services as the Secretary shall by regulation establish (taking into account accepted norms of medical practice and the reasonable expectation of patient improvement).
(3)
(A)
A program described in this paragraph is a program which is furnished by a hospital to its outpatients or by a community mental health center (as defined in subparagraph (B)), and which is a distinct and organized intensive ambulatory treatment service offering less than 24-hour-daily care other than in an individual's home or in an inpatient or residential setting.
(B)
For purposes of subparagraph (A), the term “community mental health center” means an entity that—
(i)
(I)
provides the mental health services described in section 1913(c)(1) of the Public Health Service Act; or
(II)
in the case of an entity operating in a State that by law precludes the entity from providing itself the service described in subparagraph (E) of such section, provides for such service by contract with an approved organization or entity (as determined by the Secretary);
(ii)
meets applicable licensing or certification requirements for community mental health centers in the State in which it is located;
(iii)
provides at least 40 percent of its services to individuals who are not eligible for benefits under this title; and
(iv)
meets such additional conditions as the Secretary shall specify to ensure (I) the health and safety of individuals being furnished such services, (II) the effective and efficient furnishing of such services, and (III) the compliance of such entity with the criteria described in section 1931(c)(1) of the Public Health Service Act.
(4)
The term “intensive outpatient services” has the meaning given the term “partial hospitalization services” in paragraph (1), except that—
(A)
section 1835(a)(2)(F)(i) shall not apply;
(B)
the reference in such paragraph to an individual “determined (not less frequently than monthly) by a physician to have a need for such services for a minimum of 20 hours per week” shall be treated as a reference to an individual “determined (not less frequently than once every other month) by a physician to have a need for such services for a minimum of 9 hours per week”; and
(C)
the reference to “a community mental health center (as defined in subparagraph (B))” in paragraph (3) shall be treated as a reference to “a community mental health center (as defined in subparagraph (B)), a Federally qualified health center, or a rural health clinic”.
(gg)

Certified Nurse-Midwife Services
(1)
The term “certified nurse-midwife services” means such services furnished by a certified nurse-midwife (as defined in paragraph (2)) and such services and supplies furnished as an incident to the nurse-midwife's service which the certified nurse-midwife is legally authorized to perform under State law (or the State regulatory mechanism provided by State law) as would otherwise be covered if furnished by a physician or as an incident to a physicians' service.
(2)
The term “certified nurse-midwife” means a registered nurse who has successfully completed a program of study and clinical experience meeting guidelines prescribed by the Secretary, or has been certified by an organization recognized by the Secretary.
(hh)

Clinical Social Worker; Clinical Social Worker Services
(1)
The term “clinical social worker” means an individual who—
(A)
possesses a master's or doctor's degree in social work;
(B)
after obtaining such degree has performed at least 2 years of supervised clinical social work; and
(C)
(i)
is licensed or certified as a clinical social worker by the State in which the services are performed, or
(ii)
in the case of an individual in a State which does not provide for licensure or certification—
(I)
has completed at least 2 years or 3,000 hours of post-master's degree supervised clinical social work practice under the supervision of a master's level social worker in an appropriate setting (as determined by the Secretary), and
(II)
meets such other criteria as the Secretary establishes.
(2)
The term “clinical social worker services” means services performed by a clinical social worker (as defined in paragraph (1)) for the diagnosis and treatment of mental illnesses (other than services furnished to an inpatient of a hospital and other than services furnished to an inpatient of a skilled nursing facility which the facility is required to provide as a requirement for participation) which the clinical social worker is legally authorized to perform under State law (or the State regulatory mechanism provided by State law) of the State in which such services are performed as would otherwise be covered if furnished by a physician or as an incident to a physician's professional service.
(ii)

Qualified Psychologist Services
The term “qualified psychologist services” means such services and such services and supplies furnished as an incident to his service furnished by a clinical psychologist (as defined by the Secretary) which the psychologist is legally authorized to perform under State law (or the State regulatory mechanism provided by State law) as would otherwise be covered if furnished by a physician or as an incident to a physician's service.
(jj)

Screening Mammography
The term “screening mammography” means a radiologic procedure provided to a woman for the purpose of early detection of breast cancer and includes a physician's interpretation of the results of the procedure.
(kk)

Covered Osteoporosis Drug
The term “covered osteoporosis drug” means an injectable drug approved for the treatment of post-menopausal osteoporosis provided to an individual by a home health agency if, in accordance with regulations promulgated by the Secretary—
(1)
the individual's attending physician, nurse practitioner or clinical nurse specialist (as those terms are defined in subsection (aa)(5)), certified nurse-midwife (as defined in subsection (gg)), or physician assistant (as defined in subsection (aa)(5)) certifies that the individual has suffered a bone fracture related to post-menopausal osteoporosis and that the individual is unable to learn the skills needed to self-administer such drug or is otherwise physically or mentally incapable of self-administering such drug; and
(2)
the individual is confined to the individual's home (except when receiving items and services referred to in subsection (m)(7)).
(ll)

Speech-Language Pathology Services; Audiology Services
(1)
The term “speech-language pathology services” means such speech, language, and related function assessment and rehabilitation services furnished by a qualified speech-language pathologist as the speech-language pathologist is legally authorized to perform under State law (or the State regulatory mechanism provided by State law) as would otherwise be covered if furnished by a physician.
(2)
The term “outpatient speech-language pathology services” has the meaning given the term “outpatient physical therapy services” in subsection (p), except that in applying such subsection—
(A)
“speech-language pathology” shall be substituted for “physical therapy” each place it appears; and
(B)
“speech-language pathologist” shall be substituted for “physical therapist” each place it appears.
(3)
The term “audiology services” means such hearing and balance assessment services furnished by a qualified audiologist as the audiologist is legally authorized to perform under State law (or the State regulatory mechanism provided by State law), as would otherwise be covered if furnished by a physician.
(4)
In this subsection:
(A)
The term “qualified speech-language pathologist” means an individual with a master's or doctoral degree in speech-language pathology who—
(i)
is licensed as a speech-language pathologist by the State in which the individual furnishes such services, or
(ii)
in the case of an individual who furnishes services in a State which does not license speech-language pathologists, has successfully completed 350 clock hours of supervised clinical practicum (or is in the process of accumulating such supervised clinical experience), performed not less than 9 months of supervised full-time speech-language pathology services after obtaining a master's or doctoral degree in speech-language pathology or a related field, and successfully completed a national examination in speech-language pathology approved by the Secretary.
(B)
The term “qualified audiologist” means an individual with a master's or doctoral degree in audiology who—
(i)
is licensed as an audiologist by the State in which the individual furnishes such services, or
(ii)
in the case of an individual who furnishes services in a State which does not license audiologists, has successfully completed 350 clock hours of supervised clinical practicum (or is in the process of accumulating such supervised clinical experience), performed not less than 9 months of supervised full-time audiology services after obtaining a master's or doctoral degree in audiology or a related field, and successfully completed a national examination in audiology approved by the Secretary.
(mm)

Critical Access Hospital; Critical Access Hospital Services
(1)
The term “critical access hospital” means a facility certified by the Secretary as a critical access hospital under section 1820(e).
(2)
The term “inpatient critical access hospital services” means items and services, furnished to an inpatient of a critical access hospital by such facility, that would be inpatient hospital services if furnished to an inpatient of a hospital by a hospital.
(3)
The term “outpatient critical access hospital services” means medical and other health services furnished by a critical access hospital on an outpatient basis.
(nn)

Screening Pap Smear; Screening Pelvic Exam
(1)
The term “screening pap smear” means a diagnostic laboratory test consisting of a routine exfoliative cytology test (Papanicolaou test) provided to a woman for the purpose of early detection of cervical or vaginal cancer and includes a physician's interpretation of the results of the test, if the individual involved has not had such a test during the preceding 2 years, or during the preceding year in the case of a woman described in paragraph (3).
(2)
The term “screening pelvic exam” means a pelvic examination provided to a woman if the woman involved has not had such an examination during the preceding 2 years, or during the preceding year in the case of a woman described in paragraph (3), and includes a clinical breast examination.
(3)
A woman described in this paragraph is a woman who—
(A)
is of childbearing age and has had a test described in this subsection during any of the preceding 3 years that indicated the presence of cervical or vaginal cancer or other abnormality; or
(B)
is at high risk of developing cervical or vaginal cancer (as determined pursuant to factors identified by the Secretary).
(oo)

Prostate Cancer Screening Tests
(1)
The term “prostate cancer screening test” means a test that consists of any (or all) of the procedures described in paragraph (2) provided for the purpose of early detection of prostate cancer to a man over 50 years of age who has not had such a test during the preceding year.
(2)
The procedures described in this paragraph are as follows:
(A)
A digital rectal examination.
(B)
A prostate-specific antigen blood test.
(C)
For years beginning after 2002, such other procedures as the Secretary finds appropriate for the purpose of early detection of prostate cancer, taking into account changes in technology and standards of medical practice, availability, effectiveness, costs, and such other factors as the Secretary considers appropriate.
(pp)

Colorectal Cancer Screening Tests
(1)
The term “colorectal cancer screening test” means any of the following procedures furnished to an individual for the purpose of early detection of colorectal cancer:
(A)
Screening fecal-occult blood test.
(B)
Screening flexible sigmoidoscopy.
(C)
Screening colonoscopy.
(D)
Such other tests or procedures, and modifications to tests and procedures under this subsection, with such frequency and payment limits, as the Secretary determines appropriate, in consultation with appropriate organizations.
(2)
An “individual at high risk for colorectal cancer” is an individual who, because of family history, prior experience of cancer or precursor neoplastic polyps, a history of chronic digestive disease condition (including inflammatory bowel disease, Crohn's Disease, or ulcerative colitis), the presence of any appropriate recognized gene markers for colorectal cancer, or other predisposing factors, faces a high risk for colorectal cancer.
(qq)

Diabetes Outpatient Self-Management Training Services
(1)
The term “diabetes outpatient self-management training services” means educational and training services furnished (at such times as the Secretary determines appropriate) to an individual with diabetes by a certified provider (as described in paragraph (2)(A)) in an outpatient setting by an individual or entity who meets the quality standards described in paragraph (2)(B), but only if the physician who is managing the individual's diabetic condition certifies that such services are needed under a comprehensive plan of care related to the individual's diabetic condition to ensure therapy compliance or to provide the individual with necessary skills and knowledge (including skills related to the self-administration of injectable drugs) to participate in the management of the individual's condition.
(2)
In paragraph (1)—
(A)
a “certified provider” is a physician, or other individual or entity designated by the Secretary, that, in addition to providing diabetes outpatient self-management training services, provides other items or services for which payment may be made under this title; and
(B)
a physician, or such other individual or entity, meets the quality standards described in this paragraph if the physician, or individual or entity, meets quality standards established by the Secretary, except that the physician or other individual or entity shall be deemed to have met such standards if the physician or other individual or entity meets applicable standards originally established by the National Diabetes Advisory Board and subsequently revised by organizations who participated in the establishment of standards by such Board, or is recognized by an organization that represents individuals (including individuals under this title) with diabetes as meeting standards for furnishing the services.
(rr)

Bone Mass Measurement
(1)
The term “bone mass measurement” means a radiologic or radioisotopic procedure or other procedure approved by the Food and Drug Administration performed on a qualified individual (as defined in paragraph (2)) for the purpose of identifying bone mass or detecting bone loss or determining bone quality, and includes a physician's interpretation of the results of the procedure.
(2)
For purposes of this subsection, the term “qualified individual” means an individual who is (in accordance with regulations prescribed by the Secretary)—
(A)
an estrogen-deficient woman at clinical risk for osteoporosis;
(B)
an individual with vertebral abnormalities;
(C)
an individual receiving long-term glucocorticoid steroid therapy;
(D)
an individual with primary hyperparathyroidism; or
(E)
an individual being monitored to assess the response to or efficacy of an approved osteoporosis drug therapy.
(3)
The Secretary shall establish such standards regarding the frequency with which a qualified individual shall be eligible to be provided benefits for bone mass measurement under this title.
(ss)

Religious Nonmedical Health Care Institution
(1)
The term “religious nonmedical health care institution” means an institution that—
(A)
is described in subsection (c)(3) of section 501 of the Internal Revenue Code of 1986 and is exempt from taxes under subsection (a) of such section;
(B)
is lawfully operated under all applicable Federal, State, and local laws and regulations;
(C)
provides only nonmedical nursing items and services exclusively to patients who choose to rely solely upon a religious method of healing and for whom the acceptance of medical health services would be inconsistent with their religious beliefs;
(D)
provides such nonmedical items and services exclusively through nonmedical nursing personnel who are experienced in caring for the physical needs of such patients;
(E)
provides such nonmedical items and services to inpatients on a 24-hour basis;
(F)
on the basis of its religious beliefs, does not provide through its personnel or otherwise medical items and services (including any medical screening, examination, diagnosis, prognosis, treatment, or the administration of drugs) for its patients;
(G)
(i)
is not owned by, under common ownership with, or has an ownership interest in, a provider of medical treatment or services;
(ii)
is not affiliated with—
(I)
a provider of medical treatment or services, or
(II)
an individual who has an ownership interest in a provider of medical treatment or services;
(H)
has in effect a utilization review plan which—
(i)
provides for the review of admissions to the institution, of the duration of stays therein, of cases of continuous extended duration, and of the items and services furnished by the institution,
(ii)
requires that such reviews be made by an appropriate committee of the institution that includes the individuals responsible for overall administration and for supervision of nursing personnel at the institution,
(iii)
provides that records be maintained of the meetings, decisions, and actions of such committee, and
(iv)
meets such other requirements as the Secretary finds necessary to establish an effective utilization review plan;
(I)
provides the Secretary with such information as the Secretary may require to implement section 1821, including information relating to quality of care and coverage determinations; and
(J)
meets such other requirements as the Secretary finds necessary in the interest of the health and safety of individuals who are furnished services in the institution.
(2)
To the extent that the Secretary finds that the accreditation of an institution by a State, regional, or national agency or association provides reasonable assurances that any or all of the requirements of paragraph (1) are met or exceeded, the Secretary may treat such institution as meeting the condition or conditions with respect to which the Secretary made such finding.
(3)
(A)
(i)
In administering this subsection and section 1821, the Secretary shall not require any patient of a religious nonmedical health care institution to undergo medical screening, examination, diagnosis, prognosis, or treatment or to accept any other medical health care service, if such patient (or legal representative of the patient) objects thereto on religious grounds.
(ii)
Clause (i) shall not be construed as preventing the Secretary from requiring under section 1821(a)(2) the provision of sufficient information regarding an individual's condition as a condition for receipt of benefits under part A for services provided in such an institution.
(B)
(i)
In administering this subsection and section 1821, the Secretary shall not subject a religious nonmedical health care institution or its personnel to any medical supervision, regulation, or control, insofar as such supervision, regulation, or control would be contrary to the religious beliefs observed by the institution or such personnel.
(ii)
Clause (i) shall not be construed as preventing the Secretary from reviewing items and services billed by the institution to the extent the Secretary determines such review to be necessary to determine whether such items and services were not covered under part A, are excessive, or are fraudulent.
(4)
(A)
For purposes of paragraph (1)(G)(i), an ownership interest of less than 5 percent shall not be taken into account.
(B)
For purposes of paragraph (1)(G)(ii), none of the following shall be considered to create an affiliation:
(i)
An individual serving as an uncompensated director, trustee, officer, or other member of the governing body of a religious nonmedical health care institution.
(ii)
An individual who is a director, trustee, officer, employee, or staff member of a religious nonmedical health care institution having a family relationship with an individual who is affiliated with (or has an ownership interest in) a provider of medical treatment or services.
(iii)
An individual or entity furnishing goods or services as a vendor to both providers of medical treatment or services and religious nonmedical health care institutions.
(tt)

Post-Institutional Home Health Services; Home Health Spell of Illness
(1)
The term “post-institutional home health services” means home health services furnished to an individual—
(A)
after discharge from a hospital or critical access hospital in which the individual was an inpatient for not less than 3 consecutive days before such discharge if such home health services were initiated within 14 days after the date of such discharge; or
(B)
after discharge from a skilled nursing facility in which the individual was provided post-hospital extended care services if such home health services were initiated within 14 days after the date of such discharge.
(2)
The term “home health spell of illness” with respect to any individual means a period of consecutive days—
(A)
beginning with the first day (not included in a previous home health spell of illness) (i) on which such individual is furnished post-institutional home health services, and (ii) which occurs in a month for which the individual is entitled to benefits under part A, and
(B)
ending with the close of the first period of 60 consecutive days thereafter on each of which the individual is neither an inpatient of a hospital or critical access hospital nor an inpatient of a facility described in section 1819(a)(1) or subsection (y)(1) nor provided home health services.
(uu)

Screening for Glaucoma
The term “screening for glaucoma” means a dilated eye examination with an intraocular pressure measurement, and a direct ophthalmoscopy or a slit-lamp biomicroscopic examination for the early detection of glaucoma which is furnished by or under the direct supervision of an optometrist or ophthalmologist who is legally authorized to furnish such services under State law (or the State regulatory mechanism provided by State law) of the State in which the services are furnished, as would otherwise be covered if furnished by a physician or as an incident to a physician's professional service, if the individual involved has not had such an examination in the preceding year.
(vv)

Medical Nutrition Therapy Services; Registered Dietitian or Nutrition Professional
(1)
The term “medical nutrition therapy services” means nutritional diagnostic, therapy, and counseling services for the purpose of disease management which are furnished by a registered dietitian or nutrition professional (as defined in paragraph (2)) pursuant to a referral by a physician (as defined in subsection (r)(1)).
(2)
Subject to paragraph (3), the term “registered dietitian or nutrition professional” means an individual who—
(A)
holds a baccalaureate or higher degree granted by a regionally accredited college or university in the United States (or an equivalent foreign degree) with completion of the academic requirements of a program in nutrition or dietetics, as accredited by an appropriate national accreditation organization recognized by the Secretary for this purpose;
(B)
has completed at least 900 hours of supervised dietetics practice under the supervision of a registered dietitian or nutrition professional; and
(C)
(i)
is licensed or certified as a dietitian or nutrition professional by the State in which the services are performed; or
(ii)
in the case of an individual in a State that does not provide for such licensure or certification, meets such other criteria as the Secretary establishes.
(3)
Subparagraphs (A) and (B) of paragraph (2) shall not apply in the case of an individual who, as of the date of the enactment of this subsection, is licensed or certified as a dietitian or nutrition professional by the State in which medical nutrition therapy services are performed.
(ww)

Initial Preventive Physical Examination
(1)
The term “initial preventive physical examination” means physicians' services consisting of a physical examination (including measurement of height, weight body mass index,,77 and blood pressure) with the goal of health promotion and disease detection and includes education, counseling, and referral with respect to screening and other preventive services described in paragraph (2), end-of-life planning (as defined in paragraph (3)) upon the agreement with the individual, and the furnishing of a review of any current opioid prescriptions (as defined in paragraph (4)), but does not include clinical laboratory tests.
^{77}
Two commas in subsection (ww)(1) so in law. See amendment made by section 101(b)(1)(A) of Public Law 110–275.
(2)
The screening and other preventive services described in this paragraph include the following:
(A)
Pneumococcal, influenza, and hepatitis B vaccine and administration under subsection (s)(10).
(B)
Screening mammography as defined in subsection (jj).
(C)
Screening pap smear and screening pelvic exam as defined in subsection (nn).
(D)
Prostate cancer screening tests as defined in subsection (oo).
(E)
Colorectal cancer screening tests as defined in subsection (pp).
(F)
Diabetes outpatient self-management training services as defined in subsection (qq)(1).
(G)
Bone mass measurement as defined in subsection (rr).
(H)
Screening for glaucoma as defined in subsection (uu).
(I)
Medical nutrition therapy services as defined in subsection (vv).
(J)
Cardiovascular screening blood tests as defined in subsection (xx)(1).
(K)
Diabetes screening tests as defined in subsection (yy).
(L)
Ultrasound screening for abdominal aortic aneurysm as defined in section 1861(bbb).
(M)
An electrocardiogram.
(N)78
Screening for potential substance use disorders.
^{78}
The margin for subparagraph (N) is so in law.
(O)
Additional preventive services (as defined in subsection (ddd)(1)).
(3)
For purposes of paragraph (1), the term “end-of-life planning” means verbal or written information regarding—
(A)
an individual's ability to prepare an advance directive in the case that an injury or illness causes the individual to be unable to make health care decisions; and
(B)
whether or not the physician is willing to follow the individual's wishes as expressed in an advance directive.
(4)
For purposes of paragraph (1), the term “a review of any current opioid prescriptions” means, with respect to an individual determined to have a current prescription for opioids—
(A)
a review of the potential risk factors to the individual for opioid use disorder;
(B)
an evaluation of the individual's severity of pain and current treatment plan;
(C)
the provision of information on non-opioid treatment options; and
(D)
a referral to a specialist, as appropriate.
(xx)

Cardiovascular Screening Blood Test
(1)
The term “cardiovascular screening blood test” means a blood test for the early detection of cardiovascular disease (or abnormalities associated with an elevated risk of cardiovascular disease) that tests for the following:
(A)
Cholesterol levels and other lipid or triglyceride levels.
(B)
Such other indications associated with the presence of, or an elevated risk for, cardiovascular disease as the Secretary may approve for all individuals (or for some individuals determined by the Secretary to be at risk for cardiovascular disease), including indications measured by noninvasive testing.
The Secretary may not approve an indication under subparagraph (B) for any individual unless a blood test for such is recommended by the United States Preventive Services Task Force.
(2)
The Secretary shall establish standards, in consultation with appropriate organizations, regarding the frequency for each type of cardiovascular screening blood tests, except that such frequency may not be more often than once every 2 years.
(yy)

Diabetes Screening Tests
(1)
The term “diabetes screening tests” means testing furnished to an individual at risk for diabetes (as defined in paragraph (2)) for the purpose of early detection of diabetes, including—
(A)
a fasting plasma glucose test; and
(B)
such other tests, and modifications to tests, as the Secretary determines appropriate, in consultation with appropriate organizations.
(2)
For purposes of paragraph (1), the term “individual at risk for diabetes” means an individual who has any of the following risk factors for diabetes:
(A)
Hypertension.
(B)
Dyslipidemia.
(C)
Obesity, defined as a body mass index greater than or equal to 30 kg/m^2.
(D)
Previous identification of an elevated impaired fasting glucose.
(E)
Previous identification of impaired glucose tolerance.
(F)
A risk factor consisting of at least 2 of the following characteristics:
(i)
Overweight, defined as a body mass index greater than 25, but less than 30, kg/m^2.
(ii)
A family history of diabetes.
(iii)
A history of gestational diabetes mellitus or delivery of a baby weighing greater than 9 pounds.
(iv)
65 years of age or older.
(3)
The Secretary shall establish standards, in consultation with appropriate organizations, regarding the frequency of diabetes screening tests, except that such frequency may not be more often than twice within the 12-month period following the date of the most recent diabetes screening test of that individual.
(zz)

Intravenous Immune Globulin
The term “intravenous immune globulin” means an approved pooled plasma derivative for the treatment in the patient's home of a patient with a diagnosed primary immune deficiency disease, but not including items or services furnished before January 1, 2024, related to the administration of the derivative, if a physician determines administration of the derivative in the patient's home is medically appropriate.
(aaa)

Extended Care in Religious Nonmedical Health Care Institutions
(1)
The term “home health agency” also includes a religious nonmedical health care institution (as defined in subsection (ss)(1)), but only with respect to items and services ordinarily furnished by such an institution to individuals in their homes, and that are comparable to items and services furnished to individuals by a home health agency that is not religious nonmedical health care institution.
(2)
(A)
Subject to subparagraphs (B), payment may be made with respect to services provided by such an institution only to such extent and under such conditions, limitations, and requirements (in addition to or in lieu of the conditions, limitations, and requirements otherwise applicable) as may be provided in regulations consistent with section 1821.
(B)
Notwithstanding any other provision of this title, payment may not be made under subparagraph (A)—
(i)
in a year insofar as such payments exceed $700,000; and
(ii)
after December 31, 2006.
(bbb)

Ultrasound Screening for Abdominal Aortic Aneurysm
The term “ultrasound screening for abdominal aortic aneurysm” means—
(1)
a procedure using sound waves (or such other procedures using alternative technologies, of commensurate accuracy and cost, that the Secretary may specify) provided for the early detection of abdominal aortic aneurysm; and
(2)
includes a physician's interpretation of the results of the procedure.
(ccc)

Long-Term Care Hospital
The term “long-term care hospital” means a hospital which—
(1)
is primarily engaged in providing inpatient services, by or under the supervision of a physician, to Medicare beneficiaries whose medically complex conditions require a long hospital stay and programs of care provided by a long-term care hospital;
(2)
has an average inpatient length of stay (as determined by the Secretary) of greater than 25 days, or meets the requirements of clause (II) of section 1886(d)(1)(B)(iv);
(3)
satisfies the requirements of subsection (e); and
(4)
meets the following facility criteria:
(A)
the institution has a patient review process, documented in the patient medical record, that screens patients prior to admission for appropriateness of admission to a long-term care hospital, validates within 48 hours of admission that patients meet admission criteria for long-term care hospitals, regularly evaluates patients throughout their stay for continuation of care in a long-term care hospital, and assesses the available discharge options when patients no longer meet such continued stay criteria;
(B)
the institution has active physician involvement with patients during their treatment through an organized medical staff, physician-directed treatment with physician on-site availability on a daily basis to review patient progress, and consulting physicians on call and capable of being at the patient's side within a moderate period of time, as determined by the Secretary; and
(C)
the institution has interdisciplinary team treatment for patients, requiring interdisciplinary teams of health care professionals, including physicians, to prepare and carry out an individualized treatment plan for each patient.
(ddd)

Additional Preventive Services; Preventive Services
(1)
The term “additional preventive services” means services not described in subparagraph (A) or (C) of paragraph (3) that identify medical conditions or risk factors and that the Secretary determines are—
(A)
reasonable and necessary for the prevention or early detection of an illness or disability;
(B)
recommended with a grade of A or B by the United States Preventive Services Task Force; and
(C)
appropriate for individuals entitled to benefits under part A or enrolled under part B.
(2)
In making determinations under paragraph (1) regarding the coverage of a new service, the Secretary shall use the process for making national coverage determinations (as defined in section 1869(f)(1)(B)) under this title. As part of the use of such process, the Secretary may conduct an assessment of the relation between predicted outcomes and the expenditures for such service and may take into account the results of such assessment in making such determination.
(3)
The term “preventive services” means the following:
(A)
The screening and preventive services described in subsection (ww)(2) (other than the service described in subparagraph (M) of such subsection).
(B)
An initial preventive physical examination (as defined in subsection (ww)).
(C)
Personalized prevention plan services (as defined in subsection (hhh)(1)).
(eee)

Cardiac Rehabilitation Program; Intensive Cardiac Rehabilitation Program
(1)
The term “cardiac rehabilitation program” means a program (as described in paragraph (2)) that furnishes the items and services described in paragraph (3) under the supervision of a physician (as defined in subsection (r)(1)) or a physician assistant, nurse practitioner, or clinical nurse specialist (as those terms are defined in subsection (aa)(5)).
(2)
A program described in this paragraph is a program under which—
(A)
items and services under the program are delivered—
(i)
in a physician's office;
(ii)
in a hospital on an outpatient basis; or
(iii)
in other settings determined appropriate by the Secretary;
(B)
a physician (as defined in subsection (r)(1)) or a physician assistant, nurse practitioner, or clinical nurse specialist (as those terms are defined in subsection (aa)(5)) is immediately available and accessible for medical consultation and medical emergencies at all times items and services are being furnished under the program, except that, in the case of items and services furnished under such a program in a hospital, such availability shall be presumed; and
(C)
individualized treatment is furnished under a written plan established, reviewed, and signed by a physician every 30 days that describes—
(i)
the individual's diagnosis;
(ii)
the type, amount, frequency, and duration of the items and services furnished under the plan; and
(iii)
the goals set for the individual under the plan.
(3)
The items and services described in this paragraph are—
(A)
physician-prescribed exercise;
(B)
cardiac risk factor modification, including education, counseling, and behavioral intervention (to the extent such education, counseling, and behavioral intervention is closely related to the individual's care and treatment and is tailored to the individual's needs);
(C)
psychosocial assessment;
(D)
outcomes assessment; and
(E)
such other items and services as the Secretary may determine, but only if such items and services are—
(i)
reasonable and necessary for the diagnosis or active treatment of the individual's condition;
(ii)
reasonably expected to improve or maintain the individual's condition and functional level; and
(iii)
furnished under such guidelines relating to the frequency and duration of such items and services as the Secretary shall establish, taking into account accepted norms of medical practice and the reasonable expectation of improvement of the individual.
(4)
(A)
The term “intensive cardiac rehabilitation program” means a program (as described in paragraph (2)) that furnishes the items and services described in paragraph (3) under the supervision of a physician (as defined in subsection (r)(1)) or a physician assistant, nurse practitioner, or clinical nurse specialist (as those terms are defined in subsection (aa)(5)) and has shown, in peer-reviewed published research, that it accomplished—
(i)
one or more of the following:
(I)
positively affected the progression of coronary heart disease; or
(II)
reduced the need for coronary bypass surgery; or
(III)
reduced the need for percutaneous coronary interventions; and
(ii)
a statistically significant reduction in 5 or more of the following measures from their level before receipt of cardiac rehabilitation services to their level after receipt of such services:
(I)
low density lipoprotein;
(II)
triglycerides;
(III)
body mass index;
(IV)
systolic blood pressure;
(V)
diastolic blood pressure; or
(VI)
the need for cholesterol, blood pressure, and diabetes medications.
(B)
To be eligible for an intensive cardiac rehabilitation program, an individual must have—
(i)
had an acute myocardial infarction within the preceding 12 months;
(ii)
had coronary bypass surgery;
(iii)
stable angina pectoris;
(iv)
had heart valve repair or replacement;
(v)
had percutaneous transluminal coronary angioplasty (PTCA) or coronary stenting;
(vi)
had a heart or heart-lung transplant;
(vii)79
stable, chronic heart failure (defined as patients with left ventricular ejection fraction of 35 percent or less and New York Heart Association (NYHA) class II to IV symptoms despite being on optimal heart failure therapy for at least 6 weeks); or
^{79}
The margins for clauses (vii) and (viii) are so in law.
(viii)79
any additional condition for which the Secretary has determined that a cardiac rehabilitation program shall be covered, unless the Secretary determines, using the same process used to determine that the condition is covered for a cardiac rehabilitation program, that such coverage is not supported by the clinical evidence.
(C)
An intensive cardiac rehabilitation program may be provided in a series of 72 one-hour sessions (as defined in section 1848(b)(5)), up to 6 sessions per day, over a period of up to 18 weeks.
(5)
The Secretary shall establish standards to ensure that a physician with expertise in the management of individuals with cardiac pathophysiology who is licensed to practice medicine in the State in which a cardiac rehabilitation program (or the intensive cardiac rehabilitation program, as the case may be) is offered—
(A)
is responsible for such program; and
(B)
in consultation with appropriate staff, is involved substantially in directing the progress of individual in the program.
(fff)

Pulmonary Rehabilitation Program
(1)
The term “pulmonary rehabilitation program” means a program (as described in subsection (eee)(2) with respect to a program under this subsection) that furnishes the items and services described in paragraph (2) under the supervision of a physician (as defined in subsection (r)(1)) or a physician assistant, nurse practitioner, or clinical nurse specialist (as those terms are defined in subsection (aa)(5)).
(2)
The items and services described in this paragraph are—
(A)
physician-prescribed exercise;
(B)
education or training (to the extent the education or training is closely and clearly related to the individual's care and treatment and is tailored to such individual's needs);
(C)
psychosocial assessment;
(D)
outcomes assessment; and
(E)
such other items and services as the Secretary may determine, but only if such items and services are—
(i)
reasonable and necessary for the diagnosis or active treatment of the individual's condition;
(ii)
reasonably expected to improve or maintain the individual's condition and functional level; and
(iii)
furnished under such guidelines relating to the frequency and duration of such items and services as the Secretary shall establish, taking into account accepted norms of medical practice and the reasonable expectation of improvement of the individual.
(3)
The Secretary shall establish standards to ensure that a physician with expertise in the management of individuals with respiratory pathophysiology who is licensed to practice medicine in the State in which a pulmonary rehabilitation program is offered—
(A)
is responsible for such program; and
(B)
in consultation with appropriate staff, is involved substantially in directing the progress of individual in the program.
(ggg)

Kidney Disease Education Services
(1)
The term “kidney disease education services” means educational services that are—
(A)
furnished to an individual with stage IV chronic kidney disease who, according to accepted clinical guidelines identified by the Secretary, will require dialysis or a kidney transplant;
(B)
furnished, upon the referral of the physician managing the individual's kidney condition, by a qualified person (as defined in paragraph (2)); and
(C)
designed—
(i)
to provide comprehensive information (consistent with the standards set under paragraph (3)) regarding—
(I)
the management of comorbidities, including for purposes of delaying the need for dialysis;
(II)
the prevention of uremic complications; and
(III)
each option for renal replacement therapy (including hemodialysis and peritoneal dialysis at home and in-center as well as vascular access options and transplantation);
(ii)
to ensure that the individual has the opportunity to actively participate in the choice of therapy; and
(iii)
to be tailored to meet the needs of the individual involved.
(2)
(A)
The term “qualified person” means—
(i)
a physician (as defined in section 1861(r)(1)) or a physician assistant, nurse practitioner, or clinical nurse specialist (as defined in section 1861(aa)(5)), who furnishes services for which payment may be made under the fee schedule established under section 1848; and
(ii)
a provider of services located in a rural area (as defined in section 1886(d)(2)(D)).
(B)
Such term does not include a provider of services (other than a provider of services described in subparagraph (A)(ii)) or a renal dialysis facility.
(3)
The Secretary shall set standards for the content of such information to be provided under paragraph (1)(C)(i) after consulting with physicians, other health professionals, health educators, professional organizations, accrediting organizations, kidney patient organizations, dialysis facilities, transplant centers, network organizations described in section 1881(c)(2), and other knowledgeable persons. To the extent possible the Secretary shall consult with persons or entities described in the previous sentence, other than a dialysis facility, that has not received industry funding from a drug or biological manufacturer or dialysis facility.
(4)
No individual shall be furnished more than 6 sessions of kidney disease education services under this title.
(hhh)

Annual Wellness Visit
(1)
The term “personalized prevention plan services” means the creation of a plan for an individual—
(A)
that includes a health risk assessment (that meets the guidelines established by the Secretary under paragraph (4)(A)) of the individual that is completed prior to or as part of the same visit with a health professional described in paragraph (3); and
(B)
that—
(i)
takes into account the results of the health risk assessment; and
(ii)
may contain the elements described in paragraph (2).
(2)
Subject to paragraph (4)(H), the elements described in this paragraph are the following:
(A)
The establishment of, or an update to, the individual's medical and family history.
(B)
A list of current providers and suppliers that are regularly involved in providing medical care to the individual (including a list of all prescribed medications).
(C)
A measurement of height, weight, body mass index (or waist circumference, if appropriate), blood pressure, and other routine measurements.
(D)
Detection of any cognitive impairment.
(E)
The establishment of, or an update to, the following:
(i)
A screening schedule for the next 5 to 10 years, as appropriate, based on recommendations of the United States Preventive Services Task Force and the Advisory Committee on Immunization Practices, and the individual's health status, screening history, and age-appropriate preventive services covered under this title.
(ii)
A list of risk factors and conditions for which primary, secondary, or tertiary prevention interventions are recommended or are underway, including any mental health conditions or any such risk factors or conditions that have been identified through an initial preventive physical examination (as described under subsection (ww)(1)), and a list of treatment options and their associated risks and benefits.
(F)
The furnishing of personalized health advice and a referral, as appropriate, to health education or preventive counseling services or programs aimed at reducing identified risk factors and improving self-management, or community-based lifestyle interventions to reduce health risks and promote self-management and wellness, including weight loss, physical activity, smoking cessation, fall prevention, and nutrition.
(G)80
Screening for potential substance use disorders and referral for treatment as appropriate.
^{80}
The margins for subparagraphs (G) and (H) are so in law.
(H)80
The furnishing of a review of any current opioid prescriptions (as defined in subsection (ww)(4)).
(I)
Any other element determined appropriate by the Secretary.
(3)
A health professional described in this paragraph is—
(A)
a physician;
(B)
a practitioner described in clause (i) of section 1842(b)(18)(C); or
(C)
a medical professional (including a health educator, registered dietitian, or nutrition professional) or a team of medical professionals, as determined appropriate by the Secretary, under the supervision of a physician.
(4)
(A)
For purposes of paragraph (1)(A), the Secretary, not later than 1 year after the date of enactment of this subsection, shall establish publicly available guidelines for health risk assessments. Such guidelines shall be developed in consultation with relevant groups and entities and shall provide that a health risk assessment—
(i)
identify chronic diseases, injury risks, modifiable risk factors, and urgent health needs of the individual; and
(ii)
may be furnished—
(I)
through an interactive telephonic or web-based program that meets the standards established under subparagraph (B);
(II)
during an encounter with a health care professional;
(III)
through community-based prevention programs; or
(IV)
through any other means the Secretary determines appropriate to maximize accessibility and ease of use by beneficiaries, while ensuring the privacy of such beneficiaries.
(B)
Not later than 1 year after the date of enactment of this subsection, the Secretary shall establish standards for interactive telephonic or web-based programs used to furnish health risk assessments under subparagraph (A)(ii)(I). The Secretary may utilize any health risk assessment developed under section 4004(f) of the Patient Protection and Affordable Care Act as part of the requirement to develop a personalized prevention plan to comply with this subparagraph.
(C)
(i)
Not later than 18 months after the date of enactment of this subsection, the Secretary shall develop and make available to the public a health risk assessment model. Such model shall meet the guidelines under subparagraph (A) and may be used to meet the requirement under paragraph (1)(A).
(ii)
Any health risk assessment that meets the guidelines under subparagraph (A) and is approved by the Secretary may be used to meet the requirement under paragraph (1)(A).
(D)
The Secretary may coordinate with community-based entities (including State Health Insurance Programs, Area Agencies on Aging, Aging and Disability Resource Centers, and the Administration on Aging) to—
(i)
ensure that health risk assessments are accessible to beneficiaries; and
(ii)
provide appropriate support for the completion of health risk assessments by beneficiaries.
(E)
The Secretary shall establish procedures to make beneficiaries and providers aware of the requirement that a beneficiary complete a health risk assessment prior to or at the same time as receiving personalized prevention plan services.
(F)
To the extent practicable, the Secretary shall encourage the use of, integration with, and coordination of health information technology (including use of technology that is compatible with electronic medical records and personal health records) and may experiment with the use of personalized technology to aid in the development of self-management skills and management of and adherence to provider recommendations in order to improve the health status of beneficiaries.
(G)
A beneficiary shall be eligible to receive only an initial preventive physical examination (as defined under subsection (ww)(1)) during the 12-month period after the date that the beneficiary's coverage begins under part B and shall be eligible to receive personalized prevention plan services under this subsection each year thereafter provided that the beneficiary has not received either an initial preventive physical examination or personalized prevention plan services within the preceding 12-month period.
(H)
The Secretary shall issue guidance that—
(i)
identifies elements under paragraph (2) that are required to be provided to a beneficiary as part of their first visit for personalized prevention plan services; and
(ii)
establishes a yearly schedule for appropriate provision of such elements thereafter.
(iii)

Home Infusion Therapy.—
(1)
The term “home infusion therapy” means the items and services described in paragraph (2) furnished by a qualified home infusion therapy supplier (as defined in paragraph (3)(D)) which are furnished in the individual’s home (as defined in paragraph (3)(B)) to an individual—
(A)
who is under the care of an applicable provider (as defined in paragraph (3)(A)); and
(B)
with respect to whom a plan prescribing the type, amount, and duration of infusion therapy services that are to be furnished such individual has been established by a physician (as defined in subsection (r)(1)) and is periodically reviewed by a physician (as so defined) in coordination with the furnishing of home infusion drugs (as defined in paragraph (3)(C)) under part B.
(2)
The items and services described in this paragraph are the following:
(A)
Professional services, including nursing services, furnished in accordance with the plan.
(B)
Training and education (not otherwise paid for as durable medical equipment (as defined in subsection (n)), remote monitoring, and monitoring services for the provision of home infusion therapy and home infusion drugs furnished by a qualified home infusion therapy supplier.
(3)
For purposes of this subsection:
(A)
The term “applicable provider” means—
(i)
a physician;
(ii)
a nurse practitioner; and
(iii)
a physician assistant.
(B)
The term “home” means a place of residence used as the home of an individual (as defined for purposes of subsection (n)).
(C)
The term “home infusion drug” means a parenteral drug or biological administered intravenously, or subcutaneously for an administration period of 15 minutes or more, in the home of an individual through a pump that is an item of durable medical equipment (as defined in subsection (n)). Such term does not include the following:
(i)
Insulin pump systems.
(ii)
A self-administered drug or biological on a self-administered drug exclusion list.
Clause 81 (ii) shall not apply to a self-administered drug or biological on a self-administered drug exclusion list if such drug or biological was included as a transitional home infusion drug under subparagraph (A)(iii) of section 1834(u)(7) and was identified by a HCPCS code described in subparagraph (C)(ii) of such section.
^{81}
Margin of flush left text following clause (ii) is so in law.
(D)
(i)
The term “qualified home infusion therapy supplier” means a pharmacy, physician, or other provider of services or supplier licensed by the State in which the pharmacy, physician, or provider or services or supplier furnishes items or services and that—
(I)
furnishes infusion therapy to individuals with acute or chronic conditions requiring administration of home infusion drugs;
(II)
ensures the safe and effective provision and administration of home infusion therapy on a 7-day-a-week, 24-hour-a-day basis;
(III)
is accredited by an organization designated by the Secretary pursuant to section 1834(u)(5); and
(IV)
meets such other requirements as the Secretary determines appropriate, taking into account the standards of care for home infusion therapy established by Medicare Advantage plans under part C and in the private sector.
(ii)
A qualified home infusion therapy supplier may subcontract with a pharmacy, physician, provider of services, or supplier to meet the requirements of this subparagraph.
(jjj)

Opioid Use Disorder Treatment Services; Opioid Treatment Program.—
(1)

Opioid use disorder treatment services.—
The term “opioid use disorder treatment services” means items and services that are furnished by an opioid treatment program for the treatment of opioid use disorder, including—
(A)
opioid agonist and antagonist treatment medications (including oral, injected, or implanted versions) that are approved by the Food and Drug Administration under section 505 of the Federal Food, Drug, and Cosmetic Act for use in the treatment of opioid use disorder;
(B)
dispensing and administration of such medications, if applicable;
(C)
substance use counseling by a professional to the extent authorized under State law to furnish such services;
(D)
individual and group therapy with a physician or psychologist (or other mental health professional to the extent authorized under State law);
(E)
toxicology testing, and
(F)
other items and services that the Secretary determines are appropriate (but in no event to include meals or transportation).
(2)

Opioid treatment program.—
The term “opioid treatment program” means an entity that is an opioid treatment program (as defined in section 8.2 of title 42 of the Code of Federal Regulations, or any successor regulation) that—
(A)
is enrolled under section 1866(j);
(B)
has in effect a certification by the Substance Abuse and Mental Health Services Administration for such a program;
(C)
is accredited by an accrediting body approved by the Substance Abuse and Mental Health Services Administration; and
(D)
meets such additional conditions as the Secretary may find necessary to ensure—
(i)
the health and safety of individuals being furnished services under such program; and
(ii)
the effective and efficient furnishing of such services.
(kkk)

Rural Emergency Hospital Services; Rural Emergency Hospital
(1)

Rural emergency hospital services.—
(A)

In general.—
The term “rural emergency hospital services ” means the following services furnished by a rural emergency hospital (as defined in paragraph (2)) that do not exceed an annual per patient average of 24 hours in such rural emergency hospital:
(i)
Emergency department services and observation care.
(ii)
At the election of the rural emergency hospital, with respect to services furnished on an outpatient basis, other medical and health services as specified by the Secretary through rulemaking.
(B)

Staffed emergency department.—
For purposes of subparagraph (A)(i), an emergency department of a rural emergency hospital shall be considered a staffed emergency department if it meets the following requirements:
(i)
The emergency department is staffed 24 hours a day, 7 days a week.
(ii)
A physician (as defined in section 1861(r)(1)), nurse practitioner, clinical nurse specialist, or physician assistant (as those terms are defined in section 1861(aa)(5)) is available to furnish rural emergency hospital services in the facility 24 hours a day.
(iii)
Applicable staffing and staffing responsibilities under section 485.631 of title 42, Code of Federal Regulations (or any successor regulation).
(2)

Rural emergency hospital.—
The term “rural emergency hospital” means a facility described in paragraph (3) that—
(A)
is enrolled under section 1866(j), submits the additional information described in paragraph (4)(A) for purposes of such enrollment, and makes the detailed transition plan described in clause (i) of such paragraph available to the public, in a form and manner determined appropriate by the Secretary;
(B)
does not provide any acute care inpatient services, other than those described in paragraph (6)(A);
(C)
has in effect a transfer agreement with a level I or level II trauma center;
(D)
meets—
(i)
licensure requirements as described in paragraph (5);
(ii)
the requirements of a staffed emergency department as described in paragraph (1)(B);
(iii)
such staff training and certification requirements as the Secretary may require;
(iv)
conditions of participation applicable to—
(I)
critical access hospitals, with respect to emergency services under section 485.618 of title 42, Code of Federal Regulations (or any successor regulation); and
(II)
hospital emergency departments under this title, as determined applicable by the Secretary;
(v)
such other requirements as the Secretary finds necessary in the interest of the health and safety of individuals who are furnished rural emergency hospital services; and
(vi)
in the case where the rural emergency hospital includes a distinct part unit of the facility that is licensed as a skilled nursing facility, such distinct part meets the requirements applicable to skilled nursing facilities under this title.
(3)

Facility described.—
A facility described in this paragraph is a facility that as of the date of the enactment of this subsection—
(A)
was a critical access hospital; or
(B)
was a subsection (d) hospital (as defined in section 1886(d)(1)(B)) with not more than 50 beds located in a county (or equivalent unit of local government) in a rural area (as defined in section 1886(d)(2)(D)), or was a subsection (d) hospital (as so defined) with not more than 50 beds that was treated as being located in a rural area pursuant to section 1886(d)(8)(E).
(4)

Additional information.—
(A)

Information.—
For purposes of paragraph (2)(A), a facility that submits an application for enrollment under section 1866(j) as a rural emergency hospital shall submit the following information at such time and in such form as the Secretary may require:
(i)
An action plan for initiating rural emergency hospital services (as defined in paragraph (1)), including a detailed transition plan that lists the specific services that the facility will—
(I)
retain;
(II)
modify
(III)
add; and
(IV)
discontinue.
(ii)
A description of services that the facility intends to furnish on an outpatient basis pursuant to paragraph (1)(A)(ii).
(iii)
Information regarding how the facility intends to use the additional facility payment provided under section 1834(x)(2), including a description of the services covered under this title that the additional facility payment would be supporting, such as furnishing telehealth services and ambulance services, including operating the facility and maintaining the emergency department to provide such services covered under this title.
(iv)
Such other information as the Secretary determines appropriate.
(B)

Effect of enrollment.—
Such enrollment shall remain effective with respect to a facility until such time as—
(i)
the facility elects to convert back to its prior designation as a critical access hospital or a subsection (d) hospital (as defined in section 1886(d)(1)(B)), subject to requirements applicable under this title for such designation and in accordance with procedures established by the Secretary; or
(ii)
the Secretary determines the facility does not meet the requirements applicable to a rural emergency hospital under this subsection.
(5)

Licensure.—
A facility may not operate as a rural emergency hospital in a State unless the facility—
(A)
is located in a State that provides for the licensing of such hospitals under State or applicable local law; and
(B)
(i)
is licensed pursuant to such law; or
(ii)
is approved by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing.
(6)

Discretionary authority.—
A rural emergency hospital may—
(A)
include a unit of the facility that is a distinct part licensed as a skilled nursing facility to furnish post-hospital extended care services; and
(B)
be considered a hospital with less than 50 beds for purposes of the exception to the payment limit for rural health clinics under section 1833(f).
(7)

Quality measurement.—
(A)

In general.—
The Secretary shall establish quality measurement reporting requirements for rural emergency hospitals, which may include the use of a small number of claims-based outcomes measures or surveys of patients with respect to their experience in the rural emergency hospital, in accordance with the succeeding provisions of this paragraph.
(B)

Quality reporting by rural emergency hospitals.—
(i)

In general.—
With respect to each year beginning with 2023, (or each year beginning on or after the date that is one year after one or more measures are first specified under subparagraph (C)), a rural emergency hospital shall submit data to the Secretary in accordance with clause (ii).
(ii)

Submission of quality data.—
With respect to each such year, a rural emergency hospital shall submit to the Secretary data on quality measures specified under subparagraph (C). Such data shall be submitted in a form and manner, and at a time, specified by the Secretary for purposes of this subparagraph.
(C)

Quality measures.—
(i)

In general.—
Subject to clause (ii), any measure specified by the Secretary under this subparagraph must have been endorsed by the entity with a contract under section 1890(a).
(ii)

Exception.—
In the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a), the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.
(iii)

Consideration of low case volume when specifying performance measures.—
The Secretary shall, in the selection of measures specified under this subparagraph, take into consideration ways to account for rural emergency hospitals that lack sufficient case volume to ensure that the performance rates for such measures are reliable.
(D)

Public availability of data submitted.—
The Secretary shall establish procedures for making data submitted under subparagraph (B) available to the public regarding the performance of individual rural emergency hospitals. Such procedures shall ensure that a rural emergency hospital has the opportunity to review, and submit corrections for, the data that is to be made public with respect to the rural emergency hospital prior to such data being made public. Such information shall be posted on the Internet website of the Centers for Medicare & Medicaid Services in an easily understandable format as determined appropriate by the Secretary.
(8)

Clarification regarding application of provisions relating to off-campus outpatient department of a provider.—
Nothing in this subsection, section 1833(a)(10), or section 1834(x) shall affect the application of paragraph (1)(B)(v) of section 1833(t), relating to applicable items and services (as defined in subparagraph (A) of paragraph (21) of such section) that are furnished by an off-campus outpatient department of a provider (as defined in subparagraph (B) of such paragraph).
(9)

Implementation.—
There shall be no administrative or judicial review under section 1869, 1878, or otherwise of the following:
(A)
The determination of whether a rural emergency hospital meets the requirements of this subsection.
(B)
The establishment of requirements under this subsection by the Secretary, including requirements described in paragraphs (2)(D), (4), and (7).
(C)
The determination of payment amounts under section 1834(x), including the additional facility payment described in paragraph (2) of such section.
(lll)

Marriage and Family Therapist Services; Marriage and Family Therapist; Mental Health Counselor Services; Mental Health Counselor.—
(1)

Marriage and family therapist services.—
The term “marriage and family therapist services” means services furnished by a marriage and family therapist (as defined in paragraph (2)) for the diagnosis and treatment of mental illnesses (other than services furnished to an inpatient of a hospital), which the marriage and family therapist is legally authorized to perform under State law (or the State regulatory mechanism provided by State law) of the State in which such services are furnished, as would otherwise be covered if furnished by a physician or as an incident to a physician’s professional service.
(2)

Marriage and family therapist.—
The term “marriage and family therapist” means an individual who—
(A)
possesses a master’s or doctor’s degree which qualifies for licensure or certification as a marriage and family therapist pursuant to State law of the State in which such individual furnishes the services described in paragraph (1);
(B)
is licensed or certified as a marriage and family therapist by the State in which such individual furnishes such services;
(C)
after obtaining such degree has performed at least 2 years of clinical supervised experience in marriage and family therapy; and
(D)
meets such other requirements as specified by the Secretary.
(3)

Mental health counselor services.—
The term “mental health counselor services” means services furnished by a mental health counselor (as defined in paragraph (4)) for the diagnosis and treatment of mental illnesses (other than services furnished to an inpatient of a hospital), which the mental health counselor is legally authorized to perform under State law (or the State regulatory mechanism provided by the State law) of the State in which such services are furnished, as would otherwise be covered if furnished by a physician or as incident to a physician’s professional service.
(4)

Mental health counselor.—
The term “mental health counselor” means an individual who—
(A)
possesses a master’s or doctor’s degree which qualifies for licensure or certification as a mental health counselor, clinical professional counselor, or professional counselor under the State law of the State in which such individual furnishes the services described in paragraph (3);
(B)
is licensed or certified as a mental health counselor, clinical professional counselor, or professional counselor by the State in which the services are furnished;
(C)
after obtaining such a degree has performed at least 2 years of clinical supervised experience in mental health counseling; and
(D)
meets such other requirements as specified by the Secretary.
(mmm)

Lymphedema Compression Treatment Items.—
The term “lymphedema compression treatment items” means standard and custom fitted gradient compression garments and other items determined by the Secretary that are—
(1)
furnished on or after January 1, 2024, to an individual with a diagnosis of lymphedema for the treatment of such condition;
(2)
primarily and customarily used to serve a medical purpose and for the treatment of lymphedema, as determined by the Secretary; and
(3)
prescribed by a physician (or a physician assistant, nurse practitioner, or a clinical nurse specialist (as those terms are defined in section 1861(aa)(5)) to the extent authorized under State law).

exclusions from coverage and medicare as secondary payer
Sec. 1862.
[42 U.S.C. 1395y]
(a)
Notwithstanding any other provision of this title, no payment may be made under part A or part B for any expenses incurred for items or services—
(1)
(A)
which, except for items and services described in a succeeding subparagraph or additional preventive services (as described in section 1861(ddd)(1)), are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member,
(B)
in the case of items and services described in section 1861(s)(10), which are not reasonable and necessary for the prevention of illness,
(C)
in the case of hospice care, which are not reasonable and necessary for the palliation or management of terminal illness,
(D)
in the case of clinical care items and services provided with the concurrence of the Secretary and with respect to research and experimentation conducted by, or under contract with, the Medicare Payment Advisory Commission or the Secretary, which are not reasonable and necessary to carry out the purposes of section 1886(e)(6),
(E)
in the case of research conducted pursuant to section 1142, which is not reasonable and necessary to carry out the purposes of that section,
(F)
in the case of screening mammography, which is performed more frequently than is covered under section 1834(c)(2) or which is not conducted by a facility described in section 1834(c)(1)(B), in the case of screening pap smear and screening pelvic exam, which is performed more frequently than is provided under section 1861(nn), and, in the case of screening for glaucoma, which is performed more frequently than is provided under section 1861(uu),
(G)
in the case of prostate cancer screening tests (as defined in section 1861(oo)), which are performed more frequently than is covered under such section,
(H)
in the case of colorectal cancer screening tests, which are performed more frequently than is covered under section 1834(d),
(I)
the frequency and duration of home health services which are in excess of normative guidelines that the Secretary shall establish by regulation,
(J)
in the case of a drug or biological specified in section 1847A(c)(6)(C) for which payment is made under part B that is furnished in a competitive area under section 1847B, that is not furnished by an entity under a contract under such section,
(K)
in the case of an initial preventive physical examination, which is performed more than 1 year after the date the individual's first coverage period begins under part B,
(L)
in the case of cardiovascular screening blood tests (as defined in section 1861(xx)(1)), which are performed more frequently than is covered under section 1861(xx)(2),
(M)
in the case of a diabetes screening test (as defined in section 1861(yy)(1)), which is performed more frequently than is covered under section 1861(yy)(3),
(N)
in the case of ultrasound screening for abdominal aortic aneurysm which is performed more frequently than is provided for under section 1861(s)(2)(AA),
(O)
in the case of kidney disease education services (as defined in paragraph (1) of section 1861(ggg)), which are furnished in excess of the number of sessions covered under paragraph (4) of such section, and
(P)
in the case of personalized prevention plan services (as defined in section 1861(hhh)(1)), which are performed more frequently than is covered under such section;
(2)
for which the individual furnished such items or services has no legal obligation to pay, and which no other person (by reason of such individual's membership in a prepayment plan or otherwise) has a legal obligation to provide or pay for, except in the case of Federally qualified health center services;
(3)
which are paid for directly or indirectly by a governmental entity (other than under this Act and other than under a health benefits or insurance plan established for employees of such an entity), except in the case of rural health clinic services, as defined in section 1861(aa)(1), in the case of Federally qualified health center services, as defined in section 1861(aa)(3), in the case of services for which payment may be made under section 1880(e), and in such other cases as the Secretary may specify;
(4)
which are not provided within the United States (except for inpatient hospital services furnished outside the United States under the conditions described in section 1814(f) and, subject to such conditions, limitations, and requirements as are provided under or pursuant to this title, physicians' services and ambulance services furnished an individual in conjunction with such inpatient hospital services but only for the period during which such inpatient hospital services were furnished);
(5)
which are required as a result of war, or of an act of war, occurring after the effective date of such individual's current coverage under such part;
(6)
which constitute personal comfort items (except, in the case of hospice care, as is otherwise permitted under paragraph (1)(C));
(7)
where such expenses are for routine physical checkups, eyeglasses (other than eyewear described in section 1861(s)(8)) or eye examinations for the purpose of prescribing, fitting, or changing eyeglasses, procedures performed (during the course of any eye examination) to determine the refractive state of the eyes, hearing aids or examinations therefor, or immunizations (except as otherwise allowed under section 1861(s)(10) and subparagraph (B), (F), (G), (H), (K), or (P) of paragraph (1));
(8)
where such expenses are for orthopedic shoes or other supportive devices for the feet, other than shoes furnished pursuant to section 1861(s)(12);
(9)
where such expenses are for custodial care (except, in the case of hospice care, as is otherwise permitted under paragraph (1)(C));
(10)
where such expenses are for cosmetic surgery or are incurred in connection therewith, except as required for the prompt repair of accidental injury or for improvement of the functioning of a malformed body member;
(11)
where such expenses constitute charges imposed by immediate relatives of such individual or members of his household;
(12)
where such expenses are for services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth, except that payment may be made under part A in the case of inpatient hospital services in connection with the provision of such dental services if the individual, because of his underlying medical condition and clinical status or because of the severity of the dental procedure, requires hospitalization in connection with the provision of such services;
(13)
where such expenses are for—
(A)
the treatment of flat foot conditions and the prescription of supportive devices therefor,
(B)
the treatment of subluxations of the foot, or
(C)
routine foot care (including the cutting or removal of corns or calluses, the trimming of nails, and other routine hygienic care);
(14)
which are other than physicians' services (as defined in regulations promulgated specifically for purposes of this paragraph), services described by section 1861(s)(2)(K), 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 patient of a hospital or critical access hospital by an entity other than the hospital or critical access hospital, unless the services are furnished under arrangements (as defined in section 1861(w)(1)) with the entity made by the hospital or critical access hospital;
(15)
(A)
which are for services of an assistant at surgery in a cataract operation (including subsequent insertion of an intraocular lens) unless, before the surgery is performed, the appropriate quality improvement organization (under part B of title XI) or a carrier under section 1842 has approved of the use of such an assistant in the surgical procedure based on the existence of a complicating medical condition, or
(B)
which are for services of an assistant at surgery to which section 1848(i)(2)(B) applies;
(16)
in the case in which funds may not be used for such items and services under the Assisted Suicide Funding Restriction Act of 1997;
(17)
where the 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 the expenses were incurred in a case of urgent need, or in other circumstances specified by the Secretary;
(18)
which are covered skilled nursing facility services described in section 1888(e)(2)(A)(i) and which are furnished to an individual who is a resident of a skilled nursing facility during a period in which the resident is provided covered post-hospital extended care services (or, for services described in section 1861(s)(2)(D), which are furnished to such an individual without regard to such period), 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;
(19)
which are for items or services which are furnished pursuant to a private contract described in section 1802(b);
(20)
in the case of outpatient physical therapy services, outpatient speech-language pathology services, or outpatient occupational therapy services furnished as an incident to a physician's professional services (as described in section 1861(s)(2)(A)), that do not meet the standards and conditions (other than any licensing requirement specified by the Secretary) under the second sentence of section 1861(p) (or under such sentence through the operation of subsection (g) or (ll)(2) of section 1861) as such standards and conditions would apply to such therapy services if furnished by a therapist;
(21)
where such expenses are for home health services (including medical supplies described in section 1861(m)(5), but excluding durable medical equipment to the extent provided for in such section) furnished to an individual who is under a plan of care of the home health agency if the claim for payment for such services is not submitted by the agency;
(22)
subject to subsection (h), for which a claim is submitted other than in an electronic form specified by the Secretary;
(23)
which are the technical component of advanced diagnostic imaging services described in section 1834(e)(1)(B) for which payment is made under the fee schedule established under section 1848(b) and that are furnished by a supplier (as defined in section 1861(d)), if such supplier is not accredited by an accreditation organization designated by the Secretary under section 1834(e)(2)(B);
(24)
where such expenses are for renal dialysis services (as defined in subparagraph (B) of section 1881(b)(14)) for which payment is made under such section unless such payment is made under such section to a provider of services or a renal dialysis facility for such services; or
(25)
not later than January 1, 2014, for which the payment is other than by electronic funds transfer (EFT) or an electronic remittance in a form as specified in ASC X12 835 Health Care Payment and Remittance Advice or subsequent standard.
Paragraph (7) shall not apply to Federally qualified health center services described in section 1861(aa)(3)(B). In making a national coverage determination (as defined in paragraph (1)(B) of section 1869(f)) the Secretary shall ensure consistent with subsection (l) that the public is afforded notice and opportunity to comment prior to implementation by the Secretary of the determination; meetings of advisory committees with respect to the determination are made on the record; in making the determination, the Secretary has considered applicable information (including clinical experience and medical, technical, and scientific evidence) with respect to the subject matter of the determination; and in the determination, provide a clear statement of the basis for the determination (including responses to comments received from the public), the assumptions underlying that basis, and make available to the public the data (other than proprietary data) considered in making the determination.
(b)

Medicare as Secondary Payer.—
(1)

Requirements of group health plans.—
(A)

Working aged under group health plans.—
(i)

In general.—
A group health plan—
(I)
may not take into account that an individual (or the individual's spouse) who is covered under the plan by virtue of the individual's current employment status with an employer is entitled to benefits under this title under section 226(a), and
(II)
shall provide that any individual age 65 or older (and the spouse age 65 or older of any individual) who has current employment status with an employer shall be entitled to the same benefits under the plan under the same conditions as any such individual (or spouse) under age 65.
(ii)

Exclusion of group health plan of a small employer.—
Clause (i) shall not apply to a group health plan unless the plan is a plan of, or contributed to by, an employer that has 20 or more employees for each working day in each of 20 or more calendar weeks in the current calendar year or the preceding calendar year.
(iii)

Exception for small employers in multiemployer or multiple employer group health plans.—
Clause (i) also shall not apply with respect to individuals enrolled in a multiemployer or multiple employer group health plan if the coverage of the individuals under the plan is by virtue of current employment status with an employer that does not have 20 or more individuals in current employment status for each working day in each of 20 or more calendar weeks in the current calendar year and the preceding calendar year; except that the exception provided in this clause shall only apply if the plan elects treatment under this clause.
(iv)

Exception for individuals with end stage renal disease.—
Subparagraph (C) shall apply instead of clause (i) to an item or service furnished in a month to an individual if for the month the individual is, or (without regard to entitlement under section 226) would upon application be, entitled to benefits under section 226A.
(v)

Group health plan defined.—
In this subparagraph, and subparagraph (C), the term “group health plan” has the meaning given such term in section 5000(b)(1) of the Internal Revenue Code of 1986, without regard to section 5000(d) of such Code
(B)

Disabled individuals in large group health plans.—
(i)

In general.—
A large group health plan (as defined in clause (iii)) may not take into account that an individual (or a member of the individual's family) who is covered under the plan by virtue of the individual's current employment status with an employer is entitled to benefits under this title under section 226(b).
(ii)

Exception for individuals with end stage renal disease.—
Subparagraph (C) shall apply instead of clause (i) to an item or service furnished in a month to an individual if for the month the individual is, or (without regard to entitlement under section 226) would upon application be, entitled to benefits under section 226A.
(iii)

Large Group Health Plan Defined.—
In this subparagraph, the term “large group health plan” has the meaning given such term in section 5000(b)(2) of the Internal Revenue Code of 1986, without regard to section 5000(d) of such Code.
(C)

Individuals with end stage renal disease.—
A group health plan (as defined in subparagraph (A)(v))—
(i)
may not take into account that an individual is entitled to or eligible for benefits under this title under section 226A during the 12-month period which begins with the first month in which the individual becomes entitled to benefits under part A under the provisions of section 226A, or, if earlier, the first month in which the individual would have been entitled to benefits under such part under the provisions of section 226A if the individual had filed an application for such benefits; and
(ii)
may not differentiate in the benefits it provides between individuals having end stage renal disease and other individuals covered by such plan on the basis of the existence of end stage renal disease, the need for renal dialysis, or in any other manner;
except that clause (ii) shall not prohibit a plan from paying benefits secondary to this title when an individual is entitled to or eligible for benefits under this title under section 226A after the end of the 12-month period described in clause (i). Effective for items and services furnished on or after February 1, 1991, and before the date of enactment of the Balanced Budget Act of 1997 (with respect to periods beginning on or after February 1, 1990), this subparagraph shall be applied by substituting “18- month” for “12-month” each place it appears. Effective for items and services furnished on or after the date of enactment of the Balanced Budget Act of 1997, (with respect to periods beginning on or after the date that is 18 months prior to such date), clauses (i) and (ii) shall be applied by substituting “30-month” for “12-month” each place it appears.
(D)

Treatment of certain members of religious orders.—
In this subsection, an individual shall not be considered to be employed, or an employee, with respect to the performance of services as a member of a religious order which are considered employment only by virtue of an election made by the religious order under section 3121(r) of the Internal Revenue Code of 1986.
(E)

General Provisions.—
For purposes of this subsection:
(i)

Aggregation Rules.—
(I)
All employers treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as a single employer.
(II)
All employees of the members of an affiliated service group (as defined in section 414(m) of such Code) shall be treated as employed by a single employer.
(III)
Leased employees (as defined in section 414(n)(2) of such Code) shall be treated as employees of the person for whom they perform services to the extent they are so treated under section 414(n) of such Code.
In applying sections of the Internal Revenue Code of 1986 under this clause, the Secretary shall rely upon regulations and decisions of the Secretary of the Treasury respecting such sections.
(ii)

Current employment status defined.—
An individual has “current employment status” with an employer if the individual is an employee, is the employer, or is associated with the employer in a business relationship.
(iii)

Treatment of self-employed persons as employers.—
The term “employer” includes a self-employed person.
(iv)

Application to certain postal service annuitants or family members.—
Nothing in this paragraph shall prohibit a group health plan from determining an individual’s eligibility to enroll in a health benefits plan offered under the Postal Service Health Benefits Program under section 8903c of title 5, United States Code, in accordance with subsection (e) of such section.
(F)

Limitation on beneficiary liability.—
An individual who is entitled to benefits under this title and is furnished an item or service for which such benefits are incorrectly paid is not liable for repayment of such benefits under this paragraph unless payment of such benefits was made to the individual.
(2)

Medicare secondary payer.—
(A)

In general.—
Payment under this title may not be made, except as provided in subparagraph (B), with respect to any item or service to the extent that—
(i)
payment has been made, or can reasonably be expected to be made, with respect to the item or service as required under paragraph (1), or
(ii)
payment has been made or can reasonably be expected to be made under a workmen's compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.
In the subsection, the term “primary plan” means a group health plan or large group health plan, to the extent that clause (i) applies, and a workmen's compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance, to the extent that clause (ii) applies. An entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.
(B)

Conditional payment.—
(i)

Authority to make conditional payment.—
The Secretary may make payment under this title with respect to an item or service if a primary plan described in subparagraph (A)(ii) has not made or cannot reasonably be expected to make payment with respect to such item or service promptly (as determined in accordance with regulations). Any such payment by the Secretary shall be conditioned on reimbursement to the appropriate Trust Fund in accordance with the succeeding provisions of this subsection.
(ii)

Repayment required.—
Subject to paragraph (9), a primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this title with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. A primary plan's responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan's insured, or by other means. If reimbursement is not made to the appropriate Trust Fund before the expiration of the 60-day period that begins on the date notice of, or information related to, a primary plan's responsibility for such payment 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).
(iii)

Action by united states.—
In order to recover payment made under this title for an item or service, the United States may bring an action against any or all entities that are or were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator, as an employer that sponsors or contributes to a group health plan, or large group health plan, or otherwise) to make payment with respect to the same item or service (or any portion thereof) under a primary plan. The United States may, in accordance with paragraph (3)(A) collect double damages against any such entity. In addition, the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan's payment to any entity. The United States may not recover from a third-party administrator under this clause in cases where the third-party administrator would not be able to recover the amount at issue from the employer or group health plan and is not employed by or under contract with the employer or group health plan at the time the action for recovery is initiated by the United States or for whom it provides administrative services due to the insolvency or bankruptcy of the employer or plan. An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made pursuant to paragraph (8) relating to such payment owed.
(iv)

Subrogation rights.—
The United States shall be subrogated (to the extent of payment made under this title for such an item or service) to any right under this subsection of an individual or any other entity to payment with respect to such item or service under a primary plan.
(v)

Waiver of rights.—
The Secretary may waive (in whole or in part) the provisions of this subparagraph in the case of an individual claim if the Secretary determines that the waiver is in the best interests of the program established under this title.
(vi)

Claims-filing period.—
Notwithstanding any other time limits that may exist for filing a claim under an employer group health plan, the United States may seek to recover conditional payments in accordance with this subparagraph where the request for payment is submitted to the entity required or responsible under this subsection to pay with respect to the item or service (or any portion thereof) under a primary plan within the 3-year period beginning on the date on which the item or service was furnished.
(vii)

Use of website to determine final conditional reimbursement amount.—
(I)

Notice to secretary of expected date of a settlement, judgment, etc.—
In the case of a payment made by the Secretary pursuant to clause (i) for items and services provided to the claimant, the claimant or applicable plan (as defined in paragraph (8)(F)) may at any time beginning 120 days before the reasonably expected date of a settlement, judgment, award, or other payment, notify the Secretary that a payment is reasonably expected and the expected date of such payment.
(II)

Secretarial providing access to claims information through a website.—
The Secretary shall maintain and make available to individuals to whom items and services are furnished under this title (and to authorized family or other representatives recognized under regulations and to an applicable plan which has obtained the consent of the individual) access to information on the claims for such items and services (including payment amounts for such claims), including those claims that relate to a potential settlement, judgment, award, or other payment. Such access shall be provided to an individual, representative, or plan through a website that requires a password to gain access to the information. The Secretary shall update the information on claims and payments on such website in as timely a manner as possible but not later than 15 days after the date that payment is made. Information related to claims and payments subject to the notice under subclause (I) shall be maintained and made available consistent with the following:
- (aa)
The information shall be as complete as possible and shall include provider or supplier name, diagnosis codes (if any), dates of service, and conditional payment amounts.
- (bb)
The information accurately identifies those claims and payments that are related to a potential settlement, judgment, award, or other payment to which the provisions of this subsection apply.
- (cc)
The website provides a method for the receipt of secure electronic communications with the individual, representative, or plan involved.
- (dd)
The website provides that information is transmitted from the website in a form that includes an official time and date that the information is transmitted.
- (ee)
The website shall permit the individual, representative, or plan to download a statement of reimbursement amounts (in this clause referred to as a “statement of reimbursement amount”) on payments for claims under this title relating to a potential settlement, judgment, award, or other payment.
(III)

Use of timely web download as basis for final conditional amount.—
If an individual (or other claimant or applicable plan with the consent of the individual) obtains a statement of reimbursement amount from the website during the protected period as defined in subclause (V) and the related settlement, judgment, award or other payment is made during such period, then the last statement of reimbursement amount that is downloaded during such period and within 3 business days before the date of the settlement, judgment, award, or other payment shall constitute the final conditional amount subject to recovery under clause (ii) related to such settlement, judgment, award, or other payment.
(IV)

Resolution of discrepancies.—
If the individual (or authorized representative) believes there is a discrepancy with the statement of reimbursement amount, the Secretary shall provide a timely process to resolve the discrepancy. Under such process the individual (or representative) must provide documentation explaining the discrepancy and a proposal to resolve such discrepancy. Within 11 business days after the date of receipt of such documentation, the Secretary shall determine whether there is a reasonable basis to include or remove claims on the statement of reimbursement. If the Secretary does not make such determination within the 11 business-day period, then the proposal to resolve the discrepancy shall be accepted. If the Secretary determines within such period that there is not a reasonable basis to include or remove claims on the statement of reimbursement, the proposal shall be rejected. If the Secretary determines within such period that there is a reasonable basis to conclude there is a discrepancy, the Secretary must respond in a timely manner by agreeing to the proposal to resolve the discrepancy or by providing documentation showing with good cause why the Secretary is not agreeing to such proposal and establishing an alternate discrepancy resolution. In no case shall the process under this subclause be treated as an appeals process or as establishing a right of appeal for a statement of reimbursement amount and there shall be no administrative or judicial review of the Secretary's determinations under this subclause.
(V)

Protected period.—
In subclause (III), the term “protected period” means, with respect to a settlement, judgment, award or other payment relating to an injury or incident, the portion (if any) of the period beginning on the date of notice under subclause (I) with respect to such settlement, judgment, award, or other payment that is after the end of a Secretarial response period beginning on the date of such notice to the Secretary. Such Secretarial response period shall be a period of 65 days, except that such period may be extended by the Secretary for a period of an additional 30 days if the Secretary determines that additional time is required to address claims for which payment has been made. Such Secretarial response period shall be extended and shall not include any days for any part of which the Secretary determines (in accordance with regulations) that there was a failure in the claims and payment posting system and the failure was justified due to exceptional circumstances (as defined in such regulations). Such regulations shall define exceptional circumstances in a manner so that not more than 1 percent of the repayment obligations under this subclause would qualify as exceptional circumstances.
(VI)

Effective date.—
The Secretary shall promulgate final regulations to carry out this clause not later than 9 months after the date of the enactment of this clause.
(VII)

Website including successor technology.—
In this clause, the term “website” includes any successor technology.
(viii)

Right of appeal for secondary payer determinations relating to liability insurance (including self-insurance), no fault insurance, and workers' compensation laws and plans.—
The Secretary shall promulgate regulations establishing a right of appeal and appeals process, with respect to any determination under this subsection for a payment made under this title for an item or service for which the Secretary is seeking to recover conditional payments from an applicable plan (as defined in paragraph (8)(F)) that is a primary plan under subsection (A)(ii), under which the applicable plan involved, or an attorney, agent, or third party administrator on behalf of such plan, may appeal such determination. The individual furnished such an item or service shall be notified of the plan's intent to appeal such determination 82
^{82}
So in law, section 201 of Public Law 112–242 adds a new clause (viii) without a period at the end.
(C)

Treatment of questionnaires.—
The Secretary may not fail to make payment under subparagraph (A) solely on the ground that an individual failed to complete a questionnaire concerning the existence of a primary plan.
(3)

Enforcement.—
(A)

Private cause of action.—
There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).
(B)

Reference to excise tax with respect to nonconforming group health plans.—
For provision imposing an excise tax with respect to nonconforming group health plans, see section 5000 of the Internal Revenue Code of 1986.
(C)

Prohibition of financial incentives not to enroll in a group health plan or a large group health plan.—
It is unlawful for an employer or other entity to offer any financial or other incentive for an individual entitled to benefits under this title not to enroll (or to terminate enrollment) under a group health plan or a large group health plan which would (in the case of such enrollment) be a primary plan (as defined in paragraph (2)(A)). Any entity that violates the previous sentence is subject to a civil money penalty of not to exceed $5,000 for each such violation. 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 such provisions apply to a penalty or proceeding under section 1128A(a).
(4)

Coordination of benefits.—
Where payment for an item or service by a primary plan is less than the amount of the charge for such item or service and is not payment in full, payment may be made under this title (without regard to deductibles and coinsurance under this title) for the remainder of such charge, but—
(A)
payment under this title may not exceed an amount which would be payable under this title for such item or service if paragraph (2)(A) did not apply; and
(B)
payment under this title, when combined with the amount payable under the primary plan, may not exceed—
(i)
in the case of an item or service payment for which is determined under this title on the basis of reasonable cost (or other cost-related basis) or under section 1886, the amount which would be payable under this title on such basis, and
(ii)
in the case of an item or service for which payment is authorized under this title on another basis—
(I)
the amount which would be payable under the primary plan (without regard to deductibles and coinsurance under such plan), or
(II)
the reasonable charge or other amount which would be payable under this title (without regard to deductibles and coinsurance under this title),
whichever is greater.
(5)

Identification of secondary payer situations.—
(A)

Requesting matching information.—
(i)

Commissioner of social security.—
The Commissioner of Social Security shall, not less often that annually, transmit to the Secretary of the Treasury a list of the names and TINs of medicare beneficiaries (as defined in section 6103(l)(12) of the Internal Revenue Code of 1986) and request that the Secretary disclose to the Commissioner the information described in subparagraph (A) of such section.
(ii)

Administrator.—
The Administrator of the Centers for Medicare & Medicaid Services shall request, not less often than annually, the Commissioner of the Social Security Administration to disclose to the Administrator the information described in subparagraph (B) of section 6103(l)(12) of the Internal Revenue Code of 1986.
(B)

Disclosure to fiscal intermediaries and carriers.—
In addition to any other information provided under this title to fiscal intermediaries and carriers, the Administrator shall disclose to such intermediaries and carriers (or to such a single intermediary or carrier as the Secretary may designate) the information received under subparagraph (A) for purposes of carrying out this subsection.
(C)

Contacting employers.—
(i)

In general.—
With respect to each individual (in this subparagraph referred to as an “employee”) who was furnished a written statement under section 6051 of the Internal Revenue Code of 1986 by a qualified employer (as defined in section 6103(l)(12)(E)(iii) of such Code), as disclosed under subparagraph (B), the appropriate fiscal intermediary or carrier shall contact the employer in order to determine during what period the employee or employee's spouse may be (or have been) covered under a group health plan of the employer and the nature of the coverage that is or was provided under the plan (including the name, address, and identifying number of the plan).
(ii)

Employer response.—
Within 30 days of the date of receipt of the inquiry, the employer shall notify the intermediary or carrier making the inquiry as to the determinations described in clause (i). An employer (other than a Federal or other governmental entity) who willfully or repeatedly fails to provide timely and accurate notice in accordance with the previous sentence shall be subject to a civil money penalty of not to exceed $1,000 for each individual with respect to which such an inquiry is made. The provision 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 such provisions apply to a penalty or proceeding under section 1128A(a).
(D)

Obtaining information from beneficiaries.—
Before an individual applies for benefits under part A or enrolls under part B, the Administrator shall mail the individual a questionnaire to obtain information on whether the individual is covered under a primary plan and the nature of the coverage provided under the plan, including the name, address, and identifying number of the plan.
(E)

End date.—
The provisions of this paragraph shall not apply to information required to be provided on or after July 1, 2016.
(6)

Screening requirements for providers and suppliers.—
(A)

In general.—
Notwithstanding any other provision of this title, no payment may be made for any item or service furnished under part B unless the entity furnishing such item or service completes (to the best of its knowledge and on the basis of information obtained from the individual to whom the item or service is furnished) the portion of the claim form relating to the availability of other health benefit plans.
(B)

Penalties.—
An entity that knowingly, willfully, and repeatedly fails to complete a claim form in accordance with subparagraph (A) or provides inaccurate information relating to the availability of other health benefit plans on a claim form under such subparagraph shall be subject to a civil money penalty of not to exceed $2,000 for each such incident. 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 such provisions apply to a penalty or proceeding under section 1128A(a).
(7)

Required submission of information by group health plans.—
(A)

Requirement.—
On and after the first day of the first calendar quarter beginning after the date that is 1 year after the date of the enactment of this paragraph, an entity serving as an insurer or third party administrator for a group health plan, as defined in paragraph (1)(A)(v), and, in the case of a group health plan that is self-insured and self-administered, a plan administrator or fiduciary, shall—
(i)
secure from the plan sponsor and plan participants such information as the Secretary shall specify for the purpose of identifying situations where the group health plan is or has been—
(I)
a primary plan to the program under this title; or
(II)
for calendar quarters beginning on or after January 1, 2020, a primary payer with respect to benefits relating to prescription drug coverage under part D; and
(ii)
submit such information to the Secretary in a form and manner (including frequency) specified by the Secretary.
(B)

Enforcement.—
(i)

In general.—
An entity, a plan administrator, or a fiduciary described in subparagraph (A) that fails to comply with the requirements under such subparagraph shall be subject to a civil money penalty of $1,000 for each day of noncompliance for each individual for which the information under such subparagraph should have been submitted. The provisions of subsections (e) and (k) of section 1128A shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this title with respect to an individual.
(ii)

Deposit of amounts collected.—
Any amounts collected pursuant to clause (i) shall be deposited in the Federal Hospital Insurance Trust Fund under section 1817.
(C)

Sharing of information.—
Notwithstanding any other provision of law, under terms and conditions established by the Secretary, the Secretary—
(i)
shall share information on entitlement under Part A and enrollment under Part B under this title with entities, plan administrators, and fiduciaries described in subparagraph (A);
(ii)
may share the entitlement and enrollment information described in clause (i) with entities and persons not described in such clause; and
(iii)
may share information collected under this paragraph as necessary for purposes of the proper coordination of benefits.
(D)

Implementation.—
Notwithstanding any other provision of law, the Secretary may implement this paragraph by program instruction or otherwise.
(8)

Required submission of information by or on behalf of liability insurance (including self-insurance), no fault insurance, and workers' compensation laws and plans.—
(A)

Requirement.—
On and after the first day of the first calendar quarter beginning after the date that is 18 months after the date of the enactment of this paragraph, an applicable plan shall—
(i)
determine whether a claimant (including an individual whose claim is unresolved) is entitled to benefits under the program under this title on any basis; and
(ii)
if the claimant is determined to be so entitled, submit the information described in subparagraph (B) with respect to the claimant to the Secretary in a form and manner (including frequency) specified by the Secretary.
(B)

Required information.—
The information described in this subparagraph is—
(i)
the identity of the claimant for which the determination under subparagraph (A) was made; and
(ii)
such other information as the Secretary shall specify in order to enable the Secretary to make an appropriate determination concerning coordination of benefits, including any applicable recovery claim.
Not later than 18 months after the date of enactment of this sentence, the Secretary shall modify the reporting requirements under this paragraph so that an applicable plan in complying with such requirements is permitted but not required to access or report to the Secretary beneficiary social security account numbers or health identification claim numbers, except that the deadline for such modification shall be extended by one or more periods (specified by the Secretary) of up to 1 year each if the Secretary notifies the committees of jurisdiction of the House of Representatives and of the Senate that the prior deadline for such modification, without such extension, threatens patient privacy or the integrity of the secondary payer program under this subsection. Any such deadline extension notice shall include information on the progress being made in implementing such modification and the anticipated implementation date for such modification.
(C)

Timing.—
Information shall be submitted under subparagraph (A)(ii) within a time specified by the Secretary after the claim is resolved through a settlement, judgment, award, or other payment (regardless of whether or not there is a determination or admission of liability).
(D)

Claimant.—
For purposes of subparagraph (A), the term “claimant” includes—
(i)
an individual filing a claim directly against the applicable plan; and
(ii)
an individual filing a claim against an individual or entity insured or covered by the applicable plan.
(E)

Enforcement.—
(i)

In general.—
An applicable plan that fails to comply with the requirements under subparagraph (A) with respect to any claimant may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant. The provisions of subsections (e) and (k) of section 1128A shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this title with respect to an individual.
(ii)

Deposit of amounts collected.—
Any amounts collected pursuant to clause (i) shall be deposited in the Federal Hospital Insurance Trust Fund.
(F)

Applicable plan.—
In this paragraph, the term “applicable plan” means the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan, or arrangement:
(i)
Liability insurance (including self-insurance).
(ii)
No fault insurance.
(iii)
Workers' compensation laws or plans.
(G)

Sharing of information.—
(i)

In general.—
The Secretary may share information collected under this paragraph as necessary for purposes of the proper coordination of benefits.
(ii)

Specified information.—
In responding to any query made on or after the date that is 1 year after the date of the enactment of this clause from an applicable plan related to a determination described in subparagraph (A)(i), the Secretary, notwithstanding any other provision of law, shall provide to such applicable plan—
(I)
whether a claimant subject to the query is, or during the preceding 3-year period has been, entitled to benefits under the program under this title on any basis; and
(II)
to the extent applicable, the plan name and address of any Medicare Advantage plan under part C and any prescription drug plan under part D in which the claimant is enrolled or has been enrolled during such period.
(H)

Implementation.—
Notwithstanding any other provision of law, the Secretary may implement this paragraph by program instruction or otherwise.
(I)

Regulations.—
Not later than 60 days after the date of the enactment of this subparagraph, the Secretary shall publish a notice in the Federal Register soliciting proposals, which will be accepted during a 60-day period, for the specification of practices for which sanctions will and will not be imposed under subparagraph (E), including not imposing sanctions for good faith efforts to identify a beneficiary pursuant to this paragraph under an applicable entity responsible for reporting information. After considering the proposals so submitted, the Secretary, in consultation with the Attorney General, shall publish in the Federal Register, including a 60-day period for comment, proposed specified practices for which such sanctions will and will not be imposed. After considering any public comments received during such period, the Secretary shall issue final rules specifying such practices.
(9)

Exception.—
(A)

In general.—
Clause (ii) of paragraph (2)(B) and any reporting required by paragraph (8) shall not apply with respect to any settlement, judgment, award, or other payment by an applicable plan arising from liability insurance (including self-insurance) and from alleged physical trauma-based incidents (excluding alleged ingestion, implantation, or exposure cases) constituting a total payment obligation to a claimant of not more than the single threshold amount calculated by the Secretary under subparagraph (B) for the year involved.
(B)

Annual computation of threshold.—
(i)

In general.—
Not later than November 15 before each year, the Secretary shall calculate and publish a single threshold amount for settlements, judgments, awards, or other payments for obligations arising from liability insurance (including self-insurance) and for alleged physical trauma-based incidents (excluding alleged ingestion, implantation, or exposure cases) subject to this section for that year. The annual single threshold amount for a year shall be set such that the estimated average amount to be credited to the Medicare trust funds of collections of conditional payments from such settlements, judgments, awards, or other payments arising from liability insurance (including self-insurance) and for such alleged incidents subject to this section shall equal the estimated cost of collection incurred by the United States (including payments made to contractors) for a conditional payment arising from liability insurance (including self-insurance) and for such alleged incidents subject to this section for the year. At the time of calculating, but before publishing, the single threshold amount for 2014, the Secretary shall inform, and seek review of, the Comptroller General of the United States with regard to such amount.
(ii)

Publication.—
The Secretary shall include, as part of such publication for a year—
(I)
the estimated cost of collection incurred by the United States (including payments made to contractors) for a conditional payment arising from liability insurance (including self-insurance) and for such alleged incidents; and
(II)
a summary of the methodology and data used by the Secretary in computing such threshold amount and such cost of collection.
(C)

Exclusion of ongoing expenses.—
For purposes of this paragraph and with respect to a settlement, judgment, award, or other payment not otherwise addressed in clause (ii) of paragraph (2)(B) that includes ongoing responsibility for medical payments (excluding settlements, judgments, awards, or other payments made by a workers' compensation law or plan or no fault insurance), the amount utilized for calculation of the threshold described in subparagraph (A) shall include only the cumulative value of the medical payments made under this title.
(D)

Report to congress.—
Not later than November 15 before each year, the Secretary shall submit to the Congress a report on the single threshold amount for settlements, judgments, awards, or other payments for conditional payment obligations arising from liability insurance (including self-insurance) and alleged incidents described in subparagraph (A) for that year and on the establishment and application of similar thresholds for such payments for conditional payment obligations arising from worker compensation cases and from no fault insurance cases subject to this section for the year. For each such report, the Secretary shall—
(i)
calculate the threshold amount by using the methodology applicable to certain liability claims described in subparagraph (B); and
(ii)
include a summary of the methodology and data used in calculating each threshold amount and the amount of estimated savings under this title achieved by the Secretary implementing each such threshold.
(c)
No payment may be made under part B for any expenses incurred for—
(1)
a drug product—
(A)
which is described in section 107(c)(3) of the Drug Amendments of 1962,
(B)
which may be dispensed only upon prescription,
(C)
for which the Secretary has issued a notice of an opportunity for a hearing under subsection (e) of section 505 of the Federal Food, Drug, and Cosmetic Act on a proposed order of the Secretary to withdraw approval of an application for such drug product under such section because the Secretary has determined that the drug is less than effective for all conditions of use prescribed, recommended, or suggested in its labeling, and
(D)
for which the Secretary has not determined there is a compelling justification for its medical need; and
(2)
any other drug product—
(A)
which is identical, related, or similar (as determined in accordance with section 310.6 of title 21 of the Code of Federal Regulations) to a drug product described in paragraph (1), and
(B)
for which the Secretary has not determined there is a compelling justification for its medical need,
until such time as the Secretary withdraws such proposed order.
(d)
For purposes of subsection (a)(1)(A), in the case of any item or service that is required to be provided pursuant to section 1867 to an individual who is entitled to benefits under this title, determinations as to whether the item or service is reasonable and necessary shall be made on the basis of the information available to the treating physician or practitioner (including the patient's presenting symptoms or complaint) at the time the item or service was ordered or furnished by the physician or practitioner (and not on the patient's principal diagnosis). When making such determinations with respect to such an item or service, the Secretary shall not consider the frequency with which the item or service was provided to the patient before or after the time of the admission or visit.
(e)
(1)
No payment may be made under this title with respect to any item or service (other than an emergency item or service, not including items or services furnished in an emergency room of a hospital) furnished—
(A)
by an individual or entity during the period when such individual or entity is excluded pursuant to section 1128, 1128A, 1156 or 1842(j)(2) from participation in the program under this title; or
(B)
at the medical direction or on the prescription of a physician during the period when he is excluded pursuant to section 1128, 1128A, 1156 or 1842(j)(2) from participation in the program under this title and when the person furnishing such item or service knew or had reason to know of the exclusion (after a reasonable time period after reasonable notice has been furnished to the person).
(2)
Where an individual eligible for benefits under this title submits a claim for payment for items or services furnished by an individual or entity excluded from participation in the programs under this title, pursuant to section 1128, 1128A, 1156, 1160 (as in effect on September 2, 1982), 1842(j)(2), 1862(d) (as in effect on the date of the enactment of the Medicare and Medicaid Patient and Program Protection Act of 1987), or l866, and such beneficiary did not know or have reason to know that such individual or entity was so excluded, then, to the extent permitted by this title, and notwithstanding such exclusion, payment shall be made for such items or services. In each such case the Secretary shall notify the beneficiary of the exclusion of the individual or entity furnishing the items or services. Payment shall not be made for items or services furnished by an excluded individual or entity to a beneficiary after a reasonable time (as determined by the Secretary in regulations) after the Secretary has notified the beneficiary of the exclusion of that individual or entity.
(f)
The Secretary shall establish utilization guidelines for the determination of whether or not payment may be made, consistent with paragraph (1)(A) of subsection (a), under part A or part B for expenses incurred with respect to the provision of home health services, and shall provide for the implementation of such guidelines through a process of selective postpayment coverage review by intermediaries or otherwise.
(g)
(1)
The Secretary shall, in making the determinations under paragraphs (1) and (9) of subsection (a), and for the purposes of promoting the effective, efficient, and economical delivery of health care services, and of promoting the quality of services of the type for which payment may be made under this title, enter into contracts with quality improvement organizations pursuant to part B of title XI of this Act.
(2)
In addition to any funds otherwise available, there are appropriated to the Secretary, out of any monies in the Treasury not otherwise obligated, $200,000,000, to remain available until expended, for purposes of requiring multiple organizations described in paragraph (1) to provide to skilled nursing facilities (as defined in section 1819(a)), infection control and vaccination uptake support relating to the prevention or mitigation of COVID–19, as determined appropriate by the Secretary.
(h)
(1)
The Secretary—
(A)
shall waive the application of subsection (a)(22) in cases in which—
(i)
there is no method available for the submission of claims in an electronic form; or
(ii)
the entity submitting the claim is a small provider of services or supplier; and
(B)
may waive the application of such subsection in such unusual cases as the Secretary finds appropriate.
(2)
For purposes of this subsection, the term “small provider of services or supplier” means—
(A)
a provider of services with fewer than 25 full-time equivalent employees; or
(B)
a physician, practitioner, facility, or supplier (other than provider of services) with fewer than 10 full-time equivalent employees.
(i)
In order to supplement the activities of the Medicare Payment Advisory Commission under section 1886(e) in assessing the safety, efficacy, and cost-effectiveness of new and existing medical procedures, the Secretary may carry out, or award grants or contracts for, original research and experimentation of the type described in clause (ii) of section 1886(e)(6)(E) with respect to such a procedure if the Secretary finds that—
(1)
such procedure is not of sufficient commercial value to justify research and experimentation by a commercial organization;
(2)
research and experimentation with respect to such procedure is not of a type that may appropriately be carried out by an institute, division, or bureau of the National Institutes of Health; and
(3)
such procedure has the potential to be more cost-effective in the treatment of a condition than procedures currently in use with respect to such condition.
(j)
(1)
Any advisory committee appointed to advise the Secretary on matters relating to the interpretation, application, or implementation of subsection (a)(1) shall assure the full participation of a nonvoting member in the deliberations of the advisory committee, and shall provide such nonvoting member access to all information and data made available to voting members of the advisory committee, other than information that—
(A)
is exempt from disclosure pursuant to subsection (a) of section 552 of title 5, United States Code, by reason of subsection (b)(4) of such section (relating to trade secrets); or
(B)
the Secretary determines would present a conflict of interest relating to such nonvoting member.
(2)
If an advisory committee described in paragraph (1) organizes into panels of experts according to types of items or services considered by the advisory committee, any such panel of experts may report any recommendation with respect to such items or services directly to the Secretary without the prior approval of the advisory committee or an executive committee thereof.
(k)
(1)
Subject to paragraph (2), a group health plan (as defined in subsection (a)(1)(A)(v)) providing supplemental or secondary coverage to individuals also entitled to services under this title shall not require a medicare claims determination under this title for dental benefits specifically excluded under subsection (a)(12) as a condition of making a claims determination for such benefits under the group health plan.
(2)
A group health plan may require a claims determination under this title in cases involving or appearing to involve inpatient dental hospital services or dental services expressly covered under this title pursuant to actions taken by the Secretary.
(l)

National and Local Coverage Determination Process.—
(1)

Factors and evidence used in making national coverage determinations.—
The Secretary shall make available to the public the factors considered in making national coverage determinations of whether an item or service is reasonable and necessary. The Secretary shall develop guidance documents to carry out this paragraph in a manner similar to the development of guidance documents under section 701(h) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 371(h)).
(2)

Timeframe for decisions on requests for national coverage determinations.—
In the case of a request for a national coverage determination that—
(A)
does not require a technology assessment from an outside entity or deliberation from the Medicare Coverage Advisory Committee, the decision on the request shall be made not later than 6 months after the date of the request; or
(B)
requires such an assessment or deliberation and in which a clinical trial is not requested, the decision on the request shall be made not later than 9 months after the date of the request.
(3)

Process for public comment in national coverage determinations.—
(A)

Period for proposed decision.—
Not later than the end of the 6-month period (or 9-month period for requests described in paragraph (2)(B)) that begins on the date a request for a national coverage determination is made, the Secretary shall make a draft of proposed decision on the request available to the public through the Internet website of the Centers for Medicare & Medicaid Services or other appropriate means.
(B)

30-day period for public comment.—
Beginning on the date the Secretary makes a draft of the proposed decision available under subparagraph (A), the Secretary shall provide a 30-day period for public comment on such draft.
(C)

60-day period for final decision.—
Not later than 60 days after the conclusion of the 30-day period referred to under subparagraph (B), the Secretary shall—
(i)
make a final decision on the request;
(ii)
include in such final decision summaries of the public comments received and responses to such comments;
(iii)
make available to the public the clinical evidence and other data used in making such a decision when the decision differs from the recommendations of the Medicare Coverage Advisory Committee; and
(iv)
in the case of a final decision under clause (i) to grant the request for the national coverage determination, the Secretary shall assign a temporary or permanent code (whether existing or unclassified) and implement the coding change.
(4)

Consultation with outside experts in certain national coverage determinations.—
With respect to a request for a national coverage determination for which there is not a review by the Medicare Coverage Advisory Committee, the Secretary shall consult with appropriate outside clinical experts.
(5)

Local coverage determination process.—
(A)

Plan to promote consistency of coverage determinations.—
The Secretary shall develop a plan to evaluate new local coverage determinations to determine which determinations should be adopted nationally and to what extent greater consistency can be achieved among local coverage determinations.
(B)

Consultation.—
The Secretary shall require the fiscal intermediaries or carriers providing services within the same area to consult on all new local coverage determinations within the area.
(C)

Dissemination of information.—
The Secretary should serve as a center to disseminate information on local coverage determinations among fiscal intermediaries and carriers to reduce duplication of effort.
(D)

Local coverage determinations.—
The Secretary shall require each Medicare administrative contractor that develops a local coverage determination to make available on the Internet website of such contractor and on the Medicare Internet website, at least 45 days before the effective date of such determination, the following information:
(i)
Such determination in its entirety.
(ii)
Where and when the proposed determination was first made public.
(iii)
Hyperlinks to the proposed determination and a response to comments submitted to the contractor with respect to such proposed determination.
(iv)
A summary of evidence that was considered by the contractor during the development of such determination and a list of the sources of such evidence.
(v)
An explanation of the rationale that supports such determination.
(6)

National and local coverage determination defined.—
For purposes of this subsection—
(A)

National coverage determination.—
The term “national coverage determination” means a determination by the Secretary with respect to whether or not a particular item or service is covered nationally under this title.
(B)

Local coverage determination.—
The term “local coverage determination” has the meaning given that in section 1869(f)(2)(B).
(m)

Coverage of Routine Costs Associated With Certain Clinical Trials of Category A Devices.—
(1)

In general.—
In the case of an individual entitled to benefits under part A, or enrolled under part B, or both who participates in a category A clinical trial, the Secretary shall not exclude under subsection (a)(1) payment for coverage of routine costs of care (as defined by the Secretary) furnished to such individual in the trial.
(2)

Category a clinical trial.—
For purposes of paragraph (1), a “category A clinical trial” means a trial of a medical device if—
(A)
the trial is of an experimental/investigational (category A) medical device (as defined in regulations under section 405.201(b) of title 42, Code of Federal Regulations (as in effect as of September 1, 2003));
(B)
the trial meets criteria established by the Secretary to ensure that the trial conforms to appropriate scientific and ethical standards; and
(C)
in the case of a trial initiated before January 1, 2010, the device involved in the trial has been determined by the Secretary to be intended for use in the diagnosis, monitoring, or treatment of an immediately life-threatening disease or condition.
(n)

Requirement of a Surety Bond for Certain Providers of Services and Suppliers.—
(1)

In general.—
The Secretary may require a provider of services or supplier described in paragraph (2) to provide the Secretary on a continuing basis with a surety bond in a form specified by the Secretary in an amount (not less than $50,000) that the Secretary determines is commensurate with the volume of the billing of the provider of services or supplier. The Secretary may waive the requirement of a bond under the preceding sentence in the case of a provider of services or supplier that provides a comparable surety bond under State law.
(2)

Provider of services or supplier described.—
A provider of services or supplier described in this paragraph is a provider of services or supplier the Secretary determines appropriate based on the level of risk involved with respect to the provider of services or supplier, and consistent with the surety bond requirements under sections 1834(a)(16)(B) and 1861(o)(7)(C).
(o)

Suspension of Payments Pending Investigation of Credible Allegations of Fraud.—
(1)

In general.—
The Secretary may suspend payments to a provider of services or supplier under this title pending an investigation of a credible allegation of fraud against the provider of services or supplier, unless the Secretary determines there is good cause not to suspend such payments.
(2)

Consultation.—
The Secretary shall consult with the Inspector General of the Department of Health and Human Services in determining whether there is a credible allegation of fraud against a provider of services or supplier.
(3)

Promulgation of regulations.—
The Secretary shall promulgate regulations to carry out this subsection, section 1860D–12(b)(7) (including as applied pursuant to section 1857(f)(3)(D)), and section 1903(i)(2)(C).
(4)

Credible allegation of fraud.—
In carrying out this subsection, section 1860D–12(b)(7) (including as applied pursuant to section 1857(f)(3)(D)), and section 1903(i)(2)(C), a fraud hotline tip (as defined by the Secretary) without further evidence shall not be treated as sufficient evidence for a credible allegation of fraud.

consultation with state agencies and other organizations to develop conditions of participation for providers of services
Sec. 1863.
[42 U.S.C. 1395z]
In carrying out his functions, relating to determination of conditions of participation by providers of services, under subsections (e)(9), (f)(4), (j)(15), (o)(6), (cc)(2)(I), and (dd)(2) of section 1861, or by ambulatory surgical centers under section 1832(a)(2)(F)(i), the Secretary shall consult with appropriate State agencies and recognized national listing or accrediting bodies, and may consult with appropriate local agencies. Such conditions prescribed under any of such subsections may be varied for different areas or different classes of institutions or agencies and may, at the request of a State, provide higher requirements for such State than for other States; except that, in the case of any State or political subdivision of a State which imposes higher requirements on institutions as a condition to the purchase of services (or of certain specified services) in such institutions under a State plan approved under title I, XVI, or XIX, the Secretary shall impose like requirements as a condition to the payment for services (or for the services specified by the State or subdivision) in such institutions in such State or subdivision.

use of state agencies to determine compliance by providers of services with conditions of participation
Sec. 1864.
[42 U.S.C. 1395aa]
(a)
The Secretary shall make an agreement with any State which is able and willing to do so under which the services of the State health agency or other appropriate State agency (or the appropriate local agencies) will be utilized by him for the purpose of determining whether an institution therein is a hospital or skilled nursing facility, or whether an agency therein is a home health agency, or whether an agency is a hospice program or whether a facility therein is a rural health clinic as defined in section 1861(aa)(2), a critical access hospital, as defined in section 1861(mm)(1), or a comprehensive outpatient rehabilitation facility as defined in section 1861(cc)(2), or whether a laboratory meets the requirements of paragraphs (16) and (17) of section 1861(s) or whether a clinic, rehabilitation agency or public health agency meets the requirements of subparagraph (A) or (B), as the case may be, of section 1861(p)(4), or whether an ambulatory surgical center meets the standards specified under section 1832(a)(2)(F)(i), or whether a facility is a rural emergency hospital as defined in section 1861(kkk)(2). To the extent that the Secretary finds it appropriate, an institution or agency which such a State (or local) agency certifies is a hospital, skilled nursing facility, rural health clinic, comprehensive outpatient rehabilitation facility, home health agency, or hospice program (as those terms are defined in section 1861) may be treated as such by the Secretary. Any State agency which has such an agreement may (subject to approval of the Secretary) furnish to a skilled nursing facility, after proper request by such facility, such specialized consultative services (which such agency is able and willing to furnish in a manner satisfactory to the Secretary) as such facility may need to meet one or more of the conditions specified in section 1819(a). Any such services furnished by a State agency shall be deemed to have been furnished pursuant to such agreement. Within 90 days following the completion of each survey of any health care facility, ambulatory surgical center, rural health clinic, comprehensive outpatient rehabilitation facility, laboratory, clinic, agency, or organization by the appropriate State or local agency described in the first sentence of this subsection, the Secretary shall make public in readily available form and place, and require (in the case of skilled nursing facilities) the posting in a place readily accessible to patients (and patients' representatives), the pertinent findings of each such survey relating to the compliance of each such health care facility, ambulatory surgical center, rural health clinic, comprehensive outpatient rehabilitation facility, laboratory, clinic, agency, or organization with (1) the statutory conditions of participation imposed under this title and (2) the major additional conditions which the Secretary finds necessary in the interest of health and safety of individuals who are furnished care or services by any such health care facility, ambulatory surgical center, rural health clinic, comprehensive outpatient rehabilitation facility, laboratory, clinic, agency, or organization. Any agreement under this subsection shall provide for the appropriate State or local agency to maintain a toll-free hotline (1) to collect, maintain, and continually update information on home health agencies and hospice programs located in the State or locality that are certified to participate in the program established under this title (which information shall include any significant deficiencies found with respect to patient care in the most recent certification survey conducted by a State agency or accreditation survey conducted by a private accreditation agency under section 1865 with respect to the home health agency or the hospice program, when that survey was completed, whether corrective actions have been taken or are planned, and the sanctions, if any, imposed under this title with respect to the agency or the hospice program ) and (2) to receive complaints (and answer questions) with respect to home health agencies and hospice programs in the State or locality. Any such agreement shall provide for such State or local agency to maintain a unit for investigating such complaints that possesses enforcement authority and has access to survey and certification reports, information gathered by any private accreditation agency utilized by the Secretary under section 1865, and consumer medical records (but only with the consent of the consumer or his or her legal representative).
(b)
The Secretary shall pay any such State, in advance or by way of reimbursement, as may be provided in the agreement with it (and may make adjustments in such payments on account of overpayments or underpayments previously made), for the reasonable cost of performing the functions specified in subsection (a), and for the Federal Hospital Insurance Trust Fund's fair share of the costs attributable to the planning and other efforts directed toward coordination of activities in carrying out its agreement and other activities related to the provision of services similar to those for which payment may be made under part A, or related to the facilities and personnel required for the provision of such services, or related to improving the quality of such services.
(c)
The Secretary is authorized to enter into an agreement with any State under which the appropriate State or local agency which performs the certification function described in subsection (a) will survey, on a selective sample basis (or where the Secretary finds that a survey is appropriate because of substantial allegations of the existence of a significant deficiency or deficiencies which would, if found to be present, adversely affect health and safety of patients), provider entities that, pursuant to section 1865(a)(1), are treated as meeting the conditions or requirements of this title. The Secretary shall pay for such services in the manner prescribed in subsection (b).
(d)
The Secretary may not enter an agreement under this section with a State with respect to determining whether an institution therein is a skilled nursing facility unless the State meets the requirements specified in section 1819(e) and section 1819(g) and the establishment of remedies under sections 1819(h)(2)(B) and 1819(h)(2)(C) (relating to establishment and application of remedies).
(e)
Notwithstanding any other provision of law, the Secretary may not impose, or require a State to impose, any fee on any facility or entity subject to a determination under subsection (a), or any renal dialysis facility subject to the requirements of section 1881(b)(1), for any such determination or any survey relating to determining the compliance of such facility or entity with any requirement of this title (other than any fee relating to section 353 of the Public Health Service Act).

effect of accreditation
Sec. 1865.
[42 U.S.C. 1395bb]
(a)
(1)
If the Secretary finds that accreditation of a provider entity (as defined in paragraph (4)) by the American Osteopathic Association or any other national accreditation body demonstrates that all of the applicable conditions or requirements of this title (other than the requirements of section 1834(j)) are met or exceeded—
(A)
in the case of a provider entity not described in paragraph (3)(B), the Secretary shall treat such entity as meeting those conditions or requirements with respect to which the Secretary made such finding; or
(B)
in the case of a provider entity described in paragraph (3)(B), the Secretary may treat such entity as meeting those conditions or requirements with respect to which the Secretary made such finding.
(2)
In making such a finding, the Secretary shall consider, among other factors with respect to a national accreditation body, its requirements for accreditation, its survey procedures, its ability to provide adequate resources for conducting required surveys and supplying information for use in enforcement activities, its monitoring procedures for provider entities found out of compliance with the conditions or requirements, and its ability to provide the Secretary with necessary data for validation.
(3)
(A)
Except as provided in subparagraph (B), not later than 60 days after the date of receipt of a written request for a finding under paragraph (1) (with any documentation necessary to make a determination on the request), the Secretary shall publish a notice identifying the national accreditation body making the request, describing the nature of the request, and providing a period of at least 30 days for the public to comment on the request. The Secretary shall approve or deny a request for such a finding, and shall publish notice of such approval or denial, not later than 210 days after the date of receipt of the request (with such documentation). Such an approval shall be effective with respect to accreditation determinations made on or after such effective date (which may not be later than the date of publication of the approval) as the Secretary specifies in the publication notice.
(B)
The 210-day and 60-day deadlines specified in subparagraph (A) shall not apply in the case of any request for a finding with respect to accreditation of a provider entity to which the conditions and requirements of sections 1819 and 1861(j) apply.
(4)
For purposes of this section, the term “provider entity” means a provider of services, supplier, facility (including a renal dialysis facility), clinic, agency, or laboratory.
(b)
The Secretary may not disclose any accreditation survey (other than a survey with respect to a home health agency or, beginning on the date of the enactment of the Consolidated Appropriations Act, 2021, a hospice program) made and released to the Secretary by the American Osteopathic Association or any other national accreditation body, of an entity accredited by such body, except that the Secretary may disclose such a survey and information related to such a survey to the extent such survey and information relate to an enforcement action taken by the Secretary.
(c)
Notwithstanding any other provision of this title, if the Secretary finds that a provider entity has significant deficiencies (as defined in regulations pertaining to health and safety), the entity shall, after the date of notice of such finding to the entity and for such period as may be prescribed in regulations, be deemed not to meet the conditions or requirements the entity has been treated as meeting pursuant to subsection (a)(1).
(d)
For provisions relating to validation surveys of entities that are treated as meeting applicable conditions or requirements of this title pursuant to subsection (a)(1), see section 1864(c).
(e)
With respect to an accreditation body that has received approval from the Secretary under subsection (a)(3)(A) for accreditation of provider entities that are required to meet the conditions and requirements under section 1881(b), in addition to review and oversight authorities otherwise applicable under this title, the Secretary shall (as the Secretary determines appropriate) conduct, with respect to such accreditation body and provider entities, any or all of the following as frequently as is otherwise required to be conducted under this title with respect to other accreditation bodies or other provider entities:
(1)
Validation surveys referred to in subsection (d).
(2)
Accreditation program reviews (as defined in section 488.8(c) of title 42 of the Code of Federal Regulations, or a successor regulation).
(3)
Performance reviews (as defined in section 488.8(a) of title 42 of the Code of Federal Regulations, or a successor regulation).

agreements with providers of services; enrollment processes
Sec. 1866.
[42 U.S.C. 1395cc]
(a)
(1)
Any provider of services (except a fund designated for purposes of section 1814(g) and section 1835(e)) shall be qualified to participate under this title and shall be eligible for payments under this title if it files with the Secretary an agreement—
(A)
(i)
not to charge, except as provided in paragraph (2), any individual or any other person for items or services for which such individual is entitled to have payment made under this title (or for which he would be so entitled if such provider of services had complied with the procedural and other requirements under or pursuant to this title or for which such provider is paid pursuant to the provisions of section 1814(e)), and (ii) not to impose any charge that is prohibited under section 1902(n)(3),
(B)
not to charge any individual or any other person for items or services for which such individual is not entitled to have payment made under this title because payment for expenses incurred for such items or services may not be made by reason of the provisions of paragraph (1) or (9) of section 1862(a), but only if (i) such individual was without fault in incurring such expenses and (ii) the Secretary's determination that such payment may not be made for such items and services was made after the third year following the year in which notice of such payment was sent to such individual; except that the Secretary may reduce such three-year period to not less than one year if he finds such reduction is consistent with the objectives of this title,
(C)
to make adequate provision for return (or other disposition, in accordance with regulations) of any moneys incorrectly collected from such individual or other person,
(D)
to promptly notify the Secretary of its employment of an individual who, at any time during the year preceding such employment, was employed in a managerial, accounting, auditing, or similar capacity (as determined by the Secretary by regulation) by an agency or organization which serves as a fiscal intermediary or carrier (for purposes of part A or part B, or both, of this title) with respect to the provider,
(E)
to release data with respect to patients of such provider upon request to an organization having a contract with the Secretary under part B of title XI as may be necessary (i) to allow such organization to carry out its functions under such contract, or (ii) to allow such organization to carry out similar review functions under any contract the organization may have with a private or public agency paying for health care in the same area with respect to patients who authorize release of such data for such purposes,
(F)
(i)
in the case of hospitals which provide inpatient hospital services for which payment may be made under subsection (b), (c), or (d) of section 1886, to maintain an agreement with a professional standards review organization (if there is such an organization in existence in the area in which the hospital is located) or with a quality improvement organization which has a contract with the Secretary under part B of title XI for the area in which the hospital is located, under which the organization will perform functions under that part with respect to the review of the validity of diagnostic information provided by such hospital, the completeness, adequacy, and quality of care provided, the appropriateness of admissions and discharges, and the appropriateness of care provided for which additional payments are sought under section 1886(d)(5), with respect to inpatient hospital services for which payment may be made under part A of this title (and for purposes of payment under this title, the cost of such agreement to the hospital shall be considered a cost incurred by such hospital in providing inpatient services under part A, and (I) shall be paid directly by the Secretary to such organization on behalf of such hospital in accordance with a rate per review established by the Secretary, (II) shall be transferred from the Federal Hospital 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 (III) shall not be less in the aggregate for a fiscal year than the aggregate amount expended in fiscal year 1988 for direct and administrative costs (adjusted for inflation and for any direct or administrative costs incurred as a result of review functions added with respect to a subsequent fiscal year) of such reviews),
(ii)
in the case of hospitals, critical access hospitals, rural emergency hospitals, skilled nursing facilities, and home health agencies, to maintain an agreement with a quality improvement organization (which has a contract with the Secretary under part B of title XI for the area in which the hospital, facility, or agency is located) to perform the functions described in paragraph (3)(A),
(G)
in the case of hospitals which provide inpatient hospital services for which payment may be made under subsection (b) or (d) of section 1886, not to charge any individual or any other person for inpatient hospital services for which such individual would be entitled to have payment made under part A but for a denial or reduction of payments under section 1886(f)(2),
(H)
(i)
in the case of hospitals which provide services for which payment may be made under this title and in the case of critical access hospitals which provide critical access hospital services, to have all items and services (other than physicians' services as defined in regulations for purposes of section 1862(a)(14), and other than services described by section 1861(s)(2)(K), 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 patient of the hospital, and (II) for which the individual is entitled to have payment made under this title, furnished by the hospital or otherwise under arrangements (as defined in section 1861(w)(1)) made by the hospital,
(ii)
in the case of skilled nursing facilities which provide covered skilled nursing facility services—
(I)
that are furnished to an individual who is a resident of the skilled nursing facility during a period in which the resident is provided covered post-hospital extended care services (or, for services described in section 1861(s)(2)(D), that are furnished to such an individual without regard to such period), and
(II)
for which the individual is entitled to have payment made under this title,
to have items and services (other than services described in section 1888(e)(2)(A)(ii)) furnished by the skilled nursing facility or otherwise under arrangements (as defined in section 1861(w)(1)) made by the skilled nursing facility,
(I)
in the case of a hospital, critical access hospital, or rural emergency hospital—
(i)
to adopt and enforce a policy to ensure compliance with the requirements of section 1867 and to meet the requirements of such section,
(ii)
to maintain medical and other records related to individuals transferred to or from the hospital, critical access hospital, or rural emergency hospital for a period of five years from the date of the transfer, and
(iii)
to maintain a list of physicians who are on call for duty after the initial examination to provide treatment necessary to stabilize an individual with an emergency medical condition,
(J)
in the case of hospitals which provide inpatient hospital services for which payment may be made under this title, to be a participating provider of medical care under any health plan contracted for under section 1079 or 1086 of title 10, or under section 613 of title 38, United States Code, in accordance with admission practices, payment methodology, and amounts as prescribed under joint regulations issued by the Secretary and by the Secretaries of Defense and Transportation, in implementation of sections 1079 and 1086 of title 10, United States Code,
(K)
not to charge any individual or any other person for items or services for which payment under this title is denied under section 1154(a)(2) by reason of a determination under section 1154(a)(1)(B),
(L)
in the case of hospitals which provide inpatient hospital services for which payment may be made under this title, to be a participating provider of medical care under chapter 17 of title 38, United States Code, in accordance with such admission practices, and such payment methodology and amounts, as are prescribed under joint regulations issued by the Secretary and by the Secretary of Veterans Affairs in implementation of such section,
(M)
in the case of hospitals, to provide to each individual who is entitled to benefits under part A (or to a person acting on the individual's behalf), at or about the time of the individual's admission as an inpatient to the hospital, a written statement (containing such language as the Secretary prescribes consistent with this paragraph) which explains—
(i)
the individual's rights to benefits for inpatient hospital services and for post-hospital services under this title,
(ii)
the circumstances under which such an individual will and will not be liable for charges for continued stay in the hospital,
(iii)
the individual's right to appeal denials of benefits for continued inpatient hospital services, including the practical steps to initiate such an appeal, and
(iv)
the individual's liability for payment for services if such a denial of benefits is upheld on appeal,—and which provides such additional information as the Secretary may specify,
(N)
in the case of hospitals, critical access hospitals, and rural emergency hospitals—
(i)
to make available to its patients the directory or directories of participating physicians (published under section 1842(h)(4)) for the area served by the hospital, critical access hospital, or rural emergency hospital,
(ii)
if hospital personnel (including staff of any emergency or outpatient department) refer a patient to a nonparticipating physician for further medical care on an outpatient basis, the personnel must inform the patient that the physician is a nonparticipating physician and, whenever practicable, must identify at least one qualified participating physician who is listed in such a directory and from whom the patient may receive the necessary services,
(iii)
to post conspicuously in any emergency department a sign (in a form specified by the Secretary) specifying rights of individuals under section 1867 with respect to examination and treatment for emergency medical conditions and women in labor, and
(iv)
to post conspicuously (in a form specified by the Secretary) information indicating whether or not the hospital, critical access hospital, or rural emergency hospital participates in the medicaid program under a State plan approved under title XIX,
(O)
to accept as payment in full for services that are covered under this title and are furnished to any individual enrolled with a Medicare+Choice organization under part C, with a PACE provider under section 1894 or 1934, or with an eligible organization with a risk-sharing contract under section 1876, under section 1876(i)(2)(A) (as in effect before February 1, 1985), under section 402(a) of the Social Security Amendments of 1967, or under section 222(a) of the Social Security Amendments of 1972, which does not have a contract (or, in the case of a PACE provider, contract or other agreement) establishing payment amounts for services furnished to members of the organization or PACE program eligible individuals enrolled with the PACE provider, the amounts that would be made as a payment in full under this title (less any payments under sections 1886(d)(11) and 1886(h)(3)(D)) if the individuals were not so enrolled,
(P)
in the case of home health agencies which provide home health services to individuals entitled to benefits under this title who require catheters, catheter supplies, ostomy bags, and supplies related to ostomy car (described in section 1861(m)(5)), to offer to furnish such supplies to such an individual as part of their furnishing of home health services,
(Q)
in the case of hospitals, skilled nursing facilities, home health agencies, and hospice programs, to comply with the requirement of subsection (f) (relating to maintaining written policies and procedures respecting advance directives),
(R)
to contract only with a health care clearinghouse (as defined in section 1171) that meets each standard and implementation specification adopted or established under part C of title XI on or after the date on which the health care clearinghouse is required to comply with the standard or specification,
(S)
in the case of a hospital that has a financial interest (as specified by the Secretary in regulations) in an entity to which individuals are referred as described in section 1861(ee)(2)(H)(ii), or in which such an entity has such a financial interest, or in which another entity has such a financial interest (directly or indirectly) with such hospital and such an entity, to maintain and disclose to the Secretary (in a form and manner specified by the Secretary) information on—
(i)
the nature of such financial interest,
(ii)
the number of individuals who were discharged from the hospital and who were identified as requiring home health services, and
(iii)
the percentage of such individuals who received such services from such provider (or another such provider),
(T)
in the case of hospitals and critical access hospitals, to furnish to the Secretary such data as the Secretary determines appropriate pursuant to subparagraph (E) of section 1886(d)(12) to carry out such section,
(U)
in the case of hospitals which furnish inpatient hospital services for which payment may be made under this title, to be a participating provider of medical care both—
(i)
under the contract health services program funded by the Indian Health Service and operated by the Indian Health Service, an Indian tribe, or tribal organization (as those terms are defined in section 4 of the Indian Health Care Improvement Act), with respect to items and services that are covered under such program and furnished to an individual eligible for such items and services under such program; and
(ii)
under any program funded by the Indian Health Service and operated by an urban Indian organization with respect to the purchase of items and services for an eligible urban Indian (as those terms are defined in such section 4),
in accordance with regulations promulgated by the Secretary regarding admission practices, payment methodology, and rates of payment (including the acceptance of no more than such payment rate as payment in full for such items and services,
(V)
in the case of hospitals that are not otherwise subject to the Occupational Safety and Health Act of 1970 (or a State occupational safety and health plan that is approved under 18(b) of such Act), to comply with the Bloodborne Pathogens standard under section 1910.1030 of title 29 of the Code of Federal Regulations (or as subsequently redesignated),
(W)83
in the case of a hospital described in section 1886(d)(1)(B)(v), to report quality data to the Secretary in accordance with subsection (k),
^{83}
Margin for subparagraph (W) (as added by section 3005(1)(C) of Public Law 111–148) so in law. Also, the placement of subparagraph (W) reflects the probable intent of Congress. The amendment insertion instruction provides to insert this subparagraph at the end of paragraph (1), which includes continuation text at the end following these subparagraphs.
(X)84
maintain and, upon request of the Secretary, provide access to documentation relating to written orders or requests for payment for durable medical equipment, certifications for home health services, or referrals for other items or services written or ordered by the provider under this title, as specified by the Secretary, and
^{84}
Margin for subparagraph (X) (as added as a subparagraph (W) by section 6406(b)(3) of Public Law 111–148 and redesignated by section 2(3)(A) of Public Law 114–42) so in law.
(Y)
beginning 12 months after the date of the enactment of this subparagraph, in the case of a hospital or critical access hospital, with respect to each individual who receives observation services as an outpatient at such hospital or critical access hospital for more than 24 hours, to provide to such individual not later than 36 hours after the time such individual begins receiving such services (or, if sooner, upon release)—
(i)
such oral explanation of the written notification described in clause (ii), and such documentation of the provision of such explanation, as the Secretary determines to be appropriate;
(ii)
a written notification (as specified by the Secretary pursuant to rulemaking and containing such language as the Secretary prescribes consistent with this paragraph) which—
(I)
explains the status of the individual as an outpatient receiving observation services and not as an inpatient of the hospital or critical access hospital and the reasons for such status of such individual;
(II)
explains the implications of such status on services furnished by the hospital or critical access hospital (including services furnished on an inpatient basis), such as implications for cost-sharing requirements under this title and for subsequent eligibility for coverage under this title for services furnished by a skilled nursing facility;
(III)
includes such additional information as the Secretary determines appropriate;
(IV)
either—
- (aa)
is signed by such individual or a person acting on such individual’s behalf to acknowledge receipt of such notification; or
- (bb)
if such individual or person refuses to provide the signature described in item (aa), is signed by the staff member of the hospital or critical access hospital who presented the written notification and includes the name and title of such staff member, a certification that the notification was presented, and the date and time the notification was presented; and
(V)
is written and formatted using plain language and is made available in appropriate languages as determined by the Secretary.
In the case of a hospital which has an agreement in effect with an organization described in subparagraph (F), which organization's contract with the Secretary under part B of title XI is terminated on or after October 1, 1984, the hospital shall not be determined to be out of compliance with the requirement of such subparagraph during the six month period beginning on the date of the termination of that contract.
(2)
(A)
A provider of services may charge such individual or other person (i) the amount of any deduction or coinsurance amount imposed pursuant to section 1813(a)(1), (a)(3), or (a)(4), section 1833(b), or section 1861(y)(3) with respect to such items and services (not in excess of the amount customarily charged for such items and services by such provider), and (ii) an amount equal to 20 per centum of the reasonable charges for such items and services (not in excess of 20 per centum of the amount customarily charged for such items and services by such provider) for which payment is made under part B or which are durable medical equipment furnished as home health services (but in the case of items and services furnished to individuals with end-stage renal disease, an amount equal to 20 percent of the estimated amounts for such items and services calculated on the basis established by the Secretary). In the case of items and services described in section 1833(c), clause (ii) of the preceding sentence shall be applied by substituting for 20 percent the proportion which is appropriate under such section. A provider of services may not impose a charge under clause (ii) of the first sentence of this subparagraph with respect to items and services described in section 1861(s)(10)(A) and with respect to clinical diagnostic laboratory tests for which payment is made under part B. Notwithstanding the first sentence of this subparagraph, a home health agency may charge such an individual or person, with respect to covered items subject to payment under section 1834(a), the amount of any deduction imposed under section 1833(b) and 20 percent of the payment basis described in section 1834(a)(1)(B). In the case of items and services for which payment is made under part B under the prospective payment system established under section 1833(t), clause (ii) of the first sentence shall be applied by substituting for 20 percent of the reasonable charge, the applicable copayment amount established under section 1833(t)(5). In the case of services described in section 1833(a)(8) or section 1833(a)(9) for which payment is made under part B under section 1834(k), clause (ii) of the first sentence shall be applied by substituting for 20 percent of the reasonable charge for such services 20 percent of the lesser of the actual charge or the applicable fee schedule amount (as defined in such section) for such services.
(B)
Where a provider of services has furnished, at the request of such individual, items or services which are in excess of or more expensive than the items or services with respect to which payment may be made under this title, such provider of services may also charge such individual or other person for such more expensive items or services to the extent that the amount customarily charged by it for the items or services furnished at such request exceeds the amount customarily charged by it for the items or services with respect to which payment may be made under this title.
[(ii)
Repealed.]
(C)
A provider of services may in accordance with its customary practice also appropriately charge any such individual for any whole blood (or equivalent quantities of packed red blood cells, as defined under regulations) furnished him with respect to which a deductible is imposed under section 1813(a)(2), except that (i) any excess of such charge over the cost to such provider for the blood (or equivalent quantities of packed red blood cells, as so defined) shall be deducted from any payment to such provider under this title, (ii) no such charge may be imposed for the cost of administration of such blood (or equivalent quantities of packed red blood cells, as so defined), and (iii) such charge may not be made to the extent such blood (or equivalent quantities of packed red blood cells, as so defined) has been replaced on behalf of such individual or arrangements have been made for its replacement on his behalf. For purposes of subparagraph (C), whole blood (or equivalent quantities of packed red blood cells, as so defined) furnished an individual shall be deemed replaced when the provider of services is given one pint of blood for each pint of blood (or equivalent quantities of packed red blood cells, as so defined) furnished such individual with respect to which a deduction is imposed under section 1813(a)(2).
(D)
Where a provider of services customarily furnishes items or services which are in excess of or more expensive than the items or services with respect to which payment may be made under this title, such provider, notwithstanding the preceding provisions of this paragraph, may not, under the authority of section 1866(a)(2)(B)(ii), charge any individual or other person any amount for such items or services in excess of the amount of the payment which may otherwise be made for such items or services under this title if the admitting physician has a direct or indirect financial interest in such provider.
(3)
(A)
Under the agreement required under paragraph (1)(F)(ii), the quality improvement organization must perform functions (other than those covered under an agreement under paragraph (1)(F)(i)) under the third sentence of section 1154(a)(4)(A) and under section 1154(a)(14) with respect to services, furnished by the hospital, critical access hospital, rural emergency hospital, facility, or agency involved, for which payment may be made under this title.
(B)
For purposes of payment under this title, the cost of such an agreement to the hospital, critical access hospital, rural emergency hospital, facility, or agency shall be considered a cost incurred by such hospital, critical access hospital, rural emergency hospital, facility, or agency in providing covered services under this title and shall be paid directly by the Secretary to the quality improvement organization on behalf of such hospital, critical access hospital, rural emergency hospital, facility, or agency in accordance with a schedule established by the Secretary.
(C)
Such payments—
(i)
shall be transferred in appropriate proportions from the Federal Hospital Insurance Trust Fund and from the Federal Supplementary Medical Insurance Trust Fund, without regard to amounts appropriated in advance in appropriation Acts, in the same manner as transfers are made for payment for services provided directly to beneficiaries, and
(ii)
shall not be less in the aggregate for a fiscal year—
(I)
in the case of hospitals, than the amount specified in paragraph (1)(F)(i)(III), and
(II)
in the case of facilities, critical access hospitals, rural emergency hospitals, and agencies, than the amounts the Secretary determines to be sufficient to cover the costs of such organizations' conducting the activities described in subparagraph (A) with respect to such facilities, critical access hospitals, rural emergency hospitals, or agencies under part B of title XI.
(b)
(1)
A provider of services may terminate an agreement with the Secretary under this section at such time and upon such notice to the Secretary and the public as may be provided in regulations, except that notice of more than six months shall not be required.
(2)
The Secretary may refuse to enter into an agreement under this section or, upon such reasonable notice to the provider and the public as may be specified in regulations, may refuse to renew or may terminate such an agreement after the Secretary—
(A)
has determined that the provider fails to comply substantially with the provisions of the agreement, with the provisions of this title and regulations thereunder, or with a corrective action required under section 1886(f)(2)(B),
(B)
has determined that the provider fails substantially to meet the applicable provisions of section 1861,
(C)
has excluded the provider from participation in a program under this title pursuant to section 1128 or section 1128A, or
(D)
has ascertained that the provider has been convicted of a felony under Federal or State law for an offense which the Secretary determines is detrimental to the best interests of the program or program beneficiaries.
(3)
A termination of an agreement or a refusal to renew an agreement under this subsection shall become effective on the same date and in the same manner as an exclusion from participation under the programs under this title becomes effective under section 1128(c).
(4)
(A)
A hospital that fails to comply with the requirement of subsection (a)(1)(V) (relating to the Bloodborne Pathogens standard) is subject to a civil money penalty in an amount described in subparagraph (B), but is not subject to termination of an agreement under this section.
(B)
The amount referred to in subparagraph (A) is an amount that is similar to the amount of civil penalties that may be imposed under section 17 of the Occupational Safety and Health Act of 1970 for a violation of the Bloodborne Pathogens standard referred to in subsection (a)(1)(U) by a hospital that is subject to the provisions of such Act.
(C)
A civil money penalty under this paragraph shall be imposed and collected in the same manner as civil money penalties under subsection (a) of section 1128A are imposed and collected under that section.
(c)
(1)
Where the Secretary has terminated or has refused to renew an agreement under this title with a provider of services, such provider may not file another agreement under this title unless the Secretary finds that the reason for the termination or nonrenewal has been removed and that there is reasonable assurance that it will not recur.
(2)
Where the Secretary has terminated or has refused to renew an agreement under this title with a provider of services, the Secretary shall promptly notify each State agency which administers or supervises the administration of a State plan approved under title XIX of such termination or nonrenewal.
(d)
If the Secretary finds that there is a substantial failure to make timely review in accordance with section 1861(k) of long-stay cases in a hospital, he may, in lieu of terminating his agreement with such hospital, decide that, with respect to any individual admitted to such hospital after a subsequent date specified by him, no payment shall be made under this title for inpatient hospital services (including inpatient psychiatric hospital services) after the 20th day of a continuous period of such services. Such decision may be made effective only after such notice to the hospital and to the public, as may be prescribed by regulations, and its effectiveness shall terminate when the Secretary finds that the reason therefor has been removed and that there is reasonable assurance that it will not recur. The Secretary shall not make any such decision except after reasonable notice and opportunity for hearing to the institution or agency affected thereby.
(e)
For purposes of this section, the term “provider of services” shall include—
(1)
a clinic, rehabilitation agency, or public health agency if, in the case of a clinic or rehabilitation agency, such clinic or agency meets the requirements of section 1861(p)(4)(A) (or meets the requirements of such section through the operation of subsection (g) or (ll)(2) of section 1861), or if, in the case of a public health agency, such agency meets the requirements of section 1861(p)(4)(B) (or meets the requirements of such section through the operation of subsection (g) or (ll)(2) of section 1861), but only with respect to the furnishing of outpatient physical therapy services (as therein defined), (through the operation of section 1861(g)) with respect to the furnishing of outpatient occupational therapy services, or (through the operation of section 1861(ll)(2)) with respect to the furnishing of outpatient speech-language pathology;
(2)
a community mental health center (as defined in section 1861(ff)(3)(B)), but only with respect to the furnishing of partial hospitalization services (as described in section 1861(ff)(1)), or intensive outpatient services (as described in section 1861(ff)(4)); and
(3)
opioid treatment programs (as defined in paragraph (2) of section 1861(jjj)), but only with respect to the furnishing of opioid use disorder treatment services (as defined in paragraph (1) of such section).
(f)
(1)
For purposes of subsection (a)(1)(Q) and sections 1819(c)(2)(E), 1833(s), 1855(i), 1876(c)(8), and 1891(a)(6), the requirement of this subsection is that a provider of services, Medicare+Choice organization, or prepaid or eligible organization (as the case may be) maintain written policies and procedures with respect to all adult individuals receiving medical care by or through the provider or organization—
(A)
to provide written information to each such individual concerning—
(i)
an individual's rights under State law (whether statutory or as recognized by the courts of the State) to make decisions concerning such medical care, including the right to accept or refuse medical or surgical treatment and the right to formulate advance directives (as defined in paragraph (3)), and
(ii)
the written policies of the provider or organization respecting the implementation of such rights;
(B)
to document in a prominent part of the individual's current medical record whether or not the individual has executed an advance directive;
(C)
not to condition the provision of care or otherwise discriminate against an individual based on whether or not the individual has executed an advance directive;
(D)
to ensure compliance with requirements of State law (whether statutory or as recognized by the courts of the State) respecting advance directives at facilities of the provider or organization; and
(E)
to provide (individually or with others) for education for staff and the community on issues concerning advance directives.
Subparagraph (C) shall not be construed as requiring the provision of care which conflicts with an advance directive.
(2)
The written information described in paragraph (1)(A) shall be provided to an adult individual—
(A)
in the case of a hospital, at the time of the individual's admission as an inpatient,
(B)
in the case of a skilled nursing facility, at the time of the individual's admission as a resident,
(C)
in the case of a home health agency, in advance of the individual coming under the care of the agency,
(D)
in the case of a hospice program, at the time of initial receipt of hospice care by the individual from the program, and
(E)
in the case of an eligible organization (as defined in section 1876(b)) or an organization provided payments under section 1833(a)(1)(A) or a Medicare+Choice organization, at the time of enrollment of the individual with the organization.
(3)
In this subsection, the term “advance directive” means a written instruction, such as a living will or durable power of attorney for health care, recognized under State law (whether statutory or as recognized by the courts of the State) and relating to the provision of such care when the individual is incapacitated.
(4)
For construction relating to this subsection, see section 7 of the Assisted Suicide Funding Restriction Act of 1997 (relating to clarification respecting assisted suicide, euthanasia, and mercy killing).
(g)
Except as permitted under subsection (a)(2), any person who knowingly and willfully presents, or causes to be presented, a bill or request for payment inconsistent with an arrangement under subsection (a)(1)(H) or in violation of the requirement for such an arrangement, is subject to a civil money penalty of not to exceed $2,000. 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 such provisions apply to a penalty or proceeding under section 1128A(a).
(h)
(1)
(A)
Except as provided in paragraph (2), an institution or agency dissatisfied with a determination by the Secretary that it is not a provider of services or with a determination described in subsection (b)(2) shall be entitled to a hearing thereon by the Secretary (after reasonable notice) to the same extent as is provided in section 205(b), and to judicial review of the Secretary's final decision after such hearing as is provided in section 205(g), except that, in so applying such sections 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.
(B)
An institution or agency described in subparagraph (A) that has filed for a hearing under subparagraph (A) shall have expedited access to judicial review under this subparagraph in the same manner as providers of services, suppliers, and individuals entitled to benefits under part A or enrolled under part B, or both, may obtain expedited access to judicial review under the process established under section 1869(b)(2). Nothing in this subparagraph shall be construed to affect the application of any remedy imposed under section 1819 during the pendency of an appeal under this subparagraph.
(C)
(i)
The Secretary shall develop and implement a process to expedite proceedings under this subsection in which—
(I)
the remedy of termination of participation has been imposed;
(II)
a remedy described in clause (i) or (iii) of section 1819(h)(2)(B) has been imposed, but only if such remedy has been imposed on an immediate basis; or
(III)
a determination has been made as to a finding of substandard quality of care that results in the loss of approval of a skilled nursing facility's nurse aide training program.
(ii)
Under such process under clause (i), priority shall be provided in cases of termination described in clause (i)(I).
(iii)
Nothing in this subparagraph shall be construed to affect the application of any remedy imposed under section 1819 during the pendency of an appeal under this subparagraph.
(2)
An institution or agency is not entitled to separate notice and opportunity for a hearing under both section 1128 and this section with respect to a determination or determinations based on the same underlying facts and issues.
(i)
(1)
If the Secretary determines that a psychiatric hospital which has an agreement in effect under this section no longer meets the requirements for a psychiatric hospital under this title and further finds that the hospital's deficiencies—
(A)
immediately jeopardize the health and safety of its patients, the Secretary shall terminate such agreement; or
(B)
do not immediately jeopardize the health and safety of its patients, the Secretary may terminate such agreement, or provide that no payment will be made under this title with respect to any individual admitted to such hospital after the effective date of the finding, or both.
(2)
If a psychiatric hospital, found to have deficiencies described in paragraph (1)(B), has not complied with the requirements of this title—
(A)
within 3 months after the date the hospital is found to be out of compliance with such requirements, the Secretary shall provide that no payment will be made under this title with respect to any individual admitted to such hospital after the end of such 3-month period, or
(B)
within 6 months after the date the hospital is found to be out of compliance with such requirements, no payment may be made under this title with respect to any individual in the hospital until the Secretary finds that the hospital is in compliance with the requirements of this title.
(j)

Enrollment Process for Providers of Services and Suppliers.—
(1)

Enrollment process.—
(A)

In general.—
The Secretary shall establish by regulation a process for the enrollment of providers of services and suppliers under this title. Such process shall include screening of providers and suppliers in accordance with paragraph (2), a provisional period of enhanced oversight in accordance with paragraph (3), disclosure requirements in accordance with paragraph (5), the imposition of temporary enrollment moratoria in accordance with paragraph (7), and the establishment of compliance programs in accordance with paragraph (9).
(B)

Deadlines.—
The Secretary shall establish by regulation procedures under which there are deadlines for actions on applications for enrollment (and, if applicable, renewal of enrollment). The Secretary shall monitor the performance of medicare administrative contractors in meeting the deadlines established under this subparagraph.
(C)

Consultation before changing provider enrollment forms.—
The Secretary shall consult with providers of services and suppliers before making changes in the provider enrollment forms required of such providers and suppliers to be eligible to submit claims for which payment may be made under this title.
(2)

Provider screening.—
(A)

Procedures.—
Not later than 180 days after the date of enactment of this paragraph, the Secretary, in consultation with the Inspector General of the Department of Health and Human Services, shall establish procedures under which screening is conducted with respect to providers of medical or other items or services and suppliers under the program under this title, the Medicaid program under title XIX, and the CHIP program under title XXI.
(B)

Level of screening.—
The Secretary shall determine the level of screening conducted under this paragraph according to the risk of fraud, waste, and abuse, as determined by the Secretary, with respect to the category of provider of medical or other items or services or supplier. Such screening—
(i)
shall include a licensure check, which may include such checks across States; and
(ii)
may, as the Secretary determines appropriate based on the risk of fraud, waste, and abuse described in the preceding sentence, include—
(I)
a criminal background check;
(II)
fingerprinting;
(III)
unscheduled and unannounced site visits, including preenrollment site visits;
(IV)
database checks (including such checks across States); and
(V)
such other screening as the Secretary determines appropriate.
(C)

Application fees.—
(i)

Institutional providers.—
Except as provided in clause (ii), the Secretary shall impose a fee on each institutional provider of medical or other items or services or supplier (such as a hospital or skilled nursing facility) with respect to which screening is conducted under this paragraph in an amount equal to—
(I)
for 2010, $500; and
(II)
for 2011 and each subsequent year, the amount determined under this clause for the preceding year, adjusted by the percentage change in the consumer price index for all urban consumers (all items; United States city average) for the 12-month period ending with June of the previous year.
(ii)

Hardship exception; waiver for certain medicaid providers.—
The Secretary may, on a case-by-case basis, exempt a provider of medical or other items or services or supplier from the imposition of an application fee under this subparagraph if the Secretary determines that the imposition of the application fee would result in a hardship. The Secretary may waive the application fee under this subparagraph for providers enrolled in a State Medicaid program for whom the State demonstrates that imposition of the fee would impede beneficiary access to care.
(iii)

Use of funds.—
Amounts collected as a result of the imposition of a fee under this subparagraph shall be used by the Secretary for program integrity efforts, including to cover the costs of conducting screening under this paragraph and to carry out this subsection and section 1128J.
(D)

Application and enforcement.—
(i)

New providers of services and suppliers.—
The screening under this paragraph shall apply, in the case of a provider of medical or other items or services or supplier who is not enrolled in the program under this title, title XIX , or title XXI as of the date of enactment of this paragraph, on or after the date that is 1 year after such date of enactment.
(ii)

Current providers of services and suppliers.—
The screening under this paragraph shall apply, in the case of a provider of medical or other items or services or supplier who is enrolled in the program under this title, title XIX, or title XXI as of such date of enactment, on or after the date that is 2 years after such date of enactment.
(iii)

Revalidation of enrollment.—
Effective beginning on the date that is 180 days after such date of enactment, the screening under this paragraph shall apply with respect to the revalidation of enrollment of a provider of medical or other items or services or supplier in the program under this title, title XIX, or title XXI.
(iv)

Limitation on enrollment and revalidation of enrollment.—
In no case may a provider of medical or other items or services or supplier who has not been screened under this paragraph be initially enrolled or reenrolled in the program under this title, title XIX, or title XXI on or after the date that is 3 years after such date of enactment.
(E)

Use of information from the department of treasury concerning tax debts.—
In reviewing the application of a provider of services or supplier to enroll or reenroll under the program under this title, the Secretary shall take into account the information supplied by the Secretary of the Treasury pursuant to section 6103(l)(22) of the Internal Revenue Code of 1986, in determining whether to deny such application or to apply enhanced oversight to such provider of services or supplier pursuant to paragraph (3) if the Secretary determines such provider of services or supplier owes such a debt.
(F)

Expedited rulemaking.—
The Secretary may promulgate an interim final rule to carry out this paragraph.
(3)

Provisional period of enhanced oversight for new providers of services and suppliers.—
(A)

In general.—
The Secretary shall establish procedures to provide for a provisional period of not less than 30 days and not more than 1 year during which new providers of medical or other items or services and suppliers, as the Secretary determines appropriate, including categories of providers or suppliers, would be subject to enhanced oversight, such as prepayment review and payment caps, under the program under this title, the Medicaid program under title XIX. and the CHIP program under title XXI.
(B)

Implementation.—
The Secretary may establish by program instruction or otherwise the procedures under this paragraph.
(4)

90-day period of enhanced oversight for initial claims of dme suppliers.—
For periods beginning after January 1, 2011, if the Secretary determines that there is a significant risk of fraudulent activity among suppliers of durable medical equipment, in the case of a supplier of durable medical equipment who is within a category or geographic area under title XVIII identified pursuant to such determination and who is initially enrolling under such title, the Secretary shall, notwithstanding sections 1816(c), 1842(c), and 1869(a)(2), withhold payment under such title with respect to durable medical equipment furnished by such supplier during the 90-day period beginning on the date of the first submission of a claim under such title for durable medical equipment furnished by such supplier.
(5)

Increased disclosure requirements.—
(A)

Disclosure.—
A provider of medical or other items or services or supplier who submits an application for enrollment or revalidation of enrollment in the program under this title, title XIX, or title XXI on or after the date that is 1 year after the date of enactment of this paragraph shall disclose (in a form and manner and at such time as determined by the Secretary) any current or previous affiliation (directly or indirectly) with a provider of medical or other items or services or supplier that has uncollected debt, has been or is subject to a payment suspension under a Federal health care program (as defined in section 1128B(f)), has been excluded from participation under the program under this title, the Medicaid program under title XIX, or the CHIP program under title XXI, or has had its billing privileges denied or revoked.
(B)

Authority to deny enrollment.—
If the Secretary determines that such previous affiliation poses an undue risk of fraud, waste, or abuse, the Secretary may deny such application. Such a denial shall be subject to appeal in accordance with paragraph (7).
(6)

Authority to adjust payments of providers of services and suppliers with the same tax identification number for medicare obligations.—
(A)

In general.—
Notwithstanding any other provision of this title, in the case of an applicable provider of services or supplier, the Secretary may make any necessary adjustments to payments to the applicable provider of services or supplier under the program under this title in order to satisfy any amount described in subparagraph (B)(ii) due from such obligated provider of services or supplier.
(B)

Definitions.—
In this paragraph:
(i)

In general.—
The term “applicable provider of services or supplier” means a provider of services or supplier that has the same taxpayer identification number assigned under section 6109 of the Internal Revenue Code of 1986 as is assigned to the obligated provider of services or supplier under such section, regardless of whether the applicable provider of services or supplier is assigned a different billing number or national provider identification number under the program under this title than is assigned to the obligated provider of services or supplier.
(ii)

Obligated provider of services or supplier.—
The term “obligated provider of services or supplier” means a provider of services or supplier that owes an amount that is more than the amount required to be paid under the program under this title (as determined by the Secretary).
(7)

Temporary moratorium on enrollment of new providers; nonpayment.—
(A)

In general.—
The Secretary may impose a temporary moratorium on the enrollment of new providers of services and suppliers, including categories of providers of services and suppliers, in the program under this title, under the Medicaid program under title XIX, or under the CHIP program under title XXI if the Secretary determines such moratorium is necessary to prevent or combat fraud, waste, or abuse under either such program.
(B)

Limitation on review.—
There shall be no judicial review under section 1869, section 1878, or otherwise, of a temporary moratorium imposed under subparagraph (A).
(C)

Nonpayment.—
(i)

In general.—
No payment may be made under this title or under a program described in subparagraph (A) with respect to an item or service described in clause (ii) furnished on or after October 1, 2017.
(ii)

Item or service described.—
An item or service described in this clause is an item or service furnished—
(I)
within a geographic area with respect to which a temporary moratorium imposed under subparagraph (A) is in effect; and
(II)
by a provider of services or supplier that meets the requirements of clause (iii).
(iii)

Requirements.—
For purposes of clause (ii), the requirements of this clause are that a provider of services or supplier—
(I)
enrolls under this title on or after the effective date of such temporary moratorium; and
(II)
is within a category of providers of services and suppliers (as described in subparagraph (A)) subject to such temporary moratorium.
(iv)

Prohibition on charges for specified items or services.—
In no case shall a provider of services or supplier described in clause (ii)(II) charge an individual or other person for an item or service described in clause (ii) furnished on or after October 1, 2017, to an individual entitled to benefits under part A or enrolled under part B or an individual under a program specified in subparagraph (A).
(8)

Compliance programs.—
(A)

In general.—
On or after the date of implementation determined by the Secretary under subparagraph (C), a provider of medical or other items or services or supplier within a particular industry sector or category shall, as a condition of enrollment in the program under this title, title XIX, or title XXI, establish a compliance program that contains the core elements established under subparagraph (B) with respect to that provider or supplier and industry or category.
(B)

Establishment of core elements.—
The Secretary, in consultation with the Inspector General of the Department of Health and Human Services, shall establish core elements for a compliance program under subparagraph (A) for providers or suppliers within a particular industry or category.
(C)

Timeline for implementation.—
The Secretary shall determine the timeline for the establishment of the core elements under subparagraph (B) and the date of the implementation of subparagraph (A) for providers or suppliers within a particular industry or category. The Secretary shall, in determining such date of implementation, consider the extent to which the adoption of compliance programs by a provider of medical or other items or services or supplier is widespread in a particular industry sector or with respect to a particular provider or supplier category.
(9)

Hearing rights in cases of denial or non-renewal.—
A provider of services or supplier whose application to enroll (or, if applicable, to renew enrollment) under this title is denied may have a hearing and judicial review of such denial under the procedures that apply under subsection (h)(1)(A) to a provider of services that is dissatisfied with a determination by the Secretary.
(k)

Quality Reporting by Cancer Hospitals.—
(1)

In general.—
For purposes of fiscal year 2014 and each subsequent fiscal year, a hospital described in section 1886(d)(1)(B)(v) shall submit data to the Secretary in accordance with paragraph (2) with respect to such a fiscal year.
(2)

Submission of quality data.—
For fiscal year 2014 and each subsequent fiscal year, each hospital described in such section shall submit to the Secretary data on quality measures specified under paragraph (3). Such data shall be submitted in a form and manner, and at a time, specified by the Secretary for purposes of this subparagraph.
(3)

Quality measures.—
(A)

In general.—
Subject to subparagraph (B), any measure specified by the Secretary under this paragraph must have been endorsed by the entity with a contract under section 1890(a).
(B)

Exception.—
In the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a), the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.
(C)

Time frame.—
Not later than October 1, 2012, the Secretary shall publish the measures selected under this paragraph that will be applicable with respect to fiscal year 2014.
(4)

Public availability of data submitted.—
The Secretary shall establish procedures for making data submitted under paragraph (4) available to the public. Such procedures shall ensure that a hospital described in section 1886(d)(1)(B)(v) has the opportunity to review the data that is to be made public with respect to the hospital prior to such data being made public. The Secretary shall report quality measures of process, structure, outcome, patients' perspective on care, efficiency, and costs of care that relate to services furnished in such hospitals on the Internet website of the Centers for Medicare & Medicaid Services.

demonstration of application of physician volume increases to group practices
Sec. 1866A.
[42 U.S.C. 1395cc–1]
(a)

Demonstration Program Authorized.—
(1)

In general.—
The Secretary shall conduct demonstration projects to test and, if proven effective, expand the use of incentives to health care groups participating in the program under this title that—
(A)
encourage coordination of the care furnished to individuals under the programs under parts A and B by institutional and other providers, practitioners, and suppliers of health care items and services;
(B)
encourage investment in administrative structures and processes to ensure efficient service delivery; and
(C)
reward physicians for improving health outcomes.
Such projects shall focus on the efficiencies of furnishing health care in a group-practice setting as compared to the efficiencies of furnishing health care in other health care delivery systems.
(2)

Administration by contract.—
Except as otherwise specifically provided, the Secretary may administer the program under this section in accordance with section 1866B.
(3)

Definitions.—
For purposes of this section, terms have the following meanings:
(A)

Physician.—
Except as the Secretary may otherwise provide, the term “physician” means any individual who furnishes services which may be paid for as physicians' services under this title.
(B)

Health care group.—
The term “health care group” means a group of physicians (as defined in subparagraph (A)) organized at least in part for the purpose of providing physicians' services under this title. As the Secretary finds appropriate, a health care group may include a hospital and any other individual or entity furnishing items or services for which payment may be made under this title that is affiliated with the health care group under an arrangement structured so that such individual or entity participates in a demonstration under this section and will share in any bonus earned under subsection (d).
(b)

Eligibility Criteria.—
(1)

In general.—
The Secretary is authorized to establish criteria for health care groups eligible to participate in a demonstration under this section, including criteria relating to numbers of health care professionals in, and of patients served by, the group, scope of services provided, and quality of care.
(2)

Payment method.—
A health care group participating in the demonstration under this section shall agree with respect to services furnished to beneficiaries within the scope of the demonstration (as determined under subsection (c))—
(A)
to be paid on a fee-for-service basis; and
(B)
that payment with respect to all such services furnished by members of the health care group to such beneficiaries shall (where determined appropriate by the Secretary) be made to a single entity.
(3)

Data reporting.—
A health care group participating in a demonstration under this section shall report to the Secretary such data, at such times and in such format as the Secretary requires, for purposes of monitoring and evaluation of the demonstration under this section.
(c)

Patients Within Scope of Demonstration.—
(1)

In general.—
The Secretary shall specify, in accordance with this subsection, the criteria for identifying those patients of a health care group who shall be considered within the scope of the demonstration under this section for purposes of application of subsection (d) and for assessment of the effectiveness of the group in achieving the objectives of this section.
(2)

Other criteria.—
The Secretary may establish additional criteria for inclusion of beneficiaries within a demonstration under this section, which may include frequency of contact with physicians in the group or other factors or criteria that the Secretary finds to be appropriate.
(3)

Notice requirements.—
In the case of each beneficiary determined to be within the scope of a demonstration under this section with respect to a specific health care group, the Secretary shall ensure that such beneficiary is notified of the incentives, and of any waivers of coverage or payment rules, applicable to such group under such demonstration.
(d)

Incentives.—
(1)

Performance target.—
The Secretary shall establish for each health care group participating in a demonstration under this section—
(A)
a base expenditure amount, equal to the average total payments under parts A and B for patients served by the health care group on a fee-for-service basis in a base period determined by the Secretary; and
(B)
an annual per capita expenditure target for patients determined to be within the scope of the demonstration, reflecting the base expenditure amount adjusted for risk and expected growth rates.
(2)

Incentive bonus.—
The Secretary shall pay to each participating health care group (subject to paragraph (4)) a bonus for each year under the demonstration equal to a portion of the medicare savings realized for such year relative to the performance target.
(3)

Additional bonus for process and outcome improvements.—
At such time as the Secretary has established appropriate criteria based on evidence the Secretary determines to be sufficient, the Secretary shall also pay to a participating health care group (subject to paragraph (4)) an additional bonus for a year, equal to such portion as the Secretary may designate of the saving to the program under this title resulting from process improvements made by and patient outcome improvements attributable to activities of the group.
(4)

Limitation.—
The Secretary shall limit bonus payments under this section as necessary to ensure that the aggregate expenditures under this title (inclusive of bonus payments) with respect to patients within the scope of the demonstration do not exceed the amount which the Secretary estimates would be expended if the demonstration projects under this section were not implemented.

provisions for administration of demonstration program
Sec. 1866B.
[42 U.S.C. 1395cc–2]
(a)

General Administrative Authority.—
(1)

Beneficiary eligibility.—
Except as otherwise provided by the Secretary, an individual shall only be eligible to receive benefits under the program under section 1866A (in this section referred to as the “demonstration program”) if such individual—
(A)
is enrolled under the program under part B and entitled to benefits under part A; and
(B)
is not enrolled in a Medicare+Choice plan under part C, an eligible organization under a contract under section 1876 (or a similar organization operating under a demonstration project authority), an organization with an agreement under section 1833(a)(1)(A), or a PACE program under section 1894.
(2)

Secretary's discretion as to scope of program.—
The Secretary may limit the implementation of the demonstration program to—
(A)
a geographic area (or areas) that the Secretary designates for purposes of the program, based upon such criteria as the Secretary finds appropriate;
(B)
a subgroup (or subgroups) of beneficiaries or individuals and entities furnishing items or services (otherwise eligible to participate in the program), selected on the basis of the number of such participants that the Secretary finds consistent with the effective and efficient implementation of the program;
(C)
an element (or elements) of the program that the Secretary determines to be suitable for implementation; or
(D)
any combination of any of the limits described in subparagraphs (A) through (C).
(3)

Voluntary receipt of items and services.—
Items and services shall be furnished to an individual under the demonstration program only at the individual's election.
(4)

Agreements.—
The Secretary is authorized to enter into agreements with individuals and entities to furnish health care items and services to beneficiaries under the demonstration program.
(5)

Program standards and criteria.—
The Secretary shall establish performance standards for the demonstration program including, as applicable, standards for quality of health care items and services, cost-effectiveness, beneficiary satisfaction, and such other factors as the Secretary finds appropriate. The eligibility of individuals or entities for the initial award, continuation, and renewal of agreements to provide health care items and services under the program shall be conditioned, at a minimum, on performance that meets or exceeds such standards.
(6)

Administrative review of decisions affecting individuals and entities furnishing services.—
An individual or entity furnishing services under the demonstration program shall be entitled to a review by the program administrator (or, if the Secretary has not contracted with a program administrator, by the Secretary) of a decision not to enter into, or to terminate, or not to renew, an agreement with the entity to provide health care items or services under the program.
(7)

Secretary's review of marketing materials.—
An agreement with an individual or entity furnishing services under the demonstration program shall require the individual or entity to guarantee that it will not distribute materials that market items or services under the program without the Secretary's prior review and approval.
(8)

Payment in full.—
(A)

In general.—
Except as provided in subparagraph (B), an individual or entity receiving payment from the Secretary under a contract or agreement under the demonstration program shall agree to accept such payment as payment in full, and such payment shall be in lieu of any payments to which the individual or entity would otherwise be entitled under this title.
(B)

Collection of deductibles and coinsurance.—
Such individual or entity may collect any applicable deductible or coinsurance amount from a beneficiary.
(b)

Contracts for Program Administration.—
(1)

In general.—
The Secretary may administer the demonstration program through a contract with a program administrator in accordance with the provisions of this subsection.
(2)

Scope of program administrator contracts.—
The Secretary may enter into such contracts for a limited geographic area, or on a regional or national basis.
(3)

Eligible contractors.—
The Secretary may contract for the administration of the program with—
(A)
an entity that, under a contract under section 1816 or 1842, determines the amount of and makes payments for health care items and services furnished under this title; or
(B)
any other entity with substantial experience in managing the type of program concerned.
(4)

Contract award, duration, and renewal.—
(A)

In general.—
A contract under this subsection shall be for an initial term of up to three years, renewable for additional terms of up to three years.
(B)

Noncompetitive award and renewal for entities administering part a or part b payments.—
The Secretary may enter or renew a contract under this subsection with an entity described in paragraph (3)(A) without regard to the requirements of section 5 of title 41, United States Code.
(5)

Applicability of federal acquisition regulation.—
The Federal Acquisition Regulation shall apply to program administration contracts under this subsection.
(6)

Performance standards.—
The Secretary shall establish performance standards for the program administrator including, as applicable, standards for the quality and cost-effectiveness of the program administered, and such other factors as the Secretary finds appropriate. The eligibility of entities for the initial award, continuation, and renewal of program administration contracts shall be conditioned, at a minimum, on performance that meets or exceeds such standards.
(7)

Functions of program administrator.—
A program administrator shall perform any or all of the following functions, as specified by the Secretary:
(A)

Agreements with entities furnishing health care items and services.—
Determine the qualifications of entities seeking to enter or renew agreements to provide services under the demonstration program, and as appropriate enter or renew (or refuse to enter or renew) such agreements on behalf of the Secretary.
(B)

Establishment of payment rates.—
Negotiate or otherwise establish, subject to the Secretary's approval, payment rates for covered health care items and services.
(C)

Payment of claims or fees.—
Administer payments for health care items or services furnished under the program.
(D)

Payment of bonuses.—
Using such guidelines as the Secretary shall establish, and subject to the approval of the Secretary, make bonus payments as described in subsection (c)(2)(B) to entities furnishing items or services for which payment may be made under the program.
(E)

Oversight.—
Monitor the compliance of individuals and entities with agreements under the program with the conditions of participation.
(F)

Administrative review.—
Conduct reviews of adverse determinations specified in subsection (a)(6).
(G)

Review of marketing materials.—
Conduct a review of marketing materials proposed by an entity furnishing services under the program.
(H)

Additional functions.—
Perform such other functions as the Secretary may specify.
(8)

Limitation of liability.—
The provisions of section 1157(b) shall apply with respect to activities of contractors and their officers, employees, and agents under a contract under this subsection.
(9)

Information sharing.—
Notwithstanding section 1106 and section 552a of title 5, United States Code, the Secretary is authorized to disclose to an entity with a program administration contract under this subsection such information (including medical information) on individuals receiving health care items and services under the program as the entity may require to carry out its responsibilities under the contract.
(c)

Rules Applicable to Both Program Agreements and Program Administration Contracts.—
(1)

Records, reports, and audits.—
The Secretary is authorized to require entities with agreements to provide health care items or services under the demonstration program, and entities with program administration contracts under subsection (b), to maintain adequate records, to afford the Secretary access to such records (including for audit purposes), and to furnish such reports and other materials (including audited financial statements and performance data) as the Secretary may require for purposes of implementation, oversight, and evaluation of the program and of individuals' and entities' effectiveness in performance of such agreements or contracts.
(2)

Bonuses.—
Notwithstanding any other provision of law, but subject to subparagraph (B)(ii), the Secretary may make bonus payments under the demonstration program from the Federal Health Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund in amounts that do not exceed the amounts authorized under the program in accordance with the following:
(A)

Payments to program administrators.—
The Secretary may make bonus payments under the program to program administrators.
(B)

Payments to entities furnishing services.—
(i)

In general.—
Subject to clause (ii), the Secretary may make bonus payments to individuals or entities furnishing items or services for which payment may be made under the demonstration program, or may authorize the program administrator to make such bonus payments in accordance with such guidelines as the Secretary shall establish and subject to the Secretary's approval.
(ii)

Limitations.—
The Secretary may condition such payments on the achievement of such standards related to efficiency, improvement in processes or outcomes of care, or such other factors as the Secretary determines to be appropriate.
(3)

Antidiscrimination limitation.—
The Secretary shall not enter into an agreement with an entity to provide health care items or services under the demonstration program, or with an entity to administer the program, unless such entity guarantees that it will not deny, limit, or condition the coverage or provision of benefits under the program, for individuals eligible to be enrolled under such program, based on any health status-related factor described in section 2702(a)(1) of the Public Health Service Act.
(d)

Limitations on Judicial Review.—
The following actions and determinations with respect to the demonstration program shall not be subject to review by a judicial or administrative tribunal:
(1)
Limiting the implementation of the program under subsection (a)(2).
(2)
Establishment of program participation standards under subsection (a)(5) or the denial or termination of, or refusal to renew, an agreement with an entity to provide health care items and services under the program.
(3)
Establishment of program administration contract performance standards under subsection (b)(6), the refusal to renew a program administration contract, or the noncompetitive award or renewal of a program administration contract under subsection (b)(4)(B).
(4)
Establishment of payment rates, through negotiation or otherwise, under a program agreement or a program administration contract.
(5)
A determination with respect to the program (where specifically authorized by the program authority or by subsection (c)(2))—
(A)
as to whether cost savings have been achieved, and the amount of savings; or
(B)
as to whether, to whom, and in what amounts bonuses will be paid.
(e)

Application Limited to Parts A and B.—
None of the provisions of this section or of the demonstration program shall apply to the programs under part C.
(f)

Reports to Congress.—
Not later than two years after the date of the enactment of this section, and biennially thereafter for six years, the Secretary shall report to Congress on the use of authorities under the demonstration program. Each report shall address the impact of the use of those authorities on expenditures, access, and quality under the programs under this title.

health care quality demonstration program
Sec. 1866C.
[42 U.S.C. 1395cc–3]
(a)

Definitions.—
In this section:
(1)

Beneficiary.—
The term “beneficiary” means an individual who is entitled to benefits under part A and enrolled under part B, including any individual who is enrolled in a Medicare Advantage plan under part C.
(2)

Health care group.—
(A)

In general.—
The term “health care group” means—
(i)
a group of physicians that is organized at least in part for the purpose of providing physician's services under this title;
(ii)
an integrated health care delivery system that delivers care through coordinated hospitals, clinics, home health agencies, ambulatory surgery centers, skilled nursing facilities, rehabilitation facilities and clinics, and employed, independent, or contracted physicians; or
(iii)
an organization representing regional coalitions of groups or systems described in clause (i) or (ii).
(B)

Inclusion.—
As the Secretary determines appropriate, a health care group may include a hospital or any other individual or entity furnishing items or services for which payment may be made under this title that is affiliated with the health care group under an arrangement structured so that such hospital, individual, or entity participates in a demonstration project under this section.
(3)

Physician.—
Except as otherwise provided for by the Secretary, the term “physician” means any individual who furnishes services that may be paid for as physicians' services under this title.
(b)

Demonstration Projects.—
The Secretary shall establish a demonstration program under which the Secretary shall approve demonstration projects that examine health delivery factors that encourage the delivery of improved quality in patient care, including—
(1)
the provision of incentives to improve the safety of care provided to beneficiaries;
(2)
the appropriate use of best practice guidelines by providers and services by beneficiaries;
(3)
reduced scientific uncertainty in the delivery of care through the examination of variations in the utilization and allocation of services, and outcomes measurement and research;
(4)
encourage shared decision making between providers and patients;
(5)
the provision of incentives for improving the quality and safety of care and achieving the efficient allocation of resources;
(6)
the appropriate use of culturally and ethnically sensitive health care delivery; and
(7)
the financial effects on the health care marketplace of altering the incentives for care delivery and changing the allocation of resources.
(c)

Administration by Contract.—
(1)

In general.—
Except as otherwise provided in this section, the Secretary may administer the demonstration program established under this section in a manner that is similar to the manner in which the demonstration program established under section 1866A is administered in accordance with section 1866B.
(2)

Alternative payment systems.—
A health care group that receives assistance under this section may, with respect to the demonstration project to be carried out with such assistance, include proposals for the use of alternative payment systems for items and services provided to beneficiaries by the group that are designed to—
(A)
encourage the delivery of high quality care while accomplishing the objectives described in subsection (b); and
(B)
streamline documentation and reporting requirements otherwise required under this title.
(3)

Benefits.—
A health care group that receives assistance under this section may, with respect to the demonstration project to be carried out with such assistance, include modifications to the package of benefits available under the original medicare fee-for-service program under parts A and B or the package of benefits available through a Medicare Advantage plan under part C. The criteria employed under the demonstration program under this section to evaluate outcomes and determine best practice guidelines and incentives shall not be used as a basis for the denial of medicare benefits under the demonstration program to patients against their wishes (or if the patient is incompetent, against the wishes of the patient's surrogate) on the basis of the patient's age or expected length of life or of the patient's present or predicted disability, degree of medical dependency, or quality of life.
(d)

Eligibility Criteria.—
To be eligible to receive assistance under this section, an entity shall—
(1)
be a health care group;
(2)
meet quality standards established by the Secretary, including—
(A)
the implementation of continuous quality improvement mechanisms that are aimed at integrating community-based support services, primary care, and referral care;
(B)
the implementation of activities to increase the delivery of effective care to beneficiaries;
(C)
encouraging patient participation in preference-based decisions;
(D)
the implementation of activities to encourage the coordination and integration of medical service delivery; and
(E)
the implementation of activities to measure and document the financial impact on the health care marketplace of altering the incentives of health care delivery and changing the allocation of resources; and
(3)
meet such other requirements as the Secretary may establish.
(e)

Waiver Authority.—
The Secretary may waive such requirements of titles XI and XVIII as may be necessary to carry out the purposes of the demonstration program established under this section.
(f)

Budget Neutrality.—
With respect to the period of the demonstration program under subsection (b), the aggregate expenditures under this title for such period shall not exceed the aggregate expenditures that would have been expended under this title if the program established under this section had not been implemented.
(g)

Notice Requirements.—
In the case of an individual that receives health care items or services under a demonstration program carried out under this section, the Secretary shall ensure that such individual is notified of any waivers of coverage or payment rules that are applicable to such individual under this title as a result of the participation of the individual in such program.
(h)

Participation and Support by Federal Agencies.—
In carrying out the demonstration program under this section, the Secretary may direct—
(1)
the Director of the National Institutes of Health to expand the efforts of the Institutes to evaluate current medical technologies and improve the foundation for evidence-based practice;
(2)
the Administrator of the Agency for Healthcare Research and Quality to, where possible and appropriate, use the program under this section as a laboratory for the study of quality improvement strategies and to evaluate, monitor, and disseminate information relevant to such program; and
(3)
the Administrator of the Centers for Medicare & Medicaid Services and the Administrator of the Center for Medicare Choices to support linkages of relevant medicare data to registry information from participating health care groups for the beneficiary populations served by the participating groups, for analysis supporting the purposes of the demonstration program, consistent with the applicable provisions of the Health Insurance Portability and Accountability Act of 1996.

national pilot program on payment bundling
Sec. 1866D.
[42 U.S.C. 1395cc–4]
(a)

Implementation.—
(1)

In general.—
The Secretary shall establish a pilot program for integrated care during an episode of care provided to an applicable beneficiary around a hospitalization in order to improve the coordination, quality, and efficiency of health care services under this title.
(2)

Definitions.—
In this section:
(A)

Applicable beneficiary.—
The term “applicable beneficiary” means an individual who—
(i)
is entitled to, or enrolled for, benefits under part A and enrolled for benefits under part B of such title, but not enrolled under part C or a PACE program under section 1894; and
(ii)
is admitted to a hospital for an applicable condition.
(B)

Applicable condition.—
The term “applicable condition” means 1 or more of 10 conditions selected by the Secretary. In selecting conditions under the preceding sentence, the Secretary shall take into consideration the following factors:
(i)
Whether the conditions selected include a mix of chronic and acute conditions.
(ii)
Whether the conditions selected include a mix of surgical and medical conditions.
(iii)
Whether a condition is one for which there is evidence of an opportunity for providers of services and suppliers to improve the quality of care furnished while reducing total expenditures under this title.
(iv)
Whether a condition has significant variation in—
(I)
the number of readmissions; and
(II)
the amount of expenditures for post-acute care spending under this title.
(v)
Whether a condition is high-volume and has high post-acute care expenditures under this title.
(vi)
Which conditions the Secretary determines are most amenable to bundling across the spectrum of care given practice patterns under this title.
(C)

Applicable services.—
The term “applicable services” means the following:
(i)
Acute care inpatient services.
(ii)
Physicians' services delivered in and outside of an acute care hospital setting.
(iii)
Outpatient hospital services, including emergency department services.
(iv)
Post-acute care services, including home health services, skilled nursing services, inpatient rehabilitation services, and inpatient hospital services furnished by a long-term care hospital.
(v)
Other services the Secretary determines appropriate.
(D)

Episode of care.—
(i)

In general.—
Subject to clause (ii), the term “episode of care” means, with respect to an applicable condition and an applicable beneficiary, the period that includes—
(I)
the 3 days prior to the admission of the applicable beneficiary to a hospital for the applicable condition;
(II)
the length of stay of the applicable beneficiary in such hospital; and
(III)
the 30 days following the discharge of the applicable beneficiary from such hospital.
(ii)

Establishment of period by the secretary.—
The Secretary, as appropriate, may establish a period (other than the period described in clause (i)) for an episode of care under the pilot program.
(E)

Physicians' services.—
The term “physicians' services” has the meaning given such term in section 1861(q).
(F)

Pilot program.—
The term “pilot program” means the pilot program under this section.
(G)

Provider of services.—
The term “provider of services” has the meaning given such term in section 1861(u).
(H)

Readmission.—
The term “readmission” has the meaning given such term in section 1886(q)(5)(E).
(I)

Supplier.—
The term “supplier” has the meaning given such term in section 1861(d).
(3)

Deadline for implementation.—
The Secretary shall establish the pilot program not later than January 1, 2013.
(b)

Developmental Phase.—
(1)

Determination of patient assessment instrument.—
The Secretary shall determine which patient assessment instrument (such as the Continuity Assessment Record and Evaluation (CARE) tool) shall be used under the pilot program to evaluate the applicable condition of an applicable beneficiary for purposes of determining the most clinically appropriate site for the provision of post-acute care to the applicable beneficiary.
(2)

Development of quality measures for an episode of care and for post-acute care.—
(A)

In general.—
The Secretary, in consultation with the Agency for Healthcare Research and Quality and the entity with a contract under section 1890(a) of the Social Security Act, shall develop quality measures for use in the pilot program—
(i)
for episodes of care; and
(ii)
for post-acute care.
(B)

Site-neutral post-acute care quality measures.—
Any quality measures developed under subparagraph (A)(ii) shall be site-neutral.
(C)

Coordination with quality measure development and endorsement procedures.—
The Secretary shall ensure that the development of quality measures under subparagraph (A) is done in a manner that is consistent with the measures developed and endorsed under section 1890 and 1890A that are applicable to all post-acute care settings.
(c)

Details.—
(1)

Duration.—
(A)

In general.—
Subject to subparagraph (B), the pilot program shall be conducted for a period of 5 years.
(B)

Expansion.—
The Secretary may, at any point after January 1, 2016, expand the duration and scope of the pilot program, to the extent determined appropriate by the Secretary, if—
(i)
the Secretary determines that such expansion is expected to—
(I)
reduce spending under title XVIII of the Social Security Act without reducing the quality of care; or
(II)
improve the quality of care and reduce spending;
(ii)
the Chief Actuary of the Centers for Medicare & Medicaid Services certifies that such expansion would reduce program spending under such title XVIII; and
(iii)
the Secretary determines that such expansion would not deny or limit the coverage or provision of benefits under this title for individuals.
(2)

Participating providers of services and suppliers.—
(A)

In general.—
An entity comprised of providers of services and suppliers, including a hospital, a physician group, a skilled nursing facility, and a home health agency, who are otherwise participating under this title, may submit an application to the Secretary to provide applicable services to applicable individuals under this section.
(B)

Requirements.—
The Secretary shall develop requirements for entities to participate in the pilot program under this section. Such requirements shall ensure that applicable beneficiaries have an adequate choice of providers of services and suppliers under the pilot program.
(3)

Payment methodology.—
(A)

In general.—
(i)

Establishment of payment methods.—
The Secretary shall develop payment methods for the pilot program for entities participating in the pilot program. Such payment methods may include bundled payments and bids from entities for episodes of care. The Secretary shall make payments to the entity for services covered under this section.
(ii)

No additional program expenditures.—
Payments under this section for applicable items and services under this title (including payment for services described in subparagraph (B)) for applicable beneficiaries for a year shall be established in a manner that does not result in spending more for such entity for such beneficiaries than would otherwise be expended for such entity for such beneficiaries for such year if the pilot program were not implemented, as estimated by the Secretary.
(B)

Inclusion of certain services.—
A payment methodology tested under the pilot program shall include payment for the furnishing of applicable services and other appropriate services, such as care coordination, medication reconciliation, discharge planning, transitional care services, and other patient-centered activities as determined appropriate by the Secretary.
(C)

Bundled payments.—
(i)

In general.—
A bundled payment under the pilot program shall—
(I)
be comprehensive, covering the costs of applicable services and other appropriate services furnished to an individual during an episode of care (as determined by the Secretary); and
(II)
be made to the entity which is participating in the pilot program.
(ii)

Requirement for provision of applicable services and other appropriate services.—
Applicable services and other appropriate services for which payment is made under this subparagraph shall be furnished or directed by the entity which is participating in the pilot program.
(D)

Payment for post-acute care services after the episode of care.—
The Secretary shall establish procedures, in the case where an applicable beneficiary requires continued post-acute care services after the last day of the episode of care, under which payment for such services shall be made.
(4)

Quality measures.—
(A)

In general.—
The Secretary shall establish quality measures (including quality measures of process, outcome, and structure) related to care provided by entities participating in the pilot program. Quality measures established under the preceding sentence shall include measures of the following:
(i)
Functional status improvement.
(ii)
Reducing rates of avoidable hospital readmissions.
(iii)
Rates of discharge to the community.
(iv)
Rates of admission to an emergency room after a hospitalization.
(v)
Incidence of health care acquired infections.
(vi)
Efficiency measures.
(vii)
Measures of patient-centeredness of care.
(viii)
Measures of patient perception of care.
(ix)
Other measures, including measures of patient outcomes, determined appropriate by the Secretary.
(B)

Reporting on quality measures.—
(i)

In general.—
A entity shall submit data to the Secretary on quality measures established under subparagraph (A) during each year of the pilot program (in a form and manner, subject to clause (iii), specified by the Secretary).
(ii)

Submission of data through electronic health record.—
To the extent practicable, the Secretary shall specify that data on measures be submitted under clause (i) through the use of an qualified electronic health record (as defined in section 3000(13) of the Public Health Service Act (42 U.S.C. 300jj–11(13)) in a manner specified by the Secretary.
(d)

Waiver.—
The Secretary may waive such provisions of this title and title XI as may be necessary to carry out the pilot program.
(e)

Independent Evaluation and Reports on Pilot Program.—
(1)

Independent evaluation.—
The Secretary shall conduct an independent evaluation of the pilot program, including the extent to which the pilot program has—
(A)
improved quality measures established under subsection (c)(4)(A);
(B)
improved health outcomes;
(C)
improved applicable beneficiary access to care; and
(D)
reduced spending under this title.
(2)

Reports.—
(A)

Interim report.—
Not later than 2 years after the implementation of the pilot program, the Secretary shall submit to Congress a report on the initial results of the independent evaluation conducted under paragraph (1).
(B)

Final report.—
Not later than 3 years after the implementation of the pilot program, the Secretary shall submit to Congress a report on the final results of the independent evaluation conducted under paragraph (1).
(f)

Consultation.—
The Secretary shall consult with representatives of small rural hospitals, including critical access hospitals (as defined in section 1861(mm)(1)), regarding their participation in the pilot program. Such consultation shall include consideration of innovative methods of implementing bundled payments in hospitals described in the preceding sentence, taking into consideration any difficulties in doing so as a result of the low volume of services provided by such hospitals.
(g)

Application of Pilot Program to Continuing Care Hospitals.—
(1)

In general.—
In conducting the pilot program, the Secretary shall apply the provisions of the program so as to separately pilot test the continuing care hospital model.
(2)

Special rules.—
In pilot testing the continuing care hospital model under paragraph (1), the following rules shall apply:
(A)
Such model shall be tested without the limitation to the conditions selected under subsection (a)(2)(B).
(B)
Notwithstanding subsection (a)(2)(D), an episode of care shall be defined as the full period that a patient stays in the continuing care hospital plus the first 30 days following discharge from such hospital.
(3)

Continuing care hospital defined.—
In this subsection, the term “continuing care hospital” means an entity that has demonstrated the ability to meet patient care and patient safety standards and that provides under common management the medical and rehabilitation services provided in inpatient rehabilitation hospitals and units (as defined in section 1886(d)(1)(B)(ii)), long term care hospitals (as defined in section 1886(d)(1)(B)(iv)(I)), and skilled nursing facilities (as defined in section 1819(a)) that are located in a hospital described in section 1886(d).
(h)

Administration.—
Chapter 35 of title 44, United States Code, shall not apply to the selection, testing, and evaluation of models or the expansion of such models under this section.

independence at home medical practice demonstration program
Sec. 1866E.
[42 U.S.C. 1395cc–5]
(a)

Establishment.—
(1)

In general.—
The Secretary shall conduct a demonstration program (in this section referred to as the “demonstration program”) to test a payment incentive and service delivery model that utilizes physician and nurse practitioner directed home-based primary care teams designed to reduce expenditures and improve health outcomes in the provision of items and services under this title to applicable beneficiaries (as defined in subsection (d)).
(2)

Requirement.—
The demonstration program shall test whether a model described in paragraph (1), which is accountable for providing comprehensive, coordinated, continuous, and accessible care to high-need populations at home and coordinating health care across all treatment settings, results in—
(A)
reducing preventable hospitalizations;
(B)
preventing hospital readmissions;
(C)
reducing emergency room visits;
(D)
improving health outcomes commensurate with the beneficiaries' stage of chronic illness;
(E)
improving the efficiency of care, such as by reducing duplicative diagnostic and laboratory tests;
(F)
reducing the cost of health care services covered under this title; and
(G)
achieving beneficiary and family caregiver satisfaction.
(b)

Independence at Home Medical Practice.—
(1)

Independence at home medical practice defined.—
In this section:
(A)

In general.—
The term “independence at home medical practice” means a legal entity that—
(i)
is comprised of an individual physician or nurse practitioner or group of physicians and nurse practitioners that provides care as part of a team that includes physicians, nurses, physician assistants, pharmacists, and other health and social services staff as appropriate who have experience providing home-based primary care to applicable beneficiaries, make in-home visits, and are available 24 hours per day, 7 days per week to carry out plans of care that are tailored to the individual beneficiary's chronic conditions and designed to achieve the results in subsection (a);
(ii)
is organized at least in part for the purpose of providing physicians' services;
(iii)
has documented experience in providing home-based primary care services to high-cost chronically ill beneficiaries, as determined appropriate by the Secretary;
(iv)
furnishes services to at least 200 applicable beneficiaries (as defined in subsection (d)) during each year of the demonstration program;
(v)
has entered into an agreement with the Secretary;
(vi)
uses electronic health information systems, remote monitoring, and mobile diagnostic technology; and
(vii)
meets such other criteria as the Secretary determines to be appropriate to participate in the demonstration program.
The entity shall report on quality measures (in such form, manner, and frequency as specified by the Secretary, which may be for the group, for providers of services and suppliers, or both) and report to the Secretary (in a form, manner, and frequency as specified by the Secretary) such data as the Secretary determines appropriate to monitor and evaluate the demonstration program.
(B)

Physician.—
The term “physician” includes, except as the Secretary may otherwise provide, any individual who furnishes services for which payment may be made as physicians' services and has the medical training or experience to fulfill the physician's role described in subparagraph (A)(i).
(2)

Participation of nurse practitioners and physician assistants.—
Nothing in this section shall be construed to prevent a nurse practitioner or physician assistant from participating in, or leading, a home-based primary care team as part of an independence at home medical practice if—
(A)
all the requirements of this section are met;
(B)
the nurse practitioner or physician assistant, as the case may be, is acting consistent with State law; and
(C)
the nurse practitioner or physician assistant has the medical training or experience to fulfill the nurse practitioner or physician assistant role described in paragraph (1)(A)(i).
(3)

Inclusion of providers and practitioners.—
Nothing in this subsection shall be construed as preventing an independence at home medical practice from including a provider of services or a participating practitioner described in section 1842(b)(18)(C) that is affiliated with the practice under an arrangement structured so that such provider of services or practitioner participates in the demonstration program and shares in any savings under the demonstration program.
(4)

Quality and performance standards.—
The Secretary shall develop quality performance standards for independence at home medical practices participating in the demonstration program.
(c)

Payment Methodology.—
(1)

Establishment of target spending level.—
The Secretary shall establish an estimated annual spending target, for the amount the Secretary estimates would have been spent in the absence of the demonstration, for items and services covered under parts A and B furnished to applicable beneficiaries for each qualifying independence at home medical practice under this section. Such spending targets shall be determined on a per capita basis. Such spending targets shall include a risk corridor that takes into account normal variation in expenditures for items and services covered under parts A and B furnished to such beneficiaries with the size of the corridor being related to the number of applicable beneficiaries furnished services by each independence at home medical practice. The spending targets may also be adjusted for other factors as the Secretary determines appropriate.
(2)

Incentive payments.—
Subject to performance on quality measures, a qualifying independence at home medical practice is eligible to receive an incentive payment under this section if actual expenditures for a year for the applicable beneficiaries it enrolls are less than the estimated spending target established under paragraph (1) for such year. An incentive payment for such year shall be equal to a portion (as determined by the Secretary) of the amount by which actual expenditures (including incentive payments under this paragraph) for applicable beneficiaries under parts A and B for such year are estimated to be less than 5 percent less than the estimated spending target for such year, as determined under paragraph (1).
(d)

Applicable Beneficiaries.—
(1)

Definition.—
In this section, the term “applicable beneficiary” means, with respect to a qualifying independence at home medical practice, an individual who the practice has determined—
(A)
is entitled to benefits under part A and enrolled for benefits under part B;
(B)
is not enrolled in a Medicare Advantage plan under part C or a PACE program under section 1894;
(C)
has 2 or more chronic illnesses, such as congestive heart failure, diabetes, other dementias designated by the Secretary, chronic obstructive pulmonary disease, ischemic heart disease, stroke, Alzheimer's Disease and neurodegenerative diseases, and other diseases and conditions designated by the Secretary which result in high costs under this title;
(D)
within the past 12 months has had a nonelective hospital admission;
(E)
within the past 12 months has received acute or subacute rehabilitation services;
(F)
has 2 or more functional dependencies requiring the assistance of another person (such as bathing, dressing, toileting, walking, or feeding); and
(G)
meets such other criteria as the Secretary determines appropriate.
(2)

Patient election to participate.—
The Secretary shall determine an appropriate method of ensuring that applicable beneficiaries have agreed to enroll in an independence at home medical practice under the demonstration program. Enrollment in the demonstration program shall be voluntary.
(3)

Beneficiary access to services.—
Nothing in this section shall be construed as encouraging physicians or nurse practitioners to limit applicable beneficiary access to services covered under this title and applicable beneficiaries shall not be required to relinquish access to any benefit under this title as a condition of receiving services from an independence at home medical practice.
(e)

Implementation.—
(1)

Starting date.—
The demonstration program shall begin no later than January 1, 2012. Agreements with an independence at home medical practice under the demonstration program may cover not more than a 10-year period.
(2)

No physician duplication in demonstration participation.—
The Secretary shall not pay an independence at home medical practice under this section that participates in section 1899.
(3)

No beneficiary duplication in demonstration participation.—
The Secretary shall ensure that no applicable beneficiary enrolled in an independence at home medical practice under this section is participating in the programs under section 1899.
(4)

Preference.—
In approving an independence at home medical practice, the Secretary shall give preference to practices that are—
(A)
located in high-cost areas of the country;
(B)
have experience in furnishing health care services to applicable beneficiaries in the home; and
(C)
use electronic medical records, health information technology, and individualized plans of care.
(5)

Limitation on number of practices.—
In selecting qualified independence at home medical practices to participate under the demonstration program, the Secretary shall limit the number of such practices so that the number of applicable beneficiaries that may participate in the demonstration program does not exceed 20,000. An applicable beneficiary that participates in the demonstration program by reason of the increase from 10,000 to 15,000 in the preceding sentence pursuant to the amendment made by section 50301(a)(1)(B)(i) of the Advancing Chronic Care, Extenders, and Social Services Act shall be considered in the spending target estimates under paragraph (1) of subsection (c) and the incentive payment calculations under paragraph (2) of such subsection for the sixth through tenth years of such program. An applicable beneficiary that participates in the demonstration program by reason of the increase from 15,000 to 20,000 in the first sentence of this paragraph pursuant to the amendment made by section 105 of division CC of the Consolidated Appropriations Act, 2021 shall be considered in the spending target estimates under paragraph (1) of subsection (c) and the incentive payment calculations under paragraph (2) of such subsection for the eighth through tenth years of such program.
(6)

Waiver.—
The Secretary may waive such provisions of this title and title XI as the Secretary determines necessary in order to implement the demonstration program.
(7)

Administration.—
Chapter 35 of title 44, United States Code, shall not apply to this section.
(f)

Evaluation and Monitoring.—
(1)

In general.—
The Secretary shall evaluate each independence at home medical practice under the demonstration program to assess whether the practice achieved the results described in subsection (a).
(2)

Monitoring applicable beneficiaries.—
The Secretary may monitor data on expenditures and quality of services under this title after an applicable beneficiary discontinues receiving services under this title through a qualifying independence at home medical practice.
(g)

Reports to Congress.—
The Secretary shall conduct an independent evaluation of the demonstration program and submit to Congress a final report, including best practices under the demonstration program, including, to the extent practicable, with respect to the use of electronic health information systems, as described in subsection (b)(1)(A)(vi). Such report shall include an analysis of the demonstration program on coordination of care, expenditures under this title, applicable beneficiary access to services, and the quality of health care services provided to applicable beneficiaries.
(h)

Funding.—
For purposes of administering and carrying out the demonstration program, other than for payments for items and services furnished under this title and incentive payments under subsection (c), in addition to funds otherwise appropriated, there shall be transferred to the Secretary for the Center for Medicare & Medicaid Services Program Management Account from the Federal Hospital Insurance Trust Fund under section 1817 and the Federal Supplementary Medical Insurance Trust Fund under section 1841 (in proportions determined appropriate by the Secretary) $5,000,000 for each of fiscal years 2010 through 2015 and $9,000,000 for fiscal year 2021. Amounts transferred under this subsection for a fiscal year shall be available until expended.
(i)

Termination.—
(1)

Mandatory termination.—
The Secretary shall terminate an agreement with an independence at home medical practice if—
(A)
the Secretary estimates or determines that such practice did not achieve savings for the third of 3 consecutive years under the demonstration program; or
(B)
such practice fails to meet quality standards during any year of the demonstration program.
(2)

Permissive termination.—
The Secretary may terminate an agreement with an independence at home medical practice for such other reasons determined appropriate by the Secretary.
SEC. 1866F.
[42 U.S.C. 1395cc-6]

OPIOID USE DISORDER TREATMENT DEMONSTRATION PROGRAM.
(a)

Implementation of 4-Year Demonstration Program.—
(1)

In general.—
Not later than January 1, 2021, the Secretary shall implement a 4-year demonstration program under this title (in this section referred to as the “Program”) to increase access of applicable beneficiaries to opioid use disorder treatment services, improve physical and mental health outcomes for such beneficiaries, and to the extent possible, reduce expenditures under this title. Under the Program, the Secretary shall make payments under subsection (e) to participants (as defined in subsection (c)(1)(A)) for furnishing opioid use disorder treatment services delivered through opioid use disorder care teams, or arranging for such services to be furnished, to applicable beneficiaries participating in the Program.
(2)

Opioid use disorder treatment services.—
For purposes of this section, the term “opioid use disorder treatment services”—
(A)
means, with respect to an applicable beneficiary, services that are furnished for the treatment of opioid use disorders and that utilize drugs approved under section 505 of the Federal Food, Drug, and Cosmetic Act for the treatment of opioid use disorders in an outpatient setting; and
(B)
includes—
(i)
medication-assisted treatment;
(ii)
treatment planning;
(iii)
psychiatric, psychological, or counseling services (or any combination of such services), as appropriate;
(iv)
social support services, as appropriate; and
(v)
care management and care coordination services, including coordination with other providers of services and suppliers not on an opioid use disorder care team.
(b)

Program Design.—
(1)

In general.—
The Secretary shall design the Program in such a manner to allow for the evaluation of the extent to which the Program accomplishes the following purposes:
(A)
Reduces hospitalizations and emergency department visits.
(B)
Increases use of medication-assisted treatment for opioid use disorders.
(C)
Improves health outcomes of individuals with opioid use disorders, including by reducing the incidence of infectious diseases (such as hepatitis C and HIV).
(D)
Does not increase the total spending on items and services under this title.
(E)
Reduces deaths from opioid overdose.
(F)
Reduces the utilization of inpatient residential treatment.
(2)

Consultation.—
In designing the Program, including the criteria under subsection (e)(2)(A), the Secretary shall, not later than 3 months after the date of the enactment of this section, consult with specialists in the field of addiction, clinicians in the primary care community, and beneficiary groups.
(c)

Participants; Opioid Use Disorder Care Teams.—
(1)

Participants.—
(A)

Definition.—
In this section, the term “participant” means an entity or individual—
(i)
that is otherwise enrolled under this title and that is—
(I)
a physician (as defined in section 1861(r)(1));
(II)
a group practice comprised of at least one physician described in subclause (I);
(III)
a hospital outpatient department;
(IV)
a federally qualified health center (as defined in section 1861(aa)(4));
(V)
a rural health clinic (as defined in section 1861(aa)(2));
(VI)
a community mental health center (as defined in section 1861(ff)(3)(B));
(VII)
a clinic certified as a certified community behavioral health clinic pursuant to section 223 of the Protecting Access to Medicare Act of 2014; or
(VIII)
any other individual or entity specified by the Secretary;
(ii)
that applied for and was selected to participate in the Program pursuant to an application and selection process established by the Secretary; and
(iii)
that establishes an opioid use disorder care team (as defined in paragraph (2)) through employing or contracting with health care practitioners described in paragraph (2)(A), and uses such team to furnish or arrange for opioid use disorder treatment services in the outpatient setting under the Program.
(B)

Preference.—
In selecting participants for the Program, the Secretary shall give preference to individuals and entities that are located in areas with a prevalence of opioid use disorders that is higher than the national average prevalence.
(2)

Opioid use disorder care teams.—
(A)

In general.—
For purposes of this section, the term “opioid use disorder care team” means a team of health care practitioners established by a participant described in paragraph (1)(A) that—
(i)
shall include—
(I)
at least one physician (as defined in section 1861(r)(1)) furnishing primary care services or addiction treatment services to an applicable beneficiary; and
(II)
at least one eligible practitioner (as defined in paragraph (3)), who may be a physician who meets the criterion in subclause (I); and
(ii)
may include other practitioners licensed under State law to furnish psychiatric, psychological, counseling, and social services to applicable beneficiaries.
(B)

Requirements for receipt of payment under program.—
In order to receive payments under subsection (e), each participant in the Program shall—
(i)
furnish opioid use disorder treatment services through opioid use disorder care teams to applicable beneficiaries who agree to receive the services;
(ii)
meet minimum criteria, as established by the Secretary; and
(iii)
submit to the Secretary, in such form, manner, and frequency as specified by the Secretary, with respect to each applicable beneficiary for whom opioid use disorder treatment services are furnished by the opioid use disorder care team, data and such other information as the Secretary determines appropriate to—
(I)
monitor and evaluate the Program;
(II)
determine if minimum criteria are met under clause (ii); and
(III)
determine the incentive payment under subsection (e).
(3)

Eligible practitioner defined.—
For purposes of this section, the term “eligible practitioner” means a physician or other health care practitioner, such as a nurse practitioner, that—
(A)
is enrolled under section 1866(j)(1); and
(B)
is authorized to prescribe or dispense narcotic drugs to individuals for maintenance treatment or detoxification treatment.
(d)

Participation of Applicable Beneficiaries.—
(1)

Applicable beneficiary defined.—
In this section, the term “applicable beneficiary” means an individual who—
(A)
is entitled to, or enrolled for, benefits under part A and enrolled for benefits under part B;
(B)
is not enrolled in a Medicare Advantage plan under part C;
(C)
has a current diagnosis for an opioid use disorder; and
(D)
meets such other criteria as the Secretary determines appropriate.
Such term shall include an individual who is dually eligible for benefits under this title and title XIX if such individual satisfies the criteria described in subparagraphs (A) through (D).
(2)

Voluntary beneficiary participation; limitation on number of beneficiaries.—
An applicable beneficiary may participate in the Program on a voluntary basis and may terminate participation in the Program at any time. Not more than 20,000 applicable beneficiaries may participate in the Program at any time.
(3)

Services.—
In order to participate in the Program, an applicable beneficiary shall agree to receive opioid use disorder treatment services from a participant. Participation under the Program shall not affect coverage of or payment for any other item or service under this title for the applicable beneficiary.
(4)

Beneficiary access to services.—
Nothing in this section shall be construed as encouraging providers to limit applicable beneficiary access to services covered under this title, and applicable beneficiaries shall not be required to relinquish access to any benefit under this title as a condition of receiving services from a participant in the Program.
(e)

Payments.—
(1)

Per applicable beneficiary per month care management fee.—
(A)

In general.—
The Secretary shall establish a schedule of per applicable beneficiary per month care management fees. Such a per applicable beneficiary per month care management fee shall be paid to a participant in addition to any other amount otherwise payable under this title to the health care practitioners in the participant’s opioid use disorder care team or, if applicable, to the participant. A participant may use such per applicable beneficiary per month care management fee to deliver additional services to applicable beneficiaries, including services not otherwise eligible for payment under this title.
(B)

Payment amounts.—
In carrying out subparagraph (A), the Secretary may—
(i)
consider payments otherwise payable under this title for opioid use disorder treatment services and the needs of applicable beneficiaries;
(ii)
pay a higher per applicable beneficiary per month care management fee for an applicable beneficiary who receives more intensive treatment services from a participant and for whom those services are appropriate based on clinical guidelines for opioid use disorder care;
(iii)
pay a higher per applicable beneficiary per month care management fee for the month in which the applicable beneficiary begins treatment with a participant than in subsequent months, to reflect the greater time and costs required for the planning and initiation of treatment, as compared to maintenance of treatment; and
(iv)
take into account whether a participant’s opioid use disorder care team refers applicable beneficiaries to other suppliers or providers for any opioid use disorder treatment services.
(C)

No duplicate payment.—
The Secretary shall make payments under this paragraph to only one participant for services furnished to an applicable beneficiary during a calendar month.
(2)

Incentive payments.—
(A)

In general.—
Under the Program, the Secretary shall establish a performance-based incentive payment, which shall be paid (using a methodology established and at a time determined appropriate by the Secretary) to participants based on the performance of participants with respect to criteria, as determined appropriate by the Secretary, in accordance with subparagraph (B).
(B)

Criteria.—
(i)

In general.—
Criteria described in subparagraph (A) may include consideration of the following:
(I)
Patient engagement and retention in treatment.
(II)
Evidence-based medication-assisted treatment.
(III)
Other criteria established by the Secretary.
(ii)

Required consultation and consideration.—
In determining criteria described in subparagraph (A), the Secretary shall—
(I)
consult with stakeholders, including clinicians in the primary care community and in the field of addiction medicine; and
(II)
consider existing clinical guidelines for the treatment of opioid use disorders.
(C)

No duplicate payment.—
The Secretary shall ensure that no duplicate payments under this paragraph are made with respect to an applicable beneficiary.
(f)

Multipayer Strategy.—
In carrying out the Program, the Secretary shall encourage other payers to provide similar payments and to use similar criteria as applied under the Program under subsection (e)(2)(C). The Secretary may enter into a memorandum of understanding with other payers to align the methodology for payment provided by such a payer related to opioid use disorder treatment services with such methodology for payment under the Program.
(g)

Evaluation.—
(1)

In general.—
The Secretary shall conduct an intermediate and final evaluation of the program. Each such evaluation shall determine the extent to which each of the purposes described in subsection (b) have been accomplished under the Program.
(2)

Reports.—
The Secretary shall submit to Congress—
(A)
a report with respect to the intermediate evaluation under paragraph (1) not later than 3 years after the date of the implementation of the Program; and
(B)
a report with respect to the final evaluation under paragraph (1) not later than 6 years after such date.
(h)

Funding.—
(1)

Administrative funding.—
For the purposes of implementing, administering, and carrying out the Program (other than for purposes described in paragraph (2)), $5,000,000 shall be available from the Federal Supplementary Medical Insurance Trust Fund under section 1841.
(2)

Care management fees and incentives.—
For the purposes of making payments under subsection (e), $10,000,000 shall be available from the Federal Supplementary Medical Insurance Trust Fund under section 1841 for each of fiscal years 2021 through 2024.
(3)

Availability.—
Amounts transferred under this subsection for a fiscal year shall be available until expended.
(i)

Waivers.—
The Secretary may waive any provision of this title as may be necessary to carry out the Program under this section.
SEC. 1866G.
[42 U.S.C. 1395cc– 7]

EXTENSION OF ACUTE HOSPITAL CARE AT HOME INITIATIVE.
(a)

In General.—
(1)

Extension.—
With respect to inpatient hospital admissions occurring during the period beginning on the first day after the end of the emergency period described in section 1135(g)(1)(B) and ending on January 30, 2026, the Secretary of Health and Human Services shall grant waivers and flexibilities (as described in paragraph (2)) to an individual hospital that submits a request for such waivers and flexibilities and meets specified criteria (as described in paragraph (3)) in order to participate in the Acute Hospital Care at Home initiative of the Secretary.
(2)

Acute hospital care at home waivers and flexibilities.—
For the purposes of paragraph (1), the waivers and flexibilities described in this paragraph are the following waivers and flexibilities that were made available to individual hospitals under the Acute Hospital Care at Home initiative of the Secretary during the emergency period described in section 1135(g)(1)(B):
(A)
Subject to paragraph (3)(D), waiver of the requirements to provide 24-hour nursing services on premises and for the immediate availability of a registered nurse under section 482.23(b) of title 42, Code of Federal Regulations (or any successor regulation), and the waivers of the physical environment and Life Safety Code requirements under section 482.41 of title 42, Code of Federal Regulations (or any successor regulation).
(B)
Flexibility to allow a hospital to furnish inpatient services, including routine services, outside the hospital under arrangements, as described in Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Organ Acquisition; Rural Emergency Hospitals: Payment Policies, Conditions of Participation, Provider Enrollment, Physician Self-Referral; New Service Category for Hospital Outpatient Department Prior Authorization Process; Overall Hospital Quality Star Rating; COVID–19 (87 Fed. Reg. 71748 et seq.).
(C)
Waiver of the telehealth requirements under clause (i) of section 1834(m)(4)(C), as amended by section 4113(a) of the Health Extenders, Improving Access to Medicare, Medicaid, and CHIP, and Strengthening Public Health Act of 2022, such that the originating sites described in clause (ii) of such section shall include the home or temporary residence of the individual.
(D)
Other waivers and flexibilities that, as of the date of enactment of this section, were in place for such initiative during such emergency period.
(3)

Specified criteria.—
For purposes of paragraph (1), the specified criteria for granting such waivers and flexibilities to individual hospitals are:
(A)
The hospital shall indicate to the Secretary the criteria it would use to ensure that hospital services be furnished only to an individual who requires an inpatient level of care, and shall require that a physician document in the medical record of each such individual that the individual meets such criteria.
(B)
The hospital and any other entities providing services under arrangements with the hospital shall ensure that the standard of care to treat an individual at home is the same as the standard of care to treat such individual as an inpatient of the hospital.
(C)
The hospital shall ensure that an individual is only eligible for services under paragraph (1) if the individual is a hospital inpatient or is a patient of the hospital's emergency department for whom the hospital determines that an inpatient level of care is required (as described in subparagraph (A)).
(D)
The hospital shall meet all patient safety standards determined appropriate by the Secretary, in addition to those that otherwise apply to the hospital, except those for which the waivers and flexibilities under this subsection apply.
(E)
The hospital shall provide to the Secretary, at a time, form and manner determined by the Secretary, any data and information the Secretary determines necessary to do the following:
(i)
Monitor the quality of care furnished, and to the extent practicable, ensure the safety of individuals and analyze costs of such care.
(ii)
Undertake the study described in subsection (b).
(F)
The hospital meets such other requirements and conditions as the Secretary determines appropriate.
(4)

Termination.—
The Secretary may terminate a hospital from participation in such initiative (and the waivers and flexibilities applicable to such hospital) if the Secretary determines that the hospital no longer meets the criteria described in paragraph (3).
(b)

Study and Report.—
(1)

In general.—
The Secretary shall conduct a study to—
(A)
analyze, to the extent practicable, the criteria established by hospitals under the Acute Hospital Care at Home initiative of the Secretary to determine which individuals may be furnished services under such initiative; and
(B)
analyze and compare, to the extent practicable—
(i)
quality of care furnished to individuals with similar conditions and characteristics in the inpatient setting and through the Acute Hospital Care at Home initiative, including health outcomes, hospital readmission rates, hospital mortality rates, length of stay, infection rates, and patient experience of care;
(ii)
clinical conditions treated and diagnosis-related groups of discharges from the inpatient setting and under the Acute Hospital Care at Home initiative;
(iii)
costs incurred by furnishing care in the inpatient setting and through the Acute Hospital Care at Home initiative;
(iv)
the quantity, mix and intensity of such services (such as in-person visits and virtual contacts with patients) furnished in the Acute Hospital Care at Home initiative and furnished in the inpatient setting; and
(v)
socioeconomic information on beneficiaries treated under the initiative, including racial and ethnic data, income, and whether such beneficiaries are dually eligible for benefits under this title and title XIX.
(2)

Report.—
Not later than September 30, 2024, the Secretary of Health and Human Services shall post on a website of the Centers for Medicare & Medicaid Services a report on the study conducted under paragraph (1).
(3)

Funding.—
In addition to amounts otherwise available, there is appropriated to the Centers for Medicare & Medicaid Services Program Management Account for fiscal year 2023, out of any amounts in the Treasury not otherwise appropriated, $5,000,000, to remain available until expended, for purposes of carrying out this subsection.
(c)

Implementation.—
Notwithstanding any other provision of law, the Secretary may implement this section by program instruction or otherwise.
(d)

Publicly Available Information.—
The Secretary shall, as feasible, make the information collected under subsections (a)(3)(E) and (b)(1) available on the Medicare.gov internet website (or a successor website).

examination and treatment for emergency medical conditions and women in labor
Sec. 1867.
[42 U.S.C. 1395dd]
(a)

Medical Screening Requirement.—
In the case of a hospital that has a hospital emergency department, if any individual (whether or not eligible for benefits under this title) comes to the emergency department and a request is made on the individual's behalf for examination or treatment for a medical condition, the hospital must provide for an appropriate medical screening examination within the capability of the hospital's emergency department, including ancillary services routinely available to the emergency department, to determine whether or not an emergency medical condition (within the meaning of subsection (e)(1)) exists.
(b)

Necessary Stabilizing Treatment for Emergency Medical Conditions and Labor.—
(1)

In general.—
If any individual (whether or not eligible for benefits under this title) comes to a hospital and the hospital determines that the individual has an emergency medical condition, the hospital must provide either—
(A)
within the staff and facilities available at the hospital, for such further medical examination and such treatment as may be required to stabilize the medical condition, or
(B)
for transfer of the individual to another medical facility in accordance with subsection (c).
(2)

Refusal to consent to treatment.—
A hospital is deemed to meet the requirement of paragraph (1)(A) with respect to an individual if the hospital offers the individual the further medical examination and treatment described in that paragraph and informs the individual (or a person acting on the individual's behalf) of the risks and benefits to the individual of such examination and treatment, but the individual (or a person acting on the individual's behalf) refuses to consent to the examination and treatment. The hospital shall take all reasonable steps to secure the individual's (or person's) written informed consent to refuse such examination and treatment.
(3)

Refusal to consent to transfer.—
A hospital is deemed to meet the requirement of paragraph (1) with respect to an individual if the hospital offers to transfer the individual to another medical facility in accordance with subsection (c) and informs the individual (or a person acting on the individual's behalf) of the risks and benefits to the individual of such transfer, but the individual (or a person acting on the individual's behalf) refuses to consent to the transfer. The hospital shall take all reasonable steps to secure the individual's (or person's) written informed consent to refuse such transfer.
(c)

Restricting Transfers Until Individual Stabilized.—
(1)

Rule.—
If an individual at a hospital has an emergency medical condition which has not been stabilized (within the meaning of subsection (e)(3)(B)), the hospital may not transfer the individual unless—
(A)
(i)
the individual (or a legally responsible person acting on the individual's behalf) after being informed of the hospital's obligations under this section and of the risk of transfer, in writing requests transfer to another medical facility,
(ii)
a physician (within the meaning of section 1861(r)(1)) has signed a certification that based upon the information available at the time of transfer, the medical benefits reasonably expected from the provision of appropriate medical treatment at another medical facility outweigh the increased risks to the individual and, in the case of labor, to the unborn child from effecting the transfer, or
(iii)
if a physician is not physically present in the emergency department at the time an individual is transferred, a qualified medical person (as defined by the Secretary in regulations) has signed a certification described in clause (ii) after a physician (as defined in section 1861(r)(1)), in consultation with the person, has made the determination described in such clause, and subsequently countersigns the certification; and
(B)
the transfer is an appropriate transfer (within the meaning of paragraph (2)) to that facility.
A certification described in clause (ii) or (iii) of subparagraph (A) shall include a summary of the risks and benefits upon which the certification is based.
(2)

Appropriate transfer.—
An appropriate transfer to a medical facility is a transfer—
(A)
in which the transferring hospital provides the medical treatment within its capacity which minimizes the risks to the individual's health and, in the case of a woman in labor, the health of the unborn child;
(B)
in which the receiving facility—
(i)
has available space and qualified personnel for the treatment of the individual, and
(ii)
has agreed to accept transfer of the individual and to provide appropriate medical treatment;
(C)
in which the transferring hospital sends to the receiving facility all medical records (or copies thereof), related to the emergency condition for which the individual has presented, available at the time of the transfer, including records related to the individual's emergency medical condition, observations of signs or symptoms, preliminary diagnosis, treatment provided, results of any tests and the informed written consent or certification (or copy thereof) provided under paragraph (1)(A), and the name and address of any on-call physician (described in subsection (d)(1)(C)) who has refused or failed to appear within a reasonable time to provide necessary stabilizing treatment;
(D)
in which the transfer is effected through qualified personnel and transportation equipment, as required including the use of necessary and medically appropriate life support measures during the transfer; and
(E)
which meets such other requirements as the Secretary may find necessary in the interest of the health and safety of individuals transferred.
(d)

Enforcement.—
(1)

Civil monetary penalties.—
(A)
A participating hospital that negligently violates a requirement of this section is subject to a civil money penalty of not more than $50,000 (or not more than $25,000 in the case of a hospital with less than 100 beds) for each such violation. The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this subparagraph in the same manner as such provisions apply with respect to a penalty or proceeding under section 1128A(a).
(B)
Subject to subparagraph (C), any physician who is responsible for the examination, treatment, or transfer of an individual in a participating hospital, including a physician on-call for the care of such an individual, and who negligently violates a requirement of this section, including a physician who—
(i)
signs a certification under subsection (c)(1)(A) that the medical benefits reasonably to be expected from a transfer to another facility outweigh the risks associated with the transfer, if the physician knew or should have known that the benefits did not outweigh the risks, or
(ii)
misrepresents an individual's condition or other information, including a hospital's obligations under this section,
is subject to a civil money penalty of not more than $50,000 for each such violation and, if the violation is gross and flagrant or is repeated, to exclusion from participation in this title and State health care programs. The provisions of section 1128A (other than the first and second sentences of subsection (a) and subsection (b)) shall apply to a civil money penalty and exclusion under this subparagraph in the same manner as such provisions apply with respect to a penalty, exclusion, or proceeding under section 1128A(a).
(C)
If, after an initial examination, a physician determines that the individual requires the services of a physician listed by the hospital on its list of on-call physicians (required to be maintained under section 1866(a)(1)(I)) and notifies the on-call physician and the on-call physician fails or refuses to appear within a reasonable period of time, and the physician orders the transfer of the individual because the physician determines that without the services of the on-call physician the benefits of transfer outweigh the risks of transfer, the physician authorizing the transfer shall not be subject to a penalty under subparagraph (B). However, the previous sentence shall not apply to the hospital or to the on-call physician who failed or refused to appear.
(2)

Civil enforcement.—
(A)

Personal harm.—
Any individual who suffers personal harm as a direct result of a participating hospital's violation of a requirement of this section may, in a civil action against the participating hospital, obtain those damages available for personal injury under the law of the State in which the hospital is located, and such equitable relief as is appropriate.
(B)

Financial loss to other medical facility.—
Any medical facility that suffers a financial loss as a direct result of a participating hospital's violation of a requirement of this section may, in a civil action against the participating hospital, obtain those damages available for financial loss, under the law of the State in which the hospital is located, and such equitable relief as is appropriate.
(C)

Limitations on actions.—
No action may be brought under this paragraph more than two years after the date of the violation with respect to which the action is brought.
(3)

Consultation with quality improvement organizations.—
In considering allegations of violations of the requirements of this section in imposing sanctions under paragraph (1) or in terminating a hospital's participation under this title, the Secretary shall request the appropriate quality improvement organization (with a contract under part B of title XI) to assess whether the individual involved had an emergency medical condition which had not been stabilized, and provide a report on its findings. Except in the case in which a delay would jeopardize the health or safety of individuals, the Secretary shall request such a review before effecting a sanction under paragraph (1) and shall provide a period of at least 60 days for such review. Except in the case in which a delay would jeopardize the health or safety of individuals, the Secretary shall also request such a review before making a compliance determination as part of the process of terminating a hospital's participation under this title for violations related to the appropriateness of a medical screening examination, stabilizing treatment, or an appropriate transfer as required by this section, and shall provide a period of 5 days for such review. The Secretary shall provide a copy of the organization's report to the hospital or physician consistent with confidentiality requirements imposed on the organization under such part B.
(4)

Notice upon closing an investigation.—
The Secretary shall establish a procedure to notify hospitals and physicians when an investigation under this section is closed.
(e)

Definitions.—
In this section:
(1)
The term “emergency medical condition” means—
(A)
a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in—
(i)
placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy,
(ii)
serious impairment to bodily functions, or
(iii)
serious dysfunction of any bodily organ or part; or
(B)
with respect to a pregnant woman who is having contractions—
(i)
that there is inadequate time to effect a safe transfer to another hospital before delivery, or
(ii)
that transfer may pose a threat to the health or safety of the woman or the unborn child.
(2)
The term “participating hospital” means a hospital that has entered into a provider agreement under section 1866.
(3)
(A)
The term “to stabilize” means, with respect to an emergency medical condition described in paragraph (1)(A), to provide such medical treatment of the condition as may be necessary to assure, within reasonable medical probability, that no material deterioration of the condition is likely to result from or occur during the transfer of the individual from a facility, or, with respect to an emergency medical condition described in paragraph (1)(B), to deliver (including the placenta).
(B)
The term “stabilized” means, with respect to an emergency medical condition described in paragraph (1)(A), that no material deterioration of the condition is likely, within reasonable medical probability, to result from or occur during the transfer of the individual from a facility, or, with respect to an emergency medical condition described in paragraph (1)(B), that the woman has delivered (including the placenta).
(4)
The term “transfer” means the movement (including the discharge) of an individual outside a hospital's facilities at the direction of any person employed by (or affiliated or associated, directly or indirectly, with) the hospital, but does not include such a movement of an individual who (A) has been declared dead, or (B) leaves the facility without the permission of any such person.
(5)
The term “hospital” includes a critical access hospital (as defined in section 1861(mm)(1)) and a rural emergency hospital (as defined in section 1861(kkk)(2)).
(f)

Preemption.—
The provisions of this section do not preempt any State or local law requirement, except to the extent that the requirement directly conflicts with a requirement of this section.
(g)

Nondiscrimination.—
A participating hospital that has specialized capabilities or facilities (such as burn units, shock-trauma units, neonatal intensive care units, or (with respect to rural areas) regional referral centers as identified by the Secretary in regulation) shall not refuse to accept an appropriate transfer of an individual who requires such specialized capabilities or facilities if the hospital has the capacity to treat the individual.
(h)

No Delay in Examination or Treatment.—
A participating hospital may not delay provision of an appropriate medical screening examination required under subsection (a) or further medical examination and treatment required under subsection (b) in order to inquire about the individual's method of payment or insurance status.
(i)

Whistleblower Protections.—
A participating hospital may not penalize or take adverse action against a qualified medical person described in subsection (c)(1)(A)(iii) or a physician because the person or physician refuses to authorize the transfer of an individual with an emergency medical condition that has not been stabilized or against any hospital employee because the employee reports a violation of a requirement of this section.

practicing physicians advisory council; council for technology and innovation
Sec. 1868.
[42 U.S.C. 1395ee]
(b)85

Council for Technology and Innovation.—
^{85}
So in law. There is no subsection (a) in section 1868. Section 3134(b)(2) of Public Law 111–148 provides for an amendment to repeal subsection (a).
(1)

Establishment.—
The Secretary shall establish a Council for Technology and Innovation within the Centers for Medicare & Medicaid Services (in this section referred to as “CMS”).
(2)

Composition.—
The Council shall be composed of senior CMS staff and clinicians and shall be chaired by the Executive Coordinator for Technology and Innovation (appointed or designated under paragraph (4)).
(3)

Duties.—
The Council shall coordinate the activities of coverage, coding, and payment processes under this title with respect to new technologies and procedures, including new drug therapies, and shall coordinate the exchange of information on new technologies between CMS and other entities that make similar decisions.
(4)

Executive coordinator for technology and innovation.—
The Secretary shall appoint (or designate) a noncareer appointee (as defined in section 3132(a)(7) of title 5, United States Code) who shall serve as the Executive Coordinator for Technology and Innovation. Such executive coordinator shall report to the Administrator of CMS, shall chair the Council, shall oversee the execution of its duties, and shall serve as a single point of contact for outside groups and entities regarding the coverage, coding, and payment processes under this title.
(c)

Physician-Focused Payment Models.—
(1)

Technical advisory committee.—
(A)

Establishment.—
There is established an ad hoc committee to be known as the “Physician-Focused Payment Model Technical Advisory Committee” (referred to in this subsection as the “Committee”).
(B)

Membership.—
(i)

Number and appointment.—
The Committee shall be composed of 11 members appointed by the Comptroller General of the United States.
(ii)

Qualifications.—
The membership of the Committee shall include individuals with national recognition for their expertise in physician-focused payment models and related delivery of care. No more than 5 members of the Committee shall be providers of services or suppliers, or representatives of providers of services or suppliers.
(iii)

Prohibition on federal employment.—
A member of the Committee shall not be an employee of the Federal Government.
(iv)

Ethics disclosure.—
The Comptroller General shall establish a system for public disclosure by members of the Committee of financial and other potential conflicts of interest relating to such members. Members of the Committee shall be treated as employees of Congress for purposes of applying subchapter I of chapter 131 of title 5, United States Code.
(v)

Date of initial appointments.—
The initial appointments of members of the Committee shall be made by not later than 180 days after the date of enactment of this subsection.
(C)

Term; vacancies.—
(i)

Term.—
The terms of members of the Committee shall be for 3 years except that the Comptroller General shall designate staggered terms for the members first appointed.
(ii)

Vacancies.—
Any member appointed to fill a vacancy occurring before the expiration of the term for which the member’s predecessor was appointed shall be appointed only for the remainder of that term. A member may serve after the expiration of that member’s term until a successor has taken office. A vacancy in the Committee shall be filled in the manner in which the original appointment was made.
(D)

Duties.—
The Committee shall meet, as needed, to provide comments and recommendations to the Secretary, as described in paragraph (2)(C), on physician-focused payment models.
(E)

Compensation of members.—
(i)

In general.—
Except as provided in clause (ii), a member of the Committee shall serve without compensation.
(ii)

Travel expenses.—
A member of the Committee shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for an employee of an agency under subchapter I of chapter 57 of title 5, United States Code, while away from the home or regular place of business of the member in the performance of the duties of the Committee.
(F)

Operational and technical support.—
(i)

In general.—
The Assistant Secretary for Planning and Evaluation shall provide technical and operational support for the Committee, which may be by use of a contractor. The Office of the Actuary of the Centers for Medicare & Medicaid Services shall provide to the Committee actuarial assistance as needed.
(ii)

Funding.—
The Secretary shall provide for the transfer, from the Federal Supplementary Medical Insurance Trust Fund under section 1841, such amounts as are necessary to carry out this paragraph (not to exceed $5,000,000) for fiscal year 2015 and each subsequent fiscal year. Any amounts transferred under the preceding sentence for a fiscal year shall remain available until expended.
(G)

Application.—
Section 1013 of title 5, United States Code, shall not apply to the Committee.
(2)

Criteria and process for submission and review of physician-focused payment models.—
(A)

Criteria for assessing physician-focused payment models.—
(i)

Rulemaking.—
Not later than November 1, 2016, the Secretary shall, through notice and comment rulemaking, following a request for information, establish criteria for physician-focused payment models, including models for specialist physicians, that could be used by the Committee for making comments and recommendations pursuant to paragraph (1)(D).
(ii)

MedPAC submission of comments.—
During the comment period for the proposed rule described in clause (i), the Medicare Payment Advisory Commission may submit comments to the Secretary on the proposed criteria under such clause.
(iii)

Updating.—
The Secretary may update the criteria established under this subparagraph through rulemaking.
(B)

Stakeholder submission of physician-focused payment models.—
On an ongoing basis, individuals and stakeholder entities may submit to the Committee proposals for physician-focused payment models that such individuals and entities believe meet the criteria described in subparagraph (A).
(C)

Committee review of models submitted.—
The Committee, on a periodic basis—
(i)
shall review models submitted under subparagraph (B);
(ii)
may provide individuals and stakeholder entities who submitted such models with—
(I)
initial feedback on such models regarding the extent to which such models meet the criteria described in subparagraph (A); and
(II)
an explanation of the basis for the feedback provided under subclause (I); and
(iii)
shall prepare comments and recommendations regarding whether such models meet the criteria described in subparagraph (A) and submit such comments and recommendations to the Secretary.
(D)

Secretary review and response.—
The Secretary shall review the comments and recommendations submitted by the Committee under subparagraph (C) and post a detailed response to such comments and recommendations on the Internet website of the Centers for Medicare & Medicaid Services.
(3)

Rule of construction.—
Nothing in this subsection shall be construed to impact the development or testing of models under this title or titles XI, XIX, or XXI.

determinations; appeals
Sec. 1869.
[42 U.S.C. 1395ff]
(a)

Initial Determinations.—
(1)

Promulgations of regulations.—
The Secretary shall promulgate regulations and make initial determinations with respect to benefits under part A or part B in accordance with those regulations for the following:
(A)
The initial determination of whether an individual is entitled to benefits under such parts.
(B)
The initial determination of the amount of benefits available to the individual under such parts.
(C)
Any other initial determination with respect to a claim for benefits under such parts, including an initial determination by the Secretary that payment may not be made, or may no longer be made, for an item or service under such parts, an initial determination made by a quality improvement organization under section 1154(a)(2), and an initial determination made by an entity pursuant to a contract (other than a contract under section 1852) with the Secretary to administer provisions of this title or title XI.
(2)

Deadlines for making initial determinations.—
(A)

In general.—
Subject to subparagraph (B), in promulgating regulations under paragraph (1), initial determinations shall be concluded by not later than the 45-day period beginning on the date the fiscal intermediary or the carrier, as the case may be, receives a claim for benefits from an individual as described in paragraph (1). Notice of such determination shall be mailed to the individual filing the claim before the conclusion of such 45-day period.
(B)

Clean claims.—
Subparagraph (A) shall not apply with respect to any claim that is subject to the requirements of section 1816(c)(2) or 1842(c)(2).
(3)

Redeterminations.—
(A)

In general.—
In promulgating regulations under paragraph (1) with respect to initial determinations, such regulations shall provide for a fiscal intermediary or a carrier to make a redetermination with respect to a claim for benefits that is denied in whole or in part.
(B)

Limitations.—
(i)

Appeal rights.—
No initial determination may be reconsidered or appealed under subsection (b) unless the fiscal intermediary or carrier has made a redetermination of that initial determination under this paragraph.
(ii)

Decisionmaker.—
No redetermination may be made by any individual involved in the initial determination.
(C)

Deadlines.—
(i)

Filing for redetermination.—
A redetermination under subparagraph (A) shall be available only if notice is filed with the Secretary to request the redetermination by not later than the end of the 120-day period beginning on the date the individual receives notice of the initial determination under paragraph (2).
(ii)

Concluding redeterminations.—
Redeterminations shall be concluded by not later than the 60-day period beginning on the date the fiscal intermediary or the carrier, as the case may be, receives a request for a redetermination. Notice of such determination shall be mailed to the individual filing the claim before the conclusion of such 60-day period.
(D)

Construction.—
For purposes of the succeeding provisions of this section a redetermination under this paragraph shall be considered to be part of the initial determination.
(4)

Requirements of notice of determinations.—
With respect to an initial determination insofar as it results in a denial of a claim for benefits—
(A)
the written notice on the determination shall include—
(i)
the reasons for the determination, including whether a local medical review policy or a local coverage determination was used;
(ii)
the procedures for obtaining additional information concerning the determination, including the information described in subparagraph (B); and
(iii)
notification of the right to seek a redetermination or otherwise appeal the determination and instructions on how to initiate such a redetermination under this section;
(B)
such written notice shall be provided in printed form and written in a manner calculated to be understood by the individual entitled to benefits under part A or enrolled under part B, or both; and
(C)
the individual provided such written notice may obtain, upon request, information on the specific provision of the policy, manual, or regulation used in making the redetermination.
(5)

Requirements of notice of redeterminations.—
With respect to a redetermination insofar as it results in a denial of a claim for benefits—
(A)
the written notice on the redetermination shall include—
(i)
the specific reasons for the redetermination;
(ii)
as appropriate, a summary of the clinical or scientific evidence used in making the redetermination;
(iii)
a description of the procedures for obtaining additional information concerning the redetermination; and
(iv)
notification of the right to appeal the redetermination and instructions on how to initiate such an appeal under this section;
(B)
such written notice shall be provided in printed form and written in a manner calculated to be understood by the individual entitled to benefits under part A or enrolled under part B, or both; and
(C)
the individual provided such written notice may obtain, upon request, information on the specific provision of the policy, manual, or regulation used in making the redetermination.
(b)

Appeal Rights.—
(1)

In general.—
(A)

Reconsideration of initial determination.—
Subject to subparagraph (D), any individual dissatisfied with any initial determination under subsection (a)(1) shall be entitled to reconsideration of the determination, and, subject to subparagraphs (D) and (E), a hearing thereon by the Secretary to the same extent as is provided in section 205(b) and, subject to paragraph (2), to judicial review of the Secretary's final decision after such hearing as is provided in section 205(g). For purposes of the preceding sentence, any reference to the “Commissioner of Social Security” or the “Social Security Administration” in subsection (g) or (l) of section 205 shall be considered a reference to the “Secretary” or the “Department of Health and Human Services”, respectively.
(B)

Representation by provider or supplier.—
(i)

In general.—
Sections 206(a), 1102, and 1871 shall not be construed as authorizing the Secretary to prohibit an individual from being represented under this section by a person that furnishes or supplies the individual, directly or indirectly, with services or items, solely on the basis that the person furnishes or supplies the individual with such a service or item.
(ii)

Mandatory waiver of right to payment from beneficiary.—
Any person that furnishes services or items to an individual may not represent an individual under this section with respect to the issue described in section 1879(a)(2) unless the person has waived any rights for payment from the beneficiary with respect to the services or items involved in the appeal.
(iii)

Prohibition on payment for representation.—
If a person furnishes services or items to an individual and represents the individual under this section, the person may not impose any financial liability on such individual in connection with such representation.
(iv)

Requirements for representatives of a beneficiary.—
The provisions of section 205(j) and of section 206 (other than subsection (a)(4) of such section) regarding representation of claimants shall apply to representation of an individual with respect to appeals under this section in the same manner as they apply to representation of an individual under those sections.
(C)

Succession of rights in cases of assignment.—
The right of an individual to an appeal under this section with respect to an item or service may be assigned to the provider of services or supplier of the item or service upon the written consent of such individual using a standard form established by the Secretary for such an assignment.
(D)

Time limits for filing appeals.—
(i)

Reconsiderations.—
Reconsideration under subparagraph (A) shall be available only if the individual described in subparagraph (A) files notice with the Secretary to request reconsideration by not later than the end of the 180-day period beginning on the date the individual receives notice of the redetermination under subsection (a)(3), or within such additional time as the Secretary may allow.
(ii)

Hearings conducted by the secretary.—
The Secretary shall establish in regulations time limits for the filing of a request for a hearing by the Secretary in accordance with provisions in sections 205 and 206.
(E)

Amounts in controversy.—
(i)

In general.—
A hearing (by the Secretary) shall not be available to an individual under this section if the amount in controversy is less than $100, and judicial review shall not be available to the individual if the amount in controversy is less than $1,000.
(ii)

Aggregation of claims.—
In determining the amount in controversy, the Secretary, under regulations, shall allow two or more appeals to be aggregated if the appeals involve—
(I)
the delivery of similar or related services to the same individual by one or more providers of services or suppliers, or
(II)
common issues of law and fact arising from services furnished to two or more individuals by one or more providers of services or suppliers.
(iii)

Adjustment of dollar amounts.—
For requests for hearings or judicial review made in a year after 2004, the dollar amounts specified in clause (i) shall be equal to such dollar amounts increased by the percentage increase in the medical care component of the consumer price index for all urban consumers (U.S. city average) for July 2003 to the July preceding the year involved. Any amount determined under the previous sentence that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
(F)

Expedited proceedings.—
(i)

Expedited determination.—
In the case of an individual who has received notice from a provider of services that such provider plans—
(I)
to terminate services provided to an individual and a physician certifies that failure to continue the provision of such services is likely to place the individual's health at significant risk, or
(II)
to discharge the individual from the provider of services,
the individual may request, in writing or orally, an expedited determination or an expedited reconsideration of an initial determination made under subsection (a)(1), as the case may be, and the Secretary shall provide such expedited determination or expedited reconsideration.
(ii)

Reference to expedited access to judicial review.—
For the provision relating to expedited access to judicial review, see paragraph (2).
(G)

Reopening and revision of determinations.—
The Secretary may reopen or revise any initial determination or reconsidered determination described in this subsection under guidelines established by the Secretary in regulations.
(2)

Expedited access to judicial review.—
(A)

In general.—
The Secretary shall establish a process under which a provider of services or supplier that furnishes an item or service or an individual entitled to benefits under part A or enrolled under part B, or both, who has filed an appeal under paragraph (1) (other than an appeal filed under paragraph (1)(F)(i)) may obtain access to judicial review when a review entity (described in subparagraph (D)), on its own motion or at the request of the appellant, determines that the Departmental Appeals Board does not have the authority to decide the question of law or regulation relevant to the matters in controversy and that there is no material issue of fact in dispute. The appellant may make such request only once with respect to a question of law or regulation for a specific matter in dispute in a case of an appeal.
(B)

Prompt determinations.—
If, after or coincident with appropriately filing a request for an administrative hearing, the appellant requests a determination by the appropriate review entity that the Departmental Appeals Board does not have the authority to decide the question of law or regulations relevant to the matters in controversy and that there is no material issue of fact in dispute, and if such request is accompanied by the documents and materials as the appropriate review entity shall require for purposes of making such determination, such review entity shall make a determination on the request in writing within 60 days after the date such review entity receives the request and such accompanying documents and materials. Such a determination by such review entity shall be considered a final decision and not subject to review by the Secretary.
(C)

Access to judicial review.—
(i)

In general.—
If the appropriate review entity—
(I)
determines that there are no material issues of fact in dispute and that the only issues to be adjudicated are ones of law or regulation that the Departmental Appeals Board does not have authority to decide; or
(II)
fails to make such determination within the period provided under subparagraph (B),
then the appellant may bring a civil action as described in this subparagraph.
(ii)

Deadline for filing.—
Such action shall be filed, in the case described in—
(I)
clause (i)(I), within 60 days of the date of the determination described in such clause; or
(II)
clause (i)(II), within 60 days of the end of the period provided under subparagraph (B) for the determination.
(iii)

Venue.—
Such action shall be brought in the district court of the United States for the judicial district in which the appellant is located (or, in the case of an action brought jointly by more than one applicant, the judicial district in which the greatest number of applicants are located) or in the District Court for the District of Columbia.
(iv)

Interest on any amounts in controversy.—
Where a provider of services or supplier is granted judicial review pursuant to this paragraph, the amount in controversy (if any) shall be subject to annual interest beginning on the first day of the first month beginning after the 60-day period as determined pursuant to clause (ii) and equal to the rate of interest on obligations issued for purchase by the Federal Supplementary Medical Insurance Trust Fund for the month in which the civil action authorized under this paragraph is commenced, to be awarded by the reviewing court in favor of the prevailing party. No interest awarded pursuant to the preceding sentence shall be deemed income or cost for the purposes of determining reimbursement due providers of services or suppliers under this title.
(D)

Review entity defined.—
For purposes of this subsection, the term “review entity” means an entity of up to three reviewers who are administrative law judges or members of the Departmental Appeals Board selected for purposes of making determinations under this paragraph.
(3)

Requiring full and early presentation of evidence by providers.—
A provider of services or supplier may not introduce evidence in any appeal under this section that was not presented at the reconsideration conducted by the qualified independent contractor under subsection (c), unless there is good cause which precluded the introduction of such evidence at or before that reconsideration.
(c)

Conduct of Reconsiderations by Independent Contractors.—
(1)

In general.—
The Secretary shall enter into contracts with qualified independent contractors to conduct reconsiderations of initial determinations made under subparagraphs (B) and (C) of subsection (a)(1). Contracts shall be for an initial term of three years and shall be renewable on a triennial basis thereafter.
(2)

Qualified independent contractor.—
For purposes of this subsection, the term “qualified independent contractor” means an entity or organization that is independent of any organization under contract with the Secretary that makes initial determinations under subsection (a)(1), and that meets the requirements established by the Secretary consistent with paragraph (3).
(3)

Requirements.—
Any qualified independent contractor entering into a contract with the Secretary under this subsection shall meet all of the following requirements:
(A)

In general.—
The qualified independent contractor shall perform such duties and functions and assume such responsibilities as may be required by the Secretary to carry out the provisions of this subsection, and shall have sufficient medical, legal, and other expertise (including knowledge of the program under this title) and sufficient staffing to make reconsiderations under this subsection.
(B)

Reconsiderations.—
(i)

In general.—
The qualified independent contractor shall review initial determinations. Where an initial determination is made with respect to whether an item or service is reasonable and necessary for the diagnosis or treatment of illness or injury (under section 1862(a)(1)(A)), such review shall include consideration of the facts and circumstances of the initial determination by a panel of physicians or other appropriate health care professionals and any decisions with respect to the reconsideration shall be based on applicable information, including clinical experience (including the medical records of the individual involved) and medical, technical, and scientific evidence.
(ii)

Effect of national and local coverage determinations.—
(I)

National coverage determinations.—
If the Secretary has made a national coverage determination pursuant to the requirements established under the third sentence of section 1862(a), such determination shall be binding on the qualified independent contractor in making a decision with respect to a reconsideration under this section.
(II)

Local coverage determinations.—
If the Secretary has made a local coverage determination, such determination shall not be binding on the qualified independent contractor in making a decision with respect to a reconsideration under this section. Notwithstanding the previous sentence, the qualified independent contractor shall consider the local coverage determination in making such decision.
(III)

Absence of national or local coverage determination.—
In the absence of such a national coverage determination or local coverage determination, the qualified independent contractor shall make a decision with respect to the reconsideration based on applicable information, including clinical experience and medical, technical, and scientific evidence.
(C)

Deadlines for decisions.—
(i)

Reconsiderations.—
Except as provided in clauses (iii) and (iv), the qualified independent contractor shall conduct and conclude a reconsideration under subparagraph (B), and mail the notice of the decision with respect to the reconsideration by not later than the end of the 60-day period beginning on the date a request for reconsideration has been timely filed.
(ii)

Consequences of failure to meet deadline.—
In the case of a failure by the qualified independent contractor to mail the notice of the decision by the end of the period described in clause (i) or to provide notice by the end of the period described in clause (iii), as the case may be, the party requesting the reconsideration or appeal may request a hearing before the Secretary, notwithstanding any requirements for a reconsidered determination for purposes of the party's right to such hearing.
(iii)

Expedited reconsiderations.—
The qualified independent contractor shall perform an expedited reconsideration under subsection (b)(1)(F) as follows:
(I)

Deadline for decision.—
Notwithstanding section 216(j) and subject to clause (iv), not later than the end of the 72-hour period beginning on the date the qualified independent contractor has received a request for such reconsideration and has received such medical or other records needed for such reconsideration, the qualified independent contractor shall provide notice (by telephone and in writing) to the individual and the provider of services and attending physician of the individual of the results of the reconsideration. Such reconsideration shall be conducted regardless of whether the provider of services or supplier will charge the individual for continued services or whether the individual will be liable for payment for such continued services.
(II)

Consultation with beneficiary.—
In such reconsideration, the qualified independent contractor shall solicit the views of the individual involved.
(III)

Special rule for hospital discharges.—
A reconsideration of a discharge from a hospital shall be conducted under this clause in accordance with the provisions of paragraphs (2), (3), and (4) of section 1154(e) as in effect on the date that precedes the date of the enactment of this subparagraph.
(iv)

Extension.—
An individual requesting a reconsideration under this subparagraph may be granted such additional time as the individual specifies (not to exceed 14 days) for the qualified independent contractor to conclude the reconsideration. The individual may request such additional time orally or in writing.
(D)

Qualifications for reviewers.—
The requirements of subsection (g) shall be met (relating to qualifications of reviewing professionals).
(E)

Explanation of decision.—
Any decision with respect to a reconsideration of a qualified independent contractor shall be in writing, be written in a manner calculated to be understood by the individual entitled to benefits under part A or enrolled under part B, or both, and shall include (to the extent appropriate) and shall include a detailed explanation of the decision as well as a discussion of the pertinent facts and applicable regulations applied in making such decision, and a notification of the right to appeal such determination and instructions on how to initiate such appeal under this section and in the case of a determination of whether an item or service is reasonable and necessary for the diagnosis or treatment of illness or injury (under section 1862(a)(1)(A)) an explanation of the medical and scientific rationale for the decision.
(F)

Notice requirements.—
Whenever a qualified independent contractor makes a decision with respect to a reconsideration under this subsection, the qualified independent contractor shall promptly notify the entity responsible for the payment of claims under part A or part B of such decision.
(G)

Dissemination of decisions on reconsiderations.—
Each qualified independent contractor shall make available all decisions with respect to reconsiderations of such qualified independent contractors to fiscal intermediaries (under section 1816), carriers (under section 1842), quality improvement organizations (under part B of title XI), Medicare+Choice organizations offering Medicare+Choice plans under part C, other entities under contract with the Secretary to make initial determinations under part A or part B or title XI, and to the public. The Secretary shall establish a methodology under which qualified independent contractors shall carry out this subparagraph.
(H)

Ensuring consistency in decisions.—
Each qualified independent contractor shall monitor its decisions with respect to reconsiderations to ensure the consistency of such decisions with respect to requests for reconsideration of similar or related matters.
(I)

Data collection.—
(i)

In general.—
Consistent with the requirements of clause (ii), a qualified independent contractor shall collect such information relevant to its functions, and keep and maintain such records in such form and manner as the Secretary may require to carry out the purposes of this section and shall permit access to and use of any such information and records as the Secretary may require for such purposes.
(ii)

Type of data collected.—
Each qualified independent contractor shall keep accurate records of each decision made, consistent with standards established by the Secretary for such purpose. Such records shall be maintained in an electronic database in a manner that provides for identification of the following:
(I)
Specific claims that give rise to appeals.
(II)
Situations suggesting the need for increased education for providers of services, physicians, or suppliers.
(III)
Situations suggesting the need for changes in national or local coverage determination.
(IV)
Situations suggesting the need for changes in local coverage determinations.
(iii)

Annual reporting.—
Each qualified independent contractor shall submit annually to the Secretary (or otherwise as the Secretary may request) records maintained under this paragraph for the previous year.
(J)

Hearings by the secretary.—
The qualified independent contractor shall (i) submit such information as is required for an appeal of a decision of the contractor, and (ii) participate in such hearings as required by the Secretary.
(K)

Independence requirements.—
(i)

In general.—
Subject to clause (ii), a qualified independent contractor shall not conduct any activities in a case unless the entity—
(I)
is not a related party (as defined in subsection (g)(5));
(II)
does not have a material familial, financial, or professional relationship with such a party in relation to such case; and
(III)
does not otherwise have a conflict of interest with such a party.
(ii)

Exception for reasonable compensation.—
Nothing in clause (i) shall be construed to prohibit receipt by a qualified independent contractor of compensation from the Secretary for the conduct of activities under this section if the compensation is provided consistent with clause (iii).
(iii)

Limitations on entity compensation.—
Compensation provided by the Secretary to a qualified independent contractor in connection with reviews under this section shall not be contingent on any decision rendered by the contractor or by any reviewing professional.
(4)

Number of qualified independent contractors.—
The Secretary shall enter into contracts with a sufficient number of qualified independent contractors (but not fewer than 4 such contractors) to conduct reconsiderations consistent with the timeframes applicable under this subsection.
(5)

Limitation on qualified independent contractor liability.—
No qualified independent contractor having a contract with the Secretary under this subsection and no person who is employed by, or who has a fiduciary relationship with, any such qualified independent contractor or who furnishes professional services to such qualified independent contractor, shall be held by reason of the performance of any duty, function, or activity required or authorized pursuant to this subsection or to a valid contract entered into under this subsection, to have violated any criminal law, or to be civilly liable under any law of the United States or of any State (or political subdivision thereof) provided due care was exercised in the performance of such duty, function, or activity.
(d)

Deadlines for Hearings by the Secretary; Notice.—
(1)

Hearing by administrative law judge.—
(A)

In general.—
Except as provided in subparagraph (B), an administrative law judge shall conduct and conclude a hearing on a decision of a qualified independent contractor under subsection (c) and render a decision on such hearing by not later than the end of the 90-day period beginning on the date a request for hearing has been timely filed.
(B)

Waiver of deadline by party seeking hearing.—
The 90-day period under subparagraph (A) shall not apply in the case of a motion or stipulation by the party requesting the hearing to waive such period.
(2)

Departmental appeals board review.—
(A)

In general.—
The Departmental Appeals Board of the Department of Health and Human Services shall conduct and conclude a review of the decision on a hearing described in paragraph (1) and make a decision or remand the case to the administrative law judge for reconsideration by not later than the end of the 90-day period beginning on the date a request for review has been timely filed.
(B)

DAB hearing procedure.—
In reviewing a decision on a hearing under this paragraph, the Departmental Appeals Board shall review the case de novo.
(3)

Consequences of failure to meet deadlines.—
(A)

Hearing by administrative law judge.—
In the case of a failure by an administrative law judge to render a decision by the end of the period described in paragraph (1), the party requesting the hearing may request a review by the Departmental Appeals Board of the Department of Health and Human Services, notwithstanding any requirements for a hearing for purposes of the party's right to such a review.
(B)

Departmental appeals board review.—
In the case of a failure by the Departmental Appeals Board to render a decision by the end of the period described in paragraph (2), the party requesting the hearing may seek judicial review, notwithstanding any requirements for a hearing for purposes of the party's right to such judicial review.
(4)

Notice.—
Notice of the decision of an administrative law judge shall be in writing in a manner calculated to be understood by the individual entitled to benefits under part A or enrolled under part B, or both, and shall include—
(A)
the specific reasons for the determination (including, to the extent appropriate, a summary of the clinical or scientific evidence used in making the determination);
(B)
the procedures for obtaining additional information concerning the decision; and
(C)
notification of the right to appeal the decision and instructions on how to initiate such an appeal under this section.
(e)

Administrative Provisions.—
(1)

Limitation on review of certain regulations.—
A regulation or instruction that relates to a method for determining the amount of payment under part B and that was initially issued before January 1, 1981, shall not be subject to judicial review.
(2)

Outreach.—
The Secretary shall perform such outreach activities as are necessary to inform individuals entitled to benefits under this title and providers of services and suppliers with respect to their rights of, and the process for, appeals made under this section. The Secretary shall use the toll-free telephone number maintained by the Secretary under section 1804(b) to provide information regarding appeal rights and respond to inquiries regarding the status of appeals.
(3)

Continuing education requirement for qualified independent contractors and administrative law judges.—
The Secretary shall provide to each qualified independent contractor, and, in consultation with the Commissioner of Social Security, to administrative law judges that decide appeals of reconsiderations of initial determinations or other decisions or determinations under this section, such continuing education with respect to coverage of items and services under this title or policies of the Secretary with respect to part B of title XI as is necessary for such qualified independent contractors and administrative law judges to make informed decisions with respect to appeals.
(4)

Reports.—
(A)

Annual report to congress.—
The Secretary shall submit to Congress an annual report describing the number of appeals for the previous year, identifying issues that require administrative or legislative actions, and including any recommendations of the Secretary with respect to such actions. The Secretary shall include in such report an analysis of determinations by qualified independent contractors with respect to inconsistent decisions and an analysis of the causes of any such inconsistencies.
(B)

Survey.—
Not less frequently than every 5 years, the Secretary shall conduct a survey of a valid sample of individuals entitled to benefits under this title who have filed appeals of determinations under this section, providers of services, and suppliers to determine the satisfaction of such individuals or entities with the process for appeals of determinations provided for under this section and education and training provided by the Secretary with respect to that process. The Secretary shall submit to Congress a report describing the results of the survey, and shall include any recommendations for administrative or legislative actions that the Secretary determines appropriate.
(f)

Review of Coverage Determinations.—
(1)

National coverage determinations.—
(A)

In general.—
Review of any national coverage determination shall be subject to the following limitations:
(i)
Such a determination shall not be reviewed by any administrative law judge.
(ii)
Such a determination shall not be held unlawful or set aside on the ground that a requirement of section 553 of title 5, United States Code, or section 1871(b) of this title, relating to publication in the Federal Register or opportunity for public comment, was not satisfied.
(iii)
Upon the filing of a complaint by an aggrieved party, such a determination shall be reviewed by the Departmental Appeals Board of the Department of Health and Human Services. In conducting such a review, the Departmental Appeals Board—
(I)
shall review the record and shall permit discovery and the taking of evidence to evaluate the reasonableness of the determination, if the Board determines that the record is incomplete or lacks adequate information to support the validity of the determination;
(II)
may, as appropriate, consult with appropriate scientific and clinical experts; and
(III)
shall defer only to the reasonable findings of fact, reasonable interpretations of law, and reasonable applications of fact to law by the Secretary.
(iv)
The Secretary shall implement a decision of the Departmental Appeals Board within 30 days of receipt of such decision.
(v)
A decision of the Departmental Appeals Board constitutes a final agency action and is subject to judicial review.
(B)

Definition of national coverage determination.—
For purposes of this section, the term “national coverage determination” means a determination by the Secretary with respect to whether or not a particular item or service is covered nationally under this title, but does not include a determination of what code, if any, is assigned to a particular item or service covered under this title or a determination with respect to the amount of payment made for a particular item or service so covered.
(2)

Local coverage determination.—
(A)

In general.—
Review of any local coverage determination shall be subject to the following limitations:
(i)
Upon the filing of a complaint by an aggrieved party, such a determination shall be reviewed by an administrative law judge. The administrative law judge—
(I)
shall review the record and shall permit discovery and the taking of evidence to evaluate the reasonableness of the determination, if the administrative law judge determines that the record is incomplete or lacks adequate information to support the validity of the determination;
(II)
may, as appropriate, consult with appropriate scientific and clinical experts; and
(III)
shall defer only to the reasonable findings of fact, reasonable interpretations of law, and reasonable applications of fact to law by the Secretary.
(ii)
Upon the filing of a complaint by an aggrieved party, a decision of an administrative law judge under clause (i) shall be reviewed by the Departmental Appeals Board of the Department of Health and Human Services.
(iii)
The Secretary shall implement a decision of the administrative law judge or the Departmental Appeals Board within 30 days of receipt of such decision.
(iv)
A decision of the Departmental Appeals Board constitutes a final agency action and is subject to judicial review.
(B)

Definition of local coverage determination.—
For purposes of this section, the term “local coverage determination” means a determination by a fiscal intermediary or a carrier under part A or part B, as applicable, respecting whether or not a particular item or service is covered on an intermediary- or carrier-wide basis under such parts, in accordance with section 1862(a)(1)(A).
(C)

Local coverage determinations for clinical diagnostic laboratory tests.—
For provisions relating to local coverage determinations for clinical diagnostic laboratory tests, see section 1834A(g).
(3)

No material issues of fact in dispute.—
In the case of a determination that may otherwise be subject to review under paragraph (1)(A)(iii) or paragraph (2)(A)(i), where the moving party alleges that—
(A)
there are no material issues of fact in dispute, and
(B)
the only issue of law is the constitutionality of a provision of this title, or that a regulation, determination, or ruling by the Secretary is invalid,
the moving party may seek review by a court of competent jurisdiction without filing a complaint under such paragraph and without otherwise exhausting other administrative remedies.
(4)

Pending national coverage determinations.—
(A)

In general.—
In the event the Secretary has not issued a national coverage or noncoverage determination with respect to a particular type or class of items or services, an aggrieved person (as described in paragraph (5)) may submit to the Secretary a request to make such a determination with respect to such items or services. By not later than the end of the 90-day period beginning on the date the Secretary receives such a request (notwithstanding the receipt by the Secretary of new evidence (if any) during such 90-day period), the Secretary shall take one of the following actions:
(i)
Issue a national coverage determination, with or without limitations.
(ii)
Issue a national noncoverage determination.
(iii)
Issue a determination that no national coverage or noncoverage determination is appropriate as of the end of such 90-day period with respect to national coverage of such items or services.
(iv)
Issue a notice that states that the Secretary has not completed a review of the request for a national coverage determination and that includes an identification of the remaining steps in the Secretary's review process and a deadline by which the Secretary will complete the review and take an action described in clause (i), (ii), or (iii).
(B)

Deemed action by the secretary.—
In the case of an action described in subparagraph (A)(iv), if the Secretary fails to take an action referred to in such clause by the deadline specified by the Secretary under such clause, then the Secretary is deemed to have taken an action described in subparagraph (A)(iii) as of the deadline.
(C)

Explanation of determination.—
When issuing a determination under subparagraph (A), the Secretary shall include an explanation of the basis for the determination. An action taken under clause (i) (other than clause (iv)) is deemed to be a national coverage determination for purposes of review under paragraph (1)(A).
(5)

Standing.—
An action under this subsection seeking review of a national coverage determination or local coverage determination may be initiated only by individuals entitled to benefits under part A, or enrolled under part B, or both, who are in need of the items or services that are the subject of the coverage determination.
(6)

Publication on the internet of decisions of hearings of the secretary.—
Each decision of a hearing by the Secretary with respect to a national coverage determination shall be made public, and the Secretary shall publish each decision on the Medicare Internet site of the Department of Health and Human Services. The Secretary shall remove from such decision any information that would identify any individual, provider of services, or supplier.
(7)

Annual report on national coverage determinations.—
(A)

In general.—
Not later than December 1 of each year, beginning in 2001, the Secretary shall submit to Congress a report that sets forth a detailed compilation of the actual time periods that were necessary to complete and fully implement national coverage determinations that were made in the previous fiscal year for items, services, or medical devices not previously covered as a benefit under this title, including, with respect to each new item, service, or medical device, a statement of the time taken by the Secretary to make and implement the necessary coverage, coding, and payment determinations, including the time taken to complete each significant step in the process of making and implementing such determinations.
(B)

Publication of reports on the internet.—
The Secretary shall publish each report submitted under clause (i) on the medicare Internet site of the Department of Health and Human Services.
(8)

Construction.—
Nothing in this subsection shall be construed as permitting administrative or judicial review pursuant to this section insofar as such review is explicitly prohibited or restricted under another provision of law.
(g)

Qualifications of Reviewers.—
(1)

In general.—
In reviewing determinations under this section, a qualified independent contractor shall assure that—
(A)
each individual conducting a review shall meet the qualifications of paragraph (2);
(B)
compensation provided by the contractor to each such reviewer is consistent with paragraph (3); and
(C)
in the case of a review by a panel described in subsection (c)(3)(B) composed of physicians or other health care professionals (each in this subsection referred to as a “reviewing professional”), a reviewing professional meets the qualifications described in paragraph (4) and, where a claim is regarding the furnishing of treatment by a physician (allopathic or osteopathic) or the provision of items or services by a physician (allopathic or osteopathic), a reviewing professional shall be a physician (allopathic or osteopathic).
(2)

Independence.—
(A)

In general.—
Subject to subparagraph (B), each individual conducting a review in a case shall—
(i)
not be a related party (as defined in paragraph (5));
(ii)
not have a material familial, financial, or professional relationship with such a party in the case under review; and
(iii)
not otherwise have a conflict of interest with such a party.
(B)

Exception.—
Nothing in subparagraph (A) shall be construed to—
(i)
prohibit an individual, solely on the basis of a participation agreement with a fiscal intermediary, carrier, or other contractor, from serving as a reviewing professional if—
(I)
the individual is not involved in the provision of items or services in the case under review;
(II)
the fact of such an agreement is disclosed to the Secretary and the individual entitled to benefits under part A or enrolled under part B, or both, or such individual's authorized representative, and neither party objects; and
(III)
the individual is not an employee of the intermediary, carrier, or contractor and does not provide services exclusively or primarily to or on behalf of such intermediary, carrier, or contractor;
(ii)
prohibit an individual who has staff privileges at the institution where the treatment involved takes place from serving as a reviewer merely on the basis of having such staff privileges if the existence of such privileges is disclosed to the Secretary and such individual (or authorized representative), and neither party objects; or
(iii)
prohibit receipt of compensation by a reviewing professional from a contractor if the compensation is provided consistent with paragraph (3).
For purposes of this paragraph, the term “participation agreement” means an agreement relating to the provision of health care services by the individual and does not include the provision of services as a reviewer under this subsection.
(3)

Limitations on reviewer compensation.—
Compensation provided by a qualified independent contractor to a reviewer in connection with a review under this section shall not be contingent on the decision rendered by the reviewer.
(4)

Licensure and expertise.—
Each reviewing professional shall be—
(A)
a physician (allopathic or osteopathic) who is appropriately credentialed or licensed in one or more States to deliver health care services and has medical expertise in the field of practice that is appropriate for the items or services at issue; or
(B)
a health care professional who is legally authorized in one or more States (in accordance with State law or the State regulatory mechanism provided by State law) to furnish the health care items or services at issue and has medical expertise in the field of practice that is appropriate for such items or services.
(5)

Related party defined.—
For purposes of this section, the term “related party” means, with respect to a case under this title involving a specific individual entitled to benefits under part A or enrolled under part B, or both, any of the following:
(A)
The Secretary, the medicare administrative contractor involved, or any fiduciary, officer, director, or employee of the Department of Health and Human Services, or of such contractor.
(B)
The individual (or authorized representative).
(C)
The health care professional that provides the items or services involved in the case.
(D)
The institution at which the items or services (or treatment) involved in the case are provided.
(E)
The manufacturer of any drug or other item that is included in the items or services involved in the case.
(F)
Any other party determined under any regulations to have a substantial interest in the case involved.
(h)

Prior Determination Process for Certain Items and Services.—
(1)

Establishment of process.—
(A)

In general.—
With respect to a medicare administrative contractor that has a contract under section 1874A that provides for making payments under this title with respect to physicians' services (as defined in section 1848(j)(3)), the Secretary shall establish a prior determination process that meets the requirements of this subsection and that shall be applied by such contractor in the case of eligible requesters.
(B)

Eligible requester.—
For purposes of this subsection, each of the following shall be an eligible requester:
(i)
A participating physician, but only with respect to physicians' services to be furnished to an individual who is entitled to benefits under this title and who has consented to the physician making the request under this subsection for those physicians' services.
(ii)
An individual entitled to benefits under this title, but only with respect to a physicians' service for which the individual receives, from a physician, an advance beneficiary notice under section 1879(a).
(2)

Secretarial flexibility.—
The Secretary shall establish by regulation reasonable limits on the physicians' services for which a prior determination of coverage may be requested under this subsection. In establishing such limits, the Secretary may consider the dollar amount involved with respect to the physicians' service, administrative costs and burdens, and other relevant factors.
(3)

Request for prior determination.—
(A)

In general.—
Subject to paragraph (2), under the process established under this subsection an eligible requester may submit to the contractor a request for a determination, before the furnishing of a physicians' service, as to whether the physicians' service is covered under this title consistent with the applicable requirements of section 1862(a)(1)(A) (relating to medical necessity).
(B)

Accompanying documentation.—
The Secretary may require that the request be accompanied by a description of the physicians' service, supporting documentation relating to the medical necessity for the physicians' service, and any other appropriate documentation. In the case of a request submitted by an eligible requester who is described in paragraph (1)(B)(ii), the Secretary may require that the request also be accompanied by a copy of the advance beneficiary notice involved.
(4)

Response to request.—
(A)

In general.—
Under such process, the contractor shall provide the eligible requester with written notice of a determination as to whether—
(i)
the physicians' service is so covered;
(ii)
the physicians' service is not so covered; or
(iii)
the contractor lacks sufficient information to make a coverage determination with respect to the physicians' service.
(B)

Contents of notice for certain determinations.—
(i)

Noncoverage.—
If the contractor makes the determination described in subparagraph (A)(ii), the contractor shall include in the notice a brief explanation of the basis for the determination, including on what national or local coverage or noncoverage determination (if any) the determination is based, and a description of any applicable rights under subsection (a).
(ii)

Insufficient information.—
If the contractor makes the determination described in subparagraph (A)(iii), the contractor shall include in the notice a description of the additional information required to make the coverage determination.
(C)

Deadline to respond.—
Such notice shall be provided within the same time period as the time period applicable to the contractor providing notice of initial determinations on a claim for benefits under subsection (a)(2)(A).
(D)

Informing beneficiary in case of physician request.—
In the case of a request by a participating physician under paragraph (1)(B)(i), the process shall provide that the individual to whom the physicians' service is proposed to be furnished shall be informed of any determination described in subparagraph (A)(ii) (relating to a determination of non-coverage) and the right (referred to in paragraph (6)(B)) to obtain the physicians' service and have a claim submitted for the physicians' service.
(5)

Binding nature of positive determination.—
If the contractor makes the determination described in paragraph (4)(A)(i), such determination shall be binding on the contractor in the absence of fraud or evidence of misrepresentation of facts presented to the contractor.
(6)

Limitation on further review.—
(A)

In general.—
Contractor determinations described in paragraph (4)(A)(ii) or (4)(A)(iii) (relating to pre-service claims) are not subject to further administrative appeal or judicial review under this section or otherwise.
(B)

Decision not to seek prior determination or negative determination does not impact right to obtain services, seek reimbursement, or appeal rights.—
Nothing in this subsection shall be construed as affecting the right of an individual who—
(i)
decides not to seek a prior determination under this subsection with respect to physicians' services; or
(ii)
seeks such a determination and has received a determination described in paragraph (4)(A)(ii),
from receiving (and submitting a claim for) such physicians' services and from obtaining administrative or judicial review respecting such claim under the other applicable provisions of this section. Failure to seek a prior determination under this subsection with respect to physicians' service shall not be taken into account in such administrative or judicial review.
(C)

No prior determination after receipt of services.—
Once an individual is provided physicians' services, there shall be no prior determination under this subsection with respect to such physicians' services.
(i)

Mediation Process for Local Coverage Determinations.—
(1)

Establishment of process.—
The Secretary shall establish a mediation process under this subsection through the use of a physician trained in mediation and employed by the Centers for Medicare & Medicaid Services.
(2)

Responsibility of mediator.—
Under the process established in paragraph (1), such a mediator shall mediate in disputes between groups representing providers of services, suppliers (as defined in section 1861(d)), and the medical director for a medicare administrative contractor whenever the regional administrator (as defined by the Secretary) involved determines that there was a systematic pattern and a large volume of complaints from such groups regarding decisions of such director or there is a complaint from the co-chair of the advisory committee for that contractor to such regional administrator regarding such dispute.

overpayment on behalf of individuals and settlement of claims for benefits on behalf of deceased individuals
Sec. 1870.
[42 U.S.C. 1395gg]
(a)
Any payment under this title to any provider of services or other person with respect to any items or services furnished any individual shall be regarded as a payment to such individual.
(b)
Where—
(1)
more than the correct amount is paid under this title to a provider of services or other person for items or services furnished an individual and the Secretary determines (A) that, within such period as he may specify, the excess over the correct amount cannot be recouped from such provider of services or other person, or (B) that such provider of services or other person was without fault with respect to the payment of such excess over the correct amount, or
(2)
any payment has been made under section 1814(e) to a provider of services or other person for items or services furnished an individual,
proper adjustments shall be made, under regulations prescribed (after consultation with the Railroad Retirement Board) by the Secretary, by decreasing subsequent payments—
(3)
to which such individual is entitled under title II of this Act or under the Railroad Retirement Act of 1974, as the case may be, or
(4)
if such individual dies before such adjustment has been completed, to which any other individual is entitled under title II of this Act or under the Railroad Retirement Act of 1974, as the case may be, with respect to the wages and self-employment income or the compensation constituting the basis of the benefits of such deceased individual under title II of such Act.
As soon as practicable after any adjustment under paragraph (3) or (4) is determined to be necessary, the Secretary, for purposes of this section, section 1817(g), and section 1841(f), shall certify (to the Railroad Retirement Board if the adjustment is to be made by decreasing subsequent payments under the Railroad Retirement Act of 1974) the amount of the overpayment as to which the adjustment is to be made. For purposes of clause (B) of paragraph (1), such provider of services or such other person shall, in the absence of evidence to the contrary, be deemed to be without fault if the Secretary's determination that more than such correct amount was paid was made subsequent to the fifth year following the year in which notice was sent to such individual that such amount had been paid; except that the Secretary may reduce such five-year period to not less than one year if he finds such reduction is consistent with the objectives of this title.
(c)
There shall be no adjustment as provided in subsection (b) (nor shall there be recovery) in any case where the incorrect payment has been made (including payments under section 1814(e)) with respect to an individual who is without fault or where the adjustment (or recovery) would be made by decreasing payments to which another person who is without fault is entitled as provided in subsection (b)(4), if such adjustment (or recovery) would defeat the purposes of title II or title XVIII or would be against equity and good conscience. Adjustment or recovery of an incorrect payment (or only such part of an incorrect payment as the Secretary determines to be inconsistent with the purposes of this title) against an individual who is without fault shall be deemed to be against equity and good conscience if (A) the incorrect payment was made for expenses incurred for items or services for which payment may not be made under this title by reason of the provisions of paragraph (1) or (9) of section 1862(a) and (B) if the Secretary's determination that such payment was incorrect was made subsequent to the fifth year following the year in which notice of such payment was sent to such individual; except that the Secretary may reduce such five-year period to not less than one year if he finds such reduction is consistent with the objectives of this title.
(d)
No certifying or disbursing officer shall be held liable for any amount certified or paid by him to any provider of services or other person where the adjustment or recovery of such amount is waived under subsection (c) or where adjustment under subsection (b) is not completed prior to the death of all persons against whose benefits such adjustment is authorized.
(e)
If an individual, who received services for which payment may be made to such individual under this title, dies, and payment for such services was made (other than under this title), and the individual died before any payment due him under this title with respect to such services was completed, payment of the amount due (including the amount of any unnegotiated checks) shall be made—
(1)
if the payment for such services was made (before or after such individual's death) by a person other than the deceased individual, to the person or persons determined by the Secretary under regulations to have paid for such services, or if the payment for such services was made by the deceased individual before his death, to the legal representative of the estate of such deceased individual, if any;
(2)
if there is no person who meets the requirements of paragraph (1), to the person, if any, who is determined by the Secretary to be the surviving spouse of the deceased individual and who was either living in the same household with the deceased at the time of his death or was, for the month in which the deceased individual died, entitled to a monthly benefit on the basis of the same wages and self-employment income as was the deceased individual;
(3)
if there is no person who meets the requirements of paragraph (1) or (2), or if the person who meets such requirements dies before the payment due him under this title is completed, to the child or children, if any, of the deceased individual who were, for the month in which the deceased individual died, entitled to monthly benefits on the basis of the same wages and self-employment income as was the deceased individual (and, in case there is more than one such child, in equal parts to each such child);
(4)
if there is no person who meets the requirements of paragraph (1), (2), or (3), or if each person who meets such requirements dies before the payment due him under this title is completed, to the parent or parents, if any, of the deceased individual who were, for the month in which the deceased individual died, entitled to monthly benefits on the basis of the same wages and self-employment income as was the deceased individual (and, in case there is more than one such parent, in equal parts to each such parent);
(5)
if there is no person who meets the requirements of paragraph (1), (2), (3), or (4), or if each person who meets such requirements dies before the payment due him under this title is completed, to the person, if any, determined by the Secretary to be the surviving spouse of the deceased individual;
(6)
if there is no person who meets the requirements of paragraph (1), (2), (3), (4), or (5), or if each person who meets such requirements dies before the payment due him under this title is completed, to the person or persons, if any, determined by the Secretary to be the child or children of the deceased individual (and, in case there is more than one such child, in equal parts to each such child);
(7)
if there is no person who meets the requirements of paragraph (1), (2), (3), (4), (5), or (6), or if each person who meets such requirements dies before the payment due him under this title is completed, to the parent or parents, if any, of the deceased individual (and, in case there is more than one such parent, in equal parts to each such parent); or
(8)
if there is no person who meets the requirements of paragraph (1), (2), (3), (4), (5), (6), or (7), or if each person who meets such requirements dies before the payment due him under this title is completed, to the legal representatives of the estate of the deceased individual, if any.
(f)
If an individual who received medical and other health services for which payment may be made under section 1832(a)(1) dies, and no assignment of the right to payment for such services was made by such individual before his death, and payment for such services has not been made—
(1)
if the person or persons who furnished the services agree to the terms of assignment specified in section 1842(b)(3)(B)(ii) with respect to the services, payment for such services shall be made to such person or persons, and
(2)
if the person or persons who furnished the services do not agree to the terms of assignment specified in section 1842(b)(3)(B)(ii) with respect to the services, payment for such services shall be made on the basis of an itemized bill to the person who has agreed to assume the legal obligation to make payment for such services and files a request for payment (with such accompanying evidence of such legal obligation as may be required in regulations),
but only in such amount and subject to such conditions as would be applicable if the individual who received the services had not died.
(g)
If an individual, who is enrolled under section 1818(c) of the Social Security Act or under section 1837, dies, and premiums with respect to such enrollment have been received with respect to such individual for any month after the month of his death, such premiums shall be refunded to the person or persons determined by the Secretary under regulations to have paid such premiums or if payment for such premiums was made by the deceased individual before his death, to the legal representative of the estate of such deceased individual, if any. If there is no person who meets the requirements of the preceding sentence such premiums shall be refunded to the person or persons in the priorities specified in paragraphs (2) through (7) of subsection (e).
(h)
Notwithstanding subsection (f) or any other provision of law, the Secretary shall permit a provider of services or supplier to appeal any determination of the Secretary under this title relating to services rendered under this title to an individual who subsequently dies if there is no other party available to appeal such determination.

REGULATIONS
Sec. 1871.
[42 U.S.C. 1395hh]
(a)
(1)
The Secretary shall prescribe such regulations as may be necessary to carry out the administration of the insurance programs under this title. When used in this title, the term “regulations” means, unless the context otherwise requires, regulations prescribed by the Secretary.
(2)
No rule, requirement, or other statement of policy (other than a national coverage determination) that establishes or changes a substantive legal standard governing the scope of benefits, the payment for services, or the eligibility of individuals, entities, or organizations to furnish or receive services or benefits under this title shall take effect unless it is promulgated by the Secretary by regulation under paragraph (1).
(3)
(A)
The Secretary, in consultation with the Director of the Office of Management and Budget, shall establish and publish a regular timeline for the publication of final regulations based on the previous publication of a proposed regulation or an interim final regulation.
(B)
Such timeline may vary among different regulations based on differences in the complexity of the regulation, the number and scope of comments received, and other relevant factors, but shall not be longer than 3 years except under exceptional circumstances. If the Secretary intends to vary such timeline with respect to the publication of a final regulation, the Secretary shall cause to have published in the Federal Register notice of the different timeline by not later than the timeline previously established with respect to such regulation. Such notice shall include a brief explanation of the justification for such variation.
(C)
In the case of interim final regulations, upon the expiration of the regular timeline established under this paragraph for the publication of a final regulation after opportunity for public comment, the interim final regulation shall not continue in effect unless the Secretary publishes (at the end of the regular timeline and, if applicable, at the end of each succeeding 1-year period) a notice of continuation of the regulation that includes an explanation of why the regular timeline (and any subsequent 1-year extension) was not complied with. If such a notice is published, the regular timeline (or such timeline as previously extended under this paragraph) for publication of the final regulation shall be treated as having been extended for 1 additional year.
(D)
The Secretary shall annually submit to Congress a report that describes the instances in which the Secretary failed to publish a final regulation within the applicable regular timeline under this paragraph and that provides an explanation for such failures.
(4)
If the Secretary publishes a final regulation that includes a provision that is not a logical outgrowth of a previously published notice of proposed rulemaking or interim final rule, such provision shall be treated as a proposed regulation and shall not take effect until there is the further opportunity for public comment and a publication of the provision again as a final regulation.
(b)
(1)
Except as provided in paragraph (2), before issuing in final form any regulation under subsection (a), the Secretary shall provide for notice of the proposed regulation in the Federal Register and a period of not less than 60 days for public comment thereon.
(2)
Paragraph (1) shall not apply where—
(A)
a statute specifically permits a regulation to be issued in interim final form or otherwise with a shorter period for public comment,
(B)
a statute establishes a specific deadline for the implementation of a provision and the deadline is less than 150 days after the date of the enactment of the statute in which the deadline is contained, or
(C)
subsection (b) of section 553 of title 5, United States Code, does not apply pursuant to subparagraph (B) of such subsection.
(c)
(1)
The Secretary shall publish in the Federal Register, not less frequently than every 3 months, a list of all manual instructions, interpretative rules, statements of policy, and guidelines of general applicability which—
(A)
are promulgated to carry out this title, but
(B)
are not published pursuant to subsection (a)(1) and have not been previously published in a list under this subsection.
(2)
Effective June 1, 1988, each fiscal intermediary and carrier administering claims for extended care, post-hospital extended care, home health care, and durable medical equipment benefits under this title shall make available to the public all interpretative materials, guidelines, and clarifications of policies which relate to payments for such benefits.
(3)
The Secretary shall to the extent feasible make such changes in automated data collection and retrieval by the Secretary and fiscal intermediaries with agreements under section 1816 as are necessary to make easily accessible for the Secretary and other appropriate parties a data base which fairly and accurately reflects the provision of extended care, post-hospital extended care and home health care benefits pursuant to this title, including such categories as benefit denials, results of appeals, and other relevant factors, and selectable by such categories and by fiscal intermediary, service provider, and region.
(e)
(1)
(A)86
A substantive change in regulations, manual instructions, interpretative rules, statements of policy, or guidelines of general applicability under this title shall not be applied (by extrapolation or otherwise) retroactively to items and services furnished before the effective date of the change, unless the Secretary determines that—
^{86}
So in law. There is no subsection (d) in section 1871.
(i)
such retroactive application is necessary to comply with statutory requirements; or
(ii)
failure to apply the change retroactively would be contrary to the public interest.
(B)
(i)
Except as provided in clause (ii), a substantive change referred to in subparagraph (A) shall not become effective before the end of the 30-day period that begins on the date that the Secretary has issued or published, as the case may be, the substantive change.
(ii)
The Secretary may provide for such a substantive change to take effect on a date that precedes the end of the 30-day period under clause (i) if the Secretary finds that waiver of such 30-day period is necessary to comply with statutory requirements or that the application of such 30-day period is contrary to the public interest. If the Secretary provides for an earlier effective date pursuant to this clause, the Secretary shall include in the issuance or publication of the substantive change a finding described in the first sentence, and a brief statement of the reasons for such finding.
(C)
No action shall be taken against a provider of services or supplier with respect to noncompliance with such a substantive change for items and services furnished before the effective date of such a change.
(2)
(A)
If—
(i)
a provider of services or supplier follows the written guidance (which may be transmitted electronically) provided by the Secretary or by a medicare contractor (as defined in section 1889(g)) acting within the scope of the contractor's contract authority, with respect to the furnishing of items or services and submission of a claim for benefits for such items or services with respect to such provider or supplier;
(ii)
the Secretary determines that the provider of services or supplier has accurately presented the circumstances relating to such items, services, and claim to the contractor in writing; and
(iii)
the guidance was in error;
the provider of services or supplier shall not be subject to any penalty or interest under this title or the provisions of title XI insofar as they relate to this title (including interest under a repayment plan under section 1893 or otherwise) relating to the provision of such items or service or such claim if the provider of services or supplier reasonably relied on such guidance.
(B)
Subparagraph (A) shall not be construed as preventing the recoupment or repayment (without any additional penalty) relating to an overpayment insofar as the overpayment was solely the result of a clerical or technical operational error.
(f)
(1)
Not later than 2 years after the date of the enactment of this subsection, and every 3 years thereafter, the Secretary shall submit to Congress a report with respect to the administration of this title and areas of inconsistency or conflict among the various provisions under law and regulation.
(2)
In preparing a report under paragraph (1), the Secretary shall collect—
(A)
information from individuals entitled to benefits under part A or enrolled under part B, or both, providers of services, and suppliers and from the Medicare Beneficiary Ombudsman with respect to such areas of inconsistency and conflict; and
(B)
information from medicare contractors that tracks the nature of written and telephone inquiries.
(3)
A report under paragraph (1) shall include a description of efforts by the Secretary to reduce such inconsistency or conflicts, and recommendations for legislation or administrative action that the Secretary determines appropriate to further reduce such inconsistency or conflicts.

application of certain provisions of title ii
Sec. 1872.
[42 U.S.C. 1395ii]
The provisions of sections 206 and 216(j), and of subsections (a), (d), (e), (h), (i), (j), (k), and (l) of section 205, shall also apply with respect to this title to the same extent as they are applicable with respect to title II, except that, in applying such provisions with respect to this title, 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.

designation of organization or publication by name
Sec. 1873.
[42 U.S.C. 1395jj]
Designation in this title, by name, of any nongovernmental organization or publication shall not be affected by change of name of such organization or publication, and shall apply to any successor organization or publication which the Secretary finds serves the purpose for which such designation is made.

administration
Sec. 1874.
[42 U.S.C. 1395kk]
(a)
Except as otherwise provided in this title and in the Railroad Retirement Act of 1974, the insurance programs established by this title shall be administered by the Secretary. The Secretary may perform any of his functions under this title directly, or by contract providing for payment in advance or by way of reimbursement, and in such installments, as the Secretary may deem necessary.
(b)
The Secretary may contract with any person, agency, or institution to secure on a reimbursable basis such special data, actuarial information, and other information as may be necessary in the carrying out of his functions under this title.
(c)
In the course of any hearing, investigation, or other proceeding that he is authorized to conduct under this title, the Secretary may administer oaths and affirmations.
(d)

Inclusion of Medicare Provider and Supplier Payments in Federal Payment Levy Program.—
(1)

In general.—
The Centers for Medicare & Medicaid Services shall take all necessary steps to participate in the Federal Payment Levy Program under section 6331(h) of the Internal Revenue Code of 1986 as soon as possible and shall ensure that—
(A)
at least 50 percent of all payments under parts A and B are processed through such program beginning within 1 year after the date of the enactment of this section;
(B)
at least 75 percent of all payments under parts A and B are processed through such program beginning within 2 years after such date; and
(C)
all payments under parts A and B are processed through such program beginning not later than September 30, 2011.
(2)

Assistance.—
The Financial Management Service and the Internal Revenue Service shall provide assistance to the Centers for Medicare & Medicaid Services to ensure that all payments described in paragraph (1) are included in the Federal Payment Levy Program by the deadlines specified in that subsection.
(e)

Availability of Data.—
(1)

In general.—
Subject to paragraph (4), the Secretary shall make available to qualified entities (as defined in paragraph (2)) data described in paragraph (3) for the evaluation of the performance of providers of services and suppliers.
(2)

Qualified entities.—
For purposes of this subsection, the term “qualified entity” means a public or private entity that—
(A)
is qualified (as determined by the Secretary) to use claims data to evaluate the performance of providers of services and suppliers on measures of quality, efficiency, effectiveness, and resource use; and
(B)
agrees to meet the requirements described in paragraph (4) and meets such other requirements as the Secretary may specify, such as ensuring security of data.
(3)

Data described.—
The data described in this paragraph are standardized extracts (as determined by the Secretary) of claims data under parts A, B, and D for items and services furnished under such parts for one or more specified geographic areas and time periods requested by a qualified entity. Beginning July 1, 2016, if the Secretary determines appropriate, the data described in this paragraph may also include standardized extracts (as determined by the Secretary) of claims data under titles XIX and XXI for assistance provided under such titles for one or more specified geographic areas and time periods requested by a qualified entity. The Secretary shall take such actions as the Secretary deems necessary to protect the identity of individuals entitled to or enrolled for benefits under such parts or under titles XIX or XXI.
(4)

Requirements.—
(A)

Fee.—
Data described in paragraph (3) shall be made available to a qualified entity under this subsection at a fee equal to the cost of making such data available. Any fee collected pursuant to the preceding sentence shall be deposited, for periods prior to July 1, 2016, into the Federal Supplementary Medical Insurance Trust Fund under section 1841, and, beginning July 1, 2016, into the Centers for Medicare & Medicaid Services Program Management Account.
(B)

Specification of uses and methodologies.—
A qualified entity requesting data under this subsection shall—
(i)
submit to the Secretary a description of the methodologies that such qualified entity will use to evaluate the performance of providers of services and suppliers using such data;
(ii)
(I)
except as provided in subclause (II), if available, use standard measures, such as measures endorsed by the entity with a contract under section 1890(a) and measures developed pursuant to section 931 of the Public Health Service Act; or
(II)
use alternative measures if the Secretary, in consultation with appropriate stakeholders, determines that use of such alternative measures would be more valid, reliable, responsive to consumer preferences, cost-effective, or relevant to dimensions of quality and resource use not addressed by such standard measures;
(iii)
include data made available under this subsection with claims data from sources other than claims data under this title in the evaluation of performance of providers of services and suppliers;
(iv)
only include information on the evaluation of performance of providers and suppliers in reports described in subparagraph (C);
(v)
make available to providers of services and suppliers, upon their request, data made available under this subsection; and
(vi)
prior to their release, submit to the Secretary the format of reports under subparagraph (C).
(C)

Reports.—
Any report by a qualified entity evaluating the performance of providers of services and suppliers using data made available under this subsection shall—
(i)
include an understandable description of the measures, which shall include quality measures and the rationale for use of other measures described in subparagraph (B)(ii)(II), risk adjustment methods, physician attribution methods, other applicable methods, data specifications and limitations, and the sponsors, so that consumers, providers of services and suppliers, health plans, researchers, and other stakeholders can assess such reports;
(ii)
be made available confidentially, to any provider of services or supplier to be identified in such report, prior to the public release of such report, and provide an opportunity to appeal and correct errors;
(iii)
only include information on a provider of services or supplier in an aggregate form as determined appropriate by the Secretary; and
(iv)
except as described in clause (ii), be made available to the public.
(D)

Approval and limitation of uses.—
The Secretary shall not make data described in paragraph (3) available to a qualified entity unless the qualified entity agrees to release the information on the evaluation of performance of providers of services and suppliers. Such entity shall only use such data, and information derived from such evaluation, for the reports under subparagraph (C). Data released to a qualified entity under this subsection shall not be subject to discovery or admission as evidence in judicial or administrative proceedings without consent of the applicable provider of services or supplier.
(f)

Requirement for the Secretary To Establish Policies and Claims Edits Relating to Incarcerated Individuals, Individuals Not Lawfully Present, and Deceased Individuals.—
The Secretary shall establish and maintain procedures, including procedures for using claims processing edits, updating eligibility information to improve provider accessibility, and conducting recoupment activities such as through recovery audit contractors, in order to ensure that payment is not made under this title for items and services furnished to an individual who is one of the following:
(1)
An individual who is incarcerated.
(2)
An individual who is not lawfully present in the United States and who is not eligible for coverage under this title.
(3)
A deceased individual.
(g)

Requirement for Enrollment Data Reporting.—
(1)

In general.—
Each year (beginning with 2016), the Secretary shall submit to the Committees on Ways and Means and Energy and Commerce of the House of Representatives and the Committee on Finance of the Senate a report on Medicare enrollment data (and, in the case of part A, on data on individuals receiving benefits under such part) as of a date in such year specified by the Secretary. Such data shall be presented—
(A)
by Congressional district and State; and
(B)
in a manner that provides for such data based on—
(i)
fee-for-service enrollment (as defined in paragraph (2));
(ii)
enrollment under part C (including separate for aggregate enrollment in MA–PD plans and aggregate enrollment in MA plans that are not MA–PD plans); and
(iii)
enrollment under part D.
(2)

Fee-for-service enrollment defined.—
For purpose of paragraph (1)(B)(i), the term “fee-for-service enrollment” means aggregate enrollment (including receipt of benefits other than through enrollment) under—
(A)
part A only;
(B)
part B only; and
(C)
both part A and part B.

contracts with medicare administrative contractors
Sec. 1874A.
[42 U.S.C. 1395kk–1]
(a)

Authority.—
(1)

Authority to enter into contracts.—
The Secretary may enter into contracts with any eligible entity to serve as a medicare administrative contractor with respect to the performance of any or all of the functions described in paragraph (4) or parts of those functions (or, to the extent provided in a contract, to secure performance thereof by other entities).
(2)

Eligibility of entities.—
An entity is eligible to enter into a contract with respect to the performance of a particular function described in paragraph (4) only if—
(A)
the entity has demonstrated capability to carry out such function;
(B)
the entity complies with such conflict of interest standards as are generally applicable to Federal acquisition and procurement;
(C)
the entity has sufficient assets to financially support the performance of such function; and
(D)
the entity meets such other requirements as the Secretary may impose.
(3)

Medicare administrative contractor defined.—
For purposes of this title and title XI—
(A)

In general.—
The term “medicare administrative contractor” means an agency, organization, or other person with a contract under this section.
(B)

Appropriate medicare administrative contractor.—
With respect to the performance of a particular function in relation to an individual entitled to benefits under part A or enrolled under part B, or both, a specific provider of services or supplier (or class of such providers of services or suppliers), the “appropriate” medicare administrative contractor is the medicare administrative contractor that has a contract under this section with respect to the performance of that function in relation to that individual, provider of services or supplier or class of provider of services or supplier.
(4)

Functions described.—
The functions referred to in paragraphs (1) and (2) are payment functions (including the function of developing local coverage determinations, as defined in section 1869(f)(2)(B)), provider services functions, and functions relating to services furnished to individuals entitled to benefits under part A or enrolled under part B, or both, as follows:
(A)

Determination of payment amounts.—
Determining (subject to the provisions of section 1878 and to such review by the Secretary as may be provided for by the contracts) the amount of the payments required pursuant to this title to be made to providers of services, suppliers and individuals.
(B)

Making payments.—
Making payments described in subparagraph (A) (including receipt, disbursement, and accounting for funds in making such payments).
(C)

Beneficiary education and assistance.—
Providing education and outreach to individuals entitled to benefits under part A or enrolled under part B, or both, and providing assistance to those individuals with specific issues, concerns, or problems.
(D)

Provider consultative services.—
Providing consultative services to institutions, agencies, and other persons to enable them to establish and maintain fiscal records necessary for purposes of this title and otherwise to qualify as providers of services or suppliers.
(E)

Communication with providers.—
Communicating to providers of services and suppliers any information or instructions furnished to the medicare administrative contractor by the Secretary, and facilitating communication between such providers and suppliers and the Secretary.
(F)

Provider education and technical assistance.—
Performing the functions relating to provider education, training, and technical assistance.
(G)

Improper payment outreach and education program.—
Having in place an improper payment outreach and education program described in subsection (h).
(H)

Additional functions.—
Performing such other functions, including (subject to paragraph (5)) functions under the Medicare Integrity Program under section 1893, as are necessary to carry out the purposes of this title.
(5)

Relationship to mip contracts.—
(A)

Nonduplication of duties.—
In entering into contracts under this section, the Secretary shall assure that functions of medicare administrative contractors in carrying out activities under parts A and B do not duplicate activities carried out under a contract entered into under the Medicare Integrity Program under section 1893. The previous sentence shall not apply with respect to the activity described in section 1893(b)(5) (relating to prior authorization of certain items of durable medical equipment under section 1834(a)(15)).
(B)

Construction.—
An entity shall not be treated as a medicare administrative contractor merely by reason of having entered into a contract with the Secretary under section 1893.
(6)

Application of federal acquisition regulation.—
Except to the extent inconsistent with a specific requirement of this section, the Federal Acquisition Regulation applies to contracts under this section.
(b)

Contracting Requirements.—
(1)

Use of competitive procedures.—
(A)

In general.—
Except as provided in laws with general applicability to Federal acquisition and procurement or in subparagraph (B), the Secretary shall use competitive procedures when entering into contracts with medicare administrative contractors under this section, taking into account performance quality as well as price and other factors.
(B)

Renewal of contracts.—
The Secretary may renew a contract with a medicare administrative contractor under this section from term to term without regard to section 5 of title 41, United States Code, or any other provision of law requiring competition, if the medicare administrative contractor has met or exceeded the performance requirements applicable with respect to the contract and contractor, except that the Secretary shall provide for the application of competitive procedures under such a contract not less frequently than once every 10 years.
(C)

Transfer of functions.—
The Secretary may transfer functions among medicare administrative contractors consistent with the provisions of this paragraph. The Secretary shall ensure that performance quality is considered in such transfers. The Secretary shall provide public notice (whether in the Federal Register or otherwise) of any such transfer (including a description of the functions so transferred, a description of the providers of services and suppliers affected by such transfer, and contact information for the contractors involved).
(D)

Incentives for quality.—
(i)

In general.—
Subject to clauses (ii) and (iii), the Secretary shall provide incentives for medicare administrative contractors to provide quality service and to promote efficiency.
(ii)

Improper payment rate reduction incentives.—
The Secretary shall provide incentives for medicare administrative contractors to reduce the improper payment error rates in their jurisdictions.
(iii)

Incentives.—
The incentives provided for under clause (ii)—
(I)
may include a sliding scale of award fee payments and additional incentives to medicare administrative contractors that either reduce the improper payment rates in their jurisdictions to certain thresholds, as determined by the Secretary, or accomplish tasks, as determined by the Secretary, that further improve payment accuracy; and
(II)
may include substantial reductions in award fee payments under cost-plus-award-fee contracts, for medicare administrative contractors that reach an upper end improper payment rate threshold or other threshold as determined by the Secretary, or fail to accomplish tasks, as determined by the Secretary, that further improve payment accuracy.
(2)

Compliance with requirements.—
No contract under this section shall be entered into with any medicare administrative contractor unless the Secretary finds that such medicare administrative contractor will perform its obligations under the contract efficiently and effectively and will meet such requirements as to financial responsibility, legal authority, quality of services provided, and other matters as the Secretary finds pertinent.
(3)

Performance requirements.—
(A)

Development of specific performance requirements.—
(i)

In general.—
The Secretary shall develop contract performance requirements to carry out the specific requirements applicable under this title to a function described in subsection (a)(4) and shall develop standards for measuring the extent to which a contractor has met such requirements. Such requirements shall include specific performance duties expected of a medical director of a medicare administrative contractor, including requirements relating to professional relations and the availability of such director to conduct medical determination activities within the jurisdiction of such a contractor.
(ii)

Consultation.—
In developing such performance requirements and standards for measurement, the Secretary shall consult with providers of services, organizations representative of beneficiaries under this title, and organizations and agencies performing functions necessary to carry out the purposes of this section with respect to such performance requirements.
(iii)

Publication of standards.—
The Secretary shall make such performance requirements and measurement standards available to the public.
(iv)

Contractor performance transparency.—
To the extent possible without compromising the process for entering into and renewing contracts with medicare administrative contractors under this section, the Secretary shall make available to the public the performance of each medicare administrative contractor with respect to such performance requirements and measurement standards.
(B)

Considerations.—
The Secretary shall include, as one of the standards developed under subparagraph (A), provider and beneficiary satisfaction levels.
(C)

Inclusion in contracts.—
All contractor performance requirements shall be set forth in the contract between the Secretary and the appropriate medicare administrative contractor. Such performance requirements—
(i)
shall reflect the performance requirements published under subparagraph (A), but may include additional performance requirements;
(ii)
shall be used for evaluating contractor performance under the contract; and
(iii)
shall be consistent with the written statement of work provided under the contract.
(4)

Information requirements.—
The Secretary shall not enter into a contract with a medicare administrative contractor under this section unless the contractor agrees—
(A)
to furnish to the Secretary such timely information and reports as the Secretary may find necessary in performing his functions under this title; and
(B)
to maintain such records and afford such access thereto as the Secretary finds necessary to assure the correctness and verification of the information and reports under subparagraph (A) and otherwise to carry out the purposes of this title.
(5)

Surety bond.—
A contract with a medicare administrative contractor under this section may require the medicare administrative contractor, and any of its officers or employees certifying payments or disbursing funds pursuant to the contract, or otherwise participating in carrying out the contract, to give surety bond to the United States in such amount as the Secretary may deem appropriate.
(c)

Terms and Conditions.—
(1)

In general.—
A contract with any medicare administrative contractor under this section may contain such terms and conditions as the Secretary finds necessary or appropriate and may provide for advances of funds to the medicare administrative contractor for the making of payments by it under subsection (a)(4)(B).
(2)

Prohibition on mandates for certain data collection.—
The Secretary may not require, as a condition of entering into, or renewing, a contract under this section, that the medicare administrative contractor match data obtained other than in its activities under this title with data used in the administration of this title for purposes of identifying situations in which the provisions of section 1862(b) may apply.
(d)

Limitation on Liability of Medicare Administrative Contractors and Certain Officers.—
(1)

Certifying officer.—
No individual designated pursuant to a contract under this section as a certifying officer shall, in the absence of the reckless disregard of the individual's obligations or the intent by that individual to defraud the United States, be liable with respect to any payments certified by the individual under this section.
(2)

Disbursing officer.—
No disbursing officer shall, in the absence of the reckless disregard of the officer's obligations or the intent by that officer to defraud the United States, be liable with respect to any payment by such officer under this section if it was based upon an authorization (which meets the applicable requirements for such internal controls established by the Comptroller General of the United States) of a certifying officer designated as provided in paragraph (1) of this subsection.
(3)

Liability of medicare administrative contractor.—
(A)

In general.—
No medicare administrative contractor shall be liable to the United States for a payment by a certifying or disbursing officer unless, in connection with such payment, the medicare administrative contractor acted with reckless disregard of its obligations under its medicare administrative contract or with intent to defraud the United States.
(B)

Relationship to false claims act.—
Nothing in this subsection shall be construed to limit liability for conduct that would constitute a violation of sections 3729 through 3731 of title 31, United States Code.
(4)

Indemnification by secretary.—
(A)

In general.—
Subject to subparagraphs (B) and (D), in the case of a medicare administrative contractor (or a person who is a director, officer, or employee of such a contractor or who is engaged by the contractor to participate directly in the claims administration process) who is made a party to any judicial or administrative proceeding arising from or relating directly to the claims administration process under this title, the Secretary may, to the extent the Secretary determines to be appropriate and as specified in the contract with the contractor, indemnify the contractor and such persons.
(B)

Conditions.—
The Secretary may not provide indemnification under subparagraph (A) insofar as the liability for such costs arises directly from conduct that is determined by the judicial proceeding or by the Secretary to be criminal in nature, fraudulent, or grossly negligent. If indemnification is provided by the Secretary with respect to a contractor before a determination that such costs arose directly from such conduct, the contractor shall reimburse the Secretary for costs of indemnification.
(C)

Scope of indemnification.—
Indemnification by the Secretary under subparagraph (A) may include payment of judgments, settlements (subject to subparagraph (D)), awards, and costs (including reasonable legal expenses).
(D)

Written approval for settlements or compromises.—
A contractor or other person described in subparagraph (A) may not propose to negotiate a settlement or compromise of a proceeding described in such subparagraph without the prior written approval of the Secretary to negotiate such settlement or compromise. Any indemnification under subparagraph (A) with respect to amounts paid under a settlement or compromise of a proceeding described in such subparagraph are conditioned upon prior written approval by the Secretary of the final settlement or compromise.
(E)

Construction.—
Nothing in this paragraph shall be construed—
(i)
to change any common law immunity that may be available to a medicare administrative contractor or person described in subparagraph (A); or
(ii)
to permit the payment of costs not otherwise allowable, reasonable, or allocable under the Federal Acquisition Regulation.
(e)

Requirements for Information Security.—
(1)

Development of information security program.—
A medicare administrative contractor that performs the functions referred to in subparagraphs (A) and (B) of subsection (a)(4) (relating to determining and making payments) shall implement a contractor-wide information security program to provide information security for the operation and assets of the contractor with respect to such functions under this title. An information security program under this paragraph shall meet the requirements for information security programs imposed on Federal agencies under paragraphs (1) through (8) of section 3544(b) of title 44, United States Code (other than the requirements under paragraphs (2)(D)(i), (5)(A), and (5)(B) of such section).
(2)

Independent audits.—
(A)

Performance of annual evaluations.—
Each year a medicare administrative contractor that performs the functions referred to in subparagraphs (A) and (B) of subsection (a)(4) (relating to determining and making payments) shall undergo an evaluation of the information security of the contractor with respect to such functions under this title. The evaluation shall—
(i)
be performed by an entity that meets such requirements for independence as the Inspector General of the Department of Health and Human Services may establish; and
(ii)
test the effectiveness of information security control techniques of an appropriate subset of the contractor's information systems (as defined in section 3502(8) of title 44, United States Code) relating to such functions under this title and an assessment of compliance with the requirements of this subsection and related information security policies, procedures, standards and guidelines, including policies and procedures as may be prescribed by the Director of the Office of Management and Budget and applicable information security standards promulgated under section 11331 of title 40, United States Code.
(B)

Deadline for initial evaluation.—
(i)

New contractors.—
In the case of a medicare administrative contractor covered by this subsection that has not previously performed the functions referred to in subparagraphs (A) and (B) of subsection (a)(4) (relating to determining and making payments) as a fiscal intermediary or carrier under section 1816 or 1842, the first independent evaluation conducted pursuant to subparagraph (A) shall be completed prior to commencing such functions.
(ii)

Other contractors.—
In the case of a medicare administrative contractor covered by this subsection that is not described in clause (i), the first independent evaluation conducted pursuant to subparagraph (A) shall be completed within 1 year after the date the contractor commences functions referred to in clause (i) under this section.
(C)

Reports on evaluations.—
(i)

To the department of health and human services.—
The results of independent evaluations under subparagraph (A) shall be submitted promptly to the Inspector General of the Department of Health and Human Services and to the Secretary.
(ii)

To congress.—
The Inspector General of the Department of Health and Human Services shall submit to Congress annual reports on the results of such evaluations, including assessments of the scope and sufficiency of such evaluations.
(iii)

Agency reporting.—
The Secretary shall address the results of such evaluations in reports required under section 3544(c) of title 44, United States Code.
(f)

Incentives To Improve Contractor Performance in Provider Education and Outreach.—
The Secretary shall use specific claims payment error rates or similar methodology of medicare administrative contractors in the processing or reviewing of medicare claims in order to give such contractors an incentive to implement effective education and outreach programs for providers of services and suppliers.
(g)

Communications With Beneficiaries, Providers of Services and Suppliers.—
(1)

Communication strategy.—
The Secretary shall develop a strategy for communications with individuals entitled to benefits under part A or enrolled under part B, or both, and with providers of services and suppliers under this title.
(2)

Response to written inquiries.—
Each medicare administrative contractor shall, for those providers of services and suppliers which submit claims to the contractor for claims processing and for those individuals entitled to benefits under part A or enrolled under part B, or both, with respect to whom claims are submitted for claims processing, provide general written responses (which may be through electronic transmission) in a clear, concise, and accurate manner to inquiries of providers of services, suppliers, and individuals entitled to benefits under part A or enrolled under part B, or both, concerning the programs under this title within 45 business days of the date of receipt of such inquiries.
(3)

Response to toll-free lines.—
The Secretary shall ensure that each medicare administrative contractor shall provide, for those providers of services and suppliers which submit claims to the contractor for claims processing and for those individuals entitled to benefits under part A or enrolled under part B, or both, with respect to whom claims are submitted for claims processing, a toll-free telephone number at which such individuals, providers of services, and suppliers may obtain information regarding billing, coding, claims, coverage, and other appropriate information under this title.
(4)

Monitoring of contractor responses.—
(A)

In general.—
Each medicare administrative contractor shall, consistent with standards developed by the Secretary under subparagraph (B)—
(i)
maintain a system for identifying who provides the information referred to in paragraphs (2) and (3); and
(ii)
monitor the accuracy, consistency, and timeliness of the information so provided.
(B)

Development of standards.—
(i)

In general.—
The Secretary shall establish and make public standards to monitor the accuracy, consistency, and timeliness of the information provided in response to written and telephone inquiries under this subsection. Such standards shall be consistent with the performance requirements established under subsection (b)(3).
(ii)

Evaluation.—
In conducting evaluations of individual medicare administrative contractors, the Secretary shall take into account the results of the monitoring conducted under subparagraph (A) taking into account as performance requirements the standards established under clause (i). The Secretary shall, in consultation with organizations representing providers of services, suppliers, and individuals entitled to benefits under part A or enrolled under part B, or both, establish standards relating to the accuracy, consistency, and timeliness of the information so provided.
(C)

Direct monitoring.—
Nothing in this paragraph shall be construed as preventing the Secretary from directly monitoring the accuracy, consistency, and timeliness of the information so provided.
(5)

Authorization of appropriations.—
There are authorized to be appropriated such sums as are necessary to carry out this subsection.
(h)

Improper Payment Outreach and Education Program.—
(1)

In general.—
In order to reduce improper payments under this title, each medicare administrative contractor shall establish and have in place an improper payment outreach and education program under which the contractor, through outreach, education, training, and technical assistance or other activities, shall provide providers of services and suppliers located in the region covered by the contract under this section with the information described in paragraph (2). The activities described in the preceding sentence shall be conducted on a regular basis.
(2)

Information to be provided through activities.—
The information to be provided under such payment outreach and education program shall include information the Secretary determines to be appropriate, which may include the following information:
(A)
A list of the providers’ or suppliers’ most frequent and expensive payment errors over the last quarter.
(B)
Specific instructions regarding how to correct or avoid such errors in the future.
(C)
A notice of new topics that have been approved by the Secretary for audits conducted by recovery audit contractors under section 1893(h).
(D)
Specific instructions to prevent future issues related to such new audits.
(E)
Other information determined appropriate by the Secretary.
(3)

Priority.—
A medicare administrative contractor shall give priority to activities under such program that will reduce improper payments that are one or more of the following:
(A)
Are for items and services that have the highest rate of improper payment.
(B)
Are for items and service that have the greatest total dollar amount of improper payments.
(C)
Are due to clear misapplication or misinterpretation of Medicare policies.
(D)
Are clearly due to common and inadvertent clerical or administrative errors.
(E)
Are due to other types of errors that the Secretary determines could be prevented through activities under the program.
(4)

Information on improper payments from recovery audit contractors.—
(A)

In general.—
In order to assist medicare administrative contractors in carrying out improper payment outreach and education programs, the Secretary shall provide each contractor with a complete list of the types of improper payments identified by recovery audit contractors under section 1893(h) with respect to providers of services and suppliers located in the region covered by the contract under this section. Such information shall be provided on a time frame the Secretary determines appropriate which may be on a quarterly basis.
(B)

Information.—
The information described in subparagraph (A) shall include information such as the following:
(i)
Providers of services and suppliers that have the highest rate of improper payments.
(ii)
Providers of services and suppliers that have the greatest total dollar amounts of improper payments.
(iii)
Items and services furnished in the region that have the highest rates of improper payments.
(iv)
Items and services furnished in the region that are responsible for the greatest total dollar amount of improper payments.
(v)
Other information the Secretary determines would assist the contractor in carrying out the program.
(5)

Communications.—
Communications with providers of services and suppliers under an improper payment outreach and education program are subject to the standards and requirements of subsection (g).

STUDIES AND RECOMMENDATIONS
Sec. 1875.
[42 U.S.C. 1395ll]
(a)
The Secretary shall carry on studies and develop recommendations to be submitted from time to time to the Congress relating to health care of the aged and the disabled, including studies and recommendations concerning (1) the adequacy of existing personnel and facilities for health care for purposes of the programs under parts A and B; (2) methods for encouraging the further development of efficient and economical forms of health care which are a constructive alternative to inpatient hospital care; and (3) the effects of the deductibles and coinsurance provisions upon beneficiaries, persons who provide health services, and the financing of the program.
(b)
The Secretary shall make a continuing study of the operation and administration of this title (including a validation of the accreditation process of national accreditation bodies under section 1865(a) the operation and administration of health maintenance organizations authorized by section 226 of the Social Security Amendments of 1972, the experiments and demonstration projects authorized by section 402 of the Social Security Amendments of 1967 and the experiments and demonstration projects authorized by section 222(a) of the Social Security Amendments of 1972), and shall transmit to the Congress annually a report concerning the operation of such programs.
[(c)
Repealed.]

payments to health maintenance organizations and competitive medical plans
Sec. 1876.
[42 U.S.C. 1395mm]
(a)
(1)
(A)
The Secretary shall annually determine, and shall announce (in a manner intended to provide notice to interested parties) not later than September 7 before the calendar year concerned—
(i)
a per capita rate of payment for each class of individuals who are enrolled under this section with an eligible organization which has entered into a risk-sharing contract and who are entitled to benefits under part A and enrolled under part B, and
(ii)
a per capita rate of payment for each class of individuals who are so enrolled with such an organization and who are enrolled under part B only.
For purposes of this section, the term “risk-sharing contract” means a contract entered into under subsection (g) and the term “reasonable cost reimbursement contract” means a contract entered into under subsection (h).
(B)
The Secretary shall define appropriate classes of members, based on age, disability 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 classes, if such changes will improve the determination of actuarial equivalence.
(C)
The annual per capita rate of payment for each such class shall be equal to 95 percent of the adjusted average per capita cost (as defined in paragraph (4)) for that class.
(D)
In the case of an eligible organization with a risk-sharing contract, the Secretary shall make monthly payments in advance and in accordance with the rate determined under subparagraph (C) and except as provided in subsection (g)(2), to the organization for each individual enrolled with the organization under this section.
(E)
(i)
The amount of payment under this paragraph may be retroactively adjusted to take into account any difference between the actual number of individuals enrolled in the plan under this section and the number of such individuals estimated to be so enrolled in determining the amount of the advance payment.
(ii)
(I)
Subject to subclause (II), the Secretary may make retroactive adjustments under clause (i) to take into account individuals enrolled during the period beginning on the date on which the individual enrolls with an eligible organization (which has a risk-sharing contract under this section) under a health benefit 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 plan under this section, except that for purposes of making such retroactive adjustments under this clause, such period may not exceed 90 days.
(II)
No adjustment may be made under subclause (I) with respect to any individual who does not certify that the organization provided the individual with the explanation described in subsection (c)(3)(E) at the time the individual enrolled with the organization.
(F)
(i)
At least 45 days before making the announcement under subparagraph (A) for a year (beginning with the announcement for 1991), the Secretary shall provide for notice to eligible organizations of proposed changes to be made in the methodology or benefit coverage assumptions from the methodology and assumptions used in the previous announcement and shall provide such organizations an opportunity to comment on such proposed changes.
(ii)
In each announcement made under subparagraph (A) for a year (beginning with the announcement for 1991), the Secretary shall include an explanation of the assumptions (including any benefit coverage assumptions) and changes in methodology used in the announcement in sufficient detail so that eligible organizations can compute per capita rates of payment for classes of individuals located in each county (or equivalent area) which is in whole or in part within the service area of such an organization.
(2)
With respect to any eligible organization which has entered into a reasonable cost reimbursement contract, payments shall be made to such plan in accordance with subsection (h)(2) rather than paragraph (1).
(3)
Subject to subsections (c)(2)(B)(ii) and (c)(7), payments under a contract to an eligible organization under paragraph (1) or (2) shall be instead of the amounts which (in the absence of the contract) would be otherwise payable, pursuant to sections 1814(b) and 1833(a), for services furnished by or through the organization to individuals enrolled with the organization under this section.
(4)
For purposes of this section, the term “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.
(5)
The payment to an eligible organization under this section for individuals enrolled under this section with the organization and entitled to benefits under part A and enrolled under part B shall be made from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund. The portion of that payment to the organization for a month to be paid by each trust fund shall be determined as follows:
(A)
In regard to expenditures by eligible organizations having risk-sharing contracts, the allocation shall be determined each year by the Secretary based on the relative weight that benefits from each fund contribute to the adjusted average per capita cost.
(B)
In regard to expenditures by eligible organizations operating under a reasonable cost reimbursement contract, the initial allocation shall be based on the plan's most recent budget, such allocation to be adjusted, as needed, after cost settlement to reflect the distribution of actual expenditures.
The remainder of that payment shall be paid by the former trust fund.
(6)
Subject to subsections (c)(2)(B)(ii) and (c)(7), if an individual is enrolled under this section with an eligible organization having a risk-sharing contract, only the eligible organization shall be entitled to receive payments from the Secretary under this title for services furnished to the individual.
(b)
For purposes of this section, the term “eligible organization” means a public or private entity (which may be a health maintenance organization or a competitive medical plan), organized under the laws of any State, which—
(1)
is a qualified health maintenance organization (as defined in section 1310(d) of the Public Health Service Act), or
(2)
meets the following requirements:
(A)
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)
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.
(C)
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).
(D)
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 service 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)
The entity has made adequate provision against the risk of insolvency, which provision is satisfactory to the Secretary.
Paragraph (2)(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.
(c)
(1)
The Secretary may not enter into a contract under this section with an eligible organization unless it meets the requirements of this subsection and subsection (e) with respect to members enrolled under this section.
(2)
(A)
The organization must provide to members enrolled under this section, through providers and other persons that meet the applicable requirements of this title and part A of title XI—
(i)
only those 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
(ii)
only those 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, except that (I) the organization may provide such members with such additional health care services as the members may elect, at their option, to have covered, and (II) in the case of an organization with a risk-sharing contract, the organization may provide such members with such additional health care services as the Secretary may approve. The Secretary shall approve any such additional health care services which the organization proposes to offer to such members, unless the Secretary determines that including such additional services will substantially discourage enrollment by covered individuals with the organization.
(B)
If there is a national coverage determination made in the period beginning on the date of an announcement under subsection (a)(1)(A) and ending on the date of the next announcement under such subsection that the Secretary projects will result in a significant change in the costs to the organization of providing the benefits that are the subject of such national coverage determination and that was not incorporated in the determination of the per capita rate of payment included in the announcement made at the beginning of such period—
(i)
such determination shall not apply to risk-sharing contracts under this section until the first contract year that begins after the end of such period; and
(ii)
if such coverage determination provides for coverage of additional benefits or under additional circumstances, subsection (a)(3) shall not apply to payment for such additional benefits or benefits provided under such additional circumstances until the first contract year that begins after the end of such period,
unless otherwise required by law.
(3)
(A)
(i)
Each eligible organization must have an open enrollment period, for the enrollment of individuals under this section, of at least 30 days duration every year and including the period or periods specified under clause (ii), and must provide that at any time during which enrollments are accepted, the organization will accept up to the limits of its capacity (as determined by the Secretary) and without restrictions, except as may be authorized in regulations, individuals who are eligible to enroll under subsection (d) in the order in which they apply for enrollment, unless to do so would result in failure to meet the requirements of subsection (f) or would result in the enrollment of enrollees substantially nonrepresentative, as determined in accordance with regulations of the Secretary, of the population in the geographic area served by the organization.
(ii)
(I)
If a risk-sharing contract under this section is not renewed or is otherwise terminated, eligible organizations with risk-sharing contracts under this section and serving a part of the same service area as under the terminated contract are required to have an open enrollment period for individuals who were enrolled under the terminated contract as of the date of notice of such termination. If a risk-sharing contract under this section is renewed in a manner that discontinues coverage for individuals residing in part of the service area, eligible organizations with risk-sharing contracts under this section and enrolling individuals residing in that part of the service area are required to have an open enrollment period for individuals residing in the part of the service area who were enrolled under the contract as of the date of notice of such discontinued coverage.
(II)
The open enrollment periods required under subclause (I) shall be for 30 days and shall begin 30 days after the date that the Secretary provides notice of such requirement.
(III)
Enrollment under this clause shall be effective 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.
(B)
An individual may enroll under this section with an eligible organization in such manner as may be prescribed in regulations and may terminate his enrollment with the eligible organization as of the beginning of the first calendar month following the date on which the request is made for such termination (or, in the case of financial insolvency of the organization, as may be prescribed by regulations) or, in the case of such an organization with a reasonable cost reimbursement contract, as may be prescribed by regulations. In the case of an individual's termination of enrollment, the organization shall provide the individual with a copy of the written request for termination of enrollment and a written explanation of the period (ending on the effective date of the termination) during which the individual continues to be enrolled with the organization and may not receive benefits under this title other than through the organization.
(C)
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 inform individuals eligible to enroll under this section with the organization about the organization, or may enroll such individuals with the organization. No brochures, application forms, or other promotional or informational material may be distributed by an organization to (or for the use of) individuals eligible to enroll with the organization under this section unless (i) at least 45 days before its distribution, the organization has submitted the material to the Secretary for review and (ii) 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.
(D)
The organization must provide assurances to the Secretary that it will not expel or refuse to re-enroll any such individual because of the individual's health status or requirements for health care services, and that it will notify each such individual of such fact at the time of the individual's enrollment.
(E)
Each eligible organization shall provide each enrollee, at the time of enrollment and not less frequently than annually thereafter, an explanation of the enrollee's rights under this section, including an explanation of—
(i)
the enrollee's rights to benefits from the organization,
(ii)
the restrictions on payments under this title for services furnished other than by or through the organization,
(iii)
out-of-area coverage provided by the organization,
(iv)
the organization's coverage of emergency services and urgently needed care, and
(v)
appeal rights of enrollees.
(F)
Each eligible organization that provides items and services pursuant to a contract under this section shall provide assurances to the Secretary that in the event the organization ceases to provide such items and services, the organization shall provide or arrange for supplemental coverage of benefits under this title related to a pre-existing condition with respect to any exclusion period, to all individuals enrolled with the entity who receive benefits under this title, for the lesser of six months or the duration of such period.
(G)
(i)
Each eligible organization having a risk-sharing contract under this section shall notify individuals eligible to enroll with the organization under this section and individuals enrolled with the organization under this section that—
(I)
the organization is authorized by law to terminate or refuse to renew the contract, and
(II)
termination or nonrenewal of the contract may result in termination of the enrollments of individuals enrolled with the organization under this section.
(ii)
The notice required by clause (i) shall be included in—
(I)
any marketing materials described in subparagraph (C) that are distributed by an eligible organization to individuals eligible to enroll under this section with the organization, and
(II)
any explanation provided to enrollees by the organization pursuant to subparagraph (E).
(4)
The organization must—
(A)
make the services described in paragraph (2) (and such other health care services as such individuals have contracted for) (i) available and accessible to each such individual, within the area served by the organization, with reasonable promptness and in a manner which assures continuity, and (ii) when medically necessary, available and accessible twenty-four hours a day and seven days a week, and
(B)
provide for reimbursement with respect to services which are described in subparagraph (A) and which are provided to such an individual other than through the organization, if (i) the services were medically necessary and immediately required because of an unforeseen illness, injury, or condition and (ii) it was not reasonable given the circumstances to obtain the services through the organization.
(5)
(A)
The organization 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 section.
(B)
A member enrolled with an eligible organization under this section who is dissatisfied by reason of his failure to receive any health service to which he believes he is entitled and at no greater charge than he believes he is required to pay 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. The provisions of section 1869(b)(1)(E)(iii) shall apply with respect to dollar amounts specified in the first 2 sentences of this paragraph in the same manner as they apply to the dollar amounts specified in section 1869(b)(1)(E)(i).87
^{87}
The amendment to insert a new sentence at the end of section 1876(b)(5)(B) made by section 940(b)(2)(B) of P.L. 108–173 (117 Stat. 2417) was executed to subsection (c)(5)(B) in order to reflect the probable intent of the Congress.
(6)
The organization must have arrangements, established in accordance with regulations of the Secretary, for an ongoing quality assurance program for health care services it provides to such individuals, which program (A) stresses health outcomes and (B) provides review by physicians and other health care professionals of the process followed in the provision of such health care services.
(7)
A risk-sharing contract under this section shall provide that in the case of an individual who is receiving inpatient hospital services from a subsection (d) hospital (as defined in section 1886(d)(1)(B)) as of the effective date of the individual's—
(A)
enrollment with an eligible organization under this section—
(i)
payment for such services until the date of the individual's discharge shall be made under this title as if the individual were not enrolled with the organization,
(ii)
the organization shall not be financially responsible for payment for such services until the date after the date of the individual's discharge, and
(iii)
the organization shall nonetheless be paid the full amount otherwise payable to the organization under this section; or
(B)
termination of enrollment with an eligible organization under this section—
(i)
the organization shall be financially responsible for payment for such services after such date and until the date of the individual's discharge,
(ii)
payment for such services during the stay shall not be made under section 1886(d), and
(iii)
the organization shall not receive any payment with respect to the individual under this section during the period the individual is not enrolled.
(8)
A contract under this section shall provide that the eligible organization shall meet the requirement of section 1866(f) (relating to maintaining written policies and procedures respecting advance directives).
(d)
Subject to the provisions of subsection (c)(3), every individual entitled to benefits under part A and enrolled under part B or enrolled under part B only (other than an individual medically determined to have end-stage renal disease) shall be eligible to enroll under this section with any eligible organization with which the Secretary has entered into a contract under this section and which serves the geographic area in which the individual resides.
(e)
(1)
In no case may—
(A)
the portion of an eligible organization's premium rate and the actuarial value of its deductibles, coinsurance, and copayments charged (with respect to services covered under parts A and B) to individuals who are enrolled under this section with the organization and who are entitled to benefits under part A and enrolled under part B, or
(B)
the portion of its premium rate and the actuarial value of its deductibles, coinsurance, and copayments charged (with respect to services covered under part B) to individuals who are enrolled under this section with the organization and enrolled under part B only
exceed the actuarial value of the coinsurance and deductibles that would be applicable on the average to individuals enrolled under this section with the organization (or, if the Secretary finds that adequate data are not available to determine that actuarial value, the actuarial value of the coinsurance and deductibles applicable on the average to individuals in the area, in the State, or in the United States, eligible to enroll under this section with the organization, or other appropriate data) and entitled to benefits under part A and enrolled under part B, or enrolled under part B only, respectively, if they were not members of an eligible organization.
(2)
If the eligible organization provides to its members enrolled under this section services in addition to services covered under parts A and B of this title, election of coverage for such additional services (unless such services have been approved by the Secretary under subsection (c)(2)) shall be optional for such members and such organization shall furnish such members with information on the portion of its premium rate or other charges applicable to such additional services. In no case may the sum of—
(A)
the portion of such organization's premium rate charged, with respect to such additional services, to members enrolled under this section, and
(B)
the actuarial value of its deductibles, coinsurance, and copayments charged, with respect to such services to such members
exceed the adjusted community rate for such services.
(3)
For purposes of this section, 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 section 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 section with the eligible organization, as the Secretary annually estimates is attributable to that service or services,
but adjusted for differences between the utilization characteristics of the members enrolled with the eligible organization under this section and the utilization characteristics of the other members of the organization (or, if the Secretary finds that adequate data are not available to adjust for those differences, the differences between 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 section with an eligible organization and the utilization characteristics of the rest of the population in the area, in the State, or in the United States, respectively).
(4)
Notwithstanding any other provision of law, the eligible organization may (in the case of the provision of services to a member enrolled under this section for an illness or injury for which the member is entitled to benefits under a workmen's compensation law or plan of the United States or a State, under an automobile or liability insurance policy or plan, including a self-insured plan, or under no fault insurance) charge or authorize the provider of such services to charge, in accordance with the charges allowed under such law or policy—
(A)
the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or
(B)
such member to the extent that the member has been paid under such law, plan, or policy for such services.
(f)
(1)
For contract periods beginning before January 1, 1999, each eligible organization with which the Secretary enters into a contract under this section shall have, for the duration of such contract, an enrolled membership at least one-half of which consists of individuals who are not entitled to benefits under this title.
(2)
Subject to paragraph (4), the Secretary may modify or waive the requirement imposed by paragraph (1) only—
(A)
to the extent that more than 50 percent of the population of the area served by the organization consists of individuals who are entitled to benefits under this title or under a State plan approved under title XIX, or
(B)
in the case of an eligible organization that is owned and operated by a governmental entity, only with respect to a period of three years beginning on the date the organization first enters into a contract under this section, and only if the organization has taken and is making reasonable efforts to enroll individuals who are not entitled to benefits under this title or under a State plan approved under title XIX.
(3)
If the Secretary determines that an eligible organization has failed to comply with the requirements of this subsection, the Secretary may provide for the suspension of enrollment of individuals under this section or of payment to the organization under this section for individuals newly enrolled with the organization, after the date the Secretary notifies the organization of such noncompliance.
(4)
Effective for contract periods beginning after December 31, 1996, the Secretary may waive or modify the requirement imposed by paragraph (1) to the extent the Secretary finds that it is in the public interest.
(g)
(1)
The Secretary may enter a risk-sharing contract with any eligible organization, as defined in subsection (b), which has at least 5,000 members, except that the Secretary may enter into such a contract with an eligible organization that has fewer members if the organization primarily serves members residing outside of urbanized areas.
(2)
Each risk-sharing contract shall provide that—
(A)
if the adjusted community rate, as defined in subsection (e)(3), for services under parts A and B (as reduced for the actuarial value of the coinsurance and deductibles under those parts) for members enrolled under this section with the organization and entitled to benefits under part A and enrolled in part B, or
(B)
if 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 section with the organization and entitled to benefits under part B only
is less than the average of the per capita rates of payment to be made under subsection (a)(1) at the beginning of an annual contract period for members enrolled under this section with the organization and entitled to benefits under part A and enrolled in part B, or enrolled in part B only, respectively, the eligible organization shall provide to members enrolled under a risk-sharing contract under this section with the organization and entitled to benefits under part A and enrolled in part B, or enrolled in part B only, respectively, 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 that average per capita payment and the adjusted community rate (as so reduced); except that this paragraph shall not apply with respect to any organization which elects to receive a lesser payment to the extent that there is no longer a difference between the average per capita payment and adjusted community rate (as so reduced) and except that an organization (with the approval of the Secretary) may provide that a part of the value of such additional benefits be withheld and reserved by the Secretary as provided in paragraph (5). 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 subsection (a)(1) 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 section.
(3)
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 section, or
(B)
the provision of additional health benefits,
or both.
[(4)
Repealed.]
(5)
An organization having a risk-sharing contract under this section 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 (2) 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)
(A)
A risk-sharing contract under this section shall require the eligible organization to provide prompt payment (consistent with the provisions of sections 1816(c)(2) and 1842(c)(2)) of claims submitted for services and supplies furnished to individuals pursuant to such contract, if the services or supplies are not furnished under a contract between the organization and the provider or supplier.
(B)
In the case of an eligible organization which the Secretary determines, after notice and opportunity for a hearing, has failed to make payments of amounts in compliance with subparagraph (A), the Secretary may provide for direct payment of the amounts owed to providers and suppliers for such covered services furnished to individuals enrolled under this section under the contract. If the Secretary provides for such direct payments, the Secretary shall provide for an appropriate reduction in the amount of payments otherwise made to the organization under this section to reflect the amount of the Secretary's payments (and costs incurred by the Secretary in making such payments).
(h)
(1)
If—
(A)
the Secretary is not satisfied that an eligible organization has the capacity to bear the risk of potential losses under a risk-sharing contract under this section, or
(B)
the eligible organization so elects or has an insufficient number of members to be eligible to enter into a risk-sharing contract under subsection (g)(1),
the Secretary may, if he is otherwise satisfied that the eligible organization is able to perform its contractual obligations effectively and efficiently, enter into a contract with such organization pursuant to which such organization is reimbursed on the basis of its reasonable cost (as defined in section 1861(v)) in the manner prescribed in paragraph (3).
(2)
A reasonable cost reimbursement contract under this subsection may, at the option of such organization, provide that the Secretary—
(A)
will reimburse hospitals and skilled nursing facilities either for the reasonable cost (as determined under section 1861(v)) or for payment amounts determined in accordance with section 1886, as applicable, of services furnished to individuals enrolled with such organization pursuant to subsection (d), and
(B)
will deduct the amount of such reimbursement from payment which would otherwise be made to such organization.
If such an eligible organization pays a hospital or skilled nursing facility directly, the amount paid shall not exceed the reasonable cost of the services (as determined under section 1861(v)) or the amount determined under section 1886, as applicable, unless such organization demonstrates to the satisfaction of the Secretary that such excess payments are justified on the basis of advantages gained by the organization.
(3)
Payments made to an organization with a reasonable cost reimbursement contract shall be subject to appropriate retroactive corrective adjustment at the end of each contract year so as to assure that such organization is paid for the reasonable cost actually incurred (excluding any part of incurred cost found to be unnecessary in the efficient delivery of health services) or the amounts otherwise determined under section 1886 for the types of expenses otherwise reimbursable under this title for providing services covered under this title to individuals described in subsection (a)(1).
(4)
Any reasonable cost reimbursement contract with an eligible organization under this subsection shall provide that the Secretary shall require, at such time following the expiration of each accounting period of the eligible organization (and in such form and in such detail) as he may prescribe—
(A)
that the organization report to him in an independently certified financial statement its per capita incurred cost based on the types of components of expenses otherwise reimbursable under this title for providing services described in subsection (a)(1), including therein, in accordance with accounting procedures prescribed by the Secretary, its methods of allocating costs between individuals enrolled under this section and other individuals enrolled with such organization;
(B)
that failure to report such information as may be required may be deemed to constitute evidence of likely overpayment on the basis of which appropriate collection action may be taken;
(C)
that in any case in which an eligible organization is related to another organization by common ownership or control, a consolidated financial statement shall be filed and that the allowable costs for such organization may not include costs for the types of expense otherwise reimbursable under this title, in excess of those which would be determined to be reasonable in accordance with regulations (providing for limiting reimbursement to costs rather than charges to the eligible organization by related organizations and owners) issued by the Secretary; and
(D)
that in any case in which compensation is paid by an eligible organization substantially in excess of what is normally paid for similar services by similar practitioners (regardless of method of compensation), such compensation may as appropriate be considered to constitute a distribution of profits.
(5)
(A)
After the date of the enactment of this paragraph, the Secretary may not enter into a reasonable cost reimbursement contract under this subsection (if the contract is not in effect as of such date), except for a contract with an eligible organization which, immediately previous to entering into such contract, had an agreement in effect under section 1833(a)(1)(A).
(B)
Subject to subparagraph (C), the Secretary shall approve an application for a modification to a reasonable cost contract under this section in order to expand the service area of such contract if—
(i)
such application is submitted to the Secretary on or before September 1, 2003; and
(ii)
the Secretary determines that the organization with the contract continues to meet the requirements applicable to such organizations and contracts under this section.
(C)
(i)
Subject to clause (ii), a reasonable cost reimbursement contract under this subsection may be extended or renewed indefinitely.
(ii)
Subject to clause (iv), for any period beginning on or after January 1, 2016, a reasonable cost reimbursement contract under this subsection may not be extended or renewed for a service area insofar as such area during the entire previous year was within the service area of—
(I)
2 or more MA regional plans described in clause (iii), provided that all such plans are not offered by the same Medicare Advantage organization; or
(II)
2 or more MA local plans described in clause (iii), provided that all such plans are not offered by the same Medicare Advantage organization.
(iii)
A plan described in this clause for a year for a service area is a plan described in section 1851(a)(2)(A)(i) if the service area for the year meets the following minimum enrollment requirements:
(I)
With respect to any portion of the cost plan service area involved that is within a Metropolitan Statistical Area with a population of more than 250,000 and counties contiguous to such Metropolitan Statistical Area that are not in another Metropolitan Statistical Area with a population of more than 250,000, 5,000 individuals. If the service area includes a portion in more than 1 Metropolitan Statistical Area with a population of more than 250,000, the minimum enrollment determination under the preceding sentence shall be made with respect to each such Metropolitan Statistical Area (and such applicable contiguous counties to such Metropolitan Statistical Area).
(II)
With respect to any other portion of such cost plan service area, 1,500 individuals.
(iv)
In the case of an eligible organization that is offering a reasonable cost reimbursement contract that may no longer be extended or renewed because of the application of clause (ii), or where such contract has been extended or renewed but the eligible organization has informed the Secretary in writing not later than a date determined appropriate by the Secretary that such organization voluntarily plans not to seek renewal of the reasonable cost reimbursement contract, the following shall apply:
(I)
Notwithstanding such clause, such contract may be extended or renewed for the two years subsequent to 2016. The final year in which such contract is extended or renewed is referred to in this subsection as the “last reasonable cost reimbursement contract year for the contract”.
(II)
The organization may not enroll a new enrollee under such contract during the last reasonable cost reimbursement contract year for the contract (but may continue to enroll new enrollees through the end of the year immediately preceding such year) unless such enrollee is any of the following:
- (aa)
An individual who chooses enrollment in the reasonable cost contract during the annual election period with respect to such last year.
- (bb)
An individual whose spouse, at the time of the individual’s enrollment is an enrollee under the reasonable cost reimbursement contract.
- (cc)
An individual who is covered under an employer group health plan that offers coverage through the reasonable cost reimbursement contract.
- (dd)
An individual who becomes entitled to benefits under part A, or enrolled under part B, and was enrolled in a plan offered by the eligible organization immediately prior to the individual’s enrollment under the reasonable cost reimbursement contract.
(III)
Not later than a date determined appropriate by the Secretary prior to the beginning of the last reasonable cost reimbursement contract year for the contract, the organization shall provide notice to the Secretary as to whether the organization will apply to have the contract converted over, in whole or in part, and offered as a Medicare Advantage plan under part C for the year following the last reasonable cost reimbursement contract year for the contract.
(IV)
If the organization provides the notice described in subclause (III) that the contract will be converted, in whole or in part, the organization shall, not later than a date determined appropriate by the Secretary, provide the Secretary with such information as the Secretary determines appropriate in order to carry out section 1851(c)(4) and to carry out section 1854(a)(5), including subparagraph (C)(ii) of such section.
(V)
In the case that the organization enrolls a new enrollee under such contract during the last reasonable cost reimbursement contract year for the contract, the organization shall provide the individual with a notification that such year is the last year for such contract.
(v)
If an eligible organization that is offering a reasonable cost reimbursement contract that is extended or renewed pursuant to clause (iv) provides the notice described in clause (iv)(III) that the contract will be converted, in whole or in part, the following shall apply:
(I)
The deemed enrollment under section 1851(c)(4).
(II)
The special rule for quality increase under section 1853(o)(4)(C).
(III)
During the last reasonable cost reimbursement contract year for the contract and the year immediately preceding such year, the eligible organization, or the corporate parent organization of the eligible organization, shall be permitted to offer an MA plan in the area that such contract is being offered and enroll Medicare Advantage eligible individuals in such MA plan and such cost plan.
(i)
(1)
Each contract under this section shall be for a term of at least one year, as determined by the Secretary, and may be made automatically renewable from term to term in the absence of notice by either party of intention to terminate at the end of the current term; except that in accordance with procedures established under paragraph (9), the Secretary may at any time terminate any such contract or may impose the intermediate sanctions described in paragraph (6)(B) or (6)(C) (whichever is applicable) on the eligible organization if the Secretary determines that the organization—
(A)
has failed substantially to carry out the contract;
(B)
is carrying out the contract in a manner substantially inconsistent with the efficient and effective administration of this section; or
(C)
no longer substantially meets the applicable conditions of subsections (b), (c), (e), and (f).
(2)
The effective date of any contract executed pursuant to this section shall be specified in the contract.
(3)
Each contract under this section—
(A)
shall provide that the Secretary, or any person or organization designated by him—
(i)
shall have the right to inspect or otherwise evaluate (I) the quality, appropriateness, and timeliness of services performed under the contract and (II) the facilities of the organization when there is reasonable evidence of some need for such inspection, and
(ii)
shall have the right to audit and inspect any books and records of the eligible organization that pertain (I) to the ability of the organization to bear the risk of potential financial losses, or (II) to services performed or determinations of amounts payable under the contract;
(B)
shall require the organization with a risk-sharing contract to provide (and pay for) written notice in advance of the contract's termination, as well as a description of alternatives for obtaining benefits under this title, to each individual enrolled under this section with the organization; and
(C)
(i)
shall require the organization to comply with subsections (a) and (c) of section 1318 of the Public Health Service Act (relating to disclosure of certain financial information) and with the requirement of section 1301(c)(8) of such Act (relating to liability arrangements to protect members);
(ii)
shall require the organization to provide and supply information (described in section 1866(b)(2)(C)(ii)) in the manner such information is required to be provided or supplied under that section;
(iii)
shall require the organization to notify the Secretary of loans and other special financial arrangements which are made between the organization and subcontractors, affiliates, and related parties; and
(D)
shall contain such other terms and conditions not inconsistent with this section (including requiring the organization to provide the Secretary with such information) as the Secretary may find necessary and appropriate.
(4)
The Secretary may not enter into a risk-sharing contract with an eligible organization if a previous risk-sharing contract with that organization under this section was terminated at the request of the organization within the preceding five-year period, except in circumstances which warrant special consideration, as determined by the Secretary.
(5)
The authority vested in the Secretary by this section may be performed without regard to such provisions of law or regulations relating to the making, performance, amendment, or modification of contracts of the United States as the Secretary may determine to be inconsistent with the furtherance of the purpose of this title.
(6)
(A)
If the Secretary determines that an eligible organization with a contract under this section—
(i)
fails 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;
(ii)
imposes premiums on individuals enrolled under this section in excess of the premiums permitted;
(iii)
acts to expel or to refuse to re-enroll an individual in violation of the provisions of this section;
(iv)
engages in any practice that would reasonably be expected to have the effect of denying or discouraging enrollment (except as permitted by this section) by eligible individuals with the organization whose medical condition or history indicates a need for substantial future medical services;
(v)
misrepresents or falsifies information that is furnished—
(I)
to the Secretary under this section, or
(II)
to an individual or to any other entity under this section;
(vi)
fails to comply with the requirements of subsection (g)(6)(A) or paragraph (8); or
(vii)
in the case of a risk-sharing contract, 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 employs or contracts with any entity for the provision (directly or indirectly) through such an excluded individual or entity of such services;
the Secretary may provide, in addition to any other remedies authorized by law, for any of the remedies described in subparagraph (B).
(B)
The remedies described in this subparagraph are—
(i)
civil money penalties of not more than $25,000 for each determination under subparagraph (A) or, with respect to a determination under clause (iv) or (v)(I) of such subparagraph, of not more than $100,000 for each such determination, plus, with respect to a determination under subparagraph (A)(ii), double the excess amount charged in violation of such subparagraph (and the excess amount charged shall be deducted from the penalty and returned to the individual concerned), and plus, with respect to a determination under subparagraph (A)(iv), $15,000 for each individual not enrolled as a result of the practice involved,
(ii)
suspension of enrollment of individuals under this section after the date the Secretary notifies the organization of a determination under subparagraph (A) and until the Secretary is satisfied that the basis for such determination has been corrected and is not likely to recur, or
(iii)
suspension of payment to the organization under this section for individuals enrolled after the date the Secretary notifies the organization of a determination under subparagraph (A) and until the Secretary is satisfied that the basis for such determination has been corrected and is not likely to recur.
(C)
In the case of an eligible organization for which the Secretary makes a determination under paragraph (1), the basis of which is not described in subparagraph (A), the Secretary may apply the following intermediate sanctions:
(i)
Civil money penalties of not more than $25,000 for each determination under paragraph (1) if the deficiency that is the basis of the determination has directly adversely affected (or has the substantial likelihood of adversely affecting) an individual covered under the organization's contract.
(ii)
Civil money penalties of not more than $10,000 for each week beginning after the initiation of procedures by the Secretary under paragraph (9) during which the deficiency that is the basis of a determination under paragraph (1) exists.
(iii)
Suspension of enrollment of individuals under this section after the date the Secretary notifies the organization of a determination under paragraph (1) and until the Secretary is satisfied that the deficiency that is the basis for the determination has been corrected and is not likely to recur.
(D)
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under subparagraph (B)(i) or (C)(i) in the same manner as such provisions apply to a civil money penalty or proceeding under section 1128A(a).
(7)
(A)
Each risk-sharing contract with an eligible organization under this section shall provide that the organization will maintain a written agreement with a quality improvement organization (which has a contract with the Secretary under part B of title XI for the area in which the eligible organization is located) or with an entity selected by the Secretary under section 1154(a)(4)(C) 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)
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)
Such payments—
(i)
shall be transferred in appropriate proportions from the Federal Hospital Insurance Trust Fund and from the Supplementary Medical Insurance Trust Fund, without regard to amounts appropriated in advance in appropriation Acts, in the same manner as transfers are made for payment for services provided directly to beneficiaries, and
(ii)
shall not be less in the aggregate for such organizations for a fiscal year than the amounts the Secretary determines to be sufficient to cover the costs of such organizations' conducting activities described in subparagraph (A) with respect to such eligible organizations under part B of title XI.
(8)
(A)
Each contract with an eligible organization under this section shall provide that the organization may not operate any physician incentive plan (as defined in subparagraph (B)) unless the following requirements are met:
(i)
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.
(ii)
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.
(iii)
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 subparagraph.
(B)
In this paragraph, 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.
(9)
The Secretary may terminate a contract with an eligible organization under this section or may impose the intermediate sanctions described in paragraph (6) on the organization in accordance with formal investigation and compliance procedures established by the Secretary under which—
(A)
the Secretary first provides the organization with the reasonable opportunity to develop and implement a corrective action plan to correct the deficiencies that were the basis of the Secretary's determination under paragraph (1) and the organization fails to develop or implement such a plan;
(B)
in deciding whether to impose sanctions, the Secretary considers aggravating factors such as whether an organization has a history of deficiencies or has not taken action to correct deficiencies the Secretary has brought to the organization's attention;
(C)
there are no unreasonable or unnecessary delays between the finding of a deficiency and the imposition of sanctions; and
(D)
the Secretary provides the organization with reasonable notice and opportunity for hearing (including the right to appeal an initial decision) before imposing any sanction or terminating the contract.
(j)
(1)
(A)
In the case of physicians' services or renal dialysis services described in paragraph (2) which are furnished by a participating physician or provider of services or renal dialysis facility to an individual enrolled with an eligible organization under this section and enrolled under part B, the applicable participation agreement is deemed to provide that the physician or provider of services or renal dialysis facility will accept as payment in full from the eligible organization the amount that would be payable to the physician or provider of services or renal dialysis facility under part B and from the individual under such part, if the individual were not enrolled with an eligible organization under this section.
(B)
In the case of physicians' services described in paragraph (2) which are furnished by a nonparticipating physician, the limitations on actual charges for such services otherwise applicable under part B (to services furnished by individuals not enrolled with an eligible organization under this section) shall apply in the same manner as such limitations apply to services furnished to individuals not enrolled with such an organization.
(2)
The physicians' services or renal dialysis services described in this paragraph are physicians' services or renal dialysis services which are furnished to an enrollee of an eligible organization under this section by a physician, provider of services, or renal dialysis facility who is not under a contract with the organization.
(k)
(1)
Except as provided in paragraph (2)—
(A)
on or after the date standards for Medicare+Choice organizations and plans are first established under section 1856(b)(1), the Secretary shall not enter into any risk-sharing contract under this section with an eligible organization; and
(B)
for any contract year beginning on or after January 1, 1999, the Secretary shall not renew any such contract.
(2)
An individual who is enrolled in part B only and is enrolled in an eligible organization with a risk-sharing contract under this section on December 31, 1998, may continue enrollment in such organization in accordance with regulations described in section 1856(b)(1).
(3)
Notwithstanding subsection (a), the Secretary shall provide that payment amounts under risk-sharing contracts under this section for months in a year (beginning with January 1998) shall be computed—
(A)
with respect to individuals entitled to benefits under both parts A and B, by substituting payment rates under section 1853(a) for the payment rates otherwise established under section 1876(a), and
(B)
with respect to individuals only entitled to benefits under part B, by substituting an appropriate proportion of such rates (reflecting the relative proportion of payments under this title attributable to such part) for the payment rates otherwise established under subsection (a).
(4)
The following requirements shall apply to eligible organizations with risk-sharing contracts under this section in the same manner as they apply to Medicare+Choice organizations under part C:
(A)
Data collection requirements under section 1853(a)(3)(B).
(B)
Restrictions on imposition of premium taxes under section 1854(g) in relating to payments to such organizations under this section.
(C)
The requirement to accept enrollment of new enrollees during November 1998 under section 1851(e)(6).
(D)
Payments under section 1857(e)(2).

LIMITATION ON CERTAIN PHYSICIAN REFERRALS
Sec. 1877.
[42 U.S.C. 1395nn]
(a)

Prohibition of Certain Referrals.—
(1)

In general.—
Except as provided in subsection (b), if a physician (or an immediate family member of such physician) has a financial relationship with an entity specified in paragraph (2), then—
(A)
the physician may not make a referral to the entity for the furnishing of designated health services for which payment otherwise may be made under this title, and
(B)
the entity may not present or cause to be presented a claim under this title or bill to any individual, third party payor, or other entity for designated health services furnished pursuant to a referral prohibited under subparagraph (A).
(2)

Financial relationship specified.—
For purposes of this section, a financial relationship of a physician (or an immediate family member of such physician) with an entity specified in this paragraph is—
(A)
except as provided in subsections (c) and (d), an ownership or investment interest in the entity, or
(B)
except as provided in subsection (e), a compensation arrangement (as defined in subsection (h)(1)) between the physician (or an immediate family member of such physician) and the entity.
An ownership or investment interest described in subparagraph (A) may be through equity, debt, or other means and includes an interest in an entity that holds an ownership or investment interest in any entity providing the designated health service.
(b)

General Exceptions to Both Ownership and Compensation Arrangement Prohibitions.—
Subsection (a)(1) shall not apply in the following cases:
(1)

Physicians' services.—
In the case of physicians' services (as defined in section 1861(q)) provided personally by (or under the personal supervision of) another physician in the same group practice (as defined in subsection (h)(4)) as the referring physician.
(2)

In-office ancillary services.—
In the case of services (other than durable medical equipment (excluding infusion pumps) and parenteral and enteral nutrients, equipment, and supplies)—
(A)
that are furnished—
(i)
personally by the referring physician, personally by a physician who is a member of the same group practice as the referring physician, or personally by individuals who are directly supervised by the physician or by another physician in the group practice, and
(ii)
(I)
in a building in which the referring physician (or another physician who is a member of the same group practice) furnishes physicians' services unrelated to the furnishing of designated health services, or
(II)
in the case of a referring physician who is a member of a group practice, in another building which is used by the group practice—
- (aa)
for the provision of some or all of the group's clinical laboratory services, or
- (bb)
for the centralized provision of the group's designated health services (other than clinical laboratory services),
unless the Secretary determines other terms and conditions under which the provision of such services does not present a risk of program or patient abuse, and
(B)
that are billed by the physician performing or supervising the services, by a group practice of which such physician is a member under a billing number assigned to the group practice, or by an entity that is wholly owned by such physician or such group practice,
if the ownership or investment interest in such services meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse. Such requirements shall, with respect to magnetic resonance imaging, computed tomography, positron emission tomography, and any other designated health services specified under subsection (h)(6)(D) that the Secretary determines appropriate, include a requirement that the referring physician inform the individual in writing at the time of the referral that the individual may obtain the services for which the individual is being referred from a person other than a person described in subparagraph (A)(i) and provide such individual with a written list of suppliers (as defined in section 1861(d)) who furnish such services in the area in which such individual resides.
(3)

Prepaid plans.—
In the case of services furnished by an organization—
(A)
with a contract under section 1876 to an individual enrolled with the organization,
(B)
described in section 1833(a)(1)(A) to an individual enrolled with the organization,
(C)
receiving payments on a prepaid basis, under a demonstration project under section 402(a) of the Social Security Amendments of 1967 or under section 222(a) of the Social Security Amendments of 1972, to an individual enrolled with the organization,
(D)
that is a qualified health maintenance organization (within the meaning of section 1310(d) of the Public Health Service Act) to an individual enrolled with the organization, or
(E)
that is a Medicare+Choice organization under part C that is offering a coordinated care plan described in section 1851(a)(2)(A) to an individual enrolled with the organization.
(4)

Other permissible exceptions.—
In the case of any other financial relationship which the Secretary determines, and specifies in regulations, does not pose a risk of program or patient abuse.
(5)

Electronic prescribing.—
An exception established by regulation under section 1860D–3(e)(6)88.
^{88}
The reference to “section 1860D–3(e)(6)” in subsection (b)(5) probably should be to “section 1860D–4(e)(6)”.
(c)

General Exception Related Only to Ownership or Investment Prohibition for Ownership in Publicly Traded Securities and Mutual Funds.—
Ownership of the following shall not be considered to be an ownership or investment interest described in subsection (a)(2)(A):
(1)
Ownership of investment securities (including shares or bonds, debentures, notes, or other debt instruments) which may be purchased on terms generally available to the public and which are—
(A)
(i)
securities listed on the New York Stock Exchange, the American Stock Exchange, or any regional exchange in which quotations are published on a daily basis, or foreign securities listed on a recognized foreign, national, or regional exchange in which quotations are published on a daily basis, or
(ii)
traded under an automated interdealer quotation system operated by the National Association of Securities Dealers, and
(B)
in a corporation that had, at the end of the corporation's most recent fiscal year, or on average during the previous 3 fiscal years, stockholder equity exceeding $75,000,000.
(2)
Ownership of shares in a regulated investment company as defined in section 851(a) of the Internal Revenue Code of 1986, if such company had, at the end of the company's most recent fiscal year, or on average during the previous 3 fiscal years, total assets exceeding $75,000,000.
(d)

Additional Exceptions Related Only to Ownership or Investment Prohibition.—
The following, if not otherwise excepted under subsection (b), shall not be considered to be an ownership or investment interest described in subsection (a)(2)(A):
(1)

Hospitals in puerto rico.—
In the case of designated health services provided by a hospital located in Puerto Rico.
(2)

Rural providers.—
In the case of designated health services furnished in a rural area (as defined in section 1886(d)(2)(D)) by an entity, if—
(A)
substantially all of the designated health services furnished by the entity are furnished to individuals residing in such a rural area;
(B)
effective for the 18-month period beginning on the date of the enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the entity is not a specialty hospital (as defined in subsection (h)(7)); and
(C)
in the case where the entity is a hospital, the hospital meets the requirements of paragraph (3)(D).
(3)

Hospital ownership.—
In the case of designated health services provided by a hospital (other than a hospital described in paragraph (1)) if—
(A)
the referring physician is authorized to perform services at the hospital;
(B)
effective for the 18-month period beginning on the date of the enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the hospital is not a specialty hospital (as defined in subsection (h)(7));
(C)
the ownership or investment interest is in the hospital itself (and not merely in a subdivision of the hospital); and
(D)
the hospital meets the requirements described in subsection (i)(1) not later than 18 months after the date of the enactment of this subparagraph.
(e)

Exceptions Relating to Other Compensation Arrangements.—
The following shall not be considered to be a compensation arrangement described in subsection (a)(2)(B):
(1)

Rental of office space; rental of equipment.—
(A)

Office Space.—
Payments made by a lessee to a lessor for the use of premises if—
(i)
the lease is set out in writing, signed by the parties, and specifies the premises covered by the lease,
(ii)
the space rented or leased does not exceed that which is reasonable and necessary for the legitimate business purposes of the lease or rental and is used exclusively by the lessee when being used by the lessee, except that the lessee may make payments for the use of space consisting of common areas if such payments do not exceed the lessee's pro rata share of expenses for such space based upon the ratio of the space used exclusively by the lessee to the total amount of space (other than common areas) occupied by all persons using such common areas,
(iii)
the lease provides for a term of rental or lease for at least 1 year,
(iv)
the rental charges over the term of the lease are set in advance, are consistent with fair market value, and are not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties,
(v)
the lease would be commercially reasonable even if no referrals were made between the parties, and
(vi)
the lease meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse.
(B)

Equipment.—
Payments made by a lessee of equipment to the lessor of the equipment for the use of the equipment if—
(i)
the lease is set out in writing, signed by the parties, and specifies the equipment covered by the lease,
(ii)
the equipment rented or leased does not exceed that which is reasonable and necessary for the legitimate business purposes of the lease or rental and is used exclusively by the lessee when being used by the lessee,
(iii)
the lease provides for a term of rental or lease of at least 1 year,
(iv)
the rental charges over the term of the lease are set in advance, are consistent with fair market value, and are not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties,
(v)
the lease would be commercially reasonable even if no referrals were made between the parties, and
(vi)
the lease meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse.
(C)

Holdover lease arrangements.—
In the case of a holdover lease arrangement for the lease of office space or equipment, which immediately follows a lease arrangement described in subparagraph (A) for the use of such office space or subparagraph (B) for the use of such equipment and that expired after a term of at least 1 year, payments made by the lessee to the lessor pursuant to such holdover lease arrangement, if—
(i)
the lease arrangement met the conditions of subparagraph (A) for the lease of office space or subparagraph (B) for the use of equipment when the arrangement expired;
(ii)
the holdover lease arrangement is on the same terms and conditions as the immediately preceding arrangement; and
(iii)
the holdover arrangement continues to satisfy the conditions of subparagraph (A) for the lease of office space or subparagraph (B) for the use of equipment.
(2)

Bona fide employment relationships.—
Any amount paid by an employer to a physician (or an immediate family member of such physician) who has a bona fide employment relationship with the employer for the provision of services if—
(A)
the employment is for identifiable services,
(B)
the amount of the remuneration under the employment—
(i)
is consistent with the fair market value of the services, and
(ii)
is not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician,
(C)
the remuneration is provided pursuant to an agreement which would be commercially reasonable even if no referrals were made to the employer, and
(D)
the employment meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse.
Subparagraph (B)(ii) shall not prohibit the payment of remuneration in the form of a productivity bonus based on services performed personally by the physician (or an immediate family member of such physician).
(3)

Personal service arrangements.—
(A)

In general.—
Remuneration from an entity under an arrangement (including remuneration for specific physicians' services furnished to a nonprofit blood center) if—
(i)
the arrangement is set out in writing, signed by the parties, and specifies the services covered by the arrangement,
(ii)
the arrangement covers all of the services to be provided by the physician (or an immediate family member of such physician) to the entity,
(iii)
the aggregate services contracted for do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement,
(iv)
the term of the arrangement is for at least 1 year,
(v)
the compensation to be paid over the term of the arrangement is set in advance, does not exceed fair market value, and except in the case of a physician incentive plan described in subparagraph (B), is not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties,
(vi)
the services to be performed under the arrangement do not involve the counseling or promotion or a business arrangement or other activity that violates any State or Federal law, and
(vii)
the arrangement meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse.
(B)

Physician incentive plan exception.—
(i)

In general.—
In the case of a physician incentive plan (as defined in clause (ii)) between a physician and an entity, the compensation may be determined in a manner (through a withhold, capitation, bonus, or otherwise) that takes into account directly or indirectly the volume or value of any referrals or other business generated between the parties, if the plan meets the following requirements:
(I)
No specific payment is made directly or indirectly under the plan to a physician or a physician group as an inducement to reduce or limit medically necessary services provided with respect to a specific individual enrolled with the entity.
(II)
In the case of a plan that places a physician or a physician group at substantial financial risk as determined by the Secretary pursuant to section 1876(i)(8)(A)(ii), the plan complies with any requirements the Secretary may impose pursuant to such section.
(III)
Upon request by the Secretary, the entity provides the Secretary with access to descriptive information regarding the plan, in order to permit the Secretary to determine whether the plan is in compliance with the requirements of this clause.
(ii)

Physician incentive plan defined.—
For purposes of this subparagraph, the term “physician incentive plan” means any compensation arrangement between an entity 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 entity.
(C)

Holdover personal service arrangement.—
In the case of a holdover personal service arrangement, which immediately follows an arrangement described in subparagraph (A) that expired after a term of at least 1 year, remuneration from an entity pursuant to such holdover personal service arrangement, if—
(i)
the personal service arrangement met the conditions of subparagraph (A) when the arrangement expired;
(ii)
the holdover personal service arrangement is on the same terms and conditions as the immediately preceding arrangement; and
(iii)
the holdover arrangement continues to satisfy the conditions of subparagraph (A).
(4)

Remuneration unrelated to the provision of designated health services.—
In the case of remuneration which is provided by a hospital to a physician if such remuneration does not relate to the provision of designated health services.
(5)

Physician recruitment.—
In the case of remuneration which is provided by a hospital to a physician to induce the physician to relocate to the geographic area served by the hospital in order to be a member of the medical staff of the hospital, if—
(A)
the physician is not required to refer patients to the hospital,
(B)
the amount of the remuneration under the arrangement is not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician, and
(C)
the arrangement meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse.
(6)

Isolated transactions.—
In the case of an isolated financial transaction, such as a one-time sale of property or practice, if—
(A)
the requirements described in subparagraphs (B) and (C) of paragraph (2) are met with respect to the entity in the same manner as they apply to an employer, and
(B)
the transaction meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse.
(7)

Certain group practice arrangements with a hospital.—
(A)
In general.—An arrangement between a hospital and a group under which designated health services are provided by the group but are billed by the hospital if—
(i)
with respect to services provided to an inpatient of the hospital, the arrangement is pursuant to the provision of inpatient hospital services under section 1861(b)(3),
(ii)
the arrangement began before December 19, 1989, and has continued in effect without interruption since such date,
(iii)
with respect to the designated health services covered under the arrangement, substantially all of such services furnished to patients of the hospital are furnished by the group under the arrangement,
(iv)
the arrangement is pursuant to an agreement that is set out in writing and that specifies the services to be provided by the parties and the compensation for services provided under the agreement,
(v)
the compensation paid over the term of the agreement is consistent with fair market value and the compensation per unit of services is fixed in advance and is not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties,
(vi)
the compensation is provided pursuant to an agreement which would be commercially reasonable even if no referrals were made to the entity, and
(vii)
the arrangement between the parties meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse.
(8)

Payments by a physician for items and services.—
Payments made by a physician—
(A)
to a laboratory in exchange for the provision of clinical laboratory services, or
(B)
to an entity as compensation for other items or services if the items or services are furnished at a price that is consistent with fair market value.
(9)

Physician wellness programs.—
A bona fide mental health or behavioral health improvement or maintenance program offered to a physician by an entity, if—
(A)
such program—
(i)
consists of counseling, mental health services, a suicide prevention program, or a substance use disorder prevention and treatment program;
(ii)
is made available to a physician for the primary purpose of preventing suicide, improving mental health and resiliency, or providing training in appropriate strategies to promote the mental health and resiliency of such physician;
(iii)
is set out in a written policy, approved in advance of the operation of the program by the governing body of the entity providing such program (and which shall be updated accordingly in advance to substantial changes to the operation of such program), that includes—
(I)
a description of the content and duration of the program;
(II)
a description of the evidence-based support for the design of the program;
(III)
the estimated cost of the program;
(IV)
the personnel (including the qualifications of such personnel) conducting the program; and
(V)
the method by which such entity will evaluate the use and success of the program;
(iv)
is offered by an entity described in subparagraph (B) with a formal medical staff to all physicians who practice in the geographic area served by such entity, including physicians who hold bona fide appointments to the medical staff of such entity or otherwise have clinical privileges at such entity;
(v)
is offered to all such physicians on the same terms and conditions and without regard to the volume or value of referrals or other business generated by a physician for such entity;
(vi)
is evidence-based and conducted by a qualified health professional; and
(vii)
meets such other requirements the Secretary may impose by regulation as needed to protect against program or patient abuse;
(B)
such entity is—
(i)
a hospital;
(ii)
an ambulatory surgical center;
(iii)
a community health center;
(iv)
a rural emergency hospital;
(v)
a rural health clinic;
(vi)
a skilled nursing facility; or
(vii)
a similar entity, as determined by the Secretary; and
(C)
neither the provision of such program, nor the value of such program, are contingent upon the number or value of referrals made by a physician to such entity or the amount or value of other business generated by such physician for the entity.
(f)

Reporting Requirements.—
Each entity providing covered items or services for which payment may be made under this title shall provide the Secretary with the information concerning the entity's ownership, investment, and compensation arrangements, including—
(1)
the covered items and services provided by the entity, and
(2)
the names and unique physician identification numbers of all physicians with an ownership or investment interest (as described in subsection (a)(2)(A)), or with a compensation arrangement (as described in subsection (a)(2)(B)), in the entity, or whose immediate relatives have such an ownership or investment interest or who have such a compensation relationship with the entity.
Such information shall be provided in such form, manner, and at such times as the Secretary shall specify. The requirement of this subsection shall not apply to designated health services provided outside the United States or to entities which the Secretary determines provides services for which payment may be made under this title very infrequently.
(g)

Sanctions.—
(1)

Denial of payment.—
No payment may be made under this title for a designated health service which is provided in violation of subsection (a)(1).
(2)

Requiring refunds for certain claims.—
If a person collects any amounts that were billed in violation of subsection (a)(1), the person shall be liable to the individual for, and shall refund on a timely basis to the individual, any amounts so collected.
(3)

Civil money penalty and exclusion for improper claims.—
Any person that presents or causes to be presented a bill or a claim for a service that such person knows or should know is for a service for which payment may not be made under paragraph (1) or for which a refund has not been made under paragraph (2) shall be subject to a civil money penalty of not more than $15,000 for each such service. The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(4)

Civil money penalty and exclusion for circumvention schemes.—
Any physician or other entity that enters into an arrangement or scheme (such as a cross-referral arrangement) which the physician or entity knows or should know has a principal purpose of assuring referrals by the physician to a particular entity which, if the physician directly made referrals to such entity, would be in violation of this section, shall be subject to a civil money penalty of not more than $100,000 for each such arrangement or scheme. The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(5)

Failure to report information.—
Any person who is required, but fails, to meet a reporting requirement of subsection (f) is subject to a civil money penalty of not more than $10,000 for each day for which reporting is required to have been made. The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(6)

Advisory opinions.—
(A)

In general.—
The Secretary shall issue written advisory opinions concerning whether a referral relating to designated health services (other than clinical laboratory services) is prohibited under this section. Each advisory opinion issued by the Secretary shall be binding as to the Secretary and the party or parties requesting the opinion.
(B)

Application of certain rules.—
The Secretary shall, to the extent practicable, apply the rules under subsections (b)(3) and (b)(4) and take into account the regulations promulgated under subsection (b)(5) of section 1128D in the issuance of advisory opinions under this paragraph.
(C)

Regulations.—
In order to implement this paragraph in a timely manner, the Secretary may promulgate regulations that take effect on an interim basis, after notice and pending opportunity for public comment.
(D)

Applicability.—
This paragraph shall apply to requests for advisory opinions made after the date which is 90 days after the date of the enactment of this paragraph and before the close of the period described in section 1128D(b)(6).
(h)

Definitions and Special Rules.—
For purposes of this section:
(1)

Compensation arrangement; remuneration.—
(A)
The term “compensation arrangement” means any arrangement involving any remuneration between a physician (or an immediate family member of such physician) and an entity other than an arrangement involving only remuneration described in subparagraph (C).
(B)
The term “remuneration” includes any remuneration, directly or indirectly, overtly or covertly, in cash or in kind.
(C)
Remuneration described in this subparagraph is any remuneration consisting of any of the following:
(i)
The forgiveness of amounts owed for inaccurate tests or procedures, mistakenly performed tests or procedures, or the correction of minor billing errors.
(ii)
The provision of items, devices, or supplies that are used solely to—
(I)
collect, transport, process, or store specimens for the entity providing the item, device, or supply, or
(II)
order or communicate the results of tests or procedures for such entity.
(iii)
A payment made by an insurer or a self-insured plan to a physician to satisfy a claim, submitted on a fee for service basis, for the furnishing of health services by that physician to an individual who is covered by a policy with the insurer or by the self-insured plan, if—
(I)
the health services are not furnished, and the payment is not made, pursuant to a contract or other arrangement between the insurer or the plan and the physician,
(II)
the payment is made to the physician on behalf of the covered individual and would otherwise be made directly to such individual,
(III)
the amount of the payment is set in advance, does not exceed fair market value, and is not determined in a manner that takes into account directly or indirectly the volume or value of any referrals, and
(IV)
the payment meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse.
(D)

Written requirement clarified.—
In the case of any requirement pursuant to this section for a compensation arrangement to be in writing, such requirement shall be satisfied by such means as determined by the Secretary, including by a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties involved.
(E)

Special rule for signature requirements.—
In the case of any requirement pursuant to this section for a compensation arrangement to be in writing and signed by the parties, such signature requirement shall be met if—
(i)
not later than 90 consecutive calendar days immediately following the date on which the compensation arrangement became noncompliant, the parties obtain the required signatures; and
(ii)
the compensation arrangement otherwise complies with all criteria of the applicable exception.
(2)

Employee.—
An individual is considered to be “employed by” or an “employee” of an entity if the individual would be considered to be an employee of the entity under the usual common law rules applicable in determining the employer-employee relationship (as applied for purposes of section 3121(d)(2) of the Internal Revenue Code of 1986).
(3)

Fair market value.—
The term “fair market value” means the value in arms length transactions, consistent with the general market value, and, with respect to rentals or leases, the value of rental property for general commercial purposes (not taking into account its intended use) and, in the case of a lease of space, not adjusted to reflect the additional value the prospective lessee or lessor would attribute to the proximity or convenience to the lessor where the lessor is a potential source of patient referrals to the lessee.
(4)

Group practice.—
(A)

Definition of group practice.—
The term “group practice” means a group of 2 or more physicians legally organized as a partnership, professional corporation, foundation, not-for-profit corporation, faculty practice plan, or similar association—
(i)
in which each physician who is a member of the group provides substantially the full range of services which the physician routinely provides, including medical care, consultation, diagnosis, or treatment, through the joint use of shared office space, facilities, equipment and personnel,
(ii)
for which substantially all of the services of the physicians who are members of the group are provided through the group and are billed under a billing number assigned to the group and amounts so received are treated as receipts of the group,
(iii)
in which the overhead expenses of and the income from the practice are distributed in accordance with methods previously determined,
(iv)
except as provided in subparagraph (B)(i), in which no physician who is a member of the group directly or indirectly receives compensation based on the volume or value of referrals by the physician,
(v)
in which members of the group personally conduct no less than 75 percent of the physician-patient encounters of the group practice, and
(vi)
which meets such other standards as the Secretary may impose by regulation.
(B)

Special Rules.—
(i)

Profits and productivity bonuses.—
A physician in a group practice may be paid a share of overall profits of the group, or a productivity bonus based on services personally performed or services incident to such personally performed services, so long as the share or bonus is not determined in any manner which is directly related to the volume or value of referrals by such physician.
(ii)

Faculty practice plans.—
In the case of a faculty practice plan associated with a hospital, institution of higher education, or medical school with an approved medical residency training program in which physician members may provide a variety of different specialty services and provide professional services both within and outside the group, as well as perform other tasks such as research, subparagraph (A) shall be applied only with respect to the services provided within the faculty practice plan.
(5)

Referral; referring physician.—
(A)

Physicians' services.—
Except as provided in subparagraph (C), in the case of an item or service for which payment may be made under part B, the request by a physician for the item or service, including the request by a physician for a consultation with another physician (and any test or procedure ordered by, or to be performed by (or under the supervision of) that other physician), constitutes a “referral” by a “referring physician”.
(B)

Other items.—
Except as provided in subparagraph (C), the request or establishment of a plan of care by a physician which includes the provision of the designated health service constitutes a “referral” by a “referring physician”.
(C)

Clarification respecting certain services integral to a consultation by certain specialists.—
A request by a pathologist for clinical diagnostic laboratory tests and pathological examination services, a request by a radiologist for diagnostic radiology services, and a request by a radiation oncologist for radiation therapy, if such services are furnished by (or under the supervision of) such pathologist, radiologist, or radiation oncologist pursuant to a consultation requested by another physician does not constitute a “referral” by a “referring physician”.
(6)

Designated health services.—
The term “designated health services” means any of the following items or services:
(A)
Clinical laboratory services.
(B)
Physical therapy services.
(C)
Occupational therapy services.
(D)
Radiology services, including magnetic resonance imaging, computerized axial tomography scans, and ultrasound services.
(E)
Radiation therapy services and supplies.
(F)
Durable medical equipment and supplies.
(G)
Parenteral and enteral nutrients, equipment, and supplies.
(H)
Prosthetics, orthotics, and prosthetic devices and supplies.
(I)
Home health services.
(J)
Outpatient prescription drugs.
(K)
Inpatient and outpatient hospital services.
(L)
Outpatient speech-language pathology services.
(7)

Specialty hospital.—
(A)

In general.—
For purposes of this section, except as provided in subparagraph (B), the term “specialty hospital” means a subsection (d) hospital (as defined in section 1886(d)(1)(B)) that is primarily or exclusively engaged in the care and treatment of one of the following categories:
(i)
Patients with a cardiac condition.
(ii)
Patients with an orthopedic condition.
(iii)
Patients receiving a surgical procedure.
(iv)
Any other specialized category of services that the Secretary designates as inconsistent with the purpose of permitting physician ownership and investment interests in a hospital under this section.
(B)

Exception.—
For purposes of this section, the term “specialty hospital” does not include any hospital—
(i)
determined by the Secretary—
(I)
to be in operation before November 18, 2003; or
(II)
under development as of such date;
(ii)
for which the number of physician investors at any time on or after such date is no greater than the number of such investors as of such date;
(iii)
for which the type of categories described in subparagraph (A) at any time on or after such date is no different than the type of such categories as of such date;
(iv)
for which any increase in the number of beds occurs only in the facilities on the main campus of the hospital and does not exceed 50 percent of the number of beds in the hospital as of November 18, 2003, or 5 beds, whichever is greater; and
(v)
that meets such other requirements as the Secretary may specify.
(i)

Requirements for Hospitals To Qualify for Rural Provider and Hospital Exception to Ownership or Investment Prohibition.—
(1)

Requirements described.—
For purposes of subsection (d)(3)(D), the requirements described in this paragraph for a hospital are as follows:
(A)

Provider agreement.—
The hospital had—
(i)
physician ownership or investment on December 31, 2010; and
(ii)
a provider agreement under section 1866 in effect on such date.
(B)

Limitation on expansion of facility capacity.—
Except as provided in paragraph (3), the number of operating rooms, procedure rooms, and beds for which the hospital is licensed at any time on or after the date of the enactment of this subsection is no greater than the number of operating rooms, procedure rooms, and beds for which the hospital is licensed as of such date.
(C)

Preventing conflicts of interest.—
(i)
The hospital submits to the Secretary an annual report containing a detailed description of—
(I)
the identity of each physician owner or investor and any other owners or investors of the hospital; and
(II)
the nature and extent of all ownership and investment interests in the hospital.
(ii)
The hospital has procedures in place to require that any referring physician owner or investor discloses to the patient being referred, by a time that permits the patient to make a meaningful decision regarding the receipt of care, as determined by the Secretary—
(I)
the ownership or investment interest, as applicable, of such referring physician in the hospital; and
(II)
if applicable, any such ownership or investment interest of the treating physician.
(iii)
The hospital does not condition any physician ownership or investment interests either directly or indirectly on the physician owner or investor making or influencing referrals to the hospital or otherwise generating business for the hospital.
(iv)
The hospital discloses the fact that the hospital is partially owned or invested in by physicians—
(I)
on any public website for the hospital; and
(II)
in any public advertising for the hospital.
(D)

Ensuring bona fide investment.—
(i)
The percentage of the total value of the ownership or investment interests held in the hospital, or in an entity whose assets include the hospital, by physician owners or investors in the aggregate does not exceed such percentage as of the date of enactment of this subsection.
(ii)
Any ownership or investment interests that the hospital offers to a physician owner or investor are not offered on more favorable terms than the terms offered to a person who is not a physician owner or investor.
(iii)
The hospital (or any owner or investor in the hospital) does not directly or indirectly provide loans or financing for any investment in the hospital by a physician owner or investor.
(iv)
The hospital (or any owner or investor in the hospital) does not directly or indirectly guarantee a loan, make a payment toward a loan, or otherwise subsidize a loan, for any individual physician owner or investor or group of physician owners or investors that is related to acquiring any ownership or investment interest in the hospital.
(v)
Ownership or investment returns are distributed to each owner or investor in the hospital in an amount that is directly proportional to the ownership or investment interest of such owner or investor in the hospital.
(vi)
Physician owners and investors do not receive, directly or indirectly, any guaranteed receipt of or right to purchase other business interests related to the hospital, including the purchase or lease of any property under the control of other owners or investors in the hospital or located near the premises of the hospital.
(vii)
The hospital does not offer a physician owner or investor the opportunity to purchase or lease any property under the control of the hospital or any other owner or investor in the hospital on more favorable terms than the terms offered to an individual who is not a physician owner or investor.
(E)

Patient safety.—
(i)
Insofar as the hospital admits a patient and does not have any physician available on the premises to provide services during all hours in which the hospital is providing services to such patient, before admitting the patient—
(I)
the hospital discloses such fact to a patient; and
(II)
following such disclosure, the hospital receives from the patient a signed acknowledgment that the patient understands such fact.
(ii)
The hospital has the capacity to—
(I)
provide assessment and initial treatment for patients; and
(II)
refer and transfer patients to hospitals with the capability to treat the needs of the patient involved.
(F)

Limitation on application to certain converted facilities.—
The hospital was not converted from an ambulatory surgical center to a hospital on or after the date of enactment of this subsection.
(2)

Publication of information reported.—
The Secretary shall publish, and update on an annual basis, the information submitted by hospitals under paragraph (1)(C)(i) on the public Internet website of the Centers for Medicare & Medicaid Services.
(3)

Exception to prohibition on expansion of facility capacity.—
(A)

Process.—
(i)

Establishment.—
The Secretary shall establish and implement a process under which a hospital that is an applicable hospital (as defined in subparagraph (E)) or is a high Medicaid facility described in subparagraph (F) may apply for an exception from the requirement under paragraph (1)(B).
(ii)

Opportunity for community input.—
The process under clause (i) shall provide individuals and entities in the community in which the applicable hospital applying for an exception is located with the opportunity to provide input with respect to the application.
(iii)

Timing for implementation.—
The Secretary shall implement the process under clause (i) on February 1, 2012.
(iv)

Regulations.—
Not later than January 1, 2012, the Secretary shall promulgate regulations to carry out the process under clause (i).
(B)

Frequency.—
The process described in subparagraph (A) shall permit an applicable hospital to apply for an exception up to once every 2 years.
(C)

Permitted increase.—
(i)

In general.—
Subject to clause (ii) and subparagraph (D), an applicable hospital granted an exception under the process described in subparagraph (A) may increase the number of operating rooms, procedure rooms, and beds for which the applicable hospital is licensed above the baseline number of operating rooms, procedure rooms, and beds of the applicable hospital (or, if the applicable hospital has been granted a previous exception under this paragraph, above the number of operating rooms, procedure rooms, and beds for which the hospital is licensed after the application of the most recent increase under such an exception).
(ii)

100 percent increase limitation.—
The Secretary shall not permit an increase in the number of operating rooms, procedure rooms, and beds for which an applicable hospital is licensed under clause (i) to the extent such increase would result in the number of operating rooms, procedure rooms, and beds for which the applicable hospital is licensed exceeding 200 percent of the baseline number of operating rooms, procedure rooms, and beds of the applicable hospital.
(iii)

Baseline number of operating rooms, procedure rooms, and beds.—
In this paragraph, the term “baseline number of operating rooms, procedure rooms, and beds” means the number of operating rooms, procedure rooms, and beds for which the applicable hospital is licensed as of the date of enactment of this subsection (or, in the case of a hospital that did not have a provider agreement in effect as of such date but does have such an agreement in effect on December 31, 2010, the effective date of such provider agreement).
(D)

Increase limited to facilities on the main campus of the hospital.—
Any increase in the number of operating rooms, procedure rooms, and beds for which an applicable hospital is licensed pursuant to this paragraph may only occur in facilities on the main campus of the applicable hospital.
(E)

Applicable hospital.—
In this paragraph, the term “applicable hospital” means a hospital—
(i)
that is located in a county in which the percentage increase in the population during the most recent 5-year period (as of the date of the application under subparagraph (A)) is at least 150 percent of the percentage increase in the population growth of the State in which the hospital is located during that period, as estimated by Bureau of the Census;
(ii)
whose annual percent of total inpatient admissions that represent inpatient admissions under the program under title XIX is equal to or greater than the average percent with respect to such admissions for all hospitals located in the county in which the hospital is located;
(iii)
that does not discriminate against beneficiaries of Federal health care programs and does not permit physicians practicing at the hospital to discriminate against such beneficiaries;
(iv)
that is located in a State in which the average bed capacity in the State is less than the national average bed capacity; and
(v)
that has an average bed occupancy rate that is greater than the average bed occupancy rate in the State in which the hospital is located.
(F)

High medicaid facility described.—
A high Medicaid facility described in this subparagraph is a hospital that—
(i)
is not the sole hospital in a county;
(ii)
with respect to each of the 3 most recent years for which data are available, has an annual percent of total inpatient admissions that represent inpatient admissions under title XIX that is estimated to be greater than such percent with respect to such admissions for any other hospital located in the county in which the hospital is located; and
(iii)
meets the conditions described in subparagraph (E)(iii).
(G)

Procedure rooms.—
In this subsection, the term “procedure rooms” includes rooms in which catheterizations, angiographies, angiograms, and endoscopies are performed, except such term shall not include emergency rooms or departments (exclusive of rooms in which catheterizations, angiographies, angiograms, and endoscopies are performed).
(H)

Publication of final decisions.—
Not later than 60 days after receiving a complete application under this paragraph, the Secretary shall publish in the Federal Register the final decision with respect to such application.
(I)

Limitation on review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the process under this paragraph (including the establishment of such process).
(4)

Collection of ownership and investment information.—
For purposes of subparagraphs (A)(i) and (D)(i) of paragraph (1), the Secretary shall collect physician ownership and investment information for each hospital.
(5)

Physician owner or investor defined.—
For purposes of this subsection, the term “physician owner or investor” means a physician (or an immediate family member of such physician) with a direct or an indirect ownership or investment interest in the hospital.
(6)

Clarification.—
Nothing in this subsection shall be construed as preventing the Secretary from revoking a hospital's provider agreement if not in compliance with regulations implementing section 1866.

provider reimbursement review board
Sec. 1878.
[42 U.S.C. 1395oo]
(a)
Any provider of services which has filed a required cost report within the time specified in regulations may obtain a hearing with respect to such cost report by a Provider Reimbursement Review Board (hereinafter referred to as the “Board”) which shall be established by the Secretary in accordance with subsection (h) and (except as provided in subsection (g)(2)) any hospital which receives payments in amounts computed under subsection (b) or (d) of section 1886 and which has submitted such reports within such time as the Secretary may require in order to make payment under such section may obtain a hearing with respect to such payment by the Board, if—
(1)
such provider—
(A)
(i)
is dissatisfied with a final determination of the organization serving as its fiscal intermediary pursuant to section 1816 as to the amount of total program reimbursement due the provider for the items and services furnished to individuals for which payment may be made under this title for the period covered by such report, or
(ii)
is dissatisfied with a final determination of the Secretary as to the amount of the payment under subsection (b) or (d) of section 1886,
(B)
has not received such final determination from such intermediary on a timely basis after filing such report, where such report complied with the rules and regulations of the Secretary relating to such report, or
(C)
has not received such final determination on a timely basis after filing a supplementary cost report, where such cost report did not so comply and such supplementary cost report did so comply,
(2)
the amount in controversy is $10,000 or more, and
(3)
such provider files a request for a hearing within 180 days after notice of the intermediary's final determination under paragraph (1)(A)(i), or with respect to appeals under paragraph (1)(A)(ii), 180 days after notice of the Secretary's final determination, or with respect to appeals pursuant to paragraph (1)(B) or (C), within 180 days after notice of such determination would have been received if such determination had been made on a timely basis.
(b)
The provisions of subsection (a) shall apply to any group of providers of services if each provider of services in such group would, upon the filing of an appeal (but without regard to the $10,000 limitation), be entitled to such a hearing, but only if the matters in controversy involve a common question of fact or interpretation of law or regulations and the amount in controversy is, in the aggregate, $50,000 or more.
(c)
At such hearing, the provider of services shall have the right to be represented by counsel, to introduce evidence, and to examine and cross-examine witnesses. Evidence may be received at any such hearing even though inadmissible under rules of evidence applicable to court procedure.
(d)
A decision by the Board shall be based upon the record made at such hearing, which shall include the evidence considered by the intermediary and such other evidence as may be obtained or received by the Board, and shall be supported by substantial evidence when the record is viewed as a whole. The Board shall have the power to affirm, modify, or reverse a final determination of the fiscal intermediary with respect to a cost report and to make any other revisions on matters covered by such cost report (including revisions adverse to the provider of services) even though such matters were not considered by the intermediary in making such final determination.
(e)
The Board shall have full power and authority to make rules and establish procedures, not inconsistent with the provisions of this title or regulations of the Secretary, which are necessary or appropriate to carry out the provisions of this section. In the course of any hearing the Board may administer oaths and affirmations. The provisions of subsections (d) and (e) of section 205 with respect to subpenas shall apply to the Board to the same extent as they apply to the Secretary with respect to title II.
(f)
(1)
A decision of the Board shall be final unless the Secretary, on his own motion, and within 60 days after the provider of services is notified of the Board's decision, reverses, affirms, or modifies the Board's decision. Providers shall have the right to obtain judicial review of any final decision of the Board, or of any reversal, affirmance, or modification by the Secretary, by a civil action commenced within 60 days of the date on which notice of any final decision by the Board or of any reversal, affirmance, or modification by the Secretary is received. Providers shall also have the right to obtain judicial review of any action of the fiscal intermediary which involves a question of law or regulations relevant to the matters in controversy whenever the Board determines (on its own motion or at the request of a provider of services as described in the following sentence) that it is without authority to decide the question, by a civil action commenced within sixty days of the date on which notification of such determination is received. If a provider of services may obtain a hearing under subsection (a) and has filed a request for such a hearing, such provider may file a request for a determination by the Board of its authority to decide the question of law or regulations relevant to the matters in controversy (accompanied by such documents and materials as the Board shall require for purposes of rendering such determination). The Board shall render such determination in writing within thirty days after the Board receives the request and such accompanying documents and materials, and the determination shall be considered a final decision and not subject to review by the Secretary. If the Board fails to render such determination within such period, the provider may bring a civil action (within sixty days of the end of such period) with respect to the matter in controversy contained in such request for a hearing. Such action shall be brought in the district court of the United States for the judicial district in which the provider is located (or, in an action brought jointly by several providers, the judicial district in which the greatest number of such providers are located) or in the District Court for the District of Columbia and shall be tried pursuant to the applicable provisions under chapter 7 of title 5, United States Code, notwithstanding any other provisions in section 205. Any appeal to the Board or action for judicial review by providers which are under common ownership or control or which have obtained a hearing under subsection (b) must be brought by such providers as a group with respect to any matter involving an issue common to such providers.
(2)
Where a provider seeks judicial review pursuant to paragraph (1), the amount in controversy shall be subject to annual interest beginning on the first day of the first month beginning after the 180-day period as determined pursuant to subsection (a)(3) and equal to the rate of interest on obligations issued for purchase by the Federal Hospital Insurance Trust Fund for the month in which the civil action authorized under paragraph (1) is commenced, to be awarded by the reviewing court in favor of the prevailing party.
(3)
No interest awarded pursuant to paragraph (2) shall be deemed income or cost for the purposes of determining reimbursement due providers under this Act.
(g)
(1)
The finding of a fiscal intermediary that no payment may be made under this title for any expenses incurred for items or services furnished to an individual because such items or services are listed in section 1862 shall not be reviewed by the Board, or by any court pursuant to an action brought under subsection (f).
(2)
The determinations and other decisions described in section 1886(d)(7) shall not be reviewed by the Board or by any court pursuant to an action brought under subsection (f) or otherwise.
(h)
The Board shall be composed of five members appointed by the Secretary without regard to the provisions of title 5, United States Code, governing appointments in the competitive services. Two of such members shall be representative of providers of services. All of the members of the Board shall be persons knowledgeable in the field of payment of providers of services, and at least one of them shall be a certified public accountant. Members of the Board shall be entitled to receive compensation at rates fixed by the Secretary, but not exceeding the rate specified (at the time the service involved is rendered by such members) for grade GS–18 in section 5332 of title 5, United States Code. The term of office shall be three years, except that the Secretary shall appoint the initial members of the Board for shorter terms to the extent necessary to permit staggered terms of office.
(i)
The Board is authorized to engage such technical assistance as may be required to carry out its functions, and the Secretary shall, in addition, make available to the Board such secretarial, clerical, and other assistance as the Board may require to carry out its functions.
(j)
In this section, the term “provider of services” includes a rural health clinic and a Federally qualified health center.

limitation on liability of beneficiary where medicare claims are disallowed
Sec. 1879.
[42 U.S.C. 1395pp]
(a)
Where—
(1)
a determination is made that, by reason of section 1862(a)(1) or (9) or by reason of a coverage denial described in subsection (g), payment may not be made under part A or part B of this title for any expenses incurred for items or services furnished an individual by a provider of services or by another person pursuant to an assignment under section 1842(b)(3)(B)(ii), and
(2)
both such individual and such provider of services or such other person, as the case may be, did not know, and could not reasonably have been expected to know, that payment would not be made for such items or services under such part A or part B,
then to the extent permitted by this title, payment shall, notwithstanding such determination, be made for such items or services (and for such period of time as the Secretary finds will carry out the objectives of this title), as though section 1862(a)(1) and section 1862(a)(9) did not apply and as though the coverage denial described in subsection (g) had not occurred. In each such case the Secretary shall notify both such individual and such provider of services or such other person, as the case may be, of the conditions under which payment for such items or services was made and in the case of comparable situations arising thereafter with respect to such individual or such provider or such other person, each shall, by reason of such notice (or similar notices provided before the enactment of this section), be deemed to have knowledge that payment cannot be made for such items or services or reasonably comparable items or services. Any provider or other person furnishing items or services for which payment may not be made by reason of section 1862(a)(1) or (9) or by reason of a coverage denial described in subsection (g) shall be deemed to have knowledge that payment cannot be made for such items or services if the claim relating to such items or services involves a case, provider or other person furnishing services, procedure, or test, with respect to which such provider or other person has been notified by the Secretary (including notification by a quality improvement organization) that a pattern of inappropriate utilization has occurred in the past, and such provider or other person has been allowed a reasonable time to correct such inappropriate utilization.
(b)
In any case in which the provisions of paragraphs (1) and (2) of subsection (a) are met, except that such provider or such other person, as the case may be, knew, or could be expected to know, that payment for such services or items could not be made under such part A or part B, then the Secretary shall, upon proper application filed within such time as may be prescribed in regulations, indemnify the individual (referred to in such paragraphs) for any payments received from such individual by such provider or such other person, as the case may be, for such items or services. Any payments made by the Secretary as indemnification shall be deemed to have been made to such provider or such other person, as the case may be, and shall be treated as overpayments, recoverable from such provider or such other person, as the case may be, under applicable provisions of law. In each such case the Secretary shall notify such individual of the conditions under which indemnification is made and in the case of comparable situations arising thereafter with respect to such individual, he shall, by reason of such notice (or similar notices provided before the enactment of this section), be deemed to have knowledge that payment cannot be made for such items or services. No item or service for which an individual is indemnified under this subsection shall be taken into account in applying any limitation on the amount of items and services for which payment may be made to or on behalf of the individual under this title.
(c)
No payments shall be made under this title in any cases in which the provisions of paragraph (1) of subsection (a) are met, but both the individual to whom the items or services were furnished and the provider of service or other person, as the case may be, who furnished the items or services knew, or could reasonably have been expected to know, that payment could not be made for items or services under part A or part B by reason of section 1862(a)(1) or (a)(9) or by reason of a coverage denial described in subsection (g).
(d)
In any case arising under subsection (b) (but without regard to whether payments have been made by the individual to the provider or other person) or subsection (c), the provider or other person shall have the same rights that an individual has under sections 1869(b) and 1842(b)(3)(C) (as may be applicable) when the amount of benefit or payments is in controversy, except that such rights may, under prescribed regulations, be exercised by such provider or other person only after the Secretary determines that the individual will not exercise such rights under such sections.
(e)
Where payment for inpatient hospital services or extended care services may not be made under part A of this title on behalf of an individual entitled to benefits under such part solely because of an unintentional, inadvertent, or erroneous action with respect to the transfer of such individual from a hospital or skilled nursing facility that meets the requirements of section 1861(e) or (j) by such a provider of services acting in good faith in accordance with the advice of a utilization review committee, quality improvement organization, or fiscal intermediary, or on the basis of a clearly erroneous administrative decision by a provider of services, the Secretary shall take such action with respect to the payment of such benefits as he determines may be necessary to correct the effects of such unintentional, inadvertent, or erroneous action.
(f)
(1)
A home health agency which meets the applicable requirements of paragraphs (3) and (4) shall be presumed to meet the requirement of subsection (a)(2).
(2)
The presumption of paragraph (1) with respect to specific services may be rebutted by actual or imputed knowledge of the facts described in subsection (a)(2), including any of the following:
(A)
Notice by the fiscal intermediary of the fact that payment may not be made under this title with respect to the services.
(B)
It is clear and obvious that the provider should have known at the time the services were furnished that they were excluded from coverage.
(3)
The requirements of this paragraph are as follows:
(A)
The agency complies with requirements of the Secretary under this title respecting timely submittal of bills for payment and medical documentation.
(B)
The agency program has reasonable procedures to notify promptly each patient (and the patient's physician) where it is determined that a patient is being or will be furnished items or services which are excluded from coverage under this title.
(4)
(A)
The requirement of this paragraph is that, on the basis of bills submitted by a home health agency during the previous quarter, the rate of denial of bills for the agency by reason of a coverage denial described in subsection (g) does not exceed 2.5 percent, computed based on visits for home health services billed.
(B)
For purposes of determining the rate of denial of bills for a home health agency under subparagraph (A), a bill shall not be considered to be denied until the expiration of the 60-day period that begins on the date such bill is denied by the fiscal intermediary, or, with respect to such a denial for which the agency requests reconsideration, until the fiscal intermediary issues a decision denying payment for such bill.
(5)
In this subsection, the term “fiscal intermediary” means, with respect to a home health agency, an agency or organization with an agreement under section 1816 with respect to the agency.
(6)
The Secretary shall monitor the proportion of denied bills submitted by home health agencies for which reconsideration is requested, and shall notify Congress if the proportion of denials reversed upon reconsideration increases significantly.
(g)
The coverage denial described in this subsection is—
(1)
with respect to the provision of home health services to an individual, a failure to meet the requirements of section 1814(a)(2)(C) or section 1835(a)(2)(A) in that the individual—
(A)
is or was not confined to his home, or
(B)
does or did not need skilled nursing care on an intermittent basis; and
(2)
with respect to the provision of hospice care to an individual, a determination that the individual is not terminally ill.
(h)
If a supplier of medical equipment and supplies (as defined in section 1834(j)(5))—
(1)
furnishes an item or service to a beneficiary for which no payment may be made by reason of section 1834(j)(1);
(2)
furnishes an item or service to a beneficiary for which payment is denied in advance under section 1834(a)(15); or
(3)
furnishes an item or service to a beneficiary for which no payment may be made by reason of section 1834(a)(17)(B),
any expenses incurred for items and services furnished to an individual by such a supplier on an assignment-related basis shall be the responsibility of such supplier. The individual shall have no financial responsibility for such expenses and the supplier shall refund on a timely basis to the individual (and shall be liable to the individual for) any amounts collected from the individual for such items or services. The provisions of section 1834(a)(18) shall apply to refunds required under the previous sentence in the same manner as such provisions apply to refunds under such section.
(i)
The provisions of this section shall apply with respect to a denial of a payment under this title by reason of section 1814(a)(7)(E) in the same manner as such provisions apply with respect to a denial of a payment under this title by reason of section 1862(a)(1).

indian health service facilities
Sec. 1880.
[42 U.S.C. 1395qq]
(a)
A hospital or skilled nursing facility of the Indian Health Service, whether operated by such Service or by an Indian tribe or tribal organization (as those terms are defined in section 4 of the Indian Health Care Improvement Act), shall be eligible for payments under this title, notwithstanding sections 1814(c) and 1835(d), if and for so long as it meets all of the conditions and requirements for such payments which are applicable generally to hospitals or skilled nursing facilities (as the case may be) under this title.
(b)
Notwithstanding subsection (a), a hospital or skilled nursing facility of the Indian Health Service which does not meet all of the conditions and requirements of this title which are applicable generally to hospitals or skilled nursing facilities (as the case may be), but which submits to the Secretary within six months after the date of the enactment of this section an acceptable plan for achieving compliance with such conditions and requirements, shall be deemed to meet such conditions and requirements (and to be eligible for payments under this title), without regard to the extent of its actual compliance with such conditions and requirements, during the first 12 months after the month in which such plan is submitted.
(c)
Notwithstanding any other provision of this title, payments to which any hospital or skilled nursing facility of the Indian Health Service is entitled by reason of this section shall be placed in a special fund to be held by the Secretary and used by him (to such extent or in such amounts as are provided in appropriation Acts) exclusively for the purpose of making any improvements in the hospitals and skilled nursing facilities of such Service which may be necessary to achieve compliance with the applicable conditions and requirements of this title. The preceding sentence shall cease to apply when the Secretary determines and certifies that substantially all of the hospitals and skilled nursing facilities of such Service in the United States are in compliance with such conditions and requirements.
(d)
The annual report of the Secretary which is required by section 701 of the Indian Health Care Improvement Act shall include (along with the matters specified in section 403 of such Act) a detailed statement of the status of the hospitals and skilled nursing facilities of the Service in terms of their compliance with the applicable conditions and requirements of this title and of the progress being made by such hospitals and facilities (under plans submitted under subsection (b) and otherwise) toward the achievement of such compliance.
(e)
(1)
(A)
Notwithstanding section 1835(d), subject to subparagraph (B), the Secretary shall make payment under part B to a hospital or an ambulatory care clinic (whether provider-based or freestanding) that is operated by the Indian Health Service or by an Indian tribe or tribal organization (as defined for purposes of subsection (a)) for services described in paragraph (2) (and for items and services furnished on or after January 1, 2005, all items and services for which payment may be made under part B) furnished in or at the direction of the hospital or clinic under the same situations, terms, and conditions as would apply if the services were furnished in or at the direction of such a hospital or clinic that was not operated by such Service, tribe, or organization.
(B)
Payment shall not be made for services under subparagraph (A) to the extent that payment is otherwise made for such services under this title.
(2)
The services described in this paragraph are the following:
(A)
Services for which payment is made under section 1848.
(B)
Services furnished by a practitioner described in section 1842(b)(18)(C) for which payment under part B is made under a fee schedule.
(C)
Services furnished by a physical therapist or occupational therapist as described in section 1861(p) for which payment under part B is made under a fee schedule.
(3)
Subsection (c) shall not apply to payments made under this subsection.
(f)
For provisions relating to the authority of certain Indian tribes, tribal organizations, and Alaska Native health organizations to elect to directly bill for, and receive payment for, health care services provided by a hospital or clinic of such tribes or organizations and for which payment may be made under this title, see section 405 of the Indian Health Care Improvement Act (25 U.S.C. 1645).

medicare coverage for end stage renal disease patients
Sec. 1881.
[42 U.S.C. 1395rr]
(a)
The benefits provided by parts A and B of this title shall include benefits for individuals who have been determined to have end stage renal disease as provided in section 226A, and benefits for kidney donors as provided in subsection (d) of this section. Notwithstanding any other provision of this title, the type, duration, and scope of the benefit provided by parts A and B with respect to individuals who have been determined to have end stage renal disease and who are entitled to such benefits without regard to section 226A shall in no case be less than the type, duration, and scope of the benefits so provided for individuals entitled to such benefits solely by reason of that section.
(b)
(1)
Payments under this title with respect to services, in addition to services for which payment would otherwise be made under this title, furnished to individuals who have been determined to have end stage renal disease shall include (A) payments on behalf of such individuals to providers of services and renal dialysis facilities which meet such requirements as the Secretary shall by regulation prescribe for institutional dialysis services and supplies (including self-dialysis services in a self-care dialysis unit maintained by the provider or facility), transplantation services, self-care home dialysis support services which are furnished by the provider or facility, and routine professional services performed by a physician during a maintenance dialysis episode if payments for his other professional services furnished to an individual who has end stage renal disease are made on the basis specified in paragraph (3)(A)(i) of this subsection, (B) payments to or on behalf of such individuals for home dialysis supplies and equipment, and (C) payments to a supplier of home dialysis supplies and equipment that is not a provider of services, a renal dialysis facility, or a physician for self-administered erythropoietin as described in section 1861(s)(2)(P) if the Secretary finds that the patient receiving such drug from such a supplier can safely and effectively administer the drug (in accordance with the applicable methods and standards established by the Secretary pursuant to such section). The requirements prescribed by the Secretary under subparagraph (A) shall include requirements for a minimum utilization rate for transplantations. Beginning 180 days after the date of the enactment of this sentence, an initial survey of a provider of services or a renal dialysis facility to determine if the conditions and requirements under this paragraph are met shall be initiated not later than 90 days after such date on which both the provider enrollment form (without regard to whether such form is submitted prior to or after such date of enactment) has been determined by the Secretary to be complete and the provider’s enrollment status indicates approval is pending the results of such survey.
(2)
(A)
With respect to payments for dialysis services furnished by providers of services and renal dialysis facilities to individuals determined to have end stage renal disease for which payments may be made under part B of this title, such payments (unless otherwise provided in this section) shall be equal to 80 percent of the amounts determined in accordance with subparagraph (B); and with respect to payments for services for which payments may be made under part A of this title, the amounts of such payments (which amounts shall not exceed, in respect to costs in procuring organs attributable to payments made to an organ procurement agency or histocompatibility laboratory, the costs incurred by that agency or laboratory) shall be determined in accordance with section 1861(v) or section 1886 (if applicable). Payments shall be made to a renal dialysis facility only if it agrees to accept such payments as payment in full for covered services, except for payment by the individual of 20 percent of the estimated amounts for such services calculated on the basis established by the Secretary under subparagraph (B) and the deductible amount imposed by section 1833(b).
(B)
The Secretary shall prescribe in regulations any methods and procedures to (i) determine the costs incurred by providers of services and renal dialysis facilities in furnishing covered services to individuals determined to have end stage renal disease, and (ii) determine, on a cost-related basis or other economical and equitable basis (including any basis authorized under section 1861(v)) and consistent with any regulations promulgated under paragraph (7), the amounts of payments to be made for part B services furnished by such providers and facilities to such individuals.
(C)
Such regulations, in the case of services furnished by proprietary providers and facilities (other than hospital outpatient departments) may include, if the Secretary finds it feasible and appropriate, provision for recognition of a reasonable rate of return on equity capital, providing such rate of return does not exceed the rate of return stipulated in section 1861(v)(1)(B).
(D)
For purposes of section 1878, a renal dialysis facility shall be treated as a provider of services.
(3)
(A)
With respect to payments for physicians' services furnished to individuals determined to have end stage renal disease, the Secretary shall pay 80 percent of the amounts calculated for such services—
(i)
on a reasonable charge basis (but may, in such case, make payment on the basis of the prevailing charges of other physicians for comparable services or, for services furnished on or after January 1, 1992, on the basis described in section 1848) except that payment may not be made under this subparagraph for routine services furnished during a maintenance dialysis episode, or
(ii)
subject to subparagraph (B), on a comprehensive monthly fee or other basis (which effectively encourages the efficient delivery of dialysis services and provides incentives for the increased use of home dialysis) for an aggregate of services provided over a period of time (as defined in regulations).
(B)
(i)
For purposes of subparagraph (A)(ii), subject to clauses (ii) and (iii), an individual determined to have end stage renal disease receiving home dialysis may choose to receive monthly end stage renal disease-related clinical assessments furnished on or after January 1, 2019, via telehealth.
(ii)
Except as provided in clause (iii), clause (i) shall apply to an individual only if the individual receives a face-to-face clinical assessment, without the use of telehealth—
(I)
in the case of the initial 3 months of home dialysis of such individual, at least monthly; and
(II)
after such initial 3 months, at least once every 3 consecutive months.
(iii)89
The Secretary may waive the provisions of clause (ii) during the emergency period described in section 1135(g)(1)(B).
^{89}
Margin so in law. See amendment made by section 3705(3) of division A of Public Law 116–136.
(4)
(A)
Pursuant to agreements with approved providers of services and renal dialysis facilities, the Secretary may make payments to such providers and facilities for the cost of home dialysis supplies and equipment and self-care home dialysis support services furnished to patients whose self-care home dialysis is under the direct supervision of such provider or facility, on the basis of a target reimbursement rate (as defined in paragraph (6)) or on the basis of a method established under paragraph (7).
(B)
The Secretary shall make payments to a supplier of home dialysis supplies and equipment furnished to a patient whose self-care home dialysis is not under the direct supervision of an approved provider of services or renal dialysis facility only in accordance with a written agreement under which—
(i)
the patient certifies that the supplier is the sole provider of such supplies and equipment to the patient,
(ii)
the supplier agrees to receive payment for the cost of such supplies and equipment only on an assignment-related basis, and
(iii)
the supplier certifies that it has entered into a written agreement with an approved provider of services or renal dialysis facility under which such provider or facility agrees to furnish to such patient all self-care home dialysis support services and all other necessary dialysis services and supplies, including institutional dialysis services and supplies and emergency services.
(5)
An agreement under paragraph (4) shall require, in accordance with regulations prescribed by the Secretary, that the provider or facility will—
(A)
assume full responsibility for directly obtaining or arranging for the provision of—
(i)
such medically necessary dialysis equipment as is prescribed by the attending physician;
(ii)
dialysis equipment maintenance and repair services;
(iii)
the purchase and delivery of all necessary medical supplies; and
(iv)
where necessary, the services of trained home dialysis aides;
(B)
perform all such administrative functions and maintain such information and records as the Secretary may require to verify the transactions and arrangements described in subparagraph (A);
(C)
submit such cost reports, data, and information as the Secretary may require with respect to the costs incurred for equipment, supplies, and services furnished to the facility's home dialysis patient population; and
(D)
provide for full access for the Secretary to all such records, data, and information as he may require to perform his functions under this section.
(6)
The Secretary shall establish, for each calendar year, commencing with January 1, 1979, a target reimbursement rate for home dialysis which shall be adjusted for regional variations in the cost of providing home dialysis. In establishing such a rate, the Secretary shall include—
(A)
the Secretary's estimate of the cost of providing medically necessary home dialysis supplies and equipment;
(B)
an allowance, in an amount determined by the Secretary, to cover the cost of providing personnel to aid in home dialysis; and
(C)
an allowance, in an amount determined by the Secretary, to cover administrative costs and to provide an incentive for the efficient delivery of home dialysis;
but in no event (except as may be provided in regulations under paragraph (7)) shall such target rate exceed 75 percent of the national average payment, adjusted for regional variations, for maintenance dialysis services furnished in approved providers and facilities during the preceding fiscal year. Any such target rate so established shall be utilized, without renegotiation of the rate, throughout the calendar year for which it is established. During the last quarter of each calendar year, the Secretary shall establish a home dialysis target reimbursement rate for the next calendar year based on the most recent data available to the Secretary at the time. In establishing any rate under this paragraph, the Secretary may utilize a competitive-bid procedure, a prenegotiated rate procedure, or any other procedure (including methods established under paragraph (7)) which the Secretary determines is appropriate and feasible in order to carry out this paragraph in an effective and efficient manner.
(7)
Subject to paragraph (12), the Secretary shall provide by regulation for a method (or methods) for determining prospectively the amounts of payments to be made for dialysis services furnished by providers of services and renal dialysis facilities to individuals in a facility and to such individuals at home. Such method (or methods) shall provide for the prospective determination of a rate (or rates) for each mode of care based on a single composite weighted formula (which takes into account the mix of patients who receive dialysis services at a facility or at home and the relative costs of providing such services in such settings) for hospital-based facilities and such a single composite weighted formula for other renal dialysis facilities, or based on such other method or combination of methods which differentiate between hospital-based facilities and other renal dialysis facilities and which the Secretary determines, after detailed analysis, will more effectively encourage the more efficient delivery of dialysis services and will provide greater incentives for increased use of home dialysis than through the single composite weighted formulas. The amount of a payment made under any method other than a method based on a single composite weighted formula may not exceed the amount (or, in the case of continuous cycling peritoneal dialysis, 130 percent of the amount) of the median payment that would have been made under the formula for hospital-based facilities. Subject to section 422(a)(2) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, the Secretary shall provide for such exceptions to such methods as may be warranted by unusual circumstances (including the special circumstances of sole facilities located in isolated, rural areas and of pediatric facilities). Each application for such an exception shall be deemed to be approved unless the Secretary disapproves it by not later than 60 working days after the date the application is filed. The Secretary may provide that such method will serve in lieu of any target reimbursement rate that would otherwise be established under paragraph (6). The Secretary shall reduce the amount of each composite rate payment under this paragraph for each treatment by 50 cents (subject to such adjustments as may be required to reflect modes of dialysis other than hemodialysis) and provide for payment of such amount to the organizations (designated under subsection (c)(1)(A)) for such organizations' necessary and proper administrative costs incurred in carrying out the responsibilities described in subsection (c)(2). The Secretary shall provide that amounts paid under the previous sentence shall be distributed to the organizations described in subsection (c)(1)(A) to ensure equitable treatment of all such network organizations. The Secretary in distributing any such payments to network organizations shall take into account—
(A)
the geographic size of the network area;
(B)
the number of providers of end stage renal disease services in the network area;
(C)
the number of individuals who are entitled to end stage renal disease services in the network area; and
(D)
the proportion of the aggregate administrative funds collected in the network area.
The Secretary shall increase the amount of each composite rate payment for dialysis services furnished during 2000 by 1.2 percent above such composite rate payment amounts for such services furnished on December 31, 1999, for such services furnished on or after January 1, 2001, and before January 1, 2005, by 2.4 percent above such composite rate payment amounts for such services furnished on December 31, 2000, and for such services furnished on or after January 1, 2005, by 1.6 percent above such composite rate payment amounts for such services furnished on December 31, 2004.
(8)
For purposes of this title, the term “home dialysis supplies and equipment” means medically necessary supplies and equipment (including supportive equipment) required by an individual suffering from end stage renal disease in connection with renal dialysis carried out in his home (as defined in regulations), including obtaining, installing, and maintaining such equipment.
(9)
For purposes of this title, the term “self-care home dialysis support services”, to the extent permitted in regulation, means—
(A)
periodic monitoring of the patient's home adaptation, including visits by qualified provider or facility personnel (as defined in regulations), so long as this is done in accordance with a plan prepared and periodically reviewed by a professional team (as defined in regulations) including the individual's physician;
(B)
installation and maintenance of dialysis equipment;
(C)
testing and appropriate treatment of the water; and
(D)
such additional supportive services as the Secretary finds appropriate and desirable.
(10)
For purposes of this title, the term “self-care dialysis unit” means a renal dialysis facility or a distinct part of such facility or of a provider of services, which has been approved by the Secretary to make self-dialysis services, as defined by the Secretary in regulations, available to individuals who have been trained for self-dialysis. A self-care dialysis unit must, at a minimum, furnish the services, equipment and supplies needed for self-care dialysis, have patient-staff ratios which are appropriate to self-dialysis (allowing for such appropriate lesser degree of ongoing medical supervision and assistance of ancillary personnel than is required for full care maintenance dialysis), and meet such other requirements as the Secretary may prescribe with respect to the quality and cost-effectiveness of services.
(11)
(A)
Hepatitis B vaccine and its administration, when provided to a patient determined to have end stage renal disease, shall not be included as dialysis services for purposes of payment under any prospective payment amount or comprehensive fee established under this section. Payment for such vaccine and its administration shall be made separately in accordance with section 1833.
(B)
Erythropoietin, when provided to a patient determined to have end stage renal disease, shall not be included as a dialysis service for purposes of payment under any prospective payment amount or comprehensive fee established under this section, and subject to paragraphs (12) and (13) payment for such item shall be made separately—
(i)
in the case of erythropoietin provided by a physician, in accordance with section 1833; and
(ii)
in the case of erythropoietin provided by a provider of services, renal dialysis facility, or other supplier of home dialysis supplies and equipment—
(I)
for erythropoietin provided during 1994, in an amount equal to $10 per thousand units (rounded to the nearest 100 units), and
(II)
for erythropoietin provided during a subsequent year, in an amount determined to be appropriate by the Secretary, except that such amount may not exceed the amount determined under this clause for the previous year increased by the percentage increase (if any) in the implicit price deflator for gross national product (as published by the Department of Commerce) for the second quarter of the preceding year over the implicit price deflator for the second quarter of the second preceding year.
(C)
The amount payable to a supplier of home dialysis supplies and equipment that is not a provider of services, a renal dialysis facility, or a physician for erythropoietin shall be determined in the same manner as the amount payable to a renal dialysis facility for such item.
(12)
(A)
Subject to paragraph (14), in lieu of payment under paragraph (7) beginning with services furnished on January 1, 2005, the Secretary shall establish a basic case-mix adjusted prospective payment system for dialysis services furnished by providers of services and renal dialysis facilities in a year to individuals in a facility and to such individuals at home. The case-mix under such system shall be for a limited number of patient characteristics. Under such system, the payment rate for dialysis services furnished on or after January 1, 2009, by providers of services shall be the same as the payment rate (computed without regard to this sentence) for such services furnished by renal dialysis facilities, and in applying the geographic index under subparagraph (D) to providers of services, the labor share shall be based on the labor share otherwise applied for renal dialysis facilities.
(B)
The system described in subparagraph (A) shall include—
(i)
the services comprising the composite rate established under paragraph (7); and
(ii)
the difference between payment amounts under this title for separately billed drugs and biologicals (including erythropoietin) and acquisition costs of such drugs and biologicals, as determined by the Inspector General reports to the Secretary as required by section 623(c) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003—
(I)
beginning with 2005, for such drugs and biologicals for which a billing code exists prior to January 1, 2004; and
(II)
beginning with 2007, for such drugs and biologicals for which a billing code does not exist prior to January 1, 2004,
adjusted to 2005, or 2007, respectively, as determined to be appropriate by the Secretary.
(C)
(i)
In applying subparagraph (B)(ii) for 2005, such payment amounts under this title shall be determined using the methodology specified in paragraph (13)(A)(i).
(ii)
For 2006, the Secretary shall provide for an adjustment to the payments under clause (i) to reflect the difference between the payment amounts using the methodology under paragraph (13)(A)(i) and the payment amount determined using the methodology applied by the Secretary under paragraph (13)(A)(iii) of such paragraph, as estimated by the Secretary.
(D)
The Secretary shall adjust the payment rates under such system by a geographic index as the Secretary determines to be appropriate. If the Secretary applies a geographic index under this paragraph that differs from the index applied under paragraph (7) the Secretary shall phase-in the application of the index under this paragraph over a multiyear period.
(E)
(i)
Such system shall be designed to result in the same aggregate amount of expenditures for such services, as estimated by the Secretary, as would have been made for 2005 if this paragraph did not apply.
(ii)
The adjustment made under subparagraph (B)(ii)(II) shall be done in a manner to result in the same aggregate amount of expenditures after such adjustment as would otherwise have been made for such services for 2006 or 2007, respectively, as estimated by the Secretary, if this paragraph did not apply.
(F)
Beginning with 2006, the Secretary shall annually increase the basic case-mix adjusted payment amounts established under this paragraph, by an amount determined by—
(i)
applying the estimated growth in expenditures for drugs and biologicals (including erythropoietin) that are separately billable to the component of the basic case-mix adjusted system described in subparagraph (B)(ii); and
(ii)
converting the amount determined in clause (i) to an increase applicable to the basic case-mix adjusted payment amounts established under subparagraph (B).
Except as provided in subparagraph (G), nothing in this paragraph or paragraph (14) shall be construed as providing for an update to the composite rate component of the basic case-mix adjusted system under subparagraph (B) or under the system under paragraph (14).
(G)
The Secretary shall increase the amount of the composite rate component of the basic case-mix adjusted system under subparagraph (B) for dialysis services—
(i)
furnished on or after January 1, 2006, and before April 1, 2007, by 1.6 percent above the amount of such composite rate component for such services furnished on December 31, 2005;
(ii)
furnished on or after April 1, 2007, and before January 1, 2009, by 1.6 percent above the amount of such composite rate component for such services furnished on March 31, 2007;
(iii)
furnished on or after January 1, 2009, and before January 1, 2010, by 1.0 percent above the amount of such composite rate component for such services furnished on December 31, 2008; and
(iv)
furnished on or after January 1, 2010, by 1.0 percent above the amount of such composite rate component for such services furnished on December 31, 2009.
(H)
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise, of the case-mix system, relative weights, payment amounts, the geographic adjustment factor, or the update for the system established under this paragraph, or the determination of the difference between medicare payment amounts and acquisition costs for separately billed drugs and biologicals (including erythropoietin) under this paragraph and paragraph (13).
(13)
(A)
Subject to paragraph (14), the payment amounts under this title for separately billed drugs and biologicals furnished in a year, beginning with 2004, are as follows:
(i)
For such drugs and biologicals (other than erythropoietin) furnished in 2004, the amount determined under section 1842(o)(1)(A)(v) for the drug or biological.
(ii)
For such drugs and biologicals (including erythropoietin) furnished in 2005, the acquisition cost of the drug or biological, as determined by the Inspector General reports to the Secretary as required by section 623(c) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Insofar as the Inspector General has not determined the acquisition cost with respect to a drug or biological, the Secretary shall determine the payment amount for such drug or biological.
(iii)
For such drugs and biologicals (including erythropoietin) furnished in 2006 and subsequent years, such acquisition cost or the amount determined under section 1847A for the drug or biological, as the Secretary may specify.
(B)
Drugs and biologicals (including erythropoietin) which were separately billed under this subsection on the day before the date of the enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 shall continue to be separately billed on and after such date, subject to paragraph (14).
(14)
(A)
(i)
Subject to subparagraph (E), for services furnished on or after January 1, 2011, the Secretary shall implement a payment system under which a single payment is made under this title to a provider of services or a renal dialysis facility for renal dialysis services (as defined in subparagraph (B)) in lieu of any other payment (including a payment adjustment under paragraph (12)(B)(ii)) and for such services and items furnished pursuant to paragraph (4).
(ii)
In implementing the system under this paragraph the Secretary shall ensure that the estimated total amount of payments under this title for 2011 for renal dialysis services shall equal 98 percent of the estimated total amount of payments for renal dialysis services, including payments under paragraph (12)(B)(ii), that would have been made under this title with respect to services furnished in 2011 if such system had not been implemented. In making the estimation under subclause (I), the Secretary shall use per patient utilization data from 2007, 2008, or 2009, whichever has the lowest per patient utilization.
(B)
For purposes of this paragraph, the term “renal dialysis services” includes—
(i)
items and services included in the composite rate for renal dialysis services as of December 31, 2010;
(ii)
erythropoiesis stimulating agents and any oral form of such agents that are furnished to individuals for the treatment of end stage renal disease;
(iii)
other drugs and biologicals that are furnished to individuals for the treatment of end stage renal disease and for which payment was (before the application of this paragraph) made separately under this title, and any oral equivalent form of such drug or biological; and
(iv)
diagnostic laboratory tests and other items and services not described in clause (i) that are furnished to individuals for the treatment of end stage renal disease.
Such term does not include vaccines.
(C)
The system under this paragraph may provide for payment on the basis of services furnished during a week or month or such other appropriate unit of payment as the Secretary specifies.
(D)
Such system—
(i)
shall include a payment adjustment based on case mix that may take into account patient weight, body mass index, comorbidities, length of time on dialysis, age, race, ethnicity, and other appropriate factors;
(ii)
shall include a payment adjustment for high cost outliers due to unusual variations in the type or amount of medically necessary care, including variations in the amount of erythropoiesis stimulating agents necessary for anemia management;
(iii)
shall include a payment adjustment that reflects the extent to which costs incurred by low-volume facilities (as defined by the Secretary) in furnishing renal dialysis services exceed the costs incurred by other facilities in furnishing such services, and for payment for renal dialysis services furnished on or after January 1, 2011, and before January 1, 2014, such payment adjustment shall not be less than 10 percent; and
(iv)
may include such other payment adjustments as the Secretary determines appropriate, such as a payment adjustment—
(I)
for pediatric providers of services and renal dialysis facilities;
(II)
by a geographic index, such as the index referred to in paragraph (12)(D), as the Secretary determines to be appropriate; and
(III)
for providers of services or renal dialysis facilities located in rural areas.
The Secretary shall take into consideration the unique treatment needs of children and young adults in establishing such system.
(E)
(i)
The Secretary shall provide for a four-year phase-in (in equal increments) of the payment amount under the payment system under this paragraph, with such payment amount being fully implemented for renal dialysis services furnished on or after January 1, 2014.
(ii)
A provider of services or renal dialysis facility may make a one-time election to be excluded from the phase-in under clause (i) and be paid entirely based on the payment amount under the payment system under this paragraph. Such an election shall be made prior to January 1, 2011, in a form and manner specified by the Secretary, and is final and may not be rescinded.
(iii)
The Secretary shall make an adjustment to the payments under this paragraph for years during which the phase-in under clause (i) is applicable so that the estimated total amount of payments under this paragraph, including payments under this subparagraph, shall equal the estimated total amount of payments that would otherwise occur under this paragraph without such phase-in.
(F)
(i)
(I)
Subject to subclauses (II) and (III) and clause (ii), beginning in 2012, the Secretary shall annually increase payment amounts established under this paragraph by an ESRD market basket percentage increase factor for a bundled payment system for renal dialysis services that reflects changes over time in the prices of an appropriate mix of goods and services included in renal dialysis services.I20 (II) For 2012 and each subsequent year, after determining the increase factor described in subclause (I), the Secretary shall reduce such increase factor by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II). The application of the preceding sentence may result in such increase factor being less than 0.0 for a year, and may result in payment rates under the payment system under this paragraph for a year being less than such payment rates for the preceding year. In order to accomplish the purposes of subparagraph (I) with respect to 2016, 2017, and 2018, after determining the increase factor described in the preceding sentence for each of 2016, 2017, and 2018, the Secretary shall reduce such increase factor by 1.25 percentage points for each of 2016 and 2017 and by 1 percentage point for 2018.
(II)
Subject to subclause (III), for 2012 and each subsequent year, after determining the increase factor described in subclause (I), the Secretary shall reduce such increase factor by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II). The application of the preceding sentence may result in such increase factor being less than 0.0 for a year, and may result in payment rates under the payment system under this paragraph for a year being less than such payment rates for the preceding year.
(III)90
Notwithstanding subclauses (I) and (II), in order to accomplish the purposes of subparagraph (I) with respect to 2015, the increase factor described in subclause (I) for 2015 shall be 0.0 percent pursuant to the regulation issued by the Secretary on December 2, 2013, entitled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies; Final Rule” (78 Fed. Reg. 72156).
^{90}
Margin so in law.
(ii)
For years during which a phase-in of the payment system pursuant to subparagraph (E) is applicable, the following rules shall apply to the portion of the payment under the system that is based on the payment of the composite rate that would otherwise apply if the system under this paragraph had not been enacted:
(I)
The update under clause (i) shall not apply.
(II)
Subject to clause (i)(II), the Secretary shall annually increase such composite rate by the ESRD market basket percentage increase factor described in clause (i)(I).
(G)
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the determination of payment amounts under subparagraph (A), the establishment of an appropriate unit of payment under subparagraph (C), the identification of renal dialysis services included in the bundled payment, the adjustments under subparagraph (D), the application of the phase-in under subparagraph (E), and the establishment of the market basket percentage increase factors under subparagraph (F).
(H)
Erythropoiesis stimulating agents and other drugs and biologicals shall be treated as prescribed and dispensed or administered and available only under part B if they are—
(i)
furnished to an individual for the treatment of end stage renal disease; and
(ii)
included in subparagraph (B) for purposes of payment under this paragraph.
(I)
For services furnished on or after January 1, 2014, and before January 1, 2015, the Secretary shall, by comparing per patient utilization data from 2007 with such data from 2012, make reductions to the single payment that would otherwise apply under this paragraph for renal dialysis services to reflect the Secretary's estimate of the change in the utilization of drugs and biologicals described in clauses (ii), (iii), and (iv) of subparagraph (B) (other than oral-only ESRD-related drugs, as such term is used in the final rule promulgated by the Secretary in the Federal Register on August 12, 2010 (75 Fed. Reg. 49030)). In making reductions under the preceding sentence, the Secretary shall take into account the most recently available data on average sales prices and changes in prices for drugs and biological reflected in the ESRD market basket percentage increase factor under subparagraph (F).
(c)
(1)
(A)
(i)
For the purpose of assuring effective and efficient administration of the benefits provided under this section, the Secretary shall, in accordance with such criteria as he finds necessary to assure the performance of the responsibilities and functions specified in paragraph (2)—
(I)
establish at least 17 end stage renal disease network areas, and
(II)
for each such area, designate a network administrative organization which, in accordance with regulations of the Secretary, shall establish (aa) a network council of renal dialysis and transplant facilities located in the area and (bb) a medical review board, which has a membership including at least one patient representative and physicians, nurses, and social workers engaged in treatment relating to end stage renal disease.
The Secretary shall publish in the Federal Register a description of the geographic area that he determines, after consultation with appropriate professional and patient organizations, constitutes each network area and the criteria on the basis of which such determination is made.
(ii)
(I)
In order to determine whether the Secretary should enter into, continue, or terminate an agreement with a network administrative organization designated for an area established under clause (i), the Secretary shall develop and publish in the Federal Register standards, criteria, and procedures to evaluate an applicant organization's capabilities to perform (and, in the case of an organization with which such an agreement is in effect, actual performance of) the responsibilities described in paragraph (2). The Secretary shall evaluate each applicant based on quality and scope of services and may not accord more than 20 percent of the weight of the evaluation to the element of price.
(II)
An agreement with a network administrative organization may be terminated by the Secretary only if he finds, after applying such standards and criteria, that the organization has failed to perform its prescribed responsibilities effectively and efficiently. If such an agreement is to be terminated, the Secretary shall select a successor to the agreement on the basis of competitive bidding and in a manner that provides an orderly transition.
(B)
At least one patient representative shall serve as a member of each network council and each medical review board.
(C)
The Secretary shall, in regulations, prescribe requirements with respect to membership in network organizations by individuals (and the relatives of such individuals) (i) who have an ownership or control interest in a facility or provider which furnishes services referred to in section 1861(s)(2)(F), or (ii) who have received remuneration from any such facility or provider in excess of such amounts as constitute reasonable compensation for services (including time and effort relative to the provision of professional medical services) or goods supplied to such facility or provider; and such requirements shall provide for the definition, disclosure, and, to the maximum extent consistent with effective administration, prevention of potential or actual financial or professional conflicts of interest with respect to decisions concerning the appropriateness, nature, or site of patient care.
(2)
The network organizations of each network shall be responsible, in addition to such other duties and functions as may be prescribed by the Secretary, for—
(A)
encouraging, consistent with sound medical practice, the use of those treatment settings most compatible with the successful rehabilitation of the patient and the participation of patients, providers of services, and renal disease facilities in vocational rehabilitation programs;
(B)
developing criteria and standards relating to the quality and appropriateness of patient care and with respect to working with patients, facilities, and providers in encouraging participation in vocational rehabilitation programs; and network goals with respect to the placement of patients in self-care settings and undergoing or preparing for transplantation;
(C)
evaluating the procedure by which facilities and providers in the network assess the appropriateness of patients for proposed treatment modalities;
(D)
implementing a procedure for evaluating and resolving patient grievances;
(E)
conducting on-site reviews of facilities and providers as necessary (as determined by a medical review board or the Secretary), utilizing standards of care established by the network organization to assure proper medical care;
(F)
collecting, validating, and analyzing such data as are necessary to prepare the reports required by subparagraph (H) and to assure the maintenance of the registry established under paragraph (7);
(G)
identifying facilities and providers that are not cooperating toward meeting network goals and assisting such facilities and providers in developing appropriate plans for correction and reporting to the Secretary on facilities and providers that are not providing appropriate medical care; and
(H)
submitting an annual report to the Secretary on July 1 of each year which shall include a full statement of the network's goals, data on the network's performance in meeting its goals (including data on the comparative performance of facilities and providers with respect to the identification and placement of suitable candidates in self-care settings and transplantation and encouraging participation in vocational rehabilitation programs), identification of those facilities that have consistently failed to cooperate with network goals, and recommendations with respect to the need for additional or alternative services or facilities in the network in order to meet the network goals, including self-dialysis training, transplantation, and organ procurement facilities.
(3)
Where the Secretary determines, on the basis of the data contained in the network's annual report and such other relevant data as may be available to him, that a facility or provider has consistently failed to cooperate with network plans and goals or to follow the recommendations of the medical review board, he may terminate or withhold certification of such facility or provider (for purposes of payment for services furnished to individuals with end stage renal disease) until he determines that such provider or facility is making reasonable and appropriate efforts to cooperate with the network's plans and goals. If the Secretary determines that the facility's or provider's failure to cooperate with network plans and goals does not jeopardize patient health or safety or justify termination of certification, he may instead, after reasonable notice to the provider or facility and to the public, impose such other sanctions as he determines to be appropriate, which sanctions may include denial of reimbursement with respect to some or all patients admitted to the facility after the date of notice to the facility or provider, and graduated reduction in reimbursement for all patients.
(4)
The Secretary shall, in determining whether to certify additional facilities or expansion of existing facilities within a network, take into account the network's goals and performance as reflected in the network's annual report.
(5)
The Secretary, after consultation with appropriate professional and planning organizations, shall provide such guidelines with respect to the planning and delivery of renal disease services as are necessary to assist network organizations in their development of their respective networks' goals to promote the optimum use of self-dialysis and transplantation by suitable candidates for such modalities.
(6)
It is the intent of the Congress that the maximum practical number of patients who are medically, socially, and psychologically suitable candidates for home dialysis or transplantation should be so treated and that the maximum practical number of patients who are suitable candidates for vocational rehabilitation services be given access to such services and encouraged to return to gainful employment. The Secretary shall consult with appropriate professional and network organizations and consider available evidence relating to developments in research, treatment methods, and technology for home dialysis and transplantation.
(7)
The Secretary shall establish a national end stage renal disease registry the purpose of which shall be to assemble and analyze the data reported by network organizations, transplant centers, and other sources on all end stage renal disease patients in a manner that will permit—
(A)
the preparation of the annual report to the Congress required under subsection (g);
(B)
an identification of the economic impact, cost-effectiveness, and medical efficacy of alternative modalities of treatment;
(C)
an evaluation with respect to the most appropriate allocation of resources for the treatment and research into the cause of end stage renal disease;
(D)
the determination of patient mortality and morbidity rates, and trends in such rates, and other indices of quality of care; and
(E)
such other analyses relating to the treatment and management of end stage renal disease as will assist the Congress in evaluating the end stage renal disease program under this section.
The Secretary shall provide for such coordination of data collection activities, and such consolidation of existing end stage renal disease data systems, as is necessary to achieve the purpose of such registry, shall determine the appropriate location of the registry, and shall provide for the appointment of a professional advisory group to assist the Secretary in the formulation of policies and procedures relevant to the management of such registry.
(8)
The provisions of sections 1157 and 1160 shall apply with respect to network administrative organizations (including such organizations as medical review boards) with which the Secretary has entered into agreements under this subsection.
(d)
Notwithstanding any provision to the contrary in section 226 any individual who donates a kidney for transplant surgery shall be entitled to benefits under parts A and B of this title with respect to such donation. Reimbursement for the reasonable expenses incurred by such an individual with respect to a kidney donation shall be made (without regard to the deductible, premium, and coinsurance provisions of this title), in such manner as may be prescribed by the Secretary in regulations, for all reasonable preparatory, operation, and postoperation recovery expenses associated with such donation, including but not limited to the expenses for which payment could be made if he were an eligible individual for purposes of parts A and B of this title without regard to this subsection. Payments for postoperation recovery expenses shall be limited to the actual period of recovery.
(e)
(1)
Notwithstanding any other provision of this title, the Secretary may, pursuant to agreements with approved providers of services, renal dialysis facilities, and nonprofit entities which the Secretary finds can furnish equipment economically and efficiently, reimburse such providers, facilities, and nonprofit entities (without regard to the deductible and coinsurance provisions of this title) for the reasonable cost of the purchase, installation, maintenance and reconditioning for subsequent use of artificial kidney and automated dialysis peritoneal machines (including supportive equipment) which are to be used exclusively by entitled individuals dialyzing at home.
(2)
An agreement under this subsection shall require that the provider, facility, or other entity will—
(A)
make the equipment available for use only by entitled individuals dialyzing at home;
(B)
recondition the equipment, as needed, for reuse by such individuals throughout the useful life of the equipment, including modification of the equipment consistent with advances in research and technology;
(C)
provide for full access for the Secretary to all records and information relating to the purchase, maintenance, and use of the equipment; and
(D)
submit such reports, data, and information as the Secretary may require with respect to the cost, management, and use of the equipment.
(3)
For purposes of this section, the term “supportive equipment” includes blood pumps, heparin pumps, bubble detectors, other alarm systems, and such other items as the Secretary may determine are medically necessary.
(f)
(1)
The Secretary shall initiate and carry out, at selected locations in the United States, pilot projects under which financial assistance in the purchase of new or used durable medical equipment for renal dialysis is provided to individuals suffering from end stage renal disease at the time home dialysis is begun, with provision for a trial period to assure successful adaptation to home dialysis before the actual purchase of such equipment.
(2)
The Secretary shall conduct experiments to evaluate methods for reducing the costs of the end stage renal disease program. Such experiments shall include (without being limited to) reimbursement for nurses and dialysis technicians to assist with home dialysis, and reimbursement to family members assisting with home dialysis.
(3)
The Secretary shall conduct experiments to evaluate methods of dietary control for reducing the costs of the end stage renal disease program, including (without being limited to) the use of protein-controlled products to delay the necessity for, or reduce the frequency of, dialysis in the treatment of end stage renal disease.
(4)
The Secretary shall conduct a comprehensive study of methods for increasing public participation in kidney donation and other organ donation programs.
(5)
The Secretary shall conduct a full and complete study of the reimbursement of physicians for services furnished to patients with end stage renal disease under this title, giving particular attention to the range of payments to physicians for such services, the average amounts of such payments, and the number of hours devoted to furnishing such services to patients at home, in renal disease facilities, in hospitals, and elsewhere.
(6)
The Secretary shall conduct a study of the number of patients with end stage renal disease who are not eligible for benefits with respect to such disease under this title (by reason of this section or otherwise), and of the economic impact of such noneligibility of such individuals. Such study shall include consideration of mechanisms whereby governmental and other health plans might be instituted or modified to permit the purchase of actuarially sound coverage for the costs of end stage renal disease.
(7)
(A)
The Secretary shall establish protocols on standards and conditions for the reuse of dialyzer filters for those facilities and providers which voluntarily elect to reuse such filters.
(B)
With respect to dialysis services furnished on or after January 1, 1988 (or July 1, 1988, with respect to protocols that relate to the reuse of bloodlines), no dialysis facility may reuse dialysis supplies (other than dialyzer filters) unless the Secretary has established a protocol with respect to the reuse of such supplies and the facility follows the protocol so established.
(C)
The Secretary shall incorporate protocols established under this paragraph, and the requirement of subparagraph (B), into the requirements for facilities prescribed under subsection (b)(1)(A) and failure to follow such a protocol or requirement subjects such a facility to denial of participation in the program established under this section and to denial of payment for dialysis treatment not furnished in compliance with such a protocol or in violation of such requirement.
(8)
The Secretary shall submit to the Congress no later than October 1, 1979, a full report on the experiments conducted under paragraphs (1), (2), (3), and (7), and the studies under paragraphs (4), (5), (6), and (7). Such report shall include any recommendations for legislative changes which the Secretary finds necessary or desirable as a result of such experiments and studies.
(g)
(1)
In any case where the Secretary—
(A)
finds that a renal dialysis facility is not in substantial compliance with requirements for such facilities prescribed under subsection (b)(1)(A),
(B)
finds that the facility's deficiencies do not immediately jeopardize the health and safety of patients, and
(C)
has given the facility a reasonable opportunity to correct its deficiencies,
the Secretary may, in lieu of terminating approval of the facility, determine that payment under this title shall be made to the facility only for services furnished to individuals who were patients of the facility before the effective date of the notice.
(2)
The Secretary's decision to restrict payments under this subsection shall be made effective only after such notice to the public and to the facility as may be prescribed in regulations, and shall remain in effect until (A) the Secretary finds that the facility is in substantial compliance with the requirements under subsection (b)(1)(A), or (B) the Secretary terminates the agreement under this title with the facility.
(3)
A facility dissatisfied with a determination by the Secretary under paragraph (1) shall be entitled to a hearing thereon by the Secretary (after reasonable notice) to the same extent as is provided in section 205(b), and to judicial review of the Secretary's final decision after such hearing as is provided in section 205(g), except that, in so applying such sections 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.
(h)

Quality Incentives in the End-Stage Renal Disease Program.—
(1)

Quality incentives.—
(A)

In general.—
With respect to renal dialysis services (as defined in subsection (b)(14)(B)) furnished on or after January 1, 2012, in the case of a provider of services or a renal dialysis facility that does not meet the requirement described in subparagraph (B) with respect to the year, payments otherwise made to such provider or facility under the system under subsection (b)(14) for such services shall be reduced by up to 2.0 percent, as determined appropriate by the Secretary.
(B)

Requirement.—
The requirement described in this subparagraph is that the provider or facility meets (or exceeds) the total performance score under paragraph (3) with respect to performance standards established by the Secretary with respect to measures specified in paragraph (2).
(C)

No effect in subsequent years.—
The reduction under subparagraph (A) shall apply only with respect to the year involved, and the Secretary shall not take into account such reduction in computing the single payment amount under the system under paragraph (14) in a subsequent year.
(2)

Measures.—
(A)

In general.—
The measures specified under this paragraph with respect to the year involved shall include—
(i)
measures on anemia management that reflect the labeling approved by the Food and Drug Administration for such management and measures on dialysis adequacy;
(ii)
to the extent feasible, such measure (or measures) of patient satisfaction as the Secretary shall specify;
(iii)
for 2016 and subsequent years, measures described in subparagraph (E)(i); and
(iv)
such other measures as the Secretary specifies, including, to the extent feasible, measures on—
(I)
iron management;
(II)
bone mineral metabolism; and
(III)
vascular access, including for maximizing the placement of arterial venous fistula.
(B)

Use of endorsed measures.—
(i)

In general.—
Subject to clause (ii), any measure specified by the Secretary under subparagraph (A)(iv) must have been endorsed by the entity with a contract under section 1890(a).
(ii)

Exception.—
In the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a), the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.
(C)

Updating measures.—
The Secretary shall establish a process for updating the measures specified under subparagraph (A) in consultation with interested parties.
(D)

Consideration.—
In specifying measures under subparagraph (A), the Secretary shall consider the availability of measures that address the unique treatment needs of children and young adults with kidney failure.
(E)

Measures specific to the conditions treated with oral-only drugs.—
(i)

In general.—
The measures described in this subparagraph are measures specified by the Secretary that are specific to the conditions treated with oral-only drugs. To the extent feasible, such measures shall be outcomes-based measures.
(ii)

Consultation.—
In specifying the measures under clause (i), the Secretary shall consult with interested stakeholders.
(iii)

Use of endorsed measures.—
(I)

In general.—
Subject to subclause (I), any measures specified under clause (i) must have been endorsed by the entity with a contract under section 1890(a).
(II)

Exception.—
If the entity with a contract under section 1890(a) has not endorsed a measure for a specified area or topic related to measures described in clause (i) that the Secretary determines appropriate, the Secretary may specify a measure that is endorsed or adopted by a consensus organization recognized by the Secretary that has expertise in clinical guidelines for kidney disease.
(3)

Performance scores.—
(A)

Total performance score.—
(i)

In general.—
Subject to clause (ii), the Secretary shall develop a methodology for assessing the total performance of each provider of services and renal dialysis facility based on performance standards with respect to the measures selected under paragraph (2) for a performance period established under paragraph (4)(D) (in this subsection referred to as the “total performance score”).
(ii)

Application.—
For providers of services and renal dialysis facilities that do not meet (or exceed) the total performance score established by the Secretary, the Secretary shall ensure that the application of the methodology developed under clause (i) results in an appropriate distribution of reductions in payment under paragraph (1) among providers and facilities achieving different levels of total performance scores, with providers and facilities achieving the lowest total performance scores receiving the largest reduction in payment under paragraph (1)(A).
(iii)

Weighting of measures.—
In calculating the total performance score, the Secretary shall weight the scores with respect to individual measures calculated under subparagraph (B) to reflect priorities for quality improvement, such as weighting scores to ensure that providers of services and renal dialysis facilities have strong incentives to meet or exceed anemia management and dialysis adequacy performance standards, as determined appropriate by the Secretary.
(B)

Performance score with respect to individual measures.—
The Secretary shall also calculate separate performance scores for each measure, including for dialysis adequacy and anemia management.
(4)

Performance standards.—
(A)

Establishment.—
Subject to subparagraph (E), the Secretary shall establish performance standards with respect to measures selected under paragraph (2) for a performance period with respect to a year (as established under subparagraph (D)).
(B)

Achievement and improvement.—
The performance standards established under subparagraph (A) shall include levels of achievement and improvement, as determined appropriate by the Secretary.
(C)

Timing.—
The Secretary shall establish the performance standards under subparagraph (A) prior to the beginning of the performance period for the year involved.
(D)

Performance period.—
The Secretary shall establish the performance period with respect to a year. Such performance period shall occur prior to the beginning of such year.
(E)

Special rule.—
The Secretary shall initially use as the performance standard for the measures specified under paragraph (2)(A)(i) for a provider of services or a renal dialysis facility the lesser of—
(i)
the performance of such provider or facility for such measures in the year selected by the Secretary under the second sentence of subsection (b)(14)(A)(ii); or
(ii)
a performance standard based on the national performance rates for such measures in a period determined by the Secretary.
(5)

Limitation on review.—
There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the following:
(A)
The determination of the amount of the payment reduction under paragraph (1).
(B)
The establishment of the performance standards and the performance period under paragraph (4).
(C)
The specification of measures under paragraph (2).
(D)
The methodology developed under paragraph (3) that is used to calculate total performance scores and performance scores for individual measures.
(6)

Public reporting.—
(A)

In general.—
The Secretary shall establish procedures for making information regarding performance under this subsection available to the public, including—
(i)
the total performance score achieved by the provider of services or renal dialysis facility under paragraph (3) and appropriate comparisons of providers of services and renal dialysis facilities to the national average with respect to such scores; and
(ii)
the performance score achieved by the provider or facility with respect to individual measures.
(B)

Opportunity to review.—
The procedures established under subparagraph (A) shall ensure that a provider of services and a renal dialysis facility has the opportunity to review the information that is to be made public with respect to the provider or facility prior to such data being made public.
(C)

Certificates.—
(i)

In general.—
The Secretary shall provide certificates to providers of services and renal dialysis facilities who furnish renal dialysis services under this section to display in patient areas. The certificate shall indicate the total performance score achieved by the provider or facility under paragraph (3).
(ii)

Display.—
Each facility or provider receiving a certificate under clause (i) shall prominently display the certificate at the provider or facility.
(D)

Web-based list.—
The Secretary shall establish a list of providers of services and renal dialysis facilities who furnish renal dialysis services under this section that indicates the total performance score and the performance score for individual measures achieved by the provider and facility under paragraph (3). Such information shall be posted on the Internet website of the Centers for Medicare & Medicaid Services in an easily understandable format.
SEC. 1881A.
[42 U.S.C. 1395rr–1]

MEDICARE COVERAGE FOR INDIVIDUALS EXPOSED TO ENVIRONMENTAL HEALTH HAZARDS.
(a)

Deeming of Individuals as Eligible for Medicare Benefits.—
(1)

In general.—
For purposes of eligibility for benefits under this title, an individual determined under subsection (c) to be an environmental exposure affected individual described in subsection (e)(2) shall be deemed to meet the conditions specified in section 226(a).
(2)

Discretionary deeming.—
For purposes of eligibility for benefits under this title, the Secretary may deem an individual determined under subsection (c) to be an environmental exposure affected individual described in subsection (e)(3) to meet the conditions specified in section 226(a).
(3)

Effective date of coverage.—
An Individual who is deemed eligible for benefits under this title under paragraph (1) or (2) shall be—
(A)
entitled to benefits under the program under Part A as of the date of such deeming; and
(B)
eligible to enroll in the program under Part B beginning with the month in which such deeming occurs.
(b)

Pilot Program for Care of Certain Individuals Residing in Emergency Declaration Areas.—
(1)

Program; purpose.—
(A)

Primary pilot program.—
The Secretary shall establish a pilot program in accordance with this subsection to provide innovative approaches to furnishing comprehensive, coordinated, and cost-effective care under this title to individuals described in paragraph (2)(A).
(B)

Optional pilot programs.—
The Secretary may establish a separate pilot program, in accordance with this subsection, with respect to each geographic area subject to an emergency declaration (other than the declaration of June 17, 2009), in order to furnish such comprehensive, coordinated and cost-effective care to individuals described in subparagraph (2)(B) who reside in each such area.
(2)

Individual described.—
For purposes of paragraph (1), an individual described in this paragraph is an individual who enrolls in part B, submits to the Secretary an application to participate in the applicable pilot program under this subsection, and—
(A)
is an environmental exposure affected individual described in subsection (e)(2) who resides in or around the geographic area subject to an emergency declaration made as of June 17, 2009; or
(B)
is an environmental exposure affected individual described in subsection (e)(3) who—
(i)
is deemed under subsection (a)(2); and
(ii)
meets such other criteria or conditions for participation in a pilot program under paragraph (1)(B) as the Secretary specifies.
(3)

Flexible benefits and services.—
A pilot program under this subsection may provide for the furnishing of benefits, items, or services not otherwise covered or authorized under this title, if the Secretary determines that furnishing such benefits, items, or services will further the purposes of such pilot program (as described in paragraph (1)).
(4)

Innovative reimbursement methodologies.—
For purposes of the pilot program under this subsection, the Secretary—
(A)
shall develop and implement appropriate methodologies to reimburse providers for furnishing benefits, items, or services for which payment is not otherwise covered or authorized under this title, if such benefits, items, or services are furnished pursuant to paragraph (3); and
(B)
may develop and implement innovative approaches to reimbursing providers for any benefits, items, or services furnished under this subsection.
(5)

Limitation.—
Consistent with section 1862(b), no payment shall be made under the pilot program under this subsection with respect to benefits, items, or services furnished to an environmental exposure affected individual (as defined in subsection (e)) to the extent that such individual is eligible to receive such benefits, items, or services through any other public or private benefits plan or legal agreement.
(6)

Waiver authority.—
The Secretary may waive such provisions of this title and title XI as are necessary to carry out pilot programs under this subsection.
(7)

Funding.—
For purposes of carrying out pilot programs under this subsection, the Secretary shall provide for the transfer, from the Federal Hospital Insurance Trust Fund under section 1817 and the Federal Supplementary Medical Insurance Trust Fund under section 1841, in such proportion as the Secretary determines appropriate, of such sums as the Secretary determines necessary, to the Centers for Medicare & Medicaid Services Program Management Account.
(8)

Waiver of budget neutrality.—
The Secretary shall not require that pilot programs under this subsection be budget neutral with respect to expenditures under this title.
(c)

Determinations.—
(1)

By the commissioner of social security.—
For purposes of this section, the Commissioner of Social Security, in consultation with the Secretary, and using the cost allocation method prescribed in section 201(g), shall determine whether individuals are environmental exposure affected individuals.
(2)

By the secretary.—
The Secretary shall determine eligibility for pilot programs under subsection (b).
(d)

Emergency Declaration Defined.—
For purposes of this section, the term “emergency declaration” means a declaration of a public health emergency under section 104(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980.
(e)

Environmental Exposure Affected Individual Defined.—
(1)

In general.—
For purposes of this section, the term “environmental exposure affected individual” means—
(A)
an individual described in paragraph (2); and
(B)
an individual described in paragraph (3).
(2)

Individual described.—
(A)

In general.—
An individual described in this paragraph is any individual who—
(i)
is diagnosed with 1 or more conditions described in subparagraph (B);
(ii)
as demonstrated in such manner as the Secretary determines appropriate, has been present for an aggregate total of 6 months in the geographic area subject to an emergency declaration specified in subsection (b)(2)(A), during a period ending—
(I)
not less than 10 years prior to such diagnosis; and
(II)
prior to the implementation of all the remedial and removal actions specified in the Record of Decision for Operating Unit 4 and the Record of Decision for Operating Unit 7;
(iii)
files an application for benefits under this title (or has an application filed on behalf of the individual), including pursuant to this section; and
(iv)
is determined under this section to meet the criteria in this subparagraph.
(B)

Conditions described.—
For purposes of subparagraph (A), the following conditions are described in this subparagraph:
(i)
Asbestosis, pleural thickening, or pleural plaques as established by—
(I)
interpretation by a “B Reader” qualified physician of a plain chest x-ray or interpretation of a computed tomographic radiograph of the chest by a qualified physician, as determined by the Secretary; or
(II)
such other diagnostic standards as the Secretary specifies,
except that this clause shall not apply to pleural thickening or pleural plaques unless there are symptoms or conditions requiring medical treatment as a result of these diagnoses.
(ii)
Mesothelioma, or malignancies of the lung, colon, rectum, larynx, stomach, esophagus, pharynx, or ovary, as established by—
(I)
pathologic examination of biopsy tissue;
(II)
cytology from bronchioalveolar lavage; or
(III)
such other diagnostic standards as the Secretary specifies.
(iii)
Any other diagnosis which the Secretary, in consultation with the Commissioner of Social Security, determines is an asbestos-related medical condition, as established by such diagnostic standards as the Secretary specifies.
(3)

Other individual described.—
An individual described in this paragraph is any individual who—
(A)
is not an individual described in paragraph (2);
(B)
is diagnosed with a medical condition caused by the exposure of the individual to a public health hazard to which an emergency declaration applies, based on such medical conditions, diagnostic standards, and other criteria as the Secretary specifies;
(C)
as demonstrated in such manner as the Secretary determines appropriate, has been present for an aggregate total of 6 months in the geographic area subject to the emergency declaration involved, during a period determined appropriate by the Secretary;
(D)
files an application for benefits under this title (or has an application filed on behalf of the individual), including pursuant to this section; and
(E)
is determined under this section to meet the criteria in this paragraph.

certification of medicare supplemental health insurance policies
Sec. 1882.
[42 U.S.C. 1395ss]
(a)
(1)
The Secretary shall establish a procedure whereby medicare supplemental policies (as defined in subsection (g)(1)) may be certified by the Secretary as meeting minimum standards and requirements set forth in subsection (c). Such procedure shall provide an opportunity for any insurer to submit any such policy, and such additional data as the Secretary finds necessary, to the Secretary for his examination and for his certification thereof as meeting the standards and requirements set forth in subsection (c). Subject to subsections (k)(3), (m), and (n), such certification shall remain in effect if the insurer files a notarized statement with the Secretary no later than June 30 of each year stating that the policy continues to meet such standards and requirements and if the insurer submits such additional data as the Secretary finds necessary to independently verify the accuracy of such notarized statement. Where the Secretary determines such a policy meets (or continues to meet) such standards and requirements, he shall authorize the insurer to have printed on such policy (but only in accordance with such requirements and conditions as the Secretary may prescribe) an emblem which the Secretary shall cause to be designed for use as an indication that a policy has received the Secretary's certification. The Secretary shall provide each State commissioner or superintendent of insurance with a list of all the policies which have received his certification.
(2)
No medicare supplemental policy may be issued in a State on or after the date specified in subsection (p)(1)(C) unless—
(A)
the State's regulatory program under subsection (b)(1) provides for the application and enforcement of the standards and requirements set forth in such subsection (including the 1991 NAIC Model Regulation or 1991 Federal Regulation (as the case may be)) by the date specified in subsection (p)(1)(C); or
(B)
if the State's program does not provide for the application and enforcement of such standards and requirements, the policy has been certified by the Secretary under paragraph (1) as meeting the standards and requirements set forth in subsection (c) (including such applicable standards) by such date.
Any person who issues a medicare supplemental policy, on and after the effective date specified in subsection (p)(1)(C), in violation of this paragraph is subject to a civil money penalty of not to exceed $25,000 for each such violation. The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(b)
(1)
Any medicare supplemental policy issued in any State which the Secretary determines has established under State law a regulatory program that—
(A)
provides for the application and enforcement of standards with respect to such policies equal to or more stringent than the NAIC Model Standards (as defined in subsection (g)(2)(A)), except as otherwise provided by subparagraph (H);
(B)
includes requirements equal to or more stringent than the requirements described in paragraphs (2) through (5) of subsection (c);
(C)
provides that—
(i)
information with respect to the actual ratio of benefits provided to premiums collected under such policies will be reported to the State on forms conforming to those developed by the National Association of Insurance Commissioners for such purpose, or
(ii)
such ratios will be monitored under the program in an alternative manner approved by the Secretary, and that a copy of each such policy, the most recent premium for each such policy, and a listing of the ratio of benefits provided to premiums collected for the most recent 3-year period for each such policy issued or sold in the State is maintained and made available to interested persons;
(D)
provides for application and enforcement of the standards and requirements described in subparagraphs (A), (B), and (C) to all medicare supplemental policies (as defined in subsection (g)(1)) issued in such State,
(E)
provides the Secretary periodically (but at least annually) with a list containing the name and address of the issuer of each such policy and the name and number of each such policy (including an indication of policies that have been previously approved, newly approved, or withdrawn from approval since the previous list was provided),
(F)
reports to the Secretary on the implementation and enforcement of standards and requirements of this paragraph at intervals established by the Secretary,
(G)
provides for a process for approving or disapproving proposed premium increases with respect to such policies, and establishes a policy for the holding of public hearings prior to approval of a premium increase,
(H)
in the case of a policy that meets the standards under subparagraph (A) except that benefits under the policy are limited to items and services furnished by certain entities (or reduced benefits are provided when items or services are furnished by other entities), provides for the application of requirements equal to or more stringent than the requirements under subsection (t),
shall be deemed (subject to subsections (k)(3), (m), and (n), for so long as the Secretary finds that such State regulatory program continues to meet the standards and requirements of this paragraph) to meet the standards and requirements set forth in subsection (c). Each report required under subparagraph (F) shall include information on loss ratios of policies sold in the State, frequency and types of instances in which policies approved by the State fail to meet the standards and requirements of this paragraph, actions taken by the State to bring such policies into compliance, information regarding State programs implementing consumer protection provisions, and such further information as the Secretary in consultation with the National Association of Insurance Commissioners may specify.
(2)
The Secretary periodically shall review State regulatory programs to determine if they continue to meet the standards and requirements specified in paragraph (1). If the Secretary finds that a State regulatory program no longer meets the standards and requirements, before making a final determination, the Secretary shall provide the State an opportunity to adopt such a plan of correction as would permit the State regulatory program to continue to meet such standards and requirements. If the Secretary makes a final determination that the State regulatory program, after such an opportunity, fails to meet such standards and requirements, the program shall no longer be considered to have in operation a program meeting such standards and requirements.
(3)
Notwithstanding paragraph (1), a medicare supplemental policy offered in a State shall not be deemed to meet the standards and requirements set forth in subsection (c), with respect to an advertisement (whether through written, radio, or television medium) used (or, at a State's option, to be used) for the policy in the State, unless the entity issuing the policy provides a copy of each advertisement to the Commissioner of Insurance (or comparable officer identified by the Secretary) of that State for review or approval to the extent it may be required under State law.
(c)
The Secretary shall certify under this section any medicare supplemental policy, or continue certification of such a policy, only if he finds that such policy (or, with respect to paragraph (3) or the requirement described in subsection (s), the issuer of the policy)—
(1)
meets or exceeds (either in a single policy or, in the case of nonprofit hospital and medical service associations, in one or more policies issued in conjunction with one another) the NAIC Model Standards (except as otherwise provided by subsection (t));
(2)
meets the requirements of subsection (r);
(3)
(A)
accepts a notice under section 1842(h)(3)(B) as a claim form for benefits under such policy in lieu of any claim form otherwise required and agrees to make a payment determination on the basis of the information contained in such notice;
(B)
where such a notice is received—
(i)
provides notice to such physician or supplier and the beneficiary of the payment determination under the policy, and
(ii)
provides any payment covered by such policy directly to the participating physician or supplier involved;
(C)
provides each enrollee at the time of enrollment a card listing the policy name and number and a single mailing address to which notices under section 1842(h)(3)(B) respecting the policy are to be sent;
(D)
agrees to pay any user fees established under section 1842(h)(3)(B) with respect to information transmitted to the issuer of the policy; and
(E)
provides to the Secretary at least annually, for transmittal to carriers, a single mailing address to which notices under section 1842(h)(3)(B) respecting the policy are to be sent;
(4)
may, during a period of not less than 30 days after the policy is issued, be returned for a full refund of any premiums paid (without regard to the manner in which the purchase of the policy was solicited); and
(5)
meets the applicable requirements of subsections (o) through (t).
(d)
(1)
Whoever knowingly and willfully makes or causes to be made or induces or seeks to induce the making of any false statement or representation of a material fact with respect to the compliance of any policy with the standards and requirements set forth in subsection (c) or in regulations promulgated pursuant to such subsection, or with respect to the use of the emblem designed by the Secretary under subsection (a), shall be fined under title 18, United States Code, or imprisoned not more than 5 years, or both, and, in addition to or in lieu of such a criminal penalty, is subject to a civil money penalty of not to exceed $5,000 for each such prohibited act.
(2)
Whoever falsely assumes or pretends to be acting, or misrepresents in any way that he is acting, under the authority of or in association with, the program of health insurance established by this title, or any Federal agency, for the purpose of selling or attempting to sell insurance, or in such pretended character demands, or obtains money, paper, documents, or anything of value, shall be fined under title 18, United States Code, or imprisoned not more than 5 years, or both, and, in addition to or in lieu of such a criminal penalty, is subject to a civil money penalty of not to exceed $5,000 for each such prohibited act.
(3)
(A)
(i)
It is unlawful for a person to sell or issue to an individual entitled to benefits under part A or enrolled under part B of this title (including an individual electing a Medicare+Choice plan under section 1851)—
(I)
a health insurance policy with knowledge that the policy duplicates health benefits to which the individual is otherwise entitled under this title or title XIX,
(II)
in the case of an individual not electing a Medicare+Choice plan, a medicare supplemental policy with knowledge that the individual is entitled to benefits under another medicare supplemental policy or in the case of an individual electing a Medicare+Choice plan, a medicare supplemental policy with knowledge that the policy duplicates health benefits to which the individual is otherwise entitled under the Medicare+Choice plan or under another medicare supplemental policy, or
(III)
a health insurance policy (other than a medicare supplemental policy) with knowledge that the policy duplicates health benefits to which the individual is otherwise entitled, other than benefits to which the individual is entitled under a requirement of State or Federal law.
(ii)
Whoever violates clause (i) shall be fined under title 18, United States Code, or imprisoned not more than 5 years, or both, and, in addition to or in lieu of such a criminal penalty, is subject to a civil money penalty of not to exceed $25,000 (or $15,000 in the case of a person other than the issuer of the policy) for each such prohibited act.
(iii)
A seller (who is not the issuer of a health insurance policy) shall not be considered to violate clause (i)(II) with respect to the sale of a medicare supplemental policy if the policy is sold in compliance with subparagraph (B).
(iv)
For purposes of this subparagraph, a health insurance policy (other than a Medicare supplemental policy) providing for benefits which are payable to or on behalf of an individual without regard to other health benefit coverage of such individual is not considered to “duplicate” any health benefits under this title, under title XIX, or under a health insurance policy, and subclauses (I) and (III) of clause (i) do not apply to such a policy.
(v)
For purposes of this subparagraph, a health insurance policy (or a rider to an insurance contract which is not a health insurance policy) is not considered to “duplicate” health benefits under this title or under another health insurance policy if it—
(I)
provides health care benefits only for long-term care, nursing home care, home health care, or community-based care, or any combination thereof,
(II)
coordinates against or excludes items and services available or paid for under this title or under another health insurance policy, and
(III)
for policies sold or issued on or after the end of the 90-day period beginning on the date of enactment of the Health Insurance Portability and Accountability Act of 1996 discloses such coordination or exclusion in the policy's outline of coverage.
For purposes of this clause, the terms “coordinates” and “coordination” mean, with respect to a policy in relation to health benefits under this title or under another health insurance policy, that the policy under its terms is secondary to, or excludes from payment, items and services to the extent available or paid for under this title or under another health insurance policy.
(vi)
(I)
An individual entitled to benefits under part A or enrolled under part B of this title who is applying for a health insurance policy (other than a policy described in subclause (III)) shall be furnished a disclosure statement described in clause (vii) for the type of policy being applied for. Such statement shall be furnished as a part of (or together with) the application for such policy.
(II)
Whoever issues or sells a health insurance policy (other than a policy described in subclause (III)) to an individual described in subclause (I) and fails to furnish the appropriate disclosure statement as required under such subclause shall be fined under title 18, United States Code, or imprisoned not more than 5 years, or both, and, in addition to or in lieu of such a criminal penalty, is subject to a civil money penalty of not to exceed $25,000 (or $15,000 in the case of a person other than the issuer of the policy) for each such violation.
(III)
A policy described in this subclause (to which subclauses (I) and (II) do not apply) is a Medicare supplemental policy, a policy described in clause (v), or a health insurance policy identified under 60 Federal Register 30880 (June 12, 1995) as a policy not required to have a disclosure statement.
(IV)
Any reference in this section to the revised NAIC model regulation (referred to in subsection (m)(1)(A)) is deemed a reference to such regulation as revised by section 171(m)(2) of the Social Security Act Amendments of 1994 (Public Law 103–432) and as modified by substituting, for the disclosure required under section 16D(2), disclosure under subclause (I) of an appropriate disclosure statement under clause (vii).
(vii)
The disclosure statement described in this clause for a type of policy is the statement specified under subparagraph (D) of this paragraph (as in effect before the date of the enactment of the Health Insurance Portability and Accountability Act of 1996) for that type of policy, as revised as follows:
(I)
In each statement, amend the second line to read as follows:
THIS IS NOT MEDICARE SUPPLEMENT INSURANCE ”
.
(II)
In each statement, strike the third line and insert the following: “Some health care services paid for by Medicare may also trigger the payment of benefits under this policy.”.
(III)
In each statement not described in subclause (V), strike the boldface matter that begins “This insurance” and all that follows up to the next paragraph that begins “Medicare”.
(IV)
In each statement not described in subclause (V), insert before the boxed matter (that states “Before You Buy This Insurance”) the following: “This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.”.
(V)
In a statement relating to policies providing both nursing home and non-institutional coverage, to policies providing nursing home benefits only, or policies providing home care benefits only, amend the sentence that begins “Federal law” to read as follows: “Federal law requires us to inform you that in certain situations this insurance may pay for some care also covered by Medicare.”.
(viii)
(I)
Subject to subclause (II), nothing in this subparagraph shall restrict or preclude a State's ability to regulate health insurance policies, including any health insurance policy that is described in clause (iv), (v), or (vi)(III).
(II)
A State may not declare or specify, in statute, regulation, or otherwise, that a health insurance policy (other than a Medicare supplemental policy) or rider to an insurance contract which is not a health insurance policy, that is described in clause (iv), (v), or (vi)(III) and that is sold, issued, or renewed to an individual entitled to benefits under part A or enrolled under part B “duplicates” health benefits under this title or under a Medicare supplemental policy.
(B)
(i)
It is unlawful for a person to issue or sell a medicare supplemental policy to an individual entitled to benefits under part A or enrolled under part B, whether directly, through the mail, or otherwise, unless—
(I)
the person obtains from the individual, as part of the application for the issuance or purchase and on a form described in clause (II), a written statement signed by the individual stating, to the best of the individual's knowledge, what health insurance policies (including any Medicare+Choice plan) the individual has, from what source, and whether the individual is entitled to any medical assistance under title XIX, whether as a qualified medicare beneficiary or otherwise, and
(II)
the written statement is accompanied by a written acknowledgment, signed by the seller of the policy, of the request for and receipt of such statement.
(ii)
The statement required by clause (i) shall be made on a form that—
(I)
states in substance that a medicare-eligible individual does not need more than one medicare supplemental policy,
(II)
states in substance that individuals may be eligible for benefits under the State medicaid program under title XIX and that such individuals who are entitled to benefits under that program usually do not need a medicare supplemental policy and that benefits and premiums under any such policy shall be suspended upon request of the policyholder during the period (of not longer than 24 months) of entitlement to benefits under such title and may be reinstituted upon loss of such entitlement, and
(III)
states that counseling services may be available in the State to provide advice concerning the purchase of medicare supplemental policies and enrollment under the medicaid program and may provide the telephone number for such services.
(iii)
(I)
Except as provided in subclauses (II) and (III), if the statement required by clause (i) is not obtained or indicates that the individual has a medicare supplemental policy or indicates that the individual is entitled to any medical assistance under title XIX, the sale of a medicare supplemental policy shall be considered to be a violation of subparagraph (A).
(II)
Subclause (I) shall not apply in the case of an individual who has a medicare supplemental policy, if the individual indicates in writing, as part of the application for purchase, that the policy being purchased replaces such other policy and indicates an intent to terminate the policy being replaced when the new policy becomes effective and the issuer or seller certifies in writing that such policy will not, to the best of the issuer's or seller's knowledge, duplicate coverage (taking into account any such replacement).
(III)
If the statement required by clause (i) is obtained and indicates that the individual is entitled to any medical assistance under title XIX, the sale of the policy is not in violation of clause (i) (insofar as such clause relates to such medical assistance), if (aa) a State medicaid plan under such title pays the premiums for the policy, (bb) in the case of a qualified medicare beneficiary described in section 1905(p)(1), the policy provides for coverage of outpatient prescription drugs, or (cc) the only medical assistance to which the individual is entitled under the State plan is medicare cost sharing described in section 1905(p)(3)(A)(ii).
(iv)
Whoever issues or sells a medicare supplemental policy in violation of this subparagraph shall be fined under title 18, United States Code, or imprisoned not more than 5 years, or both, and, in addition to or in lieu of such a criminal penalty, is subject to a civil money penalty of not to exceed $25,000 (or $15,000 in the case of a seller who is not the issuer of a policy) for each such violation.
(C)
Subparagraph (A) shall not apply with respect to the sale or issuance of a group policy or plan of one or more employers or labor organizations, or of the trustees of a fund established by one or more employers or labor organizations (or combination thereof), for employees or former employees (or combination thereof) or for members or former members (or combination thereof) of the labor organizations.
(4)
(A)
Whoever knowingly, directly or through his agent, mails or causes to be mailed any matter for a prohibited purpose (as determined under subparagraph (B)) shall be fined under title 18, United States Code, or imprisoned not more than 5 years, or both, and, in addition to or in lieu of such a criminal penalty, is subject to a civil money penalty of not to exceed $5,000 for each such prohibited act.
(B)
For purposes of subparagraph (A), a prohibited purpose means the advertising, solicitation, or offer for sale of a medicare supplemental policy, or the delivery of such a policy, in or into any State in which such policy has not been approved by the State commissioner or superintendent of insurance.
(C)
Subparagraph (A) shall not apply in the case of a person who mails or causes to be mailed a medicare supplemental policy into a State if such person has ascertained that the party insured under such policy to whom (or on whose behalf) such policy is mailed is located in such State on a temporary basis.
(D)
Subparagraph (A) shall not apply in the case of a person who mails or causes to be mailed a duplicate copy of a medicare supplemental policy previously issued to the party to whom (or on whose behalf) such duplicate copy is mailed.
(E)
Subparagraph (A) shall not apply in the case of an issuer who mails or causes to be mailed a policy, certificate, or other matter solely to comply with the requirements of subsection (q).
(5)
The provisions of section 1128A (other than subsections (a) and (b)) shall apply to civil money penalties under paragraphs (1), (2), (3)(A), and (4)(A) in the same manner as such provisions apply to penalties and proceedings under section 1128A(a).
(e)
(1)
The Secretary shall provide to all individuals entitled to benefits under this title (and, to the extent feasible, to individuals about to become so entitled) such information as will permit such individuals to evaluate the value of medicare supplemental policies to them and the relationship of any such policies to benefits provided under this title.
(2)
The Secretary shall—
(A)
inform all individuals entitled to benefits under this title (and, to the extent feasible, individuals about to become so entitled) of—
(i)
the actions and practices that are subject to sanctions under subsection (d), and
(ii)
the manner in which they may report any such action or practice to an appropriate official of the Department of Health and Human Services (or to an appropriate State official), and
(B)
publish the toll-free telephone number for individuals to report suspected violations of the provisions of such subsection.
(3)
The Secretary shall provide individuals entitled to benefits under this title (and, to the extent feasible, individuals about to become so entitled) with a listing of the addresses and telephone numbers of State and Federal agencies and offices that provide information and assistance to individuals with respect to the selection of medicare supplemental policies.
(f)
(1)
(A)
The Secretary shall, in consultation with Federal and State regulatory agencies, the National Association of Insurance Commissioners, private insurers, and organizations representing consumers and the aged, conduct a comprehensive study and evaluation of the comparative effectiveness of various State approaches to the regulation of medicare supplemental policies in (i) limiting marketing and agent abuse, (ii) assuring the dissemination of such information to individuals entitled to benefits under this title (and to other consumers) as is necessary to permit informed choice, (iii) promoting policies which provide reasonable economic benefits for such individuals, (iv) reducing the purchase of unnecessary duplicative coverage, (v) improving price competition, and (vi) establishing effective approved State regulatory programs described in subsection (b).
(B)
Such study shall also address the need for standards or certification of health insurance policies, other than medicare supplemental policies, sold to individuals eligible for benefits under this title.
(C)
The Secretary shall, no later than January 1, 1982, submit a report to the Congress on the results of such study and evaluation, accompanied by such recommendations as the Secretary finds warranted by such results with respect to the need for legislative or administrative changes to accomplish the objectives set forth in subparagraphs (A) and (B), including the need for a mandatory Federal regulatory program to assure the marketing of appropriate types of medicare supplemental policies, and such other means as he finds may be appropriate to enhance effective State regulation of such policies.
(2)
The Secretary shall submit to the Congress no later than July 1, 1982, and periodically as may be appropriate thereafter (but not less often than once every 2 years), a report evaluating the effectiveness of the certification procedure and the criminal penalties established under this section, and shall include in such reports an analysis of—
(A)
the impact of such procedure and penalties on the types, market share, value, and cost to individuals entitled to benefits under this title of medicare supplemental policies which have been certified by the Secretary;
(B)
the need for any change in the certification procedure to improve its administration or effectiveness; and
(C)
whether the certification program and criminal penalties should be continued.
(3)
The Secretary shall provide information via a toll-free telephone number on medicare supplemental policies (including the relationship of State programs under title XIX to such policies).
(g)
(1)
For purposes of this section, a medicare supplemental policy is a health insurance policy or other health benefit plan offered by a private entity to individuals who are entitled to have payment made under this title, which provides reimbursement for expenses incurred for services and items for which payment may be made under this title but which are not reimbursable by reason of the applicability of deductibles, coinsurance amounts, or other limitations imposed pursuant to this title; but does not include a prescription drug plan under part D or a Medicare+Choice plan or any such policy or plan of one or more employers or labor organizations, or of the trustees of a fund established by one or more employers or labor organizations (or combination thereof), for employees or former employees (or combination thereof) or for members or former members (or combination thereof) of the labor organizations and does not include a policy or plan of an eligible organization (as defined in section 1876(b)) if the policy or plan provides benefits pursuant to a contract under section 1876 or an approved demonstration project described in section 603(c) of the Social Security Amendments of 1983, section 2355 of the Deficit Reduction Act of 1984, or section 9412(b) of the Omnibus Budget Reconciliation Act of 1986, or a policy or plan of an organization if the policy or plan provides benefits pursuant to an agreement under section 1833(a)(1)(A). For purposes of this section, the term “policy” includes a certificate issued under such policy.
(2)
For purposes of this section:
(A)
The term “NAIC Model Standards” means the “NAIC Model Regulation to Implement the Individual Accident and Sickness Insurance Minimum Standards Act”, adopted by the National Association of Insurance Commissioners on June 6, 1979, as it applies to medicare supplemental policies.
(B)
The term “State with an approved regulatory program” means a State for which the Secretary has made a determination under subsection (b)(1).
(C)
The State in which a policy is issued means—
(i)
in the case of an individual policy, the State in which the policyholder resides; and
(ii)
in the case of a group policy, the State in which the holder of the master policy resides.
(h)
The Secretary shall prescribe such regulations as may be necessary for the effective, efficient, and equitable administration of the certification procedure established under this section. The Secretary shall first issue final regulations to implement the certification procedure established under subsection (a) not later than March 1, 1981.
(i)
(1)
No medicare supplemental policy shall be certified and no such policy may be issued bearing the emblem authorized by the Secretary under subsection (a) until July 1, 1982. On and after such date policies certified by the Secretary may bear such emblem, including policies which were issued prior to such date and were subsequently certified, and insurers may notify holders of such certified policies issued prior to such date using such emblem in the notification.
(2)
(A)
The Secretary shall not implement the certification program established under subsection (a) with respect to policies issued in a State unless the Panel makes a finding that such State cannot be expected to have established, by July 1, 1982, an approved State regulatory program meeting the standards and requirements of subsection (b)(1). If the Panel makes such a finding, the Secretary shall implement such program under subsection (a) with respect to medicare supplemental policies issued in such State, until such time as the Panel determines that such State has a program that meets the standards and requirements of subsection (b)(1).
(B)
Any finding by the Panel under subparagraph (A) shall be transmitted in writing, not later than January 1, 1982, to the Committee on Finance of the Senate and to the Committee on Interstate and Foreign Commerce and the Committee on Ways and Means of the House of Representatives and shall not become effective until 60 days after the date of its transmittal to the Committees of the Congress under this subparagraph. In counting such days, days on which either House is not in session because of an adjournment sine die or an adjournment of more than three days to a day certain are excluded in the computation.
(j)
Nothing in this section shall be construed so as to affect the right of any State to regulate medicare supplemental policies which, under the provisions of this section, are considered to be issued in another State.
(k)
(1)
(A)
If, within the 90-day period beginning on the date of the enactment of this subsection, the National Association of Insurance Commissioners (in this subsection referred to as the “Association”) amends the NAIC Model Regulation adopted on June 6, 1979 (as it relates to medicare supplemental policies), with respect to matters such as minimum benefit standards, loss ratios, disclosure requirements, and replacement requirements and provisions otherwise necessary to reflect the changes in law made by the Medicare Catastrophic Coverage Act of 1988, except as provided in subsection (m), subsection (g)(2)(A) shall be applied in a State, effective on and after the date specified in subparagraph (B), as if the reference to the Model Regulation adopted on June 6, 1979, were a reference to the Model Regulation as amended by the Association in accordance with this paragraph (in this subsection and subsection (l) referred to as the “amended NAIC Model Regulation”).
(B)
The date specified in this subparagraph for a State is the earlier of the date the State adopts standards equal to or more stringent than the amended NAIC Model Regulation or 1 year after the date the Association first adopts such amended Regulation.
(2)
(A)
If the Association does not amend the NAIC Model Regulation within the 90-day period specified in paragraph (1)(A), the Secretary shall promulgate, not later than 60 days after the end of such period, Federal model standards (in this subsection and subsection (l) referred to as “Federal model standards”) for medicare supplemental policies to reflect the changes in law made by the Medicare Catastrophic Coverage Act of 1988, and subsection (g)(2)(A) shall be applied in a State, effective on and after the date specified in subparagraph (B), as if the reference to the Model Regulation adopted on June 6, 1979, were a reference to Federal model standards.
(B)
The date specified in this subparagraph for a State is the earlier of the date the State adopts standards equal to or more stringent than the Federal model standards or 1 year after the date the Secretary first promulgates such standards.
(3)
Notwithstanding any other provision of this section (except as provided in subsections (l), (m), and (n))—
(A)
no medicare supplemental policy may be certified by the Secretary pursuant to subsection (a),
(B)
no certification made pursuant to subsection (a) shall remain in effect, and
(C)
no State regulatory program shall be found to meet (or to continue to meet) the requirements of subsection (b)(1)(A),
unless such policy meets (or such program provides for the application of standards equal to or more stringent than) the standards set forth in the amended NAIC Model Regulation or the Federal model standards (as the case may be) by the date specified in paragraph (1)(B) or (2)(B) (as the case may be).
(l)
(1)
Until the date specified in paragraph (3), in the case of a qualifying medicare supplemental policy described in paragraph (2) issued—
(A)
before January 1, 1989, the policy is deemed to remain in compliance with this section if the insurer issuing the policy complies with the NAIC Model Transition Regulation (including giving notices to subscribers and filing for premium adjustments with the State as described in section 5.B. of such Regulation) by January 1, 1989; or
(B)
on or after January 1, 1989, the policy is deemed to be in compliance with this section if the insurer issuing the policy complies with the NAIC Model Transition Regulation before the date of the sale of the policy.
(2)
In paragraph (1), the term “qualifying medicare supplemental policy” means a medicare supplemental policy—
(A)
issued in a State which—
(i)
has not adopted standards equal to or more stringent than the NAIC Model Transition Regulation by January 1, 1989, and
(ii)
has not adopted standards equal to or more stringent than the amended NAIC Model Regulation (or Federal model standards) by January 1, 1989; and
(B)
which has been issued in compliance with this section (as in effect on June 1, 1988).
(3)
(A)
The date specified in this paragraph is the earlier of—
(i)
the first date a State adopts, after January 1, 1989, standards equal to or more stringent than the NAIC Model Transition Regulation or equal to or more stringent than the amended NAIC Model Regulation (or Federal model standards), as the case may be, or
(ii)
the later of (I) the date specified in subsection (k)(1)(B) or (k)(2)(B) (as the case may be), or (II) the date specified in subparagraph (B).
(B)
In the case of a State which the Secretary identifies as—
(i)
requiring State legislation (other than legislation appropriating funds) in order for medicare supplemental policies to meet standards described in subparagraph (A)(i), but
(ii)
having a legislature which is not scheduled to meet in 1989 in a legislative session in which such legislation may be considered,
the date specified in this subparagraph is the first day of the first calendar quarter beginning after the close of the first legislative session of the State legislature that begins on or after January 1, 1989, and in which legislation described in clause (i) may be considered. 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.
(4)
In the case of a medicare supplemental policy in effect on January 1, 1989, and offered in a State which, as of such date—
(A)
has adopted standards equal to or more stringent than the amended NAIC Model Regulation (or Federal model standards), but
(B)
does not have in effect standards equal to or more stringent than the NAIC Model Transition Regulation (or otherwise requiring notice substantially the same as the notice required in section 5.B. of such Regulation),
the policy shall not be deemed to meet the standards in subsection (c) unless each individual who is entitled to benefits under this title and is a policyholder under such policy on January 1, 1989, is sent such a notice in any appropriate form by not later than January 31, 1989, that explains—
(A)
the improved benefits under this title contained in the Medicare Catastrophic Coverage Act of 1988, and
(B)
how these improvements affect the benefits contained in the policies and the premium for the policy.
(5)
In this subsection, the term “NAIC Model Transition Regulation” refers to the standards contained in the “Model Regulation to Implement Transitional Requirements for the Conversion of Medicare Supplement Insurance Benefits and Premiums to Conform to Medicare Program Revisions” (as adopted by the National Association of Insurance Commissioners in September 1987).
(m)
(1)
(A)
If, within the 90-day period beginning on the date of the enactment of this subsection, the National Association of Insurance Commissioners (in this subsection and subsection (n) referred to as the “Association”) revises the amended NAIC Model Regulation (referred to in subsection (k)(1)(A) and adopted on September 20, 1988) to improve such regulation and otherwise to reflect the changes in law made by the Medicare Catastrophic Coverage Repeal Act of 1989, subsection (g)(2)(A) shall be applied in a State, effective on and after the date specified in subparagraph (B), as if the reference to the Model Regulation adopted on June 6, 1979, were a reference to the amended NAIC Model Regulation (referred to in subsection (k)(1)(A)) as revised by the Association in accordance with this paragraph (in this subsection and subsection (n) referred to as the “revised NAIC Model Regulation”).
(B)
The date specified in this subparagraph for a State is the earlier of the date the State adopts standards equal to or more stringent than the revised NAIC Model Regulation or 1 year after the date the Association first adopts such revised Regulation.
(2)
(A)
If the Association does not revise the amended NAIC Model Regulation, within the 90-day period specified in paragraph (1)(A), the Secretary shall promulgate, not later than 60 days after the end of such period, revised Federal model standards (in this subsection and subsection (n) referred to as “revised Federal model standards”) for medicare supplemental policies to improve such standards and otherwise to reflect the changes in law made by the Medicare Catastrophic Coverage Repeal Act of 1989, subsection (g)(2)(A) shall be applied in a State, effective on and after the date specified in subparagraph (B), as if the reference to the Model Regulation adopted on June 6, 1979, were a reference to the revised Federal model standards.
(B)
The date specified in this subparagraph for a State is the earlier of the date the State adopts standards equal to or more stringent than the revised Federal model standards or 1 year after the date the Secretary first promulgates such standards.
(3)
Notwithstanding any other provision of this section (except as provided in subsection (n))—
(A)
no medicare supplemental policy may be certified by the Secretary pursuant to subsection (a),
(B)
no certification made pursuant to subsection (a) shall remain in effect, and
(C)
no State regulatory program shall be found to meet (or to continue to meet) the requirements of subsection (b)(1)(A),
unless such policy meets (or such program provides for the application of standards equal to or more stringent than) the standards set forth in the revised NAIC Model Regulation or the revised Federal model standards (as the case may be) by the date specified in paragraph (1)(B) or (2)(B) (as the case may be).
(n)
(1)
Until the date specified in paragraph (4), in the case of a qualifying medicare supplemental policy described in paragraph (3) issued in a State—
(A)
before the transition deadline, the policy is deemed to remain in compliance with the standards described in subsection (b)(1)(A) only if the insurer issuing the policy complies with the transition provision described in paragraph (2), or
(B)
on or after the transition deadline, the policy is deemed to be in compliance with the standards described in subsection (b)(1)(A) only if the insurer issuing the policy complies with the revised NAIC Model Regulation or the revised Federal model standards (as the case may be) before the date of the sale of the policy.
In this paragraph, the term “transition deadline” means 1 year after the date the Association adopts the revised NAIC Model Regulation or 1 year after the date the Secretary promulgates revised Federal model standards (as the case may be).
(2)
The transition provision described in this paragraph is—
(A)
such transition provision as the Association provides, by not later than December 15, 1989, so as to provide for an appropriate transition (i) to restore benefit provisions which are no longer duplicative as a result of the changes in benefits under this title made by the Medicare Catastrophic Coverage Repeal Act of 1989 and (ii) to eliminate the requirement of payment for the first 8 days of coinsurance for extended care services, or
(B)
if the Association does not provide for a transition provision by the date described in subparagraph (A), such transition provision as the Secretary shall provide, by January 1, 1990, so as to provide for an appropriate transition described in subparagraph (A).
(3)
In paragraph (1), the term “qualifying medicare supplemental policy” means a medicare supplemental policy which has been issued in compliance with this section as in effect on the date before the date of the enactment of this subsection.
(4)
(A)
The date specified in this paragraph for a policy issued in a State is—
(i)
the first date a State adopts, after the date of the enactment of this subsection, standards equal to or more stringent than the revised NAIC Model Regulation (or revised Federal model standards), as the case may be, or
(ii)
the date specified in subparagraph (B),
whichever is earlier.
(B)
In the case of a State which the Secretary identifies, in consultation with the Association, as—
(i)
requiring State legislation (other than legislation appropriating funds) in order for medicare supplemental policies to meet standards described in subparagraph (A)(i), but
(ii)
having a legislature which is not scheduled to meet in 1990 in a legislative session in which such legislation may be considered,
the date specified in this subparagraph is the first day of the first calendar quarter beginning after the close of the first legislative session of the State legislature that begins on or after January 1, 1990. 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.
(5)
In the case of a medicare supplemental policy in effect on January 1, 1990, the policy shall not be deemed to meet the standards in subsection (c) unless each individual who is entitled to benefits under this title and is a policyholder or certificate holder under such policy on such date is sent a notice in an appropriate form by not later than January 31, 1990, that explains—
(A)
the changes in benefits under this title effected by the Medicare Catastrophic Coverage Repeal Act of 1989, and
(B)
how these changes may affect the benefits contained in such policy and the premium for the policy.
(6)
(A)
Except as provided in subparagraph (B), in the case of an individual who had in effect, as of December 31, 1988, a medicare supplemental policy with an insurer (as a policyholder or, in the case of a group policy, as a certificate holder) and the individual terminated coverage under such policy before the date of the enactment of this subsection, no medicare supplemental policy of the insurer shall be deemed to meet the standards in subsection (c) unless the insurer—
(i)
provides written notice, no earlier than December 15, 1989, and no later than January 30, 1990, to the policyholder or certificate holder (at the most recent available address) of the offer described in clause (ii), and
(ii)
offers the individual, during a period of at least 60 days beginning not later than February 1, 1990, reinstitution of coverage (with coverage effective as of January 1, 1990), under the terms which (I) do not provide for any waiting period with respect to treatment of pre-existing conditions, (II) provides for coverage which is substantially equivalent to coverage in effect before the date of such termination, and (III) provides for classification of premiums on which terms are at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage never terminated.
(B)
An insurer is not required to make the offer under subparagraph (A)(ii) in the case of an individual who is a policyholder or certificate holder in another medicare supplemental policy as of the date of the enactment of this subsection, if (as of January 1, 1990) the individual is not subject to a waiting period with respect to treatment of a pre-existing condition under such other policy.
(o)
The requirements of this subsection are as follows:
(1)
Each medicare supplemental policy shall provide for coverage of a group of benefits consistent with subsections (p), (v)91 (w), and (y).
^{91}
So in law. There probably should be a comma after “(v)”. See amendment made by section 3210(b) of Public Law 111–148.
(2)
If the medicare supplemental policy provides for coverage of a group of benefits other than the core group of basic benefits described in subsection (p)(2)(B), the issuer of the policy must make available to the individual a medicare supplemental policy with only such core group of basic benefits.
(3)
The issuer of the policy has provided, before the sale of the policy, an outline of coverage that uses uniform language and format (including layout and print size) that facilitates comparison among medicare supplemental policies and comparison with medicare benefits.
(4)
The issuer of the medicare supplemental policy complies with subsection (s)(2)(E) and subsection (x).
(5)
In addition to the requirement under paragraph (2), the issuer of the policy must make available to the individual at least Medicare supplemental policies with benefit packages classified as “C” or “F”.
(p)
(1)
(A)
If, within 9 months after the date of the enactment of this subsection, the National Association of Insurance Commissioners (in this subsection referred to as the “Association”) changes the revised NAIC Model Regulation (described in subsection (m)) to incorporate—
(i)
limitations on the groups or packages of benefits that may be offered under a medicare supplemental policy consistent with paragraphs (2) and (3) of this subsection,
(ii)
uniform language and definitions to be used with respect to such benefits,
(iii)
uniform format to be used in the policy with respect to such benefits, and
(iv)
other standards to meet the additional requirements imposed by the amendments made by the Omnibus Budget Reconciliation Act of 1990,
subsection (g)(2)(A) shall be applied in each State, effective for policies issued to policyholders on and after the date specified in subparagraph (C), as if the reference to the Model Regulation adopted on June 6, 1979, were a reference to the revised NAIC Model Regulation as changed under this subparagraph (such changed regulation referred to in this section as the “1991 NAIC Model Regulation”).
(B)
If the Association does not make the changes in the revised NAIC Model Regulation within the 9-month period specified in subparagraph (A), the Secretary shall promulgate, not later than 9 months after the end of such period, a regulation and subsection (g)(2)(A) shall be applied in each State, effective for policies issued to policyholders on and after the date specified in subparagraph (C), as if the reference to the Model Regulation adopted on June 6, 1979, were a reference to the revised NAIC Model Regulation as changed by the Secretary under this subparagraph (such changed regulation referred to in this section as the “1991 Federal Regulation”).
(C)
(i)
Subject to clause (ii), the date specified in this subparagraph for a State is the date the State adopts the 1991 NAIC Model Regulation or 1991 Federal Regulation or 1 year after the date the Association or the Secretary first adopts such standards, whichever is earlier.
(ii)
In the case of a State which the Secretary identifies, in consultation with the Association, as—
(I)
requiring State legislation (other than legislation appropriating funds) in order for medicare supplemental policies to meet the 1991 NAIC Model Regulation or 1991 Federal Regulation, but
(II)
having a legislature which is not scheduled to meet in 1992 in a legislative session in which such legislation may be considered,
the date specified in this subparagraph is the first day of the first calendar quarter beginning after the close of the first legislative session of the State legislature that begins on or after January 1, 1992. 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.
(D)
In promulgating standards under this paragraph, the Association or Secretary shall consult with a working group composed of representatives of issuers of medicare supplemental policies, consumer groups, medicare beneficiaries, and other qualified individuals. Such representatives shall be selected in a manner so as to assure balanced representation among the interested groups.
(E)
If benefits (including deductibles and coinsurance) under this title are changed and the Secretary determines, in consultation with the Association, that changes in the 1991 NAIC Model Regulation or 1991 Federal Regulation are needed to reflect such changes, the preceding provisions of this paragraph shall apply to the modification of standards previously established in the same manner as they applied to the original establishment of such standards.
(2)
The benefits under the 1991 NAIC Model Regulation or 1991 Federal Regulation shall provide—
(A)
for such groups or packages of benefits as may be appropriate taking into account the considerations specified in paragraph (3) and the requirements of the succeeding subparagraphs;
(B)
for identification of a core group of basic benefits common to all policies; and
(C)
that, subject to paragraph (4)(B), the total number of different benefit packages (counting the core group of basic benefits described in subparagraph (B) and each other combination of benefits that may be offered as a separate benefit package) that may be established in all the States and by all issuers shall not exceed 10 plus the 2 plans described in paragraph (11)(A).
(3)
The benefits under paragraph (2) shall, to the extent possible—
(A)
provide for benefits that offer consumers the ability to purchase the benefits that are available in the market as of the date of the enactment of this subsection; and
(B)
balance the objectives of (i) simplifying the market to facilitate comparisons among policies, (ii) avoiding adverse selection, (iii) providing consumer choice, (iv) providing market stability, and (v) promoting competition.
(4)
(A)
(i)
Except as provided in subparagraph (B) or paragraph (6), no State with a regulatory program approved under subsection (b)(1) may provide for or permit the grouping of benefits (or language or format with respect to such benefits) under a medicare supplemental policy unless such grouping meets the applicable 1991 NAIC Model Regulation or 1991 Federal Regulation.
(ii)
Except as provided in subparagraph (B), the Secretary may not provide for or permit the grouping of benefits (or language or format with respect to such benefits) under a medicare supplemental policy seeking approval by the Secretary unless such grouping meets the applicable 1991 NAIC Model Regulation or 1991 Federal Regulation.
(B)
With the approval of the State (in the case of a policy issued in a State with an approved regulatory program) or the Secretary (in the case of any other policy), the issuer of a medicare supplemental policy may offer new or innovative benefits in addition to the benefits provided in a policy that otherwise complies with the applicable 1991 NAIC Model Regulation or 1991 Federal Regulation. Any such new or innovative benefits may include benefits that are not otherwise available and are cost-effective and shall be offered in a manner which is consistent with the goal of simplification of medicare supplemental policies.
(5)
(A)
Except as provided in subparagraph (B), this subsection shall not be construed as preventing a State from restricting the groups of benefits that may be offered in medicare supplemental policies in the State.
(B)
A State with a regulatory program approved under subsection (b)(1) may not restrict under subparagraph (A) the offering of a medicare supplemental policy consisting only of the core group of benefits described in paragraph (2)(B).
(6)
The Secretary may waive the application of standards described in clauses (i) through (iii) of paragraph (1)(A) in those States that on the date of enactment of this subsection had in place an alternative simplification program.
(7)
This subsection shall not be construed as preventing an issuer of a medicare supplemental policy who otherwise meets the requirements of this section from providing, through an arrangement with a vendor, for discounts from that vendor to policyholders or certificateholders for the purchase of items or services not covered under its medicare supplemental policies.
(8)
Any person who sells or issues a medicare supplemental policy, on and after the effective date specified in paragraph (1)(C) (but subject to paragraph (10)), in violation of the applicable 1991 NAIC Model Regulation or 1991 Federal Regulation insofar as such regulation relates to the requirements of subsection (o) or (q) or clause (i), (ii), or (iii) of paragraph (1)(A) is subject to a civil money penalty of not to exceed $25,000 (or $15,000 in the case of a seller who is not an issuer of a policy) for each such violation. The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(9)
(A)
Anyone who sells a medicare supplemental policy to an individual shall make available for sale to the individual a medicare supplemental policy with only the core group of basic benefits (described in paragraph (2)(B)).
(B)
Anyone who sells a medicare supplemental policy to an individual shall provide the individual, before the sale of the policy, an outline of coverage which describes the benefits under the policy. Such outline shall be on a standard form approved by the State regulatory program or the Secretary (as the case may be) consistent with the 1991 NAIC Model Regulation or 1991 Federal Regulation under this subsection.
(C)
Whoever sells a medicare supplemental policy in violation of this paragraph is subject to a civil money penalty of not to exceed $25,000 (or $15,000 in the case of a seller who is not the issuer of the policy) for each such violation. The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(D)
Subject to paragraph (10), this paragraph shall apply to sales of policies occurring on or after the effective date specified in paragraph (1)(C).
(10)
No penalty may be imposed under paragraph (8) or (9) in the case of a seller who is not the issuer of a policy until the Secretary has published a list of the groups of benefit packages that may be sold or issued consistent with paragraph (1)(A)(i).
(11)
(A)
For purposes of paragraph (2), the benefit packages described in this subparagraph are as follows:
(i)
The benefit package classified as “F” under the standards established by such paragraph, except that it has a high deductible feature.
(ii)
The benefit package classified as “J” under the standards established by such paragraph, except that it has a high deductible feature.
(B)
For purposes of subparagraph (A), a high deductible feature is one which—
(i)
requires the beneficiary of the policy to pay annual out-of-pocket expenses (other than premiums) in the amount specified in subparagraph (C) before the policy begins payment of benefits, and
(ii)
covers 100 percent of covered out-of-pocket expenses once such deductible has been satisfied in a year.
(C)
The amount specified in this subparagraph—
(i)
for 1998 and 1999 is $1,500, and
(ii)
for a subsequent year, is the amount specified in this subparagraph for the previous year increased by the percentage increase in the Consumer Price Index for all urban consumers (all items; U.S. city average) for the 12-month period ending with August of the preceding year.
If any amount determined under clause (ii) is not a multiple of $10, it shall be rounded to the nearest multiple of $10.
(q)
The requirements of this subsection are as follows:
(1)
Each medicare supplemental policy shall be guaranteed renewable and—
(A)
the issuer may not cancel or nonrenew the policy solely on the ground of health status of the individual; and
(B)
the issuer shall not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation.
(2)
If the medicare supplemental policy is terminated by the group policyholder and is not replaced as provided under paragraph (4), the issuer shall offer certificateholders an individual medicare supplemental policy which (at the option of the certificateholder)—
(A)
provides for continuation of the benefits contained in the group policy, or
(B)
provides for such benefits as otherwise meets the requirements of this section.
(3)
If an individual is a certificateholder in a group medicare supplemental policy and the individual terminates membership in the group, the issuer shall—
(A)
offer the certificateholder the conversion opportunity described in paragraph (2), or
(B)
at the option of the group policyholder, offer the certificateholder continuation of coverage under the group policy.
(4)
If a group medicare supplemental policy is replaced by another group medicare supplemental policy purchased by the same policyholder, issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new group policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.
(5)
(A)
Each medicare supplemental policy shall provide that benefits and premiums under the policy shall be suspended at the request of the policyholder for the period (not to exceed 24 months) in which the policyholder has applied for and is determined to be entitled to medical assistance under title XIX, but only if the policyholder notifies the issuer of such policy within 90 days after the date the individual becomes entitled to such assistance. If such suspension occurs and if the policyholder or certificate holder loses entitlement to such medical assistance, such policy shall be automatically reinstituted (effective as of the date of termination of such entitlement) under terms described in subsection (n)(6)(A)(ii) as of the termination of such entitlement if the policyholder provides notice of loss of such entitlement within 90 days after the date of such loss.
(B)
Nothing in this section shall be construed as affecting the authority of a State, under title XIX, to purchase a medicare supplemental policy for an individual otherwise entitled to assistance under such title.
(C)
Any person who issues a medicare supplemental policy and fails to comply with the requirements of this paragraph or paragraph (6) is subject to a civil money penalty of not to exceed $25,000 for each such violation. The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(6)
Each medicare supplemental policy shall provide that benefits and premiums under the policy shall be suspended at the request of the policyholder if the policyholder is entitled to benefits under section 226(b) and is covered under a group health plan (as defined in section 1862(b)(1)(A)(v)). If such suspension occurs and if the policyholder or certificate holder loses coverage under the group health plan, such policy shall be automatically reinstituted (effective as of the date of such loss of coverage) under terms described in subsection (n)(6)(A)(ii) as of the loss of such coverage if the policyholder provides notice of loss of such coverage within 90 days after the date of such loss.
(r)
(1)
A medicare supplemental policy may not be issued or renewed (or otherwise provide coverage after the date described in subsection (p)(1)(C)) in any State unless—
(A)
the policy can be expected for periods after the effective date of these provisions (as estimated for the entire period for which rates are computed to provide coverage, on the basis of incurred claims experience and earned premiums for such periods and in accordance with a uniform methodology, including uniform reporting standards, developed by the National Association of Insurance Commissioners), to return to policyholders in the form of aggregate benefits provided under the policy, at least 75 percent of the aggregate amount of premiums collected in the case of group policies and at least 65 percent in the case of individual policies; and
(B)
the issuer of the policy provides for the issuance of a proportional refund, or a credit against future premiums of a proportional amount, based on the premium paid and in accordance with paragraph (2), of the amount of premiums received necessary to assure that the ratio of aggregate benefits provided to the aggregate premiums collected (net of such refunds or credits) complies with the expectation required under subparagraph (A), treating policies of the same type as a single policy for each standard package.
For purposes of applying subparagraph (A) only, policies issued as a result of solicitations of individuals through the mails or by mass media advertising (including both print and broadcast advertising) shall be deemed to be individual policies. For the purpose of calculating the refund or credit required under paragraph (1)(B) for a policy issued before the date specified in subsection (p)(1)(C), the refund or credit calculation shall be based on the aggregate benefits provided and premiums collected under all such policies issued by an insurer in a State (separated as to individual and group policies) and shall be based only on aggregate benefits provided and premiums collected under such policies after the date specified in section 171(m)(4) of the Social Security Act Amendments of 1994.
(2)
(A)
Paragraph (1)(B) shall be applied with respect to each type of policy by standard package. Paragraph (1)(B) shall not apply to a policy until 12 months following issue. The Comptroller General, in consultation with the National Association of Insurance Commissioners, shall submit to Congress a report containing recommendations on adjustments in the percentages under paragraph (1)(A) that may be appropriate. In the case of a policy issued before the date specified in subsection (p)(1)(C), paragraph (1)(B) shall not apply until 1 year after the date specified in section 171(m)(4) of the Social Security Act Amendments of 1994.
(B)
A refund or credit required under paragraph (1)(B) shall be made to each policyholder insured under the applicable policy as of the last day of the year involved.
(C)
Such a refund or credit shall include interest from the end of the calendar year involved until the date of the refund or credit at a rate as specified by the Secretary for this purpose from time to time which is not less than the average rate of interest for 13-week Treasury notes.
(D)
For purposes of this paragraph and paragraph (1)(B), refunds or credits against premiums due shall be made, with respect to a calendar year, not later than the third quarter of the succeeding policy year.
(3)
The provisions of this subsection do not preempt a State from requiring a higher percentage than that specified in paragraph (1)(A).
(4)
The Secretary shall submit in October of each year (beginning with 1993) a report to the Committees on Energy and Commerce and Ways and Means of the House of Representatives and the Committee on Finance of the Senate on loss ratios under medicare supplemental policies and the use of sanctions, such as a required rebate or credit or the disallowance of premium increases, for policies that fail to meet the requirements of this subsection (relating to loss ratios). Such report shall include a list of the policies that failed to comply with such loss ratio requirements or other requirements of this section.
(5)
The Secretary may 92 perform audits with respect to the compliance of medicare supplemental policies with the loss ratio requirements of this subsection and shall report the results of such audits to the State involved.
^{92}
Section 1502(f)(1)(A) of the Legislative Branch Appropriations, 2008 (Title I of division H of Public Law 110–161) amended paragraph (5) by striking “(A) The Comptroller General shall periodically, not less than once every 3 years,” and inserting “The Secretary may”. The amendment was executed by striking “(A) The Comptroller General shall periodically, not less often than once every 3 years,” and inserting “The Secretary may” to reflect the probable intent of Congress.
(6)
(A)
A person who fails to provide refunds or credits as required in paragraph (1)(B) is subject to a civil money penalty of not to exceed $25,000 for each policy issued for which such failure occurred. The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(B)
Each issuer of a policy subject to the requirements of paragraph (1)(B) shall be liable to the policyholder or, in the case of a group policy, to the certificate holder for credits required under such paragraph.
(s)
(1)
If a medicare supplemental policy replaces another medicare supplemental policy, the issuer of the replacing policy shall waive any time periods applicable to preexisting conditions, waiting period, elimination periods and probationary periods in the new medicare supplemental policy for similar benefits to the extent such time was spent under the original policy.
(2)
(A)
The issuer of a medicare supplemental policy may not deny or condition the issuance or effectiveness of a medicare supplemental policy, or discriminate in the pricing of the policy, because of health status, claims experience, receipt of health care, or medical condition in the case of an individual for whom an application is submitted 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.
(B)
Subject to subparagraphs (C) and (D), subparagraph (A) shall not be construed as preventing the exclusion of benefits under a policy, during its first 6 months, based on a pre-existing condition for which the policyholder received treatment or was otherwise diagnosed during the 6 months before the policy became effective.
(C)
If a medicare supplemental policy or certificate replaces another such policy or certificate which has been in effect for 6 months or longer, the replacing policy may not provide any time period applicable to pre-existing conditions, waiting periods, elimination periods, and probationary periods in the new policy or certificate for similar benefits.
(D)
In the case of a policy issued during the 6-month period described in subparagraph (A) to an individual who is 65 years of age or older as of the date of issuance and who as of the date of the application for enrollment has a continuous period of creditable coverage (as defined in section 2701(c) of the Public Health Service Act) of—
(i)
at least 6 months, the policy may not exclude benefits based on a pre-existing condition; or
(ii)
less than 6 months, if the policy excludes benefits based on a preexisting condition, the policy shall reduce the period of any preexisting condition exclusion by the aggregate of the periods of creditable coverage (if any, as so defined) applicable to the individual as of the enrollment date.
The Secretary shall specify the manner of the reduction under clause (ii), based upon the rules used by the Secretary in carrying out section 2701(a)(3) of such Act.
(E)93
An issuer of a medicare supplemental policy shall not deny or condition the issuance or effectiveness of the policy (including the imposition of any exclusion of benefits under the policy based on a pre-existing condition) and shall not discriminate in the pricing of the policy (including the adjustment of premium rates) of an individual on the basis of the genetic information with respect to such individual.
^{93}
Margins for subparagraphs (E) and (F) are so in law.
(F)93

Rule of construction.—
Nothing in subparagraph (E) or in subparagraphs (A) or (B) of subsection (x)(2) shall be construed to limit the ability of an issuer of a medicare supplemental policy from, to the extent otherwise permitted under this title—
(i)
denying or conditioning the issuance or effectiveness of the policy or increasing the premium for an employer based on the manifestation of a disease or disorder of an individual who is covered under the policy; or
(ii)
increasing the premium for any policy issued to an individual based on the manifestation of a disease or disorder of an individual who is covered under the policy (in such case, the manifestation of a disease or disorder in one individual cannot also be used as genetic information about other group members and to further increase the premium for the employer).
(3)
(A)
The issuer of a medicare supplemental policy—
(i)
may not deny or condition the issuance or effectiveness of a medicare supplemental policy described in subparagraph (C) that is offered and is available for issuance to new enrollees by such issuer;
(ii)
may not discriminate in the pricing of such policy, because of health status, claims experience, receipt of health care, or medical condition; and
(iii)
may not impose an exclusion of benefits based on a preexisting condition under such policy,
in the case of an individual described in subparagraph (B) who seeks to enroll under the policy during the period specified in subparagraph (E) and who submits evidence of the date of termination or disenrollment along with the application for such medicare supplemental policy.
(B)
An individual described in this subparagraph is an individual described in any of the following clauses:
(i)
The individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under this title and the plan terminates or ceases to provide all such supplemental health benefits to the individual.
(ii)
The individual is enrolled with a Medicare+Choice organization under a Medicare+Choice plan under part C, and there are circumstances permitting discontinuance of the individual's election of the plan under the first sentence of section 1851(e)(4) or the individual is 65 years of age or older and is enrolled with a PACE provider under section 1894, and there are circumstances that would permit the discontinuance of the individual's enrollment with such provider under circumstances that are similar to the circumstances that would permit discontinuance of the individual's election under the first sentence of such section if such individual were enrolled in a Medicare+Choice plan.
(iii)
The individual is enrolled with an eligible organization under a contract under section 1876, a similar organization operating under demonstration project authority, effective for periods before April 1, 1999, with an organization under an agreement under section 1833(a)(1)(A), or with an organization under a policy described in subsection (t), and such enrollment ceases under the same circumstances that would permit discontinuance of an individual's election of coverage under the first sentence of section 1851(e)(4) and, in the case of a policy described in subsection (t), there is no provision under applicable State law for the continuation or conversion of coverage under such policy.
(iv)
The individual is enrolled under a medicare supplemental policy under this section and such enrollment ceases because—
(I)
of the bankruptcy or insolvency of the issuer or because of other involuntary termination of coverage or enrollment under such policy and there is no provision under applicable State law for the continuation or conversion of such coverage;
(II)
the issuer of the policy substantially violated a material provision of the policy; or
(III)
the issuer (or an agent or other entity acting on the issuer's behalf) materially misrepresented the policy's provisions in marketing the policy to the individual.
(v)
The individual—
(I)
was enrolled under a medicare supplemental policy under this section,
(II)
subsequently terminates such enrollment and enrolls, for the first time, with any Medicare+Choice organization under a Medicare+Choice plan under part C, any eligible organization under a contract under section 1876, any similar organization operating under demonstration project authority, any PACE provider under section 1894, or any policy described in subsection (t), and
(III)
the subsequent enrollment under subclause (II) is terminated by the enrollee during any period within the first 12 months of such enrollment (during which the enrollee is permitted to terminate such subsequent enrollment under section 1851(e)).
(vi)
The individual, upon first becoming eligible for benefits under part A at age 65, enrolls in a Medicare+Choice plan under part C or in a PACE program under section 1894, and disenrolls from such plan or such program by not later than 12 months after the effective date of such enrollment.
(C)
(i)
Subject to clauses (ii) and (iii), a medicare supplemental policy described in this subparagraph is a medicare supplemental policy which has a benefit package classified as “A”, “B”, “C”, or “F” under the standards established under subsection (p)(2).
(ii)
(I)
Subject to subclause (II), only for purposes of an individual described in subparagraph (B)(v), a medicare supplemental policy described in this subparagraph is the same medicare supplemental policy referred to in such subparagraph in which the individual was most recently previously enrolled, if available from the same issuer, or, if not so available, a policy described in clause (i).
(II)
If the medicare supplemental policy referred to in subparagraph (B)(v) was a medigap Rx policy (as defined in subsection (v)(6)(A)), a medicare supplemental policy described in this subparagraph is such policy in which the individual was most recently enrolled as modified under subsection (v)(2)(C)(i) or, at the election of the individual, a policy referred to in subsection (v)(3)(A)(i).
(iii)
Only for purposes of an individual described in subparagraph (B)(vi) and subject to subsection (v)(1), a medicare supplemental policy described in this subparagraph shall include any medicare supplemental policy.
(iv)
For purposes of applying this paragraph in the case of a State that provides for offering of benefit packages other than under the classification referred to in clause (i), the references to benefit packages in such clause are deemed references to comparable benefit packages offered in such State.
(D)
At the time of an event described in subparagraph (B) because of which an individual ceases enrollment or loses coverage or benefits under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, the insurer offering the policy, or the administrator of the plan, respectively, shall notify the individual of the rights of the individual under this paragraph, and obligations of issuers of medicare supplemental policies, under subparagraph (A).
(E)
For purposes of subparagraph (A), the time period specified in this subparagraph is—
(i)
in the case of an individual described in subparagraph (B)(i), the period beginning on the date the individual receives a notice of termination or cessation of all supplemental health benefits (or, if no such notice is received, notice that a claim has been denied because of such a termination or cessation) and ending on the date that is 63 days after the applicable notice;
(ii)
in the case of an individual described in clause (ii), (iii), (v), or (vi) of subparagraph (B) whose enrollment is terminated involuntarily, the period beginning on the date that the individual receives a notice of termination and ending on the date that is 63 days after the date the applicable coverage is terminated;
(iii)
in the case of an individual described in subparagraph (B)(iv)(I), the period beginning on the earlier of (I) the date that the individual receives a notice of termination, a notice of the issuer's bankruptcy or insolvency, or other such similar notice, if any, and (II) the date that the applicable coverage is terminated, and ending on the date that is 63 days after the date the coverage is terminated;
(iv)
in the case of an individual described in clause (ii), (iii), (iv)(II), (iv)(III), (v), or (vi) of subparagraph (B) who disenrolls voluntarily, the period beginning on the date that is 60 days before the effective date of the disenrollment and ending on the date that is 63 days after such effective date; and
(v)
in the case of an individual described in subparagraph (B) but not described in the preceding provisions of this subparagraph, the period beginning on the effective date of the disenrollment and ending on the date that is 63 days after such effective date.
(F)
(i)
Subject to clause (ii), for purposes of this paragraph—
(I)
in the case of an individual described in subparagraph (B)(v) (or deemed to be so described, pursuant to this subparagraph) whose enrollment with an organization or provider described in subclause (II) of such subparagraph is involuntarily terminated within the first 12 months of such enrollment, and who, without an intervening enrollment, enrolls with another such organization or provider, such subsequent enrollment shall be deemed to be an initial enrollment described in such subparagraph; and
(II)
in the case of an individual described in clause (vi) of subparagraph (B) (or deemed to be so described, pursuant to this subparagraph) whose enrollment with a plan or in a program described in such clause is involuntarily terminated within the first 12 months of such enrollment, and who, without an intervening enrollment, enrolls in another such plan or program, such subsequent enrollment shall be deemed to be an initial enrollment described in such clause.
(ii)
For purposes of clauses (v) and (vi) of subparagraph (B), no enrollment of an individual with an organization or provider described in clause (v)(II), or with a plan or in a program described in clause (vi), may be deemed to be an initial enrollment under this clause after the 2-year period beginning on the date on which the individual first enrolled with such an organization, provider, plan, or program.
(4)
Any issuer of a medicare supplemental policy that fails to meet the requirements of this subsection is subject to a civil money penalty of not to exceed $5,000 for each such failure. The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(t)
(1)
If a medicare supplemental policy meets the 1991 NAIC Model Regulation or 1991 Federal Regulation and otherwise complies with the requirements of this section except that benefits under the policy are restricted to items and services furnished by certain entities (or reduced benefits are provided when items or services are furnished by other entities), the policy shall nevertheless be treated as meeting those standards if—
(A)
full benefits are provided for items and services furnished through a network of entities which have entered into contracts or agreements with the issuer of the policy;
(B)
full benefits are provided for items and services furnished by other entities if the services are medically necessary and immediately required because of an unforeseen illness, injury, or condition and it is not reasonable given the circumstances to obtain the services through the network;
(C)
the network offers sufficient access;
(D)
the issuer of the policy has arrangements for an ongoing quality assurance program for items and services furnished through the network;
(E)
(i)
the issuer of the policy provides to each enrollee at the time of enrollment an explanation of (I) the restrictions on payment under the policy for services furnished other than by or through the network, (II) out of area coverage under the policy, (III) the policy's coverage of emergency services and urgently needed care, and (IV) the availability of a policy through the entity that meets the standards in the 1991 NAIC Model Regulation or 1991 Federal Regulation without reference to this subsection and the premium charged for such policy, and
(ii)
each enrollee prior to enrollment acknowledges receipt of the explanation provided under clause (i); and
(F)
the issuer of the policy makes available to individuals, in addition to the policy described in this subsection, any policy (otherwise offered by the issuer to individuals in the State) that meets the standards in the 1991 NAIC Model Regulation or 1991 Federal Regulation and other requirements of this section without reference to this subsection.
(2)
If the Secretary determines that an issuer of a policy approved under paragraph (1)—
(A)
fails substantially to provide medically necessary items and services to enrollees seeking such items and services through the issuer's network, if the failure has adversely affected (or has substantial likelihood of adversely affecting) the individual,
(B)
imposes premiums on enrollees in excess of the premiums approved by the State,
(C)
acts to expel an enrollee for reasons other than nonpayment of premiums, or
(D)
does not provide the explanation required under paragraph (1)(E)(i) or does not obtain the acknowledgment required under paragraph (1)(E)(ii),
the issuer is subject to a civil money penalty in an amount not to exceed $25,000 for each such violation. The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
(3)
The Secretary may enter into a contract with an entity whose policy has been certified under paragraph (1) or has been approved by a State under subsection (b)(1)(H) to determine whether items and services (furnished to individuals entitled to benefits under this title and under that policy) are not allowable under section 1862(a)(1). Payments to the entity shall be in such amounts as the Secretary may determine, taking into account estimated savings under contracts with carriers and fiscal intermediaries and other factors that the Secretary finds appropriate. Paragraph (1), the first sentence of paragraph (2)(A), paragraph (2)(B), paragraph (3)(C), paragraph (3)(D), and paragraph (3)(E) of section 1842(b) shall apply to the entity.
(u)
(1)
It is unlawful for a person to sell or issue a policy described in paragraph (2) to an individual with knowledge that the individual has in effect under section 1851 an election of an MSA plan or a Medicare+Choice private fee-for-service plan.
(2)
(A)
A policy described in this subparagraph is a health insurance policy (other than a policy described in subparagraph (B)) that provides for coverage of expenses that are otherwise required to be counted toward meeting the annual deductible amount provided under the MSA plan.
(B)
A policy described in this subparagraph is any of the following:
(i)
A policy that provides coverage (whether through insurance or otherwise) for accidents, disability, dental care, vision care, or long-term care.
(ii)
A policy of insurance to which substantially all of the coverage relates to—
(I)
liabilities incurred under workers' compensation laws,
(II)
tort liabilities,
(III)
liabilities relating to ownership or use of property, or
(IV)
such other similar liabilities as the Secretary may specify by regulations.
(iii)
A policy of insurance that provides coverage for a specified disease or illness.
(iv)
A policy of insurance that pays a fixed amount per day (or other period) of hospitalization.
(v)

Rules Relating to Medigap Policies That Provide Prescription Drug Coverage.—
(1)

Prohibition on sale, issuance, and renewal of new policies that provide prescription drug coverage.—
(A)

In general.—
Notwithstanding any other provision of law, on or after January 1, 2006, a medigap Rx policy (as defined in paragraph (6)(A)) may not be sold, issued, or renewed under this section—
(i)
to an individual who is a part D enrollee (as defined in paragraph (6)(B)); or
(ii)
except as provided in subparagraph (B), to an individual who is not a part D enrollee.
(B)

Continuation permitted for non-part d enrollees.—
Subparagraph (A)(ii) shall not apply to the renewal of a medigap Rx policy that was issued before January 1, 2006.
(C)

Construction.—
Nothing in this subsection shall be construed as preventing the offering on and after January 1, 2006, of “H”, “I”, and “J” policies described in paragraph (2)(D)(i) if the benefit packages are modified in accordance with paragraph (2)(C).
(2)

Elimination of duplicative coverage upon part d enrollment.—
(A)

In general.—
In the case of an individual who is covered under a medigap Rx policy and enrolls under a part D plan—
(i)
before the end of the initial part D enrollment period, the individual may—
(I)
enroll in a medicare supplemental policy without prescription drug coverage under paragraph (3); or
(II)
continue the policy in effect subject to the modification described in subparagraph (C)(i); or
(ii)
after the end of such period, the individual may continue the policy in effect subject to such modification.
(B)

Notice required to be provided to current policyholders with medigap rx policy.—
No medicare supplemental policy of an issuer shall be deemed to meet the standards in subsection (c) unless the issuer provides written notice (in accordance with standards of the Secretary established in consultation with the National Association of Insurance Commissioners) during the 60-day period immediately preceding the initial part D enrollment period, to each individual who is a policyholder or certificate holder of a medigap Rx policy (at the most recent available address of that individual) of the following:
(i)
If the individual enrolls in a plan under part D during the initial enrollment period under section 1860D–1(b)(2)(A), the individual has the option of—
(I)
continuing enrollment in the individual's current plan, but the plan's coverage of prescription drugs will be modified under subparagraph (C)(i); or
(II)
enrolling in another medicare supplemental policy pursuant to paragraph (3).
(ii)
If the individual does not enroll in a plan under part D during such period, the individual may continue enrollment in the individual's current plan without change, but—
(I)
the individual will not be guaranteed the option of enrollment in another medicare supplemental policy pursuant to paragraph (3); and
(II)
if the current plan does not provide creditable prescription drug coverage (as defined in section 1860D–13(b)(4)), notice of such fact and that there are limitations on the periods in a year in which the individual may enroll under a part D plan and any such enrollment is subject to a late enrollment penalty.
(iii)
Such other information as the Secretary may specify (in consultation with the National Association of Insurance Commissioners), including the potential impact of such election on premiums for medicare supplemental policies.
(C)

Modification.—
(i)

In general.—
The policy modification described in this subparagraph is the elimination of prescription coverage for expenses of prescription drugs incurred after the effective date of the individual's coverage under a part D plan and the appropriate adjustment of premiums to reflect such elimination of coverage.
(ii)

Continuation of renewability and application of modification.—
No medicare supplemental policy of an issuer shall be deemed to meet the standards in subsection (c) unless the issuer—
(I)
continues renewability of medigap Rx policies that it has issued, subject to subclause (II); and
(II)
applies the policy modification described in clause (i) in the cases described in clauses (i)(II) and (ii) of subparagraph (A).
(D)

References to rx policies.—
(i)

H, i, and j policies.—
Any reference to a benefit package classified as “H”, “I”, or “J” (including the benefit package classified as “J” with a high deductible feature, as described in subsection (p)(11)) under the standards established under subsection (p)(2) shall be construed as including a reference to such a package as modified under subparagraph (C) and such packages as modified shall not be counted as a separate benefit package under such subsection.
(ii)

Application in waivered states.—
Except for the modification provided under subparagraph (C), the waivers previously in effect under subsection (p)(2) shall continue in effect.
(3)

Availability of substitute policies with guaranteed issue.—
(A)

In general.—
The issuer of a medicare supplemental policy—
(i)
may not deny or condition the issuance or effectiveness of a medicare supplemental policy that has a benefit package classified as “A”, “B”, “C”, or “F” (including the benefit package classified as “F” with a high deductible feature, as described in subsection (p)(11)), under the standards established under subsection (p)(2), or a benefit package described in subparagraph (A) or (B) of subsection (w)(2) and that is offered and is available for issuance to new enrollees by such issuer;
(ii)
may not discriminate in the pricing of such policy, because of health status, claims experience, receipt of health care, or medical condition; and
(iii)
may not impose an exclusion of benefits based on a pre-existing condition under such policy,
in the case of an individual described in subparagraph (B) who seeks to enroll under the policy not later than 63 days after the effective date of the individual's coverage under a part D plan.
(B)

Individual covered.—
An individual described in this subparagraph with respect to the issuer of a medicare supplemental policy is an individual who—
(i)
enrolls in a part D plan during the initial part D enrollment period;
(ii)
at the time of such enrollment was enrolled in a medigap Rx policy issued by such issuer; and
(iii)
terminates enrollment in such policy and submits evidence of such termination along with the application for the policy under subparagraph (A).
(C)

Special rule for waivered states.—
For purposes of applying this paragraph in the case of a State that provides for offering of benefit packages other than under the classification referred to in subparagraph (A)(i), the references to benefit packages in such subparagraph are deemed references to comparable benefit packages offered in such State.
(4)

Enforcement.—
(A)

Penalties for duplication.—
The penalties described in subsection (d)(3)(A)(ii) shall apply with respect to a violation of paragraph (1)(A).
(B)

Guaranteed issue.—
The provisions of paragraph (4) of subsection (s) shall apply with respect to the requirements of paragraph (3) in the same manner as they apply to the requirements of such subsection.
(5)

Construction.—
Any provision in this section or in a medicare supplemental policy relating to guaranteed renewability of coverage shall be deemed to have been met with respect to a part D enrollee through the continuation of the policy subject to modification under paragraph (2)(C) or the offering of a substitute policy under paragraph (3). The previous sentence shall not be construed to affect the guaranteed renewability of such a modified or substitute policy.
(6)

Definitions.—
For purposes of this subsection:
(A)

Medigap rx policy.—
The term “medigap Rx policy” means a medicare supplemental policy—
(i)
which has a benefit package classified as “H”, “I”, or “J” (including the benefit package classified as “J” with a high deductible feature, as described in subsection (p)(11)) under the standards established under subsection (p)(2), without regard to this subsection; and
(ii)
to which such standards do not apply (or to which such standards have been waived under subsection (p)(6)) but which provides benefits for prescription drugs.
Such term does not include a policy with a benefit package as classified under clause (i) which has been modified under paragraph (2)(C)(i).
(B)

Part d enrollee.—
The term “part D enrollee” means an individual who is enrolled in a part D plan.
(C)

Part d plan.—
The term “part D plan” means a prescription drug plan or an MA–PD plan (as defined for purposes of part D).
(D)

Initial part d enrollment period.—
The term “initial part D enrollment period” means the initial enrollment period described in section 1860D–1(b)(2)(A).
(w)

Development of New Standards for Medicare Supplemental Policies.—
(1)

In general.—
The Secretary shall request the National Association of Insurance Commissioners to review and revise the standards for benefit packages under subsection (p)(1), taking into account the changes in benefits resulting from enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and to otherwise update standards to reflect other changes in law included in such Act. Such revision shall incorporate the inclusion of the 2 benefit packages described in paragraph (2). Such revisions shall be made consistent with the rules applicable under subsection (p)(1)(E) with the reference to the “1991 NAIC Model Regulation” deemed a reference to the NAIC Model Regulation as published in the Federal Register on December 4, 1998, and as subsequently updated by the National Association of Insurance Commissioners to reflect previous changes in law (and subsection (v)) and the reference to “date of enactment of this subsection” deemed a reference to the date of enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. To the extent practicable, such revision shall provide for the implementation of revised standards for benefit packages as of January 1, 2006.
(2)

New benefit packages.—
The benefit packages described in this paragraph are the following (notwithstanding any other provision of this section relating to a core benefit package):
(A)

First new benefit package.—
A benefit package consisting of the following:
(i)
Subject to clause (ii), coverage of 50 percent of the cost-sharing otherwise applicable under parts A and B, except there shall be no coverage of the part B deductible and coverage of 100 percent of any cost-sharing otherwise applicable for preventive benefits.
(ii)
Coverage for all hospital inpatient coinsurance and 365 extra lifetime days of coverage of inpatient hospital services (as in the current core benefit package).
(iii)
A limitation on annual out-of-pocket expenditures under parts A and B to $4,000 in 2006 (or, in a subsequent year, to such limitation for the previous year increased by an appropriate inflation adjustment specified by the Secretary).
(B)

Second new benefit package.—
A benefit package consisting of the benefit package described in subparagraph (A), except as follows:
(i)
Substitute “75 percent” for “50 percent” in clause (i) of such subparagraph.
(ii)
Substitute “$2,000” for “$4,000” in clause (iii) of such subparagraph.
(x)

Limitations on Genetic Testing and Information.—
(1)

Genetic testing.—
(A)

Limitation on requesting or requiring genetic testing.—
An issuer of a medicare supplemental policy shall not request or require an individual or a family member of such individual to undergo a genetic test.
(B)

Rule of construction.—
Subparagraph (A) shall not be construed to limit the authority of a health care professional who is providing health care services to an individual to request that such individual undergo a genetic test.
(C)

Rule of construction regarding payment.—
(i)

In general.—
Nothing in subparagraph (A) shall be construed to preclude an issuer of a medicare supplemental policy from obtaining and using the results of a genetic test in making a determination regarding payment (as such term is defined for the purposes of applying the regulations promulgated by the Secretary under part C of title XI and section 264 of the Health Insurance Portability and Accountability Act of 1996, as may be revised from time to time) consistent with subsection (s)(2)(E).
(ii)

Limitation.—
For purposes of clause (i), an issuer of a medicare supplemental policy may request only the minimum amount of information necessary to accomplish the intended purpose.
(D)

Research exception.—
Notwithstanding subparagraph (A), an issuer of a medicare supplemental policy may request, but not require, that an individual or a family member of such individual undergo a genetic test if each of the following conditions is met:
(i)
The request is made pursuant to research that complies with part 46 of title 45, Code of Federal Regulations, or equivalent Federal regulations, and any applicable State or local law or regulations for the protection of human subjects in research.
(ii)
The issuer clearly indicates to each individual, or in the case of a minor child, to the legal guardian of such child, to whom the request is made that—
(I)
compliance with the request is voluntary; and
(II)
non-compliance will have no effect on enrollment status or premium or contribution amounts.
(iii)
No genetic information collected or acquired under this subparagraph shall be used for underwriting, determination of eligibility to enroll or maintain enrollment status, premium rating, or the creation, renewal, or replacement of a plan, contract, or coverage for health insurance or health benefits.
(iv)
The issuer notifies the Secretary in writing that the issuer is conducting activities pursuant to the exception provided for under this subparagraph, including a description of the activities conducted.
(v)
The issuer complies with such other conditions as the Secretary may by regulation require for activities conducted under this subparagraph.
(2)

Prohibition on collection of genetic information.—
(A)

In general.—
An issuer of a medicare supplemental policy shall not request, require, or purchase genetic information for underwriting purposes (as defined in paragraph (3)).
(B)

Prohibition on collection of genetic information prior to enrollment.—
An issuer of a medicare supplemental policy shall not request, require, or purchase genetic information with respect to any individual prior to such individual's enrollment under the policy in connection with such enrollment.
(C)

Incidental collection.—
If an issuer of a medicare supplemental policy obtains genetic information incidental to the requesting, requiring, or purchasing of other information concerning any individual, such request, requirement, or purchase shall not be considered a violation of subparagraph (B) if such request, requirement, or purchase is not in violation of subparagraph (A).
(3)

Definitions.—
In this subsection:
(A)

Family member.—
The term “family member” means with respect to an individual, any other individual who is a first-degree, second-degree, third-degree, or fourth-degree relative of such individual.
(B)

Genetic information.—
(i)

In general.—
The term “genetic information” means, with respect to any individual, information about—
(I)
such individual's genetic tests,
(II)
the genetic tests of family members of such individual, and
(III)
subject to clause (iv), the manifestation of a disease or disorder in family members of such individual.
(ii)

Inclusion of genetic services and participation in genetic research.—
Such term includes, with respect to any individual, any request for, or receipt of, genetic services, or participation in clinical research which includes genetic services, by such individual or any family member of such individual.
(iii)

Exclusions.—
The term “genetic information” shall not include information about the sex or age of any individual.
(C)

Genetic test.—
(i)

In general.—
The term “genetic test” means an analysis of human DNA, RNA, chromosomes, proteins, or metabolites, that detects genotypes, mutations, or chromosomal changes.
(ii)

Exceptions.—
The term “genetic test” does not mean—
(I)
an analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes; or
(II)
an analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition that could reasonably be detected by a health care professional with appropriate training and expertise in the field of medicine involved.
(D)

Genetic services.—
The term “genetic services” means—
(i)
a genetic test;
(ii)
genetic counseling (including obtaining, interpreting, or assessing genetic information); or
(iii)
genetic education.
(E)

Underwriting purposes.—
The term “underwriting purposes” means, with respect to a medicare supplemental policy—
(i)
rules for, or determination of, eligibility (including enrollment and continued eligibility) for benefits under the policy;
(ii)
the computation of premium or contribution amounts under the policy;
(iii)
the application of any pre-existing condition exclusion under the policy; and
(iv)
other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits.
(F)

Issuer of a medicare supplemental policy.—
The term “issuer of a medicare supplemental policy” includes a third-party administrator or other person acting for or on behalf of such issuer.
(4)

Genetic information of a fetus or embryo.—
Any reference in this section to genetic information concerning an individual or family member of an individual shall—
(A)
with respect to such an individual or family member of an individual who is a pregnant woman, include genetic information of any fetus carried by such pregnant woman; and
(B)
with respect to an individual or family member utilizing an assisted reproductive technology, include genetic information of any embryo legally held by the individual or family member.
(y)

Development of New Standards for Certain Medicare Supplemental Policies.—
(1)

In general.—
The Secretary shall request the National Association of Insurance Commissioners to review and revise the standards for benefit packages described in paragraph (2) under subsection (p)(1), to otherwise update standards to include requirements for nominal cost sharing to encourage the use of appropriate physicians' services under part B. Such revisions shall be based on evidence published in peer-reviewed journals or current examples used by integrated delivery systems and made consistent with the rules applicable under subsection (p)(1)(E) with the reference to the “1991 NAIC Model Regulation” deemed a reference to the NAIC Model Regulation as published in the Federal Register on December 4, 1998, and as subsequently updated by the National Association of Insurance Commissioners to reflect previous changes in law and the reference to “date of enactment of this subsection” deemed a reference to the date of enactment of the Patient Protection and Affordable Care Act. To the extent practicable, such revision shall provide for the implementation of revised standards for benefit packages as of January 1, 2015.
(2)

Benefit packages described.—
The benefit packages described in this paragraph are benefit packages classified as “C” and “F”.
(z)

Limitation on Certain Medigap Policies for Newly Eligible Medicare Beneficiaries.—
(1)

In general.—
Notwithstanding any other provision of this section, on or after January 1, 2020, a medicare supplemental policy that provides coverage of the part B deductible, including any such policy (or rider to such a policy) issued under a waiver granted under subsection (p)(6), may not be sold or issued to a newly eligible Medicare beneficiary.
(2)

Newly eligible medicare beneficiary defined.—
In this subsection, the term “newly eligible Medicare beneficiary” means an individual who is neither of the following:
(A)
An individual who has attained age 65 before January 1, 2020.
(B)
An individual who was entitled to benefits under part A pursuant to section 226(b) or 226A, or deemed to be eligible for benefits under section 226(a), before January 1, 2020.
(3)

Treatment of waivered states.—
In the case of a State described in subsection (p)(6), nothing in this section shall be construed as preventing the State from modifying its alternative simplification program under such subsection so as to eliminate the coverage of the part B deductible for any medical supplemental policy sold or issued under such program to a newly eligible Medicare beneficiary on or after January 1, 2020.
(4)

Treatment of references to certain policies.—
In the case of a newly eligible Medicare beneficiary, except as the Secretary may otherwise provide, any reference in this section to a medicare supplemental policy which has a benefit package classified as “C” or “F” shall be deemed, as of January 1, 2020, to be a reference to a medicare supplemental policy which has a benefit package classified as “D” or “G”, respectively.
(5)

Enforcement.—
The penalties described in clause (ii) of subsection (d)(3)(A) shall apply with respect to a violation of paragraph (1) in the same manner as it applies to a violation of clause (i) of such subsection.

HOSPITAL PROVIDERS OF EXTENDED CARE SERVICES
Sec. 1883.
[42 U.S.C. 1395tt]
(a)
(1)
Any hospital which has an agreement under section 1866 may (subject to subsection (b)) enter into an agreement with the Secretary under which its inpatient hospital facilities may be used for the furnishing of services of the type which, if furnished by a skilled nursing facility, would constitute extended care services.
(2)
(A)
Notwithstanding any other provision of this title, payment to any hospital (other than a critical access hospital) for services furnished under an agreement entered into under this section shall be based upon the reasonable cost of the services as determined under subparagraph (B).
(B)
(i)
The reasonable cost of the services consists of the reasonable cost of routine services (determined under clause (ii)) and the reasonable cost of ancillary services (determined under clause (iii)).
(ii)
The reasonable cost of routine services furnished during any calendar year by a hospital under an agreement under this section is equal to the product of—
(I)
the number of patient-days during the year for which the services were furnished, and
(II)
the average reasonable cost per patient-day, such average reasonable cost per patient-day being the average rate per patient-day paid for routine services during the most recent year for which cost reporting data are available with respect to such services (increased in a compounded manner by the applicable increase for payments for routine service costs of skilled nursing facilities under subsections (a) through (d) of section 1888 for subsequent cost reporting periods and up to and including such calendar year) under this title to freestanding skilled nursing facilities in the region (as defined in section 1886(d)(2)(D)) in which the facility is located.
(iii)
The reasonable cost of ancillary services shall be determined in the same manner as the reasonable cost of ancillary services provided for inpatient hospital services.
(3)
Notwithstanding any other provision of this title, a critical access hospital shall be paid for covered skilled nursing facility services furnished under an agreement entered into under this section on the basis of equal to 101 percent of the reasonable costs of such services (as determined under section 1861(v)).
(b)
The Secretary may not enter into an agreement under this section with any hospital unless, except as provided under subsection (g), the hospital is located in a rural area and has less than 100 beds.
(c)
An agreement with a hospital under this section shall, except as otherwise provided under regulations of the Secretary, be of the same duration and subject to termination on the same conditions as are agreements with skilled nursing facilities under section 1866 and shall, where not inconsistent with any provision of this section, impose the same duties, responsibilities, conditions, and limitations, as those imposed under such agreements entered into under section 1866; except that no such agreement with any hospital shall be in effect for any period during which the hospital does not have in effect an agreement under section 1866. A hospital with respect to which an agreement under this section has been terminated shall not be eligible to enter into a new agreement until a two-year period has elapsed from the termination date.
(d)
Any agreement with a hospital under this section shall provide that payment for services will be made only for services for which payment would be made as post-hospital extended care services if those services had been furnished by a skilled nursing facility under an agreement entered into under section 1866; and any individual who is furnished services, for which payment may be made under an agreement under this section, shall, for purposes of this title (other than this section), be deemed to have received post-hospital extended care services in like manner and to the same extent as if the services furnished to him had been post-hospital extended care services furnished by a skilled nursing facility under an agreement under section 1866.
(e)
During a period for which a hospital has in effect an agreement under this section, in order to allocate routine costs between hospital and long-term care services for purposes of determining payment for inpatient hospital services, the total reimbursement due for routine services from all classes of long-term care patients (including title XVIII, title XIX, and private pay patients) shall be subtracted from the hospital's total routine costs before calculations are made to determine title XVIII reimbursement for routine hospital services.
(f)
A hospital which enters into an agreement with the Secretary under this section shall be required to meet those conditions applicable to skilled nursing facilities relating to discharge planning and the social services function (and staffing requirements to satisfy it) which are promulgated by the Secretary under section 1819. Services furnished by such a hospital which would otherwise constitute post-hospital extended care services if furnished by a skilled nursing facility shall be subject to the same requirements applicable to such services when furnished by a skilled nursing facility except for those requirements the Secretary determines are inappropriate in the case of these services being furnished by a hospital under this section.
(g)
The Secretary may enter into an agreement under this section on a demonstration basis with any hospital which does not meet the requirement of subsection (b)(1), if the hospital otherwise meets the requirements of this section.

payments to promote closing and conversion of underutilized hospital facilities
Sec. 1884.
[42 U.S.C. 1395uu]
(a)
Any hospital may file an application with the Secretary (in such form and including such data and information as the Secretary may require) for establishment of a transitional allowance under this title with respect to the closing or conversion of an underutilized hospital facility. The Secretary also may establish procedures, consistent with this section, by which a hospital, before undergoing an actual closure or conversion of a hospital facility, can have a determination made as to whether or not it will be eligible for a transitional allowance under this section with respect to such closure or conversion.
(b)
If the Secretary finds, after consideration of an application under subsection (a), that—
(1)
the hospital's closure or conversion—
(A)
is formally initiated after September 30, 1981,
(B)
is expected to benefit the program under this title by (i) eliminating excess bed capacity, (ii) discontinuing an underutilized service for which there are adequate alternative sources, or (iii) substituting for the underutilized service some other service which is needed in the area, and
(C)
is consistent with the findings of an appropriate health planning agency and with any applicable State program for reduction in the number of hospital beds in the State, and
(2)
in the case of a complete closure of a hospital—
(A)
the hospital is a private nonprofit hospital or a local governmental hospital, and
(B)
the closure is not for replacement of the hospital,
the Secretary may include as an allowable cost in the hospital's reasonable cost (for the purpose of making payments to the hospital under this title) an amount (in this section referred to as a “transitional allowance”), as provided in subsection (c).
(c)
(1)
Each transitional allowance established shall be reasonably related to the prior or prospective use of the facility involved under this title and shall recognize—
(A)
in the case of a facility conversion or closure (other than a complete closure of a hospital)—
(i)
in the case of a private nonprofit or local governmental hospital, that portion of the hospital's costs attributable to capital assets of the facility which have been taken into account in determining reasonable cost for purposes of determining the amount of payment to the hospital under this title, and
(ii)
in the case of any hospital, transitional operating cost increases related to the conversion or closure to the extent that such operating costs exceed amounts ordinarily reimbursable under this title; and
(B)
in the case of complete closure of a hospital, the outstanding portion of actual debt obligations previously recognized as reasonable for purposes of reimbursement under this title, less any salvage value of the hospital.
(2)
A transitional allowance shall be for a period (not to exceed 20 years) specified by the Secretary, except that, in the case of a complete closure described in paragraph (1)(B), the Secretary may provide for a lump-sum allowance where the Secretary determines that such a one-time allowance is more efficient and economical.
(3)
A transitional allowance shall take effect on a date established by the Secretary, but not earlier than the date of completion of the closure or conversion concerned.
(4)
A transitional allowance shall not be considered in applying the limits to costs recognized as reasonable pursuant to the third sentence of subparagraph (A) and subparagraph (L)(i) of section 1861(v)(1) of this Act, or in determining whether the reasonable cost exceeds the customary charges for a service for purposes of determining the amount to be paid to a provider pursuant to sections 1814(b) and 1833(a)(2) of this Act.
(d)
A hospital dissatisfied with a determination of the Secretary on its application under this section may obtain an informal or formal hearing, at the discretion of the Secretary, by filing (in such form and within such time period as the Secretary establishes) a request for such a hearing. The Secretary shall make a final determination on such application within 30 days after the last day of such hearing.

withholding of payments for certain medicaid providers
Sec. 1885.
[42 U.S.C. 1395vv]
(a)
The Secretary may adjust, in accordance with this section, payments under parts A and B to any institution which has in effect an agreement with the Secretary under section 1866, and any person who has accepted payment on the basis of an assignment under section 1842(b)(3)(B)(ii), where such institution or person—
(1)
has (or previously had) in effect an agreement with a State agency to furnish medical care and services under a State plan approved under title XIX, and
(2)
from which (or from whom) such State agency (A) has been unable to recover overpayments made under the State plan, or (B) has been unable to collect the information necessary to enable it to determine the amount (if any) of the overpayments made to such institution or person under the State plan.
(b)
The Secretary shall by regulation provide procedures for implementation of this section, which procedures shall—
(1)
assure that the authority under this section is exercised only on behalf of a State agency which demonstrates to the Secretary's satisfaction that it has provided adequate notice of a determination or of a need for information, and an opportunity to appeal such determination or to provide such information,
(2)
determine the amount of the payment to which the institution or person would otherwise be entitled under this title which shall be treated as a setoff against overpayments under title XIX, and
(3)
assure the restoration to the institution or person of amounts withheld under this section which are ultimately determined to be in excess of overpayments under title XIX and to which the institution or person would otherwise be entitled under this title.
(c)
Notwithstanding any other provision of this Act, from the trust funds established under sections 1817 and 1841, as appropriate, the Secretary shall pay to the appropriate State agency amounts recovered under this section to offset the State agency's overpayment under title XIX. Such payments shall be accounted for by the State agency as recoveries of overpayments under the State plan.

payment to hospitals for inpatient hospital services
Sec. 1886.
[42 U.S.C. 1395ww]
(a)
(1)
(A)
(i)
The Secretary, in determining the amount of the payments that may be made under this title with respect to operating costs of inpatient hospital services (as defined in paragraph (4)) shall not recognize as reasonable (in the efficient delivery of health services) costs for the provision of such services by a hospital for a cost reporting period to the extent such costs exceed the applicable percentage (as determined under clause (ii)) of the average of such costs for all hospitals in the same grouping as such hospital for comparable time periods.
(ii)
For purposes of clause (i), the applicable percentage for hospital cost reporting periods beginning—
(I)
on or after October 1, 1982, and before October 1, 1983, is 120 percent;
(II)
on or after October 1, 1983, and before October 1, 1984, is 115 percent; and
(III)
on or after October 1, 1984, is 110 percent.
(B)
(i)
For purposes of subparagraph (A) the Secretary shall establish case mix indexes for all short- term hospitals, and shall set limits for each hospital based upon the general mix of types of medical cases with respect to which such hospital provides services for which payment may be made under this title.
(ii)
The Secretary shall set such limits for a cost reporting period of a hospital—
(I)
by updating available data for a previous period to the immediate preceding cost reporting period by the estimated average rate of change of hospital costs industry-wide, and
(II)
by projecting for the cost reporting period by the applicable percentage increase (as defined in subsection (b)(3)(B)).
(C)
The limitation established under subparagraph (A) for any hospital shall in no event be lower than the allowable operating costs of inpatient hospital services (as defined in paragraph (4)) recognized under this title for such hospital for such hospital's last cost reporting period prior to the hospital's first cost reporting period for which this section is in effect.
(D)
Subparagraph (A) shall not apply to cost reporting periods beginning on or after October 1, 1983.
(2)
The Secretary shall provide for such exemptions from, and exceptions and adjustments to, the limitation established under paragraph (1)(A) as he deems appropriate, including those which he deems necessary to take into account—
(A)
the special needs of sole community hospitals, of new hospitals, of risk based health maintenance organizations, and of hospitals which provide atypical services or essential community services, and to take into account extraordinary circumstances beyond the hospital's control, medical and paramedical education costs, significantly fluctuating population in the service area of the hospital, and unusual labor costs,
(B)
the special needs of psychiatric hospitals and of public or other hospitals that serve a significantly disproportionate number of patients who have low income or are entitled to benefits under part A of this title, and
(C)
a decrease in the inpatient hospital services that a hospital provides and that are customarily provided directly by similar hospitals which results in a significant distortion in the operating costs of inpatient hospital services.
(3)
The limitation established under paragraph (1)(A) shall not apply with respect to any hospital which—
(A)
is located outside of a standard metropolitan statistical area, and
(B)
(i)
has less than 50 beds, and
(ii)
was in operation and had less than 50 beds on the date of the enactment of this section.
(4)
For purposes of this section, the term “operating costs of inpatient hospital services” includes all routine operating costs, ancillary service operating costs, and special care unit operating costs with respect to inpatient hospital services as such costs are determined on an average per admission or per discharge basis (as determined by the Secretary), and includes the costs of all services for which payment may be made under this title that are provided by the hospital (or by an entity wholly owned or operated by the hospital) to the patient during the 3 days (or, in the case of a hospital that is not a subsection (d) hospital, during the 1 day) immediately preceding the date of the patient's admission if such services are diagnostic services (including clinical diagnostic laboratory tests) or are other services related to the admission (as defined by the Secretary). Such term does not include costs of approved educational activities, a return on equity capital, other capital-related costs (as defined by the Secretary for periods before October 1, 1987), for cost reporting periods beginning on or after October 1, 2020, costs related to hematopoietic stem cell acquisition for the purpose of an allogeneic hematopoietic stem cell transplant (as described in subsection (d)(5)(M)), or costs with respect to administering blood clotting factors to individuals with hemophilia. In applying the first sentence of this paragraph, the term “other services related to the admission” includes all services that are not diagnostic services (other than ambulance and maintenance renal dialysis services) for which payment may be made under this title that are provided by a hospital (or an entity wholly owned or operated by the hospital) to a patient—
(A)94
on the date of the patient's inpatient admission; or
^{94}
Margins so in law.
(B)94
during the 3 days (or, in the case of a hospital that is not a subsection (d) hospital, during the 1 day) immediately preceding the date of such admission unless the hospital demonstrates (in a form and manner, and at a time, specified by the Secretary) that such services are not related (as determined by the Secretary) to such admission.
(b)
(1)
Notwithstanding section 1814(b) but subject to the provisions of section 1813, if the operating costs of inpatient hospital services (as defined in subsection (a)(4)) of a hospital (other than a subsection (d) hospital, as defined in subsection (d)(1)(B) and other than a rehabilitation facility described in subsection (j)(1)) for a cost reporting period subject to this paragraph—
(A)
are less than or equal to the target amount (as defined in paragraph (3)) for that hospital for that period, the amount of the payment with respect to such operating costs payable under part A on a per discharge or per admission basis (as the case may be) shall be equal to the amount of such operating costs, plus—
(i)
15 percent of the amount by which the target amount exceeds the amount of the operating costs, or
(ii)
2 percent of the target amount,
whichever is less;
(B)
are greater than the target amount but do not exceed 110 percent of the target amount, the amount of the payment with respect to those operating costs payable under part A on a per discharge basis shall equal the target amount; or
(C)
are greater than 110 percent of the target amount, the amount of the payment with respect to such operating costs payable under part A on a per discharge or per admission basis (as the case may be) shall be equal to (i) the target amount, plus (ii) in the case of cost reporting periods beginning on or after October 1, 1991, an additional amount equal to 50 percent of the amount by which the operating costs exceed 110 percent of the target amount (except that such additional amount may not exceed 10 percent of the target amount) after any exceptions or adjustments are made to such target amount for the cost reporting period;
plus the amount, if any, provided under paragraph (2), except that in no case may the amount payable under this title (other than on the basis of a DRG prospective payment rate determined under subsection (d)) with respect to operating costs of inpatient hospital services exceed the maximum amount payable with respect to such costs pursuant to subsection (a).
(2)
(A)
Except as provided in subparagraph (E), in addition to the payment computed under paragraph (1), in the case of an eligible hospital (described in subparagraph (B)) for a cost reporting period beginning on or after October 1, 1997, the amount of payment on a per discharge basis under paragraph (1) shall be increased by the lesser of—
(i)
50 percent of the amount by which the operating costs are less than the expected costs (as defined in subparagraph (D)) for the period; or
(ii)
1 percent of the target amount for the period.
(B)
For purposes of this paragraph, an “eligible hospital” means with respect to a cost reporting period, a hospital—
(i)
that has received payments under this subsection for at least 3 full cost reporting periods before that cost reporting period, and
(ii)
whose operating costs for the period are less than the least of its target amount, its trended costs (as defined in subparagraph (C)), or its expected costs (as defined in subparagraph (D)) for the period.
(C)
For purposes of subparagraph (B)(ii), the term “trended costs” means for a hospital cost reporting period ending in a fiscal year—
(i)
in the case of a hospital for which its cost reporting period ending in fiscal year 1996 was its third or subsequent full cost reporting period for which it receives payments under this subsection, the lesser of the operating costs or target amount for that hospital for its cost reporting period ending in fiscal year 1996, or
(ii)
in the case of any other hospital, the operating costs for that hospital for its third full cost reporting period for which it receives payments under this subsection,
increased (in a compounded manner) for each succeeding fiscal year (through the fiscal year involved) by the market basket percentage increase for the fiscal year.
(D)
For purposes of this paragraph, the term “expected costs”, with respect to the cost reporting period ending in a fiscal year, means the lesser of the operating costs of inpatient hospital services or target amount per discharge for the previous cost reporting period updated by the market basket percentage increase (as defined in paragraph (3)(B)(iii)) for the fiscal year.
(E)
(i)
In the case of an eligible hospital that is a hospital or unit that is within a class of hospital described in clause (ii) with a 12-month cost reporting period beginning before the enactment of this subparagraph, in determining the amount of the increase under subparagraph (A), the Secretary shall substitute for the percentage of the target amount applicable under subparagraph (A)(ii)—
(I)
for a cost reporting period beginning on or after October 1, 2000, and before September 30, 2001, 1.5 percent; and
(II)
for a cost reporting period beginning on or after October 1, 2001, and before September 30, 2002, 2 percent.
(ii)
For purposes of clause (i), each of the following shall be treated as a separate class of hospital:
(I)
Hospitals described in clause (i) of subsection (d)(1)(B) and psychiatric units described in the matter following clause (v) of such subsection.
(II)
Hospitals described in clause (iv) of such subsection.
(3)
(A)
Except as provided in subparagraph (C) and succeeding subparagraphs and in paragraph (7)(A)(ii), for purposes of this subsection, the term “target amount” means, with respect to a hospital for a particular 12-month cost reporting period—
(i)
in the case of the first such reporting period for which this subsection is in effect, the allowable operating costs of inpatient hospital services (as defined in subsection (a)(4)) recognized under this title for such hospital for the preceding 12-month cost reporting period, and
(ii)
in the case of a later reporting period, the target amount for the preceding 12-month cost reporting period,
increased by the applicable percentage increase under subparagraph (B) for that particular cost reporting period.
(B)
(i)
For purposes of subsection (d) and subsection (j) for discharges occurring during a fiscal year, the “applicable percentage increase” shall be—
(I)
for fiscal year 1986, ½ percent,
(II)
for fiscal year 1987, 1.15 percent,
(III)
for fiscal year 1988, 3.0 percent for hospitals located in a rural area, 1.5 percent for hospitals located in a large urban area (as defined in subsection (d)(2)(D)), and 1.0 percent for hospitals located in other urban areas,
(IV)
for fiscal year 1989, the market basket percentage increase minus 1.5 percentage points for hospitals located in a rural area, the market basket percentage increase minus 2.0 percentage points for hospitals located in a large urban area, and the market basket percentage increase minus 2.5 percentage points for hospitals located in other urban areas,
(V)
for fiscal year 1990, the market basket percentage increase plus 4.22 percentage points for hospitals located in a rural area, the market basket percentage increase plus 0.12 percentage points for hospitals located in a large urban area, and the market basket percentage increase minus 0.53 percentage points for hospitals located in other urban areas,
(VI)
for fiscal year 1991, the market basket percentage increase minus 2.0 percentage points for hospitals in a large urban or other urban area, and the market basket percentage increase minus 0.7 percentage point for hospitals located in a rural area,
(VII)
for fiscal year 1992, the market basket percentage increase minus 1.6 percentage points for hospitals in a large urban or other urban area, and the market basket percentage increase minus 0.6 percentage point for hospitals located in a rural area,
(VIII)
for fiscal year 1993, the market basket percentage increase minus 1.55 percentage point for hospitals in a large urban or other urban area, and the market basket percentage increase minus 0.55 for hospitals located in a rural area,
(IX)
for fiscal year 1994, the market basket percentage increase minus 2.5 percentage points for hospitals located in a large urban or other urban area, and the market basket percentage increase minus 1.0 percentage point for hospitals located in a rural area,
(X)
for fiscal year 1995, the market basket percentage increase minus 2.5 percentage points for hospitals located in a large urban or other urban area, and such percentage increase for hospitals located in a rural area as will provide for the average standardized amount determined under subsection (d)(3)(A) for hospitals located in a rural area being equal to such average standardized amount for hospitals located in an urban area (other than a large urban area),
(XI)
for fiscal year 1996, the market basket percentage increase minus 2.0 percentage points for hospitals in all areas,
(XII)
for fiscal year 1997, the market basket percentage increase minus 0.5 percentage point for hospitals in all areas,
(XIII)
for fiscal year 1998, 0 percent,
(XIV)
for fiscal year 1999, the market basket percentage increase minus 1.9 percentage points for hospitals in all areas,
(XV)
for fiscal year 2000, the market basket percentage increase minus 1.8 percentage points for hospitals in all areas,
(XVI)
for fiscal year 2001, the market basket percentage increase for hospitals in all areas,
(XVII)
for fiscal year 2002, the market basket percentage increase minus 0.55 percentage points for hospitals in all areas,
(XVIII)
for fiscal year 2003, the market basket percentage increase minus 0.55 percentage points for hospitals in all areas,
(XIX)
for each of fiscal years 2004 through 2006, subject to clause (vii), the market basket percentage increase for hospitals in all areas; and
(XX)
for each subsequent fiscal year, subject to clauses (viii), (ix), (xi), and (xii), the market basket percentage increase for hospitals in all areas.
(ii)
For purposes of subparagraphs (A) and (E), the “applicable percentage increase” for 12-month cost reporting periods beginning during—
(I)
fiscal year 1986, is 0.5 percent,
(II)
fiscal year 1987, is 1.15 percent,
(III)
fiscal year 1988, is the market basket percentage increase minus 2.0 percentage points,
(IV)
a subsequent fiscal year ending on or before September 30, 1993, is the market basket percentage increase,
(V)
fiscal years 1994 through 1997, is the market basket percentage increase minus the applicable reduction (as defined in clause (v)(II)), or in the case of a hospital for a fiscal year for which the hospital's update adjustment percentage (as defined in clause (v)(I)) is at least 10 percent, the market basket percentage increase,
(VI)
for fiscal year 1998, is 0 percent,
(VII)
for fiscal years 1999 through 2002, is the applicable update factor specified under clause (vi) for the fiscal year, and
(VIII)
subsequent fiscal years is the market basket percentage increase.
(iii)
For purposes of this subparagraph, the term “market basket percentage increase” means, with respect to cost reporting periods and discharges occurring in a fiscal year, the percentage, estimated by the Secretary before the beginning of the period or fiscal year, by which the cost of the mix of goods and services (including personnel costs but excluding nonoperating costs) comprising routine, ancillary, and special care unit inpatient hospital services, based on an index of appropriately weighted indicators of changes in wages and prices which are representative of the mix of goods and services included in such inpatient hospital services, for the period or fiscal year will exceed the cost of such mix of goods and services for the preceding 12-month cost reporting period or fiscal year.
(iv)
For purposes of subparagraphs (C) and (D), the “applicable percentage increase” is—
(I)
for 12-month cost reporting periods beginning during fiscal years 1986 through 1993, the applicable percentage increase specified in clause (ii),
(II)
for fiscal year 1994, the market basket percentage increase minus 2.3 percentage points (adjusted to exclude any portion of a cost reporting period beginning during fiscal year 1993 for which the applicable percentage increase is determined under subparagraph (I)),
(III)
for fiscal year 1995, the market basket percentage increase minus 2.2 percentage points, and
(IV)
for fiscal year 1996 and each subsequent fiscal year, the applicable percentage increase under clause (i).
(v)
For purposes of clause (ii)(V)—
(I)
a hospital's “update adjustment percentage” for a fiscal year is the percentage by which the hospital's allowable operating costs of inpatient hospital services recognized under this title for the cost reporting period beginning in fiscal year 1990 exceeds the hospital's target amount (as determined under subparagraph (A)) for such cost reporting period, increased for each fiscal year (beginning with fiscal year 1994) by the sum of any of the hospital's applicable reductions under subclause (V) for previous fiscal years; and
(II)
the “applicable reduction” with respect to a hospital for a fiscal year is the lesser of 1 percentage point or the percentage point difference between 10 percent and the hospital's update adjustment percentage for the fiscal year.
(vi)
For purposes of clause (ii)(VII) for a fiscal year, if a hospital's allowable operating costs of inpatient hospital services recognized under this title for the most recent cost reporting period for which information is available—
(I)
is equal to, or exceeds, 110 percent of the hospital's target amount (as determined under subparagraph (A)) for such cost reporting period, the applicable update factor specified under this clause is the market basket percentage;
(II)
exceeds 100 percent, but is less than 110 percent, of such target amount for the hospital, the applicable update factor specified under this clause is 0 percent or, if greater, the market basket percentage minus 0.25 percentage points for each percentage point by which such allowable operating costs (expressed as a percentage of such target amount) is less than 110 percent of such target amount;
(III)
is equal to, or less than 100 percent, but exceeds ⅔ of such target amount for the hospital, the applicable update factor specified under this clause is 0 percent or, if greater, the market basket percentage minus 2.5 percentage points; or
(IV)
does not exceed ⅔ of such target amount for the hospital, the applicable update factor specified under this clause is 0 percent.
(vii)
(I)
For purposes of clause (i)(XIX) for fiscal years 2005 and 2006, in a case of a subsection (d) hospital that does not submit data to the Secretary in accordance with subclause (II) with respect to such a fiscal year, the applicable percentage increase under such clause for such fiscal year shall be reduced by 0.4 percentage points. Such reduction shall apply only with respect to the fiscal year involved, and the Secretary shall not take into account such reduction in computing the applicable percentage increase under clause (i)(XIX) for a subsequent fiscal year.
(II)
For fiscal years 2005 and 2006, each subsection (d) hospital shall submit to the Secretary quality data (for a set of 10 indicators established by the Secretary as of November 1, 2003) that relate to the quality of care furnished by the hospital in inpatient settings in a form and manner, and at a time, specified by the Secretary for purposes of this clause, but with respect to fiscal year 2005, the Secretary shall provide for a 30-day grace period for the submission of data by a hospital.
(viii)
(I)
For purposes of clause (i) for fiscal year 2007 and each subsequent fiscal year, in the case of a subsection (d) hospital that does not submit, to the Secretary in accordance with this clause, data required to be submitted on measures selected under this clause with respect to such a fiscal year, the applicable percentage increase under clause (i) for such fiscal year shall be reduced by 2.0 percentage points (or, beginning with fiscal year 2015, by one-quarter of such applicable percentage increase (determined without regard to clause (ix), (xi), or (xii))). Such reduction shall apply only with respect to the fiscal year involved and the Secretary shall not take into account such reduction in computing the applicable percentage increase under clause (i) for a subsequent fiscal year, and the Secretary and the Medicare Payment Advisory Commission shall carry out the requirements under section 5001(b) of the Deficit Reduction Act of 2005.
(II)
Each subsection (d) hospital shall submit data on measures selected under this clause to the Secretary in a form and manner, and at a time, specified by the Secretary for purposes of this clause. The Secretary may require hospitals to submit data on measures that are not used for the determination of value-based incentive payments under subsection (o).
(III)
The Secretary shall expand, beyond the measures specified under clause (vii)(II) and consistent with the succeeding subclauses, the set of measures that the Secretary determines to be appropriate for the measurement of the quality of care (including medication errors) furnished by hospitals in inpatient settings.
(IV)
Effective for payments beginning with fiscal year 2007, in expanding the number of measures under subclause (III), the Secretary shall begin to adopt the baseline set of performance measures as set forth in the November 2005 report by the Institute of Medicine of the National Academy of Sciences under section 238(b) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
(V)
Effective for payments for fiscal years 2008 through 2012, the Secretary shall add other measures that reflect consensus among affected parties and, to the extent feasible and practicable, shall include measures set forth by one or more national consensus building entities.
(VI)
For purposes of this clause and clause (vii), the Secretary may replace any measures or indicators in appropriate cases, such as where all hospitals are effectively in compliance or the measures or indicators have been subsequently shown not to represent the best clinical practice.
(VII)
The Secretary shall establish procedures for making information regarding measures submitted under this clause available to the public. Such procedures shall ensure that a hospital has the opportunity to review the data that are to be made public with respect to the hospital prior to such data being made public. The Secretary shall report quality measures of process, structure, outcome, patients' perspectives on care, efficiency, and costs of care that relate to services furnished in inpatient settings in hospitals on the Internet website of the Centers for Medicare & Medicaid Services.
(VIII)
Effective for payments beginning with fiscal year 2013, with respect to quality measures for outcomes of care, the Secretary shall provide for such risk adjustment as the Secretary determines to be appropriate to maintain incentives for hospitals to treat patients with severe illnesses or conditions.
(IX)
- (aa)
Subject to item (bb), effective for payments beginning with fiscal year 2013, each measure specified by the Secretary under this clause shall be endorsed by the entity with a contract under section 1890(a).
- (bb)
In the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a), the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.
(X)
To the extent practicable, the Secretary shall, with input from consensus organizations and other stakeholders, take steps to ensure that the measures specified by the Secretary under this clause are coordinated and aligned with quality measures applicable to—
- (aa)
physicians under section 1848(k); and
- (bb)
other providers of services and suppliers under this title.
(XI)
The Secretary shall establish a process to validate measures specified under this clause as appropriate. Such process shall include the auditing of a number of randomly selected hospitals sufficient to ensure validity of the reporting program under this clause as a whole and shall provide a hospital with an opportunity to appeal the validation of measures reported by such hospital.
(XII)
- (aa)
With respect to a Hospital Consumer Assessment of Healthcare Providers and Systems survey (or a successor survey) conducted on or after January 1, 2020, such survey may not include questions about communication by hospital staff with an individual about such individual’s pain unless such questions take into account, as applicable, whether an individual experiencing pain was informed about risks associated with the use of opioids and about non-opioid alternatives for the treatment of pain.
- (bb)
The Secretary shall not include on the Hospital Compare internet website any measures based on the questions appearing on the Hospital Consumer Assessment of Healthcare Providers and Systems survey in 2018 or 2019 about communication by hospital staff with an individual about such individual’s pain.
(ix)
(I)
For purposes of clause (i) for fiscal year 2015 and each subsequent fiscal year, in the case of an eligible hospital (as defined in subsection (n)(6)(B)95) that is not a meaningful EHR user (as defined in subsection (n)(3)) for an EHR reporting period for such fiscal year, three-quarters of the applicable percentage increase otherwise applicable under clause (i) (determined without regard to clause (viii), (xi), or (xii)) for such fiscal year shall be reduced by 33⅓ percent for fiscal year 2015, 66⅔ percent for fiscal year 2016, and 100 percent for fiscal year 2017 and each subsequent fiscal year. Such reduction shall apply only with respect to the fiscal year involved and the Secretary shall not take into account such reduction in computing the applicable percentage increase under clause (i) for a subsequent fiscal year.
^{95}
Section 4(b)(1) of the Patient Access and Medicare Protection Act (P.L. 114–115) attempts to amend the first sentence of clause (ix)(I) by striking “(n)(6)(A)” and inserting “(n)(6)”. Such amendment could not be executed because the matter proposed to be struck does not appear as a result of an earlier amendment made by section 602(b)(1)(A) of division O of Public Law 114–113, which struck “(n)(6)(A)” and inserted “(n)(6)(B)”.
(II)
The Secretary may, on a case-by-case basis (and, with respect to the application of subclause (I) for fiscal year 2017, for categories of subsection (d) hospitals, as established by the Secretary and posted on the Internet website of the Centers for Medicare & Medicaid Services prior to December 15, 2015, an application for which must be submitted to the Secretary by not later than April 1, 2016), exempt an eligible hospital from the application of subclause (I) with respect to a fiscal year if the Secretary determines, subject to annual renewal, that requiring such hospital to be a meaningful EHR user during such fiscal year would result in a significant hardship, such as in the case of a hospital in a rural area without sufficient Internet access. The Secretary shall exempt an eligible hospital from the application of the payment adjustment under subclause (I) with respect to a fiscal year, subject to annual renewal, if the Secretary determines that compliance with the requirement for being a meaningful EHR user is not possible because the certified EHR technology used by such hospital is decertified under a program kept or recognized pursuant to section 3001(c)(5) of the Public Health Service Act. In no case may a hospital be granted an exemption under this subclause for more than 5 years.
(III)
For fiscal year 2015 and each subsequent fiscal year, a State in which hospitals are paid for services under section 1814(b)(3) shall adjust the payments to each subsection (d) hospital in the State that is not a meaningful EHR user (as defined in subsection (n)(3)) in a manner that is designed to result in an aggregate reduction in payments to hospitals in the State that is equivalent to the aggregate reduction that would have occurred if payments had been reduced to each subsection (d) hospital in the State in a manner comparable to the reduction under the previous provisions of this clause. The State shall report to the Secretary the methodology it will use to make the payment adjustment under the previous sentence.
(IV)
For purposes of this clause, the term “EHR reporting period” means, with respect to a fiscal year, any period (or periods) as specified by the Secretary.
(x)
(I)
The Secretary shall develop standard Internet website reports tailored to meet the needs of various stakeholders such as hospitals, patients, researchers, and policymakers. The Secretary shall seek input from such stakeholders in determining the type of information that is useful and the formats that best facilitate the use of the information.
(II)
The Secretary shall modify the Hospital Compare Internet website to make the use and navigation of that website readily available to individuals accessing it.
(xi)
(I)
For 2012 and each subsequent fiscal year, after determining the applicable percentage increase described in clause (i) and after application of clauses (viii) and (ix), such percentage increase shall be reduced by the productivity adjustment described in subclause (II).
(II)
The productivity adjustment described in this subclause, with respect to a percentage, factor, or update for a fiscal year, year, cost reporting period, or other annual period, is a productivity adjustment equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multi-factor productivity (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost reporting period, or other annual period).
(III)
The application of subclause (I) may result in the applicable percentage increase described in clause (i) being less than 0.0 for a fiscal year, and may result in payment rates under this section for a fiscal year being less than such payment rates for the preceding fiscal year.
(xii)
After determining the applicable percentage increase described in clause (i), and after application of clauses (viii), (ix), and (xi), the Secretary shall reduce such applicable percentage increase—
(I)
for each of fiscal years 2010 and 2011, by 0.25 percentage point;
(II)
for each of fiscal years 2012 and 2013, by 0.1 percentage point;
(III)
for fiscal year 2014, by 0.3 percentage point;
(IV)
for each of fiscal years 2015 and 2016, by 0.2 percentage point; and
(V)
for each of fiscal years 2017, 2018, and 2019, by 0.75 percentage point.
The application of this clause may result in the applicable percentage increase described in clause (i) being less than 0.0 for a fiscal year, and may result in payment rates under this section for a fiscal year being less than such payment rates for the preceding fiscal year.
(C)
In the case of a hospital that is a sole community hospital (as defined in subsection (d)(5)(D)(iii)), subject to subparagraphs (I) and (L), 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—
(I)
the allowable operating costs of inpatient hospital services (as defined in subsection (a)(4)) recognized under this title for the hospital for the 12-month cost reporting period (in this subparagraph referred to as the “base cost reporting period”) preceding the first cost reporting period for which this subsection was in effect with respect to such hospital, increased (in a compounded manner) by—
(II)
the applicable percentage increases applied to such hospital under this paragraph for cost reporting periods after the base cost reporting period and up to and including such first 12-month cost reporting period,
(ii)
with respect to a later cost reporting period beginning before fiscal year 1994, the target amount for the preceding 12-month cost reporting period, increased by the applicable percentage increase under subparagraph (B)(iv) for discharges occurring in the fiscal year in which that later cost reporting period begins,
(iii)
with respect to discharges occurring in fiscal year 1994, the target amount for the cost reporting period beginning in fiscal year 1993 increased by the applicable percentage increase under subparagraph (B)(iv), or
(iv)
with respect to discharges occurring in fiscal year 1995 and each subsequent fiscal year, the target amount for the preceding year increased by the applicable percentage increase under subparagraph (B)(iv).
There shall be substituted for the base cost reporting period described in clause (i) a hospital's cost reporting period (if any) beginning during fiscal year 1987 if such substitution results in an increase in the target amount for the hospital.
(D)
For cost reporting periods ending on or before September 30, 1994, and for cost reporting periods occurring on or after October 1, 1997, and before January 31, 2026, in the case of a hospital that is a medicare-dependent, small rural hospital (as defined in subsection (d)(5)(G)), subject to subparagraph (K), 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—
(I)
the allowable operating costs of inpatient hospital services (as defined in subsection (a)(4)) recognized under this title for the hospital for the 12-month cost reporting period (in this subparagraph referred to as the “base cost reporting period”) preceding the first cost reporting period for which this subsection was in effect with respect to such hospital, increased (in a compounded manner) by—
(II)
the applicable percentage increases applied to such hospital under this paragraph for cost reporting periods after the base cost reporting period and up to and including such first 12-month cost reporting period, or
(ii)
with respect to a later cost reporting period beginning before fiscal year 1994, the target amount for the preceding 12-month cost reporting period, increased by the applicable percentage increase under subparagraph (B)(iv) for discharges occurring in the fiscal year in which that later cost reporting period begins,
(iii)
with respect to discharges occurring in fiscal year 1994, the target amount for the cost reporting period beginning in fiscal year 1993 increased by the applicable percentage increase under subparagraph (B)(iv), and
(iv)
with respect to discharges occurring during fiscal year 1998 through fiscal year 2025 and the portion of fiscal year 2026 beginning on October 1, 2025, and ending on January 30, 2026, the target amount for the preceding year increased by the applicable percentage increase under subparagraph (B)(iv).
There shall be substituted for the base cost reporting period described in clause (i) a hospital's cost reporting period (if any) beginning during fiscal year 1987 if such substitution results in an increase in the target amount for the hospital.
(E)
In the case of a hospital described in clause (v) of subsection (d)(1)(B), 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—
(I)
the allowable operating costs of inpatient hospital services (as defined in subsection (a)(4)) recognized under this title for the hospital for the 12-month cost reporting period (in this subparagraph referred to as the “base cost reporting period”) preceding the first cost reporting period for which this subsection was in effect with respect to such hospital, increased (in a compounded manner) by—
(II)
the sum of the applicable percentage increases applied to such hospital under this paragraph for cost reporting periods after the base cost reporting period and up to and including such first 12-month cost reporting period, or
(ii)
with respect to a later cost reporting period, the target amount for the preceding 12-month cost reporting period, increased by the applicable percentage increase under subparagraph (B)(ii) for that later cost reporting period.
There shall be substituted for the base cost reporting period described in clause (i) a hospital's cost reporting period (if any) beginning during fiscal year 1987 if such substitution results in an increase in the target amount for the hospital.
(F)
(i)
In the case of a hospital (or unit described in the matter following clause (v) of subsection (d)(1)(B)) that received payment under this subsection for inpatient hospital services furnished during cost reporting periods beginning before October 1, 1990, that is within a class of hospital described in clause (iii), and that elects (in a form and manner determined by the Secretary) this subparagraph to apply to the hospital, the target amount for the hospital's 12-month cost reporting period beginning during fiscal year 1998 is equal to the average described in clause (ii).
(ii)
The average described in this clause for a hospital or unit shall be determined by the Secretary as follows:
(I)
The Secretary shall determine the allowable operating costs for inpatient hospital services for the hospital or unit for each of the 5 cost reporting periods for which the Secretary has the most recent settled cost reports as of the date of the enactment of this subparagraph.
(II)
The Secretary shall increase the amount determined under subclause (I) for each cost reporting period by the applicable percentage increase under subparagraph (B)(ii) for each subsequent cost reporting period up to the cost reporting period described in clause (i).
(III)
The Secretary shall identify among such 5 cost reporting periods the cost reporting periods for which the amount determined under subclause (II) is the highest, and the lowest.
(IV)
The Secretary shall compute the averages of the amounts determined under subclause (II) for the 3 cost reporting periods not identified under subclause (III).
(iii)
For purposes of this subparagraph, each of the following shall be treated as a separate class of hospital:
(I)
Hospitals described in clause (i) of subsection (d)(1)(B) and psychiatric units described in the matter following clause (v) of such subsection.
(II)
Hospitals described in clause (ii) of such subsection and rehabilitation units described in the matter following clause (v) of such subsection.
(III)
Hospitals described in clause (iii) of such subsection.
(IV)
Hospitals described in clause (iv) of such subsection.
(V)
Hospitals described in clause (v) of such subsection.
(G)
(i)
In the case of a qualified long-term care hospital (as defined in clause (ii)) that elects (in a form and manner determined by the Secretary) this subparagraph to apply to the hospital, the target amount for the hospital's 12-month cost reporting period beginning during fiscal year 1998 is equal to the allowable operating costs of inpatient hospital services (as defined in subsection (a)(4)) recognized under this title for the hospital for the 12-month cost reporting period beginning during fiscal year 1996, increased by the applicable percentage increase for the cost reporting period beginning during fiscal year 1997.
(ii)
In clause (i), a “qualified long-term care hospital” means, with respect to a cost reporting period, a hospital described in clause (iv) of subsection (d)(1)(B) during each of the 2 cost reporting periods for which the Secretary has the most recent settled cost reports as of the date of the enactment of this subparagraph for each of which—
(I)
the hospital's allowable operating costs of inpatient hospital services recognized under this title exceeded 115 percent of the hospital's target amount, and
(II)
the hospital would have a disproportionate patient percentage of at least 70 percent (as determined by the Secretary under subsection (d)(5)(F)(vi)) if the hospital were a subsection (d) hospital.
(H)
(i)
In the case of a hospital or unit that is within a class of hospital described in clause (iv), for a cost reporting period beginning during fiscal years 1998 through 2002, the target amount for such a hospital or unit may not exceed the amount as updated up to or for such cost reporting period under clause (ii).
(ii)
(I)
In the case of a hospital or unit that is within a class of hospital described in clause (iv), the Secretary shall estimate the 75th percentile of the target amounts for such hospitals within such class for cost reporting periods ending during fiscal year 1996, as adjusted under clause (iii).
(II)
The Secretary shall update the amount determined under subclause (I), for each cost reporting period after the cost reporting period described in such subclause and up to the first cost reporting period beginning on or after October 1, 1997, by a factor equal to the market basket percentage increase.
(III)
For cost reporting periods beginning during each of fiscal years 1999 through 2002, subject to subparagraph (J), the Secretary shall update such amount by a factor equal to the market basket percentage increase.
(iii)
In applying clause (ii)(I) in the case of a hospital or unit, the Secretary shall provide for an appropriate adjustment to the labor-related portion of the amount determined under such subparagraph to take into account differences between average wage-related costs in the area of the hospital and the national average of such costs within the same class of hospital.
(iv)
For purposes of this subparagraph, each of the following shall be treated as a separate class of hospital:
(I)
Hospitals described in clause (i) of subsection (d)(1)(B) and psychiatric units described in the matter following clause (v) of such subsection.
(II)
Hospitals described in clause (ii) of such subsection and rehabilitation units described in the matter following clause (v) of such subsection.
(III)
Hospitals described in clause (iv) of such subsection.
(I)
(i)
Subject to subparagraph (L), for cost reporting periods beginning on or after October 1, 2000, in the case of a sole community hospital there shall be substituted for the amount otherwise determined under subsection (d)(5)(D)(i), if such substitution results in a greater amount of payment under this section for the hospital—
(I)
with respect to discharges occurring in fiscal year 2001, 75 percent of the amount otherwise applicable to the hospital under subsection (d)(5)(D)(i) (referred to in this clause as the “subsection (d)(5)(D)(i) amount”) and 25 percent of the rebased target amount (as defined in clause (ii));
(II)
with respect to discharges occurring in fiscal year 2002, 50 percent of the subsection (d)(5)(D)(i) amount and 50 percent of the rebased target amount;
(III)
with respect to discharges occurring in fiscal year 2003, 25 percent of the subsection (d)(5)(D)(i) amount and 75 percent of the rebased target amount; and
(IV)
with respect to discharges occurring after fiscal year 2003, 100 percent of the rebased target amount.
(ii)
For purposes of this subparagraph, the “rebased target amount” has the meaning given the term “target amount” in subparagraph (C) except that—
(I)
there shall be substituted for the base cost reporting period the 12-month cost reporting period beginning during fiscal year 1996;
(II)
any reference in subparagraph (C)(i) to the “first cost reporting period” described in such subparagraph is deemed a reference to the first cost reporting period beginning on or after October 1, 2000; and
(III)
applicable increase percentage shall only be applied under subparagraph (C)(iv) for discharges occurring in fiscal years beginning with fiscal year 2002.
(iii)
In no case shall a hospital be denied treatment as a sole community hospital or payment (on the basis of a target rate as such as a hospital) because data are unavailable for any cost reporting period due to changes in ownership, changes in fiscal intermediaries, or other extraordinary circumstances, so long as data for at least one applicable base cost reporting period is available.
(J)
For cost reporting periods beginning during fiscal year 2001, for a hospital described in subsection (d)(1)(B)(iv)—
(i)
the limiting or cap amount otherwise determined under subparagraph (H) shall be increased by 2 percent; and
(ii)
the target amount otherwise determined under subparagraph (A) shall be increased by 25 percent (subject to the limiting or cap amount determined under subparagraph (H), as increased by clause (i)).
(K)
(i)
With respect to discharges occurring on or after October 1, 2006, in the case of a medicare-dependent, small rural hospital, for purposes of applying subparagraph (D)—
(I)
there shall be substituted for the base cost reporting period described in subparagraph (D)(i) the 12-month cost reporting period beginning during fiscal year 2002; and
(II)
any reference in such subparagraph to the “first cost reporting period” described in such subparagraph is deemed a reference to the first cost reporting period beginning on or after October 1, 2006.
(ii)
This subparagraph shall only apply to a hospital if the substitution described in clause (i)(I) results in an increase in the target amount under subparagraph (D) for the hospital.
(L)
(i)
For cost reporting periods beginning on or after January 1, 2009, in the case of a sole community hospital there shall be substituted for the amount otherwise determined under subsection (d)(5)(D)(i) of this section, if such substitution results in a greater amount of payment under this section for the hospital, the subparagraph (L) rebased target amount.
(ii)
For purposes of this subparagraph, the term “subparagraph (L) rebased target amount” has the meaning given the term “target amount” in subparagraph (C), except that—
(I)
there shall be substituted for the base cost reporting period the 12-month cost reporting period beginning during fiscal year 2006;
(II)
any reference in subparagraph (C)(i) to the “first cost reporting period” described in such subparagraph is deemed a reference to the first cost reporting period beginning on or after January 1, 2009; and
(III)
the applicable percentage increase shall only be applied under subparagraph (C)(iv) for discharges occurring on or after January 1, 2009.
(4)
(A)
(i)
The Secretary shall provide for an exception and adjustment to (and in the case of a hospital described in subsection (d)(1)(B)(iii), may provide an exemption from) the method under this subsection for determining the amount of payment to a hospital where events beyond the hospital's control or extraordinary circumstances, including changes in the case mix of such hospital, create a distortion in the increase in costs for a cost reporting period (including any distortion in the costs for the base period against which such increase is measured). The Secretary may provide for such other exemptions from, and exceptions and adjustments to, such method as the Secretary deems appropriate, including the assignment of a new base period which is more representative, as determined by the Secretary, of the reasonable and necessary cost of inpatient services and including those which he deems necessary to take into account a decrease in the inpatient hospital services that a hospital provides and that are customarily provided directly by similar hospitals which results in a significant distortion in the operating costs of inpatient hospital services. The Secretary shall announce a decision on any request for an exemption, exception, or adjustment under this paragraph not later than 180 days after receiving a completed application from the intermediary for such exemption, exception, or adjustment, and shall include in such decision a detailed explanation of the grounds on which such request was approved or denied.
(ii)
The payment reductions under paragraph (3)(B)(ii)(V) shall not be considered by the Secretary in making adjustments pursuant to clause (i). In making such reductions, the Secretary shall treat the applicable update factor described in paragraph (3)(B)(vi) for a fiscal year as being equal to the market basket percentage for that year.
(B)
In determining under subparagraph (A) whether to assign a new base period which is more representative of the reasonable and necessary cost to a hospital of providing inpatient services, the Secretary shall take into consideration—
(i)
changes in applicable technologies and medical practices, or differences in the severity of illness among patients, that increase the hospital's costs;
(ii)
whether increases in wages and wage-related costs for hospitals located in the geographic area in which the hospital is located exceed the average of the increases in such costs paid by hospitals in the United States; and
(iii)
such other factors as the Secretary considers appropriate in determining increases in the hospital's costs of providing inpatient services.
(C)
Paragraph (1) shall not apply to payment of hospitals which is otherwise determined under paragraph (3) of section 1814(b).
(5)
In the case of any hospital having any cost reporting period of other than a 12-month period, the Secretary shall determine the 12-month period which shall be used for purposes of this section.
(6)
In the case of any hospital which becomes subject to the taxes under section 3111 of the Internal Revenue Code of 1954, with respect to any or all of its employees, for part or all of a cost reporting period, and was not subject to such taxes with respect to any or all of its employees for all or part of the 12-month base cost reporting period referred to in subsection (b)(3)(A)(i), the Secretary shall provide for an adjustment by increasing the base period amount described in such subsection for such hospital by an amount equal to the amount of such taxes which would have been paid or accrued by such hospital for such base period if such hospital had been subject to such taxes for all of such base period with respect to all its employees, minus the amount of any such taxes actually paid or accrued for such base period.
(7)
(A)
Notwithstanding paragraph (1), in the case of a hospital or unit that is within a class of hospital described in subparagraph (B) which first receives payments under this section on or after October 1, 1997—
(i)
for each of the first 2 cost reporting periods for which the hospital has a settled cost report, the amount of the payment with respect to operating costs described in paragraph (1) under part A on a per discharge or per admission basis (as the case may be) is equal to the lesser of—
(I)
the amount of operating costs for such respective period, or
(II)
110 percent of the national median (as estimated by the Secretary) of the target amount for hospitals in the same class as the hospital for cost reporting periods ending during fiscal year 1996, updated by the hospital market basket increase percentage to the fiscal year in which the hospital first received payments under this section, as adjusted under subparagraph (C); and
(ii)
for purposes of computing the target amount for the subsequent cost reporting period, the target amount for the preceding cost reporting period is equal to the amount determined under clause (i) for such preceding period.
(B)
For purposes of this paragraph, each of the following shall be treated as a separate class of hospital:
(i)
Hospitals described in clause (i) of subsection (d)(1)(B) and psychiatric units described in the matter following clause (v) of such subsection.
(ii)
Hospitals described in clause (ii) of such subsection and rehabilitation units described in the matter following clause (v) of such subsection.
(iii)
Hospitals described in clause (iv) of such subsection.
(C)
In applying subparagraph (A)(i)(II) in the case of a hospital or unit, the Secretary shall provide for an appropriate adjustment to the labor-related portion of the amount determined under such subparagraph to take into account differences between average wage-related costs in the area of the hospital and the national average of such costs within the same class of hospital.
(c)
(1)
The Secretary may provide, in his discretion, that payment with respect to services provided by a hospital in a State may be made in accordance with a hospital reimbursement control system in a State, rather than in accordance with the other provisions of this title, if the chief executive officer of the State requests such treatment and if—
(A)
the Secretary determines that the system, if approved under this subsection, will apply (i) to substantially all non- Federal acute care hospitals (as defined by the Secretary) in the State and (ii) to the review of at least 75 percent of all revenues or expenses in the State for inpatient hospital services and of revenues or expenses for inpatient hospital services provided under the State's plan approved under title XIX;
(B)
the Secretary has been provided satisfactory assurances as to the equitable treatment under the system of all entities (including Federal and State programs) that pay hospitals for inpatient hospital services, of hospital employees, and of hospital patients;
(C)
the Secretary has been provided satisfactory assurances that under the system, over 36-month periods (the first such period beginning with the first month in which this subsection applies to that system in the State), the amount of payments made under this title under such system will not exceed the amount of payments which would otherwise have been made under this title not using such system;
(D)
the Secretary determines that the system will not preclude an eligible organization (as defined in section 1876(b)) from negotiating directly with hospitals with respect to the organization's rate of payment for inpatient hospital services; and
(E)
the Secretary determines that the system requires hospitals to meet the requirement of section 1866(a)(1)(G) and the system provides for the exclusion of certain costs in accordance with section 1862(a)(14) (except for such waivers thereof as the Secretary provides by regulation).
The Secretary cannot deny the application of a State under this subsection on the ground that the State's hospital reimbursement control system is based on a payment methodology other than on the basis of a diagnosis-related group or on the ground that the amount of payments made under this title under such system must be less than the amount of payments which would otherwise have been made under this title not using such system. If the Secretary determines that the conditions described in subparagraph (C) are based on maintaining payment amounts at no more than a specified percentage increase above the payment amounts in a base period, the State has the option of applying such test (for inpatient hospital services under part A) on an aggregate payment basis or on the basis of the amount of payment per inpatient discharge or admission. If the Secretary determines that the conditions described in subparagraph (C) are based on maintaining aggregate payment amounts below a national average percentage increase in total payments under part A for inpatient hospital services, the Secretary cannot deny the application of a State under this subsection on the ground that the State's rate of increase in such payments for such services must be less than such national average rate of increase.
(2)
In determining under paragraph (1)(C) the amount of payment which would otherwise have been made under this title for a State, the Secretary may provide for appropriate adjustment of such amount to take into account previous reductions effected in the amount of payments made under this title in the State due to the operation of the hospital reimbursement control system in the State if the system has resulted in an aggregate rate of increase in operating costs of inpatient hospital services (as defined in subsection (a)(4)) under this title for hospitals in the State which is less than the aggregate rate of increase in such costs under this title for hospitals in the United States.
(3)
The Secretary shall discontinue payments under a system described in paragraph (1) if the Secretary—
(A)
determines that the system no longer meets the requirements of subparagraphs (A), (D), and (E) of paragraph (1) and, if applicable, the requirements of paragraph (5), or
(B)
has reason to believe that the assurances described in subparagraph (B) or (C) of paragraph (1) (or, if applicable, in paragraph (5)) are not being (or will not be) met.
(4)
The Secretary shall approve the request of a State under paragraph (1) with respect to a hospital reimbursement control system if—
(A)
the requirements of subparagraphs (A), (B), (C), (D), and (E) of paragraph (1) have been met with respect to the system, and
(B)
with respect to that system a waiver of certain requirements of title XVIII of the Social Security Act has been approved on or before (and which is in effect as of) the date of the enactment of the Social Security Amendments of 1983, pursuant to section 402(a) of the Social Security Amendments of 1967 or section 222(a) of the Social Security Amendments of 1972.
With respect to a State system described in this paragraph, the Secretary shall judge the effectiveness of such system on the basis of its rate of increase or inflation in inpatient hospital payments for individuals under this title, as compared to the national rate of increase or inflation for such payments, with the State retaining the option to have the test applied on the basis of the aggregate payments under the State system as compared to aggregate payments which would have been made under the national system since October 1, 1984, to the most recent date for which annual data are available.
(5)
The Secretary shall approve the request of a State under paragraph (1) with respect to a hospital reimbursement control system if—
(A)
the requirements of subparagraphs (A), (B), (C), (D), and (E) of paragraph (1) have been met with respect to the system;
(B)
the Secretary determines that the system—
(i)
is operated directly by the State or by an entity designated pursuant to State law,
(ii)
provides for payment of hospitals covered under the system under a methodology (which sets forth exceptions and adjustments, as well as any method for changes in the methodology) by which rates or amounts to be paid for hospital services during a specified period are established under the system prior to the defined rate period, and
(iii)
hospitals covered under the system will make such reports (in lieu of cost and other reports, identified by the Secretary, otherwise required under this title) as the Secretary may require in order to properly monitor assurances provided under this subsection;
(C)
the State has provided the Secretary with satisfactory assurances that operation of the system will not result in any change in hospital admission practices which result in—
(i)
a significant reduction in the proportion of patients (receiving hospital services covered under the system) who have no third-party coverage and who are unable to pay for hospital services,
(ii)
a significant reduction in the proportion of individuals admitted to hospitals for inpatient hospital services for which payment is (or is likely to be) less than the anticipated charges for or costs of such services,
(iii)
the refusal to admit patients who would be expected to require unusually costly or prolonged treatment for reasons other than those related to the appropriateness of the care available at the hospital, or
(iv)
the refusal to provide emergency services to any person who is in need of emergency services if the hospital provides such services;
(D)
any change by the State in the system which has the effect of materially reducing payments to hospitals can only take effect upon 60 days notice to the Secretary and to the hospitals the payment to which is likely to be materially affected by the change; and
(E)
the State has provided the Secretary with satisfactory assurances that in the development of the system the State has consulted with local governmental officials concerning the impact of the system on public hospitals.
The Secretary shall respond to requests of States under this paragraph within 60 days of the date the request is submitted to the Secretary.
(6)
If the Secretary determines that the assurances described in paragraph (1)(C) have not been met with respect to any 36-month period, the Secretary may reduce payments under this title to hospitals under the system in an amount equal to the amount by which the payment under this title under such system for such period exceeded the amount of payments which would otherwise have been made under this title not using such system.
(7)
In the case of a State which made a request under paragraph (5) before December 31, 1984, for the approval of a State hospital reimbursement control system and which request was approved—
(A)
in applying paragraphs (1)(C) and (6), a reference to a “36-month period” is deemed a reference to a “48-month period”, and
(B)
in order to allow the State the opportunity to provide the assurances described in paragraph (1)(C) for a 48-month period, the Secretary may not discontinue payments under the system, under the authority of paragraph (3)(A) because the Secretary has reason to believe that such assurances are not being (or will not be) met, before July 1, 1986.
(d)
(1)
(A)
Notwithstanding section 1814(b) but subject to the provisions of section 1813, the amount of the payment with respect to the operating costs of inpatient hospital services (as defined in subsection (a)(4)) of a subsection (d) hospital (as defined in subparagraph (B)) for inpatient hospital discharges in a cost reporting period or in a fiscal year—
(i)
beginning on or after October 1, 1983, and before October 1, 1984, is equal to the sum of—
(I)
the target percentage (as defined in subparagraph (C)) of the hospital's target amount for the cost reporting period (as defined in subsection (b)(3)(A), but determined without the application of subsection (a)), and
(II)
the DRG percentage (as defined in subparagraph (C)) of the regional adjusted DRG prospective payment rate determined under paragraph (2) for such discharges;
(ii)
beginning on or after October 1, 1984, and before October 1, 1987, is equal to the sum of—
(I)
the target percentage (as defined in subparagraph (C)) of the hospital's target amount for the cost reporting period (as defined in subsection (b)(3)(A), but determined without the application of subsection (a)), and
(II)
the DRG percentage (as defined in subparagraph (C)) of the applicable combined adjusted DRG prospective payment rate determined under subparagraph (D) for such discharges; or
(iii)
beginning on or after April 1, 1988, is equal to
(I)
the national adjusted DRG prospective payment rate determined under paragraph (3) for such discharges, or
(II)
for discharges occurring during a fiscal year ending on or before September 30, 1996, the sum of 85 percent of the national adjusted DRG prospective payment rate determined under paragraph (3) for such discharges and 15 percent of the regional adjusted DRG prospective payment rate determined under such paragraph, but only if the average standardized amount (described in clause (i)(I) or clause (ii)(I) of paragraph (3)(D)) for hospitals within the region of, and in the same large urban or other area (or, for discharges occurring during a fiscal year ending on or before September 30, 1994, the same rural, large urban, or other urban area) as, the hospital is greater than the average standardized amount (described in the respective clause) for hospitals within the United States in that type of area for discharges occurring during such fiscal year.
(B)
As used in this section, the term “subsection (d) hospital” means a hospital located in one of the fifty States or the District of Columbia other than—
(i)
a psychiatric hospital (as defined in section 1861(f)),
(ii)
a rehabilitation hospital (as defined by the Secretary),
(iii)
a hospital whose inpatients are predominantly individuals under 18 years of age,
(iv)
a hospital which has an average inpatient length of stay (as determined by the Secretary) of greater than 25 days,
(v)
(I)
a hospital that the Secretary has classified, at any time on or before December 31, 1990, (or, in the case of a hospital that, as of the date of the enactment of this clause, is located in a State operating a demonstration project under section 1814(b), on or before December 31, 1991) for purposes of applying exceptions and adjustments to payment amounts under this subsection, as a hospital involved extensively in treatment for or research on cancer,
(II)
a hospital that was recognized as a comprehensive cancer center or clinical cancer research center by the National Cancer Institute of the National Institutes of Health as of April 20, 1983, that is located in a State which, as of December 19, 1989, was not operating a demonstration project under section 1814(b), that applied and was denied, on or before December 31, 1990, for classification as a hospital involved extensively in treatment for or research on cancer under this clause (as in effect on the day before the date of the enactment of this subclause), that as of the date of the enactment of this subclause, is licensed for less than 50 acute care beds, and that demonstrates for the 4–year period ending on December 31, 1996, that at least 50 percent of its total discharges have a principal finding of neoplastic disease, as defined in subparagraph (E), or
(III)
a hospital that was recognized as a clinical cancer research center by the National Cancer Institute of the National Institutes of Health as of February 18, 1998, that has never been reimbursed for inpatient hospital services pursuant to a reimbursement system under a demonstration project under section 1814(b), that is a freestanding facility organized primarily for treatment of and research on cancer and is not a unit of another hospital, that as of the date of the enactment of this subclause, is licensed for 162 acute care beds, and that demonstrates for the 4-year period ending on June 30, 1999, that at least 50 percent of its total discharges have a principal finding of neoplastic disease, as defined in subparagraph (E), or
(vi)
a hospital that first received payment under this subsection in 1986 which has an average inpatient length of stay (as determined by the Secretary) of greater than 20 days and that has 80 percent or more of its annual medicare inpatient discharges with a principal diagnosis that reflects a finding of neoplastic disease in the 12-month cost reporting period ending in fiscal year 1997;
and, in accordance with regulations of the Secretary, does not include a psychiatric or rehabilitation unit of the hospital which is a distinct part of the hospital (as defined by the Secretary). A hospital that was classified by the Secretary on or before September 30, 1995, as a hospital described in clause (iv) (as in effect as of such date) shall continue to be so classified (or, in the case of a hospital described in clause (iv)(II), as so in effect, shall be classified under clause (vi) on and after the effective date of such clause (vi) and for cost reporting periods beginning on or after January 1, 2015, shall not be subject to subsection (m) as of the date of such classification) notwithstanding that it is located in the same building as, or on the same campus as, another hospital.
(C)
For purposes of this subsection, for cost reporting periods beginning—
(i)
on or after October 1, 1983, and before October 1, 1984, the “target percentage” is 75 percent and the “DRG percentage” is 25 percent;
(ii)
on or after October 1, 1984, and before October 1, 1985, the “target percentage” is 50 percent and the “DRG percentage” is 50 percent;
(iii)
on or after October 1, 1985, and before October 1, 1986, the “target percentage” is 45 percent and the “DRG percentage” is 55 percent; and
(iv)
on or after October 1, 1986, and before October 1, 1987, the “target percentage” is 25 percent and the “DRG percentage” is 75 percent.
(D)
For purposes of subparagraph (A)(ii)(II), the “applicable combined adjusted DRG prospective payment rate” for discharges occurring—
(i)
on or after October 1, 1984, and before October 1, 1986, is a combined rate consisting of 25 percent of the national adjusted DRG prospective payment rate, and 75 percent of the regional adjusted DRG prospective payment rate, determined under paragraph (3) for such discharges; and
(ii)
on or after October 1, 1986, and before October 1, 1987, is a combined rate consisting of 50 percent of the national adjusted DRG prospective payment rate, and 50 percent of the regional adjusted DRG prospective payment rate, determined under paragraph (3) for such discharges.
(E)
For purposes of subclauses (II) and (III) of subparagraph (B)(v) only, the term “principal finding of neoplastic disease” means the condition established after study to be chiefly responsible for occasioning the admission of a patient to a hospital, except that only discharges with ICD–9–CM principal diagnosis codes of 140 through 239, V58.0, V58.1, V66.1, V66.2, or 990 will be considered to reflect such a principal diagnosis.
(2)
The Secretary shall determine a national adjusted DRG prospective payment rate, for each inpatient hospital discharge in fiscal year 1984 involving inpatient hospital services of a subsection (d) hospital in the United States, and shall determine a regional adjusted DRG prospective payment rate for such discharges in each region, for which payment may be made under part A of this title. Each such rate shall be determined for hospitals located in urban or rural areas within the United States or within each such region, respectively, as follows:
(A)

Determining allowable individual hospital costs for base period.—
The Secretary shall determine the allowable operating costs per discharge of inpatient hospital services for the hospital for the most recent cost reporting period for which data are available.
(B)

Updating for fiscal year 1984.—
The Secretary shall update each amount determined under subparagraph (A) for fiscal year 1984 by—
(i)
updating for fiscal year 1983 by the estimated average rate of change of hospital costs industry-wide between the cost reporting period used under such subparagraph and fiscal year 1983 and the most recent case-mix data available, and
(ii)
projecting for fiscal year 1984 by the applicable percentage increase (as defined in subsection (b)(3)(B)) for fiscal year 1984.
(C)

Standardizing amounts.—
The Secretary shall standardize the amount updated under subparagraph (B) for each hospital by—
(i)
excluding an estimate of indirect medical education costs (taking into account, for discharges occurring after September 30, 1986, the amendments made by section 9104(a) of the Medicare and Medicaid Budget Reconciliation Amendments of 1985), except that the Secretary shall not take into account any reduction in the amount of additional payments under paragraph (5)(B)(ii) resulting from the amendment made by section 4621(a)(1) of the Balanced Budget Act of 1997 or any additional payments under such paragraph resulting from the application of section 111 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999, of section 302 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, or the Medicare Prescription Drug, Improvement, and Modernization Act of 2003,
(ii)
adjusting for variations among hospitals by area in the average hospital wage level,
(iii)
adjusting for variations in case mix among hospitals, and
(iv)
for discharges occurring on or after October 1, 1986, excluding an estimate of the additional payments to certain hospitals to be made under paragraph (5)(F), except that the Secretary shall not exclude additional payments under such paragraph made as a result of the enactment of section 6003(c) of the Omnibus Budget Reconciliation Act of 1989, the enactment of section 4002(b) of the Omnibus Budget Reconciliation Act of 1990, the enactment of section 303 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, or the enactment of section 402(a)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
(D)

Computing urban and rural averages.—
The Secretary shall compute an average of the standardized amounts determined under subparagraph (C) for the United States and for each region—
(i)
for all subsection (d) hospitals located in an urban area within the United States or that region, respectively, and
(ii)
for all subsection (d) hospitals located in a rural area within the United States or that region, respectively.
For purposes of this subsection, the term “region” means one of the nine census divisions, comprising the fifty States and the District of Columbia, established by the Bureau of the Census for statistical and reporting purposes; the term “urban area” means an area within a Metropolitan Statistical Area (as defined by the Office of Management and Budget) or within such similar area as the Secretary has recognized under subsection (a) by regulation; the term “large urban area” means, with respect to a fiscal year, such an urban area which the Secretary determines (in the publications described in subsection (e)(5) before the fiscal year) has a population of more than 1,000,000 (as determined by the Secretary based on the most recent available population data published by the Bureau of the Census); and the term “rural area” means any area outside such an area or similar area. A hospital located in a Metropolitan Statistical Area shall be deemed to be located in the region in which the largest number of the hospitals in the same Metropolitan Statistical Area are located, or, at the option of the Secretary, the region in which the majority of the inpatient discharges (with respect to which payments are made under this title) from hospitals in the same Metropolitan Statistical Area are made.
(E)

Reducing for value of outlier payments.—
The Secretary shall reduce each of the average standardized amounts determined under subparagraph (D) by a proportion equal to the proportion (estimated by the Secretary) of the amount of payments under this subsection based on DRG prospective payment rates which are additional payments described in paragraph (5)(A) (relating to outlier payments).
(F)

Maintaining budget neutrality.—
The Secretary shall adjust each of such average standardized amounts as may be required under subsection (e)(1)(B) for that fiscal year.
(G)

Computing drg-specific rates for urban and rural hospitals in the united states and in each region.—
For each discharge classified within a diagnosis-related group, the Secretary shall establish a national DRG prospective payment rate and shall establish a regional DRG prospective payment rate for each region, each of which is equal—
(i)
for hospitals located in an urban area in the United States or that region (respectively), to the product of—
(I)
the average standardized amount (computed under subparagraph (D), reduced under subparagraph (E), and adjusted under subparagraph (F)) for hospitals located in an urban area in the United States or that region, and
(II)
the weighting factor (determined under paragraph (4)(B)) for that diagnosis-related group; and
(ii)
for hospitals located in a rural area in the United States or that region (respectively), to the product of—
(I)
the average standardized amount (computed under subparagraph (D), reduced under subparagraph (E), and adjusted under subparagraph (F)) for hospitals located in a rural area in the United States or that region, and
(II)
the weighting factor (determined under paragraph (4)(B)) for that diagnosis-related group.
(H)

Adjusting for different area wage levels.—
The Secretary shall adjust the proportion, (as estimated by the Secretary from time to time) of hospitals' costs which are attributable to wages and wage-related costs, of the national and regional DRG prospective payment rates computed under subparagraph (G) for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level.
(3)
The Secretary shall determine a national adjusted DRG prospective payment rate, for each inpatient hospital discharge in a fiscal year after fiscal year 1984 involving inpatient hospital services of a subsection (d) hospital in the United States, and shall determine, for fiscal years before fiscal year 1997, a regional adjusted DRG prospective payment rate for such discharges in each region for which payment may be made under part A of this title. Each such rate shall be determined for hospitals located in large urban, other urban, or rural areas within the United States and within each such region, respectively, as follows:
(A)

Updating previous standardized amounts.—
(i)
For discharges occurring in a fiscal year beginning before October 1, 1987, the Secretary shall compute an average standardized amount for hospitals located in an urban area and for hospitals located in a rural area within the United States and for hospitals located in an urban area and for hospitals located in a rural area within each region, equal to the respective average standardized amount computed for the previous fiscal year under paragraph (2)(D) or under this subparagraph, increased for the fiscal year involved by the applicable percentage increase under subsection (b)(3)(B). With respect to discharges occurring on or after October 1, 1987, the Secretary shall compute urban and rural averages on the basis of discharge weighting rather than hospital weighting, making appropriate adjustments to ensure that computation on such basis does not result in total payments under this section that are greater or less than the total payments that would have been made under this section but for this sentence, and making appropriate changes in the manner of determining the reductions under subparagraph (C)(ii).
(ii)
For discharges occurring in a fiscal year beginning on or after October 1, 1987, and ending on or before September 30, 1994, the Secretary shall compute an average standardized amount for hospitals located in a large urban area, for hospitals located in a rural area, and for hospitals located in other urban areas, within the United States and within each region, equal to the respective average standardized amount computed for the previous fiscal year under this subparagraph increased by the applicable percentage increase under subsection (b)(3)(B)(i) with respect to hospitals located in the respective areas for the fiscal year involved.
(iii)
For discharges occurring in the fiscal year beginning on October 1, 1994, the average standardized amount for hospitals located in a rural area shall be equal to the average standardized amount for hospitals located in an urban area. For discharges occurring on or after October 1, 1994, the Secretary shall adjust the ratio of the labor portion to non-labor portion of each average standardized amount to equal such ratio for the national average of all standardized amounts.
(iv)
(I)
Subject to subclause (II), for discharges occurring in a fiscal year beginning on or after October 1, 1995, the Secretary shall compute an average standardized amount for hospitals located in a large urban area and for hospitals located in other areas within the United States and within each region equal to the respective average standardized amount computed for the previous fiscal year under this subparagraph increased by the applicable percentage increase under subsection (b)(3)(B)(i) with respect to hospitals located in the respective areas for the fiscal year involved.
(II)
For discharges occurring in a fiscal year (beginning with fiscal year 2004), the Secretary shall compute a standardized amount for hospitals located in any area within the United States and within each region equal to the standardized amount computed for the previous fiscal year under this subparagraph for hospitals located in a large urban area (or, beginning with fiscal year 2005, for all hospitals in the previous fiscal year) increased by the applicable percentage increase under subsection (b)(3)(B)(i) for the fiscal year involved.
(v)
Average standardized amounts computed under this paragraph shall be adjusted to reflect the most recent case-mix data available.
(vi)
Insofar as the Secretary determines that the adjustments under paragraph (4)(C)(i) for a previous fiscal year (or estimates that such adjustments for a future fiscal year) did (or are likely to) result in a change in aggregate payments under this subsection during the fiscal year that are a result of changes in the coding or classification of discharges that do not reflect real changes in case mix, the Secretary may adjust the average standardized amounts computed under this paragraph for subsequent fiscal years so as to eliminate the effect of such coding or classification changes.
(B)

Reducing for value of outlier payments.—
The Secretary shall reduce each of the average standardized amounts determined under subparagraph (A) by a factor equal to the proportion of payments under this subsection (as estimated by the Secretary) based on DRG prospective payment amounts which are additional payments described in paragraph (5)(A) (relating to outlier payments).
(C)
(i)

Maintaining budget neutrality for fiscal year 1985.—
For discharges occurring in fiscal year 1985, the Secretary shall adjust each of such average standardized amounts as may be required under subsection (e)(1)(B) for that fiscal year.
(ii)

Reducing for savings from amendment to indirect teaching adjustment for discharges after September 30, 1986.—
For discharges occurring after September 30, 1986, the Secretary shall further reduce each of the average standardized amounts (in a proportion which takes into account the differing effects of the standardization effected under paragraph (2)(C)(i)) so as to provide for a reduction in the total of the payments (attributable to this paragraph) made for discharges occurring on or after October 1, 1986, of an amount equal to the estimated reduction in the payment amounts under paragraph (5)(B) that would have resulted from the enactment of the amendments made by section 9104 of the Medicare and Medicaid Budget Reconciliation Amendments of 1985 and by section 4003(a)(1) of the Omnibus Budget Reconciliation Act of 1987 if the factor described in clause (ii)(II) of paragraph (5)(B) (determined without regard to amendments made by the Omnibus Budget Reconciliation Act of 1990) were applied for discharges occurring on or after such date instead of the factor described in clause (ii) of that paragraph.
(D)

Computing drg-specific rates for hospitals.—
For each discharge classified within a diagnosis-related group, the Secretary shall establish for the fiscal year a national DRG prospective payment rate and shall establish, for fiscal years before fiscal year 1997, a regional DRG prospective payment rate for each region which is equal—
(i)
for fiscal years before fiscal year 2004, for hospitals located in a large urban area in the United States or that region (respectively), to the product of—
(I)
the average standardized amount (computed under subparagraph (A), reduced under subparagraph (B), and adjusted or reduced under subparagraph (C)) for the fiscal year for hospitals located in such a large urban area in the United States or that region, and
(II)
the weighting factor (determined under paragraph (4)(B)) for that diagnosis-related group;
(ii)
for fiscal years before fiscal year 2004, for hospitals located in other areas in the United States or that region (respectively), to the product of—
(I)
the average standardized amount (computed under subparagraph (A), reduced under subparagraph (B), and adjusted or reduced under subparagraph (C)) for the fiscal year for hospitals located in other areas in the United States or that region, and
(II)
the weighting factor (determined under paragraph (4)(B)) for that diagnosis-related group; and
(iii)
for a fiscal year beginning after fiscal year 2003, for hospitals located in all areas, to the product of—
(I)
the applicable standardized amount (computed under subparagraph (A)), reduced under subparagraph (B), and adjusted or reduced under subparagraph (C) for the fiscal year; and
(II)
the weighting factor (determined under paragraph (4)(B)) for that diagnosis-related group.
(E)

Adjusting for different area wage levels.—
(i)

In general.—
Except as provided in clause (ii) , (iii), or (iv), the Secretary shall adjust the proportion, (as estimated by the Secretary from time to time) of hospitals' costs which are attributable to wages and wage-related costs, of the DRG prospective payment rates computed under subparagraph (D) for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level. Not later than October 1, 1990, and October 1, 1993 (and at least every 12 months thereafter), the Secretary shall update the factor under the preceding sentence on the basis of a survey conducted by the Secretary (and updated as appropriate) of the wages and wage-related costs of subsection (d) hospitals in the United States. Not less often than once every 3 years the Secretary (through such survey or otherwise) shall measure the earnings and paid hours of employment by occupational category and shall exclude data with respect to the wages and wage-related costs incurred in furnishing skilled nursing facility services. Any adjustments or updates made under this subparagraph for a fiscal year (beginning with fiscal year 1991) shall be made in a manner that assures that the aggregate payments under this subsection in the fiscal year are not greater or less than those that would have been made in the year without such adjustment. The Secretary shall apply the previous sentence for any period as if the amendments made by section 403(a)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 200396, the amendments made by section 10324(a)(1) of the Patient Protection and Affordable Care Act, and the amendments made by section 9831(a) of the American Rescue Plan Act of 2021 had not been enacted.
^{96}
Section 10324(a)(2) of Public Law 111–148 (124 Stat. 959) provides for an amendment to the third sentence of section 1886(d)(3)(E) by inserting “and the amendments made by section 10324(a)(1) of the Patient Protection and Affordable Care Act” after “2003”. Such amendment was carried out by inserting such language after “2003” in the fifth sentence to reflect the probable intent of Congress.
Subsequently, section 9831(b) of subtitle L of Public Law 117–2 amends this clause in the fifth sentence.
(ii)

Alternative proportion to be adjusted beginning in fiscal year 2005.—
For discharges occurring on or after October 1, 2004, the Secretary shall substitute “62 percent” for the proportion described in the first sentence of clause (i), unless the application of this clause would result in lower payments to a hospital than would otherwise be made.
(iii)

Floor on area wage index for hospitals in frontier states.—
(I)

In general.—
Subject to subclause (IV), for discharges occurring on or after October 1, 2010, the area wage index applicable under this subparagraph to any hospital which is located in a frontier State (as defined in subclause (II)) may not be less than 1.00.
(II)

Frontier state defined.—
In this clause, the term “frontier State” means a State in which at least 50 percent of the counties in the State are frontier counties.
(III)

Frontier county defined.—
In this clause, the term “frontier county” means a county in which the population per square mile is less than 6.
(IV)

Limitation.—
This clause shall not apply to any hospital located in a State that receives a non-labor related share adjustment under paragraph (5)(H).
(iv)

Floor on area wage index for hospitals in all-urban states.—
(I)

In general.—
For discharges occurring on or after October 1, 2021, the area wage index applicable under this subparagraph to any hospital in an all-urban State (as defined in subclause (IV)) may not be less than the minimum area wage index for the fiscal year for hospitals in that State, as established under subclause (II).
(II)

Minimum area wage index.—
For purposes of subclause (I), the Secretary shall establish a minimum area wage index for a fiscal year for hospitals in each all-urban State using the methodology described in section 412.64(h)(4)(vi) of title 42, Code of Federal Regulations, as in effect for fiscal year 2018.
(III)

Waiving budget neutrality.—
Pursuant to the fifth sentence of clause (i), this clause shall not be applied in a budget neutral manner.
(IV)

All-urban state defined.—
In this clause, the term “all-urban State” means a State in which there are no rural areas (as defined in paragraph (2)(D)) or a State in which there are no hospitals classified as rural under this section.
(4)
(A)
The Secretary shall establish a classification of inpatient hospital discharges by diagnosis-related groups and a methodology for classifying specific hospital discharges within these groups.
(B)
For each such diagnosis-related group the Secretary shall assign an appropriate weighting factor which reflects the relative hospital resources used with respect to discharges classified within that group compared to discharges classified within other groups.
(C)
(i)
The Secretary shall adjust the classifications and weighting factors established under subparagraphs (A) and (B), for discharges in fiscal year 1988 and at least annually thereafter, to reflect changes in treatment patterns, technology (including a new medical service or technology under paragraph (5)(K)), and other factors which may change the relative use of hospital resources.
(ii)
For discharges in fiscal year 1990, the Secretary shall reduce the weighting factor for each diagnosis-related group by 1.22 percent.
(iii)
Any such adjustment under clause (i) for discharges in a fiscal year (beginning with fiscal year 1991) or payments under paragraph (5)(M) (beginning with fiscal year 2021) shall be made in a manner that assures that the aggregate payments under this subsection for discharges in the fiscal year are not greater or less than those that would have been made for discharges in the year without such adjustment or payments under paragraph (5)(M).
(iv)
(I)
For discharges occurring during the emergency period described in section 1135(g)(1)(B), in the case of a discharge of an individual diagnosed with COVID–19, the Secretary shall increase the weighting factor that would otherwise apply to the diagnosis-related group to which the discharge is assigned by 20 percent. The Secretary shall identify a discharge of such an individual through the use of diagnosis codes, condition codes, or other such means as may be necessary.
(II)
Any adjustment under subclause (I) shall not be taken into account in applying budget neutrality under clause (iii)
(III)
In the case of a State for which the Secretary has waived all or part of this section under the authority of section 1115A, nothing in this section shall preclude such State from implementing an adjustment similar to the adjustment under subclause (I).
(D)
(i)
For discharges occurring on or after October 1, 2008, the diagnosis-related group to be assigned under this paragraph for a discharge described in clause (ii) shall be a diagnosis-related group that does not result in higher payment based on the presence of a secondary diagnosis code described in clause (iv).
(ii)
A discharge described in this clause is a discharge which meets the following requirements:
(I)
The discharge includes a condition identified by a diagnosis code selected under clause (iv) as a secondary diagnosis.
(II)
But for clause (i), the discharge would have been classified to a diagnosis-related group that results in a higher payment based on the presence of a secondary diagnosis code selected under clause (iv).
(III)
At the time of admission, no code selected under clause (iv) was present.
(iii)
As part of the information required to be reported by a hospital with respect to a discharge of an individual in order for payment to be made under this subsection, for discharges occurring on or after October 1, 2007, the information shall include the secondary diagnosis of the individual at admission.
(iv)
By not later than October 1, 2007, the Secretary shall select diagnosis codes associated with at least two conditions, each of which codes meets all of the following requirements (as determined by the Secretary):
(I)
Cases described by such code have a high cost or high volume, or both, under this title.
(II)
The code results in the assignment of a case to a diagnosis-related group that has a higher payment when the code is present as a secondary diagnosis.
(III)
The code describes such conditions that could reasonably have been prevented through the application of evidence-based guidelines.
The Secretary may from time to time revise (through addition or deletion of codes) the diagnosis codes selected under this clause so long as there are diagnosis codes associated with at least two conditions selected for discharges occurring during any fiscal year.
(v)
In selecting and revising diagnosis codes under clause (iv), the Secretary shall consult with the Centers for Disease Control and Prevention and other appropriate entities.
(vi)
Any change resulting from the application of this subparagraph shall not be taken into account in adjusting the weighting factors under subparagraph (C)(i) or in applying budget neutrality under subparagraph (C)(iii).
(5)
(A)
(i)
For discharges occurring during fiscal years ending on or before September 30, 1997, the Secretary shall provide for an additional payment for a subsection (d) hospital for any discharge in a diagnosis-related group, the length of stay of which exceeds the mean length of stay for discharges within that group by a fixed number of days, or exceeds such mean length of stay by some fixed number of standard deviations, whichever is the fewer number of days.
(ii)
For cases which are not included in clause (i), a subsection (d) hospital may request additional payments in any case where charges, adjusted to cost, exceed a fixed multiple of the applicable DRG prospective payment rate, or exceed such other fixed dollar amount, whichever is greater, or for discharges in fiscal years beginning on or after October 1, 1994, exceed the sum of the applicable DRG prospective payment rate plus any amounts payable under subparagraphs (B) and (F) plus a fixed dollar amount determined by the Secretary.
(iii)
The amount of such additional payment under clauses (i) and (ii) shall be determined by the Secretary and shall (except as payments under clause (i) are required to be reduced to take into account the requirements of clause (v)) approximate the marginal cost of care beyond the cutoff point applicable under clause (i) or (ii).
(iv)
The total amount of the additional payments made under this subparagraph for discharges in a fiscal year may not be less than 5 percent nor more than 6 percent of the total payments projected or estimated to be made based on DRG prospective payment rates for discharges in that year.
(v)
The Secretary shall provide that—
(I)
the day outlier percentage for fiscal year 1995 shall be 75 percent of the day outlier percentage for fiscal year 1994;
(II)
the day outlier percentage for fiscal year 1996 shall be 50 percent of the day outlier percentage for fiscal year 1994; and
(III)
the day outlier percentage for fiscal year 1997 shall be 25 percent of the day outlier percentage for fiscal year 1994.
(vi)
For purposes of this subparagraph the term “day outlier percentage” means, for a fiscal year, the percentage of the total additional payments made by the Secretary under this subparagraph for discharges in that fiscal year which are additional payments under clause (i).
(B)
The Secretary shall provide for an additional payment amount for subsection (d) hospitals with indirect costs of medical education, in an amount computed in the same manner as the adjustment for such costs under regulations (in effect as of January 1, 1983) under subsection (a)(2), except as follows:
(i)
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