Public Law 101–239. To provide for reconciliation pursuant to section 5 of the concurrent resolution on the budget for the fiscal year 1990
174,782 words·~794 min read·
/statutes-at-large/vol-103/public-law-101-239A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
103 STAT. 2106 Public Law 101–239 101st Congress An Act To provide for reconciliation pursuant to section 5 of the concurrent resolution on the budget for the fiscal year 1990.Dec. 19, 1989[[H.R. 3299](/us/bill/101/hr/3299)] *Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled*,Omnibus Budget Reconciliation Act of 1989. SECTION I. SHORT TITLE. This Act may be cited as the “Omnibus Budget Reconciliation Act of 1989”. SEC. 2.
TABLE OF CONTENTS. Title I— Agriculture and related programs Title II— Student loan and pension fiduciary amendments. Title III— Regulatory agency fees. Title IV— Civil service and postal service programs. Title V— Veterans programs. Title VI— Medicare, medicaid, maternal and child health, and other health provisions. Title VII— Revenue provisions. Title VIII— Human resource and income security provisions. Title IX— Offshore oil pollution compensation fund. Title X— Miscellaneous and technical Social Security Act amendments.
Title XI— Miscellaneous. TITLE I—AGRICULTURE AND RELATED PROGRAMS Agricultural Reconciliation Act of 1989. SEC. 1001. SHORT TITLE: TABLE OF CONTENTS.
(a)[7 USC 1421 note](/us/usc/t7/s1421). Short Title.—This title may be cited as the “Agricultural Reconciliation Act of 1989”.
(b)Table of Contents.—The table of contents is as follows: Sec. 1001. Short title; table of contents Sec. 1002. Soybean, sunflower, and safflower planting program; feed grain acreage limitation program. Sec. 1003. Reduction of deficiency payments for 1990 crops. Sec. 1004. Repayment of advance deficiency payments. Sec. 1005. Reduction of expenditures under the export enhancement program and for targeted export assistance. Sec. 1006. Purchases of Financial Assistance Corporation stock by Farm Credit System institutions. Sec. 1007. Adjustments in dairy price support program. SEC. 1002. SOYBEAN, SUNFLOWER, AND SAFFLOWER PLANTING PROGRAM; FEED GRAIN ACREAGE LIMITATION PROGRAM.
(a)Planting of Soybeans, Sunflowers, and Safflowers on Permitted Acreage.—Effective only for the 1990 crops, subsection
(e)of section 504 of the Agricultural Act of 1949 (7 U.S.C. 1464(e)) is amended to read as follows: " “(e) Notwithstanding any other provision of this Act— 103 STAT. 2107 “(1) Effective for the 1990 crops, the Secretary shall, subject to paragraph (2), permit producers on a farm to plant soybeans, sunflowers, or safflowers on a portion specified by the producer (but in any event not more than 25 percent) of the producers’ 1990 wheat, feed grain, upland cotton, extra long staple cotton, and rice permitted acreage, as determined by the Secretary. “(2)(A) The Secretary shall establish a sign-up period during which the producers on a farm, participating in the 1990 crop wheat, feed grain, upland cotton, extra long staple cotton, or rice price support and production adjustment program, must state their intentions regarding use of the increased planting provision under paragraph (1). “(B) After termination of the sign-up period under subparagraph (A), the Secretary shall estimate whether, based on the anticipated additional soybean, sunflower, and safflower plantings for the crop, the average market price for the 1990 crop of soybeans will be below 110 percent of the loan rate established for the 1989 crop of soybeans. “(C) If the Secretary estimates that the average market price for the 1990 crop of soybeans will be below 110 percent of such loan rate, the Secretary shall reduce the percentage of permitted acreage on the farm that may be planted to soybeans, sunflowers, and safflowers to a level, or prohibit such plantings, as necessary to ensure that the average soybean market price does not fall below 110 percent of such loan rate. “(D) The Secretary shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a statement setting forth the reasons for any reduction in the permitted planting percentage, or prohibition on such plantings, under this paragraph. “(3)(A) For the purposes of determining the farm acreage base or the crop acreage bases for the farm, any acreage on the farm on which soybeans, sunflowers, or safflowers are planted under this subsection shall be considered to be planted to the program crop for which soybeans, sunflowers, or safflowers are substituted. “(B) The Secretary may not make program benefits other than soybean or sunflower seed price support loans and purchases available to producers with respect to acreage planted to soybeans, sunflowers, or safflowers under this subsection and shall ensure that the crop acreage bases established for the farm and the farm acreage base are not increased due to such plantings.”."
(b)Feed Grain Acreage Limitation Program.—Effective only for the 1990 crop of feed grains, section 105C(f)(1)(C) of such Act (7 U.S.C. 1444e(f)(1)(C) is amended—
(1)by striking “(C)”, “1990”, “(i)”, and “(ii)” and inserting “(C)(i)”, “1989”, “(I)”, and “(II)”, respectively; and
(2)by adding at the end the following new clause: " “(ii) In the case of the 1990 crop of feed grains, if the Secretary estimates, not later than September 30, 1989, that the quantity of corn on hand in the United States on the first day of the marketing year for that crop (not including any quantity of corn of that crop) will be— “(I) more than 2,000,000,000 bushels, the Secretary shall provide for an acreage limitation program (as described in para-103 STAT. 2108graph (2)) under which the acreage planted to feed grains for harvest on a farm would be limited to the feed grain crop acreage base for the farm for the crop reduced by not less than 12½ percent nor more than 20 percent; “(II) less than 2,000,000,000 bushels but more than 1,800,000,000 bushels, the Secretary shall provide for an acreage limitation program (as described in paragraph (2)) under which the acreage planted to feed grains for harvest on a farm would be limited to the feed grain crop acreage base for the farm for the crop reduced by not less than 10 percent nor more than 12½ percent; or “(III) 1,800,000,000 bushels or less, the Secretary may provide for an acreage limitation program (as described in paragraph (2)) under which the acreage planted to feed grains for harvest on a farm would be limited to the feed grain crop acreage base for the farm for the crop reduced by not more than 10 percent.”." SEC. 1003. REDUCTION OF DEFICIENCY PAYMENTS FOR 1990 CROPS.
(a)In General.—Effective only for the 1990 crops, title IV of the Agricultural Act of 1949 (7 U.S.C. 1421 et seq.) is amended by adding at the end the following new section: " “SEC. 425. [7 USC 1433d](/us/usc/t7/s1433d). REDUCTION OF DEFICIENCY PAYMENTS FOR 1990 CROPS. “(a) In General.—Notwithstanding any other provision of law, the amount of deficiency payments made available to producers of the 1990 crops of wheat, feed grains, upland cotton, and rice under sections 107D(c), 105C(c), 103A(c), and 101A(c), respectively, shall be reduced by— “(1) in the case of wheat, 2.33 cents per bushel; “(2) in the case of corn, 2.33 cents per bushel (and a comparable amount for other feed grains, as determined by the Secretary); “(3) in the case of upland cotton, .515 cents per pound; and “(4) in the case of rice, 5.15 cents per hundredweight. “(b) Application to Advance Deficiency Payments.—To the extent practicable, the Secretary shall apply the reduction required under subsection
(a)to any advance deficiency payment made available to producers of the 1990 crops under section 107C.”."
(b)Technical and Conforming Amendments.—
(1)Effective only for the 1990 crops of wheat, feed grains, upland cotton, and rice, section 107C(a)(2)(G) of such Act (7 U.S.C. 1445b–2(a)(2)(G)) is amended—
(A)by inserting after “subsection” the following: “(taking into consideration any reduction in the payment made under section 425)”; and
(B)by striking “finally” and inserting “finally”.
(2)Effective only for the 1986 through 1990 crops of feed grains, section 105C(c)(1)(D)(i) of such Act (7 U.S.C. 1444e(c)(1)(D)(i)) is amended by striking “subsection (a)(4)” and inserting “subsection (a)(3)”. SEC. 1004. REPAYMENT OF ADVANCE DEFICIENCY PAYMENTS.
(a)Disaster assistance. Delay in Refund.—Paragraph
(4)of section 201(b) of the Disaster Assistance Act of 1988 (7 U.S.C. 1421 note) (as amended by section 602 of the Disaster Assistance Act of 1989 (Public Law 101–82; 103 Stat. 587)) is amended to read as follows: 103 STAT. 2109 " “(4) Effective only for the 1988 crops of wheat, feed grains, upland cotton, and rice, if the Secretary determines that any portion of the advance deficiency payment made to producers for the crop under section 107C of such Act must be refunded, such refund shall not be required— “(A) prior to December 31, 1989, if such producers suffered losses of 1988 or 1989 crops due to a natural disaster in 1988 or 1989; or “(B) prior to July 31, 1990, for that portion of the crop for which a disaster payment is made under subsection (a).”. "
(b)Rationale.—For purposes of section 202 of Public Law 100–119 (2 U.S.C. 909), the amendment made by subsection
(a)is a necessary (but secondary) result of a significant policy change. SEC. 1005. REDUCTION OF EXPENDITURES UNDER THE EXPORT ENHANCEMENT PROGRAM AND FOR TARGETED EXPORT ASSISTANCE.
(a)Export Enhancement Program.—During fiscal year 1990, the Commodity Credit Corporation shall not, except to the extent provided for under section 4301 of the Agricultural Competitiveness and Trade Act of 1988 (Public Law 100–418; 7 U.S.C. 1446 note), make available to exporters, processors, or foreign importers under the authority of section 5(f) of the Commodity Credit Corporation Charter Act (15 U.S.C. 714c(f)) more than $566,000,000 in commodities of the Commodity Credit Corporation to enhance the export of United States commodities by making the price of such commodities competitive in the world market.
(b)Targeted Export Assistance.—Section 1124(a) of the Food Security Act of 1985 (7 U.S.C. 1736s(a)) is amended—
(1)by striking “and” at the end of paragraph (2); and
(2)by striking paragraph
(3)and inserting the following: " “(3) for the fiscal year 1989, the Secretary shall use under this section not less than $325,000,000 of the funds of, or commodities owned by, the Corporation; and “(4) for the fiscal year 1990, the Secretary shall use under this section not less than $200,000,000 of the funds of, or commodities owned by, the Corporation.”. " SEC. 1006. PURCHASES OF FINANCIAL ASSISTANCE CORPORATION STOCK BY FARM CREDIT SYSTEM INSTITUTIONS. [12 USC 2278b–9 note](/us/usc/t12/s2278b/9).
(a)Delayed Effective Date for Stock Purchase Requirement.—Notwithstanding any other provision of law, the amendments to section 6.29 of the Farm Credit Act of 1971 (12 U.S.C. 2278b–9) made by section 646 of the Rural Development, Agriculture, and Related Agencies Appropriations Act, 1989 (Public Law 100–460; 102 Stat 2266) shall be effective on October 1, 1992.
(b)Payments.—
(1)Four annual payments.—Notwithstanding any other provision of law, the Financial Assistance Corporation shall pay, out of the Financial Assistance Corporation Trust Fund (hereinafter in this section referred to as the “Trust Fund”) established under section 6.25(b) of the Farm Credit Act of 1971 (12 U.S.C. 2278b–5(b)), to each of the institutions of the Farm Credit System that purchased stock in the Financial Assistance Corporation under section 6.29 of the Farm Credit Act of 1971, four annual payments as provided in this subsection. 103 STAT. 2110
(2)Timing of payments.—The annual payments provided for by this subsection shall be made available as soon as practicable after October 1 of each of the calendar years 1989 through 1992.
(3)Calculation of first payment.— The first annual payment made available under this subsection shall be in an amount equal to—
(A)a percentage equal to 1.5 times the average rate of interest received by the Financial Assistance Corporation on assets of the Trust Fund from March 30, 1988, through September 30, 1989; times
(B)the difference between $177,000,000 and 4.4 percent of the cumulative amount of the bonds issued by the Financial Assistance Corporation through September 30, 1989.
(4)Calculation of remaining payments.— The second, third, and fourth annual payments made available under this subsection shall be in an amount equal to—
(A)a percentage equal to the average rate of interest received by the Financial Assistance Corporation on assets of the Trust Fund during each of the fiscal years 1990 through 1992; times
(B)the difference between $177,000,000 and 4.4 percent of the cumulative amount of the bonds issued by the Financial Assistance Corporation through September 30 of each of such fiscal years.
(5)Distribution of annual payments.—Annual payments due under this subsection shall be made available to each institution described in paragraph
(1)in an amount equal to the total amount of annual payments to be made available times the ratio of the amount of stock each institution purchased divided by $177,000,000. SEC. 1007. ADJUSTMENTS IN DAIRY PRICE SUPPORT PROGRAM. Effective only for calendar year 1990, section 201(d)(1) of the Agricultural Act of 1949 (7 U.S.C. 1446(d)(1)) is amended—
(1)in subparagraph (C)—
(A)in clause (ii), by inserting after “Except as provided in” the following: “clause
(iii)and”; and
(B)by adding at the end the following new clause: " “(iii) In carrying out this paragraph during calendar year 1990, the Secretary shall offer to purchase butter for not more than $1.10 per pound, except that the Secretary may allocate the rate of price support between the purchase prices for nonfat dry milk and butter in such other manner as the Secretary determines will result in the lowest level of expenditures by the Commodity Credit Corporation and shall notify the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate of such determination.”; and "
(2)in subparagraph (D)(i)—
(A)by striking “each of the calendar years 1988 and 1990” and inserting “calendar year 1990”; and
(B)by striking “shall reduce by” and inserting “may reduce by not more than”. 103 STAT. 2111 TITLE II—STUDENT LOAN AND PENSION FIDUCIARY AMENDMENTS Student Loan Reconciliation Amendments of 1989. Subtitle A—Student Loan Reconciliation Amendments SEC. 2001. SHORT TITLE. [20 USC 1001 note](/us/usc/t20/s1001). This subtitle may be cited as the “Student Loan Reconciliation Amendments of 1989”. SEC. 2002. INTERNSHIP DEFERMENTS AND FORBEARANCE. Health care professionals.
(a)Determents.—
(1)Federally insured student loans.—Section 427(a)(2)(C)(i) of the Higher Education Act of 1965 (20 U.S.C. 1077(a)(2)(C)(i)) is amended by inserting before the semicolon at the end thereof the following: “, except that no borrower shall be eligible for a deferment under this clause, or a loan made under this part (other than a loan made under 428B or 4280, while serving in a medical internship or residency program”.
(2)Federal payments to reduce student interest costs.—Section 428(b)(1)(M)(i) of such Act (20 U.S.C. 1078(b)(1)(M)(i)) is amended by inserting before the semicolon at the end thereof the following: “, except that no borrower shall be eligible for a deferment under this clause, or loan made under this part (other than a loan made under 428B or 4280, while serving in a medical internship or residency program”.
(3)Loan agreements.—Section 464(c)(2)(A)(i) of such Act (20 U.S.C. 1087dd(c)(2)(A)(i)) is amended by inserting before the semicolon at the end thereof the following: “, except that no borrower shall be eligible for a deferment under this clause, or a loan made under this part (other than a loan made under 428B or 428C), while serving in a medical internship or residency program”.
(4)Effective date.—The amendments made by this subsection [20 USC 1077 note](/us/usc/t20/s1077).shall apply to any loan made, insured, or guaranteed under part B or part E of title IV of the Higher Education Act of 1965, including a loan made before the enactment of this Act, and shall take effect on January 1, 1990, except that such amendments shall not apply with respect to any portion of a period of deferment granted to a borrower under section 427(a)(2)(C)(i), 428(b)(1)(M)(i), or 464(c)(2)(A)(i) of the Higher Education Act of 1965 for service in a medical internship or residency program that is completed prior to the effective date of this section.
(b)Forbearance.—
(1)Federal payments to reduce student interest costs.— Section 428 of the Higher Education Act of 1965 (20 U.S.C. 1078) is amended—
(A)in subsection (b)(1)—
(i)in subparagraph (D, by striking “and” at the end thereof;
(ii)in subparagraph (U), by striking the period at the end thereof and inserting “; and”; and
(iii)by adding at the end thereof the following new subparagraph: 103 STAT. 2112 " “(V)(i) provides that, upon written request, a lender shall grant a borrower forbearance, renewable at 12-month intervals for a period equal to the length of time remaining in the borrower’s medical or dental internship or residency program, on such terms as are otherwise consistent with the regulations of the Secretary and agreed upon in writing by the parties to the loan, with the approval of the insurer, if the borrower— “(I) is serving in a medical or dental internship or residency program, the successful completion of which is required to begin professional practice or service, or is serving in a medical or dental internship or residency program leading to a degree or certificate awarded by an institution of higher education, a hospital, or a health care facility that offers postgraduate training; and “(II) has exhausted his or her eligibility for a deferment under section 427(a)(2)(C)(vii) or subparagraph (M)(vii) of this paragraph; and “(ii) provides that no administrative or other fee may be charged in connection with the granting of a forbearance under clause (i), and that no adverse information regarding a borrower may be reported to a credit bureau organization solely because of the granting of a forbearance under clause (i).”; and"
(B)by amending subsection (c)(3) to read as follows: " “(3) Forbearance.—A guaranty agreement under this subsection— “(A) shall contain provisions providing for forbearance in accordance with subsection (b)(1)(V) for the benefit of the student borrower serving in a medical or dental internship or residency program; and “(B) may, to the extent provided in regulations of the Secretary, contain provisions that permit such forbearance for the benefit of the student borrower as may be agreed upon by the parties to an insured loan and approved by the insurer. Such regulations shall not preclude guaranty agencies from permitting the parties to such a loan from entering into a forbearance agreement solely because the loan is in default.”."
(2)[20 USC 1078 note](/us/usc/t20/s1078). Effective date.—The amendments made by this subsection shall apply with respect to loans made before, on, or after the date of enactment of this Act. SEC. 2003. CHANGES IN THE SUPPLEMENTAL LOANS FOR STUDENTS PROGRAM.
(a)Restrictions on SLS Program at Institutions With High Cohort Default Rates.—
(1)Restriction.— Section 428A(a) of the Higher Education Act of 1965 (20 U.S.C. 1078–1(a)) is amended—
(A)by striking “(a) Authority To Borrow.—Graduate and professional students”; and inserting the following: " “(a) Authority To Borrow.— “(1) Student eligibility.— Graduate and professional students”;"
(B)by indenting the remaining text of subsection
(a)two em spaces; and 103 STAT. 2113
(C)by adding at the end thereof the following: " “(2) Institutional eligibility.—Funds may not be borrowed under this section by any undergraduate student who is enrolled at any institution during any fiscal year if the cohort default rate for such institution, for the most recent fiscal year for which such rates are available, equals or exceeds 30 percent. The Secretary shall notify institutions to which such restriction applies annually, and specify the fiscal year covered by the restriction. The Secretary shall afford any institution to which such restriction applies an opportunity to present evidence contesting the accuracy of the calculation of the cohort default rate for such institution.”. "
(2)Definition.—Section 435 of such Act (20 U.S.C. 1085) is amended by adding at the end thereof the following new subsection: " “(m) Cohort Default Rate.—The term ‘cohort default rate’ means, for any fiscal year in which 30 or more current and former students at the institution enter repayment on loans under section 428 or 428A received for attendance at the institution, the percentage of those current and former students who enter repayment on such loans received for attendance at that institution in that fiscal year who default before the end of the following fiscal year. For any fiscal year in which less than 30 of the institution’s current and former students enter repayment, the term ‘cohort default rate’ means the average of the rate calculated under the preceding sentence for the 3 most recent fiscal years. In the case of a student who has attended and borrowed at more than one school, the student (and his or her subsequent repayment or default) is attributed to each school for attendance at which the student received a loan that entered repayment in the fiscal year. A loan on which a payment is made by the school, its owner, agent, contractor, employee, or any other entity or individual affiliated with such school, in order to avoid default by the borrower, is considered as in default for purposes of this subsection. Any loan which has been rehabilitated before the end of such following fiscal year is not considered as in default for purposes of this subsection. The Secretary shall prescribe Regulations.regulations designed to prevent an institution from evading the application to that institution of a default rate determination under this subsection through the use of such measures as branching, consolidation, change of ownership or control, or any similar device.”. "
(3)Effective date.— [20 USC 1078–1 note](/us/usc/t20/s1078/1).
(A)Except as provided in subparagraph (B), the amendments made by this subsection shall apply to loans made on or after January 1, 1990, and before October 1, 1991. Regulations prescribed by the Secretary under the last sentence of section 435(m) of the Higher Education Act of 1965 (as added by such amendments) shall apply with respect to measures described in such sentence that are used on or after October 1, 1989.
(B)The amendments made by this subsection shall not be applied to prevent an individual who is enrolled on the date of enactment of this Act in a program of instruction for which the individual has obtained a loan under section 428A of the Higher Education Act of 1965 from receiving additional loans under such section to cover the cost of 103 STAT. 2114attendance at that eligible institution to complete that program of instruction.
(C)If, on or after November 8, 1989, the duration of any program of instruction is extended, subparagraph
(B)shall not permit a student enrolled in such program of instruction to receive additional loans under such section 428A during the extension.
(b)Maximum Loan Amounts.—
(1)Amendment.—Section 428A(b)(1) of the Higher Education Act of 1965 (20 U.S.C. 1078–1(b)(D) is amended to read as follows: " “(1) Regulations. Annual limit.— Subject to paragraphs
(2)and (3), the maximum amount a student may borrow in any academic year or its equivalent (as defined by regulation by the Secretary), or in any period of 9 consecutive months, whichever is longer, is $4,000, except that in the case of a student who has not successfully completed the first year of a program of undergraduate education and who is not enrolled in a program that is at least one academic year in length, as determined in accordance with regulations prescribed by the Secretary, such maximum amount shall be— “(A) $2,500 for a student who is determined, in accordance with such regulations, to be enrolled in a program whose length is at least ⅔ of an academic year; “(B) $1,500 for a student who is determined, in accordance with such regulations, to be enrolled in a program whose length is less than ⅔, but at least ⅓, of an academic year; and “(C) zero for a student who is determined, in accordance with such regulations, to be enrolled in a program whose length is less than ⅓ of an academic year.”. "
(2)[20 USC 1078–1 note](/us/usc/t20/s1078/1). Effective date.—The amendment made by this subsection shall apply to loans made on or after January 1, 1990, and before October 1, 1991.
(c)Completion of High School Equivalency Required.—
(1)Ability-to-benefit students ineligible for sls program until ged completion.—Section 428A(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1078–1(a)(1)) is further amended by adding at the end thereof the following new sentence: “No student who is admitted on the basis of the ability to benefit from the education or training provided by the institution (as determined under section 484(d)) shall be eligible to borrow funds under this section until such student has obtained a certificate of high school equivalency or a high school diploma.”.
(2)[20 USC 1094](/us/usc/t20/s1094). GED program required for ability-to-benefit students.—Section 487(a) of the Higher Education Act of 1965 is amended by adding at the end thereof the following new paragraph: " “(11) In the case of any institution which admits students on the basis of their ability to benefit from the education or training provided by such institution (as determined under section 484(d)), the institution will make available to such students a program proven successful in assisting students in obtaining a certificate of high school equivalency.”. "
(3)[20 USC 1078–1 note](/us/usc/t20/s1078/1). Effective date.—The amendments made by this subsection shall apply with respect to periods of enrollment beginning on or after January 1, 1990. 103 STAT. 2115 SEC. 2004. ADDITIONAL REQUIREMENTS WITH RESPECT TO DISBURSEMENT OF STUDENT LOANS.
(a)Amendment.—Part B of title IV of the Higher Education Act of 1965 is amended by inserting after section 428F (20 U.S.C. 1078–6) the following new section: " “requirements for disbursement of student loans “Sec. 428G.
(a)Multiple Disbursement Required.— [20 USC 1078–7](/us/usc/t20/s107/7). “(1) Two disbursements required.—The proceeds of any loan made, insured, or guaranteed under this part that is made for any period of enrollment shall be disbursed in 2 or more installments, none of which exceeds one-half of the loan. “(2) Minimum interval required.—The interval between the first and second such installments shall be not less than one-half of such period of enrollment, except as necessary to permit the second installment to be disbursed at the beginning of the second semester, quarter, or similar division of such period of enrollment. “(b) Disbursement and Endorsement Requirements.— “(1) SLS loans to first-year students.— The first installment of the proceeds of any loan made under section 428A that is made to a student borrower who has not successfully completed the first year of a program of undergraduate education shall not (regardless of the amount of such loan or the duration of the period of enrollment) be presented by the institution to the student for endorsement until— “(A) 30 days after the borrower begins a course of study; and “(B) the institution certifies that the borrower continues to be enrolled and in attendance at the end of such 30-day period, and is maintaining satisfactory progress; but may be disbursed to the eligible institution prior to the end of such 30-day period. “(2) Other students.—The proceeds of any loan made, insured, or guaranteed under this part that is made to any student other than a student described in paragraph
(1)shall not be disbursed more than 30 days prior to the beginning of the period of enrollment for which the loan is made. “(c) Method of Multiple Disbursement.—Disbursements under subsection (a)— “(1) shall be made in accordance with a schedule provided by the institution (under section 428(a)(2)(A)(i)(III)) that complies with the requirements of this section; and “(2) may be made directly by the lender or, in the case of a loan under sections 428 and 428A, may be disbursed pursuant to the escrow provisions of section 428(i). “(d) Withholding of Second Disbursement.— “(1) Withdrawing students.—A lender or escrow agent that is informed by the borrower or the institution that the borrower has ceased to be enrolled before the disbursement of the second or any succeeding installment shall withhold such disbursement. Any disbursement which is so withheld shall be credited to the borrower’s loan and treated as a prepayment thereon. “(2) Students receiving over-awards.—If the sum of a disbursement for any student and the other financial aid obtained by such student exceeds the amount of assistance for 103 STAT. 2116which the student is eligible under this title, the institution such student is attending shall withhold and return to the lender or escrow agent the portion (or all) of such installment that exceeds such eligible amount Any portion (or all) of a disbursement installment which is so returned shall be credited to the borrower’s loan and treated as a prepayment thereon. “(e) Exclusion or PLUS, Consolidation, and Foreign Study Loans.—The provisions of this section shall not apply in the case of a loan made under section 428B or 428C or made to a student to cover the cost of attendance at an eligible institution outside the United States. “(f) Beginning of Period or Enrollment.—For purposes of this section, a period of enrollment begins on the first day that classes begin for the applicable period of enrollment”. "
(b)Conforming Amendments.—
(1)Transmittal of institution schedules to lenders.— Section 428(a)(2)(A)(i) of the Higher Education Act of 1965 (20 U.S.C. 1078(a)(2)(A)(i)) is amended—
(A)by striking “and” at the end of clause (I); and
(B)by inserting after clause
(II)the following: " “(III) sets forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of section 428G; and”. "
(2)Federally insured loans.—Section 427(a)(4) of the Higher Education Act of 1965 (20 U.S.C. 1077(a)(4)) is amended to read as follows: " “(4) the funds borrowed by a student are disbursed in accordance with section 428G.”. "
(3)Stafford loans.— Section 428(b)(1)(O) of the Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)(O)) is amended to read as follows: " “(O) provides that the proceeds of the loans will be disbursed in accordance with the requirements of section 428G;”. "
(c)[20 USC 1077 note](/us/usc/t20/s1077). Effective Date.—The amendments made by this section shall apply with respect to loans made to cover the cost of instruction for periods of enrollment beginning on or after January 1, 1990. SEC. 2005. DEFAULT REDUCTION PROGRAM.
(a)Amendment.—Section 428F of the Higher Education Act of 1965 (20 U.S.C. 1078–6) is amended to read as follows: " “default reduction program “Sec. 428F.
(a)Program Requirements.— “(1) Authority to establish a default reduction program.—The Secretary shall, in accordance with the requirements of this section, establish a default reduction program for borrowers who have one or more loans under part B of this title which are in default, as defined in section 435(1), as of the date of enactment of this section. Such program shall be commenced on, March 1, 1990, and shall last for six months. “(2) Eligibility for the benefits of the default reduction program.—In order to be eligible for the benefits of the default reduction program, a borrower who has a loan or loans which are in default shall contact the holder of such loan or loans 103 STAT. 2117during the default reduction program and shall pay in full all remaining principal and interest on such loan or loans. “(3) Benefits of the default reduction program.— For each borrower meeting the requirement of paragraph (2)— “(A) no penalties shall be charged on defaulted loans which are paid in full; “(B) the guaranty agency shall report to the appropriate credit bureau or bureaus that the loan has been paid in full; and “(C) notwithstanding section 484, eligibility to receive additional assistance under this title shall be reestablished. “(4) Secretary’s share of repayments.—The Secretary’s equitable share for purposes of section 428(c)(2)(D) of amounts paid by any borrower under paragraph
(2)of this subsection shall be 81.5 percent of the principal amount outstanding on the loan at the time of repayment, multiplied by the reinsurance percentage in effect when the payment under the guaranty agreement was made with respect to such loan. “(b) Other Repayment Incentives.— “(1) Sale of loan.— “(A) Upon securing consecutive payments for 12 months of amounts owed on a loan for which the Secretary has made a payment under paragraph
(1)of section 428(c), the guaranty agency (pursuant to an agreement with the Secretary) or the Secretary shall, if practicable, sell the loan to an eligible lender. Such loan shall not be sold to an eligible lender who has been found by the guaranty agency or the Secretary to have substantially failed to exercise the due diligence required of lenders under this part “(B) An agreement between the guaranty agency and the Contracts.Secretary for purposes of this paragraph shall provide— “(i) for the repayment by the agency to the Secretary of 81.5 percent of the amount of the principal balance outstanding at the time of such sale, multiplied by the reinsurance percentage in effect when payment under the guaranty agreement was made with respect to the loan; and “(ii) for the reinstatement by the Secretary
(I)of the obligation to reimburse such agency for the amount expended by it in discharge of its insurance obligation under its loan insurance program, and
(II)of the obligation to pay to the holder of such loan a special allowance pursuant to section 438. “(C) A loan which does not meet the requirements of subparagraph
(A)may also be eligible for sale under this paragraph upon a determination that the loan was in default due to clerical or data processing error and would not, in the absence of such error, be in a delinquent status. “(2) Use of proceeds or sales.—Amounts received by the Secretary pursuant to the sale of such loans by a guaranty agency under this paragraph shall be deducted from the calculations of the amount of reimbursement for which the agency is eligible under paragraph (I)(B)(ii) of this section for the fiscal year in which the amount was received, notwithstanding the fact that the default occurred in a prior fiscal year. “(3) Borrower eligibility.—Any borrower whose loan is sold under paragraph
(1)shall not be precluded by section 484 from 103 STAT. 2118receiving additional loans under this title (for which he or she is otherwise eligible) on the basis of defaulting on the loan prior to such loan sale. “(4) Applicability of general loan conditions.—A loan which is sold under this paragraph shall, so long as the borrower continues to make scheduled repayments thereon, be subject to the same terms and conditions and qualify for the same benefits and privileges as other loans made under this part”. "
(b)[20 USC 1078–6 note](/us/usc/t20/s1078/6). Publicity.—The Secretary of Education shall, from funds available through student loan collections, commencing not less than 30 days before the beginning of the default reduction program required by the amendment made by this section, and continuing throughout the duration of such program, widely publicize (through various communications media) the availability of the default reduction program. SEC. 2006. SANCTIONS AGAINST LENDERS AND INSTITUTIONS.
(a)Sanctions by Secretary on Lenders.—Section 432 of the Higher Education Act of 1965 (20 U.S.C. 1082) is amended by adding at the end thereof the following new subsection: " “(j) Authority of the Secretary To Take Emergency Actions Against Lenders.— “(1) Imposition of sanctions.— If the Secretary— “(A) receives information, determined by the Secretary to be reliable, that a lender is violating any provision of this title, any regulation prescribed under this title, or any applicable special arrangement, agreement, or limitation; “(B) determines that immediate action is necessary to prevent misuse of Federal funds; and “(C) determines that the likelihood of loss outweighs the importance of following the limitation, suspension, or termination procedures authorized in subsection (h); Mail. the Secretary shall, effective on the date on which a notice and statement of the basis of the action is mailed to the lender (by registered mail, return receipt requested), take emergency action to stop the issuance of guarantee commitments and the payment of interest benefits and special allowance to the lender. “(2) Length of emergency action.—An emergency action under this subsection may not exceed 30 days unless a limitation, suspension, or termination proceeding is initiated against the lender under subsection
(h)before the expiration of that period. “(3) Opportunity to show cause.—The Secretary shall provide the lender, if it so requests, an opportunity to show cause that the emergency action is unwarranted.”. "
(b)Sanctions by Guaranty Agencies.—Section 428(b)(1) (20 U.S.C. 1078(b)(1)) is amended—
(1)by inserting “emergency action,” before “limitation,” each place it appears in subparagraphs
(T)and (U); and
(2)by inserting “take emergency action,” before “limit, suspend,” in subparagraph (U).
(c)Sanctions Against Institutions and Institutions’ Agents.—Section 487(c)(1) of the Higher Education Act of 1965 (20 U.S.C. 1094(c)(1)) is amended—
(1)in subparagraph (C), by striking “and” at the end thereof; 103 STAT. 2119
(2)in subparagraph (D)—
(A)by striking “or any regulation prescribed under this title,” and inserting in lieu thereof a comma and “any regulation prescribed under this title, or any applicable special arrangement, agreement, or limitation,”; and
(B)by striking out the period at the end thereof and inserting in lieu thereof a semicolon; and
(3)by adding at the end thereof the following new subparagraphs: " “(E) an emergency action against an institution, under Mail.which the Secretary shall, effective on the date on which a notice and statement of the basis of the action is mailed to the institution (by registered mail, return receipt requested), withhold funds from the institution or its students and withdraw the institution’s authority to obligate funds under any program under this title, if the Secretary— “(i) receives information, determined by the Secretary to be reliable, that the institution is violating any provision of this title, any regulation prescribed under this title, or any applicable special arrangement, agreement, or limitation, “(ii) determines that immediate action is necessary to prevent misuse of Federal funds, and “(iii) determines that the likelihood of loss outweighs the importance of the procedures prescribed under subparagraph
(D)for limitation, suspension, or termination, except that an emergency action shall not exceed 30 days unless limitation, suspension, or termination proceedings are initiated by the Secretary against the institution within that period of time, and except that the Secretary shall provide the institution an opportunity to show cause, if it so requests, that the emergency action is unwarranted; “(F) the limitation, suspension, or termination of theContracts. eligibility of an individual or an organization to contract with any institution to administer any aspect of an institution’s student assistance program under this title, or the imposition of a civil penalty under paragraph (2)(B), whenever the Secretary has determined, after reasonable notice and opportunity for a hearing on the record, that such organization, acting on behalf of an institution, has violated or failed to carry out any provision of this title, any regulation prescribed under this title, or any applicable special arrangement, agreement, or limitation, except that no period of suspension under this subparagraph shall exceed 60 days unless the organization and the Secretary agree to an extension, or unless limitation or termination proceedings are initiated by the Secretary against the individual or organization within that period of time; and “(G) an emergency action against an individual or an Contracts.Mail.organization that has contracted with an institution to administer any aspect of the institution’s student assistance program under this title, under which the Secretary shall, effective on the date on which a notice and statement of the basis of the action is mailed to such individual or organization (by registered mail, return receipt requested), withhold funds from the individual or organization and withdraw the 103 STAT. 2120individual or organization’s authority to act on behalf of an institution under any program under this title, if the Secretary— “(i) receives information, determined by the Secretary to be reliable, that the individual or organization, acting on behalf of an institution, is violating any provision of this title, any regulation prescribed under this title, or any applicable special arrangement, agreement, or limitation, “(ii) determines that immediate action is necessary to prevent misuse of Federal funds, and “(iii) determines that the likelihood of loss outweighs the importance of the procedures prescribed under subparagraph (F), for limitation, suspension, or termination, except that an emergency action shall not exceed 30 days unless the limitation, suspension, or termination proceedings are initiated by the Secretary against the individual or organization within that period of time, and except that the Secretary shall provide the individual or organization an opportunity to show cause, if it so requests, that the emergency action is unwarranted.”." SEC. 2007. EFFECT OF LOSS OF ACCREDITATION.
(a)Status as Eligible Institution for Stafford Student Loan Program.—Section 435 of the Higher Education Act of 1965 (20 U.S.C. 1085) is amended—
(1)in subsection (a)(1), by striking “The term” and inserting “Subject to subsection (n), the term”; and
(2)by adding at the end thereof the following: " “(n) Impact of Loss of Accreditation.—An institution may not be certified or recertified as an eligible institution under subsection
(a)of this section if such institution has— “(1) had its institutional accreditation withdrawn, revoked, or otherwise terminated for cause during the preceding 24 months; or “(2) withdrawn from institutional accreditation voluntarily under a show cause or suspension order during the preceding 24 months; unless— “(A) such accreditation has been restored by the same accrediting agency which had accredited it prior to the withdrawal, revocation, or termination; or “(B) the institution has demonstrated its academic integrity to the satisfaction of the Secretary in accordance with section 1201(a)(5)
(A)or
(B)of this Act.”. "
(b)Status as Eligible Institution for Other Title IV Programs.—Section 481 of the Higher Education Act of 1965 (20 U.S.C. 1088) is amended—
(1)in subsection (a)(1), by striking “For the purpose” and inserting “Subject to subsection (e), for the purpose”; and
(2)by adding at the end thereof the following: " “(e) Impact of Loss of Accreditation.—An institution may not be certified or recertified as an institution of higher education under subsection
(a)of this section if such institution has— 103 STAT. 2121 “(1) had its institutional accreditation withdrawn, revoked, or otherwise terminated for cause during the preceding 24 months; or “(2) withdrawn from institutional accreditation voluntarily under a show cause or suspension order during the preceding 24 months; unless— “(A) such accreditation has been restored by the same accrediting agency which had accredited it prior to the withdrawal, revocation, or termination; or “(B) the institution has demonstrated its academic integrity to the satisfaction of the Secretary in accordance with section 1201(a)(5)
(A)or
(B)of this Act’. "
(c)Eligible Institution Accreditation Rule.—Section 481(a) of the Higher Education Act of 1965 (20 U.S.C. 1088(a)) is amended by inserting after paragraph
(2)the following new paragraph: " “(3) Whenever the Secretary determines eligibility under paragraph (1), the Secretary shall not recognize the accreditation of any eligible institution of higher education under this subsection if the institution of higher education is in the process of receiving a new accreditation or changing accrediting agency or association unless the eligible institution submits to the Secretary all materials relating to the prior accreditation, including materials demonstrating reasonable cause for changing the accrediting agency or association.”. " SEC. 2008. REVISION OF NATIONAL STUDENT LOAN DATA SYSTEM. Section 485B of the Higher Education Act of 1965 (20 U.S.C 1092(b)) is amended to read as follows: " “national student loan data system “Sec. 485B.
(a)Development of the System.—The Secretary shall [20 USC 1092b](/us/usc/t20/s1092b).consult with a representative group of guaranty agencies, eligible lenders, and eligible institutions to develop a mutually agreeable proposal for the establishment of a National Student Loan Data System containing information regarding loans made, insured, or guaranteed under part B and loans made under part E. The information in the data system shall include (but is not limited to)— “(1) the amount and type of each such loan made; “(2) the names and social security numbers of the borrowers; “(3) the guaranty agency responsible for the guarantee of the loan; “(4) the institution of higher education or organization responsible for loans made under part E; “(5) the eligible institution in which the student was enrolled or accepted for enrollment at the time the loan was made, and any additional institutions attended by the borrower, “(6) the total amount of loans made to any borrower and the remaining balance of the loans; “(7) the lender, holder, and servicer of such loans; “(8) information concerning the date of any default on the loan and the collection of the loan, including any information concerning the repayment status of any defaulted loan on which the Secretary has made a payment pursuant to section 430(a) or the guaranty agency has made a payment to the previous holder of the loan; 103 STAT. 2122 “(9) information regarding any deferments or forbearance granted on such loans; and “(10) the date of cancellation of the note upon completion of repayment by the borrower of the loan or payment by the Secretary pursuant to section 437. “(b) Additional Information.—For the purposes of research and policy analysis, the proposal shall also contain provisions for obtaining additional data concerning the characteristics of borrowers and the extent of student loan indebtedness on a statistically valid sample of borrowers under part B. Such data shall include— “(1) information concerning the income level of the borrower and his family and the extent of the borrower’s need for student financial assistance, including loans; “(2) information concerning the type of institution attended by the borrower and the year of the program of education for which the loan was obtained; “(3) information concerning other student financial assistance received by the borrower; and “(4) information concerning Federal costs associated with the student loan program under part B of this title, including the costs of interest subsidies, special allowance payments, and other subsidies. “(c) Verification.—The Secretary may require lenders, guaranty agencies, or institutions of higher education to verify information or obtain eligibility or other information through the National Student Loan Data System prior to making, guaranteeing, or certifying a loan made under part B or part E. “(d) Report to Congress.—The Secretary shall prepare and submit to the appropriate committees of the Congress, in each fiscal year, a report describing the results obtained by the establishment and operation of the student loan data system authorized by this section.”. " SEC. 2009. INFORMATION USED IN EXERCISE OF AID ADMINISTRATOR DISCRETION. Section 479A(a) of such Act (20 U.S.C. 1987tt(a)) is amended to read as follows: " “Sec. 479A.
(a)In General.—Nothing in this title shall be interpreted as limiting the authority of the financial aid administrator, on the basis of adequate documentation, to make adjustments on a case-by-case basis to the cost of attendance or the data required to calculate the expected student or parent contribution (or both) to allow for treatment of an individual eligible applicant with special circumstances not addressed by the data elements in subparts 1 and 2 of part A and parts B, C, and E of this title. However, this authority shall not be construed to permit aid administrators to deviate from the contributions expected under subparts 1 and 2 of part A and parts B, C, and E in the absence of special circumstances. Special circumstances shall be conditions that differentiate an individual student from a class of students rather than conditions Records.that exist across a class of students. Adequate documentation for such adjustments shall substantiate such special circumstances of individual students. In addition, nothing in this title shall be interpreted as limiting the authority of the student financial aid administrator in such cases to request and use supplementary information about the financial status or personal circumstances of eligible applicants in selecting recipients and determining the amount of 103 STAT. 2123awards under subparts 1 and 2 of part A and parts B, C, and E of this title.”. " Subtitle B—Fiduciary Responsibilities SEC. 2101. CIVIL PENALTIES ON VIOLATIONS BY FIDUCIARIES.
(a)In General.—Section 502 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132) is amended by adding at the end thereof the following new subsection: " “(l)(1) In the case of— “(A) any breach of fiduciary responsibility under (or other violation of) part 4 by a fiduciary, or “(B) any knowing participation in such a breach or violation by any other person, the Secretary shall assess a civil penalty against such fiduciary or other person in an amount equal to 20 percent of the applicable recovery amount. “(2) For purposes of paragraph (1), the term ‘applicable recovery amount’ means any amount which is recovered from a fiduciary or other person with respect to a breach or violation described in paragraph (1)— “(A) pursuant to any settlement agreement with the Secretary, or “(B) ordered by a court to be paid by such fiduciary or other person to a plan or its participants and beneficiaries in a judicial proceeding instituted by the Secretary under subsection (a)(2) or (a)(5). “(3) The Secretary may, in the Secretary’s sole discretion, waive or reduce the penalty under paragraph
(1)if the Secretary determines in writing that— “(A) the fiduciary or other person acted reasonably and in good faith, or “(B) it is reasonable to expect that the fiduciary or other person will not be able to restore all losses to the plan without severe financial hardship unless such waiver or reduction is granted. “(4) The penalty imposed on a fiduciary or other person under this subsection with respect to any transaction shall be reduced by the amount of any penalty or tax imposed on such fiduciary or other person with respect to such transaction under subsection
(i)of this section and section 4975 of the Internal Revenue Code of 1986.”. "
(b)Conforming Amendment.—Section 502(a)(6) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132(a)(6)) is amended by inserting “or (l)” after “subsection (i)”.
(c)Effective Date.—The amendments made by this section shall [29 USC 1132 note](/us/usc/t29/s1132).apply to any breach of fiduciary responsibility or other violation occurring on or after the date of the enactment of this Act. 103 STAT. 2124 TITLE III—REGULATORY AGENCY FEES Subtitle A—Federal Communications Commission Fees and Penalties SEC. 3001. FEDERAL COMMUNICATIONS COMMISSION FEES.
(a)Update of Fee Schedule.—Section 8 of the Communications Act of 1934 (47 U.S.C. 158) is amended by adding at the end thereof the following: " “(g) Until modified pursuant to subsection
(b)of this section, the Schedule of Charges which the Federal Communications Commission shall prescribe pursuant to subsection
(a)of this section shall be as follows: “SCHEDULE OF CHARGES Service Fee amount private radio services 1. Marine Coast Stations a. New License (per station) $70.00 b. Modification of License (per station) 70.00 c. Renewal of License (per station) 70.00 d. Special Temporary Authority (Initial, Modifications, Extensions) 100.00 e. Assignments (per station) 70.00 f. Transfers of Control (per station) 35.00 g. Request for Waiver
(i)Routine (per request) 105.00
(ii)Non-Routine (per rule section/per station) 105.00 2. Ship Stations a. New License (per application) 35.00 b. Modification of License (per application) 35.00 c. Renewal of License (per application) 35.00 d. Request for Waiver
(i)Routine (per request) 105.00
(ii)Non-Routine (per rule section/per station) 105.00 3. Operational Fixed Microwave Stations a. New License (per station) 155.00 b. Modification of License (per station) 155.00 c. Renewal of License (per station) 155.00 d. Special Temporary Authority (Initial, Modifications, Extensions) 35.00 e. Assignments (per station) 155.00 f. Transfers of Control (per station) 35.00 g. Request for Waiver
(i)Routine (per request) 105.00
(ii)Non-Routine (per rule section/per station) 105.00 4. Aviation (Ground Stations) a. New License (per station) 70.00 b. Modification of License (per station) 70.00 c. Renewal of License (per station) 70.00 d. Special Temporary Authority (Initial, Modifications, Extensions) 100.00 e. Assignments (per station) 70.00 f. Transfers of Control (per station) 35.00 g. Request for Waiver
(i)Routine (per request) 105.00
(ii)Non-Routine (per rule section/per station) 105.00 5. Aircraft Stations a. New License (per application) 35.00 b. Modification of License (per application) 35.00 c. Renewal of License (per application) 35.00 d. Request for Waiver
(i)Routine (per request) 105.00
(ii)Non-Routine (per rule section/per station) 105.00 6. Land Mobile Radio Stations (including Special Emergency and Public Safety Stations) a. New License (per call sign) 35.00 103 STAT. 2125 b. Modification of License (per call sign) 35.00 c. Renewal of License (per call sign) 35.00 d. Special Temporary Authority (Initial, Modifications, Extensions) 35.00 e. Assignments (per station) 35.00 f. Transfers of Control (per call sign) 35.00 g. Request for Waiver
(i)Routine (per request) 105.00
(ii)Non-Routine (per rule section/per station) 105.00 h. Reinstatement (per call sign) 35.00 i. Specialized Mobile Radio Systems-Base Stations
(i)New License (per call sign) 35.00
(ii)Modification of License (per call sign) 35.00
(iii)Renewal of License (per call sign) 35.00
(iv)Waiting List (annual charge per application) 35.00
(v)Special Temporary Authority (Initial, Modifications, Extensions) 35.00
(vi)Assignments (per call sign) 35.00
(vii)Transfers of Control (per call sign) 35.00
(viii)Request for Waiver
(1)Routine (per request) 105.00
(2)Non-Routine (per rule section/per station) 105.00
(ix)Reinstatements (per call sign) 35.00 j. Private Carrier Licensee
(i)New License (per call sign) 35.00
(ii)Modification of License (per call sign) 35.00
(iii)Renewal of License (per call sign) 35.00
(iv)Special Temporary Authority (Initial, Modifications, Extensions) 35.00
(v)Assignments (per call sign) 35.00
(vi)Transfers of Control (per call sign) 35.00
(vii)Request for Waiver
(1)Routine (per request) 105.00
(2)Non-Routine (per rule section/per station) 105.00
(viii)Reinstatements (per call sign) 35.00 7. General Mobile Radio Service a. New License (per call sign) 35.00 b. Modifications of License (per call sign) 35.00 c. Renewal of License (per call sign) 35.00 d. Request for Waiver
(i)Routine (per request) 105.00
(ii)Non-Routine (per rule section/per station) 105.00 e. Special Temporary Authority (Initial, Modifications, Extensions) 35.00 f. Transfer of control (per call sign) 35.00 8. Restricted Radiotelephone Operator Permit 35.00 9. Request for Duplicate Station License (all services) 35.00 10. Hearing (Comparative, New, and Modifications) 6,760.00 equipment approval services/experimental radio 1. Certification a. Receivers (except TV and FM receivers) 285.00 b. All Other Devices 735.00 c. Modifications and Class II Permissive Changes 35.00 d. Request for Confidentiality 105.00 2. Type Acceptance a. All Devices 370.00 b. Modifications and Class II Permissive Changes 35.00 c. Request for Confidentiality 105.00 3. Type Approval (all devices) a. With Testing (including Major Modifications) 1,465.00 b. Without Testing (including Minor Modifications) 170.00 c. Request for Confidentiality 105.00 4. Notifications 115.00 5. Advance Approval for Subscription TV System 2,25500 a. Request for Confidentiality 105.00 6. Assignment of Grantee Code for Equipment Identification 35.00 7. Experimental Radio Service a. New Construction Permit and Station Authorization (per application) 35.00 b. Modification to Existing Construction Permit and Station Authorization (per application) 35.00 c. Renewal of Station Authorization (per application) 35.00 103 STAT. 2126 d. Assignment or Transfer of Control (per application) 35.00 e. Special Temporary Authority (per application) 35.00 f. Additional Charge for Applications Containing Requests to Withhold Information From Public Inspection (per application) 35.00 mass media services 1. Commercial TV Stations a. New or Major Change Construction Permits 2,535.00 b. Minor Change 565.00 c. Hearing (Major/Minor Change, Comparative New, or Comparative Renewal) 6,760.00 d. License 170.00 e. Assignment or Transfer
(i)Long Form (Forms 314/315) 565.00
(ii)Short Form (Form 316) 80.00 f. Renewal 100.00 g. Call Sign (New or Modification) 55.00 h. Special Temporary Authority (other than to remain silent or extend an existing STA to remain silent) 100.00 i. Extension of Time to Construct or Replacement of CP 200.00 j. Permit to Deliver Programs to Foreign Broadcast Stations 55.00 k. Petition for Rulemaking for New Community of License 1,565.00 l. Ownership Report (per report) 35.00 2. Commercial Radio Stations a. New and Major Change Construction Permit
(i)AM Station 2,255.00
(ii)FM Station 2,030.00 b. Minor Change
(i)AM Station 565.00
(ii)FM Station 565.00 c. Hearing (Major/Minor Change, Comparative New, or Comparative Renewal) 6,760.00 d. License
(i)AM 370.00
(ii)FM 115.00
(iii)AM Directional Antenna 425.00
(iv)FM Directional Antenna 355.00
(v)AM Remote Control 35.00 e. Assignment or Transfer
(i)Long Form (Forms 314/315) 565.00
(ii)Short Form (Form 316) 80.00 f. Renewal 100.00 g. Call Sign (New or Modification) 55.00 h. Special Temporary Authority (other than to remain silent or extend an existing STA to remain silent) 100.00 i. Extension of Time to Construct or Replacement of CP 200.00 j. Permit to Deliver Programs to Foreign Broadcast Stations 55.00 k. Petition for Rulemaking for New Community of License or Higher Class Channel 1,565.00 l. Ownership Report (per report) 35.00 3. FM Translators a. New or Major Change Construction Permit 425.00 b. License 85.00 c. Assignment or Transfer 80.00 d. Renewal 35.00 e. Special Temporary Authority (other than to remain silent or extend an existing STA to remain silent) 100.00 4. TV Translators and LPTV Stations a. New or Major Change Construction Permit 425.00 b. License 85.00 c. Assignment or Transfer 80.00 d. Renewal 35.00 e. Special Temporary Authority (other than to remain silent or extend an existing STA to remain silent) 100.00 5. Auxiliary Services (Includes Remote Pickup stations, TV Auxiliary Broadcast stations, Aural Broadcast STL and Intercity Relay stations, and Low Power Auxiliary stations) a. Major Actions 85.00 b. Renewals 35.00 c. Special Temporary Authority (other than to remain silent or extend an existing STA to remain silent) 100.00 103 STAT. 2127 6. FM/TV Boosters a. New and Major Change Construction Permits 425.00 b. License 85.00 c. Special Temporary Authority (other than to remain silent or extend an existing STA to remain silent) 100.00 7. International Broadcast Station a. New Construction Permit and Facilities Change CP 1,705.00 b. License 385.00 c. Assignment or Transfer (per station) 60.00 d. Renewal 95.00 e. Frequency Assignment and Coordination (per frequency hour) 35.00 f. Special Temporary Authority (other than to remain silent or extend an existing STA to remain silent) 100.00 8. Cable Television Service a. Cable Television Relay Service
(i)Construction Permit 155.00
(ii)Assignment or Transfer 155.00
(iii)Renewal 155.00
(iv)Modification 155.00
(v)Special Temporary Authority (other than to remain silent or extend an existing STA to remain silent) 100.00 b. Cable Special Relief Petition 790.00 c. 76.12 Registration Statement (per statement) 35.00 d. Aeronautical Frequency Usage Notifications (per notice) 35.00 e. Aeronautical Frequency Usage Waivers (per waiver) 35.00 9. Direct Broadcast Satellite a. New or Major Change Construction Permit
(i)Application for Authorization to Construct a Direct Broadcast Satellite 2,030.00
(ii)Issuance of Construction Permit & Launch Authority 19,710.00
(iii)License to Operate Satellite 565.00 b. Hearing (Comparative New, Major/Minor Modifications, or Comparative Renewal) 6,760.00 c. Special Temporary Authority (Other than to remain silent or extend an existing STA to remain silent) 100.00 common carrier services 1. All Common Carrier Services a. Hearing (Comparative New or Major/Minor Modifications) 6,760.00 b. Development Authority . . . Same charge as regular authority in service unless otherwise indicated c. Formal Complaints and Pole Attachment Complaints Filing Fee 120.00 2. Domestic Public Land Mobile Stations (includes Base, Dispatch, Control & Repeater Stations) a. New or Additional Facility (per transmitter) 230.00 b. Major Modifications (per transmitter) 230.00 c. Fill In Transmitters (per transmitter) 230.00 d. Major Amendment to a Pending Application (per transmitter) 230.00 e. Assignment or Transfer
(i)First Call Sign on Application 230.00
(ii)Each Additional Call Sign 35.00 f. Partial Assignment (per call sign) 230.00 g. Renewal (per call sign) 35.00 h. Minor Modification (per transmitter) 35.00 i. Special Temporary Authority (per frequency/per location) 200.00 j. Extension of Time to Construct (per application) 35.00 k. Notice of Completion of Construction (per application) 35.00 l. Auxiliary Test Station (per transmitter) 200.00 m. Subsidiary Communications Service (per request) 100.00 n. Reinstatement (per application) 35.00 o. Combining Call Signs (per call sign) 200.00 p. Standby Transmitter (per transmitter/per location) 200.00 q. 900 MHz Nationwide Paging
(i)Renewal
(1)Network Organizer 35.00
(2)Network Operator (per operator/per city) 35.00 r. Air-Ground Individual License (per station)
(i)Initial License 35.00
(ii)Renewal of License 35.00
(iii)Modification of License 35.00 103 STAT. 2128 3. Cellular Systems (per system) a. New or Additional Facilities 230.00 b. Major Modification 230 00 c. Minor Modification 60.00 d. Assignment or Transfer (including partial) 230.00 e. License to Cover Construction
(i)Initial License for Wireline Carrier 595.00
(ii)Subsequent License for Wireline Carrier 60.00
(iii)License for Nonwireline Carrier 60.00
(iv)Fill In License (all carriers) 60.00 f. Renewal 35.00 g. Extension of Time to Complete Construction 35.00 h. Special Temporary Authority (per system) 200.00 i. Combining Cellular Geographic Service Areas (per system) 50.00 4. Rural Radio (includes Central Office, Interoffice, or Relay Facilities) a. New or Additional Facility (per transmitter) 105.00 b. Major Modification (per transmitter) 105.00 c. Major Amendment to Pending Application (per transmitter) 105.00 d. Minor Modification (per transmitter) 35.00 e. Assignments or Transfers
(i)First Call Sign on Application 105.00
(ii)Each Additional Call Sign 35.00
(iii)Partial Assignment (per call sign) 105.00 f. Renewal (per call sign) 35.00 g. Extension of Time to Complete Construction (per application) 35.00 h. Notice of Completion of Construction (per application) 35.00 i. Special Temporary Authority (per frequency/per location) 200.00 j. Reinstatement (per application) 35.00 k. Combining Call Signs (per call sign) 200.00 l. Auxiliary Test Station (per transmitter) 200.00 m. Standby Transmitter (per transmitter/per location) 200.00 5. Offshore Radio Service (Mobile, Subscriber, and Central Stations; fees would also apply to any expansion of this service into coastal waters other than the Gulf of Mexico) a. New or Additional Facility (per transmitter) 105.00 b. Major Modifications (per transmitter) 105.00 c. Fill In Transmitters (per transmitter) 105.00 d. Major Amendment to Pending Application (per transmitter) 105.00 e. Minor Modification (per transmitter) 35.00 f. Assignment or Transfer
(i)Each Additional Call Sign 35.00
(ii)Partial Assignment (per call sign) 105.00 g. Renewal (per call sign) 35.00 h. Extension of Time to Complete Construction (per application) 35.00 i. Reinstatement (per application) 35.00 j. Notice of Completion of Construction (per application) 35.00 k. Special Temporary Authority (per frequency/per location) 200.00 l. Combining Call Signs (per call sign) 200.00 m. Auxiliary Test Station (per transmitter) 200.00 n. Standby Transmitter (per transmitter/ per location) 200.00 6. Point-to-Point Microwave and Local Television Radio Service a. Conditional License (per station) 155.00 b. Major Modification of Conditional License or License Authorization (per station) 155.00 c. Certification of Completion of Construction (per station) 155.00 d. Renewal (per licensed station) 155.00 e. Assignment or Transfer
(i)First Station on Application 55.00
(ii)Each Additional Station 35.00 f. Extension of Construction Authorization (per station) 55.00 g. Special Temporary Authority or Request for Waiver of Prior Construction Authorization (per request) 70.00 7. Multipoint Distribution Service (including multichannel MDS) a. Conditional License (per station) 155.00 b. Major Modification of Conditional License or License Authorization (per station) 155.00 c. Certification of Completion of Construction (per channel) 455.00 d. Renewal (per licensed station) 155.00 e. Assignment or Transfer
(i)First Station on Application 55.00
(ii)Each Additional Station 35.00 103 STAT. 2129 f. Extension of Construction Authorization (per station) 110.00 g. Special Temporary Authority or Request for Waiver of Prior Construction Authorization (per request) 70.00 8. Digital Electronic Message Service a. Conditional License (per nodal station) 155.00 b. Modification of Conditional License or License Authorization (per nodal station) 155.00 c. Certification of Completion of Construction (per nodal station) 155.00 d. Renewal (per licensed nodal station) 155.00 e. Assignment or Transfer
(i)First Station on Application 55.00
(ii)Each Additional Station 35.00 f. Extension of Construction Authorization (per station) 55.00 g. Special Temporary Authority or Request for Waiver of Prior Construction Authorization (per request) 70.00 9. International Fixed Public Radio (Public and Control Stations) a. Initial Construction Permit (per station) 510.00 b. Assignment or Transfer (per application) 510.00 c. Renewal (per license) 370.00 d. Modification (per station) 370.00 e. Extension of Construction Authorization (per station) 185.00 f. Special Temporary Authority or Request for Waiver (per request) 185.00 10. Fixed Satellite Transmit/Receive Earth Stations a. Initial Application (per station) 1,525.00 b. Modification of License (per station) 105.00 c. Assignment or Transfer
(i)First Station on Application 300.00
(ii)Each Additional Station 100.00 d. Developmental Station (per station) 1,000.00 e. Renewal of License (per station) 105.00 f. Special Temporary Authority or Waivers of Prior Construction Authorization (per request) 105.00 g. Amendment of Application (per station) 105.00 h. Extension of Construction Permit (per station) 105.00 11. Small Transmit/Receive Earth Stations (2 meters or less and operating in the 4/6 GHz frequency band) a. Lead Application 3,380.00 b. Routine Application (per station) 35.00 c. Modification of License (per station) 105.00 d. Assignment or Transfer
(i)First Station on Application 300.00
(ii)Each Additional Station 35.00 e. Developmental Station (per station) 1,000.00 f. Renewal of License (per station) 105.00 g. Special Temporary Authority or Waivers of Prior Construction Authorization (per request) 105.00 h. Amendment of Application (per station) 105.00 i. Extension of Construction Permit (per station) 105.00 12. Receive Only Earth Stations a. Initial Application for Registration 230.00 b. Modification of License or Registration (per station) 105.00 c. Assignment or Transfer
(i)First Station on Application 300.00
(ii)Each Additional Station 100.00 d. Renewal of License (per station) 105.00 e. Amendment of Application (per station) 105.00 f. Extension of Construction Permit (per station) 105.00 g. Waivers (per request) 105.00 13. Very Small Aperture Terminal
(VSAT)Systems a. Initial Application (per system) 5,630.00 b. Modification of License (per system) 105.00 c. Assignment or Transfer of System 1,505.00 d. Developmental Station 1,000.00 e. Renewal of License (per system) 105.00 f. Special Temporary Authority or Waivers of Prior Construction Authorization (per request) 105.00 g. Amendment of Application (per system) 105.00 h. Extension of Construction Permit (per system) 105.00 14. Mobile Satellite Earth Stations a. Initial Application of Blanket Authorization 5,630.00 b. Initial Application for Individual Earth Station 1,350.00 103 STAT. 2130 c. Modification of License (per system) 105.00 d. Assignment or Transfer (per system) 1,505.00 e. Developmental Station 1,000.00 f. Renewal of License (per system) 105.00 g. Special Temporary Authority or Waivers of Prior Construction Authorization (per request) 105.00 h. Amendment of Application (per system) 105.00 i. Extension of Construction Permit (per system) 105.00 15. Radio determination Satellite Earth Stations a. Initial Application of Blanket Authorization 5,630.00 b. Initial Application for Individual Earth Station 1,350.00 c. Modification of License (per system) 105.00 d. Assignment or Transfer (per system) 1,505.00 e. Developmental Station 1,000.00 f. Renewal of License (per system) 105.00 g. Special Temporary Authority or Waivers of Prior Construction Authorization (per request) 105.00 h. Amendment of Application (per system) 105.00 i. Extension of Construction Permit (per system) 105.00 16. Space Stations a. Application for Authority to Construct 2,030.00 b. Application for Authority to Launch & Operate
(i)Initial Application 70,000.00
(ii)Replacement Satellite 70,000.00 c. Assignment or Transfer (per satellite) 5,000.00 d. Modification 5,000.00 e. Special Temporary Authority or Waiver of Prior Construction Authorization (per request) 500.00 f. Amendment of Application 1,000.00 g. Extension of Construction Permit/Launch Authorization (per request) 500.00 17. Section 214 Applications a. Overseas Cable Construction 9,125.00 b. Cable Landing License
(i)Common Carrier 1,025.00
(ii)Non-Common Carrier 10,150.00 c. Domestic Cable Construction 610.00 d. All Other 214 Applications 610.00 e. Special Temporary Authority (all services) 610.00 f. Assignments or Transfers (all services) 610.00 18. Recognized Private Operating Status (per application) 610.00 19. Telephone Equipment Registration 155.00 20. Tariff Filings a. Filing Fee 490.00 b. Special Permission Filing (per filing) 490.00 21. Accounting and Audits a. Field Audit 62,290.00 b. Review of Attest Audit 34,000.00 c. Review of Depreciation Update Study (Single State) 20,685.00
(i)Each Additional State 680.00 d. Interpretation of Accounting Rules (per request) 2,885.00 e. Petition for Waiver (per petition) 4,660.00 miscellaneous charges 1. International Telecommunications Settlements Administrative Fee for Collections (per line item) 2.00 2. Radio Operator Examinations a. Commercial Radio Operator Examination 35.00 b. Renewal of Commercial Radio Operator License, Permit, or Certificate 35.00 c. Duplicate or Replacement Commercial Radio Operator License, Permit, or Certificate 35.00 3. Ship Inspections a. Inspection of Oceangoing Vessels Under Title III, Part II of the Communications Act (per inspection) 620.00 b. Inspection of Passenger Vessels Under Title III. Part III of the Communications Act (per inspection) 320.00 c. Inspection of Vessels Under the Great Lakes Agreement (per inspection) 360.00 103 STAT. 2131 d. Inspection of Foreign Vessels Under the Safety of Life at Sea (SOLAS) Convention (per inspection)…. 540.00 e. Temporary Waiver for Compulsorily Equipped Vessel. 60.00”. "
(b)Conforming Amendments.—Section 8 of the Communications Act of 1934 is further amended— [47 USC 158](/us/usc/t47/s158).
(1)by striking the last sentence of subsection (a);
(2)in subsection (b)(1), by striking “April 1, 1987” and inserting “October 1, 1991”; and
(3)in subsection (d)(1)—
(A)by striking out “to the following radio services:” and inserting “(A) to governmental entities and nonprofit entities licensed in the following radio services:”; and
(B)by inserting “(B)” after “Emergency Radio, or”.
(c)Effective Date; Implementation.—The amendments made by [47 USC 158 note](/us/usc/t47/s158).this section shall take effect on the date of enactment of this Act, and the Schedule of Charges required by the amendment made by subsection
(a)of this section shall be implemented not later than 150 days after the date of enactment of this Act. SEC. 3002. FINES AND PENALTIES UNDER THE COMMUNICATIONS ACT OF 1934.
(a)Discrimination and Preference by Common Carrier.—Section 202(c) of the Communications Act of 1984 (47 U.S.C. 202(c)) is amended—
(1)by striking “$500” and inserting “$6,000”; and
(2)by striking “$25” and inserting “$300”.
(b)Failure in Filing of Schedule of Charges.—Section 203(e) of such Act (47 U.S.C. 203(e)) is amended—
(1)by striking “$500” and inserting “$6,000”; and
(2)by striking “$25” and inserting “$300”.
(c)Noncompliance With Rate Orders.—Section 205(b) of such Act (47 U.S.C. 205(b)) is amended by striking “$1,000” and inserting “$12,000”.
(d)Noncompliance With Line Extension Orders.—Section 214(d) of the Act (47 U.S.C. 214(d)) is amended by striking “$100” and inserting “$1,200”.
(e)Failure to File Reports or Information.—Section 219(b) of the Act (47 U.S.C. 219(b)) is amended by striking “$100” and inserting “$1,200”.
(f)Recordkeeping Failures.—Section 220(d) of the Act (47 U.S.C. 220(d)) is amended by striking “$500” and inserting “$6,000”.
(g)Noncompliance With Shipboard Radio Requirements.—Section 364 of such Act (47 U.S.C. 362) is amended—
(1)by striking “$500” in subsection
(a)and inserting “$5,000”; and
(2)by striking “$100” in subsection
(b)and inserting “$1,000”.
(h)Noncompliance With Passenger Vessel Radio Requirements.—Section 386 of such Act (47 U.S.C. 386) is amended—
(1)by striking “$500” in subsection
(a)and inserting “$5,000”; and
(2)by striking “$100” in subsection
(b)and inserting “$1,000”.
(i)General Forfeitures.—Subsection
(b)of section 503 of the Communications Act of 1934 (47 U.S.C. 503(b)) is amended—
(1)by inserting “(1)” after “(b)” at the beginning of such subsection; and
(2)by striking paragraph
(2)and inserting the following: 103 STAT. 2132 " “(2)(A) If the violator is
(i)a broadcast station licensee or permittee,
(ii)a cable television operator, or
(iii)an applicant for any broadcast or cable television operator license, permit, certificate, or other instrument or authorization issued by the Commission, the amount of any forfeiture penalty determined under this section shall not exceed $25,000 for each violation or each day of a continuing violation, except that the amount assessed for any continuing violation shall not exceed a total of $250,000 for any single act or failure to act described in paragraph
(1)of this subsection. “(B) If the violator is a common carrier subject to the provisions of this Act or an applicant for any common carrier license, permit, certificate, or other instrument of authorization issued by the Commission, the amount of any forfeiture penalty determined under this subsection shall not exceed $100,000 for each violation or each day of a continuing violation, except that the amount assessed for any continuing violation shall not exceed a total of $1,000,000 for any single act or failure to act described in paragraph
(1)of this subsection. “(C) In any case not covered in subparagraph
(A)or (B), the amount of any forfeiture penalty determined under this subsection shall not exceed $10,000 for each violation or each day of a continuing violation, except that the amount assessed for any continuing violation shall not exceed a total of $75,000 for any single act or failure to act described in paragraph
(1)of this subsection. “(D) The amount of such forfeiture penalty shall be assessed by the Commission, or its designee, by written notice. In determining the amount of such a forfeiture penalty, the Commission or its designee shall take into account the nature, circumstances, extent, and gravity of the violation and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and such other matters as justice may require.”. " Subtitle B—NRC User Fees SEC. 3201. NRC USER FEES. Section 7601 of the Consolidated Omnibus Budget Reconciliation [42 USC 2213](/us/usc/t42/s2213).Act of 1985 (COBRA) (Public Law 99–272) is amended to read as follows: " “(1) In general.— The Nuclear Regulatory Commission shall assess and collect annual charges from its licensees on a fiscal year basis, except that— “(A) the maximum amount of the aggregate charges assessed pursuant to this paragraph in any fiscal *year* may not exceed an amount that, when added to other amounts collected by the Commission for such fiscal year under other provisions of law, is estimated to be equal to 33 percent of the costs incurred by the Commission with respect to such fiscal year, except that for fiscal year 1990 such maximum amount shall be estimated to be equal to 45 percent of the costs incurred by the Commission for fiscal year 1990; and “(B) any such charge assessed pursuant to this paragraph shall be reasonably related to the regulatory service provided by the Commission and shall fairly reflect the cost to the Commission of providing such service. 103 STAT. 2133 “(2) Establishment of amount by rule.—The amount of the charges assessed pursuant to this paragraph shall be established by rule.”. " TITLE IV—CIVIL SERVICE AND POSTAL SERVICE PROGRAMS SEC. 4001. BUDGETARY TREATMENT OF THE POSTAL SERVICE FUND.
(a)Treatment of the Postal Service Fund.—
(1)In general.— Chapter 20 of title 39, United States Code, is amended by inserting after section 2009 the following: " “§ 2009a. Budgetary treatment of the Postal Service Fund “Notwithstanding any other provision of law, the receipts and disbursements of the Postal Service Fund, including disbursements for administrative expenses incurred in connection with the Fund— “(1) shall not be included in the totals of— “(A) the budget of the United States Government as submitted by the President, or “(B) the congressional budget (including allocations of budget authority and outlays provided therein); “(2) shall be exempt from any general budget limitation imposed by statute on expenditures and net lending (budget outlays) of the United States Government; and “(3) shall be exempt from any order issued under part C of the Balanced Budget and Emergency Deficit Control Act of 1985, and shall not be counted for purposes of calculating the deficit under section 3(6) of the Congressional Budget and Impoundment Control Act of 1974 for purposes of comparison with the maximum deficit amount under the Balanced Budget and Emergency Deficit Control Act of 1985 nor counted in calculating the excess deficit for purposes of sections 251 and 252 of the Balanced Budget and Emergency Deficit Control Act of 1985, for any fiscal year.”. "
(2)Chapter analysis.—The analysis for chapter 20 of title 39, United States Code, is amended by inserting after the item relating to section 2009 the following: " “2009a. Budgetary treatment of the Postal Service Fund.” "
(b)Construction.—Nothing in any amendment made by subsection [39 USC 2009a note](/us/usc/t39/s2009a).(a) shall be considered to diminish the oversight responsibilities or authority of the Congress under law, rule, or regulation with respect to the budget and operations of the United States Postal Service.
(c)Applicability.—The amendments made by this section shall [39 USC 2009a note](/us/usc/t39/s2009a).apply with respect to budgets for fiscal years beginning after September 30, 1989. SEC. 4002. FUNDING OF COST-OF-LIVING ADJUSTMENTS FOR CERTAIN POSTAL SERVICE ANNUITANTS AND SURVIVOR ANNUITANTS.
(a)In General.—Section 8348 of title 5, United States Code, is amended by adding at the end the following: " “(m)(1) Notwithstanding any other provision of law, the United States Postal Service shall be liable for that portion of any estimated increase in the unfunded liability of the Fund which is 103 STAT. 2134attributable to any benefits payable from the Fund to former employees of the Postal Service who first become annuitants by reason of separation from the Postal Service on or after October 1, 1986, or to their survivors, or to the survivors of individuals who die on or after October 1, 1986, while employed by the Postal Service, when the increase results from a cost-of-living adjustment under section 8340 of this title. “(2) The estimated increase in the unfunded liability referred to in paragraph
(1)of this subsection shall be determined by the Office after consultation with the Postal Service. The Postal Service shall pay the amount so determined to the Office in 15 equal annual installments with interest computed at the rate used in the most recent valuation of the Civil Service Retirement System, and with the first payment thereof due at the end of the fiscal year in which the cost-of-living adjustment with respect to which the payment relates becomes effective. “(3) In determining any amount for which the Postal Service is liable under this subsection, the amount of the liability shall be prorated to reflect only that portion of total service (used in computing the benefits involved) which is attributable to civilian service performed after June 30, 1971, as estimated by the Office.”. "
(b)[5 USC 8348 note](/us/usc/t5/s8348). Effective Date; Size of Annual Installments to Fund Earlier COLAs; Additional Amount Initially Payable.—
(1)Effective date.—This section and the amendment made by this section shall be effective as of October 1, 1986.
(2)Size of annual installments to fund previous years’ COLAs.— Notwithstanding any provision of section 8348(m) of title 5, United States Code (as added by subsection (a)), the estimated increase in the unfunded liability referred to in paragraph
(1)of such section 8348(m) shall be payable based on annual installments equal to—
(A)$100,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1987;
(B)$6,000,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1988; and
(C)$15,000,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1989.
(3)Additional amount payable.—
(A)Generally.—The first payment made under the provisions of section 8348(m) of title 5, United States Code (as added by subsection (a)) shall include, in addition to the amount which would otherwise be payable at that time, an amount equal to the sum of any amounts which would have been due under those provisions in any prior year if this section had been enacted before October 1, 1986.
(B)Computation method.—Subject to paragraph (2), the additional amount payable under this paragraph shall be computed in accordance with section 8348(m) of title 5, United States Code (as added by subsection (a)), and shall include interest. Interest on an amount—
(i)shall be computed at the rate used in the most recent valuation of the Civil Service Retirement System;
(ii)shall accrue, and be compounded, annually; and
(iii)shall be computed for the period beginning on the date by which such amount should have been paid 103 STAT. 2135(if this section had been enacted before October 1, 1986) and ending on the date on which payment is made. SEC. 4003. FUNDING OF HEALTH BENEFIT PREMIUMS FOR SURVIVORS OF EMPLOYEES AND FORMER EMPLOYEES OF THE POSTAL SERVICE.
(a)Generally.—Section 8906(g)(2) of title 5, United States Code, is amended by inserting “or for a survivor of such an individual or of an individual who died on or after October 1, 1986, while employed by the United States Postal Service,” after “1986,”.
(b)Effective Date.—The amendment made by subsection
(a)[5 USC 8906 note](/us/usc/t5/s8906).shall take effect on October 1, 1989, and shall apply with respect to amounts payable for periods beginning on or after that date. SEC. 4004. POSTAL SERVICE PAYMENTS TO THE EMPLOYEES’ COMPENSATION FUND.
(a)Amendment.—Section 2003 of title 39, United States Code, is amended by adding at the end the following: " “(g) Notwithstanding any provision of section 8147 of title 5, whenever the Secretary of Labor furnishes a statement to the Postal Service indicating an amount due from the Postal Service under subsection
(b)of that section, the Postal Service shall make the deposit required pursuant to that statement (and any additional payment under subsection
(c)of that section, to the extent that it relates to the period covered by such statement) not later than 30 days after the date on which such statement is so furnished. Any deposit (and any additional payment) which is subject to the preceding sentence shall, once made, remain available without fiscal year limitation.”. "
(b)Effective Date.—The amendment made by subsection
(a)[39 USC 2003 note](/us/usc/t39/s2003).shall take effect on October 1, 1989. SEC. 4005. PARTIAL DEFERRED PAYMENT OF LUMP-SUM CREDIT FOR CERTAIN INDIVIDUALS ELECTING ALTERNATIVE FORMS OF ANNUITIES. [5 USC 8343a note](/us/usc/t5/s8343a).
(a)In General.—Notwithstanding any other provision of law, and except as provided in subsection (c), any lump-sum credit payable to an employee or Member pursuant to the election of an alternative form of annuity by such employee or Member under section 8343a or section 8420a of title 5, United States Code, shall be paid in accordance with the schedule under subsection
(b)(instead of the schedule which would otherwise apply), if the commencement date of the annuity payable to such employee or Member occurs after December 2, 1989, and before October 1, 1990.
(b)Schedule of Payments.—The schedule of payment of any lump-sum credit subject to this section is as follows:
(1)50 percent of the lump-sum credit shall be payable on the date on which, but for the enactment of this section, the full amount of the lump-sum credit would otherwise be payable.
(2)The remainder of the lump-sum credit shall be payable on the date which occurs 12 months after the date described in paragraph (1). An amount payable in accordance with paragraph
(2)shall be payable with interest, computed using the rate under section 8334(e)(3) of title 5, United States Code.
(c)Exceptions.—The Office of Personnel Management shall prescribe Regulations.regulations to provide that, unless the individual involved 103 STAT. 2136indicates otherwise by written notice to the Office (submitted at such time and in such manner as the regulations may require), this section shall not apply—
(1)in the case of any individual who is separated from Government service involuntarily, other than for cause on charges of misconduct or delinquency; and
(2)in the case of any individual as to whom the application of this section would be against equity and good conscience, due to a life-threatening affliction or other critical medical condition affecting such individual.
(d)Annuity Benefits Not Affected.—Nothing in this section shall affect the commencement date, the amount, or any other aspect of any annuity benefits payable under section 8343a or section 8420a of title 5, United States Code.
(e)Definitions.—For purposes of this section, the terms “lump-sum credit”, “employee”, and “Member” each has the meaning given such term by section 8331 or section 8401 of title 5, United States Code, as appropriate. SEC. 4006. COORDINATION. For purposes of section 202 of the Balanced Budget and Emergency Deficit Reaffirmation Act of 1987 (2 U.S.C. 909), any transfer resulting from any provision of this title or any of the amendments made by this title is a necessary (but secondary) result of a significant policy change (within the meaning of section 202(b) of such Act). TITLE V—VETERANS PROGRAMS SEC. 5001. EXTENSION OF LOAN FEE. Section 1829(c) of title 38, United States Code, is amended by striking out “September 30, 1989” and inserting in lieu thereof “September 30, 1990”. SEC. 5002. POSTPONEMENT OF RESTRICTIONS ON WITHOUT-RECOURSE VENDEE LOAN SALES. Section 1833(a)(3) of title 38, United States Code, is amended by striking out “October 1, 1989” each place it appears and inserting in lieu thereof “October 1, 1990”. SEC. 5003. PROCEEDS OF VENDEE LOAN SALES.
(a)In General.—Section 1833 of title 38, United States Code, is amended by adding at the end the following new subsection: " “(e) Notwithstanding any other provision of law, the amount received from the sale of any note evidencing a loan secured by real property described in subsection (a)(1) of this section shall be credited, without any reduction and for the fiscal year in which the amount is received, as offsetting collections of— “(1) the revolving fund for which a fee under section 1829 of this title was collected (or was exempted from being collected) at the time of the original guaranty of the loan that was secured by the same property; or “(2) in any case in which there was no requirement of (or exemption from) a fee at the time of the original guaranty of the loan that was secured by the same property, the Loan Guaranty Revolving Fund; and 103 STAT. 2137the total so credited to any revolving fund for a fiscal year shall offset outlays attributed to such revolving fund during such fiscal year.”. "
(b)Effective Date.—Subsection
(e)of section 1833 of title 38, [38 USC 1833 note](/us/usc/t38/s1833).United States Code, as added by subsection (a), shall apply with respect to amounts referred to in such subsection
(e)received on or after October 1, 1989. TITLE VI—MEDICARE, MEDICAID, MATERNAL AND CHILD HEALTH, AND OTHER HEALTH PROVISIONS table of contents of title Subtitle A— Medicare Part 1— Provisions Relating to Part A Subpart A— General Provisions Sec. 6001. Extension of reductions under original sequester order and applicability of new sequester order. Sec. 6002. Reduction in payments for capital-related coats of inpatient hospital services for fiscal year 1990. Sec. 6003. Prospective payment hospitals. Sec. 6004. PPS-exempt hospitals. Sec. 6005. Payments for hospice care. Subpart B— Technical and Miscellaneous Provisions Sec. 6011. Pass through payment for hemophilia inpatients. Sec. 6012. Medicare buy-in for continued benefits for disabled individuals. Sec. 6013. Buy-in under part A for qualified medicare beneficiaries. Sec. 6014. PROPAC study on medicare dependent hospitals. Sec. 6015. Provisions relating to target amount adjustments. Sec. 6016. Study of methods to compensate hospices for high-cost care. Sec. 6017. Prohibition on nursing home balance billing. Sec. 6018. Hospital anti-dumping provisions. Sec. 6019. Release and use of hospital accreditation surveys. Sec. 6020. Intermediate sanctions for psychiatric hospitals. Sec. 6021. Eligibility of merged or consolidated hospitals for periodic interim payments. Sec. 6022. Extension of waiver for Finger Lakes Area Hospital Corporation. Sec. 6023. Clarification of continuation of August 1987 hospital bad debt recognition policy. Sec. 6024. Use of more recent data regarding routine service costs of skilled nursing facilities. Sec. 6025. Permitting dentist to serve as hospital medical director. Sec. 6026. GAO study of hospital-based and freestanding skilled nursing facilities. Sec. 6027. Massachusetts medicare repayment Sec. 6028. Allowing certifications and recertifications by nurse practitioners and clinical nurse specialists for certain services. Part 2— Provisions Relating to Part B Subpart A— General Provisions Sec. 6101. Extension of reductions under sequester order. Sec. 6102. Physician payment reform. Sec. 6103. Establishment of Agency for Health Care Policy and Research. Sec. 6104. Reduction in payments for certain procedures. Sec. 6105. Reduction in payments for radiology services. Sec. 6106. Anesthesia services. Sec. 6107. Delay in update and reduction in percentage increase in the medicare economic index. Sec. 6108. Miscellaneous provisions relating to payment for physicians’ services. Sec. 6109. Waiver of liability limiting recoupment in certain cases. Sec. 6110. Reduction in capital payments for outpatient hospital services. 103 STAT. 2138 Sec. 6111. Clinical diagnostic laboratory tests. Sec. 6112. Durable medical equipment Sec. 6113. Mental health services. Sec. 6114. Coverage of nurse practitioner services in nursing facilities. Sec. 6115. Coverage of screening pap smears. Sec. 6116. Coverage under, and payment for, outpatient rural primary care hospital services under part B. Subpart B— Technical and Miscellaneous Provisions Sec. 6131. Modification of payment for therapeutic shoes for individuals with severe diabetic foot disease. Sec. 6132. Payments to certified registered nurse anesthetists. Sec. 6133. Increase in payment limit for physical and occupational therapy services. Sec. 6134. Study of payment for portable x-ray services. Sec. 6135. Extension *Of* municipal health service demonstration projects. Sec. 6136. Study of reimbursement for ambulance services. Sec. 6137. PROPAC study of payments for services in hospital outpatient departments Sec. 6138. PhysPRC study of payments for assistants at surgery. Sec. 6139. GAO study of standards for use of and payment for items of durable medical equipment Sec. 6140. Narrowing of range of amounts recognized for items of durable medical equipment Sec. 6141. Physician office labs. Sec. 6142. Study of reimbursement for blood clotting factor for hemophilia patients. Part 3— Provisions Relating to Parts A and B Subpart A— General Provisions Sec. 6201. Reductions under original sequester order and applicability of new sequester order for health maintenance organizations. Sec. 6202. Medicare as secondary payer. Sec. 6203. Payment for end stage renal disease services. Sec. 6204. Physician ownership of, and referral to, health care entities. Sec. 6206. Costs of nursing and allied health education. _ _ Sec. 6206. Disclosure of assumptions in establishing AAPCC; elimination of coordinated open enrollment requirement Sec. 6207. Extension of expiring authorities. Subpart B— Technical and Miscellaneous Provisions Sec. 6211. Medicare hospital patient protection amendments. Sec. 6212. Health maintenance organizations and competitive medical plans. Sec. 6213. Rural health clinic services. Sec. 6214. Determining eligibility of home health agencies for waiver of liability for denied claims. Sec. 6215. Extension of authority to contract with fiscal intermediaries and carriers on other than a cost basis. Sec. 6216. Expansion of rural health medical education demonstration project Sec. 6217. Inner-city hospital triage demonstration project Sec. 6218. GAO study of administrative costs of medicare program. Sec. 6219. Provisions relating to end stage renal disease services. Sec. 6220. Amendments relating to the United States Bipartisan Commission on Comprehensive Health Care. Sec. 6221. National Commission on Children. Sec. 6222. Continued use of home health wage index in effect prior to July 1, 1989, until after July 1, 1990. Sec. 6223. HCFA personnel study. Sec. 6224. Peer review organizations. Part 4— Part B Premium Sec. 6301. Part B premium. Subtitle B— Medicaid Part 1— General Provisions Sec. 6401. Mandatory coverage of certain low-income pregnant women and children. Sec. 6402. Payment for obstetrical and pediatric services. Sec. 6403. Early and periodic screening, diagnostic, and treatment services defined. Sec. 6404. Payment for federally qualified health center services. 103 STAT. 2139 Sec. 6405. Required coverage of nurse practitioner services. Sec. 6406. Required medicaid notice and coordination with special supplemental food program far women, infants, and children (WIC). Sec. 6407. Demonstration projects to study the effect of allowing States to extend medicaid to pregnant women and children not otherwise qualified to receive medicaid benefits. Sec. 6408. Other medicaid provisions Part 2— Technical and Miscellaneous Provisions Sec. 6411. Miscellaneous medicaid technical amendments. Subtitle C— Maternal and Child Health Block Grant Program Sec. 6501. Increase in authorization of appropriations. Sec. 6502. Allotments to State and Federal set-asides. Sec. 6503. Use of allotment funds and application for block grant funds. Sec. 6504. Reports. Sec. 6505. Federal administration and assistance. Sec. 6506. Development of model applications. Sec. 6507. Research on infant mortality and medicaid services. Sec. 6508. Demonstration project on health insurance for medically uninsurable children. Sec. 6509. Maternal and child health handbook. Sec. 6610. Effective dates. Subtitle D— Vaccine Compensation Technicals Sec. 6601. Vaccine injury compensation technicals Sec. 6602. Severability. Subtitle E— Provisions With Respect to COBRA Continuation Coverage Part 1— Extension of Coverage for Disabled Employees Sec. 6701. Extension, under Internal Revenue Code, of coverage from 18 to 29 months for those with a disability at time of termination of employment. Sec. 6702. Extension, under Public Health Service Act, of coverage from 18 to 29 months for those with a disability at time of termination of employment. Sec. 6703. Extension, under ERISA, of coverage from 18 to 29 months for those with a disability at time of employment. Part 2— Miscellaneous Amendments Sec. 6801. Public Health Service Act Subtitle F— Technical and Miscellaneous Provisions Relating to Nursing Home Reform Sec. 6901. Medicare and medicaid technical corrections relating to nursing home reform. Subtitle G— Public Health Service Act Sec. 6911. Establishment of Agency for Health Care Policy and Research. Subtitle A—Medicare **PART 1—****PROVISIONS RELATING TO PART A** **Subpart A—****General Provisions** SEC. 6001. EXTENSION OF REDUCTIONS UNDER ORIGINAL SEQUESTER ORDER AND APPLICABILITY OF NEW SEQUESTER ORDER. [2 USC 902 note](/us/usc/t2/s902). Notwithstanding any other provision of law (including section 11002 or any other provision of this Act, other than section 6201), 103 STAT. 2140the reductions in the amount of payments required under title XVIII of the Social Security Act made by the final sequester order issued by the President on October 16, 1989. pursuant to section 252(b) of the Balanced Budget and Emergency Deficit Control Act of 1985 shall continue to be effective (as provided by sections 252(a)(4)(B) and 256(d)(2) of such Act) through December 31, 1989, with respect to payments for items and services under part A of such title (including payments under section 1886 of such title attributable or allocated to such part). Each such payment made for items and services provided during fiscal year 1990 after such date shall be increased by 1.42 percent above what it would otherwise be under this Act. SEC. 6002. REDUCTION IN PAYMENTS FOR CAPITAL-RELATED COSTS OF INPATIENT HOSPITAL SERVICES FOR FISCAL YEAR 1990. Section 1886(g)(3)(A) of the Social Security Act (42 U.S.C. 1395ww(g)(3)(A)) is amended—
(1)in clause (iii), by striking “and”;
(2)in clause (iv), by striking the period at the end and inserting “, and”; and
(3)by adding at the end the following new clause: " “(v) 15 percent for payments attributable to portions of cost reporting periods or discharges (as the case may be) occurring during the period beginning January 1, 1990, and ending September 30, 1990.”." SEC. 6003. Rural areas. PROSPECTIVE PAYMENT HOSPITALS.
(a)Changes in Hospital Update Factors.—
(1)In general.— Section 1886(b)(3)(B)(i) of the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)) is amended—
(A)by striking “and” at the end of subclause (IV),
(B)in subclause (V), by striking “1990” and inserting “1991” and redesignating such subclause as subclause (VI), and
(C)by inserting after subclause
(IV)the following new subclause: " “(V) Urban areas. 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, and”. "
(2)[42 USC 1395ww note](/us/usc/t42/s1395ww). Effective date.—The amendments made by paragraph
(1)shall apply to payments for discharges occurring on or after January 1, 1990.
(3)[42 USC 1395ww note](/us/usc/t42/s1395ww). Indexing of future applicable percentage increases.—For discharges occurring on or after October 1, 1990, the applicable percentage increase (described in section 1886(b)(3)(B) of the Social Security Act) for discharges occurring during fiscal year 1990 is deemed to have been such percentage increase as amended by paragraph (1).
(b)Reduction in DRG Weighting Factors for Fiscal Year 1990; Future Annual Recalibration of DRG Weights on Budget-Neutral Basis.—Section 1886(d)(4)(C) of such Act (42 U.S.C. 1395ww(d)(4)(C)) is amended—
(1)by striking “(C)” and inserting “(C)(i)”; and
(2)by adding at the end the following new clauses: 103 STAT. 2141 " “(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) 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. “(iv) The Secretary shall include recommendations with respect to Reports.adjustments to weighting factors under clause
(i)in the annual report to Congress required under subsection (e)(3)(B).”. "
(c)Increase in Disproportionate Share Adjustment.—
(1)Change in formula.— Section 1886(d)(5)(F) of such Act (42 U.S.C. 1395ww(d)(5)(F)) is amended—
(A)in clause (iv)(I), by striking “the following formula” and all that follows through “(as defined in clause (vi));” and inserting “the applicable formula described in clause (vii);”, and
(B)by adding at the end the following new clause: " “(vii) The formula used to determine the disproportionate share adjustment percentage for a cost reporting period for a hospital described in clause (iv)(I) is— “(I) in the case of such a hospital with a disproportionate patient percentage (as defined in clause (vi)) greater than 20.2, (P–20.2)(.65)+5.62, or “(II) in the case of any other such hospital, (P–15)(.6)+2.5, where ‘P’ is the hospital’s disproportionate patient percentage (as defined in clause (vi)).”."
(2)Treatment of rural hospitals for disproportionate share calculation.— Section 1886(d)(5)(F) of such Act (42 U.S.C. 1395ww(d)(5)(F)), as amended by paragraph (1), is amended—
(A)in clause (iv)—
(i)in subclause (II), by striking “or”,
(ii)in subclause (III), by inserting “in subclause
(IV)or
(V)or” after “described”,
(iii)by striking the period at the end of subclause
(III)and inserting a semicolon, and
(iv)by adding at the end the following new subclauses: " “(IV) is located in a rural area, is classified as a rural referral center under subparagraph (C), and is classified as a sole community hospital under subparagraph (D), is equal to 10 percent or, if greater, the percent determined in accordance with the applicable formula described in clause (viii); “(V) is located in a rural area, is classified as a rural referral center under subparagraph (C), and is not classified as a sole community hospital under subparagraph (D), is equal to the percent determined in accordance with the applicable formula described in clause (viii); or “(VI) is located in a rural area, is classified as a sole community hospital under subparagraph (D), and is not classified as a rural referral center under subparagraph (C), is 10 percent.”,"
(B)in clause (v)—
(i)in subclause (III), by striking “area” and inserting “area and is not described in subclause (II)”, 103 STAT. 2142
(ii)by redesignating subclauses
(II)and
(III)as subclauses
(III)and (IV), and
(iii)by inserting after subclause
(I)the following new subclause: " “(II) 30 percent, if the hospital is located in a rural area and has more than 100 beds, or is located in a rural area and is classified as a sole community hospital under subparagraph (D),”, and"
(C)by adding at the end the following new clause: " “(viii) The formula used to determine the disproportionate share adjustment percentage for a cost reporting period for a hospital described in clause (iv)(IV) or (iv)(V) is the percentage determined in accordance with the following formula: (P–30)(.6)+4.0, where ‘P’ is the hospital’s disproportionate patient percentage (as defined in clause (vi)).”."
(3)Increase for hospitals with disproportionate indigent care revenues.—Section 1886(d)(5)(F)(iii) of such Act (42 U.S.C. 1395ww(d)(5)(F)(iii)) is amended by striking “25 percent” and inserting “30 percent”.
(4)[42 USC 1395ww note](/us/usc/t42/s1395ww). Effective date.—The amendments made by this subsection shall apply with respect to discharges occurring on or after April 1, 1990.
(d)[42 USC 1395ww note](/us/usc/t42/s1395ww). Extension of Regional Referral Center Classification.—Any hospital that is classified as a regional referral center under section 1886(d)(5)(C) of the Social Security Act as of September 30, 1989, including a hospital so classified as a result of section 9302(d)(2) of the Omnibus Budget Reconciliation Act of 1986, shall continue to be classified as a regional referral center for cost reporting periods beginning on or after October 1, 1989, and before October 1, 1992.
(e)Criteria and Payment for Sole Community Hospitals.—
(1)In general.—(A) Section 1886(d)(5) of the Social Security Act (42 U.S.C. 1395ww(d)(5)) is amended—
(i)by transferring clause
(iv)of subparagraph
(C)to the end and by redesignating it as subparagraph (H),
(ii)by transferring clause
(iii)of subparagraph
(C)to the end and by redesignating it as subparagraph (I),
(iii)in subparagraph (D), by striking “(D)(i)” and inserting “(E)(i)”, and
(iv)by amending clause
(ii)of subparagraph
(C)to read as follows: " “(D)(i) For any cost reporting period beginning on or after April 1, 1990, with respect to a subsection
(d)hospital which is a sole community hospital, payment under paragraph (1)(A) shall be— “(I) an amount based on 100 percent of the hospital’s target amount for the cost reporting period, as defined in subsection (b)(3)(O, or “(II) the amount determined under paragraph (1)(A)(iii), whichever results in greater payment to the hospital. “(ii) In the case of a sole community hospital that experiences, in a cost reporting period compared to the previous cost reporting period, a decrease of more than 5 percent in its total number of inpatient cases due to circumstances beyond its control, the Secretary shall provide for such adjustment to the payment amounts under this subsection (other than under paragraph (9)) as may be necessary to fully compensate the hospital for the fixed costs it incurs in the 103 STAT. 2143period in providing inpatient hospital services, including the reasonable cost of maintaining necessary core staff and services. “(iii) The term ‘sole community hospital’ means any hospital— “(I) that the Secretary determines is located more than 35 road miles from another hospital, or “(II) that, by reason of factors such as the time required for an individual to travel to the nearest alternative source of appropriate inpatient care (in accordance with standards promulgated by the Secretary), location, weather conditions, travel conditions, or absence of other like hospitals (as determined by the Secretary), is the sole source of inpatient hospital services reasonably available to individuals in a geographic area who are entitled to benefits under part A. “(iv) The Secretary shall promulgate a standard for determining whether a hospital meets the criteria for classification as a sole community hospital under clause (iii)(II) because of the time required for an individual to travel to the nearest alternative source of appropriate inpatient care.”. "
(B)Section 1886(b)(8) of such Act (42 U.S.C. 1395ww(b)(8)) is amended—
(i)in subparagraph (A), by striking “(A) For purposes of this subsection” and inserting “(A) Except as provided in subparagraph (C), for purposes of this subsection”, and
(ii)by adding at the end the following new subparagraph: " “(C) In the case of a hospital that is a sole community hospital (as defined in subsection (d)(5)(D)(iii)), 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, the target amount for the preceding 12-month cost reporting period, increased by the applicable percentage increase under subparagraph (B)(i) for discharges occurring in the fiscal year in which that later cost reporting period begins. 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.”."
(2)Conforming amendments.— Such Act is further amended—
(A)in section 1833(h)(1)(D), by striking “the last sentence [42 USC 1395*l*](/us/usc/t42/s1395l).of section 1886(d)(5)(C)(ii)” and inserting “section 1886(d)(5)(D)(iii)”;
(B)in section 1886(d)(5)(C)(i)— [42 USC 1395ww](/us/usc/t42/s1395ww).
(i)by striking “(C)(i)(I)” and inserting “(C)(i)”, and 103 STAT. 2144
(ii)by redesignating subclause
(II)as clause
(ii)and by striking “subclause (I)” each place it appears in such clause and inserting “clause (i)”;
(C)[42 USC 1395ww](/us/usc/t42/s1395ww).in section 1886(d)(9)(B)(ii)(IV), by striking “(D)(v)” and inserting “(D)(iii)”;
(D)in section 1886(d)(9)(D)—
(i)by striking clause (iv),
(ii)by transferring clause
(iii)to the end and redesignating it as clause (iv), and by striking “(C)(iii)” and inserting “(H)”, and
(iii)by redesignating clause
(v)as clause (iii); and
(E)in section 1886(g)(3)(B), by striking “(d)(5)(C)(ii)” and inserting “(d)(5)(D)(iii)”.
(3)[42 USC 1395ww note](/us/usc/t42/s1395ww). Continuation of sole community hospital designation for current sole community hospitals.—Any hospital classified as a sole community hospital under section 1886(d)(5)(C)(ii) of the Social Security Act on the date of the enactment of this Act that will no longer be classified as a sole community hospital after such date as a result of the amendments made by paragraph
(1)shall continue to be classified as a sole community hospital for purposes of section 1886(d)(5)(D) of such Act.
(f)Criteria and Payment for Medicare-Dependent, Small Rural Hospitals.—
(1)Criteria.— Section 1886(d)(5) of the Social Security Act (42 U.S.C. 1395ww(d)(5)), as amended by subsection (e)(1)(A), is further amended by inserting after subparagraph
(F)the following new subparagraph: " “(G)(i) For any cost reporting period beginning on or after April 1, 1990, and ending on or before March 31, 1993, with respect to a subsection
(d)hospital which is a medicare-dependent, small rural hospital, payment under paragraph (1)(A) shall be— “(I) an amount based on 100 percent of the hospital’s target amount for the cost reporting period, as defined in subsection (b)(3)(D), or “(II) the amount determined under paragraph (1)(A)(iii), whichever results in the greater payment to the hospital. “(ii) In the case of a medicare dependent, small rural hospital that experiences, in a cost reporting period compared to the previous cost reporting period, a decrease of more than 5 percent in its total number of inpatient cases due to circumstances beyond its control, the Secretary shall provide for such adjustment to the payment amounts under this subsection (other than under paragraph (9)) as may be necessary to fully compensate the hospital for the fixed costs it incurs in the period in providing inpatient hospital services, including the reasonable cost of maintaining necessary core staff and services. “(iii) The term ‘medicare-dependent, small rural hospital’ means, with respect to any cost reporting period to which clause
(i)applies, any hospital— “(I) located in a rural area, “(II) that has not more than 100 beds, “(III) that is not classified as a sole community hospital under subparagraph (D), and “(IV) for which not less than 60 percent of its inpatient days or discharges during the cost reporting period beginning in fiscal year 1987 were attributable to inpatients entitled to benefits under part A.”. " 103 STAT. 2145
(2)Payment.—Section 1886(b)(3) of such Act (42 U.S.C. 1395ww(b)(3)), as amended by subsection (e)(1)(B), is further amended—
(i)in subparagraph (A), by striking “subparagraph (C)” and inserting “subparagraphs
(C)and (D)”, and
(ii)by adding at the end the following new subparagraph: " “(D) For cost reporting periods ending on or before March 31, 1993, in the case of a hospital that is a medicare-dependent, small rural hospital (as defined in subsection (d)(5)(G)), 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, the target amount for the preceding 12-month cost reporting period, increased by the applicable percentage increase under subparagraph (B)(i) for discharges occurring in the fiscal year in which that later cost reporting period begins. 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.”."
(g)Essential Access Community Hospital Program.—
(1)Establishment of program.—
(A)In general.—Part A of title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.) is amended by adding at the end the following new section: " “essential access community hospital program “Sec. 1820.
(a)In General.—There is hereby established a program Grants.State and local governments.[42 USC 1395i–4](/us/usc/t42/s1395i/4).under which the Secretary— “(1) shall make grants to not more than 7 States to carry out the activities described in subsection (d)(1); “(2) shall make grants to eligible hospitals and facilities (or consortia of hospitals and facilities) to carry out the activities described in subsection (d)(2); and “(3) shall designate (under subsection (i)) hospitals and facilities located in States receiving grants under paragraph
(1)as essential access community hospitals or rural primary care hospitals. “(b) Eligibility of States for Grants.—A State is eligible to receive a grant under subsection (a)(1) only 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— 103 STAT. 2146 “(A) has developed, or is in the process of developing, a State rural health care plan that— “(i) provides for the creation of one or more rural health networks (as defined in subsection (g)) in the State, “(ii) promotes regionalization of rural health services in the State, “(iii) improves access to hospital and other health services for rural residents of the State, and “(iv) enhances the provision of emergency and other transportation services related to health care; “(B) has developed the rural health care plan described in subparagraph
(A)in consultation with the hospital association of the State and rural hospitals located in the State (or, in the case of a State in the process of developing such plan, that assures the Secretary that it will consult with its State hospital association and rural hospitals located in the State in developing such plan); and “(C) has designated, or is in the process of designating, rural non-profit or public hospitals or facilities located in the State as essential access community hospitals or rural primary care hospitals within such networks; and “(2) such other information and assurances as the Secretary may require. “(c) Eligibility of Hospitals and Consortia for Grants.— “(1) In general.— Except as provided in paragraph (3), a hospital or facility is eligible to receive a grant under subsection (a)(2) only if the hospital or facility— “(A) is located in a State receiving a grant under subsection (a)(1); “(B) is designated as an essential access community hospital or a rural primary care hospital by the State in which it is located or is a member of a rural health network (as defined in subsection (g)); “(C) submits to the State in which it is located and to the Secretary, at such time and in such form as the Secretary may require, an application containing such information and assurances as the Secretary may require; and “(D) the State in which the hospital or facility is located certifies to the Secretary that— “(i) the receiving of such a grant by the hospital or facility is consistent with the State’s rural health care plan (described in subsection (b)(1)(A)), and “(ii) the State has approved the application submitted under subparagraph (C). “(2) Treatment of consortia.—A consortium of hospitals or facilities each of which is part of the same rural health network is eligible to receive a grant under subsection (a)(2) if each of its members would individually be eligible to receive such a grant. “(3) Eligibility of rpc hospitals not located in a state receiving grant.—A facility designated as a rural primary care hospital by the Secretary under subsection (i)(2)(C) shall be eligible to receive a grant under subsection (a)(2). “(d) Activities for Which Grants May Be Used.— “(1) Communications and telecommunications.Transportation. Grants to states.—A State shall use a grant received under subsection (a)(1) to carry out the demonstration program established under this section in the State. Such grant may be 103 STAT. 2147used for engaging in activities relating to planning and implementing a rural health care plan and rural health networks, designating hospitals or facilities in the State as essential access community hospitals or rural primary care hospitals, and developing and supporting communication and emergency transportation systems. “(2) Grants to hospitals, facilities, and consortia.—A hospital or facility shall use a grant received under subsection (a)(2) to finance the costs it incurs in converting itself to a rural primary care hospital or an essential access community hospital or in becoming part of a rural health network in the State in which it is located, including capital costs, costs incurred in the development of necessary communications systems, and costs incurred in the development of an emergency transportation system. A consortium shall use a grant received under subsection (a)(2) to finance the costs it incurs in converting hospitals or facilities that are part of the consortium into rural primary care hospitals or in developing and implementing a rural health network consisting of its members in the State in which it is located, including capital costs, costs incurred in the development of necessary communications systems, and costs incurred in the development of an emergency transportation system. “(e) Designation by State of Essential Access Community Hospitals.—A State may designate a hospital as an essential access community hospital only if the hospital— “(1) is located in a rural area (as defined in section 1886(d)(2)(D)); “(2)(A) is located more than 35 miles from any hospital that either
(i)has been designated as an essential access community hospital,
(ii)is classified by the Secretary as a rural referral center under section 1886(d)(5)(C), or
(iii)is located in an urban area that meets the criteria for classification as a regional referral center under such section, or
(B)meets such other criteria relating to geographic location as the State may impose with the approval of the Secretary; “(3) has at least 75 inpatient beds or is located more than 35 miles from any other hospital; “(4) has in effect an agreement to provide emergency and Contracts.medical backup services to rural primary care hospitals participating in the rural health network of which it is a member and throughout its service area; “(5) has in effect an agreement, with each rural primary care hospital participating in the rural health network of which it is a member, to accept patients transferred from such primary care hospital, to receive data from and transmit data to such primary care hospital, and to provide staff privileges to physicians providing care at such primary care hospital; and “(6) meets any other requirements imposed by the State with the approval of the Secretary. “(f) Designation by State of Rural Primary Care Hospitals.— “(1) Criteria for designation.— A State may designate a facility as a rural primary care hospital only if the facility— “(A) is located in a rural area (as defined in section 1886(d)(2)(D)); “(B) at the time such facility applies to the State for designation as a rural primary care hospital, is a hospital with a participation agreement in effect under section 103 STAT. 21481866(a) and had not been found, on the basis of a survey under section 1864, to be in violation of any requirement to participate as a hospital under this title; “(C) has ceased, or agrees (upon the approval of such application) to cease, providing inpatient care (except as required under subparagraph (F)); “(D) Contracts.Communications and telecommunications in the case of a facility that is a member of a rural health network, has in effect an agreement to participate with other hospitals and facilities in the communications system of such network, including the network’s system for the electronic sharing of patient data, including telemetry and medical records, if the network has in operation such a system; “(E) makes available 24-hour emergency care; “(F) provides not more than 6 inpatient beds (meeting such conditions as the Secretary may establish) for providing inpatient care for a period not to exceed 72 hours (unless a longer period is required because transfer to a hospital is precluded because of inclement weather or other emergency conditions) to patients requiring stabilization before discharge or transfer to a hospital; “(G) 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, except insofar as the facility is required to provide emergency care on a 24-hour basis under subparagraph (E), “(ii) the facility may provide any services otherwise required to be provided by a full-time, on-site dietician, pharmacist, laboratory technician, medical technologist, and radiological technologist on a part-time, off-site basis, and “(iii) the inpatient care described in subparagraph
(F)may be provided by a physician’s assistant or nurse practitioner, subject to the oversight of a physician; and “(H) meets the requirements of subparagraphs
(C)through
(J)of paragraph
(2)of section 1861(aa) and of clauses
(ii)and
(iv)of the second sentence of that paragraph. “(2) Preference given to hospitals or facilities participating in rural health network.—In designating facilities as rural primary care hospitals under paragraph (1), the State shall give preference to hospitals or facilities participating in a rural health network. “(3) Permitting rural primary care hospitals to maintain swing beds.—Nothing in this subsection shall be construed to prohibit a State from designating a facility as a rural primary care hospital solely because the facility has entered into an agreement with the Secretary under section 1883 under which the facility’s inpatient hospital facilities may be used for the furnishing of extended care services. “(g) Rural Health Network Defined.—For purposes of this section, the term ‘rural health network’ means, with respect to a State, an organization— 103 STAT. 2149 “(1) consisting of— “(A) at least 1 hospital that— “(i) the State has designated or plans to designate as an essential access community hospital under subsection (b)(1)(C), “(ii) is classified by the Secretary as a rural referral center under section 1886(d)(5)(C), or “(iii) is located in an urban area and meets the criteria for classification as a regional referral center under such section, and “(B) at least 1 facility that the State has designated or plans to designate as a rural primary care hospital, and “(2) the members of which have entered into agreements regarding— “(A) patient referral and transfer, “(B) the development and use of communications systems, including (where feasible) telemetry systems and systems for electronic sharing of patient data, and “(C) the provision of emergency and non-emergency transportation among the members. “(h) Limit on Amount of Grant to Hospital or Facility.—A grant made to a hospital or facility under subsection (a)(2) may not exceed $200,000. “(i) Eligibility of Hospitals or Facilities for Designation by Secretary.— “(1) Essential access community hospital.—(A) The Secretary shall designate a hospital as an essential access community hospital if the hospital— “(i) is located in a State receiving a grant under subsection (a)(1); “(ii) is designated as an essential access community hospital by the State in which it is located (except as provided in subparagraph (B)); and “(iii) meets such other criteria as the Secretary may require. “(B) In the case of a hospital that is not eligible for designation as an essential access community hospital under this paragraph solely because it is not designated as an essential access community hospital by the State in which it is located, the Secretary may designate such hospital as an essential access community hospital under this paragraph if the hospital is not so designated by the State in which it is located solely because of its failure to meet the criteria described in paragraph
(3)of subsection (e). “(2) Rural primary care hospital.—(A) The Secretary shall designate a facility as a rural primary care hospital if the facility— “(i) is located in a State receiving a grant under subsection (a)(1); “(ii) is designated as a rural primary care hospital by the State in which it is located (except as provided in subparagraph (B)); and “(iii) meets such other criteria as the Secretary may require. “(B) In the case of a facility that is not eligible for designation as a rural primary care hospital under this paragraph solely because it is not designated as a rural primary care hospital by 103 STAT. 2150the State in which it is located, the Secretary may designate such facility as a rural primary care hospital under this paragraph if the facility is not so designated by the State in which it is located solely because of its failure to meet the criteria described in subparagraphs (C), (F), or
(G)of subsection (f)(1). “(C) The Secretary may designate not more than 15 facilities as rural primary care hospitals under this paragraph that do not meet the requirements of clauses
(i)and
(ii)of subparagraph
(A)if such a facility meets the criteria described in subparagraphs (A), (B), and
(E)of subsection (f)(1), except that nothing in this subparagraph shall be construed to prohibit the Secretary from designating a facility as a rural primary care hospital solely because the facility has entered into an agreement with the Secretary under section 1883 under which the facility’s inpatient hospital facilities may be used for the furnishing of extended care services. “(j) Waiver of Conflicting Part A Provisions.—The Secretary is authorized to waive such provisions of this part as are necessary to conduct the program established under this section. “(k) Authorization of Appropriations.—There are authorized to be appropriated from the Federal Hospital Insurance Trust Fund for each of the fiscal years 1990, 1991, and 1992— “(1) $10,000,000 for grants to States under subsection (a)(1); and “(2) $15,000,000 for grants to hospitals, facilities, and consortia under subsection (a)(2).”. "
(B)Modification of rural health care transition grant program.—(i) Section 4005(e) of the Omnibus Budget [42 USC 1395ww note](/us/usc/t42/s1395ww).Reconciliation Act of 1987 is amended—
(I)in paragraph (1), by adding at the end the following new sentence: “Grants under this paragraph may be used to provide instruction and consultation (and such other services as the Administrator determines appropriate) via telecommunications to physicians in such rural areas (within the meaning of section 1886(d)(2)(D) of the Social Security Act) as are designated either class 1 or class 2 health manpower shortage areas under section 332(a)(1)(A) of the Public Health Service Act.”,
(II)in paragraph (3)(A), by striking “an application to the Governor” and inserting “an application to the Administrator and a copy of such application to the Governor”,
(III)in paragraph (3)(B), by striking “any application” and all that follows through “accompanied by” and inserting “to the Administrator, within a reasonable time after receiving a copy of an application pursuant to subparagraph (A),”,
(IV)in paragraph (6), by striking “2 years” and inserting “3 years”,
(V)in paragraph (7)(A), by striking “(D)” and inserting “(B)”,
(VI)in paragraph (7)(C), by striking the period at the end and inserting the following: “, except that this limitation shall not apply with respect to a grant used for the purposes described in subparagraph (D).”, 103 STAT. 2151
(VII)by adding at the end of paragraph
(7)the following new subparagraph: " “(D) A hospital may use a grant received under this subsection to develop a plan for converting itself to a rural primary care hospital (as described in section 1820 of the Social Security Act) or to develop a rural health network (as defined in section 1820(g) of such Act) in the State in which it is located if the State is receiving a grant under section 1820(a)(1).”, and"
(VIII)in paragraph (9), by striking “each of the fiscal years 1989 and 1990” and inserting “fiscal year 1989 and $25,000,000 for each of the fiscal years 1990, 1991, and 1992”.
(ii)The amendments made by clause
(i)shall apply with Effective date.[42 USC 1395ww note](/us/usc/t42/s1395ww).respect to applications for grants under the Rural Health Care Transition Grant Program described in section 4005(e) of the Omnibus Budget Reconciliation Act of 1987 submitted on or after October 1, 1989, except that the amendments made by subclauses
(V)and
(VII)of such clause shall take effect on the date of the enactment of this Act.
(2)Treatment of Essential Access Community Hospitals as Sole Community Hospitals.— Section 1886(d)(5)(D) of such Act (42 U.S.C. 1395ww(d)(5)(D)) (as redesignated and amended by subsection (e)(1)(A)) is further amended—
(A)in clause (iii)—
(i)in subclause (I), by striking “or”,
(ii)in subclause (II), by striking the period at the end and inserting “, or”, and
(iii)by adding at the end the following new subclause: " “(III) that is designated by the Secretary as an essential access community hospital under section 1820(i)(1).”, and "
(B)by adding at the end the following new clause: " “(v) If the Secretary determines that, in the case of a hospital designated by the Secretary as an essential access community hospital under section 1820(i)(1), the hospital has incurred increases in reasonable costs during a cost reporting period as a result of becoming a member of a rural health network (as defined in section 1820(g)) in the State in which it is located, and in incurring such increases, the hospital will increase its costs for subsequent cost reporting periods, the Secretary shall increase the hospital’s target amount under subsection (b)(3)(C) to account for such incurred increases.”."
(3)Coverage of, and payment for, inpatient rural primary care hospital services.—
(A)Definitions.— Section 1861 of such Act (42 U.S.C. 1395x) is amended by adding at the end the following new subsection: " “Rural Primary Care Hospital; Rural Primary Care Hospital Services “(mm)(1) The term ‘rural primary care hospital’ means a facility designated by the Secretary as a rural primary care hospital under section 1820(i)(2). “(2) The term ‘inpatient rural primary care hospital services’ means items and services, furnished to an inpatient of a rural primary care hospital by such a hospital, that would be inpatient 103 STAT. 2152hospital services if furnished to an inpatient of a hospital by a hospital.”. "
(B)Coverage and payment.—(i) Section 1812(a)(1) of such Act (42 U.S.C. 1395d(a)(1)), as restored by the Medicare Catastrophic Coverage Repeal Act of 1989, is amended by inserting “and inpatient rural primary care hospital services” before the semicolon.
(ii)Section 1814(a) of such Act (42 U.S.C. 1395f(a)) is amended—
(I)by striking “and” at the end of paragraph (6),
(II)by striking the period at the end of paragraph
(7)and inserting and”, and
(III)by inserting after paragraph
(7)the following new paragraph: " “(8) in the case of inpatient rural primary care hospital services, a physician certifies that such services were required to be immediately furnished on a temporary, inpatient basis.”. "
(iii)Section 1814 of such Act is further amended—
(I)in subsection (b), by inserting “, other than a rural primary care hospital providing inpatient rural primary care hospital services,” after “providing hospice care”, and
(II)by adding at the end the following new subsection: " “Payment for Inpatient Rural Primary Care Hospital Services “(l)(1) The amount of payment under this part for inpatient rural primary care hospital services— “(A) in the case of the first 12-month cost reporting period for which the facility operates as such a hospital, is the reasonable costs of the facility in providing inpatient rural primary care hospital services during such period, as such costs are determined on a per diem basis, and “(B) in the case of a later reporting period, is the per diem payment amount established under this paragraph for the preceding 12-month cost reporting period, increased by the applicable percentage increase under section 1886(b)(3)(B)(i) for that particular cost reporting period applicable to hospitals located in a rural area. The payment amounts otherwise determined under this paragraph shall be reduced, to the extent necessary, to avoid duplication of any payment made under section 1820(a)(2) (or under section 4005(e) of the Omnibus Budget Reconciliation Act of 1987) to cover the provision of inpatient rural primary care hospital services.
(2)The Secretary shall develop a prospective payment system for determining payment amounts for inpatient rural primary care hospital services under this part furnished on or after January 1, 1993.”. "
(C)Treatment of rural primary care hospitals as providers of services.—(i) Section 1861(u) of such Act (42 U.S.C. 1395x(u)) is amended by inserting “rural primary care hospital,” after “hospital,”.
(ii)Section 1863 of such Act (42 U.S.C. 1395z) is amended by striking “and (jj)(3)” and inserting “(jj)(3), and (mm)(1)”.
(iii)The first sentence of section 1864(a) of such Act (42 U.S.C. 1395aa(a)) is amended by inserting “, a rural primary 103 STAT. 2153care hospital, as defined in section 1861(mm)(1),” after “1861(aa)(2)”.
(iv)The third sentence of section 1865(a) of such Act (42 U.S.C. 1395bb(a)) is amended by striking “or 1861(dd)(2)” and inserting “1861(dd)(2), or 1861(mm)(1)”.
(D)Conforming amendments.—(i) Section 1128A(b)(1) of such Act (42 U.S.C. 1320a–7a(b)(1)) is amended by striking “hospital” each place it appears and inserting “hospital or a rural primary care hospital”.
(ii)Section 1128B(c) of such Act (42 U.S.C. 1320a–7b(c)) is amended by inserting “rural primary care hospital,” after “hospital,”.
(iii)Section 1134 of such Act (42 U.S.C. 1320b–4) is amended by striking “hospitals” each place it appears and inserting “hospitals or rural primary care hospitals”.
(iv)Section 1138(a)(1) of such Act (42 U.S.C. 1320b–8(a)(1)) is amended by striking “hospital” each place it appears in the matter preceding clause
(i)of subparagraph
(A)and inserting “hospital or rural primary care hospital”.
(v)Section 1164(e) of such Act (42 U.S.C. 1320c–13(e)) is amended by inserting “rural primary care hospitals,” after “hospitals,”.
(vi)Section 1816(c)(2)(C) of such Act (42 U.S.C. 1395h(c)(2)(O) is amended by inserting “rural primary care hospital,” after “hospital,”.
(vii)Section 1833 of such Act (42 U.S.C. 13951) is amended—
(I)in subsection (h)(5)(A)(iii), by striking “hospital,” each place it appears and inserting “hospital or rural primary care hospital,”;
(II)in subsection (i)(I)(A), by inserting “, rural primary care hospital,” after “1832(a)(2)(F)(i))”;
(III)in subsection (i)(3)(A), by inserting “or rural primary care hospital services” after “facility services”;
(IV)in subsection (l)(5)(A), by inserting “rural primary care hospital,” after “hospital,” each place it appears; and
(V)in subsection (1)(5)(0, by striking “hospital” each place it appears and inserting “hospital or rural primary care hospital”.
(viii)Section 1835(c) of such Act (42 U.S.C. 1395n(c)) is amended by adding at the end the following: “A rural primary care hospital shall be considered a hospital for purposes of this subsection.”.
(ix)Section 1842(b)(6)(A)(ii) of such Act (42 U.S.C. 1395u(b)(6)(A)(ii)) is amended by inserting “rural primary care hospital,” after “hospital,”.
(x)Section 1861 of such Act (42 U.S.C. 1395x) is amended—
(I)in subsection (e), by adding at the end the following: “The term ‘hospital’ does not include, unless the context otherwise requires, a rural primary care hospital (as defined in section 1861(mm)(1)).”,
(II)in subsection (w)(1), by inserting “rural primary care hospital,” after “hospital,”, and 103 STAT. 2154
(III)in subsection (w)(2), by striking “hospital” each place it appears and inserting “hospital or rural primary care hospital”.
(xi)Section 1862(a)(14) of such Act (42 U.S.C. 1395y(a)(14)) is amended by striking “hospital” each place it appears and inserting “hospital or rural primary care hospital”.
(xii)Section 1866(a)(1) of such Act (42 U.S.C. 1395cc(a)(1)) is amended—
(I)in subparagraph (F)(ii), by inserting “rural primary care hospitals,” after “hospitals,”;
(II)in subparagraph (H), by inserting after “this title” the first place it appears the following: “and in the case of rural primary care hospitals which provide rural primary care hospital services”;
(III)in subparagraph (I), by inserting “and in the case of a rural primary care hospital” after “hospital”; and
(IV)in subparagraph (N), by striking “hospitals” and “hospital,” and inserting “hospitals and rural primary care hospitals” and “hospital or rural primary care hospital,”, respectively.
(xiii)Section 1866(a)(3) of such Act (42 U.S.C. 1395cc(a)(3)) is amended—
(I)by striking “hospital,” each place it appears in subparagraphs
(A)and
(B)and inserting “hospital, rural primary care hospital,”, and
(II)in subparagraph (C)(ii)(II), by striking “facilities” each place it appears and inserting “facilities, rural primary care hospitals,”.
(xiv)Section 1867(e) of such Act (42 U.S.C. 1395dd(e)) is amended by adding at the end the following new paragraph: " “(6) The term ‘hospital’ includes a rural primary care hospital (as defined in section 1861(mm)(1)).”. "
(4)Avoiding duplicative payments to hospitals participating in rural health care transition grants.—Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended by adding at the end the following new subsection: " “(i) Avoiding Duplicative Payments to Hospitals Participating in Rural Demonstration Programs.—The Secretary shall reduce any payment amounts otherwise determined under this section to the extent necessary to avoid duplication of any payment made under section 4005(e) of the Omnibus Budget Reconciliation Act of 1987.”. "
(h)Geographic Classification of Hospitals.—
(1)Establishment of medicare geographical classification board.—Section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)) is amended by adding at the end the following new paragraph: " “(10)(A) There is hereby established the Medicare Geographical Classification Review Board (hereinafter in this paragraph referred to as the ‘Board’). “(B)(i) The Board shall be composed of 5 members appointed by the Secretary without regard to the provisions of title 5, United States Code, governing appointments in the competitive service. Two of such members shall be representatives of subsection
(d)hospitals located in a rural area under paragraph (2)(D). At least 1 member shall be a member of the Prospective Payment Assessment 103 STAT. 2155Commission, and at least 1 member shall be knowledgeable in the field of analyzing costs with respect to the provision of inpatient hospital services. “(ii) The Secretary shall make all appointments to the Board as provided in this paragraph within 180 days after the date of the enactment of this paragraph. “(C)(i) The Board shall consider the application of any subsection
(d)hospital requesting that the Secretary change the hospital’s geographic classification for purposes of determining for a fiscal year— “(I) the hospital’s average standardized amount under paragraph (2)(D), or “(II) the area wage index applicable to such hospital under paragraph (3)(E). “(ii) A hospital requesting a change in geographic classification under clause
(i)for a fiscal year shall submit its application to the Board not later than the first day of the preceding fiscal year. “(iii)(I) The Board shall render a decision on an application submitted under clause
(i)not later than 180 days after the deadline referred to in clause (ii). “(II) A decision of the Board shall be final unless the unsuccessful applicant appeals such decision to the Secretary by not later than 15 days after the Board renders its decision. The Secretary in considering the appeal of an applicant shall receive no new evidence but shall consider the record as a whole as such record appeared before the Board. The Secretary shall issue a decision on such an appeal not later than 90 days after the appeal is filed. The decision of the Secretary shall be final and shall not be subject to judicial review. “(D)(i) The Secretary shall publish guidelines to be utilized by the Board in rendering decisions on applications submitted under this paragraph, and shall include in such guidelines the following: “(I) Guidelines for comparing wages, taking into account occupational mix, in the area in which the hospital is classified and the area in which the hospital is applying to be classified. “(II) Guidelines for determining whether the county in which the hospital is located should be treated as being a part of a particular Metropolitan Statistical Area. “(III) Guidelines for considering information provided by an applicant with respect to the effects of the hospital’s geographic classification on access to inpatient hospital services by medicare beneficiaries. “(IV) Guidelines for considering the appropriateness of the criteria used to define New England County Metropolitan Areas. “(ii) The Secretary shall publish the guidelines described in clause
(i)by July 1, 1990. “(E)(i) 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 paragraph. 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 such provisions apply to the Secretary with respect to title II. “(ii) The Board is authorized to engage such technical assistance and to receive such information as may be required to carry out its functions, and the Secretary shall, in addition, make available to the 103 STAT. 2156Board such secretarial, clerical, and other assistance as the Board may require to carry out its functions. “(F)(i) Each member of the Board who is not an officer or employee of the Federal Government shall be compensated at a rate equal to the daily equivalent of the annual rate of basic pay prescribed for grade GS–18 of the General Schedule under section 5332 of title 5, United States Code, for each day (including travel time) during which such member is engaged in the performance of the duties of the Board. Each member of the Board who is an officer or employee of the United States shall serve without compensation in addition to that received for service as an officer or employee of the United States. “(ii) Members of the Board shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from their homes or regular places of business in the performance of services for the Board.”. "
(2)Effect of decisions of board on payments to hospitals.— Section 1886(d)(8) of such Act (42 U.S.C. 1395ww(d)(8)) is amended—
(A)in subparagraph (C)(i), by striking “subparagraph (B)” each place it appears and inserting “subparagraph
(B)or a decision of the Medicare Geographic Classification Review Board or the Secretary under paragraph (10),”, and
(B)in subparagraph (D), by striking “(B) and (C)” each place it appears and inserting “(B) and
(C)or a decision of the Medicare Geographic Classification Review Board or the Secretary under paragraph (10)”.
(3)Urban areas.[42 USC 1395ww](/us/usc/t42/s1395ww). Revision of rules for treatment of reclassified hospitals.— Section 1886(d)(8)(C) of such Act is amended to read as follows: " “(C)(i) If the application of subparagraph
(B)or a decision of the Medicare Geographic Classification Review Board or the Secretary under paragraph (10), by treating hospitals located in a rural county or counties as being located in an urban area— “(I) reduces the wage index for that urban area (as applied under this subsection) by 1 percentage point or less, the Secretary, in calculating such wage index under this subsection, shall exclude those hospitals so treated, or “(II) reduces the wage index for that urban area by more than 1 percentage point (as applied under this subsection), the Secretary shall calculate and apply such wage index under this subsection separately to hospitals located in such urban area (excluding all the hospitals so treated) and to the hospitals so treated (as if each affected rural county were a separate urban area). “(ii) If the application of subparagraph
(B)or a decision of the Medicare Geographic Classification Review Board or the Secretary under paragraph (10), by reclassifying a county from a rural to an urban area or by reclassifying an urban county from one urban area to another urban area— “(I) reduces the wage index for the urban area within which the county or counties is reclassified by 1 percentage point or less (as applied under this subsection), the Secretary, in calculating such wage index under this subsection, shall exclude those counties so reclassified, or 103 STAT. 2157 “(II) reduces the wage index for the urban area within which the county or counties is reclassified by more than 1 percentage point (as applied under this subsection), the Secretary shall calculate and apply such wage index under this subsection separately to hospitals located in such urban area (excluding all the hospitals so reclassified) and to hospitals located in the counties so reclassified (as if each affected county were a separate area). “(iii) If the application of subparagraph
(B)or a decision of the Medicare Geographic Classification Review Board or the Secretary under paragraph (10), by treating hospitals located in a rural county or counties as not being located in the rural area in a State, reduces the wage index for that rural area (as applied under this subsection), the Secretary shall calculate and apply such wage index under this subsection as if the hospitals so treated had not been excluded from calculation of the wage index for that rural area.”. "
(4)Floor for area wage indices.—Section 1886(d)(8)(C) of such Act (as amended by paragraph (3)) is further amended by adding at the end the following new clause: " “(iv) The application of subparagraph
(B)or a decision of the Medicare Geographic Classification Review Board or the Secretary under paragraph
(10)may not result in the reduction of any county’s wage index to a level below the wage index for rural areas in the State in which the county is located.”. "
(5)Additional payment resulting from corrections of erroneously determined wage index.— [42 USC 1395ww note](/us/usc/t42/s1395ww).
(A)In general.—If the Secretary of Health and Human Services (hereinafter referred to as the “Secretary”) discovers an error with respect to the determination, adjustment, or computation of the area wage index described in section 1886(d)(3)(E) of the Social Security Act and subsequently corrects such error, the Secretary shall make an additional payment under title XVIII of such Act to a hospital affected by such error for inpatient hospital discharges occurring during the period when the erroneously determined, adjusted, or computed wage index was in effect.
(B)Conditions for additional payment.—A hospital is eligible for an additional payment under subparagraph
(A)only if—
(i)the error resulted from the submission of erroneous data, except that a hospital is not eligible for such additional payment if it submitted such erroneous data;
(ii)the error was made with respect to the survey of the 1984 wages and wage-related costs of hospitals in the United States conducted under section 1886(d)(3)(E) of the Social Security Act; and
(iii)the correction of the error resulted in an adjustment to the area wage index of not less than 3 percentage points.
(C)Period of applicability.—A hospital may not receive an additional payment under subparagraph
(A)for discharges occurring after October 1, 1990.
(6)Updates to wage index survey.— Section 1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395ww(d)(3)(E)) is amended—
(A)by striking “October 1, 1990 (and at least every 36 months thereafter)” and inserting “October 1, 1990, and 103 STAT. 2158October 1, 1993 (and at least every 12 months thereafter)”, and
(B)by adding at the end the following new sentence: “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”.
(7)[42 USC 1395ww note](/us/usc/t42/s1395ww). Effective date.—The amendments made by paragraphs
(3)and
(4)shall apply to discharges occurring on or after April 1, 1990.
(i)Urban areas.[42 USC 1395ww note](/us/usc/t42/s1395ww). Legislative Proposal Eliminating Separate Average Standardized Amounts.—
(1)In general.— The Secretary of Health and Human Services (hereinafter referred to as the “Secretary”) shall design a legislative proposal eliminating the system of determining separate average standardized amounts for subsection
(d)hospitals (as defined in section 1886(d)(1)(B) of the Social Security Act) classified as being located in large urban, other urban, or rural areas under section 1886(d)(2)(D) of such Act, and shall include in such proposal the following:
(A)A transition period beginning in fiscal year 1992 during which a single rate for determining payment to hospitals in all areas shall be phased in with such single rate to be completely in effect by fiscal year 1995.
(B)Recommendations, where appropriate, for modifying or maintaining additional payments or adjustments made under title XVIII of the Social Security Act for teaching hospitals, rural referral centers, sole community hospitals, disproportionate share hospitals, and outlier cases, and for creating additional payments or adjustments where deemed appropriate by the Secretary.
(C)Recommendations with respect to recalculating standardized amounts to reflect information from more recent cost reporting periods.
(D)Recommendations, where appropriate, for modifying reimbursement for hospitals that are not subsection
(d)hospitals under title XVIII of such Act.
(E)A recommendation for a methodology to reflect the severity of illness of different patients within the same diagnosis-related group (as determined in section 1886(d)(4)(B) of such Act).
(2)Report to congress and propac.—(A) Not later than October 1, 1990, the Secretary shall submit the proposal described in paragraph
(1)and an accompanying analysis of the impact of the proposed elimination of separate average standardized amounts on various categories of hospitals to Congress and the Prospective Payment Assessment Commission.
(B)Not later than February 1, 1991, the Prospective Payment Assessment Commission and the Director of the Congressional Budget Office shall each prepare and submit to Congress a report analyzing the legislative proposal submitted under subparagraph (A), and shall include in such report an analysis of the probable impact of such legislation on hospitals participating in the medicare program. 103 STAT. 2159
(j)PROPAC Study of Payments to Rural Sole Community Hospitals and Small Rural Hospitals.—
(1)Study.— The Prospective Payment Assessment Commission (hereinafter referred to as the “Commission”) shall conduct a study of the feasibility and desirability of—
(A)using a cost-based reimbursement system to determine the amount of payments to be made under the medicare program to small rural hospitals and rural sole community hospitals for the operating costs of inpatient hospital services;
(B)developing and applying alternative definitions of market share for use in determining the eligibility of hospitals for classification as sole community hospitals under section 1886(d)(5) of the Social Security Act; and
(C)developing and applying a method for accounting for decreases in the number of inpatients served in determining payment to small rural hospitals under section 1886(d) of the Social Security Act for the operating costs of in-patient hospital services.
(2)Report.—By not later than May 1, 1990, the Commission shall submit a report to Congress on the study conducted under paragraph (1). SEC. 6004. PPS-EXEMPT HOSPITALS.
(a)Exemption of Cancer Hospitals From Prospective Payment System.—
(1)In general.— Section 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)) is amended—
(A)in clause (iii), by striking “or”;
(B)in clause (iv), by striking the semicolon at the end and inserting “, or”; and
(C)by inserting after clause
(iv)the following new clause: " “(v) 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;”. "
(2)Conforming amendment.—Section 1886(d)(5)(1) of such Act (as redesignated by section 6003(e)(1)(A)) is amended by striking “(including” and all that follows through “cancer)”.
(3)Effective date.— The amendments made by this subsection [42 USC 1395ww note](/us/usc/t42/s1395ww).shall apply with respect to cost reporting periods beginning on or after October 1, 1989, except that—
(A)in the case of a hospital classified by the Secretary of Health and Human Services as a hospital involved extensively in treatment for or research on cancer under section 1886(d)(5)(I) of the Social Security Act (as redesignated by section 6003(e)(1)(A)) after the date of the enactment of this Act, such amendments shall apply with respect to cost reporting periods beginning on or after the date of such classification,
(B)in the case of a hospital that is not described in subparagraph (A), such amendments shall apply with respect to portions of cost reporting periods or discharges 103 STAT. 2160occurring during and after fiscal year 1987 for purposes of section 1886(g) of the Social Security Act, and
(C)such amendments shall take effect 30 days after the date of the enactment of this Act for purposes of determining the eligibility of a hospital to receive periodic interim payments under section 1815(e)(2) of the Social Security Act.
(b)Rebasing for Cancer Hospitals.—
(1)In general.— Section 1886(b)(3) of such Act (42 U.S.C. 1395ww(b)(3)), as amended by subsections (e)(1)(B) and (f)(2) of section 6003, is further amended—
(A)in subparagraph (A), by striking “(C) and (D)” and inserting “(C), (D), and (E)”,
(B)in subparagraph (B)(ii), by striking “For purposes of subparagraph (A)” and inserting “For purposes of subparagraphs
(A)and (E)”, and
(C)by adding at the end the following new subparagraph: " “(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.”. "
(2)[42 USC 1395ww note](/us/usc/t42/s1395ww). Effective date.—The amendments made by paragraph
(1)shall apply with respect to cost reporting periods beginning on or after April 1, 1989. SEC. 6005. PAYMENTS FOR HOSPICE CARE.
(a)Increase in Current Rates.—Section 1814(i)(1) of the Social Security Act (42 U.S.C. 1395f(i)(1)) is amended—
(1)in subparagraph (A), by inserting “and except as otherwise provided in this paragraph” after “1813(a)(4)”, and
(2)by striking subparagraph
(C)and inserting the following: " “(C)(i) With respect to routine home care and other services included in hospice care furnished during fiscal year 1990, the payment rates for such care and services shall be 120 percent of such rates in effect as of September 30, 1989. 103 STAT. 2161 “(ii) With respect to routine home care and other services included in hospice care furnished during a subsequent fiscal year, 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 the market basket percentage increase (as defined in section 1886(b)(3)(B)(iii)) otherwise applicable to discharges occurring in the fiscal year.”."
(b)Requirement of Certification of Terminal Illness for Hospice Care Modified.—Section 1814(a)(7)(A)(i) of the Social Security Act (42 U.S.C. 1395f(a)(7)(A)(i)) is amended by striking “certify,” and all that follows through “initiated,” and inserting the following: “certify in writing, not later than 2 days after hospice care is initiated (or, if each certify verbally not later than 2 days after hospice care is initiated, not later than 8 days after such care is initiated),”.
(c)Effective Date.—The amendments made by subsection
(a)[42 USC 1395f note](/us/usc/t42/s1395f).shall become effective with respect to care and services furnished on or after January 1, 1990. **Subpart B—****Technical and Miscellaneous Provisions** SEC. 6011. PASS THROUGH PAYMENT FOR HEMOPHILIA INPATIENTS.
(a)Pass Through Payment for Hemophilia Inpatients.—The second sentence of section 1886(a)(4) of the Social Security Act (42 U.S.C. 1395ww(d)(4)) is amended—
(1)by striking “or,”; and
(2)by striking “October 1, 1987)” and inserting “October 1, 1987), or costs with respect to administering blood clotting factors to individuals with hemophilia”.
(b)Determining Payment Amount.—The Secretary of Health [42 USC 1395ww note](/us/usc/t42/s1395ww).and Human Services shall determine the amount of payment made to hospitals under part A of title XVIII of the Social Security Act for the costs of administering blood clotting factors to individuals with hemophilia by multiplying a predetermined price per unit of blood clotting factor (determined in consultation with the Prospective Payment Assessment Commission) by the number of units provided to the individual.
(c)Recommendations on Payments.—The Prospective Payment [42 USC 1395ww note](/us/usc/t42/s1395ww).Assessment Commission and the Health Care Financing Administration shall develop recommendations with respect to payments to hospitals under part A of title XVIII of the Social Security Act for the costs of administering blood clotting factors to individuals with hemophilia, and shall submit such recommendations to Congress not later than 18 months after the date of enactment of this Act.
(d)Effective Date.—The amendments made by subsection
(a)[42 USC 1395ww note](/us/usc/t42/s1395ww).shall apply with respect to items furnished 6 months after the date of enactment of this Act and shall expire 2 years after the date of enactment of this Act. SEC. 6012. MEDICARE BUY-IN FOR CONTINUED BENEFITS FOR DISABLED INDIVIDUALS.
(a)In General.—Title XVIII of the Social Security Act is amended—
(1)in the heading of section 1818, by inserting “elderly” after [42 USC 1395i–2](/us/usc/t42/s1395i/2).“uninsured”; and
(2)by inserting after section 1818 the following new section: 103 STAT. 2162 " “hospital insurance benefits for disabled individuals who have exhausted other entitlement “Sec. 1818A. [42 USC 1395i–2a](/us/usc/t42/s1395i/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). 103 STAT. 2163 “(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)and
(i)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 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). “(C) For purposes of applying section 1839(g) of this title and section 59B(f)(1)(B)(i) of the Internal Revenue Code of 1986, any reference to section 1818 shall be deemed to include a reference to this section. “(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.”. "
(b)Effective Date.—The amendments made by this section shall [42 USC 1395i–2a note](/us/usc/t42/s1395i/2a).take effect on the date of the enactment of this Act, but shall not apply so as to provide for coverage under part A of title XVIII of the Social Security Act for any month before July 1990. SEC. 6013. BUY-IN UNDER PART A FOR QUALIFIED MEDICARE BENEFICIARIES.
(a)In General.—Section 1818 of the Social Security Act (42 U.S.C. 1395i–2) is amended by adding at the end the following: " “(g)(1) The Secretary shall, at the request of a State made after Contracts.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 103 STAT. 2164same 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)(with reference to subsection
(b)of section 1839)’ for ‘subsection (b).’.”. "
(b)Conforming Amendment.—Section 1843 of such Act (42 U.S.C. 1395v) is amended by adding at the end the following: " “(i) For provisions relating to enrollment of qualified medicare beneficiaries under part A, see section 1818(g).”. "
(c)[42 USC 1395i–2 note](/us/usc/t42/s1395i/2). Effective Date.—The amendments made by this section shall become effective January 1, 1990. SEC. 6014. PROPAC STUDY ON MEDICARE-DEPENDENT HOSPITALS.
(a)Study.—The Prospective Payment Assessment Commission shall conduct a study *of* the appropriateness of making an adjustment to the methodology for determining the amount of payment to hospitals for which individuals entitled to benefits under part A of title XVIII of the Social Security Act represent a high proportion of discharges.
(b)Report.—Not later than June 1, 1990, the Commission shall include a report on the study conducted under subsection
(a)in its annual report submitted to Congress. SEC. 6015. PROVISIONS RELATING TO TARGET AMOUNT ADJUSTMENTS.
(a)Including New Base Period in Target Adjustments.—Section 1886(b)(4)(A) of the Social Security Act (42 U.S.C. 1395ww(b)(4)(A)) is amended by striking “deems appropriate,” and inserting “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”.
(b)[42 USC 1395ww note](/us/usc/t42/s1395ww). Publication of Instructions Relating to Exceptions and Adjustments in Target Amounts.—By not later than 180 days after the date of enactment of this Act, the Secretary of Health and Human Services shall publish instructions specifying the application process to be used in providing exceptions and adjustments under section 1886(b)(4)(A) of the Social Security Act.
(c)[42 USC 1395ww note](/us/usc/t42/s1395ww). Effective Date.—The amendment made by subsection
(a)shall become effective with respect to cost reporting periods beginning on or after April 1, 1990. SEC. 6016. [42 USC 1395f note](/us/usc/t42/s1395f). STUDY OF METHODS TO COMPENSATE HOSPICES FOR HIGH-COST CARE.
(a)Study.—The Secretary of Health and Human Services shall—
(1)conduct a study of high-cost hospice care provided to medicare beneficiaries under the medicare program, and evaluate the ability of hospice programs participating in the medicare program to provide such high-cost care to such patients; and
(2)based on such study, develop methods to compensate such programs for providing such high-cost care.
(b)Report to Congress.—Not later than April 1, 1991, the Secretary shall submit a report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate on the study conducted under subsection
(a)and shall include in the report any recommendations developed by the Sec-103 STAT. 2165retary to compensate hospice programs for providing high-cost hospice care to medicare beneficiaries. SEC. 6017. PROHIBITION ON NURSING HOME BALANCE BILLING. Section 1866(a)(2)(B) of the Social Security Act (42 U.S.C. 1395cc(a)(2)(B)) is amended—
(1)in clause (i), by striking “(i)”; and
(2)by striking clause (ii). SEC. 6018. HOSPITAL ANTI-DUMPING PROVISIONS.
(a)Hospital Obligations With Respect to Treatment of Emergency Medical Conditions and Indigent Care.—Section 1866(a)(1) of the Social Security Act (42 U.S.C. 1395cc(a)(1)) is amended—
(1)by amending subparagraph
(I)to read as follows: " “(I) in the case of a hospital or rural primary care hospital— “(i) to adopt and enforce a policy to ensure compliance with the requirements of section 1867, “(ii) to maintain medical and other records related to individuals transferred to or from the 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;”; and"
(2)in subparagraph (N)—
(A)by striking “and” at the end of clause (i),
(B)by striking “and” at the end of clause (ii), and
(C)by adding at the end the following new clauses: " “(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 participates in the medicaid program under a State plan approved under title XIX, and”. "
(b)Effective Date.—The amendments made by subsection
(a)[42 USC 1395cc note](/us/usc/t42/s1395cc).shall take effect on the first day of the first month that begins more than 180 days after the date of the enactment of this Act, without regard to whether regulations to carry out such amendments have been promulgated by such date. SEC. 6019. RELEASE AND USE OF HOSPITAL ACCREDITATION SURVEYS.
(a)Requiring All Institutions and JCAHO to Release Surveys to Secretary.—Section 1865(a)(2) of the Social Security Act (42 U.S.C. 1395bb(a)(2)) is amended—
(1)by striking “(2) such institution” and inserting “(2)(A) such institution”;
(2)by striking “(if it is included within a survey described in section 1864(c))”;
(3)by striking the comma at the end and inserting the following: “, together with any other information directly related to the survey as the Secretary may require (including corrective action plans),”; and
(4)by adding at the end the following new subparagraph: 103 STAT. 2166 " “(B) such Commission releases such a copy and any such information to the Secretary,”. "
(b)[42 USC 1395bb](/us/usc/t42/s1395bb). Authorizing Secretary to Release Certain Information.—Section 1865(a) of such Act is further amended by striking the period at the end of the last sentence and inserting the following: ”, 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)Permitting Secretary to Withdraw Hospital’s Status Based Upon Information Other Than Surveys.—Section 1865(b) of such Act is amended by striking “following a survey made pursuant to section 1864(c)”.
(d)[42 USC 1395bb note](/us/usc/t42/s1395bb). Effective date.—(1) Except as provided in paragraph (2), the amendments made by this section shall take effect on the date of the enactment of this Act.
(2)The amendments made by subsection
(a)shall take effect 6 months after the date of the enactment of this Act. SEC. 6020. INTERMEDIATE SANCTIONS FOR PSYCHIATRIC HOSPITALS. Contracts. Section 1866 of the Social Security Act (42 U.S.C. 1395cc) is amended by adding at the end the following new subsection: " “(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.”. " SEC. 6021. ELIGIBILITY OF MERGED OR CONSOLIDATED HOSPITALS FOR PERIODIC INTERIM PAYMENTS.
(a)In General.—Section 1815(e) of the Social Security Act (42 U.S.C. 1395g(e)) is amended by adding at the end the following new paragraph: " “(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 103 STAT. 2167 “(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.”. "
(b)Effective Date.—The amendment made by subsection
(a)[42 USC 1395g note](/us/usc/t42/s1395g).shall apply to payments made for discharges occurring on or after the expiration of the 30-day period that begins on the date of the enactment of this Act, regardless of the date of the merger or consolidation involved. SEC. 6022. EXTENSION OF WAIVER FOR FINGER LAKES AREA HOSPITAL CORPORATION. Section 1886(c)(4) of the Social Security Act (42 U.S.C. 1395ww(c)(4)) is amended in the second sentence by striking “the aggregate payment or payments” and all that follows and inserting “the aggregate rate of increase from October 1, 1984, to the most recent date for which annual data are available.”. SEC. 6023. CLARIFICATION OF CONTINUATION OF AUGUST 1987 HOSPITAL BAD DEBT RECOGNITION POLICY.
(a)In General.—Section 4008(c) of the Omnibus Budget Reconciliation Act of 1987 is amended by adding at the end the following: [42 USC 1395f note](/us/usc/t42/s1395f).“The Secretary may not require a hospital to change its bad debt collection policy if a fiscal intermediary, in accordance with the rules in effect as of August 1, 1987, with respect to criteria for indigency determination procedures, record keeping, and determining whether to refer a claim to an external collection agency, has accepted such policy before that date, and the Secretary may not collect from the hospital on the basis of an expectation of a change in the hospital’s collection policy.”.
(b)Effective Date.—The amendment made by subsection
(a)[42 USC 1395f note](/us/usc/t42/s1395f).shall take effect as if included in the enactment of the Omnibus Budget Reconciliation Act of 1987. SEC. 6024. USE OF MORE RECENT DATA REGARDING ROUTINE SERVICE COSTS OF SKILLED NURSING FACILITIES. [42 USC 1395yy note](/us/usc/t42/s1395yy). The Secretary of Health and Human Services shall determine mean per diem routine service costs for freestanding and hospital based skilled nursing facilities under section 1888(a) of the Social Security Act for cost reporting periods beginning on or after October 1, 1989, in accordance with regulations published by the Secretary that require the use of cost reports submitted by skilled nursing facilities for cost reporting periods beginning not earlier than October 1, 1985. SEC. 6025. PERMITTING DENTIST TO SERVE AS HOSPITAL MEDICAL DIRECTOR. [42 USC 1395x note](/us/usc/t42/s1395x). Notwithstanding the requirement that the responsibility for organization and conduct of the medical staff of an institution be assigned only to a doctor of medicine or osteopathy in order for the institution to participate as a hospital under the medicare program, an institution that has a doctor of dental surgery or of dental medicine serving as its medical director shall be considered to meet such requirement if the laws of the State in which the institution is located permit a doctor of dental surgery or of dental medicine to serve as the medical staff director of a hospital. 103 STAT. 2168 SEC. 6026. GAO STUDY OF HOSPITAL-BASED AND FREESTANDING SKILLED NURSING FACILITIES.
(a)Study.—The Comptroller General shall conduct a study to assess the differences in costs and case-mix between hospital-based and freestanding skilled nursing facilities participating in the medicare program.
(b)Report.—By not later than June 1, 1990, the Comptroller General shall submit a report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate on the study conducted under paragraph
(1)and shall include in the report any recommendations, including recommendations regarding the payment differential between hospital-based and freestanding skilled nursing facilities, the Comptroller General considers appropriate. SEC. 6027. MASSACHUSETTS MEDICARE REPAYMENT. The Secretary of Health and Human Services may not, on or after the date of the enactment of this Act and before May 1, 1990, recoup from, or otherwise reduce payments to, hospitals in the State of Massachusetts because of alleged overpayments to such hospitals under part A of title XVIII of the Social Security Act which occurred during the period of the statewide hospital reimbursement demonstration project conducted in that State between October 1, 1982, and June 30, 1986, under section 402 of the Social Security Amendments of 1967 and section 222 of the Social Security Amendments of 1972. Interest shall not accrue on any such alleged overpayments during the period beginning on the date of the enactment of this Act and ending on May 1, 1990. SEC. 6028. ALLOWING CERTIFICATIONS AND RECERTIFICATIONS BY NURSE PRACTITIONERS AND CLINICAL NURSE SPECIALISTS FOR CERTAIN SERVICES. Section 1814(a) of the Social Security Act (42 U.S.C. 1395f(a)) is amended—
(1)in paragraph
(2)by striking “(2) a physician” and inserting “(2) a physician, or, in the case of services described in subparagraph (B), a physician, or a nurse practitioner or clinical nurse specialist who does not have a direct or indirect employment relationship with the facility but is working in collaboration with a physician,”; and
(2)in the matter following the final paragraph by striking “a physician makes” and inserting “a physician, nurse practitioner, or clinical nurse specialist (as the case may be) makes”. **PART 2—****PROVISIONS RELATING TO PART B** **Subpart A—****General Provisions** SEC. 6101. [2 USC 902 note](/us/usc/t2/s902). EXTENSION OF REDUCTIONS UNDER SEQUESTER ORDER. Notwithstanding any other provision of law (including any other provision of this Act, other than section 6201), the reductions in the amount of payments required under title XVIII of the Social Security Act made by the final sequester order issued by the President on October 16, 1989, pursuant to section 252(b) of the Balanced Budget and Emergency Deficit Control Act of 1985 shall continue to be effective (as provided by sections 252(a)(4)(B) and 256(d)(2) of such 103 STAT. 2169Act) through March 31, 1990, with respect to payments for items and services under part B of such title. SEC. 6102. PHYSICIAN PAYMENT REFORM.
(a)In General.—Part B of title XVIII of the Social Security Act is amended by adding at the end the following new section: " “payment for physicians’ services “Sec. 1848.
(a)Payment Based on Fee Schedule.— [42 USC 1395w–4](/us/usc/t42/s1395w/4). “(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) or 1834(f), 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 deter mined 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— 103 STAT. 2170 “(I) 67 percent of the fee schedule amount determined under clause (i), adjusted by the update established under subsection (d)(3) for 1994, 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 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). “(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)), 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). “(3) Incentives for participating physicians.—In applying paragraph (1)(B) in the case of a nonparticipating physician, the fee schedule amount shall be 95 percent of such amount otherwise applied under this subsection (without regard to this paragraph). “(b) Regulations. Establishment of Fee Schedules.— “(1) In general.— Before January 1 of each year beginning with 1992, 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. 103 STAT. 2171 “(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). “(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 preoperative 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. In this subparagraph, the term ‘practice expenses’ includes all expenses for furnishing physicians’ services, excluding malpractice expenses, physician compensation, and other physician fringe benefits. “(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.— 103 STAT. 2172 “(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. “(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), 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.—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 Physician Payment Review Commission and organizations representing physicians. “(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 based on the relative resources incorporating physician time and intensity required in furnishing the service. “(ii) Practice expense relative value units.—The Secretary shall determine a number of practice expense relative value units 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)). 103 STAT. 2173 “(iii) Malpractice relative value units.—The Secretary shall determine a number of malpractice relative value units equal to the product of— “(I) the base allowed charges (as defined in subparagraph (D)) for the service, and “(II) the malpractice percentage for the service (as determined under paragraph (3)(C)(iii)). “(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. “(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.—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) by the proportion (determined under subparagraph (A)) of such service (or services) performed by physicians in that specialty. “(iii) Malpractice percentage.—The malpractice percentage for a service (or class of services) is equal to the sum (for all physician specialties) of— 103 STAT. 2174 “(I) the average percentage division for the malpractice component for each physician specialty (determined under subparagraph (B)), multiplied by “(II) by 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. “(3) 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 subsection. “(4) 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 only for services furnished on or after January 1, 1993. The Secretary, in establishing such coding system, shall consult with the Physician Payment Review Commission and other organizations representing physicians. “(5) 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. “(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 subparagraph (C)) for the year involved. “(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) Federal Register, publication. Publication.—The Secretary shall cause to have published in the Federal Register, during the last 15 days of October of— “(i) 1991, the conversion factor (or factors) which will apply to physicians’ services for 1992, and the update (or updates) determined under paragraph
(3)for 1992; and “(ii) each succeeding year, the update (or updates) determined under paragraph
(3)for the following year. “(2) Recommendation of update.— “(A) Reports. In general.—Not later than April 15 of each year (beginning with 1991), the Secretary shall transmit to the Congress a report that includes a recommendation on the 103 STAT. 2175appropriate update (or updates) in the conversion factor (or factors) for all physicians’ services in the following year. The Secretary may recommend a uniform update or different updates for different categories or groups of services. In making the recommendation, the Secretary shall consider— “(i) the percentage change in the medicare economic index (described in the fourth sentence of section 1842(b)(3)) for that year; “(ii) the percentage by which actual expenditures for all physicians’ services (as defined in subsection (f)(5)(A)) under this part for the fiscal year ending in the year preceding the year in which such recommendation is made were greater or less than actual expenditures for all such physicians’ services in the fiscal year ending in the second preceding year; “(iii) the relationship between the percentage determined under clause
(ii)for a fiscal year and the performance standard rate of increase (established under subsection (f)(2)) for that fiscal year; “(iv) changes in volume or intensity of services; “(v) access to services; and “(vi) other factors that may contribute to changes in volume or intensity of services or access to services. For purposes of making the comparison under clause (iii), the Secretary shall adjust the performance standard rate of increase for a fiscal year to reflect changes in the actual proportion of HMO enrollees (as defined in subsection (f)(5)(B)) in that fiscal year compared with such proportion for the previous fiscal year. “(B) Additional considerations.—In making recommendations under subparagraph (A), the Secretary may also consider— “(i) unexpected changes by physicians in response to the implementation of the fee schedule; “(ii) unexpected changes in outlay projections; “(iii) changes in the quality or appropriateness of care; and “(iv) any other relevant factors not measured in the resource-based payment methodology. “(C) Special rule for 1992 update.—In considering the update for 1992, the Secretary shall make a separate determination of the percentage and relationship described in clauses
(ii)and
(iii)of subparagraph
(A)with respect to the category of surgical services (as defined by the Secretary pursuant to subsection (j)(1)). “(D) Explanation of update.—The Secretary shall include in each report under subparagraph (A)— “(i) the update recommended for each category of physicians’ services (established by the Secretary under subsection (j)(I)) and for each of the following groups of physicians’ services: nonsurgical services, visits, consultations, and emergency room services; “(ii) the rationale for the recommended update (or updates) for each category and group of services described in clause (i); and 103 STAT. 2176 “(iii) the data and analyses underlying the update (or updates) recommended. “(E) Computation of budget-neutral adjustment.— “(i) In general.—The Secretary shall include in the report made under subparagraph
(A)in a year a statement of the percentage by which
(I)the actual expenditures for physicians’ services under this part (during the fiscal year ending in the preceding year, as set forth in most recent annual report made pursuant to section 1841(b)(2)), exceeded, or was less than
(II)the expenditures projected for the fiscal year under clause (ii). “(ii) Projected expenditures.—For purposes of clause (i), the expenditures projected under this clause for a fiscal year is the actual expenditures for physicians’ services made under this part in the second preceding fiscal year— “(I) increased by the weighted average percentage increase permitted under this part for physicians’ services in the preceding fiscal year; “(II) adjusted to reflect the percentage change in the average number of individuals enrolled under this part (who are not enrolled with a risk-sharing contract under section 1876) for the preceding fiscal year compared with the second preceding fiscal year; “(III) adjusted to reflect the average annual percentage growth in the volume and intensity of physicians’ services under this part for the five-fiscal-year period ending with the second preceding fiscal year; and “(IV) adjusted to reflect the percentage change in expenditures for physicians’ services under this part in the preceding fiscal year (compared with the second preceding fiscal year) which result from changes in law or regulations. “(F) Reports.Commission review.—The Physician Payment Review Commission shall review the report submitted under subparagraph
(A)in a year and shall submit to the Congress, by not later than May 15 of the year, a report including its recommendations respecting the update (or updates) in the conversion factor (or factors) for the following year. “(3) Update.— “(A) Based on index.— “(i) In general.—Unless Congress otherwise provides, subject to subparagraph (B), for purposes of this section the update for a year is equal to the Secretary’s estimate of the percentage increase in the appropriate update index (as defined in clause (ii)) for the year. “(ii) Appropriate update index defined.—In clause (i), the term ‘appropriate update index’ means— “(I) for services for which prevailing charges in 1989 were subject to a limit under the fourth sentence of section 1842(b)(3), the medicare economic index (referred to in that sentence), and 103 STAT. 2177 “(II) for other services, such index (such as the consumer price index) that was applicable under this part in 1989 to increases in the payment amounts recognized under this part with respect to such services. “(B) Adjustment in update.— “(i) In general.—The update for a year provided under subparagraph
(A)shall, subject to clause (ii), be increased or decreased by the same percentage by which
(I)the percentage increase in the actual expenditures for physicians’ services (as defined in section (f)(5)(A)) in the second previous fiscal year over the third previous fiscal year, was less or greater, respectively, than
(II)the performance standard rate of increase (established under subsection (f)) for such category of services for the second previous fiscal year. “(ii) Restrictions on adjustment.—The adjustment made under clause
(i)for a year may not result in a decrease of— “(I) more than 2 percentage points for the update for 1992 or 1993, “(II) 2½ percentage points for the update for 1994 or 1995, and “(III) 3 percentage points for the update for any succeeding year. “(e) Geographic Adjustment Factors.— “(1) Establishment of geographic indices.— “(A) In general.—Subject to subparagraph (B), 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. “(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 para-103 STAT. 2178graph (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). “(f) Medicare Volume Performance Standard Rates of Increase.— “(1) Process for establishing medicare volume performance standard rates of increase.— “(A) Secretary’s recommendation.—By not later than April 15 of each year (beginning with 1990), the Secretary shall transmit to the Congress a recommendation on performance standard rates of increase for all physicians’ services and for each category of such services for the fiscal year beginning in such year. In making the recommendation, the Secretary shall confer with organizations representing physicians and shall consider— “(i) inflation, “(ii) changes in numbers of enrollees (other than HMO enrollees) under this part, “(iii) changes in the age composition of enrollees (other than HMO enrollees) under this part, “(iv) changes in technology, “(v) evidence of inappropriate utilization of services, “(vi) evidence of lack of access to necessary physicians’ services, and “(vii) such other factors as the Secretary considers appropriate. “(B) Commission review.—The Physician Payment Review Commission shall review the recommendation transmitted during a year under subparagraph
(A)and shall make its recommendation to Congress, by not later 103 STAT. 2179than May 15 of the year, respecting the performance standard rates of increase for the fiscal year beginning in that year. “(C) Publication of performance standard rates of increase.—Federal Register, publication.The Secretary shall cause to have published in the Federal Register, in the last 15 days of October of each year (beginning with 1990), the performance standard rates of increase for all physicians’ services and for each category of physicians’ services for the fiscal year beginning in that year. The Secretary shall cause to nave published in the Federal Register, by not later than January 1, 1990, the performance standard rate of increase under subparagraph
(D)for fiscal year 1990. “(D) Performance standard rate of increase for fiscal year 1990.—The performance standard rate of increase for fiscal year 1990 is equal to the sum of— “(i) the Secretary’s estimate of the weighted average percentage increase in the reasonable charges for physicians’ services (as defined in subsection (f)(5)(A)) under this part for calendar years included in fiscal year 1990, “(ii) the Secretary’s estimate of the percentage increase or decrease in the average number of individuals enrolled under this part (other than HMO enrollees) from fiscal year 1989 to fiscal year 1990, “(iii) the Secretary’s estimate of the average annual percentage growth in volume and intensity of physicians’ services under this part for the 5-fiscal-year period ending with fiscal year 1989 (based upon information contained in the most recent annual report made pursuant to section 1841(b)(2)), and “(iv) the Secretary’s estimate of the percentage increase or decrease in expenditures for physicians’ services (as defined in subsection (f)(5)(A)) in fiscal year 1990 (compared with fiscal year 1989) which will result from changes in law or regulations and which is not taken into account in the percentage increase described in clause (i), reduced by ½ percent. “(2) Specification of performance standard rates of increase for subsequent fiscal years.— “(A) In general.—Unless Congress otherwise provides, subject to paragraph (4), each performance standard rate of increase for a fiscal year (beginning with fiscal year 1991) shall be equal to the sum of— “(i) the Secretary’s estimate of the weighted average percentage increase in the fees for physicians’ services (as defined in subsection (f)(5)(A)) under this part for calendar years included in the fiscal year involved, “(ii) the Secretary’s estimate of the percentage increase or decrease in the average number of individuals enrolled under this part (other than HMO enrollees) from the previous fiscal year to the fiscal year involved, “(iii) the Secretary’s estimate of the average annual percentage growth in volume and intensity of physicians’ services under this part for the 5-fiscal-year 103 STAT. 2180period ending with the preceding fiscal year (based upon information contained in the most recent annual report made pursuant to section 1841(b)(2)), and “(iv) the Secretary’s estimate of the percentage increase or decrease in expenditures for physicians’ services (as defined in subsection (f)(5)(A)) in the fiscal year (compared with the preceding fiscal year) which will result from changes in law or regulations and which is not taken into account in the percentage increase described in clause (i), reduced by the performance standard factor (specified in subparagraph (B)). In clause (i), the term ‘fees’ means, with respect to 1991, reasonable charges and, with respect to any succeeding year, fee schedule amounts. “(B) Performance standard factor.—For purposes of subparagraph (A), the performance standard factor— “(i) for 1991 is 1 percentage point, “(ii) for 1992 is 1 ½ percentage points, and “(iii) for each succeeding year is 2 percentage points. “(3) Quarterly reporting.—The Secretary shall establish procedures for providing, on a quarterly basis to the Physician Payment Review Commission, the Congressional Budget Office, the Congressional Research Service, the Committees on Ways and Means and Energy and Commerce of the House of Representatives, and the Committee on Finance of the Senate, information on compliance with performance standard rates of increase established under this subsection. “(4) Separate group-specific performance standard rates of increase.— “(A) Implementation of plan.—Subject to paragraph (B), the Secretary shall, after completion of the study required under section 6102(e)(3) of the Omnibus Budget Reconciliation Act of 1989, but not before October 1, 1991, implement a plan under which qualified physician groups could elect annually separate performance standard rates of increase other than the performance standard rate of increase established for the year under paragraph
(2)for such physicians. The Secretary shall develop criteria to determine which physician groups are eligible to elect to have applied to such groups separate performance standard rates of increase and the methods by which such group-specific performance standard rates of increase would be Reports.accomplished. The Secretary shall report to the Congress on the criteria and methods by April 15, 1991. The Physician Payment Review Commission shall review and comment on Federal Register, publication.such recommendations by May 15, 1991. Before implementing group-specific performance standard rates of increase, the Secretary shall provide for notice and comment in the Federal Register and consult with organizations representing physicians. “(B) Approval.—The Secretary may not implement the plan described in subparagraph (A), unless Congress specifically approves the plan. “(5) 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 103 STAT. 2181services), specified by the Secretary, that are commonly performed or furnished by a physician or in a physician’s office, but does not include services furnished to an HMO enrollee under a risk-sharing contract under section 1876. “(B) HMO enrollee.—The term ‘HMO enrollee’ means, with respect to a fiscal year, an individual enrolled under this part who is enrolled with an entity under a risk-sharing contract under section 1876 in the fiscal year. “(g) Limitation on Beneficiary Liability.— “(1) Limitation on actual charges for unassigned claims.—If a nonparticipating physician knowingly and willfully bills on a repeated basis for physicians’ services (furnished with respect to an individual enrolled under this part on or after January 1, 1991) an actual charge in excess of the limiting charge described in paragraph
(2)and for which payment is not made on an assignment-related basis under this part, the Secretary may apply sanctions against such physician in accordance with section 1842(j)(2). “(2) Limiting charge defined.— “(A) For 1991.—For physicians’ services of a physician furnished during 1991, 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. “(B) For 1992.—For physicians’ services furnished during 1992, 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. “(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), 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.— 103 STAT. 2182 “(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. “(B) Penalty.—A person may not bill for physicians’ services subject to subparagraph
(A)other than on an assignment-related basis. If a person knowingly and willfully bills for physicians’ services in violation of the previous 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) Claims.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 m 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 partici-103 STAT. 2183pating 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 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 Physician Payment Review 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 Physician Payment Review 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 furnishing physicians’ services under this part, for serv-103 STAT. 2184ices commonly performed by the physician, 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 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 historical payment basis (as defined in subsection (a)(2)(C)(i)), “(B) the determination of relative values and relative value units under subsection (c), “(C) the determination of conversion factors under subsection (d), “(D) the establishment of geographic adjustment factors under subsection (e), and “(E) the establishment of the system for the coding of physicians’ services under this section. “(j) Definitions.—In this section: “(1) Category.—The term ‘category’ means, with respect to physicians’ services, surgical services, and all physicians’ services other than surgical services, and such other category or categories of physicians’ services as the Secretary, from time to Federal Register, publication.time, defines in regulation. The Secretary shall define surgical services and publish such definition in the Federal Register no later than May 1, 1990, after consultation with organizations representing physicians. “(2) Fee schedule area.—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), (3), and
(4)of section 1861(s) (other than clinical diagnostic laboratory tests and such other items and services as the Secretary may specify). “(4) Practice expenses.—The term ‘practice expenses’ includes all expenses for furnishing physicians’ services, excluding malpractice expenses, physician compensation, and other physician fringe benefits.”. "
(b)Requirements for Carriers to Profile Physicians.—Section 1842(b)(3) of such Act (42 U.S.C. 1395u(b)(3)) is amended—
(1)by striking “and” at the end of subparagraph (J),
(2)by inserting “and” at the end of subparagraph (K), and
(3)by inserting after subparagraph
(K)the following new subparagraph: " “(L) will 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;”. "
(c)Rural and Inner-City Access Adjustments.—
(1)Adjustments.— Section 1833(m) of such Act (42 U.S.C. 1395l(m)) is amended—
(A)by striking “class 1 or class 2”, and
(B)by striking “5 percent” and inserting “10 percent” 103 STAT. 2185
(2)Effective date.—The amendments made by paragraph
(1)[42 USC 1395*l* note](/us/usc/t42/s1395l).shall apply to services furnished on or after January 1, 1991.
(d)Studies.— [42 USC 1395w–4 note](/us/usc/t42/s1395w/4).
(1)GAO study of alternative payment methodology for malpractice component.— The Comptroller General shall provide for—
(A)a study of alternative ways of paying, under section 1848 of the Social Security Act, for the malpractice component for physicians’ services, in a manner that would assure, to the extent practicable, payment for medicare’s share of malpractice insurance premiums, and
(B)a study to examine alternative resolution procedures for malpractice claims respecting professional services furnished under the medicare program. The examination under subparagraph
(B)shall include review of the feasibility of establishing procedures that involve no-fault payment or that involve mandatory arbitration. By not later Reports.than April 1, 1991, the Comptroller General shall submit a report to Congress on the results of the studies.
(2)Study of payments to risk-contracting plans.—The Secretary of Health and Human Services (in this subsection referred to as the “Secretary”) shall conduct a study of how payments under section 1848 of the Social Security Act may affect payments to eligible organizations with risk-sharing contracts under section 1876 of such Act. By not later than April 1, Reports.1990, the Secretary shall submit a report to Congress on such study and shall include in the report such recommendations for such changes in the methodology for payment under such risk-sharing contracts as the Secretary deems appropriate.
(3)Study of volume performance standard rates of increase by geography, specialty, and type of service.— The Secretary shall conduct a study of the feasibility of establishing, under section 1848(f) of the Social Security Act, separate performance standard rates of increase for services furnished by or within each of the following (including combinations of the following):
(A)Geographic area (such as a region, State, or other area).
(B)Specialty or group of specialties of physicians.
(C)Type of services (such as primary care, services of hospital-based physicians, and other inpatient services). Such study shall also include the scope of services included within, or excluded from, the rate of increase in expenditure system. By not later than July 1, 1990, the Secretary shall Reports.submit a report to Congress on such study and shall include in the report such recommendations respecting the feasibility of establishing separate performance standard rates of increase in expenditures as the Secretary deems appropriate.
(4)HHS visit code modification study.—The Secretary shall conduct a study of the desirability of including time as a factor in establishing visit codes. By not later than July 1, 1991, the Reports.Secretary shall consult with the Physician Payment Review Commission, and submit a report to Congress on such study and shall include in the report recommendations respecting the desirability of modifying the number of visit codes, whether greater coding uniformity would result from including time in visit codes when compared with clarifying the clinical descrip-103 STAT. 2186tions of existing codes, and the ability to audit physician time accurately.
(5)Commission study of payment for practice expenses.— The Physician Payment Review Commission shall conduct a study of—
(A)the extent to which practice costs and malpractice costs vary by geographic locality (including region. State, Metropolitan Statistical Areas, or other areas and by specialty),
(B)the extent to which available geographic practice-cost indices accurately reflect practice costs and malpractice costs in rural areas,
(C)which geographic units would be most appropriate to use in measuring and adjusting practice costs and malpractice costs,
(D)appropriate methods for allocating malpractice expenses to particular procedures which could be incorporated into the determination of relative values for particular procedures using a consensus panel and other appropriate methodologies,
(E)the effect of alternative methods of allocating malpractice expenses on medicare expenditures by specialty, type of service, and by geographic area, and
(F)the special circumstances of rural independent laboratories in determining the geographic cost-of-practice index. Reports. By not later than July 1, 1991, the Commission shall submit a report to the Committees on Ways and Means and Energy and Commerce of the House of Representatives and the Committee on Finance of the Senate on the study and shall include in the report such recommendations as it deems appropriate.
(6)Commission study of geographic payment areas.—The Physician Payment Review Commission shall conduct a study of the feasibility and desirability of using Metropolitan Statistical Areas or other payment areas for purposes of payment for physicians’ services under part B of title XVIII of the Social Reports.Security Act. By not later than July 1, 1991, the Commission shall submit a report to Congress on such study and shall include in the report recommendations on the desirability of retaining current carrier-wide localities, changing to a system of statewide localities, or adopting Metropolitan Statistical Areas or other payment areas for purposes of payment under such part B.
(7)Commission study of payment for non-physician providers of medicare services.—The Physician Payment Review Commission shall conduct a study of the implications of a resource-based fee schedule for physicians’ services for non-physician practitioners, such as physician assistants, clinical psychologists, nurse midwives, and other health practitioners whose services can be billed under the medicare program on a fee-for-service basis. The study shall address
(A)what the proper level of payment should be for these practitioners,
(B)whether or not adjustments to their payments should be subject to the medicare volume performance standard process, and
(C)what update to use for services outside the medicare volume performance Reports.standard process. The Commission shall submit a report to Congress on such study by not later than July 1, 1991. 103 STAT. 2187
(8)Commission study of physician fees under medicaid.—The Physician Payment Review Commission shall conduct a study on physician fees under State medicaid programs established under title XIX of the Social Security Act. The Commission shall specifically examine in such study the adequacy of physician reimbursement under such programs, physician participation in such programs, and access to care by medicaid beneficiaries. By no later than July 1, 1991, the Commission Reports.shall submit a report to Congress on such study and shall include such recommendations as the Commission deems appropriate.
(9)GAO study on physician anti-trust issues.—The Comptroller General shall conduct a study of the effect of anti-trust laws on the ability of physicians to act in groups to educate and discipline peers of such physicians in order to reduce and eliminate ineffective practice patterns and inappropriate utilization. The study shall further address anti-trust issues as they relate to the adoption of practice guidelines by third-party payers and the role that practice guidelines might play as a defense in malpractice cases. By no later than July 1, Reports.1991, the Comptroller General shall submit a report to Congress on such study and shall make such recommendations as the Comptroller General deems appropriate.
(e)Miscellaneous Conforming Amendments.—
(1)Reference to new payment rules.— Section 1833(a)(1) of the Social Security Act (42 U.S.C. 1395l(a)(1)) is amended—
(A)by striking “and” before clause (M), and
(B)by inserting before the semicolon the following new clause: “and
(N)with respect to expenses incurred for physicians’ services (as defined in section 1848(j)(3)), the amounts paid shall be 80 percent of the payment basis determined under section 1848(a)(1)”.
(2)Changing reference to maximum allowable actual charges.—Section 1842(b)(3)(G) of such Act (42 U.S.C. 1395u(b)(3)(G)) is amended by striking “maximum allowable actual charges (established under subsection (j)(1)(C))” and inserting “limiting charges established under subsection (j)(1)(C)”.
(3)Differential for participating physicians.—Effective Effective date.for physicians’ services furnished on or after January 1, 1992, the first sentence of section 1842(b)(4)(A)(iv) of such Act (42 U.S.C. 1395u(b)(4)(A)(iv)) is amended by inserting “and before January 1, 1992,” after “January 1, 1987,”.
(4)Payment for physician assistants.—Section 1842(b)(12)(A)(ii)(II) of such Act (42 U.S.C. 1395u(b)(12)(A)(ii)(II)) is amended by inserting “(or, for services furnished on or after January 1, 1992, the fee schedule amount specified in section 1848, as the case may be)” after “prevailing charge rate for such services”.
(5)Payment for certified registered nurse anesthetists.—Section 1833(a)(1)(H) of such Act (42 U.S.C. 1395l(a)(1)(H)) is amended by inserting “(or, for services furnished on or after January 1, 1992, the fee schedule amount provided under section 1848, as the case may be)” after “prevailing charge that would be recognized”. 103 STAT. 2188
(6)Payment for radiologist services.—(A) Section 1833(a)(1)(J) of such Act (42 U.S.C. 1395l(a)(1)(J)) is amended by inserting “subject to section 1848,” before “the amounts”.
(B)Section 4049(b)(2) of the Omnibus Budget Reconciliation [42 USC 1395m note](/us/usc/t42/s1395m).Act of 1987 is amended by striking “, and until” and all that follows through “Social Security Act”.
(7)Payment for nurse midwives.—Section 1833(a)(1)(K) of the Social Security Act (42 U.S.C. 1395l(a)(1)(K)) is amended by inserting “, or, for services furnished on or after January 1, 1992, 65 percent of the fee schedule amount provided under section 1848 for the same service performed by a physician” after “for the same service performed by a physician”.
(8)Physicians’ services for individuals with end stage renal disease.—Section 1881(b)(3)(A) of such Act (42 U.S.C. 1395rr(b)(3)(A)) is amended by inserting “or, for services furnished on or after January 1, 1992, on the basis described in section 1848” after “comparable services”.
(9)Extension of maximum allowable actual charge limits.—Subparagraphs (B)(ii) and (D)(v) of section 1842(j)(1) of such Act (42 U.S.C. 1395u(j)(1)) are each amended by striking all that follows “after” the first place it appears and inserting “December 31, 1990.”.
(10)[42 USC 1395u note](/us/usc/t42/s1395u). Treatment of certain eye examination visits as primary care services.—In applying section 1842(i)(4) of the Social Security Act for services furnished on or after January 1, 1990, intermediate and comprehensive office visits for eye examinations and treatments (codes 92002 and 92004) shall be considered to be primary care services.
(11)[42 USC 1395w–4 note](/us/usc/t42/s1395w/4). Distribution of model fee schedule.—By September 1, 1990, the Secretary shall develop a Model Fee Schedule, using the methodology set forth in section 1848 of the Social Security Act. The Model Fee Schedule shall include as many services as the Secretary concludes can be assigned valid relative values. Public information.The Secretary shall submit the Model Fee Schedule to the appropriate committees of Congress and make it generally available to the public.
(f)Payment for Pathology Services.—
(1)Fee schedule.—Section 1834 of the Social Security Act (42 U.S.C. 1395m) is amended by adding at the end the following new subsection: " “(f) Fee Schedule for Physician Pathology Services.— “(1) Application.—Subject to section 1848, the Secretary shall provide for application of a fee schedule with respect to physician pathology services. Subject to paragraph (2), such fee schedule shall be based on relative values developed by the Secretary, in consultation with organizations representing physicians performing such services. Such fee schedule shall be designed so as to result in expenditures under this part for services covered under the schedule in an amount that would not exceed the amount of such expenditures which would otherwise occur. In developing such fee schedule the Secretary shall take into account the special circumstances of rural independent laboratories. “(2) Geographic area adjustment.—The Secretary shall provide for a geographic area adjustment of the conversion factors in a manner comparable to the geographic area adjustment applied to physicians’ services under section 1848 during the year in which the services are furnished.”. " 103 STAT. 2189
(2)Payment on basis of fee schedule.— Section 1833(a)(1)(J) of such Act (42 U.S.C. 1395l(a)(1)( J)) is amended—
(A)by inserting “or physician pathology services” after “1834(b)(6))”, and
(B)by inserting “or section 1834(f), respectively” after “1834(b)”.
(3)Effective date.—The amendments made by this subsection [42 USC 1395*l* note](/us/usc/t42/s1395l).shall apply to services furnished on or after January 1, 1991.
(g)Effective Date.—Except as otherwise provided in this section, [42 USC 1395*l* note](/us/usc/t42/s1395l).this section, and the amendments made by this section, shall take effect on the date of the enactment of this Act. SEC. 6103. ESTABLISHMENT OF AGENCY FOR HEALTH CARE POLICY AND RESEARCH.
(a)In General.—The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by inserting after title VIII the following new title: " “TITLE IX—AGENCY FOR HEALTH CARE POLICY AND RESEARCH “Part A—Establishment and General Duties “SEC. 901. ESTABLISHMENT. [42 USC 299](/us/usc/t42/s299). “(a) In General.—There is established within the Service an agency to be known as the Agency for Health Care Policy and Research. “(b) Purpose.—The purpose of the Agency is to enhance the quality, appropriateness, and effectiveness of health care services, and access to such services, through the establishment of a broad base of scientific research and through the promotion of improvements in clinical practice and in the organization, financing, and delivery of health care services. “(c) Appointment of Administrator.—There shall be at the head of the Agency an official to be known as the Administrator for Health Care Policy and Research. The Administrator shall be appointed by the Secretary, The Secretary, acting through the Administrator, shall carry out the authorities and duties established in this title. “SEC. 902. GENERAL AUTHORITIES AND DUTIES. [42 USC 299a](/us/usc/t42/s299a). “(a) In General.—In carrying out section 901(b), the Administrator shall conduct and support research, demonstration projects, evaluations, training, guideline development, and the dissemination of information, on health care services and on systems for the delivery of such services, including activities with respect to— “(1) the effectiveness, efficiency, and quality of health care services; “(2) subject to subsection (d), the outcomes of health care services and procedures; “(3) clinical practice, including primary care and practice-oriented research; “(4) health care technologies, facilities, and equipment; “(5) health care costs, productivity, and market forces; “(6) health promotion and disease prevention; “(7) health statistics and epidemiology; and “(8) medical liability. 103 STAT. 2190 “(b) Requirements With Respect to Rural Areas and Underserved Populations.—In carrying out subsection (a), the Administrator shall undertake and support research, demonstration projects, and evaluations with respect to— “(1) the delivery of health care services in rural areas (including frontier areas); and “(2) the health of low-income groups, minority groups, and the elderly. “(c) Multidisciplinary Centers.—The Administrator may provide financial assistance to public or nonprofit private entities for meeting the costs of planning and establishing new centers, and operating existing and new centers, for multidisciplinary health services research, demonstration projects, evaluations, training, policy analysis, and demonstrations respecting the matters referred to in subsection (b). “(d) Relation to Certain Authorities Regarding Social Security.—Activities authorized in this section may include, and shall be appropriately coordinated with, experiments, demonstration projects, and other related activities authorized by the Social Security Act and the Social Security Amendments of 1967. Activities under subsection (a)(2) of this section that affect the programs under titles XVIII and XIX of the Social Security Act shall be carried out consistent with section 1142 of such Act. “SEC. 903. [42 USC 299a–1](/us/usc/t42/s299a/1). DISSEMINATION. “(a) In General.—The Administrator shall— “(1) promptly publish, make available, and otherwise disseminate, in a form understandable and on as broad a basis as practicable so as to maximize its use, the results of research, demonstration projects, and evaluations conducted or supported under this title and the guidelines, standards, and review criteria developed under this title; “(2) Public information. promptly make available to the public data developed in such research, demonstration projects, and evaluations; “(3) provide indexing, abstracting, translating, publishing, and other services leading to a more effective and timely dissemination of information on research, demonstration projects, and evaluations with respect to health care to public and private entities and individuals engaged in the improvement of health care delivery and the general public, and undertake programs to develop new or improved methods for making such information available; and “(4) State and local governments. as appropriate, provide technical assistance to State and local government and health agencies and conduct liaison activities to such agencies to foster dissemination. “(b) Prohibition Against Restrictions.—Except as provided in subsection (c), the Administrator may not restrict the publication or dissemination of data from, or the results of, projects conducted or supported under this title. “(c) Limitation on Use of Certain Information.—No information, if an establishment or person supplying the information or described in it is identifiable, obtained in the course of activities undertaken or supported under this title may be used for any purpose other than the purpose for which it was supplied unless such establishment or person has consented (as determined under regulations of the Secretary) to its use for such other purpose. Such information may not be published or released in other form if the 103 STAT. 2191person who supplied the information or who is described in it is identifiable unless such person has consented (as determined under regulations of the Secretary) to its publication or release in other form. “(d) Certain Interagency Agreement.—The Administrator and Contracts.the Director of the National Library of Medicine shall enter into an agreement providing for the implementation of subsection (a)(3). “SEC. 904. HEALTH CARE TECHNOLOGY AND TECHNOLOGY ASSESSMENT. [42 USC 299a–2](/us/usc/t42/s299a/2). “(a) In General.—In carrying out section 901(b), the Administrator shall promote the development and application of appropriate health care technology assessments— “(1) by identifying needs in, and establishing priorities for, the assessment of specific health care technologies; “(2) by developing and evaluating criteria and methodologies for health care technology assessment; “(3) by conducting and supporting research on the development and diffusion of health care technology; “(4) by conducting and supporting research on assessment methodologies; and “(5) by promoting education, training, and technical assistance in the use of health care technology assessment methodologies and results. “(b) Specific Assessments.— “(1) In general.—In carrying out section 901(b), the Administrator shall conduct and support specific assessments of health care technologies. “(2) Consideration of certain factors.—In carrying out paragraph (1), the Administrator shall consider the safety, efficacy, and effectiveness, and, as appropriate, the cost-effectiveness, legal, social, and ethical implications, and appropriate uses of such technologies, including consideration of geographic factors. “(c) Information Center.— “(1) In general.—There shall be established at the National Establishment.Library of Medicine an information center on health care technologies and health care technology assessment. “(2) Interagency agreement.—The Administrator and the Contracts.Director of the National Library of Medicine shall enter into an agreement providing for the implementation of paragraph (1). “(d) Recommendations With Respect to Health Care Technology.— “(1) In general.—The Administrator shall make recommendations to the Secretary with respect to whether specific health care technologies should be reimbursable under federally financed health programs, including recommendations with respect to any conditions and requirements under which any such reimbursements should be made. “(2) Consideration of certain factors.—In making recommendations respecting health care technologies, the Administrator shall consider the safety, efficacy, and effectiveness, and, as appropriate, the cost-effectiveness and appropriate uses of such technologies. “(3) Consultations.—In carrying out this subsection, the Administrator shall cooperate and consult with the Director of the National Institutes of Health, the Commissioner of Food 103 STAT. 2192and Drugs, and the heads of any other interested Federal department or agency. “Part B—Forum for Quality and Effectiveness in Health Care “SEC. 911. [42 USC 299b](/us/usc/t42/s299b). ESTABLISHMENT OF OFFICE. “There is established within the Agency an office to be known as the Office of the Forum for Quality and Effectiveness in Health Care. The office shall be headed by a director, who shall be appointed by the Administrator. “SEC. 912. [42 USC 299b–1](/us/usc/t42/s299b/1). DUTIES. “(a) Establishment of Forum Program.—The Administrator, acting through the Director, shall establish a program to be known as the Forum for Quality and Effectiveness in Health Care. For the purpose of promoting the quality, appropriateness, and effectiveness of health care, the Director, using the process set forth in section 913, shall arrange for the development and periodic review and updating of— “(1) clinically relevant guidelines that may be used by physicians, educators, and health care practitioners to assist in determining how diseases, disorders, and other health conditions can most effectively and appropriately be prevented, diagnosed, treated, and managed clinically; and “(2) standards of quality, performance measures, and medical review criteria through which health care providers and other appropriate entities may assess or review the provision of health care and assure the quality of such care. “(b) Certain Requirements.—Guidelines, standards, performance measures, and review criteria under subsection
(a)shall— “(1) be based on the best available research and professional judgment regarding the effectiveness and appropriateness of health care services and procedures; “(2) be presented in formats appropriate for use by physicians, health care practitioners, providers, medical educators, and medical review organizations and in formats appropriate for use by consumers of health care; and “(3) include 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. “(c) Authority for Contracts.—In carrying out this part, the Director may enter into contracts with public or nonprofit private entities. “(d) Date Certain for Initial Guidelines and Standards.—The Administrator, by not later than January 1, 1991, shall assure the development of an initial set of guidelines, standards, performance measures, and review criteria under subsection
(a)that includes not less than 3 clinical treatments or conditions described in section 1142(a)(3) of the Social Security Act. “(e) Relationship With Medicare Program.—To assure an appropriate reflection of the needs and priorities of the program under title XVIII of the Social Security Act, activities under this part that affect such program shall be conducted consistent with section 1142 of such Act. 103 STAT. 2193 “SEC. 913. PROCESS FOR DEVELOPMENT OF GUIDELINES AND STANDARDS. [42 USC 299b–2](/us/usc/t42/s299b/2). “(a) Development Through Contracts and Panels.—The Director shall— “(1) enter into contracts with public and nonprofit private entities for the purpose of developing and periodically reviewing and updating the guidelines, standards, performance measures, and review criteria described in section 912(a); and “(2) convene panels of appropriately qualified experts (including practicing physicians with appropriate expertise) and health care consumers for the purpose of— “(A) developing and periodically reviewing and updating the guidelines, standards, performance measures, and review criteria described in section 912(a); and “(B) reviewing the guidelines, standards, performance measures, and review criteria developed under contracts under paragraph (1). “(b) Authority for Additional Panels.—The Director may convene panels of appropriately qualified experts (including practicing physicians with appropriate expertise) and health care consumers for the purpose of— “(1) developing the standards and criteria described in section 914(b); and “(2) providing advice to the Administrator and the Director with respect to any other activities carried out under this part or under section 902(a)(2). “(c) Selection of Panel Members.—In selecting individuals to serve on panels convened under this section, the Director shall consult with a broad range of interested individuals and organizations, including organizations representing physicians in the general practice of medicine and organizations representing physicians in specialties and subspecialties pertinent to the purposes of the panel involved. The Director shall seek to appoint physicians reflecting a variety of practice settings. “SEC. 914. ADDITIONAL REQUIREMENTS. [42 USC 299b–3](/us/usc/t42/s299b/3). “(a) Program Agenda.— “(1) In general.— The Administrator shall provide for an agenda for the development of the guidelines, standards, performance measures, and review criteria described in section 912(a), including— “(A) with respect to the guidelines, identifying specific diseases, disorders, and other health conditions for which the guidelines are to be developed and those that are to be given priority in the development of the guidelines; and “(B) with respect to the standards, performance measures, and review criteria, identifying specific aspects of health care for which the standards, performance measures, and review criteria are to be developed and those that are to be given priority in the development of the standards, performance measures, and review criteria. “(2) Consideration of certain factors in establishing priorities.— “(A) Factors considered by the Administrator in establishing priorities for purposes of paragraph
(1)shall include consideration of the extent to which the guidelines, 103 STAT. 2194standards, performance measures, and review criteria involved can be expected— “(i) to improve methods of prevention, diagnosis, treatment, and clinical management for the benefit of a significant number of individuals; “(ii) to reduce clinically significant variations among physicians in the particular services and procedures utilized in making diagnoses and providing treatments; and “(iii) to reduce clinically significant variations in the outcomes of health care services and procedures. “(B) In providing for the agenda required in paragraph (1), including the priorities, the Administrator shall consult with the Administrator of the Health Care Financing Administration and otherwise act consistent with section 1142(b)(3) of the Social Security Act. “(b) Standards and Criteria.— “(1) Process for development, review, and updating.—The Director shall establish standards and criteria to be utilized by the recipients of contracts under section 913, and by the expert panels convened under such section, with respect to the development and periodic review and updating of the guidelines, standards, performance measures, and review criteria described in section 912(a). “(2) Award of contracts.—The Director shall establish standards and criteria to be utilized for the purpose of ensuring that contracts entered into for the development or periodic review or updating of the guidelines, standards, performance measures, and review criteria described in section 912(a) will be entered into only with appropriately qualified entities. “(3) Certain requirements for standards and criteria.— The Director shall ensure that the standards and criteria established under paragraphs
(1)and
(2)specify that— “(A) appropriate consultations with interested individuals and organizations are to be conducted in the development of the guidelines, standards, performance measures, and review criteria described in section 912(a); and “(B) such development may be accomplished through the adoption, with or without modification, of guidelines, standards, performance measures, and review criteria that— “(i) meet the requirements of this part; and “(ii) are developed by entities independently of the program established in this part. “(4) Improvements of standards and criteria.—The Director shall conduct and support research with respect to improving the standards and criteria developed under this subsection. “(c) Dissemination.—The Director shall promote and support the dissemination of the guidelines, standards, performance measures, and review criteria described in section 912(a). Such dissemination shall be carried out through organizations representing health care providers, organizations representing health care consumers, peer review organizations, accrediting bodies, and other appropriate entities. “(d) Pilot Testing.—The Director may conduct or support pilot testing of the guidelines, standards, performance measures, and review criteria developed under section 912(a). Any such pilot test-103 STAT. 2195ing may be conducted prior to, or concurrently with, their dissemination under subsection (c). “(e) Evaluations.—The Director shall conduct and support evaluations of the extent to which the guidelines, standards, performance standards, and review criteria developed under section 912 have had an effect on the clinical practice of medicine. “(f) Recommendations to Administrator.—The Director shall make recommendations to the Administrator on activities that should be carried out under section 902(a)(2) and under section 1142 of the Social Security Act, including recommendations of particular research projects that should be carried out with respect to— “(1) evaluating the outcomes of health care services and procedures; “(2) developing the standards and criteria required in subsection (b); and “(3) promoting the utilization of the guidelines, standards, performance standards, and review criteria developed under section 912(a).”. "
(b)Outcomes of Health Care Services and Procedures.—
(1)Establishment of program of research.—Part A of title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is amended by adding at the end the following new section: " “research on outcomes of health care services and procedures [42 USC 1320b–12](/us/usc/t42/s1320b/12). “Sec. 1142.
(a)Establishment of Program.— “(1) In general.— The Secretary, acting through the Administrator for Health Care Policy and Research, shall— “(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— 103 STAT. 2196 “(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) Reports.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
(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. “(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; 103 STAT. 2197 “(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 Health Care Financing Administration. “(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 Grants.Contracts.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.— Education. “(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 103 STAT. 2198providers, 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.”. "
(2)[42 USC 1320b–12 note](/us/usc/t42/s1320b/12). Report on linkage of public and private research related data.—Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall report to the Congress on the feasibility of linking research-related data described in section 1142(d) of the Social Security Act (as added by paragraph
(1)of this subsection) with 103 STAT. 2199similar data collected or maintained by non-Federal entities and by Federal agencies other than the Department of Health and Human Services (including the Departments of Defense and Veterans Affairs and the Office of Personnel Management).
(3)Technical and conforming provisions.—
(A)Effective for fiscal years beginning after fiscal year 1990. subsection
(c)of section 1875 of the Social Security Act (42 U.S.C. 1395ll) is repealed.
(B)Section 1862(a)(1)(E) of the Social Security Act (42 U.S.C. 1395y(a)(1)(E)) is amended by striking “section 1875(c)” and inserting “section 1142”.
(c)Additional Authorities and Duties With Respect to Agency for Health Care Policy and Research.—Title IX of the Public Health Service Act, as added by subsection
(a)of this section, is amended by adding at the end the following new part: " “Part C—General Provisions “SEC. 921. ADVISORY COUNCIL FOR HEALTH CARE POLICY. RESEARCH. AND EVALUATION. [42 USC 299c](/us/usc/t42/s299c). “(a) Establishment.—There is established an advisory council to be known as the National Advisory Council for Health Care Policy, Research, and Evaluation. “(b) Duties.— “(1) In general.—The Council shall advise the Secretary and the Administrator with respect to activities to carry out the purpose of the Agency under section 901(b). “(2) Certain recommendations.— Activities of the Council under paragraph
(1)shall include making recommendations to the Administrator regarding priorities for a national agenda and strategy for— “(A) the conduct of research, demonstration projects, and evaluations with respect to health care, including clinical practice and primary care; “(B) the development and application of appropriate health care technology assessments; “(C) the development and periodic review and updating of guidelines for clinical practice, standards of quality, performance measures, and medical review criteria with respect to health care; and “(D) the conduct of research on outcomes of health care services and procedures. “(c) Membership.— “(1) In general.—The Council shall, in accordance with this subsection, be composed of appointed members and ex officio members. All members of the Council shall be voting members, other than officials designated under paragraph (3)(B) as ex officio members of the Council. “(2) Appointed members.— The Secretary shall appoint to the Council 17 appropriately qualified representatives of the public who are not officers or employees of the United States. The Secretary shall ensure that the appointed members of the Council, as a group, are representative of professions and entities concerned with, or affected by, activities under this title and 103 STAT. 2200under section 1142 of the Social Security Act Of such members— “(A) 8 shall be individuals distinguished in the conduct of research, demonstration projects, and evaluations with respect to health care; “(B) 3 shall be individuals distinguished in the practice of medicine; “(C) 2 shall be individuals distinguished in the health professions; “(D) 2 shall be individuals distinguished in the fields of business, law, ethics, economics, and public policy; and “(E) 2 shall be individuals representing the interests of consumers of health care. “(3) Ex officio members.— The Secretary shall designate as ex officio members of the Council— “(A) the Director of the National Institutes of Health, the Director of the Centers for Disease Control, the Administrator of the Health Care Financing Administration, the Assistant Secretary of Defense (Health Affairs), the Chief Medical Officer of the Department of Veterans Affairs; and “(B) such other Federal officials as the Secretary may consider appropriate. . “(d) Subcouncil on Outcomes and Guidelines.— “(1) Establishment.—For the purpose of carrying out the duties specified in subparagraphs
(C)and
(D)of subsection (b)(2), the Secretary shall establish a subcouncil of the Council and shall designate the membership of the subcouncil in accordance with paragraph (2). “(2) Membership.— The subcouncil established pursuant to paragraph
(1)shall consist of— “(A) 6 individuals from among the individuals appointed to the Council under subparagraphs
(A)through
(C)of subsection (c)(2); “(B) 2 individuals from among the individuals appointed to the Council under subparagraphs
(D)and
(E)of such subsection; and “(C) each of the officials designated as ex officio members of the Council under subsection (c)(3)(A). “(e) Terms.— “(1) In general.—Except as provided in paragraph (2), members of the Council appointed under subsection (c)(2) shall serve for a term of 3 years. “(2) Staggered rotation.—Of the members first appointed to the Council under subsection (c)(2), the Secretary shall appoint 6 members to serve for a term of 3 years, 6 members to serve for a term of 2 years, and 5 members to serve for a term of 1 year. “(3) Service beyond term.—A member of the Council appointed under subsection (c)(2) may continue to serve after the expiration of the term of the member until a successor is appointed. “(f) Vacancies.—If a member of the Council appointed under subsection (c)(2) does not serve the full term applicable under subsection (e), the individual appointed to fill the resulting vacancy shall be appointed for the remainder of the term of the predecessor of the individual. 103 STAT. 2201 “(g) Chair.—The Administrator shall, from among the members of the Council appointed under subsection (c)(2), designate an individual to serve as the chair of the Council. “(h) Meetings.—The Council shall meet not less than once during each discrete 4-month period and shall otherwise meet at the call of the Administrator or the chair. “(i) Compensation and Reimbursement of Expenses.— “(1) Appointed members.—Members of the Council appointed under subsection (c)(2) shall receive compensation for each day (including traveltime) engaged in carrying out the duties of the Council. Such compensation may not be in an amount in excess of the maximum rate of basic pay payable for GS–18 of the General Schedule. “(2) Ex officio members.—Officials designated under subsection (c)(3) as ex officio members of the Council may not receive compensation for service on the Council in addition to the compensation otherwise received for duties carried out as officers of the United States. “(j) Staff.—The Administrator shall provide to the Council such staff, information, and other assistance as may be necessary to carry out the duties of the Council. “(k) Duration.—Notwithstanding section 14(a) of the Federal Advisory Committee Act, the Council shall continue in existence until otherwise provided by law. “SEC. 922. PEER REVIEW WITH RESPECT TO GRANTS AND CONTRACTS. [42 USC 299c–1](/us/usc/t42/s299c/1). “(a) Requirement of Review.— “(1) In general.—Appropriate technical and scientific peer review shall be conducted with respect to each application for a grant, cooperative agreement, or contract under this title. “(2) Reports to administrator.—Each peer review group to which an application is submitted pursuant to paragraph
(1)shall report its finding and recommendations respecting the application to the Administrator in such form and in such manner as the Administrator shall require. “(b) Approval as Precondition of Awards.—The Administrator may not approve an application described in subsection (a)(1) unless the application is recommended for approval by a peer review group established under subsection (c). “(c) Establishment of Peer Review Groups.— “(1) In general.—The Administrator shall establish such technical and scientific peer review groups as may be necessary to carry out this section. Such groups shall be established without regard to the provisions of title 5, United States Code, that govern appointments in the competitive service, and without regard to the provisions of chapter 51, and subchapter III of chapter 53, of such title that relate to classification and pay rates under the General Schedule. “(2) Membership.—The members of any peer review group established under this section shall be appointed from among individuals who are not officers or employees of the United States and who by virtue of their training or experience are eminently qualified to carry out the duties of such peer review group. “(3) Duration.—Notwithstanding section 14(a) of the Federal Advisory Committee Act, peer review groups established under 103 STAT. 2202this section shall continue in existence until otherwise provided by law. “(d) Categories of Review.— “(1) In general.—With respect to technical and scientific peer review under this section, such review of applications with respect to research, demonstration projects, or evaluations shall be conducted by different peer review groups than the peer review groups that conduct such review of applications with respect to dissemination activities or the development of research agendas (including conferences, workshops, and meetings).
(2)Authority for procedural adjustments in certain cases.—In the case of applications described in subsection (a)(1) for financial assistance whose direct costs will not exceed $50,000, the Administrator may make appropriate adjustments in the procedures otherwise established by the Administrator for the conduct of peer review under this section. Such adjustments may be made for the purpose of encouraging the entry of individuals into the field of research, for the purpose of encouraging clinical practice-oriented research, and for such other purposes as the Administrator may determine to be appropriate. “(e) Regulations.—The Secretary shall issue regulations for the conduct of peer review under this section. “SEC. 923. [42 USC 299c–2](/us/usc/t42/s299c/2). CERTAIN PROVISIONS WITH RESPECT TO DEVELOPMENT, COLLECTION, AND DISSEMINATION OF DATA. “(a) Standards With Respect to Utility of Data.— “(1) In general.—With respect to data developed or collected by any entity for the purpose described in section 901(b), the Administrator shall, in order to assure the utility, accuracy, and sufficiency of such data for all interested entities, establish guidelines for uniform methods of developing and collecting such data. Such guidelines shall include specifications for the development and collection of data on the outcomes of health care services and procedures. “(2) Relationship with medicare program.—In any case where guidelines under paragraph
(1)may affect the administration of the program under title XVIII of the Social Security Act, the guidelines shall be in the form of recommendations to the Secretary for such program. “(b) Statistics.—The Administrator shall— “(1) take such action as may be necessary to assure that statistics developed under this title are of high quality, timely, and comprehensive, as well as specific, standardized, and adequately analyzed and indexed; and “(2) publish, make available, and disseminate such statistics on as wide a basis as is practicable. “SEC. 924. [42 USC 299c–3](/us/usc/t42/s299c/3). ADDITIONAL PROVISIONS WITH RESPECT TO GRANTS AND CONTRACTS. “(a) Requirement of Application.—The Administrator may not, with respect to any program under this title authorizing the provision of grants, cooperative agreements, or contracts, provide any such financial assistance unless an application for the assistance is submitted to the Secretary and the application is in such form, is made in such manner, and contains such agreements, assurances, 103 STAT. 2203and information as the Administrator determines to be necessary to carry out the program involved. “(b) Provision of Supplies and Services in Lieu of Funds.— “(1) In general.—Upon the request of an entity receiving a grant, cooperative agreement, or contract under this title, the Secretary may, subject to paragraph (2), provide supplies, equipment, and services for the purpose of aiding the entity in carrying out the project involved and, for such purpose, may detail to the entity any officer or employee of the Department of Health and Human Services. “(2) Corresponding reduction in funds.—With respect to a request described in paragraph (1), the Secretary shall reduce the amount of the financial assistance involved by an amount equal to the costs of detailing personnel and the fair market value of any supplies, equipment, or services provided by the Administrator. The Secretary shall, for the payment of expenses incurred in complying with such request, expend the amounts withheld. “(c) Applicability of Certain Provisions With Respect to Contracts.—Contracts may be entered into under this part without regard to sections 3648 and 3709 of the Revised Statutes (31 U.S.C. 529; 41 U.S.C. 5). “SEC. 925. CERTAIN ADMINISTRATIVE AUTHORITIES. [42 USC 299c–4](/us/usc/t42/s299c/4). “(a) Deputy Administrator and Other Officers and Employees.— “(1) Deputy administrator.—The Administrator may appoint a deputy administrator for the Agency. “(2) Other officers and employees.—The Administrator may appoint and fix the compensation of such officers and employees as may be necessary to carry out this title. Except as otherwise provided by law, such officers and employees shall be appointed in accordance with the civil service laws and their compensation fixed in accordance with title 5, United States Code. “(b) Facilities.—The Secretary, in carrying out this title— District of Columbia. “(1) may acquire, without regard to the Act of March 3, 1877 (40 U.S.C. 34), by lease or otherwise through the Administrator of General Services, buildings or portions of buildings in the District of Columbia or communities located adjacent to the District of Columbia for use for a period not to exceed 10 years; and “(2) may acquire, construct, improve, repair, operate, and maintain laboratory, research, and other necessary facilities and equipment, and such other real or personal property (including patents) as the Secretary deems necessary. “(c) Provision of Financial Assistance.—The Administrator, in Grants.Contracts.carrying out this title, may make grants to, and enter into cooperative agreements with, public and nonprofit private entities and individuals, and when appropriate, may enter into contracts with public and private entities and individuals. “(d) Utilization of Certain Personnel and Resources.— “(1) Department of health and human services.—The Administrator, in carrying out this title, may utilize personnel and equipment, facilities, and other physical resources of the Department of Health and Human Services, permit appropriate (as determined by the Secretary) entities and individuals to 103 STAT. 2204utilize the physical resources of such Department, and provide technical assistance and advice. “(2) Other agencies.—The Administrator, in carrying out this title, may use, with their consent, the services, equipment, personnel, information, and facilities of other Federal, State, or local public agencies, or of any foreign government, with or without reimbursement of such agencies. “(e) Consultants.—The Secretary, in carrying out this title, may secure, from time to time and for such periods as the Administrator deems advisable but in accordance with section 3109 of title 5, United States Code, the assistance and advice of consultants from the United States or abroad. “(f) Experts.— “(1) In general.—The Secretary may, in carrying out this title, obtain the services of not more than 50 experts or consultants who have appropriate scientific or professional qualifications. Such experts or consultants shall be obtained in accordance with section 3109 of title 5, United States Code, except that the limitation in such section on the duration of service shall not apply. “(2) Travel expenses.— “(A) Experts and consultants whose services are obtained under paragraph
(1)shall be paid or reimbursed for their expenses associated with traveling to and from their assignment location in accordance with sections 5724, 5724a(a)(1), 5724a(a)(3), and 5726(c) of title 5, United States Code. “(B) Expenses specified in subparagraph
(A)may not be allowed in connection with the assignment of an expert or consultant whose services are obtained under paragraph
(1)unless and until the expert agrees in writing to complete the entire period of assignment, or one year, whichever is shorter, unless separated or reassigned for reasons that are beyond the control of the expert or consultant and that are acceptable to the Secretary. If the expert or consultant violates the agreement, the money spent by the United States for the expenses specified in subparagraph
(A)is recoverable from the expert or consultant as a debt of the United States. The Secretary may waive in whole or in part a right of recovery under this subparagraph. “(g) Voluntary and Uncompensated Services.—The Administrator, in carrying out this title, may accept voluntary and uncompensated services. “SEC. 926. [42 USC 299c–5](/us/usc/t42/s299c/5). FUNDING. “(a) Authorization of Appropriations.—For the purpose of carrying out this title, there are authorized to be appropriated $35,000,000 for fiscal year 1990, $50,000,000 for fiscal year 1991, and $70,000,000 for fiscal year 1992. “(b) Evaluations.—In addition to amounts available pursuant to subsection
(a)for carrying out this title, there shall be made available for such purpose, from the amounts made available pursuant to section 2611 of this Act (relating to evaluations), an amount equal to 40 percent of the maximum amount authorized in such section 2611 to be made available. “SEC. 927. [42 USC 299c–6](/us/usc/t42/s299c/6). DEFINITIONS. “For purposes of this title: 103 STAT. 2205 “(1) The term ‘Administrator’ means the Administrator for Health Care Policy and Research. “(2) The term ‘Agency’ means the Agency for Health Care Policy and Research. “(3) The term ‘Council’ means the National Advisory Council on Health Care Policy, Research, and Evaluation. “(4) The term ‘Director’ means the Director of the Office of the Forum for Quality and Effectiveness in Health Care.”."
(d)General Provisions.—
(1)Terminations.—
(A)The National Center for Health Services Research [42 USC 242c note](/us/usc/t42/s242c).and Health Care Technology Assessment is terminated, and part A of title III of the Public Health Service Act (42 U.S.C. 241 et seq.) is amended by striking section 305. [42 USC 242c](/us/usc/t42/s242c).[42 USC 242n note](/us/usc/t42/s242n).
(B)The council on health care technology established under section 309 of the Public Health Service Act is terminated, and part A of title III of such Act is amended by striking section 309. [42 USC 242n](/us/usc/t42/s242n).[42 USC 299a–2 note](/us/usc/t42/s299a/2).
(2)Contract for temporary assistance to secretary with respect to health care technology assessment.—
(A)The Secretary of Health and Human Services shall request the Institute of Medicine of the National Academy of Sciences to enter into a contract—
(i)to develop and recommend to the Secretary priorities for the assessment of specific health care technologies under section 904 of the Public Health Service Act (as added by subsection
(a)of this section); and
(ii)to assist the Administrator for Health Care Policy and Research, and the Director of the National Library of Medicine, in establishing the information center required under subsection (c)(1) of such section 904.
(B)In carrying out section 904(c)(1) of the Public Health Service Act (as added by subsection
(a)of this section), the Secretary of Health and Human Services shall, as appropriate, provide for the transfer to the Secretary of any information and materials developed by the council on health care technology under section 309(c)(1)(A) of the Public Health Service Act (as such section was in effect on the day before the effective date of this section).
(C)The Secretary of Health and Human Services shall ensure that the contract under subparagraph
(A)specifies that the activities described in clauses
(i)and
(ii)of such subparagraph shall be completed not later than 1 year after the date on which the Secretary enters into the contract.
(D)For the purpose of carrying out the contract under Appropriation authorization.subparagraph (A), there is authorized to be appropriated $300,000 for fiscal year 1990.
(e)Technical and Conforming Amendments.—
(1)Section 304.— Section 304 of the Public Health Service Act (42 U.S.C. 242b) is amended—
(A)in subsection (a)—
(i)by striking paragraphs
(1)and (2); and
(ii)by striking the paragraph designation in paragraph (3);
(B)in subsection
(a)(as amended by subparagraph
(A)of this paragraph)— 103 STAT. 2206
(i)by striking “the National Center for Health Services Research and Health Care Technology Assessment” and inserting “the Agency for Health Care Policy and Research”; and
(ii)by striking “in sections 305, 306, and 309” and inserting “in section 306 and in title IX”;
(C)in subsection (b), in the matter preceding paragraph (1), by striking “subsection (a),” and inserting “subsection
(a)and section 306,”; and
(D)in subsection (c)—
(i)in paragraph (1), in the second sentence, by striking “the National Center for Health Services Research and Health Care Technology Assessment” and inserting “the Agency *for* Health Care Policy and Research”; and
(ii)in paragraph (2), by striking “the National Center for Health Services Research and Health Care Technology Assessment” and inserting “the Agency for Health Care Policy and Research”.
(2)Section 306.— Section 306 of the Public Health Service Act (42 U.S.C. 242k) is amended—
(A)in subsection (a), by adding at the end the following new sentence: “The Secretary, acting through the Center, shall conduct and support statistical and epidemiological activities for the purpose of improving the effectiveness, efficiency, and quality of health services in the United States.”;
(B)in subsection (b), in the matter preceding paragraph (1), by striking “section 304(a),” and inserting “subsection (a),”; and
(C)by adding at the end the following new subsection: " “(m) Appropriation authorization. For health statistical and epidemiological activities undertaken or supported under this section, there are authorized to be appropriated $55,000,000 for fiscal year 1988 and such sums as may be necessary for each of the fiscal years 1989 and 1990.”. "
(3)Section 307.—Section 307(a) of the Public Health Service Act (42 U.S.C. 242l(a)) is amended by striking “sections 304, 305, 306, and 309” and inserting “section 306 and by title IX”.
(4)Section 308.— Section 308 of the Public Health Service Act (42 U.S.C. 242m) is amended—
(A)in the section heading, by striking “sections” and all that follows and inserting the following: “effectiveness, efficiency, and quality of health services”;
(B)in subsection (a)—
(i)in paragraph (1)(A)(i), by striking “sections 304 through 307 and section 309” and inserting “sections 304, 306, and 307 and title IX”; and
(ii)in paragraph (2), by striking “the National Center for Health Services Research and Health Care Technology Assessment” and inserting “the Agency for Health Care Policy and Research”;
(C)in subsection (b)—
(i)in paragraph (1), by striking “sections 304, 305, 306, 307, and 309” and inserting “section 304, 306, or 307”;
(ii)in subparagraph
(A)of paragraph (2)— 103 STAT. 2207
(I)in the first sentence, by striking “under section 304 or 305,” and inserting “under section 306”;
(II)by striking the second sentence; and
(III)by amending the last sentence to read as follows: “The Director of the National Center for Health Statistics shall establish such peer review groups as may be necessary to provide for such an evaluation of each such application.”;
(iii)in subparagraph
(B)of paragraph (2), by striking “the Director involved,” and inserting “the Director of the National Center for Health Statistics,”;
(iv)in subparagraph
(C)of paragraph (2), by striking “the Directors,” and inserting “the Director of the National Center for Health Statistics,”; and
(v)in paragraph (3), in the first sentence—
(I)by striking “section 304, 305, or 306” the first place such term appears and inserting “section 306”; and
(II)by striking “section 304, 305, or 306” the second place such term appears and inserting “any of such sections”;
(D)in subsection (d)—
(i)in the matter preceding paragraph (1), by striking “section 304, 305, 306, 307, or 309” and inserting “section 304, 306, or 307”;
(ii)in paragraph (1), by striking “in other form, and” and inserting “in other form.” and by striking the paragraph designation; and
(iii)by striking paragraph (2);
(E)in subsection (e)—
(i)in paragraph (1), by striking “section 304, 305, 306, 307, or 309” and inserting “section 304, 306, or 307”; and
(ii)in paragraph (2), in the matter preceding subparagraph (A), by striking “section 304, 305, 306, 307, or 309” and inserting “section 304, 306, or 307”;
(F)in subsection (f), by striking “section 304, 305, 306, or 309” and inserting “section 304 or 306”;
(G)in subsection (g)—
(i)in paragraph (1), by striking the matter after and below subparagraph (C); and
(ii)in paragraph (2), by striking “sections 304, 305, 306, and 309” and inserting “sections 304 and 306”;
(H)in subsection (h)(1)—
(i)by striking “section 304, 305, 306, or 309” the first place such term appears and inserting “section 306”; and
(ii)by striking “section 304, 305, 306, or 309” the second place such term appears and inserting “any of such sections”; and
(I)by striking subsection (i).
(5)Section 330.—Section 330(e)(3)(G)(i) of the Public Health Indians.Service Act (42 U.S.C. 254c(e)(3)(G)(i)) is amended by inserting after “(i)” the following: “except in the case of an entity operated by an Indian tribe or tribal or Indian organization under the Indian Self-Determination Act,”. 103 STAT. 2208
(6)[42 USC 11137 note](/us/usc/t42/s11137). Section 402.— Section 402 of the Public Health Service Amendments of 1987 is amended—
(A)by redesignating subsection
(c)as subsection
(d)and by inserting after subsection
(b)the following new subsection: " “(c) State and local governments.[42 USC 11111](/us/usc/t42/s11111).[42 USC 11115](/us/usc/t42/s11115). Such Act is amended in section 411(c)(2) by striking subparagraph (B), by striking ‘subparagraphs
(A)and (B)’ in subparagraph (C), and by redesignating subparagraph
(C)as subparagraph (B). Such Act is amended in section 415(a) by inserting before the period at the end the following: ‘or as preempting or overriding any State law which provides incentives, immunities, or protection for those engaged in a professional review action that is in addition to or greater than that provided by this part’”; and "
(B)[42 USC 11137 note](/us/usc/t42/s11137).in subsection (d)(1) (as so redesignated), by striking “subsection (a)” and inserting “subsections
(a)and (c)”.
(7)Section 487.—Section 487(d)(3)(B) of the Public Health Service Act (42 U.S.C. 288(d)(3)(B)) is amended by striking “National Center” and all that follows through “Assessment” and inserting “Agency for Health Care Policy and Research”.
(f)[42 USC 299 note](/us/usc/t42/s299). Transitional and Savings Provisions.—
(1)Transfer of personnel, assets, and liabilities.—Personnel of the Department of Health and Human Services employed on the date of the enactment of this Act in connection with the functions vested in the Administrator for Health Care Policy and Research pursuant to the amendments made by this section, and assets, property, contracts, liabilities, records, unexpended balances of appropriations, authorizations, allocations, and other funds, of such Department arising from or employed, held, used, or available on such date, or to be made available after such date, in connection with such functions shall be transferred to the Administrator for appropriate allocation. Unexpended funds transferred under this paragraph shall be used only for the purposes for which the funds were originally authorized and appropriated.
(2)Savings provisions.—With respect to functions vested in the Administrator for Health Care Policy and Research pursuant to the amendments made by this section, all orders, rules, regulations, grants, contracts, certificates, licenses, privileges, and other determinations, actions, or official documents, of the Department of Health and Human Services that have been issued, made, granted, or allowed to become effective in the performance of such functions, and that are effective on the date of the enactment of this Act, shall continue in effect according to their terms unless changed pursuant to law. SEC. 6104. REDUCTION IN PAYMENTS FOR CERTAIN PROCEDURES.
(a)In General.—Section 1842(b) of the Social Security Act (42 U.S.C. 1395u(b)) is amended by adding at the end the following new paragraph: " “(14)(A) 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. 103 STAT. 2209 “(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 ratio for the service (specified in Table # 1 in the Joint Explanatory Statement referred to in subparagraph (C)(i)), multiplied by the geographic practice cost index value (specified in subparagraph (C)(iv)) for the locality, and “(II) 1 minus the practice expense ratio. “(C) For purposes of this paragraph: “(i) The physicians’ services specified in this clause are the physicians’ services specified in Table #2 in the Joint Explanatory Statement of the Committee of Conference submitted with the Conference Report to accompany H.R. 3299 (the ‘Omnibus Budget Reconciliation Act of 1989’), 101st Congress, 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 ‘percent change’ specified in this clause, for a physicians’ service specified in clause (i), is the percent change specified for the service in Table #2 in the Joint Explanatory Statement referred to in clause (i). “(iv) The geographic practice cost index value specified in this clause for a locality is such value specified for the locality in Table #3 in the Joint Explanatory Statement referred to in clause (i). “(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)”."
(b)Special Limits on Actual Charges.—Section 1842(j)(1)(D) of such Act is amended— [42 USC 1395u note](/us/usc/t42/s1395u).
(1)in clause (ii)(II), by inserting “or (b)(14)(A)” after “(b)(10)(A)”, and
(2)in clause (iii)(II), by striking “or (b)(11)(C)(i)” and inserting “(b)(11)(C)(i), or (b)(14)(A)”. 103 STAT. 2210 SEC. 6105. REDUCTION IN PAYMENTS FOR RADIOLOGY SERVICES.
(a)Fee Schedules for Radiologist Services Reduced.—Section 1834(b)(4) of the Social Security Act (42 U.S.C. 1395m(b)(4)) is amended—
(1)by redesignating subparagraphs
(C)and
(D)as subparagraphs
(D)and (E), and
(2)by inserting after subparagraph
(B)the following new subparagraph: " “(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.”. "
(b)[42 USC 1395m note](/us/usc/t42/s1395m). Special Rule for Nuclear Medicine Physicians.—In applying section 1834(b) of the Social Security Act with respect to nuclear medicine services furnished by a physician for whom nuclear medicine services account for at least 80 percent of the total amount of charges made under part B of title XVIII of the Social Security Act—
(1)during 1990, after April 1, 1990, there shall be substituted for the fee schedule otherwise applicable a fee schedule based on the fee schedule computed under such section (without regard to this subsection) and % on 101 percent of the 1988 prevailing charge for such services; and
(2)during 1991, there shall be substituted for the fee schedule otherwise applicable a fee schedule based % on the fee schedule computed under such section (without regard to this subsection) and ⅓ on 101 percent of the 1988 prevailing charge for such services.
(c)[42 USC 1395m note](/us/usc/t42/s1395m). Interventional Radiologists.—In applying section 1834(b) of the Social Security Act to radiologist services furnished in 1990, the exception for “split billing” set forth at section 5262J of the Medicare Carriers Manual shall apply to services furnished in 1990 in the same manner and to the same extent as the exception applied to services furnished in 1989. SEC. 6106. ANESTHESIA SERVICES.
(a)Counting Actual Time Units for Anesthesia Services and Codification of Previous Authority.—Section 1842 of the Social Security Act (42 U.S.C. 1395u) is amended by adding at the end the following new subsection: " “(q)(1) Regulations.The Secretary, in consultation with groups representing physicians who furnish anesthesia services, shall establish by regulation a relative value guide for use in all carrier 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. “(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.”. "
(b)[42 USC 1395u note](/us/usc/t42/s1395u). Effective Date.—The amendment made by subsection
(a)shall apply to services furnished on or after April 1, 1990. 103 STAT. 2211 SEC. 6107. DELAY IN UPDATE AND REDUCTION IN PERCENTAGE INCREASE IN THE MEDICARE ECONOMIC INDEX.
(a)Delaying Updates Until April 1.— [42 USC 1395u note](/us/usc/t42/s1395u).
(1)In general.—Subject to the amendments made by this section, any increase or adjustment in customary, prevailing, or reasonable charges, fee schedule amounts, maximum allowable actual charges, and other limits on actual charges with respect to physicians’ services and other items and services described in paragraph
(2)under part B of title XVIII of the Social Security Act which would otherwise occur as of January 1, 1990, shall be delayed so as to occur as of April 1, 1990, and, notwithstanding any other provision of law, the amount of payment under such part for such items and services which are furnished during the period beginning on January 1, 1990, and ending on March 31, 1990, shall be determined on the same basis as the amount of payment for such services furnished on December 31, 1989.
(2)Items and services covered.—The items and services described in this paragraph are items and services (other than ambulance services and clinical diagnostic laboratory services) for which payment is made under part B of title XVIII of the Social Security Act on the basis of a reasonable charge or a fee schedule.
(3)Extension of participation agreements and related provisions.—Notwithstanding any other provision of law—
(A)subject to the last sentence of this paragraph, each participation agreement in effect on December 31, 1989, under section 1842(h)(1) of the Social Security Act shall remain in effect for the 3-month period beginning on January 1, 1990;
(B)the effective period for such agreements under such section entered into for 1990 shall be the 9-month period beginning on April 1, 1990, and the Secretary of Health and Human Services shall provide an opportunity for physicians and suppliers to enroll as participating physicians and suppliers before April 1, 1990;
(C)instead of publishing, under section 1842(h)(4) of the Social Security Act, at the beginning of 1990, directories of participating physicians and suppliers for 1990, the Secretary shall provide for such publication, at the beginning of the 9-month period beginning on April 1, 1990, of such directories of participating physicians and suppliers for such period; and
(D)instead of providing to nonparticipating physicians under section 1842(b)(3)(G) of the Social Security Act at the beginning of 1990, a list of maximum allowable actual charges for 1990, the Secretary shall provide, at the beginning of the 9-month period beginning on April 1, 1990, such physicians such a list for such 9-month period. An agreement with a participating physician or supplier described in subparagraph
(A)in effect on December 31, 1989, under section 1842(h)(1) of the Social Security Act shall not remain in effect for the period described in subparagraph
(A)if the participating physician or supplier requests on or before December 31, 1989, that the agreement be terminated. 103 STAT. 2212
(b)Percentage Increase in MEI for 1990.—Section 1842(b)(4)(E) of the Social Security Act (42 U.S.C. 1395u(b)(4)(E)) is amended by adding at the end the following new clause: " “(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 Table #2 in the Joint Explanatory Statement of the Committee of Conference submitted with the Conference Report to accompany H.R. 3299 (the ‘Omnibus Budget Reconciliation Act of 1989’), 101st Congress, “(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)).”." SEC. 6108. MISCELLANEOUS PROVISIONS RELATING TO PAYMENT FOR PHYSICIANS’ SERVICES.
(a)Customary Charge for New Physicians.—
(1)Phase-in to prevailing charge level.— Section 1842(b)(4)(F) of the Social Security Act (42 U.S.C. 1395u(b)(4)(F)) is amended—
(A)by inserting “furnished during a calendar year” after “physicians’ services”, and
(B)by adding at the end the following: “For the first calendar year during which the preceding sentence no longer applies, the Secretary shall set the customary charge at a level no higher than 85 percent of the prevailing charge for the service.”.
(2)[42 USC 1395u note](/us/usc/t42/s1395u). Effective date.—(A) Subject to subparagraph (B), the amendments made by paragraph
(1)apply to services furnished in 1990 which were subject to the first sentence of section 1842(b)(4)(F) of the Social Security Act in 1989.
(B)The amendments made by paragraph
(1)shall not apply to services furnished in 1990 before April 1, 1990. With respect to physicians’ services furnished during 1990 on and after April 1, such amendments shall be applied as though any reference, in the matter inserted by such amendments, to the “first calendar year during which the preceding sentence no longer applies” were deemed a reference to the remainder of 1990.
(b)Limitation on Amounts for Certain Services Furnished by More Than One Specialty.—
(1)In general.—Section 1842(b) of such Act (42 U.S.C. 1395u(b)), as amended by section 6104(a) of this subtitle, is amended by adding at the end the following: " “(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 103 STAT. 2213under this part, after the effective date of the reduction, the physician’s actual charge is subject to a limit under subsection (j)(1)(D).”. "
(2)Special limits on actual charges.— Section 1842(j)(1)(D) of such Act (42 U.S.C. 1395u(j)(1)(D)) is amended—
(A)in clause (ii)(IV), by inserting “or (b)(15)(A)” before the comma at the end, and
(B)in clause (iii)(II), by striking “or (b)(14)(A)” and inserting “(b)(14)(A), or(b)(15)(A)”.
(3)Effective date.—The amendments made by this subsection [42 USC 1395u note](/us/usc/t42/s1395u).apply to procedures performed after March 31, 1990. SEC. 6109. WAIVER OF LIABILITY LIMITING RECOUPMENT IN CERTAIN CASES. [42 USC 1395gg note](/us/usc/t42/s1395gg). In the case where more than the correct amount may have been paid to a physician or individual under part B of title XVIII of the Social Security Act with respect to services furnished during the period beginning on July 1, 1985, and ending on March 31, 1986, as a result of a carrier’s establishing statewide fees for certain procedure codes while the carrier was m the process of implementing the national common procedure coding system of the Health Care Financing Administration, the provisions of section 1870(c) of the Social Security Act shall apply, without the need for affirmative action by such a physician or individual, so as to prevent any recoupment, or other decrease in subsequent payments, to the physician or individual. The previous sentence shall apply to claims for items and services which were reopened by carriers on or after July 31, 1987. SEC. 6110. REDUCTION IN CAPITAL PAYMENTS FOR OUTPATIENT HOSPITAL SERVICES. Section 1861(v)(1)(S) of the Social Security Act (42 U.S.C. 1395x(v)(1)(S)) is amended—
(1)by inserting “(i)” after “(S)”, and
(2)by adding at the end the following new clause: " “(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. “(II) Subclause
(I)shall not apply to payments with respect to the capital-related costs of any hospital that is a sole community hospital (as defined in section 1886(d)(5)(D)(iii)). “(III) In applying subclause
(I)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), capital-related 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.”." SEC. 6111. CLINICAL DIAGNOSTIC LABORATORY TESTS.
(a)Reduction of Limitation Amount on Payment Amount.—Section 1833(h) of the Social Security Act (42 U.S.C. 1395l(h)) is amended—
(1)in subparagraphs
(B)and
(C)of paragraph (1), by striking “during the period” and all that follows through “established on a nationwide basis” and inserting “on or after July 1, 1984”; 103 STAT. 2214
(2)in paragraph (4)(B)(i), by striking “or” at the end;
(3)in paragraph (4)(B)(ii)—
(A)by striking “and so long as a fee schedule for the test has not been established on a nationwide basis,”,
(B)by inserting “and before January 1, 1990,” after “March 31, 1988,”, and
(C)by striking the period at the end and inserting “, and”; and
(4)by adding at the end of paragraph (4)(B) the following new clause: " “(iii) after December 31, 1989, is equal to 93 percent of the median of all the fee schedules established for that test for that laboratory setting under paragraph (1).”. "
(b)Restriction on Payment to Referring Laboratory.—
(1)In general.— Section 1833(h)(5)(A)(ii) of such Act (42 U.S.C. 1395l(h)(5)(A)(ii)) is amended by striking “referring laboratory, and” and inserting “referring laboratory but only if— " “(I) Rural areas.the referring laboratory is located in, or is part of, a rural hospital, “(II) the referring laboratory is a wholly-owned subsidiary of 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 submits bills or requests for payment in any year are performed by another laboratory, and”."
(2)[42 USC 1395*l* note](/us/usc/t42/s1395l). Effective date.—The amendment made by paragraph
(1)shall apply with respect to clinical diagnostic laboratory tests performed on or after January 1, 1990. SEC. 6112. DURABLE MEDICAL EQUIPMENT.
(a)Delay in and Reduction of Update for 1990.—
(1)Inexpensive and routinely purchased durable medical equipment and items requiring frequent and substantial servicing.—Paragraphs (2)(B)(i) and (3)(B)(i) of section 1834(a) of the Social Security Act (42 U.S.C. 1395m(a)) are each amended by striking “in 1989” and inserting “in 1989 and in 1990”.
(2)Miscellaneous devices and items and other covered items.— Paragraph (8)(A)(ii) of such section is amended—
(A)in subclause (I), by striking “1989” and inserting “1989 and 1990”, and
(B)in subclause (II), by striking “1990, 1991,” and inserting “1991”.
(3)Oxygen and oxygen equipment.— Paragraph (9)(A)(ii) of such section is amended—
(A)in subclause (I), by striking “1989” and inserting “1989 and 1990”, and
(B)in subclause (II), by striking “1990, 1991,” and inserting “1991”.
(4)Conforming amendments.— Such section is further amended—
(A)in paragraph (7)(A)(i), by striking “this subparagraph” and inserting “this clause”;
(B)in paragraph (7)(B)(i), by inserting “in” after “rental of the item”; and 103 STAT. 2215
(C)in paragraph (7)(B)(ii), by striking “the payment amount” and all that follows and inserting “clause
(i)shall apply in the same manner as it applies to items furnished during 1989.”.
(b)Rental Payments for Enteral and Parenteral Pumps.— [42 USC 1395m note](/us/usc/t42/s1395m).
(1)In general.—Except as provided in paragraph (2), the amount of any monthly rental payment under part B of title XVIII of the Social Security Act for an enteral or parenteral pump furnished on or after April 1, 1990, shall be determined in accordance with the methodology under which monthly rental payments for such pumps were determined during 1989.
(2)Cap on Rental Payments, Servicing, and Repairs.— In the case of an enteral or parenteral pump described in paragraph
(1)that is furnished on a rental basis during a period of medical need—
(A)monthly rental payments shall not be made under part B of title XVIII of the Social Security Act for more than 15 months during such period, and
(B)after monthly rental payments have been made for 15 months during such period, payment under such part shall be made for maintenance and servicing of the pump in such amounts as the Secretary of Health and Human Services determines to be reasonable and necessary to ensure the proper operation of the pump.
(c)Reduction in Fee Schedules for Seat-Lift Chairs and Transcutaneous Electrical Nerve Stimulators.—Paragraph
(1)of such section 1834(a) is amended by adding at the end the following [42 USC 1395m](/us/usc/t42/s1395m).new subparagraph: " “(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.”."
(d)Treatment of Power Driven Wheelchairs.—
(1)As routinely purchased.— Section 1834(a)(2)(A) of the Social Security Act (42 U.S.C. 1395m(a)(2)(A)) is amended—
(A)by striking “or” at the end of clause (i),
(B)by adding “or” at the end of clause (ii), and
(C)by inserting after clause
(ii)the following new clause: “(iii) which is a power-driven wheelchair (other than a customized wheelchair that is classified as a customized item under paragraph
(4)pursuant to criteria specified by the Secretary),”.
(2)As customized item.—The Secretary of Health and Regulations.[42 USC 1395m note](/us/usc/t42/s1395m).Human Services shall by regulation specify criteria to be used by carriers in making determinations on a case-by-case basis as whether to classify power-driven wheelchairs as a customized item (as described in section 1834(a)(4) of the Social Security Act) for purposes of reimbursement under title XVIII of such Act.
(e)Ostomy Supplies as Part of Home Health Services.—
(1)Specific inclusion in home health services.—Section 1861(m)(5) of the Social Security Act (42 U.S.C. 1395x(m)(5)) is amended to read as follows: " “(5) medical supplies (including catheters, catheter supplies, ostomy bags, and supplies related to ostomy care, but excluding 103 STAT. 2216drugs and biologicals) and durable medical equipment while under such a plan;”. "
(2)Exclusion from covered items.—Section 1834(a)(13) of such Act (42 U.S.C. 1395m(a)(13)) is amended by inserting after “intraocular lenses” the following: “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)”.
(3)Requiring provision as part of home health services.— Section 1866(a)(1) of such Act (42 U.S.C. 1395cc(a)(1)) is amended—
(A)by striking “and” at the end of subparagraph (N),
(B)by striking the period at the end of subparagraph
(O)and inserting “; and”,
(C)and by inserting after subparagraph
(O)the following new subparagraph: " “(P) in the case of home health agencies which provide home health services to individuals entitled to benefits under this title who require ostomy supplies (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.”. "
(4)Regulations.[42 USC 1395m note](/us/usc/t42/s1395m). Effective date.—The amendments made by this subsection shall apply with respect to items furnished on or after January 1, 1990. SEC. 6113. MENTAL HEALTH SERVICES.
(a)Eliminating Restriction on Psychologists’ Services to Services Furnished at Community Mental Health Centers.—Section 1861(ii) of the Social Security Act (42 U.S.C. 1395x(ii)) is amended by striking “on-site at a community mental health center” and all that follows through “because of similar circumstances of the individual,”.
(b)Clinical Social Workers.—
(1)Coverage of services.— Section 1861(s)(2) of the Social Security Act (42 U.S.C. 1395x(s)(2)) is amended—
(A)by striking “and” at the end of subparagraph (L);
(B)by adding “and” at the end of subparagraph (M); and
(C)by adding at the end the following new subparagraph: " “(N) clinical social worker services (as defined in subsection (hh)(2));”. "
(2)Definitions.— Section 1861 of such Act (42 U.S.C. 1395x) is amended—
(A)in subsection (s)(2)(H)(ii), by striking “(hh)” and inserting “(hh)(2)”, and
(B)in subsection (hh)—
(i)by amending the heading to read as follows: " “Clinical Social Worker, Clinical Social Worker Services”, "
(ii)by redesignating clauses
(i)and
(ii)of paragraph (3)(B) as subclauses
(I)and (II), respectively,
(iii)by redesignating subparagraphs
(A)and
(B)of paragraph
(3)as clauses
(i)and (ii), respectively,
(iv)by redesignating paragraphs (1), (2), and
(3)as subparagraphs (A), (B), and (C), respectively,
(v)by striking “(hh)” and inserting “(hh)(1)”, and 103 STAT. 2217
(vi)by adding at the end the following new paragraph: " “(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.”. "
(3)Payment basis.— Section 1833 of such Act (42 U.S.C. 1395l) is amended—
(A)by inserting after clause
(E)of subsection (a)(1) the following new clause: “(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),”; and
(B)in subsection (p)—
(i)by striking “1861(s)(2)(L) and” and by inserting “1861(s)(2)(L),”, and
(ii)by inserting “and in the case of clinical social worker services for which payment may be made under this part only pursuant to section 1861(s)(2)(N),” after “1861(s)(2)(M),”.
(c)Development of Criteria Regarding Consultation with a Physician.—[42 USC 1395*l* note](/us/usc/t42/s1395l).The Secretary of Health and Human Services shall, taking into consideration concerns for patient confidentiality, develop criteria with respect to payment for qualified psychologist services for which payment may be made directly to the psychologist under part B of title XVIII of the Social Security Act under which such a psychologist must agree to consult with a patient’s attending physician in accordance with such criteria.
(d)Eliminating Dollar Limitation on Mental Health Services.—Section 1833(d)(1) of the Social Security Act (42 U.S.C. 1395l(d)(1)) is amended by striking “whichever” and all that follows in the first sentence and inserting “62½ percent of such expenses.”.
(e)Effective Date.—The amendments made by this section, and [42 USC 1395*l* note](/us/usc/t42/s1395l).the provisions of subsection (c), shall apply to services furnished on or after July 1, 1990, and the amendments made by subsection
(d)shall apply to expenses incurred in a year beginning with 1990. SEC. 6114. COVERAGE OF NURSE PRACTITIONER SERVICES IN NURSING FACILITIES.
(a)Services Covered.—Section 1861(s)(2) of the Social Security Act (42 U.S.C. 1395x(s)(2)) is amended—
(1)by striking “and” at the end of subparagraph (J), and
(2)in subparagraph (K)—
(A)in clause (i), by striking “and” at the end,
(B)in clause (ii), by striking “to such services” and inserting “to services described in clause
(i)or (ii)”,
(C)by redesignating clause
(ii)as clause (iii), and
(D)by inserting after clause
(i)the following new clause: 103 STAT. 2218 " “(ii) services which would be physicians’ services if furnished by a physician (as defined in subsection (r)(1)) and which are performed by a nurse practitioner (as defined in subsection (aa)(3)) working in collaboration (as defined in subsection (aa)(4)) with a physician (as defined in subsection (r)(1)) in a skilled nursing facility or nursing facility (as defined in section 1919(a)) which the nurse practitioner is legally authorized to perform by the State in which the services are performed, and”. "
(b)Determination of Payment Amount.—Section 1842(b)(12)(A) of such Act (42 U.S.C. 1395u(b)(12)(A)) is amended by striking “physician assistant acting under the supervision of a physician” and inserting “physician assistants and nurse practitioners”.
(c)Payment to Employer; Payment for Routine Visits by Members of a Team.—Section 1842(b) of such Act (42 U.S.C. 1395u(b)) is amended—
(1)in clause
(C)of the first sentence of paragraph (6), by inserting “or nurse practitioner” after “physician assistant”, and
(2)by adding at the end of paragraph (2), the following new subparagraph: " “(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 carriers 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.”. "
(d)Definition of Collaboration.—Section 1861(aa) of such Act (42 U.S.C. 1395x(aa)) is amended by adding at the end the following new paragraph: " “(4) 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.”. "
(e)[42 USC 1395u note](/us/usc/t42/s1395u). State Demonstration Projects on Application of Limitation on Visits Per Month Per Resident on Aggregate Basis for a Team.—The Secretary of Health and Human Services shall provide for at least 1 demonstration project under which, in the application of section 1842(b)(2)(C) of the Social Security Act (as added by subsection (c)(2) of this section) in one or more States, the limitation on the number of visits per month per resident would be applied on an average basis over the aggregate total of residents receiving services from members of the team.
(f)[42 USC 1395u note](/us/usc/t42/s1395u). Effective Date.—The amendments made by this section shall apply to services furnished on or after April 1, 1990. SEC. 6115. COVERAGE OF SCREENING PAP SMEARS.
(a)In General.—Section 1861 of the Social Security Act (42 U.S.C. 1395x), as amended by section 6003(g)(3)(A) of this subtitle, is amended—
(1)in subsection (s)—
(A)by striking “and” at the end of paragraph (12), 103 STAT. 2219
(B)by striking the period at the end of paragraph
(13)and inserting and”,
(C)by redesignating paragraphs
(14)and
(15)as paragraphs
(15)and (16), respectively, and
(D)by inserting after paragraph
(13)the following new paragraph; " “(14) screening pap smear.”; and "
(2)by adding at the end the following new subsection: " “Screening Pap Smear “(nn) 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 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 3 years (or such shorter period as the Secretary may specify in the case of a woman who is at nigh risk of developing cervical cancer (as determined pursuant to factors identified by the Secretary)).”."
(b)Revision of Exclusion Grounds.—Section 1862(a)(1)(F) of such Act (42 U.S.C. 1395y(a)(1)(F)) is amended by inserting before the semicolon at the end the following: “, and, in the case of screening pap smear, which is performed more frequently than is provided under 1861(nn)”.
(c)Conforming Amendments.—Sections 1864(a), 1865(a), 1902(a)(9)(C), and 1915(a)(1)(B)(ii)(I) of such Act (42 U.S.C. 1395aa(a), 1395bb(a), 1396(a)(9)(C), 1396n(a)(1)(B)(ii)(I)) are each amended by [42 USC 1396a](/us/usc/t42/s1396a).striking “paragraphs
(14)and (15)” and inserting “paragraphs
(15)and (16)”.
(d)Effective Date.—The amendments made by this section shall [42 USC 1395x note](/us/usc/t42/s1395x).apply to screening pap smears performed on or after July 1, 1990. SEC. 6116. COVERAGE UNDER. AND PAYMENT FOR, OUTPATIENT RURAL PRIMARY CARE HOSPITAL SERVICES UNDER PART B.
(a)Coverage.—
(1)Section 1861(mm) of the Social Security Act (42 U.S.C. 1395x(mm)), as added by section 6003(g)(3)(A) of this subtitle, is amended by adding at the end the following: " “(3) The term ‘outpatient rural primary care hospital services’ means medical and other health services furnished by a rural primary care hospital.”. "
(2)Section 1832(a)(2) of such Act (42 U.S.C. 1395k(a)(2)) is amended—
(A)in subparagraph (F), by striking “and” at the end,
(B)in subparagraph
(G)by striking the period at the end and inserting “;and”, and
(C)by inserting after subparagraph
(G)the following new subparagraph: " “(H) outpatient rural primary care hospital services (as defined in section 1861(mm)(3)).”. "
(b)Payment.—
(1)Section 1833(a) of such Act (42 US.C. 1395l(a)) is amended—
(A)in paragraph (2). in the matter before subparagraph (A), by striking “and (G)” and inserting “(G), and (H)”,
(B)in paragraph (4), by striking “and” at the end, 103 STAT. 2220
(C)in paragraph (5), by striking the period at the end arid inserting “; and”, and
(D)by inserting after paragraph
(5)the following new paragraph: " “(6) in the case of outpatient rural primary care hospital services, the amounts described in section 1834(g).”. "
(2)Section 1834 of such Act (42 U.S.C. 1395m) is amended by adding at the end the following new subsection: " “(g) Payment for Outpatient Rural Primary Care Hospital Services.— “(1) In general.— The amount of payment for outpatient rural primary care hospital services provided during a year before 1993 in a rural primary care hospital under this part shall be determined by one of the 2 following methods, as elected by the rural primary care hospital: “(A) Cost-based facility fee plus professional charges.— “(i) Facility fee.—With respect to facility services, not including any services for which payment may be made under clause (ii), there shall be paid amounts equal to the amounts described in section 1833(a)(2)(B) (describing amounts paid for hospital outpatient services). “(ii) Reasonable charges for professional services.—In electing treatment under this subparagraph, payment for professional medical services otherwise included within outpatient rural primary care hospital services shall be made under such other provisions of this part as would apply to payment for such services if they were not included in outpatient rural primary care hospital services. “(B) All-inclusive rate.—With respect to both facility services and professional medical services, there shall be paid amounts equal to 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, less the amount the hospital may charge as described in clause
(i)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) and for items and services furnished in connection with obtaining a second opinion required under section 1164(c)(2), or a third opinion, if the second opinion was in disagreement with the first opinion) exceed 80 percent of such costs. “(2) Development and implementation of all inclusive, prospective payment system.—Not later than January 1, 1993, the Secretary shall develop and implement a prospective payment system for determining payments under this part for outpatient rural primary care hospital services using a methodology that includes all costs in providing all such services (including related professional medical services) and that determines the payment amount for such services on a prospective basis.”. " 103 STAT. 2221 **Subpart B—****Technical and Miscellaneous Provisions** SEC. 6131. MODIFICATION OF PAYMENT FOR THERAPEUTIC SHOES FOR INDIVIDUALS WITH SEVERE DIABETIC FOOT DISEASE.
(a)Permitting Additional Inserts.—
(1)In general.— Section 1833(o) of the Social Security Act (42 U.S.C. 1395l(o)) is amended—
(A)by amending subparagraph
(A)of paragraph
(1)to read as follows: " “(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)in paragraphs (1)(B) and (2)(A), by striking “limit” and inserting “limits”;
(C)in the second sentence of paragraph (1), by inserting “(or inserts)” after “shoes” each place it appears;
(D)by amending clause
(i)of paragraph (2)(A) to read as follows: " “(i) for the furnishing of— “(I) one pair of custom molded shoes (including any inserts that are provided initially with the shoes) is $300, and “(II) any additional pair of inserts with respect to such shoes is $50; and”; and "
(E)in paragraph (2)(A)(ii)(II), by inserting “any pairs of” after “$50 for”.
(2)Conforming amendment.—Section 1861(s)(12) of such Act (42 U.S.C. 1395x(s)(12)) is amended by inserting “with inserts” after “custom molded shoes”.
(b)Permitting Substitution of Shoe Modifications for Inserts.—Section 1833(o)(2) of such Act is amended by adding at the end the following new subparagraph: " “(D) 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) pairs of inserts (other than the original pair of inserts with respect to such shoes). In such case, the Secretary shall substitute, for the limits established under subparagraph (A), such limits as the Secretary estimates will assure that there is no net increase in expenditures under this subsection as a result of this subparagraph.”. "
(c)Effective Date.— [42 USC 1395*l*](/us/usc/t42/s1395l).
(1)The amendments made by this section shall apply with respect to therapeutic shoes and inserts furnished on or after July 1, 1989.
(2)In applying the amendments made by this section, the increase under subparagraph
(C)of section 1833(o)(2) of the Social Security Act shall apply to the dollar amounts specified under subparagraph
(A)of such section (as amended by this section) in the same manner as the increase would have applied to the dollar amounts specified under subparagraph
(A)of such section (as in effect before the date of the enactment of this Act). 103 STAT. 2222 SEC. 6132. PAYMENTS TO CERTIFIED REGISTERED ANESTHETISTS.
(a)Extension and Expansion of CRNA Pass-Through.—Section 9320(k) of the Omnibus Budget Reconciliation Act of 1986, as added [42 USC 1395k note](/us/usc/t42/s1395k).by section 608(c)(2) of the Family Support Act of 1988, is amended—
(1)by striking “250” each place it appears and inserting “500”;
(2)in paragraph (1)—
(A)by striking “1989, 1990, and 1991” and inserting “a year (beginning with 1989)”, and
(B)by striking “before April 1, 1989,” and inserting “at any time before the year”;
(3)in paragraph (2)—
(A)by striking “1990 or 1991” and inserting “in a year (after 1989)”, and
(B)by striking “each respective year” and inserting “the year”; and
(4)by striking paragraph (3).
(b)Effective Date.—The amendments made by this section shall apply to services furnished on or after January 1, 1990. SEC. 6133. INCREASE IN PAYMENT LIMIT FOR PHYSICAL AND OCCUPATIONAL THERAPY SERVICES.
(a)In General.—Section 1833(g) of the Social Security Act (42 U.S.C. 1395l(g)) is amended by striking “$500” each place it appears and inserting “$750”.
(b)[42 USC 1395*l* note](/us/usc/t42/s1395l). Effective Date.—The amendment made by subsection
(a)shall apply to services furnished on or after January 1, 1990. SEC. 6134. [42 USC 1395m note](/us/usc/t42/s1395m). STUDY OF PAYMENT FOR PORTABLE X-RAY SERVICES. The Secretary of Health and Human Services shall conduct a study of the costs of furnishing, and payments for, portable x-ray Reports.services under part B of title XVIII of the Social Security Act. Not later than 1 year after the date of the enactment of this Act, the Secretary shall report to Congress on the results of such study and shall include a recommendation respecting whether payment for such services should be made in the same manner as for radiologists’ services or on the basis of a separate fee schedule. SEC. 6135. EXTENSION OF MUNICIPAL HEALTH SERVICE DEMONSTRATION PROJECTS. Section 9215 of the Consolidated Omnibus Budget Reconciliation [42 USC 1395b–1 note.](/us/usc/t42/s1395b/1)Act of 1985 is amended—
(1)by striking “, for a period of three additional years,” and inserting “through December 31, 1993,”; and
(2)Reports. by adding at the end the following: “The Secretary shall submit a report to Congress on the waiver program with respect to the quality of health care, beneficiary costs, and such other factors as may be appropriate.”. SEC. 6136. [42 USC 1395*l* note](/us/usc/t42/s1395l). STUDY OF REIMBURSEMENT FOR AMBULANCE SERVICES.
(a)In General.—The Secretary of Health and Human Services shall conduct a study to determine the adequacy and appropriateness of payment amounts under title XVIII of the Social Security Act for ambulance services. Such study shall examine at least the following:
(1)The effect of payment amounts on the provision of ambulance services in rural areas. 103 STAT. 2223
(2)The relationship of such payment amounts to the direct and indirect costs of providing ambulance services. Such relationship shall be examined separately— (A)(i) for tax-subsidized, municipally-owned and operated services,
(ii)for volunteer services,
(iii)for private, for-profit services, and
(iv)for hospital-owned services, and
(B)for different levels (such as basic life support and advanced life support) of such services.
(3)How such payment amounts compare to the payment amounts made for ambulance services under medicaid plans under title XIX of such Act
(b)Report.—By not later than one year after the date of the enactment of this Act, the Secretary shall submit a report to Congress on the results of the study conducted under subsection
(a)and shall include in the report such recommendations for changes in medicare payment policy with respect to ambulance services as may be needed to ensure access by medicare beneficiaries to quality ambulance services in metropolitan and rural areas. SEC. 6137. PROPAC STUDY OF PAYMENTS FOR SERVICES IN HOSPITAL OUTPATIENT DEPARTMENTS. [42 USC 1395*l* note](/us/usc/t42/s1395l).
(a)In General.—The Prospective Payment Assessment Commission shall conduct a study on payment under title XVIII of the Social Security Act for hospital outpatient services. Such study shall include an examination of—
(1)the sources of growth in spending for hospital outpatient services;
(2)the differences between the costs of delivering services in a hospital outpatient department as opposed to providing similar services in other appropriate settings (including ambulatory surgery centers and physician offices);
(3)the effects on outpatient hospital costs of the step-down method used to allocate hospital capital between inpatient and outpatient departments and the extent to which hospital outpatient costs were affected by the implementation of the prospective payment system of payment for inpatient hospital services and by increased review of such services by peer review organizations; and
(4)alternative methods for reimbursing hospitals for services in outpatient departments under the medicare program, including prospective payment methods, fee schedules, and such other methods as the Commission may consider appropriate.
(b)Reports.—(1) By not later than July 1, 1990, the Commission shall submit a report to Congress on the study conducted under subsection
(a)with respect to the portions of the study described in paragraphs (1), (2), and
(3)of such subsection, and shall include in the report such recommendations as the Commission deems appropriate.
(2)By not later than March 1, 1991, the Commission shall submit a report to Congress on the study conducted under subsection
(a)with respect to the portion of the study described in paragraph
(4)of such subsection, and shall include in the report such recommendations as the Commission deems appropriate. 103 STAT. 2224 SEC. 6138. [42 USC 1395w–1 note](/us/usc/t42/s1395w/1). PHYSPRC STUDY OF PAYMENTS FOR ASSISTANTS AT SURGERY.
(a)Study; Contents.—The Physician Payment Review Commission shall conduct a study of the payments made under title XVIII of the Social Security Act for assistants at surgery. Such study shall examine—
(1)the necessity and appropriateness of using an assistant at surgery;
(2)the use of physician and non-physician assistants at surgery;
(3)the appropriateness of providing for payments, and the appropriate level of payment, under title XVIII of the Social Security Act for assistants at surgery, and
(4)the effect of the amendments made by section 9338 of the Omnibus Budget Reconciliation Act of 1986 on the employment of registered nurses as assistants at surgery, and whether or not the reductions described in subsection
(d)of such section have been implemented.
(b)Report.—By not later than April 1, 1991, the Commission shall submit a report to Congress on the study conducted under subsection (a), and shall include in the report such recommendations as it deems appropriate. SEC. 6139. [42 USC 1395m note](/us/usc/t42/s1395m). GAO STUDY OF STANDARDS FOR USE OF AND PAYMENT FOR ITEMS OF DURABLE MEDICAL EQUIPMENT.
(a)Study.—The Comptroller General shall conduct a study of the appropriate uses of items of durable medical equipment and of the appropriate criteria for making determinations of medical necessity under title XVIII of the Social Security Act for such items, with particular emphasis on items (including seat-lift chairs) that may be subject to abusive billing practices. Such study shall include an analysis of—
(1)the appropriate use of forms in making medical necessity determinations for items of durable medical equipment under such title; and
(2)procedures for identifying items of durable medical equipment that should no longer be covered under such title.
(b)Use of Panel in Conducting Study.—The Comptroller General shall conduct such study with a panel convened by the Comptroller General consisting of—
(1)specialists in the disciplines of orthopedic medicine, rehabilitation, arthritis, and geriatric medicine;
(2)representatives of consumer organizations; and
(3)representatives of carriers under the medicare program.
(c)Report.—Not later than April 1, 1991, the Comptroller General shall submit a report to the Committees on Ways and Means and Energy and Commerce of the House of Representatives and the Committee on Finance of the Senate on the study conducted under subsection (a), and shall include in such report such recommendations as the Comptroller General deems appropriate. SEC. 6140. NARROWING OF RANGE OF AMOUNTS RECOGNIZED FOR ITEMS OF DURABLE MEDICAL EQUIPMENT. Paragraphs
(8)and
(9)of section 1834(a) of the Social Security Act (42 U.S.C. 1395m(a)) are each amended in subparagraph (D)—
(1)in clause (i), by striking “1991” and all that follows through “80 percent” and inserting “1991, may not exceed 125 percent, and may not be lower than 85 percent”; and 103 STAT. 2225
(2)in clause (ii), by striking “125 percent” and all that follows through “85 percent” and inserting “120 percent, and may not be lower than 90 percent”. SEC. 6141. PHYSICIAN OFFICE LABS.
(a)In General.—Section 1861(s) of the Social Security Act (42 U.S.C. 1395x(s)) is amended—
(1)in the matter following paragraph (14), by striking “which is independent” and all that follows through “per year,” and inserting the following: “, including a laboratory that is part of”;
(2)by redesignating paragraph
(16)as subparagraph (B); and
(3)by inserting immediately after paragraph
(16)the following:
(4)6)(A) meets the certification requirements under section 353 of the Public Health Service Act; and”.
(b)Effective Date.—The amendments made by subsection
(a)[42 USC 1395x note](/us/usc/t42/s1395x).shall take effect on the date of the enactment of this Act. SEC. 6142. STUDY OF REIMBURSEMENT FOR BLOOD CLOTTING FACTOR FOR HEMOPHILIA PATIENTS. The Secretary of Health and Human Services shall review the current methodology for reimbursing for blood clotting factor for hemophilia patients under part B of title XVIII of the Social Security Act and shall evaluate the effect of such methodology on the accessibility and affordability of such factor to medicare beneficiaries. By not later than 6 months after the date of the enactment Reports.of this Act, the Secretary shall 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 such review and shall include in such report such recommendations as the Secretary deems appropriate. **PART 3—****PROVISIONS RELATING TO PARTS A AND B** **Subpart A—****General Provisions** SEC. 6201. REDUCTIONS UNDER ORIGINAL SEQUESTER ORDER AND APPLICABILITY OF NEW SEQUESTER ORDER FOR HEALTH MAINTENANCE ORGANIZATIONS. [2 USC 902 note](/us/usc/t2/s902). Notwithstanding any other provision of law (including section 11002 or any other provision of this Act), the reductions in the amount of payments required under title XVIII of the Social Security Act made by the final sequester order issued by the President on October 16, 1989, pursuant to section 252(b) of the Balanced Budget and Emergency Deficit Control Act of 1985 shall continue to be effective (as provided by sections 252(a)(4)(B) and 256(d)(2) of such Act) through December 31, 1989, with respect to payments under section 1833(a)(1)(A) or 1876 of the Social Security Act, section 402 of the Social Security Amendments of 1967, or section 222 of the Social Security Amendments of 1972. Each such payment made during fiscal year 1990 after such date shall be increased by 1.42 percent above what it would otherwise be under this Act. SEC. 6202. MEDICARE AS SECONDARY PAYER.
(a)Identification of Medicare Secondary Payer Situations.— 103 STAT. 2226
(1)Disclosure of certain taxpayer identity information for verification of employment status of medicare beneficiary and spouse of medicare beneficiary.—
(A)In general.—Subsection
(1)of section 6103 of the [26 USC 6103](/us/usc/t26/s6103).Internal Revenue Code of 1986 (relating to disclosure of returns and return information for purposes other than tax administration) is amended by adding at the end thereof the following new paragraph: " “(12) Disclosure of certain taxpayer identity information for verification of employment status of medicare beneficiary and spouse of medicare beneficiary.— “(A) Return information from internal revenue service.—The Secretary shall, upon written request from the Commissioner of Social Security, disclose to the Commissioner available filing status and taxpayer identity information from the individual master files of the Internal Revenue Service relating to whether any medicare beneficiary identified by the Commissioner was a married individual (as defined in section 7703) for any specified year after 1986, and, if so, the name of the spouse of such individual and such spouse’s TIN. “(B) Return information from social security administration.—The Commissioner of Social Security shall, upon written request from the Administrator of the Health Care Financing Administration, disclose to the Administrator the following information: “(i) The name and TIN of each medicare beneficiary who is identified as having received wages (as defined in section 3401(a)) from a qualified employer in a previous year. “(ii) For each medicare beneficiary who was identified as married under subparagraph
(A)and whose spouse is identified as having received wages from a qualified employer in a previous year— “(I) the name and TIN of the medicare beneficiary, and “(II) the name and TIN of the spouse. “(iii) With respect to each such qualified employer, the name, address, and TIN of the employer and the number of individuals with respect to whom written statements were furnished under section 6051 by the employer with respect to such previous year. “(C) Disclosure by health care financing administration.—With respect to the information disclosed under subparagraph (B), the Administrator of the Health Care Financing Administration may disclose— “(i) to the qualified employer referred to in such subparagraph the name and TIN of each individual identified under such subparagraph as having received wages from the employer (hereinafter in this subparagraph referred to as the ‘employee’) for purposes of determining during what period such employee or the employee’s spouse may be (or have been) covered under a group health plan of the employer and what benefits are or were covered under the plan (including the name, address, and identifying number of the plan), 103 STAT. 2227 “(ii) to any group health plan which provides or provided coverage to such an employee or spouse, the name of such employee and the employee’s spouse (if the spouse is a medicare beneficiary) and the name and address of the employer, and, for the purpose of presenting a claim to the plan— “(I) the TIN of such employee if benefits were paid under title XVIII of the Social Security Act with respect to the employee during a period in which the plan was a primary plan (as defined in section 1862(b)(2)(A) of the Social Security Act), and “(II) the TIN of such spouse if benefits were paid under such title with respect to the spouse during such period, and “(iii) to any agent of such Administrator the information referred to in subparagraph
(B)for purposes of carrying out clauses
(i)and
(ii)on behalf of such Administrator. “(D) Special rules.— “(i) Restrictions on disclosure.—Information may be disclosed under this paragraph only for purposes of, and to the extent necessary in, determining the extent to which any medicare beneficiary is covered under any group health plan. “(ii) Timely response to requests.—Any request made under subparagraph
(A)or
(B)shall be complied with as soon as possible but in no event later than 120 days after the date the request was made. “(E) Definitions.—For purposes of this paragraph— “(i) Medicare beneficiary.—The term ‘medicare beneficiary’ means an individual entitled to benefits under part A, or enrolled under part B, of title XVIII of the Social Security Act, but does not include such an individual enrolled in part A under section 1818. “(ii) Group health plan.—The term ‘group health plan’ means— “(I) any group health plan (as defined in section 5000(b)(1)), and “(II) any large group health plan (as defined in section 5000(b)(2)). “(iii) Qualified employer.—The term ‘qualified employer’ means, for a calendar year, an employer which has furnished written statements under section 6051 with respect to at least 20 individuals for wages paid in the year. “(F) Termination.—Subparagraphs
(A)and
(B)shall not apply to— “(i) any request made after September 30, 1991, and “(ii) any request made before such date for information relating to— “(I) 1990 or thereafter in the case of subparagraph (A), or “(II) 1991 or thereafter in the case of subparagraph (B).” "
(B)Safeguards.—(i) Paragraph
(3)of section 6103(a) of such Code is [26 USC 6103](/us/usc/t26/s6103).amended by inserting “(1)(12),” after “"(e)(1)(D)(iii),"”. 103 STAT. 2228
(ii)Subparagraph
(A)of section 6103(p)(3) of such Code is amended [26 USC 6103](/us/usc/t26/s6103).by striking “or (11)” and inserting “(11), or (12)”.
(iii)Paragraph
(4)of section 6103(p) of such Code is amended in the material preceding subparagraph
(A)by striking “or
(9)shall” and inserting “(9), or
(12)shall”.
(iv)Clause
(ii)of section 6103(p)(4)(F) of such Code is amended by striking “or (11)” and inserting “(11), or (12)”.
(v)The next to the last sentence of paragraph
(4)of section 6103(p) of such Code is amended by inserting “or which receives any information under subsection (1)(12)(B) and which discloses any such information to any agent” before “, this paragraph”.
(C)Penalty.—Paragraph
(2)of section 7213(a) of such Code is amended by striking “or (10)” and inserting “(10), or (12)”.
(D)[26 USC 6103 note](/us/usc/t26/s6103).Effective date.—The amendments made by this paragraph shall take effect on the date of the enactment of this Act.
(2)Responsibilities of hcfa.—
(A)In general.—Section 1862(b) of the Social Security Act (42 U.S.C. 1395y(b)), as amended by subsection (b)(1) of this section, is amended by inserting after paragraph
(4)the following new paragraph: " “(5) Identification of secondary payer situations.— “(A) Requesting matching information.— “(i) Commissioner of social security.—The Commissioner of Social Security shall, not less often than annually, transmit to the Secretary of the Treasury a list of the names and TINs of medicare beneficiaries (as defined in section 6103(1)(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 Health Care Financing Administration 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(1)(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 the 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)(D)(iii) of such 103 STAT. 2229Code), 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 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). “(iii) Sunset on requirement.—Clause
(ii)shall not apply to inquiries made after September 30, 1991.”. "
(B)Deadline for first request.—The Commissioner of [42 USC 1395y note](/us/usc/t42/s1395y).Social Security shall first—
(i)transmit to the Secretary of the Treasury information under paragraph (5)(A)(i) of section 1862(b) of the Social Security Act (as inserted by subparagraph (A)), and
(ii)request from the Secretary disclosure of information described in section 6013(1)(12)(A) of the Internal Revenue Code of 1986, by not later than 14 days after the date of the enactment of this Act.
(b)Uniform Enforcement and Coordination of Benefits.—
(1)In general.—Section 1862 of the Social Security Act (42 U.S.C. 1395y) is amended—
(A)in the heading, by adding at the end the following: “and medicare as secondary payer”; and
(B)by amending subsection
(b)to read as follows: " “(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, for any item or service furnished to an individual 65 years of age or older at the time the individual is covered under the plan by reason of the current employment of the individual (or the individual’s spouse), that the individual is entitled to benefits under this title under section 226(a), and “(II) shall provide that any employee age 65 or older, and any employee’s spouse age 65 or older, shall be entitled to the same benefits under the plan under the same conditions as any employee, and the spouse of such employee, under age 65. 103 STAT. 2230 “(ii) Exclusion of group health plan of a small employer.—Clause
(i)shall not apply to a group health plan unless the plan is sponsored by 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 multi-employer 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 employment with an employer that does not have 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; 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.—Clause
(i)shall not apply to an item or service furnished in a month to an individual if for the month the individual is, or 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. “(B) Disabled active individuals in large group health plans.— “(i) In general.—A large group health plan (as defined in clause (iv)(II)) may not take into account that an active individual (as defined in clause (iv)(I)) is entitled to benefits under this title under section 226(b). “(ii) Exception for individuals with end stage renal disease.—Clause
(i)shall not apply to an item or service furnished in a month to an individual if for the month the individual is, or would upon application be, entitled to benefits under section 226A. “(iii) Sunset.—Clause
(i)shall only apply to items and services furnished on or after January 1, 1987, and before January 1, 1992. “(iv) Definitions.—In this subparagraph: “(I) Active individual.—The term ‘active individual’ means an employee (as may be defined in regulations), the employer, self-employed individual (such as the employer), an individual associated with the employer in a business relationship, or a member of the family of any of such persons. “(II) Large group health plan.—The term ‘large group health plan’ has the meaning given such term in section 5000(b)(2) of the Internal Revenue Code of 1986. 103 STAT. 2231 “(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 benefits under this title solely by reason of section 226A during the 12-month period which begins with the earlier of— “(I) the month in which a regular course of renal dialysis is initiated, or “(II) in the case of an individual who receives a kidney transplant, the first month in which he would be eligible for benefits under part A (if he had filed an application for such benefits) under the provisions of section 226A(b)(1)(B); 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 taking into account that an individual is entitled to benefits under this title solely by reason of section 226A after the end of the 12-month period described in clause (i). “(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 promptly (as determined in accordance with regulations) 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 this 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. “(B) Conditional payment.— “(i) Primary plans.—Any payment under this title with respect to any item or service to which subparagraph
(A)applies shall be conditioned on reimbursement to the appropriate Trust Fund established by this title when notice or other information is received that payment for such item or service has been or could be made under such subparagraph. “(ii) Action by united states.—In order to recover payment under this title for such an item or service, the United States may bring an action against any entity which is required or responsible under this subsection to pay with respect to such item or service (or any portion thereof) under a primary plan (and may, in accordance with paragraph (3)(A) collect double 103 STAT. 2232damages against that entity), or against any other entity (including any physician or provider) that has received payment from that entity with respect to the item or service, and may join or intervene in any action related to the events that gave rise to the need for the item or service. “(iii) 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. “(iv) 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. “(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 such paragraphs
(1)and (2)(A). “(B) Reference to excise tax with respect to non-conforming 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. “(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.”." 103 STAT. 2233
(2)Enforcement through excise tax.— Section 5000 of the Internal Revenue Code of 1986 is amended— [26 USC 5000](/us/usc/t26/s5000).
(A)by striking “LARGE” in the heading;
(B)in subsection (a), by striking “large” each place it appears; and
(C)by amending subsections
(b)and
(c)to read as follows: " “(b) Group Health Plan and Large Group Health Plan.—For purposes of this section— “(1) Group health plan.—The term ‘group health plan’ means any plan of, or contributed to by, an employer (including a self-insured plan) to provide health care (directly or otherwise) to the employer’s employees, former employees, or the families of such employees or former employees. “(2) Large group health plan.—The term ‘large group health plan’ means a plan of, or contributed to by, an employer or employee organization (including a self-insured plan) to provide health care (directly or otherwise) to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families, that covers employees of at least one employer that normally employed at least 100 employees on a typical business day during the previous calendar year. “(c) Nonconforming Group Health Plan.—For purposes of this section, the term ‘nonconforming group health plan’ means a group health plan or large group health plan that at any time during a calendar year does not comply with the requirements of subparagraphs
(A)and
(C)or subparagraph (B), respectively, of section 1862(b)(1) of the Social Security Act.”. "
(3)Repeal of certain alternative enforcement provisions.—
(A)Denial of deduction for group health plans.—Subsection
(i)of section 162 of such Code (relating to group health plans) is repealed.
(B)Conforming amendment.—Section 4980B(g)(2) of such Code is amended by striking “162(i)” and inserting “5000(b)(1)”.
(C)Age discrimination in employment act.—The Age Discrimination in Employment Act of 1967 is amended—
(i)by striking subsection
(g)of section 4, and[29 USC 623](/us/usc/t29/s623).[29 USC 631](/us/usc/t29/s631).
(ii)in section 12(a), by striking “(except the provisions of section 4(g))”.
(4)Clerical and conforming amendments.—
(A)Chapter 47 of the Internal Revenue Code of 1986 is amended—
(i)in the heading, by striking “LARGE”, and
(ii)in the table of sections, by striking “large”.
(B)The item in the table of chapters of subtitle D of such Code relating to chapter 47 is amended by striking “large”.
(C)Sections 1837(i) and 1839(b) of the Social Security Act (42 U.S.C. 1395p(i), 1395r(b)) are each amended by striking “1862(b)(3)(A)(iv)” and “1862(b)(4)(B)” each place each appears and inserting “1862(b)(1)(A)(v)” and “1862(b)(1)(B)(iv)”, respectively.
(5)Effective date.—The amendments made by this subsection [42 USC 162 note](/us/usc/t42/s162).shall apply to items and services furnished after the date of the enactment of this Act.
(c)Special Enrollment Period for Disabled Employees.— 103 STAT. 2234
(1)In general.— Section 1837(i) of the Social Security Act (42 U.S.C. 1395p(i)) is amended—
(A)in paragraph (1)—
(i)by striking subparagraph (A),
(ii)by redesignating subparagraphs
(B)and
(C)as subparagraphs
(A)and (B), respectively, and
(iii)in the second sentence, by inserting “not described in the previous sentence” after “In the case of an individual”; and
(B)in paragraph (2)—
(i)in subparagraph (B)(i), by striking “(1)(B)” and inserting “(1)(A)”,
(ii)by striking subparagraph (A),
(iii)by redesignating subparagraphs
(B)through
(D)as subparagraphs
(A)through (C), respectively, and
(iv)in the second sentence, by inserting “not described in the previous sentence” after “In the case of an individual”.
(2)Conforming amendment.—The second sentence of section 1839(b) of such Act (42 U.S.C. 1395r(b)) is amended by striking “during which the individual has attained the age of 65 and”.
(3)[42 USC 1395p note](/us/usc/t42/s1395p). Effective date.—The amendments made by this subsection shall apply to enrollments occurring after, and premiums for months sifter, the second calendar quarter beginning after the date of the enactment of this Act.
(d)No Matching Based on Private Activities Required in Fiscal Intermediary Agreements and Carrier Contracts.—
(1)Fiscal intermediary agreements.—Section 1816(c)(1) of the Social Security Act (42 U.S.C. 1395h(c)(1)) is amended by adding at the end the following: “The Secretary may not require, as a condition of entering into or renewing an agreement under this section or under section 1871, that a fiscal intermediary match data obtained other than in its activities under this part with data used in the administration of this part for purposes of identifying situations in which the provisions of section 1862(b) may apply.”.
(2)Carrier contracts.—Section 1842(b)(2)(A) of such Act (42 U.S.C. 1395u(b)(2)(A)) is amended by adding at the end the following: “The Secretary may not require, as a condition of entering into or renewing a contract under this section or under section 1871, that a carrier match data obtained other than in its activities under this part with data used in the administration of this part for purposes of identifying situations in which section 1862(b) may apply.”.
(3)[42 USC 1395h note](/us/usc/t42/s1395h). Effective date.—The amendments made by this subsection shall apply to agreements and contracts entered into or renewed on or after the date of the enactment of this Act.
(e)Treatment of Employment as a Member of a Religious Order.—
(1)In general.— Section 1862(b)(1) of the Social Security Act (42 U.S.C. 1395y(b)(1)), as amended by subsection (b)(1) of this section, is amended by adding at the end the following new subparagraph: " “(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 103 STAT. 2235order 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.”. "
(2)Effective date.—The amendment made by paragraph
(1)[42 USC 1395y note](/us/usc/t42/s1395y).shall apply to items and services furnished on or after October 1, 1989. SEC. 6203. PAYMENT FOR END STAGE RENAL DISEASE SERVICES.
(a)Maintenance of Current Composite Rate.—
(1)In general.— Section 9335(a)(1) of the Omnibus Budget Reconciliation Act of 1986 is amended— [42 USC 1395rr note](/us/usc/t42/s1395rr).
(A)by striking “and before October 1, 1988” and inserting “and before October 1, 1990”, and
(B)by adding at the end the following: “No change may be made in the base rate in effect as of September 30, 1990, unless the Secretary makes such change in accordance with notice and comment requirements set forth in section 1871(b)(1) of such Act.”.
(2)Effective date.—The amendment made by paragraph
(1)[42 USC 1396rr note](/us/usc/t42/s1396rr).shall take effect as if included in the enactment of the Omnibus Budget Reconciliation Act of 1986.
(b)Requirements for Patients Dealing Directly With Medicare.—
(1)Limitation on amount of payment generally.—Section 1881(b)(7) of the Social Security Act (42 U.S.C. 1395rr(b)(7)) is amended by inserting after the second sentence the following new sentence: “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.”.
(2)Agreements with providers of services.— Section 1881(b)(4) of such Act (42 U.S.C. 1395rr(b)(4)) is amended—
(A)by striking “(4)” and inserting “(4)(A)”, and
(B)by adding at the end the following new subparagraph: " “(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.”. "
(3)Effective Date.—The amendments made by this subsection [42 USC 1395rr note](/us/usc/t42/s1395rr).shall apply with respect to dialysis services, supplies, and equipment furnished on or after February 1, 1990. 103 STAT. 2236 SEC. 6204. PHYSICIAN OWNERSHIP OF. AND REFERRAL TO, HEALTH CARE ENTITIES.
(a)Prohibition of Certain Financial Arrangements Between Referring Physicians and Clinical Laboratories.—Title XVIII of the Social Security Act is amended by inserting after section 1876 the following new section: " “limitation on certain physician referrals “Sec. 1877.
(a)[42 USC 1395nn](/us/usc/t42/s1395nn).Prohibition of Certain Referrals.— “(1) In general.— Except as provided in subsection (b), if a physician (or 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 clinical laboratory 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 clinical laboratory 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 immediate family member) 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)(A)) between the physician (or immediate family member) and the entity. An ownership or investment interest described in subparagraph
(A)may be through equity, debt, or other means. “(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— “(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 employed by such physician or group practice and who are personally 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 clinical laboratory 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 for the centralized provision of the group’s clinical laboratory services, and 103 STAT. 2237 “(B) that are billed by the physician performing or supervising the services, by a group practice of which such physician is a member, 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. “(3) Prepaid plans.— In the case of services furnished— “(A) by an organization with a contract under section 1876 to an individual enrolled with the organization, “(B) by an organization described in section 1833(a)(1)(A) to an individual enrolled with the organization, or “(C) by an organization 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. “(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. “(c) General Exception Related Only to Ownership or Investment Prohibition for Ownership in Publicly-Traded Securities.—Ownership of investment securities (including shares or bonds, debentures, notes, or other debt instruments) which were purchased on terms generally available to the public and which are in a corporation that— “(1) is listed for trading on the New York Stock Exchange or on the American Stock Exchange, or is a national market system security traded under an automated interdealer quotation system operated by the National Association of Securities Dealers, and “(2) had, at the end of the corporation’s most recent fiscal year, total assets exceeding $100,000,000, shall not be considered to be an ownership or investment interest described in subsection (a)(2)(A). “(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 clinical laboratory services provided by a hospital located in Puerto Rico. “(2) Rural provider.—In the case of clinical laboratory services if the laboratory furnishing the services is in a rural area (as defined in section 1886(d)(2)(D)). “(3) Hospital ownership.— In the case of clinical laboratory 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, and “(B) the ownership or investment interest is in the hospital itself (and not merely in a subdivision thereof). “(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.— Payments made for the rental or lease of office space if— 103 STAT. 2238 “(A) there is a written agreement, signed by the parties, for the rental or lease of the space, which agreement— “(i) specifies the space covered by the agreement and dedicated for the use of the lessee, “(ii) provides for a term of rental or lease of at least one year; “(iii) provides for payment on a periodic basis of an amount that is consistent with fair market value; “(iv) provides for an amount of aggregate payments that does not vary (directly or indirectly) based on the volume or value of any referrals of business between the parties; and “(v) would be considered to be commercially reasonable even if no referrals were made between the parties; “(B) in the case of rental or lease of office space in which a physician who is an interested investor (or an interested investor who is an immediate family member of the physician) has an ownership or investment interest, the office space is in the same building as the building in which the physician (or group practice of which the physician is a member) has a practice; and “(C) the arrangement meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse. “(2) Employment and service arrangements with hospitals.— An arrangement between a hospital and a physician (or immediate family member) for the employment of the physician (or family member) or for the provision of administrative services, if— “(A) the arrangement is for identifiable services; “(B) the amount of the remuneration under the arrangement— “(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 hospital; and “(D) the arrangement meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse. “(3) Other service arrangements.— Remuneration from an entity (other than a hospital) under an arrangement if— “(A) the arrangement is— “(i) for specific identifiable services as the medical director or as a member of a medical advisory board at the entity pursuant to a requirement of this title, “(ii) for specific identifiable physicians’ services to be furnished to an individual receiving hospice care if payment for such services may only be made under this title as hospice care, “(iii) for specific physicians’ services furnished to a nonprofit blood center, or 103 STAT. 2239 “(iv) for specific identifiable administrative services (other than direct patient care services), but only under exceptional circumstances specified by the Secretary in regulations; “(B) 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 a hospital; and “(C) the arrangement meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse. “(4) 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. “(5) Isolated transactions.— In the case of an isolated financial transaction, such as a one-time sale of property, 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 a hospital, and “(B) the transaction meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse. “(6) Salaried physicians in a group practice.—A compensation arrangement involving payment by a group practice of the salary of a physician member of the group practice. “(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 arrangements, including— “(1) the covered items and services provided by the entity, and “(2) the names and all of the medicare provider numbers of the physicians who are interested investors or who are immediate relatives of interested investors. Such information shall be provided in such form, manner, and at such times as the Secretary shall specify. Such information shall first be provided not later than 1 year after the date of the enactment of this section. “(g) Sanctions.— “(1) Denial of payment.—No payment may be made under this title for a clinical laboratory 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. 103 STAT. 2240 “(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. “(h) Definitions.—For purposes of this section: “(1) Compensation arrangement; remuneration.—(A) The term ‘compensation arrangement’ means any arrangement involving any remuneration between a physician (or immediate family member) and an entity. “(B) The term ‘remuneration’ includes any remuneration, directly or indirectly, overtly or covertly, in cash or in kind. “(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.— The term ‘group practice’ means a group of two or more physicians legally organized as a partnership, professional corporation, foundation, not-for-profit corporation, faculty practice plan, or similar association— “(A) in which each physician who is a member of the group provides substantially the full range of services 103 STAT. 2241which the physician routinely provides (including medical care, consultation, diagnosis, or treatment) through the joint use of shared office space, facilities, equipment, and personnel; “(B) for which substantially all of the services of the physicians who are members of the group are provided through the group and are billed in the name of the group and amounts so received are treated as receipts of the group; “(C) in which the overhead expenses of and the income from the practice are distributed in accordance with methods previously determined by members of the group; and “(D) which meets such other standards as the Secretary may impose by regulation. In the case of a faculty practice plan associated with a hospital 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), the previous sentence shall be applied only with respect to the services provided within the faculty practice plan. “(5) Interested investor; disinterested investor.—The term ‘interested investor’ means, with respect to an entity, an investor who is a physician in a position to make or to influence referrals or business to the entity (or who is an immediate family member of such an investor), and the term ‘disinterested investor’ means an investor other than an interested investor. “(6) Referral; referring physician.— “(A) Physicians’ services.—Except as provided in subparagraph (C), in the case of a clinical laboratory service which under law is required to be provided by (or under the supervision of) a physician, the request by a physician for the 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), in the case of another clinical laboratory service, the request or establishment of a plan of care by a physician which includes the provision of the clinical laboratory 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, if such services are furnished by (or under the supervision of) such pathologist pursuant to a consultation requested by another physician does not constitute a ‘referral’ by a ‘referring physician’.”. "
(b)Requiring Requests for Payment to Include Information on Referring Physician.—Section 1833 of such Act (42 U.S.C. 1395l) is amended by adding at the end the following new subsection: " “(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 103 STAT. 2242meaning of section 1877) shall include the name and provider number for the referring physician and indicate whether or not the referring physician is an interested investor (within the meaning of section 1877(h)(5)). “(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).”. "
(c)[42 USC 1395nn note](/us/usc/t42/s1395nn). Effective Dates.—
(1)Except as provided in paragraph (2), the amendments made by this section shall become effective with respect to referrals made on or after January 1, 1992.
(2)The reporting requirement of section 1877(f) of the Social Security Act shall take effect on October 1, 1990.
(d)[42 USC 1395nn note](/us/usc/t42/s1395nn). Deadline for Certain Regulations.—The Secretary of Health and Human Services shall publish final regulations to carry out section 1877 of the Social Security Act by not later than October 1, 1990.
(e)[42 USC 1395nn note](/us/usc/t42/s1395nn). GAO Study of Ownership by Referring Physicians.—The Comptroller General shall conduct a study of the ownership of hospitals and other providers of medicare services by referring physicians. Such study shall investigate—
(1)the types of such ownership arrangements and types of services offered under such arrangements,
(2)the returns generally earned by physician investors in such arrangements,
(3)the effect of such arrangements on
(A)the utilization of items and services by medicare beneficiaries,
(B)medicare expenditures, and
(C)other entities providing items and services in the communities served,
(4)the effect of such arrangements on independent providers of similar services, and
(5)the effect on the provision of in-office clinical laboratory services of the limitation on payment for certain referrals contained in section 1877 of the Social Security Act. Reports. By not later than February 1, 1991, the Comptroller General shall report to Congress on the results of such study. 103 STAT. 2243
(f)Quarterly Reports to Congress on Comparative Utilization.—[42 USC 1395nn note](/us/usc/t42/s1395nn).The Secretary of Health and Human Services shall submit to the Congress and the Comptroller General, not later than 90 days after the end of each calendar quarter, a report which provides a statistical profile (by State and type of item or service) comparing utilization of items and services by medicare beneficiaries served by entities in which the referring physician has a direct or indirect financial interest and by medicare beneficiaries served by other entities. SEC. 6205. COSTS OF NURSING AND ALLIED HEALTH EDUCATION.
(a)Recognition of Costs of Certain Hospital-Based Nursing Schools.—
(1)In general.—(A) The reasonable costs incurred by a hospital [42 USC 1395x note](/us/usc/t42/s1395x).in training students of a hospital-based nursing school shall be allowable as reasonable costs under title XVIII of the Social Security Act and reimbursed under such title on the same basis as if they were allowable direct costs of a hospital-operated educational program (other than an approved graduate medical education program) if, before June 15, 1989, and thereafter, the hospital demonstrates that for each year, it incurs at least 50 percent of the costs of training nursing students at such school, the nursing school and the hospital share some common board members, and all instruction is provided at the hospital or, if in another building, a building on the immediate grounds of the hospital.
(B)Section 8411(b) of the Technical and Miscellaneous Revenue Act of 1988 is amended by striking “1989, 1990, and” and [42 USC 1395b–1 note](/us/usc/t42/s1395b/1).inserting “1986 through”.
(2)Effective date.—Paragraph (1)(A) shall apply with respect [42 USC 1395x note](/us/usc/t42/s1395x).to cost reporting periods beginning on or after the date of the enactment of this Act and on or before the date on which the Secretary issues regulations pursuant to subsection (b)(2)(A).
(b)Delay in Recoupment of Certain Nursing and Allied Education Costs.— [42 USC 1395ww note](/us/usc/t42/s1395ww).
(1)The Secretary of Health and Human Services (in this subsection referred to as the “Secretary”) shall not, before October 1, 1990, recoup from, or otherwise reduce or adjust payments under title XVIII of the Social Security Act to, hospitals because of alleged overpayments to such hospitals under such title due to a determination that costs which were reported by a hospital on its medicare cost reports relating to approved nursing and allied health education programs were allowable costs and are included in the definition of “operating costs of inpatient hospital services” pursuant to section 1886(a)(4) of such Act, so that no pass-through of such costs was permitted under that section. (2)(A) Before July 1, 1990, the Secretary shall issue regulations Regulations.respecting payment of costs described in paragraph (1).
(B)In issuing such regulations—
(i)the Secretary shall allow a comment period of not less than 60 days,
(ii)the Secretary shall consult with the Prospective Payment Assessment Commission, and 103 STAT. 2244
(iii)Federal Register, publication.any final rule shall not be effective prior to October 1, 1990, or 30 days after publication of the final rule in the Federal Register, whichever is later.
(C)Such regulations shall specify—
(i)the relationship required between an approved nursing or allied health education program and a hospital for the program’s costs to be attributed to the hospital;
(ii)the types of costs related to nursing or allied health education programs that are allowable by medicare;
(iii)the distinction between costs of approved educational activities as recognized under section 1886(a)(3) of the Social Security Act and educational costs treated as operating costs of inpatient hospital services; and
(iv)the treatment of other funding sources for the program. SEC. 6206. DISCLOSURE OF ASSUMPTIONS IN ESTABLISHING AAPCC: ELIMINATION OF COORDINATED OPEN ENROLLMENT REQUIREMENT.
(a)Disclosure of Assumptions in Establishing AAPCC.—
(1)In general.— Section 1876(a)(1) of the Social Security Act (42 U.S.C. 1395mm(a)(1)) is amended by adding at the end the following new subparagraph: " “(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)[42 USC 1395mm note](/us/usc/t42/s1395mm). Notice.—Before July 1, 1990, the Secretary of Health and Human Services shall provide for notice to eligible organizations of the methodology used in making the announcement under section 1876(a)(1)(A) of the Social Security Act for 1990.
(b)Elimination of Coordinated Open Enrollment Requirement.—
(1)In general.— Section 1876(c)(3)(A) of such Act (42 U.S.C. 1395mm(c)(3)(A)) is amended—
(A)in clause (i), by striking “30-day period” and inserting “period or periods”, and
(B)by striking clause
(ii)and inserting the following: " “(ii)
(I)Contracts.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 103 STAT. 2245area, 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.”. "
(2)Effective date.—The amendments made by paragraph
(1)[42 USC 1395mm note](/us/usc/t42/s1395mm).shall take effect 60 days after the date of the enactment of this Act. SEC. 6207. EXTENSION OF EXPIRING AUTHORITIES.
(a)Delay in Effective Date in Physician Incentive Rules.—Section 9313(c)(2)(B) of the Omnibus Budget Reconciliation Act of 1986, as amended by section 4016 of the Omnibus Budget Reconciliation Act of 1987, is amended by striking “April 1, 1990” and [42 USC 1320a–7a note](/us/usc/t42/s1320a/7a).inserting “April 1, 1991”.
(b)Extension of Prohibition on Cost Savings Policies Before Beginning of Fiscal Year.—Section 4039(d) of the Omnibus Budget Reconciliation Act of 1987, as amended by section 426(e) of the Medicare Catastrophic Coverage Act of 1988, is amended— [42 USC 1395ww note](/us/usc/t42/s1395ww).
(1)by striking “October 15, 1989” and inserting “October 15, 1990”, and
(2)by inserting “or in fiscal year 1991” after “fiscal year 1990”. **Subpart B—****Technical and Miscellaneous Provisions** SEC. 6211. MEDICARE HOSPITAL PATIENT PROTECTION AMENDMENTS.
(a)Scope of Hospital Responsibility for Screening.—Subsection
(a)of section 1867 of the Social Security Act (42 U.S.C. 1395dd) is amended by striking “department” the third place it appears and inserting the following: “department, including ancillary services routinely available to the emergency department,”.
(b)Informed Refusals of Treatment or Transfers.—Subsection
(b)of such section is amended—
(1)in paragraph (2)—
(A)by inserting “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,” after “in that paragraph”,
(B)by striking “or treatment” and inserting “and treatment”, and
(C)by adding at the end the following new sentence: “The hospital shall take all reasonable steps to secure the individual’s (or person’s) written informed consent to refuse such examination and treatment.”; and
(2)in paragraph (3)—
(A)by inserting “and informs the individual (or a person acting on the individual’s behalf) of the risks and benefits to the individual of such transfer,” after “with subsection (c)”, and 103 STAT. 2246
(B)by adding at the end the following new sentence: “The hospital shall take all reasonable steps to secure the individual’s (or person’s) written informed consent to refuse such transfer.”.
(c)Authorization for Transfers.—
(1)Informed consent for transfers at individual request.—Subsection (c)(1)(A)(i) of such section is amended by striking “requests that the transfer be effected” and inserting “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”.
(2)Clarifying physician authorization for transfers.— Subsection (c)(1)(A) of such section is amended—
(A)by striking “or” at the end of clause (i);
(B)in clause (ii)—ii
(i)by striking “, or other qualified medical personnel when a physician is not readily available in the emergency department,”, and
(ii)by inserting “of transfer” after “information available at the time”:
(C)by striking and” at the end of clause
(ii)and inserting “, or”, and
(D)by adding at the end the following new clause: " “(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”. "
(3)Standard for authorizing transfer.— Subsection (c)(1)(A)(ii) of such section is amended—
(A)by striking “, based upon the reasonable risks and benefits to the patient, and”, and
(B)by striking “individual’s medical condition” and inserting “individual and, in the case of labor, to the unborn child”.
(4)Inclusion of summary of risks and benefits in certificate of transfer.—Subsection (c)(1) of such section is amended by adding at the end the following: " “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.”. "
(5)Provision of services pending transfer.— Subsection (c)(2) of such section is amended—
(A)by redesignating subparagraphs
(A)through
(D)as subparagraphs
(B)through (E), respectively, and
(B)by inserting before subparagraph (B), as so redesignated, the following new subparagraph: " “(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;”. "
(d)Requiring Maintenance of Records of Transfers.—Subsection (c)(2)(C) of such section, as redesignated by subsection (c)(5)(A) of this section, is amended—
(1)by striking “provides” and inserting “sends to”, and 103 STAT. 2247
(2)by striking “with appropriate medical records” and all that follows through “transferring hospital” and inserting “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)(2)(C)) who has refused or failed to appear within a reasonable time to provide necessary stabilizing treatment”.
(e)Physician Liability.—Subsection (d)(2) of such subsection is amended—
(1)by amending subparagraph
(B)to read as follows: " “(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 knowingly 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 knowing and willful or negligent, 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).”; and "
(2)by striking subparagraph
(C)and inserting the following: " “(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.”. "
(f)Additional Obligations.—Such section is amended by adding at the end the following new subsections: " “(g) Nondiscrimination.—A participating hospital that has specialized capabilities or facilities (such as burn units, shock-103 STAT. 2248trauma 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 physician because the physician refuses to authorize the transfer of an individual with an emergency medical condition that has not been stabilized.”. "
(g)Change in “Patient” Terminology.—
(1)Subsection
(c)of such section is amended—
(A)by striking “Patient” and inserting “Individual”, and
(B)by striking “a patient” “the patient”, “patient’s”, and “patients” each place each appears and inserting “an individual”, “the individual”, “individual’s”, and “individuals”, respectively.
(2)Subsection (e)(5) of such section is amended by striking “a patient” each place it appears and inserting “an individual”.
(h)Clarification of “Emergency Medical Condition” Definition.—
(1)In general.— Subsection
(e)of such section (as amended by section 6003(g)(3)(D)(xiv)) is amended—
(A)in paragraph (1), by striking “means” and all that follows and inserting the following: " “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 women 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.”; "
(B)by striking paragraph (2);
(C)in paragraph (4)(A)—
(i)by inserting “described in paragraph (1)(A)” after “emergency medical condition”,
(ii)by inserting “or occur during” after “likely to result from”,
(iii)by inserting before the period at the end the following: “, or, with respect to an emergency medical 103 STAT. 2249condition described in paragraph (1)(B), to deliver (including the placenta)”;
(D)in paragraph (4)(B)—
(i)by inserting “described in paragraph (1)(A)” after “emergency medical condition”,
(ii)by inserting “or occur during” after “to result from”, and
(iii)by inserting before the period at the end the following: “, or, with respect to an emergency medical condition described in paragraph (1)(B), that the woman has delivered (including the placenta)”; and
(E)by redesignating paragraphs
(3)through
(6)as paragraphs
(2)through (5), respectively.
(2)Conforming amendments.— Such section is further amended—
(A)in the heading, by striking “active”;
(B)in subsection (a), by striking “or to determine if the individual is in active labor (within the meaning of section (e)(2))”;
(C)in the heading of subsection (b), by striking “Active”;
(D)in subsection (b)(1)—
(i)by striking “or is in active labor”, and
(ii)in subparagraph (A), by striking “or to provide for treatment of the labor”; and
(E)in subsection (c)(1), by striking “(e)(4)(B)) or is in active labor” and inserting “(e)(3)(B))”.
(i)Effective Date.—The amendments made by this section shall [42 USC 1395dd note](/us/usc/t42/s1395dd).take effect on the first day of the first month that begins more than 180 days after the date of the enactment of this Act, without regard to whether regulations to carry out such amendments have been promulgated by such date. SEC. 6212. HEALTH MAINTENANCE ORGANIZATIONS AND COMPETITIVE MEDICAL PLANS.
(a)Temporary Waiver for Watts Health Foundation.—Section [42 USC 1395mm note](/us/usc/t42/s1395mm).9312(c)(3)(D) of the Omnibus Budget Reconciliation Act of 1986, as added by section 4018(d) of the Omnibus Budget Reconciliation Act of 1987, is amended—
(1)in clause (i), by striking “January 1, 1990” and inserting [42 USC 1320a–7a note](/us/usc/t42/s1320a/7a).“January 1, 1994”; and
(2)by amending clauses
(ii)and
(iii)to read as follows: " “(ii) beginning on January 1, 1990, the Secretary of Health and Human Services shall conduct an annual review of the organization to determine the organization’s compliance with the quality assurance requirements of section 1876(c)(6) of such Act; and “(iii) after January 1, 1990, if the organization receives an unfavorable review under clause (ii), the Secretary, after notice to the organization of the unfavorable review and an opportunity to correct any deficiencies identified during the review, may provide for the sanction described in section 1876(f)(3) of such Act effective with respect to individuals enrolling with the organization after the date the Secretary notifies the organization that the organization is not in compliance with the requirements of section 1876(c)(6) of such Act.”. " 103 STAT. 2250
(b)Limit on Charges for Emergency Services and Out-of-Area Coverage.—
(1)In general.—Section 1876 of the Social Security Act (42 U.S.C. 1395mm) is amended by adding at the end the following new subsection: " “(j)(1)(A) In the case of physicians’ services described in paragraph
(2)which are furnished by a participating physician to an individual enrolled with an eligible organization under this section and enrolled under part B, the participation agreement under section 1842(h)(1) is deemed to provide that the physician will accept as payment in full from the eligible organization the amount that would be payable to the physician 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 described in this paragraph are physicians’ services which— “(A) are emergency services or out-of-area coverage (described in clauses
(iii)and
(iv)of subsection (b)(2)(A)), and “(B) are furnished to an enrollee of an eligible organization under this section by a person who is not under a contract with the organization.”. "
(2)Effective date.—[42 USC 1395mm note](/us/usc/t42/s1395mm).The amendment made by paragraph
(1)shall apply to services furnished on or after April 1, 1990.
(c)Making Authority for Benefit Stabilization Fund Permanent.—
(1)Repeal on limitation on establishment of a fund.—Section 2350(b) of the Deficit Reduction Act of 1984 (Public Law [42 USC 1395mm note](/us/usc/t42/s1395mm).98–369) is amended by striking paragraphs
(3)and (4).
(2)Repeal on limiting period of use.—Section 1876(g)(5) of the Social Security Act (42 U.S.C. 1395mm(g)(5)) is amended by striking “and during a period of not longer than four years”.
(3)[42 USC 1395mm note](/us/usc/t42/s1395mm). Effective date.—The amendments made by this subsection shall take effect on the date of the enactment of this Act. SEC. 6213. RURAL HEALTH CLINIC SERVICES.
(a)Staffing Requirements; Inclusion of Nurse-Midwife Services.—Section 1861(aa)(2) of the Social Security Act (42 U.S.C. 1395x(aa)(2)) is amended—
(1)by striking “; and” at the end of subparagraph
(I)and inserting a semicolon;
(2)by redesignating subparagraph
(J)as subparagraph (K); and
(3)by inserting after subparagraph
(I)the following new subparagraph: " “(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”. "
(b)Coverage of Social Worker Services.—Section 1861(aa)(1)(B) of such Act (42 U.S.C. 1395x(aa)(1)(B)) is amended— 103 STAT. 2251
(1)by striking “or” before “by”; and
(2)by inserting “or by a clinical social worker (as defined in subsection (hh)(1)),” after “Secretary)”.
(c)Expansion of Eligible Areas.—The second sentence of section 1861(aa)(2) of such Act is amended— [42 USC 1395x](/us/usc/t42/s1395x).
(1)by striking “designated by the Secretary” and inserting “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 that is designated by the Secretary”;
(2)by striking “section 1302(7) of the Public Health Service Act or” and inserting “section 330(b)(3) or 1302(7) of the Public Health Service Act,”; and
(3)by striking “medical care manpower,” and inserting the following: “medical care manpower,
(III)as a high impact area described in section 329(a)(5) of that Act, or
(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,”.
(d)Effective Date.—The amendments made by subsections
(a)[42 USC 1395x note](/us/usc/t42/s1395x).through
(c)of this section shall take effect October 1, 1989.
(e)Dissemination of Rural Health Clinic Information.— State and local governments.[42 USC 1395x note](/us/usc/t42/s1395x).
(1)In general.—Not later than 60 days after the date of the enactment of this Act, the Secretary of Health and Human Services, in consultation with the Director of the Office of Rural Health Policy, shall disseminate to health care facilities and to the chief executive officer, chief health officer, and chief human services officer of each State, applications and other necessary information to enable such a facility to apply for designation as a rural health clinic for the purposes of titles XVIII and XIX of the Social Security Act.
(2)Definitions.— For purposes of this subsection:
(A)The term “health care facility” means a community health center or a migrant health center, or a hospital, home health agency, or skilled nursing facility participating in a program established under title XVIII or title XIX of the Social Security Act.
(B)The term “State” includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.
(f)Treatment of Certain Facilities as Rural Health Clinics.—[42 USC 1395x note](/us/usc/t42/s1395x).The Secretary of Health and Human Services shall not deny certification of a facility as a rural health clinic under section 1861(aa)(2) of the Social Security Act if the facility is located on an island and would otherwise be qualified to be certified as such a facility but for the requirement that the services of a physician assistant or nurse practitioner be provided in the facility.
(g)Expansion of Functions of Office of Rural Health Policy.—Section 711(b) of the Social Security Act (42 U.S.C. 912(b)) is amended—
(1)in paragraph (2)(A), by striking “health care issues” and inserting “health care issues, including rural mental health, rural infant mortality prevention, and rural occupational safety and preventive health promotion”;
(2)in paragraph (2)(C), by striking “rural areas” and inserting “rural areas, including programs providing community-based mental health services, prenatal and infant care services, and 103 STAT. 2252rural occupational safety and preventive health education and promotion”; and
(3)in paragraph (4), by striking “rural health care” and inserting “rural health care, including activities relating to rural mental health, rural infant mortality, and rural occupational safety and preventive health promotion”. SEC. 6214. DETERMINING ELIGIBILITY OF HOME HEALTH AGENCIES FOR WAIVER OF LIABILITY FOR DENIED CLAIMS.
(a)Scope of Waiver and Determination of Denied Claim.—Section 1879(f) of the Social Security Act (42 U.S.C. 1395pp(f)) is amended—
(1)in paragraph (1), by striking “with respect to” and all that follows and inserting a period; and
(2)in paragraph (4), by striking “(4) The requirement” and inserting “(4)(A) The requirement”, and by adding at the end the following new subparagraph: " “(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.”. "
(b)Monitoring of Denied Claims.—Section 1879(f) of such Act (42 U.S.C. 1395pp(f)) is amended by adding at the end the following new paragraph: " “(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.”. "
(c)[42 USC 1395pp note](/us/usc/t42/s1395pp). Effective Date.—The amendments made by subsection
(a)shall apply to determinations for quarters beginning on or after the date of the enactment of this Act. SEC. 6215. EXTENSION OF AUTHORITY TO CONTRACT WITH FISCAL INTERMEDIARIES AND CARRIERS ON OTHER THAN A COST BASIS.
(a)In General.—Section 2326(a) of the Deficit Reduction Act of [42 USC 1395h note](/us/usc/t42/s1395h).1984 is amended—
(1)in the first sentence, by striking “fiscal year 1989” and inserting “fiscal year 1993”,
(2)in the second sentence, by striking “over a period of time” and inserting “over a 2-year period of time”, and
(3)by inserting after the second sentence the following: “In addition, during such period the Secretary may enter into such additional agreements and contracts without regard to such cost reimbursement provisions if the fiscal intermediary or carrier involved and the Secretary agree to waive such provisions, but the Secretary may not take any action that has the effect of requiring that the intermediary or carrier agree to waive such provisions, including requiring such a waiver as a condition for entering into or renewing such an agreement or contract.”.
(b)[42 USC 1395h note](/us/usc/t42/s1395h). Effective Date.—The amendments made by subsection
(a)shall apply beginning with fiscal year 1990. 103 STAT. 2253 SEC. 6216. EXPANSION OF RURAL HEALTH MEDICAL EDUCATION DEMONSTRATION PROJECT.
(a)Number or Projects.—Section 4038(a) of the Omnibus Budget Reconciliation Act of 1987 is amended by striking “four sponsoring [42 USC 1395ww note](/us/usc/t42/s1395ww).hospitals” and inserting “10 sponsoring hospitals”.
(b)Selection of New Projects.—Section 4038(c) of such Act is amended—
(1)by striking “In selecting” and inserting “(1) In selecting”;
(2)by redesignating paragraphs
(1)and
(2)as subparagraphs
(A)and (B); and
(3)by adding at the end the following new paragraph: " “(2) The provisions of paragraph
(1)shall not apply with respect to applications submitted as a result of amendments made by section 6216 of the Omnibus Budget Reconciliation Act of 1989.”. "
(c)Commencement of New Projects.—Section 4038(e) of such Act is amended by inserting “(or the date of the enactment of the Omnibus Budget Reconciliation Act of 1989, in the case of a project conducted as a result of the amendments made by section 6216 of such Act)” after “this Act”. SEC. 6217. INNER-CITY HOSPITAL TRIAGE DEMONSTRATION PROJECT. [42 USC 1395ww note](/us/usc/t42/s1395ww).
(a)Establishment.—The Secretary of Health and Human Services shall establish a demonstration project in a public hospital that is located in a large urban area and that has established a triage system, under which the Secretary shall make payments for 3 years to reimburse the hospital for the reasonable costs of operating the system, including costs—
(1)to train hospital personnel to operate and participate in the system; and
(2)to provide services to patients who might otherwise be denied appropriate and prompt care.
(b)Limitations on Payment.—(1) The Secretary may not make payment under the demonstration project established under subsection
(a)for costs that the Secretary determines are not reasonable.
(2)The amount of payment made under the demonstration project during a single year may not exceed $500,000. SEC. 6218. GAO STUDY OF ADMINISTRATIVE COSTS OF MEDICARE PROGRAM.
(a)Study.—The Comptroller General shall conduct a study of the administrative burden of medicare regulations and program requirements on providers of services, fiscal intermediaries, and carriers, and shall include in such study—
(1)an assessment of current administrative costs to such entities and of trends in such administrative costs since 1982; and
(2)a comparison of the administrative burden to such entities in providing services to individuals who are not medicare beneficiaries. For purposes of such assessment, administrative costs shall include personnel costs, training costs, the costs of data and communications systems as affected by changes in requirements of the medicare program, and costs to such entities of non-compliance with such requirements resulting from the failure of the Secretary of Health and Human Services to provide entities with adequate notice of changes in program requirements. 103 STAT. 2254
(b)Report.—Not later than March 31, 1990, the Comptroller General shall submit a report to the Committees on Ways and Means and Energy and Commerce of the House of Representatives and the Committee on Finance of the Senate on the study conducted under subsection (a). SEC. 6219. PROVISIONS RELATING TO END STAGE RENAL DISEASE SERVICES.
(a)Flexibility in Funding ESRD Network Organizations.—The last sentence of section 1881(b)(7) of the Social Security Act (42 U.S.C. 1395rr(b)(7)) is amended by striking “network administrative” and all that follows and inserting the following: “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.”. "
(b)Liability Protection for ESRD Network Organizations and Prohibition Against Disclosure of Information.—Section 1881(c) of such Act (42 U.S.C. 1395rr(c)) is amended by adding at the end the following new paragraph: " “(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.”. "
(c)Report on Payment for Erythropoietin (EPO).—Not later than April 1, 1990, the Secretary of Health and Human Services shall submit a report to the Committees on Ways and Means and Energy and Commerce of the House of Representatives and the Committee on Finance of the Senate and to the Comptroller General on the methodology and rationale used to establish a payment rate for the drug erythropoietin
(EPO)under title XVIII of the Social Security Act and shall include in the report
(1)a summary of information provided to the Secretary by the manufacturer of EPO and used by the Secretary to establish such rate and
(2)a plan for ensuring the appropriateness of such rate in the future. SEC. 6220. AMENDMENTS RELATING TO THE UNITED STATES BIPARTISAN COMMISSION ON COMPREHENSIVE HEALTH CARE.
(a)Commission Name.—Section 401 of the Medicare Catastrophic [42 USC 1395b note](/us/usc/t42/s1395b).Coverage Act of 1988 is amended by inserting before the period at the end the following: “and also to be known as the ‘Claude Pepper Commission’ or the ‘Pepper Commission’ ”.
(b)[42 USC 1395b note](/us/usc/t42/s1395b). 4 Vice Chairmen.—Section 403(b) of such Act is amended—
(1)by striking “Vice Chairman” and inserting “Vice Chairmen”; and 103 STAT. 2255
(2)by striking “vice chairman” and inserting “4 vice chairmen”.
(c)Additional Mailing Privilege.—Section 405(f) of such Act is [42 USC 1395b note](/us/usc/t42/s1395b).amended by inserting before the period at the end the following: “, and shall, for purposes of the frank, be considered a commission of Congress as described in section 3215 of title 39, United States Code”.
(d)Printing of Reports.—Section 405 of such Act is further amended by adding at the end the following new subsection: " “(j) Printing.—For purposes of costs relating to printing and binding, including the costs of personnel detailed from the Government Printing Office, the Commission shall be deemed to be a committee of the Congress.”. "
(e)Report Deadlines.—Section 406 of such Act is amended— [42 USC 1395b note](/us/usc/t42/s1395b).
(1)in each of subsections
(a)and (b), by striking “, not later than” and all that follows through “for the Commission,”; and
(2)by adding at the end the following new subsection: " “(c) Deadlines.—The two reports required under this section shall be submitted concurrently by not later than November 9, 1989.”. " SEC. 6221. NATIONAL COMMISSION ON CHILDREN. Section 1139 of the Social Security Act (42 U.S.C. 1320b–9) is amended—
(1)in subsection (d)—
(A)by striking “September 30, 1988” and inserting “March 31, 1990”; and
(B)by striking “March 31, 1990” and inserting “March 31, 1991”;
(2)in subsection (e), by striking “September 30, 1990” and inserting “March 31, 1991”;
(3)in subsection (j), by striking “such sums” and inserting “through fiscal year 1991, such sums”; and
(4)by adding at the end thereof the following new subsections: " “(k)(1) The Commission is authorized to accept donations of Gifts and property.money, property, or personal services. Funds received from donations shall be deposited in the Treasury in a separate fund created for this purpose. Funds appropriated for the Commission and donated funds may be expended for such purposes as official reception and representation expenses, public surveys, public service announcements, preparation of special papers, analyses, and documentaries, and for such other purposes as determined by the Commission to be in furtherance of its mission to review national issues affecting children. “(2) For purposes of Federal income, estate, and gift taxation, money and other property accepted under paragraph
(1)of this subsection shall be considered as a gift or bequest to or for the use of the United States. “(3) Expenditure of appropriated and donated funds shall be subject to such rules and regulations as may be adopted by the Commission and shall not be subject to Federal procurement requirements. “(l) The Commission is authorized to conduct such public surveys as it deems necessary in support of its review of national issues affecting children and, in conducting such surveys, the Commission shall not be deemed to be an ‘agency’ for the purpose of section 3502 of title 44, United States Code.”. " 103 STAT. 2256 SEC. 6222. [42 USC 1395x note](/us/usc/t42/s1395x). CONTINUED USE OF HOME HEALTH WAGE INDEX IN EFFECT PRIOR TO JULY 1, 1989, UNTIL AFTER JULY 1, 1991. Notwithstanding the requirement of section 1861(v)(1)(L)(iii) of the Social Security Act, the Secretary of Health and Human Services shall, in determining the limits of reasonable costs under title XVIII of the Social Security Act with respect to services furnished by home health agencies, continue to utilize the wage index that was in effect for cost reporting periods beginning before July 1, 1989, until cost reporting periods beginning on or after July 1, 1991. SEC. 6223. HCFA PERSONNEL STUDY.
(a)In General.—The Secretary of Health and Human Services shall (subject to subsection (c)) enter into an agreement with the National Academy of Public Administration (hereafter in this section referred to as the “Academy”) to—
(1)study personnel administration at the Health Care Financing Administration (hereafter in this section referred to as “HCFA”);
(2)assess the adequacy of HCFA staffing; and
(3)recommend any needed changes with respect to HCFA staffing to the Secretary of Health and Human Services and the Congress.
(b)Requirements of Study.—In conducting the study, the Academy shall interview management officials at HCFA and other appropriate agencies. The study shall include consideration of—
(1)the average years in service, years to retirement and average age of various categories of HCFA personnel;
(2)the adequacy of HCFA practices to recruit personnel to replace persons who retire or resign and train new employees in the intricacies of HCFA programs;
(3)the grade structure of various categories of HCFA personnel, and the need for additional nonsupervisory positions at the GS–13, GS–14, and GS–15 levels for particularly skilled and expert personnel needed for HCFA to carry out its missions;
(4)the grade structure at HCFA with Federal agencies of similar size and responsibilities;
(5)whether bonus payments or other incentives are needed for HCFA to recruit and retain specialized personnel;
(6)particular problems in hiring personnel that may prevent recruitment and retention of qualified staff;
(7)Office of Personnel Management rules that may be burdensome to the hiring process; and
(8)how HCFA can more appropriately address the priorities of both Congress and the executive branch of Government.
(c)Arrangements for Study.—The Secretary shall request the Academy, acting through appropriate units, to submit an application to conduct the study described in this section. If the Academy submits an acceptable application, the Secretary shall enter into an appropriate arrangement with the Academy for the conduct of the study. If the Academy does not submit an acceptable application to conduct the study, the Secretary may request one or more appropriate nonprofit private entities to submit an application to conduct the study and may enter into an appropriate arrangement for the conduct of the study by the entity which submits the best acceptable application. 103 STAT. 2257
(d)Date of Report.—The results of the study shall be reported to Congress and the Secretary of Health and Human Services no later than December 31, 1990. SEC. 6224. PEER REVIEW ORGANIZATIONS.
(a)Peer Review of Non-Physician Services.—
(1)In general.—Section 1154(a)(1) of the Social Security Act (42 U.S.C. 1320c–3(a)(1)) is amended by adding at the end the following: " “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)Effective date.—The amendment made by paragraph
(1)[42 USC 1320c–3 note](/us/usc/t42/s1320c/3).shall apply to contracts entered into after the date of the enactment of this Act
(b)Provider and Practitioner Right to Reconsideration of PRO Determination before Notice to Beneficiary.—
(1)In general.— Section 1154(a)(3) of the Social Security Act (42 U.S.C. 1320c–3(a)(3)) is amended—
(A)in subparagraph (A), by striking “subparagraph (B)” and inserting “subparagraphs
(B)and (D)”,
(B)in subparagraph (B), by inserting “with respect to services or items disapproved by reason of subparagraph
(A)or
(C)of paragraph (1)” after “under subparagraph (A)”, and
(C)by adding at the end the following new subparagraphs: " “(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) In the case of services and items disapproved by reason of paragraph (1)(B), the notice to the patient shall state the following: ‘In the judgment of the peer review organization, the medical care received was not acceptable under the medicare program. The reasons for the denial have been discussed with your physician and hospital.’.”. "
(2)Conforming amendment.—Section 1155 of such Act (42 U.S.C. 1320c–5) is amended by inserting “, subject to section [42 USC 1320c–4 note](/us/usc/t42/s1320c/4).1154(a)(3)(D),” before “any practitioner or provider”.
(3)Effective date.—The amendments made by this subsection [42 USC 1320c–3 note](/us/usc/t42/s1320c/3).shall apply to determinations by utilization and quality control peer review organizations with respect to which prelimi-103 STAT. 2258nary notifications were made under section 1154(a)(3)(B) of the Social Security Act more than 30 days after the date of the enactment of this Act. **PART 4—****PART B PREMIUM** SEC. 6301. PART B PREMIUM. Section 1839(e) of the Social Security Act (42 U.S.C. 1395r(e)) is amended by striking “1990” each place it appears and inserting “1991”. **Subtitle B—****Medicaid** **PART 1—****GENERAL PROVISIONS** SEC. 6401. MANDATORY COVERAGE OF CERTAIN LOW-INCOME PREGNANT WOMEN AND CHILDREN.
(a)In General.—Section 1902 of the Social Security Act (42 U.S.C. 1396a) is amended—
(1)in subsection (a)(10)(A)(i)—
(A)by striking “or” at the end of subclause (IV),
(B)by striking the semicolon at the end of subclause
(V)and inserting “, or”, and
(C)by adding at the end the following new subclause: " “(VI) who are described in subparagraph
(C)of subsection (l)(1) and whose family income does not exceed the income level the State is required to establish under subsection (l)(2)(B) for such a family;”; "
(2)in subsection (a)(10)(A)(ii)(IX), by inserting “or clause (i)(VI)” after “clause (i)(IV)”;
(3)in subsection (l)(1)—
(A)by striking “and” at the end of subparagraph (B), and
(B)by striking subparagraph
(C)and inserting the following: " “(C) children who have attained one year of age but have not attained 6 years of age, and “(D) at the option of the State, children born after September 30, 1983, who have attained 6 years of age but have not attained 7 or 8 years of age (as selected by the State),”; "
(4)in subsection (l)(2)(A)—
(A)in clause (ii), by amending subclause
(II)to read as follows: " “(II) April 1, 1990, 133 percent, or, if greater, the percentage provided under clause (iv).”; and "
(B)by adding at the end the following new clause: " “(iv) In the case of a State which, as of the date of the enactment of this clause, has established under clause (i), or has enacted legislation authorizing, or appropriating funds, to provide for, a percentage (of the income official poverty line) that is greater than 133 percent, the percentage provided under clause
(ii)for medical assistance on or after April 1, 1990, shall not be less than— “(I) the percentage specified by the State in an amendment to its State plan (whether approved or not) as of the date of the enactment of this clause, or 103 STAT. 2259 “(II) if no such percentage is specified as of the date of the enactment of this clause, the percentage established under the State’s authorizing legislation or provided for under the State’s appropriations.”; "
(5)in subparagraph
(B)of subsection (l)(2)—
(A)by striking “, or, if less, the percentage established under subparagraph (A)”, and
(B)by redesignating such subparagraph as subparagraph (C);
(6)in subsection (l)(2), by inserting after subparagraph
(A)the following new subparagraph: " “(B) For purposes of paragraph
(1)with respect to individuals described in subparagraph
(C)of such paragraph, the State shall establish an income level which is equal to 133 percent of the income official poverty line described in subparagraph
(A)applicable to a family of the size involved.”; "
(6)in subsection (l)(3)—
(A)by inserting“, (a)(10)(A)(i)(VI),” after “(a)(10)(A)(i)(IV)”, and
(B)in subparagraph (C), by striking “or (C)” and inserting “,(C), or (D)”;
(7)in subsection (l)(4)—
(A)in subparagraph (A), by inserting “and for children described in subsection (a)(10)(A)(i)(VI)” after “(a)(10)(A)(i)(IV)”, and
(B)in subparagraph (B), by inserting “or (a)(10)(A)(i)(VI)” after “(a)(10)(A)(i)(IV)”;
(8)in subsection (e)(T), by striking “or (C)” and inserting, (C), or (D)”; and
(9)in subsection (r)(2)(A), by inserting “(a)(10)(A)(i)(VI),” after “(a)(10)(A)(i)(IV),”.
(b)Conforming Amendment.—Section 1903(f)(4) of such Act (42 U.S.C. 1396b(f)(4)) is amended by inserting “1902(a)(10)(A)(i)(VI),” after “1902(a)(10)(A)(i)(IV),”.
(c)Effective Date.— [42 USC 1396a note](/us/usc/t42/s1396a).
(1)Except as provided in paragraph (2), the amendments made by this section shall apply to payments under title XIX of the Social Security Act for calendar quarters beginning on or after April 1, 1990, with respect to eligibility for medical assistance on or after such date, without regard to whether or not final regulations to carry out such amendments have been promulgated by such date.
(2)In the case of a State plan for medical assistance under title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation (other than legislation appropriating funds) in order for the plan to meet the additional requirements imposed by the amendments made by this section, the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of the enactment of this Act. 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. 103 STAT. 2260 SEC. 6402. PAYMENT FOR OBSTETRICAL AND PEDIATRIC SERVICES.
(a)Codification of Adequate Payment Level Provisions.—Section 1902(a)(30)(A) of the Social Security Act (42 U.S.C. 1396a(a)(30)(A)) is amended by inserting before the semicolon at the end the following: “and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area”.
(b)Assuring Adequate Payment Levels for Obstetrical and Pediatric Services.—Title XIX of such Act, as amended by section 303 of the Family Support Act of 1988, is amended by redesignating [42 USC 1396s](/us/usc/t42/s1396s).section 1926 as section 1927 and by inserting after section 1925 the following new section: " “assuring adequate payment levels for obstetrical and pediatric services “Sec. 1926. (a)(1) [42 USC 1396r–7](/us/usc/t42/s1396r/7).A State plan under this title shall not be considered to meet the requirement of section 1902(a)(30)(A) with respect to obstetrical services (as defined in paragraph (4)(A)), as of July 1 of each year (beginning with 1990), unless, by not later than April 1 of such year, the State submits to the Secretary an amendment to the plan that specifies the payment rates to be used for such services under the plan in the succeeding period and includes in such submission such additional data as will assist the Secretary in evaluating the State’s compliance with such requirement, including data relating to how rates established for payments to health maintenance organizations under section 1903(m) take into account such payment rates. “(2) A State plan under this title shall not be considered to meet the requirement of section 1902(a)(30)(A) with respect to pediatric services (as defined in paragraph (4)(B)), as of July 1 of each year (beginning with 1990), unless, by not later than April 1 of such year, the State submits to the Secretary an amendment to the plan that specifies, by pediatric procedure, the payment rates to be used for such services under the plan in the succeeding period and includes in such submission such additional data as will assist the Secretary in evaluating the State’s compliance with such requirement, including data relating to how rates established for payments to health maintenance organizations under section 1903(m) take into account such payment rates. “(3) The Secretary, by not later than 90 days after the date of submission of a plan amendment under paragraph
(1)or (2), shall— “(A) review each such amendment for compliance with the requirement of section 1902(a)(30)(A), and “(B) approve or disapprove each such amendment. If the Secretary disapproves such an amendment, the State shall immediately submit a revised amendment which meets such requirement. “(4) In this section: “(A) The term ‘obstetrical services’ means services relating to pregnancy covered under the State plan provided by an obstetrician, obstetrician-gynecologist, family practitioner, certified nurse midwife, or certified family nurse practitioner and does not include inpatient or outpatient hospital services or other institutional services. 103 STAT. 2261 “(B) The term ‘pediatric services’ means services covered under the State plan provided by a pediatrician, family practitioner, or certified pediatric nurse practitioner to children under 18 years of age and does not include inpatient or outpatient hospital services or other institutional services. “(b) For amendments submitted under subsection (a)(1) in 1992 and thereafter, the data submitted under such subsection must include, for the second previous year, at least the statewide average payment rates under the State plan for obstetrical services furnished by obstetricians, obstetrician-gynecologists, family practitioners, certified family nurse practitioners, and certified nurse midwives, by procedure. Such information shall be provided separately for providers located in each metropolitan statistical area (or similar area) in the State and in the remainder of the State. “(c) For amendments submitted under subsection (a)(2) in 1992 and thereafter, the data submitted under such subsection must include, for the second previous year, at least the statewide average payment rates under the State plan for pediatric services furnished by pediatricians, family practitioners, and certified pediatric nurse practitioners by procedure. Such information shall be provided separately for providers located in each metropolitan statistical area (or similar area) in the State and in the remainder of the State. “(d) Nothing in this title (including section 1902(a)(30)(A)) shall be construed as preventing a State from establishing payment levels for obstetrical or pediatric services that are higher for those services furnished in rural areas than those furnished in metropolitan statistical areas.”. "
(c)Payment for Certain Services in Certain Federally Funded Health Centers.—
(1)Coverage.—Section 1905(a)(2) of the Social Security Act (42 U.S.C. 1396d(a)(2)) is amended by striking “and” before “(B)” and by inserting before the semicolon at the end the following: “, and
(C)ambulatory services offered by a health center receiving funds under section 329, 330, or 340 of the Public Health Service Act to a pregnant woman or individual under 18 years of age”.
(2)Payment amounts.—Section 1902(a)(13)(E) of such Act (42 U.S.C. 1396a(a)(13)(E)) is amended by inserting “, and for payment for services described in section 1905(a)(2)(C) under the plan,” after “provided by a rural health clinic under the plan”.
(d)Effective Date.—(1) The amendments made by subsections
(a)[42 USC 1396a note](/us/usc/t42/s1396a).and
(b)(except as otherwise provided in such amendments) shall take effect on the date of the enactment of this Act. (2)(A) The amendments made by subsection
(c)apply (except as provided under subparagraph (B)) to payments under title XIX of the Social Security Act for calendar quarters beginning on or after July 1, 1990, without regard to whether or not final regulations to carry out such amendments have been promulgated by such date.
(B)In the case of a State plan for medical assistance under title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation (other than legislation appropriating funds) in order for the plan to meet the additional requirements imposed by the amendments made by subsection (c), the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first 103 STAT. 2262regular session of the State legislature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature. SEC. 6403. EARLY AND PERIODIC SCREENING, DIAGNOSTIC, AND TREATMENT SERVICES DEFINED.
(a)In General.—Section 1905 of the Social Security Act (42 U.S.C. 1396d) is amended by adding at the end the following new subsection: " “(r) The term ‘early and periodic screening, diagnostic, and treatment services’ means the following items and services: “(1) Screening services— “(A) which are provided— “(i) at intervals which meet reasonable standards of medical and dental practice, as determined by the State after consultation with recognized medical and dental organizations involved in child health care, and “(ii) at such other intervals, indicated as medically necessary, to determine the existence of certain physical or mental illnesses or conditions; and “(B) which shall at a minimum include— “(i) a comprehensive health and developmental history (including assessment of both physical and mental health development), “(ii) a comprehensive unclothed physical exam, “(iii) appropriate immunizations according to age and health history, “(iv) laboratory tests (including lead blood level assessment appropriate for age and risk factors), and “(v) health education (including anticipatory guidance). “(2) Vision services— “(A) which are provided— “(i) at intervals which meet reasonable standards of medical practice, as determined by the State after consultation with recognized medical organizations involved in child health care, and “(ii) at such other intervals, indicated as medically necessary, to determine the existence of a suspected illness or condition; and “(B) which shall at a minimum include diagnosis and treatment for defects in vision, including eyeglasses. “(3) Dental services— “(A) which are provided— “(i) at intervals which meet reasonable standards of dental practice, as determined by the State after consultation with recognized dental organizations involved in child health care, and “(ii) at such other intervals, indicated as medically necessary, to determine the existence of a suspected illness or condition; and “(B) which shall at a minimum include relief of pain and infections, restoration of teeth, and maintenance of dental health. “(4) Hearing services— 103 STAT. 2263 “(A) which are provided— “(i) at intervals which meet reasonable standards of medical practice, as determined by the State after consultation with recognized medical organizations involved in child health care, and “(ii) at such other intervals, indicated as medically necessary, to determine the existence of a suspected illness or condition; and “(B) which shall at a minimum include diagnosis and treatment for defects in hearing, including hearing aids. “(5) Such other necessary health care, diagnostic services, treatment, and other measures described in section 1905(a) to correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services, whether or not such services are covered under the State plan. Nothing in this title shall be construed as limiting providers of early and periodic screening, diagnostic, and treatment services to providers who are qualified to provide all of the items and services described in the previous sentence or as preventing a provider that is qualified under the plan to furnish one or more (but not all) of such items or services from being qualified to provide such items and services as part of early and periodic screening, diagnostic, and treatment services. "
(b)Report on Provision of EPSDT.—Section 1902(a)(43) of such Act (42 U.S.C. 1396a(a)(43)) is amended—
(1)by striking “and” at the end of subparagraph (B),
(2)by striking the semicolon at the end of subparagraph
(C)and inserting “, and”, and
(3)by adding at the end the following new subparagraph: " “(D) reporting to the Secretary (in a uniform form and manner established by the Secretary, by age group and by basis of eligibility for medical assistance, and by not later than April 1 after the end of each fiscal year, beginning with fiscal year 1990) the following information relating to early and periodic screening, diagnostic, and treatment services provided under the plan during each fiscal year: “(i) the number of children provided child health screening services, “(ii) the number of children referred for corrective treatment (the need for which is disclosed by such child health screening services), “(iii) the number of children receiving dental services, and “(iv) the State’s results in attaining the participation goals set for the State under section 1905(r);”. "
(c)Annual Participation Goals.—Section 1905(r) of such Act, as added by subsection (a), is amended by adding at the end the following: “The Secretary shall, not later than July 1, 1990, and every 12 months thereafter, develop and set annual participation goals for each State for participation of individuals who are covered under the State plan under this title in early and periodic screening, diagnostic, and treatment services.”.
(d)Conforming Amendments.—(1) Section 1902(a)(43)(A) of such Act (42 U.S.C. 1396a(a)(43)(A)) is amended by striking “and treatment services as described in section 1905(a)(4)(B)” and inserting “and treatment services as described in section 1905(r)”. 103 STAT. 2264
(2)Section 1905(a)(4) of such Act (42 U.S.C. 1396d(a)(4)) is amended by amending clause
(B)to read as follows: “(B) early and periodic screening, diagnostic, and treatment services (as defined in subsection (r)) for individuals who are eligible under the plan and are under the age of 21; and”.
(e)[42 USC 1396a note](/us/usc/t42/s1396a). Effective Date.—The amendments made by this section shall take effect on April 1, 1990, without regard to whether or not final regulations to carry out such amendments have been promulgated by such date. SEC. 6404. PAYMENT FOR FEDERALLY-QUALIFIED HEALTH CENTER SERVICES.
(a)Coverage.—Section 1905(a)(2) of the Social Security Act (42 U.S.C. 1396d(a)(2)) is amended—
(1)by striking “and” before “(B)”,
(2)by striking “subsection (l)” and inserting “subsection (l)(1)”, and
(3)by inserting before the semicolon at the end the following: and
(C)Federally-qualified health center services (as defined in subsection (l)(2)) and any other ambulatory services offered by a Federally-qualified health center and which are otherwise included in the plan”.
(b)Terms Defined.—Section 1905(1) of such Act is amended—
(1)by redesignating clauses
(1)and
(2)as clauses
(A)and (B),
(2)by inserting “(1)” after “(l)”, and
(3)by adding at the end the following new paragraph: " “(2)
(A)The term ‘Federally-qualified health center services’ means services of the type described in subparagraphs
(A)through
(C)of section 1861(aa)(1) when furnished to an individual as an outpatient of a Federally-qualified health center and, for this purpose, any reference to a rural health clinic or a physician described in section 1861(aa)(2)(B) is deemed a reference to a Federally-qualified health center or a physician at the center, respectively. “(B) The term ‘Federally-qualified health center’ means a facility which— “(i) is receiving a grant under section 329, 330, or 340 of the Public Health Service Act, or “(ii) 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. In applying clause (ii), the Secretary may waive any requirement referred to in such clause for up to 2 years for good cause shown.”. "
(c)Payment Amounts.—Section 1902(a)(13)(E) of such Act (42 U.S.C. 1396a(a)(13)(E)) is amended by striking “section 1905(a)(2)(B) provided by a rural health clinic” and inserting “clause
(B)or
(C)of section 1905(a)(2)”.
(d)[42 USC 1396a note](/us/usc/t42/s1396a). Effective Date.—(1) The amendments made by this section apply (except as provided under paragraph (2)) to payments under title XIX of the Social Security Act for calendar quarters beginning on or after April 1, 1990, without regard to whether or not final regulations to carry out such amendments have been promulgated by such date.
(2)In the case of a State plan for medical assistance under title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation (other than legislation appropriating funds) in order for the plan to meet the 103 STAT. 2265additional requirements imposed by the amendments made by this section, the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of the enactment of this Act. 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. SEC. 6405. REQUIRED COVERAGE OF NURSE PRACTITIONER SERVICES.
(a)In General.—Section 1905(a) of the Social Security Act (42 U.S.C. 1396d(a)) is amended—
(1)in paragraph (20), by striking “and”;
(2)by redesignating paragraph
(21)as paragraph (22); and
(3)by inserting after paragraph
(20)the following new paragraph: " “(21) services furnished by a certified pediatric nurse practitioner or certified family nurse practitioner (as defined by the Secretary) which the certified pediatric nurse practitioner or certified family nurse practitioner is legally authorized to perform under State law (or the State regulatory mechanism provided by State law), whether or not the certified pediatric nurse practitioner or certified family nurse practitioner is under the supervision of, or associated with, a physician or other health care provider, and”. "
(b)Conforming Amendment.—Section 1902(a)(10)(A) of such Act (42 U.S.C. 1396a(a)(10)(A)) is amended by striking “(1) through
(5)and (17)” and by inserting “(1) through (5),
(17)and (21)”.
(c)Effective Date.—The amendments made by this section shall [42 USC 1396a note](/us/usc/t42/s1396a).become effective with respect to services furnished by a certified pediatric nurse practitioner or certified family nurse practitioner on or after July 1, 1990. SEC. 6406. REQUIRED MEDICAID NOTICE AND COORDINATION WITH SPECIAL SUPPLEMENTAL FOOD PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC).
(a)State Plan Requirements of Notice and Coordination.—Section 1902(a) of the Social Security Act (42 U.S.C. 1396a(a)) is amended—
(1)in paragraph (11), by striking “and” before “(B)” and by inserting before the semicolon at the end the following: “, and
(C)provide for coordination of the operations under this title with the State’s operations under the special supplemental food program for women, infants, and children under section 17 of the Child Nutrition Act of 1966”;
(2)by striking “and” at the end of paragraph (51);
(3)by striking the period at the end of paragraph
(52)and inserting and”; and
(4)by inserting after paragraph
(52)the following new paragraph: " “(53) provide— “(A) for notifying in a timely manner all individuals in the State who are determined to be eligible for medical assistance and who are pregnant women, breastfeeding or 103 STAT. 2266postpartum women (as defined in section 17 of the Child Nutrition Act of 1966), or children below the age of 5, of the availability of benefits furnished by the special supplemental food program under such section, and “(B) for referring any such individual to the State agency responsible for administering such program.”. "
(b)[42 USC 1396a note](/us/usc/t42/s1396a). Effective Date.—The amendments made by subsection
(a)shall take effect on July 1, 1990, without regard to whether regulations to carry out such amendments have been promulgated by such date. SEC. 6407. Disadvantaged persons.[42 USC 1396r–7 note](/us/usc/t42/s1396r/7). DEMONSTRATION PROJECTS TO STUDY THE EFFECT OF ALLOWING STATES TO EXTEND MEDICAID TO PREGNANT WOMEN AND CHILDREN NOT OTHERWISE QUALIFIED TO RECEIVE MEDICAID BENEFITS.
(a)Contracts. In General.—In order to allow States to develop and carry out innovative programs to extend health insurance coverage to pregnant women and children under age 20 who lack insurance and to encourage workers to obtain health insurance for themselves and their children, the Secretary of Health and Human Services (in this section referred to as the “Secretary”) shall enter into agreements with several States submitting applications in accordance with subsection
(b)for the purpose of conducting demonstration projects to study the effect on access to health care, private insurance coverage, and costs of health care when such States are allowed to extend benefits under title XIX of the Social Security Act, either directly, in the same manner, or otherwise as alternative assistance authorized in section 1925(b)(4)(D) of such Act, to pregnant women and children under 20 years of age who are not otherwise qualified to receive benefits under such section.
(b)Project Requirements.—(1) Each State applying to participate in the demonstration project under subsection
(a)shall assure the Secretary that eligibility shall be limited to pregnant women and children who have not attained 20 years of age who are in families with income below 185 percent of the income official poverty line (referred to in subsection (c)(1)).
(2)The Secretary shall further provide in conducting demonstration projects under this section that, if one or more of such demonstration projects utilizes employer coverage as allowed under section 1925(b)(4)(D) of the Social Security Act, such project shall require an employer contribution.
(c)Premiums.—In the case of pregnant women and children eligible to participate in such demonstration projects whose family income level is—
(1)below 100 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, there shall be no premium charged; and
(2)between 100 and 185 percent of such income official poverty line, there shall be a premium equal to—
(A)an amount based on a sliding scale relating to income, or
(B)3 percent of the family’s average gross monthly earnings, whichever is less. 103 STAT. 2267
(d)Duration.—Each demonstration project under this section shall be conducted for a period not to exceed 3 years.
(e)Waiver.—The Secretary where he deems appropriate may waive the statewideness requirement described in section 1902(a)(1) of the Social Security Act.
(f)Loot on Expenditures.—The Secretary in conducting the demonstration projects described in this section shall limit the amount of the Federal share of benefits paid and expenses incurred under title XIX of the Social Security Act to $10,000,000 in each of fiscal years 1990, 1991, and 1992.
(g)Evaluation and Report.—(1) For each demonstration project conducted under this section, the Secretary shall assure that an evaluation is conducted on the effect of the project with respect to—
(A)access to health care;
(B)private health care insurance coverage;
(C)costs with respect to health care; and
(D)developing feasible premium and cost-sharing policies.
(2)The Secretary shall submit to Congress an interim report containing a summary of the evaluations conducted under paragraph
(1)not later than January 1, 1992, and a final report containing such summary together with such further recommendations as the Secretary may determine appropriate not later than January 1, 1994. SEC. 6468. OTHER MEDICAID PROVISIONS.
(a)Institutions fob Mental Diseases.—
(1)Study.—The Secretary of Health and Human Services shall conduct a study of—
(A)the implementation, under current provisions, regulations, guidelines, and regulatory practices under title XIX of the Social Security Act, of the exclusion of coverage of services to certain individuals residing in institutions for mental diseases, and
(B)the costs and benefits of providing services under title XIX of the Social Security Act in public subacute psychiatric facilities which provide services to psychiatric patients who would otherwise require acute hospitalization.
(2)Report.—By not later than October 1, 1990, the Secretary shall submit a report to Congress on the study and shall include in the report recommendations respecting—
(A)modifications in such provisions, regulations, guidelines, and practices, if any, that may be appropriate to accommodate changes that may have occurred since 1972 in the delivery of psychiatric and other mental health services on an inpatient basis to such individuals, and
(B)the continued coverage of services provided in subacute psychiatric facilities under title XIX of the Social Security Act.
(3)Moratorium on treatment of certain facilities.—Any Michigan.determination by the Secretary that Kent Community Hospital Complex in Michigan or Saginaw Community Hospital in Michigan is an institution for mental diseases, for purposes of title XIX of the Social Security Act shall not take effect until 180 days after the date the Congress receives the report required under paragraph (2).
(b)Extension of Texas Personal Care Services Waiver.—Section 9523(a) of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended by section 4115(d) of the Omnibus Budget 103 STAT. 2268Reconciliation Act of 1987 (added by section 411(k)(9)(C) of the [102 Stat. 768](/us/stat/102/768).Medicare Catastrophic Coverage Act of 1988), is amended by striking “January 1, 1990” and inserting “July 1, 1990”.
(c)Hospice Payment for Room and Board.—
(1)In general.—Section 1902(a)(13)(D) of the Social Security Act (42 U.S.C. 1396a(a)(13)(D)) is amended—
(A)by striking “in the same amounts, and using the same methodology, as used” and inserting “in amounts no lower than the amounts, using the same methodology, used”, and
(B)by striking “a separate rate may be paid for” and inserting “in the case of”, and
(C)by striking “to take into account the room and board furnished by such facility” and inserting “there shall be paid an additional amount, to take into account the room and board furnished by the facility, equal to at least 95 percent of the rate that would have been paid by the State under the plan for facility services in that facility for that individual”.
(2)[42 USC 1396a note](/us/usc/t42/s1396a). Effective date.—The amendments made by paragraph
(1)shall apply to services furnished on or after April 1, 1990, without regard to whether or not final regulations have been promulgated by such date to implement such amendments.
(d)Medicare Buy-in for Premiums of Certain Working Disabled.—
(1)In general.—Section 1902(a)(10)(E) of the Social Security Act (42 U.S.C. 1396a(a)(10)(E)) is amended—
(A)by inserting “(i)” after “(E)”,
(B)by striking the semicolon at the end and inserting “, and”, and
(C)by adding at the end the following new clause: " “(ii) for making medical assistance available for payment of medicare cost-sharing described in section 1905(p)(3)(A)(i) for qualified disabled and working individuals described in section 1905(s);”. "
(2)Eligibility.—Section 1905 of such Act (42 U.S.C. 1396d), as amended by section 6403(a) of this subtitle, is amended by adding at the end the following new subsection: " “(s) The term ‘qualified disabled and working individual’ means an individual— “(1) who is entitled to enroll for hospital insurance benefits under part A of title XVIII under section 1818A (as added by 6012 of the Omnibus Budget Reconciliation Act of 1989); “(2) whose income (as determined under section 1612 for purposes of the supplemental security income program) does not exceed 200 percent of the 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; “(3) whose resources (as determined under section 1613 for purposes of the supplemental security income program) do not exceed twice the maximum amount of resources that an individual or a couple (in the case of an individual with a spouse) may have and obtain benefits for supplemental security income benefits under title XVI; and “(4) who is not otherwise eligible for medical assistance under this title.”. " 103 STAT. 2269
(3)Premium payments required for certain individuals.—Section 1916 of such Act (42 U.S.C. 1396o) is amended—
(A)in subsection (a), by striking “(E)” and inserting “(E)(i)”,
(B)by redesignating subsections
(d)and
(e)as subsections
(e)and (f), respectively, and
(C)by inserting after subsection
(c)the following new subsection: " “(d) With respect to a qualified disabled and working individual described in section 1905(s) whose income (as determined under paragraph
(3)of that section) exceeds 150 percent of the official poverty line referred to in that paragraph, the State plan of a State may provide for the charging of a premium (expressed as a percentage of the medicare cost-sharing described in section 1905(p)(3)(A)(i) provided with respect to the individual) according to a sliding scale under which such percentage increases from 0 percent to 100 percent, in reasonable increments (as determined by the Secretary), as the individual’s income increases from 150 percent of such poverty line to 200 percent of such poverty line.”. "
(4)Conforming amendments.—
(A)Section 1905(p)(3) of such Act (42 U.S.C. 1396d(p)(3)) is amended—
(i)by amending subparagraph
(A)to read as follows: " “(A)(i) premiums under section 1818, and “(ii) premiums under section 1839,”, and "
(ii)in subparagraph
(A)as so amended, by striking “section 1818” and inserting “section 1818 or 1818A”.
(B)Section 1905(p)(1)(A) of such Act is amended by inserting “, but not including an individual entitled to such benefits only pursuant to an enrollment under section 1818A” after “1818”.
(C)Section 1902(f) of such Act (42 U.S.C. 1396a(f) is amended by inserting “, except with respect to qualified disabled and working individuals (described in section 1905(s)),” after “1619(b)(3)”.
(5)Effective date.— [42 USC 1396a note](/us/usc/t42/s1396a).
(A)The amendments made by this subsection apply (except as provided under subparagraph (B)) to payments under title XIX of the Social Security Act for calendar quarters beginning on or after July 1, 1990, without regard to whether or not final regulations to carry out such amendments have been promulgated by such date.
(B)In the case of a State plan for medical assistance under title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation (other than legislation appropriating funds) in order for the plan to meet the additional requirements imposed by the amendments made by this subsection, the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of the enactment of this Act, For purposes of the previous sentence, in the case 103 STAT. 2270of 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. **PART 2—****TECHNICAL AND MISCELLANEOUS PROVISIONS** SEC. 6411. MISCELLANEOUS MEDICAID TECHNICAL AMENDMENTS.
(a)Technical Correction to Medicare Buy-in for the Elderly.—
(1)Clarification with respect to “section 209 (b)” states.—The first sentence of section 1902(f) of the Social Security Act (42 U.S.C. 1396a(f)) is amended by inserting “and except with respect to qualified medicare beneficiaries, qualified severely impaired individuals, and individuals described in subsection (m)(1)” before “, no State”.
(2)[42 USC 1396a note](/us/usc/t42/s1396a). Effective date.—The amendment made by paragraph
(1)shall apply as if it had been included in the enactment of the Medicare Catastrophic Coverage Act of 1988.
(b)Extension of Delay in Issuance of Certain Final Regulations.—Section 8431 of the Technical and Miscellaneous Revenue [102 Stat. 3804](/us/stat/102/3804).Act of 1988 is amended by striking “May 1, 1989” and inserting “December 31, 1990”.
(c)Disproportionate Share Hospitals.—
(1)Special rule for new jersey uncompensated care trust fund.—Section 1923(e)(1) of the Social Security Act (42 U.S.C. 1396r–4(e)(1)) is amended—
(A)by inserting “(A)(i)” after “without regard to the requirement of subsection
(a)if”, and
(B)by striking “and if” and inserting “or
(ii)the plan as of January 1, 1987, provided for payment adjustments based on a statewide pooling arrangement involving all acute care hospitals and the arrangement provides for reimbursement of the total amount of uncompensated care provided by each participating hospital, and (B)”.
(2)Conforming amendment.—Section 1915(b)(4) of such Act (42 U.S.C. 1396n(b)(4)) is amended by inserting “shall be consistent with the requirements of section 1923 and” after “which standards”.
(3)Missouri.Disadvantaged persons. Transition rule.—The State of Missouri shall be treated as having met the requirement of section 1902(a)(13)(A) of the Social Security Act (insofar as it requires payments to hospitals to take into account the situation of hospitals that serve, a disproportionate number of low-income patients with special needs) for the period beginning with July 1, 1988, and ending with (and including) June 30, 1990, if the total amount of such payments for such period is not less than the total of such payments otherwise required by law for such period.
(4)[42 USC 1396n note](/us/usc/t42/s1396n). Effective date.—The amendment made by paragraph
(2)shall be effective as if included in the enactment of the Omnibus Budget Reconciliation Act of 1987,
(d)Fraud and Abuse Technical Amendments.—
(1)Treatment of loss of right to renew license.—Section 1128(b)(4)(A) of the Social Security Act (42 U.S.C. 1396a–7(b)(4)(A)) [42 USC 1320a–7](/us/usc/t42/s1320a/7).is amended by inserting “or the right to apply for or renew such a license” after “lost such a license”. 103 STAT. 2271
(2)Clarification with respect to emergency treatment.—Sections 1862(e)(1) and 1903(i)(2) of such Act (42 U.S.C. 1395y(e)(1), 1396b(i)(2)) are each amended by inserting “, not including items or services furnished in an emergency room of a hospital” after “emergency item or service”.
(3)Clarification of exclusion with respect to employment by health maintenance organizations.—(A) Section 1876(i)(6)(A) of the Social Security Act (42 U.S.C. 1395mm(i)(6)(A)) is amended—
(i)by striking “or” at the end of clause (v),
(ii)by adding “or” at the end of clause (vi), and
(iii)by inserting after clause
(vi)the following new clause: " “(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;”. "
(B)Section 1902(p)(2) of such Act (42 U.S.C. 1396a(p)(2)) is amended—
(i)by striking “or” at the end of subparagraph (A),
(ii)by striking the period at the end of subparagraph
(B)and inserting “, or”, and
(iii)by adding at the end the following new subparagraph: " “(C) 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.”."
(4)Effective dates.—The amendments made by paragraphs [42 USC 1320a–7 note](/us/usc/t42/s1320a/7).(1) and
(2)shall take effect on the date of the enactment of this Act.
(B)The amendments made by paragraph
(3)shall apply to [42 USC 1395mm note](/us/usc/t42/s1395mm).employment and contracts as of 90 days after the date of the enactment of this Act.
(e)Spousal Impoverishment.—
(1)Equal treatment of transfers by community spouse before institutionalization.—Section 1917(c) of the Social Security Act (42 U.S.C. 1396p(c)) is amended—
(A)in paragraph (1), by inserting “or whose spouse,” after “an institutionalized individual (as defined in paragraph (3)) who,”, and
(B)in paragraph (2)(B)—
(i)by amending clause
(i)to read as follows: “(i) to or from (or to another for the sole benefit of) the individual’s spouse, or”, and
(ii)by striking “, or (iii)” and all that follows through “fair market value”.
(2)Clarifying application to “section 209(b)” states.—Section 1902(0 of such Act (42 U.S.C. 1396a(f)) is amended by inserting “and section 1924” after “1619(b)(3)”.
(3)Clarification of application of income rules to redeterminations—Subsections (b)(2) and (d)(1) of section 1924 103 STAT. 2272of such Act (42 U.S.C. 1396r–5) are amended by inserting “or redetermined” after “determined”.
(4)[42 USC 1396a note](/us/usc/t42/s1396a). Effective dates.—
(A)Spousal transfers.—The amendments made by paragraph
(1)shall apply to transfers occurring after the date of the enactment of this Act.
(B)Other amendments.—Except as provided in subparagraph (A), the amendments made by this subsection shall apply as if included in the enactment of section 303 of the Medicare Catastrophic Coverage Act of 1988.
(f)Extension of Waiver for Health Insuring Organization.—The Secretary of Health and Human Services shall continue to waive, through June 30, 1992, the application of section 1903(m)(2)(A)(ii) of the Social Security Act to the Tennessee Primary Care Network, Inc., under the same terms and conditions as applied to such waiver as of July 1, 1989.
(g)[42 USC 1396b note](/us/usc/t42/s1396b). Day Habilitation and Related Services.—
(1)Prohibition of disallowance pending issuance of regulations.—Except as specifically permitted under paragraph (3), the Secretary of Health and Human Services may not—
(A)withhold, suspend, disallow, or deny Federal financial participation under section 1903(a) of the Social Security Act for day habilitation and related services under paragraph
(9)or
(13)of section 1905(a) of such Act on behalf of persons with mental retardation or with related conditions pursuant to a provision of its State plan as approved on or before June 30, 1989, or
(B)withdraw Federal approval of any such State plan provision.
(2)Requirements for regulation.—A final regulation described in this paragraph is a regulation, promulgated after a notice of proposed rule-making and a period of at least 60 days for public comment, that—
(A)specifies the types of day habilitation and related services that a State may cover under paragraph
(9)or
(13)of section 1905(a) of the Social Security Act on behalf of persons with mental retardation or with related conditions, and
(B)any requirements respecting such coverage.
(3)Prospective application of regulation.—If the Secretary promulgates a final regulation described in paragraph
(2)and the Secretary determines that a State plan under title XIX of the Social Security Act does not comply with such regulation, the Secretary shall notify the State of the determination and its basis, and such determination shall not apply to day habilitation and related services furnished before the first day of the first calendar quarter beginning after the date of the notice to the State.
(h)Moratorium on Issuance of Final Regulation on Medically Needy Income Levels for Certain 1-Member Families.—The Secretary of Health and Human Services may not issue in final form, before December 31, 1990, any regulation implementing the proposed regulation published on September 26, 1989 (54 Federal Register 39421) insofar as such regulation changes the method for establishing the medically needy income level for single individuals in any State (including the proposed change to section 435.1007(a)(1) of title 42, Code of Federal Regulations). 103 STAT. 2273
(i)Technical Corrections Concerning Transitional Coverage.—
(1)Clarification of termination when no child in household.—Subsections (a)(3)(A) and (b)(3)(A)(i) of section 1925 of the Social Security Act (42 U.S.C. 1396r–6) are each amended by striking “who is” and inserting “, whether or not the child is”.
(2)Effective date for termination of current 9-month extension.—Section 303(f)(2)(A) of the Family Support Act of 1988 is amended by inserting before the period at the end the [42 USC 602 note](/us/usc/t42/s602).following: “, but such amendment shall not apply with respect to families that cease to be eligible for aid under part A of title IV of the Social Security Act before such date”.
(3)Correction of references.—Subsections (a)(3)(C) and (b)(3)(C)(i) of section 1925 of the Social Security Act (42 U.S.C. 1396r–6) are each amended by striking “or
(v)of section 1905(a)” and inserting “of section 1905(a) or clause (i)(IV), (i)(VI), or (ii)(IX) of section 1902(a)(10)(A)”.
(4)Effective date.—The amendments made by this subsection [42 USC 1396r–6 note](/us/usc/t42/s1396r/6).shall be effective as if included in the enactment of the Family Support Act of 1988.
(j)Minnesota Prepaid Medicaid Demonstration Project Extension.—Section 507 of the Family Support Act of 1988 is amended by [102 Stat. 2407](/us/stat/102/2407).striking “1990” and inserting “1991”. Subtitle C—Maternal and Child Health Block Grant Program SEC. 6501. INCREASE IN AUTHORIZATION OF APPROPRIATIONS.
(a)In General.—Section 501 of the Social Security Act (42 U.S.C. 701) is amended—
(1)by amending subsection
(a)to read as follows: " “(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 $686,000,000 for fiscal year 1990 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 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 103 STAT. 2274under 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 “(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.”, and "
(2)by adding at the end of subsection
(b)the following new paragraphs: " “(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— 103 STAT. 2275 “(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.”. "
(b)Conforming Amendment.—Section 505(2)(C)(ii) of such Act (42 U.S.C. 705(2)(C)(ii)) is amended by striking “paragraphs
(1)through
(3)of section 501(a)” and inserting “subparagraphs
(A)through
(D)of section 501(a)(1)”. SEC. 6502. ALLOTMENTS TO STATE AND FEDERAL SET-ASIDES.
(a)In General.—Section 502 of the Social Security Act (42 U.S.C. 702) is amended—
(1)by amending the first sentence of paragraph
(1)of subsection
(a)to read as follows: “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).”;
(2)in subsection (a)(3), by inserting “or subsection (b)” after “this subsection”;
(3)by striking subsection (c), by redesignating subsection
(b)as subsection (c), and by inserting after subsection
(a)the following new subsection: " “(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 12% 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.”; and "
(4)in subsection (c), as redesignated by paragraph (2)—
(A)by striking “$478,000,000” and inserting “$600,000,000”, and
(B)by amending paragraph
(2)to read as follows: " “(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 103 STAT. 2276 “(B) the State’s proportion (determined under paragraph (I)(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.”. "
(b)Conforming Amendments.—Sections 503(a) and 508(b) of such Act (42 U.S.C. 703(a), 708(b)) are amended by striking “502(b)” each place it appears and inserting “502(c)”. SEC. 6503. USE OF ALLOTMENT FUNDS AND APPLICATION FOR BLOCK GRANT FUNDS.
(a)Expanding Use of Funds and Limitation on Use of Funds for Administrative Costs.—Section 504 of the Social Security Act (42 U.S.C. 704) is amended—
(1)in subsection (a), by inserting “and including payment of salaries and other related expenses of National Health Service Corps personnel” after “education, and evaluation”, and
(2)by adding at the end the following new subsection: " “(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.”. "
(b)Application.—Section 505 of such Act (42 U.S.C. 705) is amended—
(1)by amending the heading to read as follows: " “application for block grant funds”; "
(2)by inserting “(a)” after “Sec. 505.”;
(3)in the matter before paragraph (1), by inserting “an application (in a standardized form specified by the Secretary) that” after “must prepare and transmit to the Secretary”;
(4)by striking paragraph
(1)and redesignating paragraph
(2)as paragraph
(5)and by inserting before paragraph (5), as redesignated, the following new paragraphs: " “(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); 103 STAT. 2277 “(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”; and "
(5)in paragraph (5), as redesignated by paragraph
(4)of this subsection—
(A)by striking “a statement of assurances that represents to the Secretary” and inserting “provides”;
(B)in subparagraph (A), by striking “will provide” and inserting “will establish”;
(C)by amending subparagraph (C)(i) to read as follows: " “(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”;"
(D)in subparagraph (D), by striking “and” at the end;
(E)by redesignating subparagraph
(E)as subparagraph
(F)and by inserting after subparagraph
(D)the following new subparagraph: " “(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”; and "
(F)in subparagraph
(F)(as redesignated by subparagraph (E))—
(i)by striking “participate” before clause (i),
(ii)in clause (i), by striking “diagnosis” and inserting “diagnostic”,
(iii)in clause (i), by striking “title XIX” and inserting “section 1905(a)(4)(B) (including the establishment of periodicity and content standards for early and periodic screening, diagnostic, and treatment services)”,
(iv)by inserting “participate” after “(i)”, after “(ii)”, and after “(iii)”,
(v)by striking “and” at the end of clause (ii),
(vi)by striking the period at the end of clause
(iii)and inserting “, and”, and 103 STAT. 2278
(vii)by inserting after clause
(iii)the following new clause: " “(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.”; "
(6)by striking the last 2 sentences and inserting the following: " Public information. “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.”; and "
(7)by adding at the end the following new subsection: " “(b) The Secretary may waive the requirement 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.”. "
(c)Conforming Amendments.—(1) Section 502(c) of such Act (42 U.S.C. 702(c)), as redesignated by section 6502(a)(3) of this subtitle, is amended by striking “a description of intended activities and statement of assurances” and inserting “an application”.
(2)Section 504(a) of such Act (42 U.S.C. 704(a)) is amended by striking “its description of intended expenditures and statement of assurances” and insert “its application”.
(3)Section 506(a)(1)(C) of such Act (42 U.S.C. 706(a)(1)(C)) is amended by striking “description and statement” and inserting “application”.
(4)Sections 502(b), 502(d)(1), 503(c), 504(a), 506(a)(1)(C), and 509(a)(6) of such Act (42 U.S.C. 702(b), 702(d)(1), 703(c), 704(a), 706(a)(1)(C), 709(a)(6)) are each amended by striking “505” each place it appears and inserting “505(a)”. SEC. 6504. REPORTS.
(a)State Reports.—Subsection
(a)of section 506 of the Social Security Act (42 U.S.C. 706) is amended—
(1)in paragraph (1)—
(A)by inserting after the first sentence the following: “Each such report shall be prepared by, or in consultation with, the State maternal and child health agency.”,
(B)by striking “be in such form and contain such information” and inserting “be in such standardized form and contain such information (including information described in paragraph (2))”, and 103 STAT. 2279
(C)by striking “and of the progress made toward achieving the purposes of this title, and (C)” and inserting “,
(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)”;
(2)by redesignating paragraph
(2)as paragraph (3); and
(3)by inserting after paragraph
(1)the following new paragraph: " “(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 at any time during the year. 103 STAT. 2280 “(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.”. "
(b)Secretarial Report.—Paragraph
(3)of subsection
(a)of such section, as redesignated by subsection (a)(2) of this section, is amended to read as follows: " “(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 103 STAT. 2281postpartum 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 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).”. " SEC. 6505. FEDERAL ADMINISTRATION AND ASSISTANCE. Section 509(a) of the Social Security Act (42 U.S.C. 709(a)) is amended—
(1)in paragraph
(4)by inserting before the semicolon at the end the following: “and in developing consistent and accurate data collection mechanisms in order to report the information required under section 506(a)(2)”;
(2)in paragraph
(5)by striking “and” at the end thereof;
(3)in paragraph
(6)by striking the period and inserting “; and”; and
(4)by adding at the end thereof the following new paragraphs: " “(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).”. " SEC. 6506. DEVELOPMENT OF MODEL APPLICATIONS.
(a)For Maternal and Child Assistance Programs.— [42 USC 701 note](/us/usc/t42/s701). 103 STAT. 2282
(1)In general.—The Secretary of Health and Human Services shall develop, by not later than one year after the date of the enactment of this Act and in consultation with the Secretary of Agriculture, a model application form for use in applying, simultaneously, for assistance for a pregnant woman or a child less than 6 years of age under maternal and child assistance programs (as defined in paragraph (3)). In developing such form, the Secretary is not authorized to change any requirement with respect to eligibility under any maternal and child assistance program.
(2)Federal Register, publication. Dissemination of model form.—The Secretary shall provide for publication in the Federal Register of the model application form developed under paragraph
(1)and shall send a copy of such form to each State agency responsible for administering a maternal and child assistance program.
(3)Maternal and child assistance program defined.—In this subsection, the term “maternal and child assistance program” means any of the following programs:
(A)The maternal and child health services block grant program under title V of the Social Security Act.
(B)The medicaid program under title XIX of the Social Security Act.
(C)The migrant and community health centers programs under sections 329 and 330 of the Public Health Service Act.
(D)The grant program for the homeless under section 340 of the Public Health Service Act
(E)The “WIC” program under section 17 of the Child Nutrition Act of 1966.
(F)The head start program under the Head Start Act.
(b)[42 USC 1396a note](/us/usc/t42/s1396a).For Medicaid Program.—
(1)In general.—The Secretary of Health and Human Services shall, by not later than 1 year after the date of the enactment of this Act, develop a model application form for use in applying for benefits under title XIX of the Social Security Act for individuals who are not receiving cash assistance under part A of title IV of the Social Security Act, and who are not institutionalized. In developing such model application form, the Secretary is not authorized to require that such form be adopted by States as part of their State medicaid plan.
(2)Federal Register, publication. Dissemination of model form.—The Secretary shall provide for publication in the Federal Register of the model application form developed under paragraph (1), and shall send a copy of such form to each State agency responsible for administering a State medicaid plan. SEC. 6507. [42 USC 701 note](/us/usc/t42/s701). RESEARCH ON INFANT MORTALITY AND MEDICAID SERVICES. The Secretary of Health and Human Services shall develop a national data system for linking, for any infant up to age one—
(1)the infant’s birth record,
(2)any death record for the infant, and
(3)information on any claims submitted under title XIX of the Social Security Act for health care furnished to the infant or with respect to the birth of the infant. 103 STAT. 2283 SEC. 6508. DEMONSTRATION PROJECT ON HEALTH INSURANCE FOR MEDICALLY UNINSURABLE CHILDREN. [42 USC 701 note](/us/usc/t42/s701).
(a)In General.—The Secretary of Health and Human Services (in this section referred to as the “Secretary”) may conduct not more than 4 demonstration projects to provide health insurance coverage (as defined by the Secretary) through an eligible plan (as defined in subsection (b)) to medically uninsurable children (as defined by the Secretary) under 19 years of age.
(b)Eligibility.—In this section, the term “eligible plan” means—
(1)a school-based plan;
(2)a plan operated under the direction of a not-for-profit entity offering health insurance; and
(3)a plan operated by a not-for-profit hospital.
(c)Requirements.—A demonstration project conducted under subsection
(a)may only be conducted under an agreement between the Secretary and an eligible plan which provides that—
(1)health insurance coverage will be made available under the project for at least 2 years, and, if the eligible plan fails to provide such coverage during such period, the Secretary will guarantee the provision of such coverage;
(2)non-Federal funds will be made available to fund the project at a level not less than—
(A)50 percent in the first year of such agreement,
(B)65 percent in the second year of such agreement, and
(C)80 percent in the third or subsequent year of such agreement;
(3)the plan may not—
(A)restrict health insurance coverage on the basis of a child’s medical condition, or
(B)impose waiting periods or exclusions for preexisting conditions;
(4)any premium imposed under the project shall be disclosed in advance of enrollment and shall be varied by the income of individuals; and
(5)with respect to a plan which at the time of entering into such agreement is conducting a project similar to the one described in this subsection such plan must maintain its current level of non-Federal funding at its current level unless such level is less than the applicable level described in paragraph (2).
(d)Application.—No funds may be made available by the Secretary under this section 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 section.
(e)Evaluation and Report.—
(1)Evaluation.—The Secretary shall provide for an evaluation of the effects of the demonstration projects conducted under subsection
(a)on— 103 STAT. 2284
(A)access to health services by previously medically uninsurable children,
(B)the availability of insurance coverage to participating medically uninsurable children,
(C)the demographic characteristics and health status of participating medically uninsurable children and their families, and
(D)out-of-pocket health care costs for such families.
(2)Report.—The Secretary shall submit a report on the demonstration projects conducted under subsection
(a)to the Committee on Energy and Commerce of the House of Representatives and the Committee on Finance of the Senate, and shall include in such report a summary of the evaluation described in paragraph (1).
(f)Authorization of Appropriations.—There are authorized to be appropriated to carry out this section $5,000,000, for each of fiscal years 1991, 1992, and 1993. SEC. 6509. [42 USC 701 note](/us/usc/t42/s701). MATERNAL AND CHILD HEALTH HANDBOOK.
(a)In General.—
(1)Development.—The Secretary of Health and Human Services shall develop a maternal and child health handbook in consultation with the National Commission to Prevent Infant Mortality and public and private organizations interested in the health and welfare of mothers and children.
(2)Field testing and evaluation.—The Secretary shall complete publication of the handbook for field testing by July 1, 1990, and shall complete field testing and evaluation by June 1, 1991.
(3)Availability and distribution.—The Secretary shall make the handbook available to pregnant women and families with young children, and shall provide copies of the handbook to maternal and child health programs (including maternal and child health clinics supported through either title V or title XIX of the Social Security Act, community and migrant health centers under sections 329 and 330 of the Public Health Service Act, the grant program for the homeless under section 340 of the Public Health Service Act, the “WIG” program under section 17 of the Child Nutrition Act of 1966, and the head start program under the Head Start Act) that serve high-risk women. The Secretary shall coordinate the distribution of the handbook with State maternal and child health departments, State and local public health clinics, private providers of obstetric and pediatric care, and community groups where applicable. The Secretary shall make efforts to involve private entities in the distribution of the handbook under this paragraph.
(b)Authorization of Appropriations.—There are authorized to be appropriated $1,000,000 for each of fiscal years 1991, 1992, and 1993, for carrying out the purposes of this section. SEC. 6510. [42 USC 701 note](/us/usc/t42/s701). EFFECTIVE DATES.
(a)In General.—Except as provided in subsection (b), the amendments made by this subtitle shall apply to appropriations for fiscal years beginning with fiscal year 1990.
(b)Application and Report.—The amendments made— 103 STAT. 2285
(1)by subsections
(b)and
(c)of section 6503 shall apply to payments for allotments for fiscal years beginning with fiscal year 1991, and
(2)by section 6504 shall apply to annual reports for fiscal years beginning with fiscal year 1991. Subtitle D—Vaccine Compensation Technicals SEC. 6601. VACCINE INJURY COMPENSATION TECHNICALS.
(a)Reference.—Whenever in this section an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Public Health Service Act.
(b)Publication of Program.—Section 2110 (42 U.S.C. 300aa–10) is amended by adding at the end thereof the following: " “(c) Publicity.—The Secretary shall undertake reasonable efforts to inform the public of the availability of the Program.”. "
(c)Petitions.—
(1)Section 2111(a)(1) (42 U.S.C. 300aa–11(a)(1)) is amended—
(A)by striking out “filing of a petition” and inserting in lieu thereof “filing of a petition containing the matter prescribed by subsection (c)”, and
(B)by inserting at the end of paragraph
(1)“The clerk of the United States Claims Court shall immediately forward the filed petition to the chief special master for assignment to a special master under section 2112(d)(1).”.
(2)Section 2111(a)(2)(A)(i) (42 U.S.C. 300aa–11(a)(2)(A)(i)) is amended by striking out “under subsection (b)”.
(3)Section 2111(a)(5) (42 U.S.C. 300aa–11(a)(5)) is amended—
(A)in subparagraph (A), by striking out “elect to withdraw such action” and inserting in lieu thereof “petition to have such action dismissed without prejudice or costs”, and
(B)in subparagraph (B), by striking out “on the effective date of this part had pending” and inserting in lieu thereof “has pending” and by striking out “does not withdraw the action under subparagraph (A)”.
(4)Section 2111(a)(6) (42 US C. 300aa–11(a)(6)) is amended by striking out “the effective date of this part” each place it occurs and inserting in lieu thereof “November 15, 1988”.
(5)Section 2111(a) (42 U.S.C. 300aa–11(a)) is amended by redesignating paragraph
(8)as paragraph
(9)and by inserting after paragraph
(7)the following: " “(8) If on the effective date of this part there was pending an appeal or rehearing with respect to a civil action brought against a vaccine administrator or manufacturer and if the outcome of the last appellate review of such action or the last rehearing of such action is the denial of damages for a vaccine-related injury or death, the person who brought such action may file a petition under subsection
(b)for such injury or death.”. "
(6)Section 2111(c) (42 U.S.C. 300aa–11(c)) is amended—
(A)in paragraph (1), by inserting “except as provided in paragraph (3),” after “(1)” and in paragraph (2), by inserting “except as provided in paragraph (3),” after “(2)”, 103 STAT. 2286
(B)by redesignating paragraph
(2)as subsection (d), by expanding the margin of the paragraph to full measure, and by striking out “all available” and inserting in lieu thereof “(d) Additional Information.—A petition may also include other available”, by striking out “(including autopsy reports, if any)”, and by striking out “and an identification” and all that follows and inserting in lieu thereof a period,
(C)by adding after paragraph
(1)the following new paragraphs: " “(2) Records. except as provided in paragraph (3), maternal prenatal and delivery records, newborn hospital records (including all physicians’ and nurses’ notes and test results), vaccination records associated with the vaccine allegedly causing the injury, pre- and post-injury physician or clinic records (including all relevant growth charts and test results), all post-injury in-patient and outpatient records (including all provider notes, test results, and medication records), if applicable, a death certificate, and if applicable, autopsy results, and “(3) an identification of any records of the type described in paragraph
(1)or
(2)which are unavailable to the petitioner and the reasons for their unavailability.”, and "
(D)by redesignating paragraph (3), as in effect on the date of the enactment, as subsection (e), by expanding the margin of the paragraph to full measure, and by striking out “appropriate” and inserting in lieu thereof “(e) Schedule.—The petitioner shall submit in accordance with a schedule set by the special master assigned to the petition”.
(7)[42 USC 300aa–11](/us/usc/t42/s300aa/11). The margin on paragraph
(9)of section 2111(a) (as so redesignated) is indented two ems.
(8)Section 2115(e)(2) (42 U.S.C. 300aa–15(e)(2)) is amended—
(A)by striking out “and elected under section 2111(a)(4) to withdraw such action” and inserting in lieu thereof “and petitioned under section 2111(a)(5) to have such action dismissed”, and
(B)by striking out “the judgment of the court on such petition may include” and inserting in lieu thereof “in awarding compensation on such petition the special master or court may include”.
(d)Jurisdiction.—Section 2112(a) (42 U.S.C. 300aa–12(a)) is amended—
(1)by striking out “shall have jurisdiction (1)” and inserting in lieu thereof “and the United States Claims Court special masters shall, in accordance with this section, have jurisdiction”,
(2)by striking out “, and
(2)to issue” and inserting in lieu thereof a period and the following: “The United States Claims Court may issue”, and
(3)by striking out “deem” and inserting in lieu thereof “deems”.
(e)Special Masters Established.—Section 2112 (42 U.S.C. 300aa– 12) is amended—
(1)by redesignating subsections (c), (d), and
(e)as subsections (d), (e), and (f), respectively, and
(2)by inserting after subsection
(b)the following new subsection: " “(c) Establishment. United States Claims Court Special Masters.— 103 STAT. 2287 “(1) There is established within the United States Claims Court an office of special masters which shall consist of not more than 8 special masters. The judges of the United States Claims Court shall appoint the special masters, 1 of whom, by designation of the judges of the United States Claims Court, shall serve as chief special master. The appointment and reappointment of the special masters shall be by the concurrence of a majority of the judges of the court. “(2) The chief special master and other special masters shall be subject to removal by the judges of the United States Claims Court for incompetency, misconduct, or neglect of duty or for physical or mental disability or for other good cause shown. “(3) A special master’s office shall be terminated if the judges of the United States Claims Court determine, upon advice of the chief special master, that the services performed by that office are no longer needed. “(4) The appointment of any individual as a special master shall be for a term of 4 years, subject to termination under paragraphs
(2)and (3). Individuals serving as special masters upon the date of the enactment of this subsection shall serve for 4 years from the date of their original appointment, subject to termination under paragraphs
(2)and (3). The chief special master in office on the date of the enactment of this subsection shall continue to serve as chief special master for the balance of the master’s term, subject to termination under paragraphs
(2)and (3). “(5) The compensation of the special masters shall be determined by the judges of the United States Claims Court, upon advice of the chief special master. The salary of the chief special master shall be the annual rate of basic pay for level IV of the Executive Schedule, as prescribed by section 5315, title 5, United States Code. The salaries of the other special masters shall not exceed the annual rate of basic pay of level V of the Executive Schedule, as prescribed by section 5316, title 5, United States Code. “(6) The chief special master shall be responsible for the following: “(A) Administering the office of special masters and their staff, providing for the efficient, expeditious, and effective handling of petitions, and performing such other duties related to the Program as may be assigned to the chief special master by a concurrence of a majority of the United States Claims Courts judges. “(B) Appointing and fixing the salary and duties of such administrative staff as are necessary. Such staff shall be subject to removal for good cause by the chief special master. “(C) Managing and executing all aspects of budgetary and administrative affairs affecting the special masters and their staff, subject to the rules and regulations of the Judicial Conference of the United States. The Conference rules and regulations pertaining to United States magistrates shall be applied to the special masters. “(D) Coordinating with the United States Claims Court the use of services, equipment, personnel, information, and facilities of the United States Claims Court without reimbursement. 103 STAT. 2288 “(E) Reporting annually to the Congress and the judges of the United States Claims Court on the number of petitions filed under section 2111 and their disposition, the dates on which the vaccine-related injuries and deaths for which the petitions were filed occurred, the types and amounts of awards, the length of time for the disposition of petitions, the cost of administering the Program, and recommendations for changes in the Program.”. "
(f)Parties.—Section 2112(b) (42 U.S.C. 300aa–12(b)) is amended—
(1)by amending the first sentence to read as follows: “In all proceedings brought by the filing of a petition under section 2111(b), the Secretary shall be named as the respondent, shall participate, and shall be represented in accordance with section 518(a) of title 28, United States Code.”, and
(2)by striking out the second sentence.
(g)Special Master Functions.—Section 2112(d) (42 U.S.C. 300aa– 12(d)) (as so redesignated by subsection (e)) is amended—
(1)by amending paragraph
(1)to read as follows: " “(1) Following the receipt and filing of a petition under section 2111, the clerk of the United States Claims Court shall forward the petition to the chief special master who shall designate a special master to carry out the functions authorized by paragraph (3).”, and "
(2)by striking out paragraph
(2)and inserting in lieu thereof the following: " “(2) The special masters shall recommend rules to the Claims Court and, taking into account such recommended rules, the Claims Court shall promulgate rules pursuant to section 2071 of title 28, United States Code. Such rules shall— “(A) provide for a less-adversarial, expeditious, and informal proceeding for the resolution of petitions, “(B) include flexible and informal standards of admissibility of evidence, “(C) include the opportunity for summary judgment, “(D) include the opportunity for parties to submit arguments and evidence on the record without requiring routine use of oral presentations, cross examinations, or hearings, and “(E) provide for limitations on discovery and allow the special masters to replace the usual rules of discovery in civil actions in the United States Claims Court. “(3)(A) A special master to whom a petition has been assigned shall issue a decision on such petition with respect to whether compensation is to be provided under the Program and the amount of such compensation. The decision of the special master shall— “(i) include findings of fact and conclusions of law, and “(ii) be issued as expeditiously as practicable but not later than 240 days, exclusive of suspended time under subparagraph (C), after the date the petition was filed. The decision of the special master may be reviewed by the United States Claims Court in accordance with subsection (e). “(B) In conducting a proceeding on a petition a special master— “(i) may require such evidence as may be reasonable and necessary. 103 STAT. 2289 “(ii) may require the submission of such information as may be reasonable and necessary, “(iii) may require the testimony of any person and the production of any documents as may be reasonable and necessary, “(iv) shall afford all interested persons an opportunity to submit relevant written information— “(I) relating to the existence of the evidence described in section 2113(a)(1)(B), or “(II) relating to any allegation in a petition with respect to the matters described in section 2111(c)(1)(C)(ii), and “(v) may conduct such hearings as may be reasonable and necessary. There may be no discovery in a proceeding on a petition other than the discovery required by the special master. “(C) In conducting a proceeding on a petition a special master shall suspend the proceedings one time for 30 days on the motion of either party. After a motion for suspension is granted, further motions for suspension by either party may be granted by the special master, if the special master determines the suspension is reasonable and necessary, for an aggregate period not to exceed 150 days. “(4)(A) Except as provided in subparagraph (B), information submitted to a special master or the court in a proceeding on a petition may not be disclosed to a person who is not a party to the proceeding without the express written consent of the person who submitted the information. “(B) A decision of a special master or the court in a proceeding Classified information.shall be disclosed, except that if the decision is to include information— “(i) which is trade secret or commercial or financial information which is privileged and confidential, or “(ii) which are medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of privacy, and if the person who submitted such information objects to the inclusion of such information in the decision, the decision shall be disclosed without such information.”. "
(h)Action by the United States Claims Court.—Section 2112(e) (42 U.S.C. 300aa–12(e)) (as so redesignated by subsection (e)) is amended to read as follows: " “(e) Action by the United States Claims Court.— “(1) Upon issuance of the special master’s decision, the parties shall have 30 days to file with the clerk of the United States Claims Court a motion to have the court review the decision. If such a motion is filed, the other party shall file a response with the clerk of the United States Claims Court no later than 30 days after the filing of such motion. “(2) Upon the filing of a motion under paragraph
(1)with respect to a petition, the United States Claims Court shall have jurisdiction to undertake a review of the record of the proceedings and may thereafter— “(A) uphold the findings of fact and conclusions of law of the special master and sustain the special master’s decision, “(B) set aside any findings of fact or conclusion of law of the special master found to be arbitrary, capricious, an 103 STAT. 2290abuse of discretion, or otherwise not in accordance with law and issue its own findings of fact and conclusions of law, or “(C) remand the petition to the special master for further action in accordance with the court’s direction. The court shall complete its action on a petition within 120 days of the filing of a response under paragraph
(1)excluding any days the petition is before a special master as a result of a remand under subparagraph (C). The court may allow not more than 90 days for remands under subparagraph (C). “(3) In the absence of a motion under paragraph
(1)respecting the special master’s decision or if the United States Claims Court takes the action described in paragraph (2)(A) with respect to the special master’s decision, the clerk of the United States Claims Court shall immediately enter judgment in accordance with the special master’s decision.”. "
(i)Appeals—Section 2112(f) (42 U.S.C. 300aa–12(f)) (as so redesignated by subsection (e)) is amended by inserting before the period the following: “within 60 days of the date of entry of the United States Claims Court’s judgment with such court of appeals”.
(j)Determination of Eligibility and Compensation.—Section 2113 (42 U.S.C. 300aa–13) is amended—
(1)by striking “court” each place it appears and inserting in lieu thereof “special master or court”, and
(2)by inserting before “United States Claims Court” in subsection
(c)“special masters of”.
(k)Table.—
(1)The table contained in section 2114(a) (42 U.S.C. 300aa– 14(a)) is amended by striking out “(c)(2)” each place it appears and inserting in lieu thereof “(b)(2)”.
(2)Section 2114(b)(3)(B) (42 U.S.C. 300aa–14(b)(3)(B)) is amended by striking out “2111(b)” and inserting in lieu thereof “2111”.
(l)Compensation.—
(1)Section 2115(b) (42 U.S.C. 300aa–15(b)) is amended by striking out “may not include” and all that follows and inserting in lieu thereof “may include the compensation described in paragraphs (1)(A) and
(2)of subsection
(a)and may also include an amount, not to exceed a combined total of $30,000, for— " “(1) lost earnings (as provided in paragraph
(3)of subsection (a)), “(2) pain and suffering (as provided in paragraph
(4)of subsection (a)), and “(3) reasonable attorneys’ fees and costs (as provided in subsection (e).”. "
(2)Section 2115(e) (42 U.S.C. 300aa–15(b)) is amended—
(A)in the first sentence of paragraph (1), by striking out “The judgment of the United States Claims Court on a petition filed under section 2111 awarding compensation shall include an amount to cover” and inserting in lieu thereof “In awarding compensation on a petition filed under section 2111 the special master or court shall also award as part of such compensation an amount to cover”,
(B)in the second sentence of paragraph (1), by striking out “civil action” each place it appears and inserting in lieu thereof “petition”,
(C)in the second sentence of paragraph (1), by striking out “may include in the judgment an amount to cover” and inserting in lieu thereof “may award an amount of com-103 STAT. 2291pensation to cover” and by striking out “court” each place it appears and inserting in lieu thereof “special master or court”,
(D)in paragraph (2), by striking out “the judgment of the court on such petition may include an amount” and inserting in lieu thereof “the special master or court may also award an amount of compensation”, and
(E)in paragraph (3), by striking out “included under paragraph
(1)in a judgment on such petition” and inserting in lieu thereof “awarded as compensation by the special master or court under paragraph (I)”.
(3)Section 2115(f) (42 U.S.C. 300aa–15(f)) is amended—
(A)in paragraph (3), by inserting after “Payments of compensation” the following: “under the Program and the costs of carrying out the Program”,
(B)in paragraph (4)(A), by striking out “made in a lump sum” and by adding after “compensation” the second time it appears the following: “and shall be paid from the trust fund in a lump sum of which all or a portion of the proceeds may be used as ordered by the special master to purchase an annuity or otherwise be used, with the consent of the petitioner, in a manner determined by the special master to be in the best interests of the petitioner”, and
(C)in paragraph (4)(B), by striking out “paid in 4 equal annual installments.” and inserting in lieu thereof “determined on the basis of the net present value of the elements of compensation and paid in 4 equal annual installments of which all or a portion of the proceeds may be used as ordered by the special master to purchase an annuity or otherwise be used, with the consent of the petitioner, in a manner determined by the special master to be in the best interests of the petitioner. Any reasonable attorneys’ fees and costs shall be paid in a lump sum.”.
(4)Section 2115 (42 U.S.C. 300aa–15) is amended—
(A)in subsection (g), by inserting “(other than under title XIX of the Social Security Act)” after “State health benefits program”, and
(B)in subsection (h), by inserting before the period at the end the following: “, except that this subsection shall not apply to the provision of services or benefits under title XIX of the Social Security Act”.
(5)Section 2115(i)(1) (42 U.S.C. 300aa–15(i)(1)) is amended by striking out “(i)” and inserting in lieu thereof “(j)”.
(6)The first sentence of section 2115(i) (42 U.S.C. 300aa–15(j)) is amended by striking out “and” after “1991,” and by inserting before the period a comma and “$80,000,000 for fiscal year 1993”.
(m)Technicals.—
(1)Section 2116(c) (42 U.S.C. 300aa–16(c)) is amended by striking out “2111(b)” and inserting in lieu thereof “2111”.
(2)Section 2117(b) (42 U.S.C. 300aa—17(b)) is amended by striking out “the trust fund which has been established to provide compensation under the Program” and inserting in lieu thereof “the Vaccine Injury Compensation Trust Fund established under section 9510 of the Internal Revenue Code of 1986”.
(n)Election.—
(1)Section 2121(a) (42 U.S.C. 300aa–21(a)) is amended— 103 STAT. 2292
(A)in the first sentence, by striking out “After the judgment of the United States Claims Court under section 2111 on a petition filed for compensation under the Program for a vaccine-related injury or death has become final, the person who filed the petition shall file with the court” and inserting in lieu thereof: “After judgment has been entered by the United States Claims Court or, if an appeal is taken under section 2112(f), after the appellate court’s mandate is issued, the petitioner who filed the petition under section 2111 shall file with the clerk of the United States Claims Court”, and
(B)by amending the last sentence to read as follows: “For limitations on the bringing of civil actions, see section 2111(a)(2).”.
(2)Section 2121(b) (42 U.S.C. 300aa–21(b)) is amended—
(A)in the first sentence, by striking out “within 365 days” and inserting in lieu thereof “within 420 days (excluding any period of suspension under section 2112(d) and excluding any days the petition is before a special master as a result of a remand under section 2112(e)(2)(C))”, and
(B)by amending the second sentence to read as follows: “An election shall be filed under this subsection not later than 90 days after the date of the entry of the Claims Court’s judgment or the appellate court’s mandate with respect to which the election is to be made.”.
(o)Trial.—Section 2123(e) (42 U.S.C. 300aa–23(e)) is amended—
(1)by striking out “finding” and inserting in lieu thereof “finding of fact or conclusion of law”,
(2)by striking out “master appointed by such court” and inserting in lieu thereof “special master”, and
(3)by striking out “a district court of the United States” and inserting in lieu thereof “the United States Claims Court and subsequent appellate review”.
(p)Vaccine Information.—Section 2126(c)(9) (42 U.S.C. 300aa– 26(c)(9)) is amended to read as follows: " “(9) a summary of— “(A) relevant Federal recommendations concerning a complete schedule of childhood immunizations, and “(B) the availability of the Program, and”. "
(q)Safer Vaccines.—Section 2127 (42 U.S.C. 300aa–27) is amended by redesignating subsection
(b)as subsection
(c)and by adding after subsection
(a)the following: " “(b) Establishment. Task Force.— “(1) The Secretary shall establish a task force on safer childhood vaccines which shall consist of the Director of the National Institutes of Health, the Commissioner of the Food and Drug Administration, and the Director of the Centers for Disease Control. “(2) The Director of the National Institutes of Health shall serve as chairman of the task force. “(3) In consultation with the Advisory Commission on Childhood Vaccines, the task force shall prepare recommendations to the Secretary concerning implementation of the requirements of subsection (a).”. "
(r)Authorizations.— 103 STAT. 2293
(1)For administering part A of subtitle 2 of title XXI of the Public Health Service Act there is authorized to be appropriated from the Vaccine Injury Compensation Trust Fund established under section 9510(c) of the Internal Revenue Code of 1986 to the Secretary of Health and Human Services $1,500,000 for each of the fiscal years 1990 and 1991.
(2)For administering part A of subtitle 2 of title XXI of the Public Health Service Act there is authorized to be appropriated from the Vaccine Injury Compensation Trust Fund to the Attorney General $1,500,000 for each of the fiscal years 1990 and 1991.
(3)For administering part A of subtitle 2 of title XXI of the Public Health Service Act there is authorized to be appropriated from the Vaccine Injury Compensation Trust Fund to the United States Claims Court $1,500,000 for each of the fiscal years 1990 and 1991.
(s)Applicability and Effective Date.— [42 USC 300aa–10 note](/us/usc/t42/s300aa/10).
(1)Except as provided in paragraph (2), the amendments made by this section shall apply as follows:
(A)Petitions filed after the date of enactment of this section shall proceed under the National Vaccine Injury Compensation Program under title XXI of the Public Health Service Act as amended by this section.
(B)Petitions currently pending in which the evidentiary record is closed shall continue to proceed under the Program in accordance with the law in effect before the date of the enactment of this section, except that if the United States Claims Court is to review the findings of fact and conclusions of law of a special master on such a petition, the court may receive further evidence in conducting such review.
(C)Petitions currently pending in which the evidentiary record is not closed shall proceed under the Program in accordance with the law as amended by this section. All pending cases which will proceed under the Program as amended by this section shall be immediately suspended for 30 days to enable the special masters and parties to prepare for ‘proceeding under the Program as amended by this section. In determining the 240-day period prescribed by section 2112(d) of the Public Health Service Act, as amended by this section, or the 420-day period prescribed by section 2121(b) of such Act, as so amended, any period of suspension under the preceding sentence shall be excluded.
(2)The amendments to section 2115 of the Public Health Service Act shall apply to all pending and subsequently filed petitions.
(t)Study.—The Secretary of Health and Human Services shall Reports.[42 USC 300aa–1 note](/us/usc/t42/s300aa/1).evaluate the National Vaccine Injury Compensation Program under title XXI of the Public Health Service Act and shall report the results of such study to the Committee on Energy and Commerce of the House of Representatives and the Committee on Labor and Human Resources of the Senate not later than January 1, 1992. SEC. 6602. SEVERABILITY. Section 322 of the National Childhood Vaccine Injury Act of 1986 (42 U.S.C. 300aa–1 note) is amended to read as follows: 103 STAT. 2294 " “SEC. 322. SEVERABILITY.“(a) In General.—Except as provided in subsection (b), if any provision of title XXI of the Public Health Service Act, as added by section 311(a), or the application of such a provision to any person or circumstance is held invalid by reason of a violation of the Constitution, such title XXI shall be considered invalid. “(b) Special Rule.—If any amendment made by section 6601 of the Omnibus Budget Reconciliation Act of 1989 to title XXI of the Public Health Service Act or the application of such a provision to any person or circumstance is held invalid by reason of the Constitution, subsection
(a)shall not apply and such title XXI of the Public Health Service Act without such amendment shall continue in effect.”. " Subtitle E—Provisions With Respect to COBRA Continuation Coverage **PART 1—****EXTENSION OF COVERAGE FOR DISABLED EMPLOYEES** SEC. 6701. EXTENSION, UNDER INTERNAL REVENUE CODE, OF COVERAGE FROM 18 TO 29 MONTHS FOR THOSE WITH A DISABILITY AT TIME OF TERMINATION OF EMPLOYMENT.
(a)In General.—Paragraph (2)(B) of section 4980B(f) of the Internal Revenue Code of 1986, as added by section 3011(a) of the Technical and Miscellaneous Revenue Act of 1988 (Public Law 100–647), (relating to maximum required period of continuation coverage), is amended—
(1)in clause
(i)by adding after and below subclause
(IV)the following new sentence: " “In the case of a qualified beneficiary who is determined, under title II or XVI of the Social Security Act, to have been disabled at the time of a qualifying event described in paragraph (3KB), any reference in subclause
(I)or
(II)to 18 months with respect to such event is deemed a reference to 29 months, but only if the qualified beneficiary has provided notice of such determination under paragraph (6)(0 before the end of such 18 months.”; and "
(2)by adding at the end the following new clause: " “(v) Termination of extended coverage for disability.—In the case of a qualified beneficiary who is disabled at the time of a qualifying event described in paragraph (3)(B), the month that begins more than 30 days after the date of the final determination under title II or XVI of the Social Security Act that the qualified beneficiary is no longer disabled.”. "
(b)Increased Premium Permitted.—Paragraph (2)(C) of such section (relating to premium requirements) is amended by adding at the end the following new sentence: “In the case of an individual described in the last sentence of subparagraph (B)(i), any reference in clause
(i)of this subparagraph to ‘102 percent’ is deemed a reference to ‘150 percent’ for any month after the 18th month of continuation coverage described in subclause
(I)or
(II)of subparagraph (B)(i).”. 103 STAT. 2295
(c)Notices Required.—Paragraph (6)(C) of such section (relating to certain notices to plan administrator) is amended by inserting before the period at the end the following: “and each qualified beneficiary who is determined, under title 11 or XVI of the Social Security Act, to have been disabled at the time of a qualifying event described in paragraph (3)(B) is responsible for notifying the plan administrator of such determination within 60 days after the date of the determination and for notifying the plan administrator within 30 days of the date of any final determination under such title or titles that the qualified beneficiary is no longer disabled”.
(d)Effective Date.—The amendments made by this section shall [42 USC 4980B note](/us/usc/t42/s4980B)apply to plan years beginning on or after the date of the enactment of this Act, regardless of whether the qualifying event occurred before, on, or after such date. SEC. 6702. EXTENSION, UNDER PUBLIC HEALTH SERVICE ACT, OF COVERAGE FROM IS TO 29 MONTHS FOR THOSE WITH A DISABILITY AT TIME OF TERMINATION OF EMPLOYMENT.
(a)In General.—Section 2202(2) of the Public Health Service Act (42 U.S.C. 300bb–2) is amended—
(1)in subparagraph (A), by adding after and below clause
(iii)the following new sentence: " “In the case of an individual who is determined, under title II or XVI of the Social Security Act, to have been disabled at the time of a qualifying event described in section 2203(2), any reference in clause
(i)or
(ii)to 18 months with respect to such event is deemed a reference to 29 months, but only if the qualified beneficiary has provided notice of such determination under section 2206(3) before the end of such 18 months.”; and "
(2)by adding at the end the following new subparagraph: " “(E) Termination of extended coverage for disability.—In the case of a qualified beneficiary who is disabled at the time of a qualifying event described in section 2203(2), the month that begins more than 30 days after the date of the final determination under title II or XVI of the Social Security Act that the qualified beneficiary is no longer disabled.”. "
(b)Increased Premium Permitted.—Section 2202(3) of the Public Health Service Act (42 U.S.C. 300bb–3) is amended in the matter [42 SC 300bb–2](/us/usc/t42/s300bb/2).after and below subparagraph
(B)by adding at the end the following new sentence: “In the case of an individual described in the last sentence of paragraph (2)(A), any reference in subparagraph
(A)of this paragraph to “102 percent’ is deemed a reference to ‘150 percent’ for any month after the 18th month of continuation coverage described in clause
(i)or
(ii)of paragraph (2)(A).”.
(c)Notices Required—Section 2206(3) of such Act (42 U.S.C. 300bb–6(3)) (relating to certain notices to plan administrator) is amended by inserting before the comma the following: “and each qualified beneficiary who is determined, under title II or XVI of the Social Security Act, to have been disabled at the time of a qualifying event described in section 2203(2) is responsible for notifying the plan administrator of such determination within 60 days after the date of the determination and for notifying the plan administrator within 30 days after the date of any final determination under such title or titles that the qualified beneficiary is no longer disabled”. 103 STAT. 2296
(d)[42 USC 300bb–2 note](/us/usc/t42/s300bb/2).Effective Date.—The amendments made by this section shall apply to plan years beginning on or after the date of the enactment of this Act, regardless of whether the qualifying event occurred before, on, or after such date. SEC. 6703. EXTENSION, UNDER ERISA, OF COVERAGE FROM 18 TO 29 MONTHS FOR THOSE WITH A DISABILITY AT TIME OF TERMINATION OF EMPLOYMENT.
(a)In General.—Section 602(2) of the Employee Retirement [29 USC 1162](/us/usc/t29/s1162).Income Security Act of 1974 (42 U.S.C. 1162(2)) is amended—
(1)in subparagraph (A), by adding after and below clause
(iv)the following new sentence: " “In the case of an individual who is determined, under title II or XVI of the Social Security Act, to have been disabled at the time of a qualifying event described in section 603(2), any reference in clause
(i)or
(ii)to 18 months with respect to such event is deemed a reference to 29 months, but only if the qualified beneficiary has provided notice of such determination under section 606(3) before the end of such 18 months.”; and "
(2)by adding at the end the following new subparagraph: " “(E) Termination of extended coverage for disability.—In the case of a qualified beneficiary who is disabled at the time of a qualifying event described in section 603(2), the month that begins more than 30 days after the date of the final determination under title II or XVI of the Social Security Act that the qualified beneficiary is no longer disabled.”. "
(b)Increased Premium Permitted.—Section 602(3) of such Act (42 [29 USC 1162](/us/usc/t29/s1162).U.S.C. 1162(3)) is amended in the matter after and below subparagraph
(B)by adding at the end the following new sentence: “In the case of an individual described in the last sentence of paragraph (2)(A), any reference in subparagraph
(A)of this paragraph to ‘102 percent’ is deemed a reference to ‘150 percent’ for any month after the 18th month of continuation coverage described in clause
(i)or
(ii)of paragraph (2)(A).”.
(c)Notices Required.—Section 606(3) of such Act (42 U.S.C. [29 USC 1166](/us/usc/t29/s1166).1166(3)) (relating to certain notices to plan administrator) is amended by inserting before the comma the following: “and each qualified beneficiary who is determined, under title II or XVI of the Social Security Act, to have been disabled at the time of a qualifying event described in section 603(2) is responsible for notifying the plan administrator of such determination within 60 days after the date of the determination and for notifying the plan administrator within 30 days after the date of any final determination under such title or titles that the qualified beneficiary is no longer disabled”.
(d)[29 USC 1162 note](/us/usc/t29/s1162). Effective Date.—The amendments made by this section shall apply to plan years beginning on or after the date of the enactment of this Act, regardless of whether the qualifying event occurred before, on, or after such date. **PART 2—****MISCELLANEOUS AMENDMENTS** SEC. 6801. PUBLIC HEALTH SERVICE ACT.
(a)Section 2201.— 103 STAT. 2297
(1)Subsection (B).—Section 2201(b) of the Public Health Service Act (42 U.S.C. 300bb–1(b)) is amended by striking the matter after and below paragraph (2).
(2)Effective date.—The amendment made by paragraph
(1)[42 USC 300bb–1 note](/us/usc/t42/s300bb/1).shall apply to years beginning after December 31, 1986.
(b)Section 2202.—
(1)Paragraph (2)(A)—
(A)In general.— Section 2202(2)(A) of the Public Health Service Act (42 U.S.C. 300bb–2(2)(A)) is amended by adding at the end the following new clause: " “(iv) Qualifying event involving medicare entitlement.—In the case of an event described in section 2203(4) (without regard to whether such event is a qualifying event), the period of coverage for qualified beneficiaries other than the covered employee for such event or any subsequent qualifying event shall not terminate before the close of the 36-month period beginning on the date the covered employee becomes entitled to benefits under title XVIII of the Social Security Act.” "
(B)Effective date.—The amendments made by this [42 USC 300bb–2 note](/us/usc/t42/s300bb/2).paragraph shall apply to plan years beginning after December 31, 1989.
(2)Paragraph (2)(D).—
(A)In general.—Section 2202(2)(D) of the Public Health Service Act (42 U.S.C. 300bb–2(2)(D)) is amended—
(i)in the heading for such paragraph, by striking “eligibility” and inserting “entitlement”; and
(ii)in clause (i), by inserting before the comma the following: “which does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary”.
(B)Effective date.—The amendments made by subparagraph [42 USC 300bb–2 note](/us/usc/t42/s300bb/2).(A) shall apply to—
(i)qualifying events occurring after December 31, 1989, and
(ii)in the case of qualified beneficiaries who elected continuation coverage after December 31, 1988, the period for which the required premium was paid (or was attempted to be paid but was rejected as such).
(3)Paragraph (3).—
(A)In general.—Section 2202(3) of the Public Health Service Act (42 U.S.C. 300bb–2(3)) is amended by amending the matter after and below subparagraph
(B)to read as follows: " “In no event may the plan require the payment of any premium before the day which is 45 days after the day on which the qualified beneficiary made the initial election tor continuation coverage.”. "
(B)Effective date.—The amendment made by subparagraph [42 USC 300bb–2 note](/us/usc/t42/s300bb/2).(A) shall apply to plan years beginning after December 31, 1989.
(c)Section 2208.—
(1)Paragraph (2).—Section 2208(2) of the Public Health Service Act (42 U.S.C. 300bb–8(2)) is amended by striking “the individual’s employment or previous employment with an employer” and inserting “the performance of services by the 103 STAT. 2298individual for 1 or more persona maintaining the plan (including as an employee defined in section 401(c)(1) of the Internal Revenue Code of 1986)”.
(2)[42 USC 300bb–8 note](/us/usc/t42/s300bb/8). Effective Date.—The amendment made by paragraph
(1)shall apply to plan years beginning after December 31, 1989. Subtitle F—Technical and Miscellaneous Provisions Relating to Nursing Home Reform SEC. 6901. MEDICARE AND MEDICAID TECHNICAL CORRECTIONS RELATING TO NURSING HOME REFORM.
(a)Moratorium on Implementation or February 2, 1989 Regulation.—The regulations promulgated by the Secretary of Health and Human Services on February 2, 1989 (54 Federal Register 5315 et seq., relating to requirements for long-term care facilities) shall not be effective before October 1, 1990, insofar as such regulations apply to skilled nursing facilities and intermediate care facilities under title XVIII or XIX of the Social Security Act.
(b)Nurse Aide Training.—
(1)Delay in requirement.—Sections 1819(b)(5) and 1919(b)(5) of the Social Security Act (42 U.S.C. 1395i–3(b)(5), 1396r(b)(5)) are each amended—
(A)in subparagraph (A), by striking “January 1, 1990” and inserting “October 1, 1990”, and
(B)in subparagraph (B), by striking “July 1, 1989” and “January 1, 1990” and inserting “January 1, 1990” and “October 1, 1990”, respectively.
(2)[42 USC 1395i–3 note](/us/usc/t42/s1395i/3). Publication of proposed regulations.—The Secretary of Health and Human Services shall issue proposed regulations to establish the requirements described in sections 1819(0(2) and 1919(0(2) of the Social Security Act by not later than 90 days after the date of the enactment of this Act.
(3)Requirements for training and evaluation programs.—Sections 1819(f)(2)(A) and 1919(f)(2)(A) of the Social Security Act (42 U.S.C. 1395i–3(f)(2)(A), 1396r(f)(2)(A)) are each amended—
(A)in clause (i)(I), by inserting “care of cognitively impaired residents,” after “social service needs,”;
(B)in clause (ii), by striking “cognitive, behavioral and social care” and inserting “recognition of mental health and social service needs, care of cognitively impaired residents”;
(C)by striking the period at the end of clause
(iii)and inserting “; and”; and
(D)by adding at the end the following new clause: " “(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)), and 103 STAT. 2299 “(II) prohibit the imposition on a nurse aide of any charges (including any charges for textbooks and other required course materials and any charges for the competency evaluation) for either such program.”. "
(4)Delay and transition in 75-hour training program requirement.—
(A)Section 1919(i)(2)(B)(ii) of such Act (42 U.S.C. 1396r(f)(2)(B)(ii)) is amended by striking “January 1, 1989” and inserting “July 1, 1989”.
(B)A nurse aide shall be considered to satisfy the requirement [42 USC 1395i–3 note](/us/usc/t42/s1395i/3).of sections 1819(b)(5)(A) and 1919(b)(5)(A) of the Social Security Act (of having completed a training and competency evaluation program approved by a State under section 18I9(e)(1)(A) or 1919(e)(1)(A) of such Act), if such aide would have satisfied such requirement as of July 1, 1989, if a number of hours (not less than 60 hours) were substituted for “75 hours” in sections 1819(f)(2) and 1919(l)(2) of such Act, respectively, and if such aide had received, before July 1, 1989, at least the difference in the number of such hours in supervised practical nurse aide training or in regular in-service nurse aide education.
(C)A nurse aide shall be considered to satisfy the requirement of sections 1819(b)(5)(A) and 1919(b)(5)(A) of the Social Security Act (of having completed a training and competency evaluation program approved by a State under section 1819(e)(1)(A) or 1919(e)(1)(A) of such Act), if such aide was found competent (whether or not by the State), before July 1, 1989, after the completion of a course of nurse aide training of at least 100 hours duration.
(D)With respect to the nurse aide competency evaluation requirements described in sections 1819(b)(5)(A) and 1919(b)(5)(A) of the Social Security Act, a State may waive such requirements with respect to an individual who can demonstrate to the satisfaction of the State that such individual has served as a nurse aide at one or more facilities of the same employer in the State for at least 24 consecutive months before the date of the enactment of this Act.
(5)Clarification of temporary enhanced federal financial participation for nurse aide training by nursing facilities.—
(A)In general.—Section 1903(a)(2)(B) of such Act (42 U.S.C. 1396b(a)(2)(B)) is amended—
(i)by inserting “(including the costs for nurse aides to complete such competency evaluation programs)” after “1919(e)(1)”, and
(ii)by inserting “(or, for calendar quarters beginning on or after July 1, 1988, and before July 1, 1990, the lesser of 90 percent or the Federal medical assistance percentage plus 25 percentage points)” after “50 percent”.
(B)No allocation of costs before october 1, 1990.—In [42 USC 1396b note](/us/usc/t42/s1396b).making payments under section 1903(a)(2)(B) of the Social Security Act for amounts expended for nurse aide training and competency evaluation programs, and competency 103 STAT. 2300evaluation programs, described in section 1919(e)(1) of such Act, in the case of activities conducted before October 1, 1990, the Secretary of Health and Human Services shall not take into account, or allocate amounts on the basis of, the proportion of residents of nursing facilities that is entitled to benefits under title XVIII or XIX of such Act.
(6)[42 USC 1395i–3 note](/us/usc/t42/s1395i/3). Effective dates.—
(A)In general.—Except as provided in subparagraph (B), the amendments made by this subsection shall take effect as if they were included in the enactment of the Omnibus Budget Reconciliation Act of 1987.
(B)Exception.—The amendments made by paragraph
(3)shall apply to nurse aide training and competency evaluation programs, and nurse aide competency evaluation programs, offered on or after the end of the 90-day period beginning on the date of the enactment of this Act, but shall not affect competency evaluations conducted under programs offered before the end of such period.
(c)[42 USC 1896r note](/us/usc/t42/s1896r). Publication of Proposed Regulations Respecting Preadmission Screening and Annual Resident Review.—The Secretary of Health and Human Services shall issue proposed regulations to establish the criteria described in section 1919(f)(8)(A) of the Social Security Act by not later than 90 days after the date of the enactment of this Act
(d)Other Amendments.—
(1)Clarification of applicability of enforcement rules to dually-certified facilities.—Section 1919(h)(8) of the Social Security Act (42 U.S.C. 1396r(h)(8)) is amended by adding at the end the following: “The provisions of this subsection shall apply to a nursing facility (or portion thereof) notwithstanding that the facility (or portion thereof) also is a skilled nursing facility for purposes of title XVIII”.
(2)[42 USC 1396b note](/us/usc/t42/s1396b). Clarification of federal matching rate for survey and certification activities.—During the period before October 1, 1990, the Federal percentage matching payment rate under section 1903(a) of the Social Security Act for so much of the sums expended under a State plan under title XIX of such Act as are attributable to compensation or training of personnel responsible for inspecting public or private skilled nursing or intermediate care facilities to individuals receiving medical assistance to determine compliance with health or safety standards shall be 75 percent.
(3)New York. Medicare waiver authority for certain demonstration projects.—(A) The Secretary of Health and Human Services may waive the survey and certification requirements of sections 1819(g) and 1864(a) of the Social Security Act to the extent the Secretary determines is required to carry out a demonstration project in New York (relating to testing an approved alternative survey and certification process), which has been approved as of the date of the enactment of this Act. Such waiver shall apply only during the period beginning on November 1, 1988, and ending on October 31, 1991.
(B)Wisconsin. The Secretary also may waive the survey and certification requirements described in subparagraph
(A)to the extent the Secretary determines is required to carry out a pilot demonstration project in Wisconsin (relating to testing an approved alternative survey and certification process). Such waiver shall apply 103 STAT. 2301only during the one-year period beginning on the date of implementation of the project.
(4)Miscellaneous technical corrections.—Sections 1819 and 1919 of the Social Security Act are each further amended— [42 USC 1395i–3, 1396r](/us/usc/t42/s1395i/3/1396r).
(A)in subsection (c)(I)(A)(ii)(II), by striking the closing parenthesis after “Secretary” and inserting a closing parenthesis after “obtained”,
(B)in subsection (c)(I)(A)(v)(I), by striking “accommodations” and inserting “accommodation”,
(C)in subsection (f)(2)(A)(i), by striking “, content of the curriculum” and inserting “and content of the curriculum”, and
(D)in subsection (h)(2)(C) (of section 1819) and in subsection (h)(3)(D) (of section 1919), by inserting “after the effective date of the findings” after “6 months”.
(5)Additional miscellaneous technical corrections.—Section 1910 of such Act (42 U.S.C. 13961) is amended—
(A)by inserting “and intermediate care facilities for the mentally retarded” after “rural health clinics”,
(B)in subsection (b)(1), by striking “skilled nursing or intermediate care facility” and inserting “intermediate care facility for the mentally retarded”,
(C)in subsection (b)(1), as amended by section 411(l)(6)(F) of the Medicare Catastrophic Coverage Act of 1988, by striking “1902(a)(28) or section 1919 or section 1905(c)” and inserting “1902(a)(31) or section 1905(d)”, and
(D)in subsections (b)(1) and (b)(2), by striking “skilled nursing facility or intermediate care facility” each place it appears and inserting “intermediate care facility for the mentally retarded”.
(6)Effective date.— [42 USC 1395i–3](/us/usc/t42/s1395i/3).
(A)In general.—Except as provided in subparagraph (B), the amendments made by this subsection shall take effect as if they were included in the enactment of the Omnibus Budget Reconciliation Act of 1987.
(B)Exception.—The amendment made by paragraph
(1)shall take effect on the date of the enactment of this Act. Subtitle G—Public Health Service Act SEC. 8911. ESTABLISHMENT OF AGENCY FOR HEALTH CARE POLICY AND RESEARCH. For amendments establishing the Agency for Health Care Policy and Research and creating a new title IX in the Public Health Service Act, see section 6103 of this Act. TITLE VII—REVENUE MEASURES Revenue Reconciliation Act of 1989.[26 USC 1 note](/us/usc/t26/s1). SEC. 7001. SHORT TITLE; ETC.
(a)Short Title.—This title may be cited as the “Revenue Reconciliation Act of 1989”.
(b)Amendment of 1986 Code.—Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or 103 STAT. 2302other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.
(c)Table of Contents.— TITLE VII— REVENUE MEASURES Sec. 7001. Short title; etc. Subtitle A— Extension of Expiring Tax Provisions Sec. 7101. Employer-provided educational assistance. Sec. 7102. Employer-provided group legal services. Sec. 7103. Extension and modification of targeted jobs credit. Sec. 7104. Extension of qualified mortgage bonds. Sec. 7105. Extension of qualified small issue bonds. Sec. 7106. Extension of energy investment credit for solar, geothermal, and ocean thermal property. Sec. 7107. Extension of special rules for health insurance costs of self-employed individuals. Sec. 7108. Extension and modification of low-income housing credit Sec. 7109. Low-income housing credit exempt from income phaseout of $25,000 exemption from passive loss rules. Sec. 7110. Extension and modification of research credit Sec. 7111. Allocation of research and experimental expenditures. Subtitle B— Corporate Provisions Sec. 7201. Limitation on use of group losses to offset income of subsidiary paying preferred dividends. Sec. 7202. Treatment of certain high yield original issue discount obligations. Sec. 7203. Securities treated as boot under section 351. Sec. 7204. Provisions related to regulated investment companies. Sec. 7205. Limitation on threshold requirement under section 382 built-in gain and loss provisions. Sec. 7206. Distributions on certain preferred stock treated as extraordinary dividends. Sec. 7207. Repeal of election to reduce excess loss account recapture by reducing basis of indebtedness. Sec. 7208. Other provisions relating to treatment of stock and debt; etc. Sec. 7209. Estimated tax payments required for S corporations. Sec. 7210. Limitation on deduction for certain interest paid to related person. Sec. 7211. Limitations on refunds due to net operating loss carrybacks or excess interest allocable to corporate equity reduction transactions. Subtitle C— Employee Benefit Provisions Part I— Employee Stock Ownership Plan Provisions Sec. 7301. Limitations on partial exclusion of interest on loans used to acquire employer securities. Sec. 7302. Limitations on deductions for dividends paid on employer securities. Sec. 7303. 3-year holding period required before section 1042 sale. Sec. 7304. Repeal of certain provisions relating to employee stock ownership plans. Part II— Section 401(h) Accounts Sec. 7311. Limitation on contributions to section 401(h) accounts. Subtitle D— Foreign Provisions Sec. 7401. Taxable year of certain foreign corporations. Sec. 7402. Limitation on use of deconsolidation to avoid foreign tax credit limitations. Sec. 7403. Information with respect to certain foreign-owned corporations. Sec. 7404. Repeal of special treatment of interest on certain foreign loans. Subtitle E— Excise Tax Provisions Sec. 7501. 1-year suspension of automatic reduction in aviation-related taxes. Sec. 7502. Acceleration of deposit requirements for airline ticket tax. Sec. 7503. Increase in international air passenger departure tax. Sec. 7504. Ship passengers international departure tax. Sec. 7505. Oil Spill Liability Trust Fund tax to take effect on January 1, 1990. Sec. 7506. Excise tax on sale of chemicals which deplete the ozone layer and of products containing such chemicals. Sec. 7507. Acceleration of deposit requirements for gasoline excise tax. 103 STAT. 2303 Sec. 7508. Taxation of bulk cigar imports. Subtitle F— Miscellaneous Provisions Part I— Limitation on Nonrecognition for Certain Exchanges Sec. 7601. Like kind exchanges between related persons. Part II— Minimum Tax Provisions Sec. 7611. Simplification of adjusted current earnings preference. Sec. 7612. Other modifications to minimum tax. Part III— Accounting Provisions Sec. 7621. Repeal of completed contract method of accounting for long-term contracts. Sec. 7622. Changes in treatment of transfers of franchises, trademarks, and trade names. Part IV— Employment Tax Provisions Sec. 7631. Treatment of agricultural workers under wage withholding. Sec. 7632. Acceleration of deposit requirements. Part V— Other Provisions Sec. 7641. Limitation on section 104 exclusion. Sec. 7642. Treatment of distributions by partnerships of contributed property. Sec. 7643. Depreciation treatment of cellular telephones. Sec. 7644. Elimination of retroactive certification of employees for work incentive jobs credit. Sec. 7645. Disallowance of depreciation for certain term interests. Sec. 7646. Reporting of points on mortgage loans. Sec. 7647. Treatment of certain investment-oriented life insurance contracts. Part VI— Tax-Exempt Bond Provisions Sec. 7651. Treatment of hedge bonds. Sec. 7652. Exceptions from arbitrage rebate requirement. Subtitle G— Revision of Civil Penalties Sec. 7701. Short title. Part I— Document and Information Return Penalties Sec. 7711. Uniform penalties for failures to comply with certain information reporting requirements. Sec. 7712. Information required with respect to certain foreign corporations. Sec. 7713. Uniform requirements for returns on magnetic media. Sec. 7714. Study of procedures to prevent mismatching. Sec. 7715. Study of service bureaus. Part II— Revision or Accuracy-Related Penalties Sec. 7721. Revision of accuracy-related penalties. Part III— Preparer, Promoter, and Protester Penalties Sec. 7731. Penalty for instituting proceedings before tax court primarily for delay, etc. Sec. 7732 , Modifications to penalties on return preparers for certain understatements. Sec. 7733. Modifications to other assessable penalties with respect to return preparers. Sec. 7734. Modifications to penalty for promoting abusive tax shelters, etc. Sec. 7735. Modifications to penalties for aiding and abetting understatement of tax liability. Sec. 7736. Modification to penalty for frivolous income tax return. Sec. 7737. Authority to counterclaim for balance of penalty in partial refund suite. Sec. 7738. Repeal of bonding requirement under section 7407. Sec. 7739. Certain disclosures of information by preparers permitted. Part IV— Failures To File or Pay Sec. 7741. Increase in penalty for fraudulent failure to file. Sec. 7742. Failure to make deposit of taxes. Sec. 7743. Effect of payment of tax by recipient on certain penalties. 103 STAT. 2304 Subtitle H— Technical Corrections Sec. 7801. Definitions; coordination with other subtitles. Part I— Amendments Related to Technical and Miscellaneous Revenue Act or 1988 Sec. 7811. Amendments related to title I of the 1988 Act Sec. 7812. Amendments related to title II of the 1988 Act Sec. 7813. Amendments related to title III of the 1988 Act Sec. 7814. Amendments related to title IV of the 1988 Act Sec. 7815. Amendments related to title V of the 1988 Act Sec. 7816. Amendments related to title VI of the 1988 Act Sec. 7817. Effective date. Part II— Amendments Related to Revenue Act of 1987 Sec. 7821. Amendments related to subtitle B. Sec. 7822. Amendments related to subtitle C and following subtitles. Sec. 7823. Effective date. Part III— Amendments Related to Tax Reform Act or 1986 Sec. 7831. Amendments related to Tax Reform Act of 1986. Part IV— Miscellaneous Changes Sec. 7841. Miscellaneous changes. Part V— Amendments Related to Pension Provisions Sec. 7851. Definitions. subpart a— amendments related to tax reform act of 1986 Sec. 7861. Amendments related to title XI of the Reform Act. Sec. 7862. Amendments related to title X VIII of the Reform Act Sec. 7863. Effective date. subpart b— amendments related to omnibus budget reconciliation act of 1986 Sec. 7871. Amendments related to Omnibus Budget Reconciliation Act of 1986. subpart c— amendments related to pension protection act Sec. 7881. Amendments related to Pension Protection Act Sec. 7882. Effective date. subpart d— additional pension provisions Sec. 7891. Amendments relating to the Tax Reform Act of 1986. Sec. 7892. Amendments relating to the Pension Protection Act Sec. 7893. Amendments relating to the Single-Employer Pension Plan Amendments Act of 1986 Sec. 7894. Other amendments to ERISA. Subtitle A—Extension of Expiring Tax Provisions SEC. 7101. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE.
(a)Extension.—
(1)In general—Subsection
(d)of section 127 (relating to educational assistance programs) is amended by striking “December 31, 1988” and inserting “September 30, 1990”.
(2)[26 USC 127 note](/us/usc/t26/s127). Special rule.—In the case of any taxable year beginning in 1990, only amounts paid before October 1, 1990, by the employer for educational assistance for the employee shall be taken into account in determining the amount excluded under section 127 of the Internal Revenue Code of 1986 with respect to such employee for such taxable year.
(b)Certain Otherwise Taxable Employer-Provided Educational Assistance May Be Excludible as Working Condition 103 STAT. 2305Fringe.—Subsection
(h)of section 132 is amended by adding at the [26 USC 132](/us/usc/t26/s132).end thereof the following new paragraph: " “(9) Application of section to otherwise taxable employer-provided educational assistance.—Amounts which would be excludible from gross income under section 127 but for subsection (a)(2) thereof or the last sentence of subsection (c)(1) thereof shall be excluded from gross income under this section if (and only if) such amounts are a working condition fringe.” "
(c)Effective Date.—The amendments made by this section shall [26 USC 127 note](/us/usc/t26/s127).apply to taxable years beginning after December 31, 1988. SEC. 7102. EMPLOYER-PROVIDED GROUP LEGAL SERVICES.
(a)Extension.—
(1)In general.—Subsection
(e)of section 120 (relating to group legal services plans) is amended by striking “ending after December 31, 1988” and inserting “beginning after September 30, 1990”.
(2)Special rule.—In the case of any taxable year beginning [26 USC 120 note](/us/usc/t26/s120).in 1990, only amounts paid before October 1, 1990, by the employer for coverage for the employee, his spouse, or his dependents under a qualified group legal services plan for periods before October 1, 1990, shall be taken into account in determining the amount excluded under section 120 of the Internal Revenue Code of 1986 with respect to such employee for such taxable year.
(b)Effective Date.—The amendment made by subsection
(a)[26 USC 120 note](/us/usc/t26/s120).shall apply to taxable years ending after December 31, 1988. SEC. 7103. EXTENSION AND MODIFICATION OF TARGETED JOBS CREDIT.
(a)Extension.—Paragraph
(4)of section 51(c) (relating to termination) is amended by striking “December 31, 1989” and inserting “September 30, 1990”.
(b)Extension of Authorization.—Paragraph
(2)of section 261(f) of the Economic Recovery Tax Act of 1981 is amended by striking [26 USC 51 note](/us/usc/t26/s51).“and 1989” and inserting “1989, and 1990”.
(c)Modification or Request for Certification.—
(1)In general.—Paragraph
(16)of section 51(d) is amended by adding at the end thereof the following new subparagraph: " “(C) Employer request must specify potential basis for eligibility.—In any request for a certification of an individual as a member of a targeted group, the employer shall— “(i) specify each subparagraph (but not more than 2) of paragraph
(1)by reason of which the employer believes that such individual is such a member, and “(ii) certify that a good faith effort was made to determine that such individual is such a member.”"
(2)Effective date.—The amendment made by paragraph
(1)[26 USC 51 note](/us/usc/t26/s51).shall apply to individuals who begin work for the employer after December 31, 1989. SEC. 7104. EXTENSION OF QUALIFIED MORTGAGE BONDS.
(a)In General.—Subparagraph
(B)of section 143(a)(1) (defining qualified mortgage bond) is amended by striking “December 31, 1989” each place it appears and inserting “September 30, 1990”.
(b)Mortgage Credit Certificates.—Subsection
(h)of section 25 is amended by striking “for any calendar year after 1989” and inserting “for any period after September 30, 1990”. 103 STAT. 2306 SEC. 7105. EXTENSION OF QUALIFIED SMALL ISSUE BONDS. Subparagraph
(B)of section 144(a)(12) is amended by striking “substituting ‘1989’ for ‘1986’” and inserting “substituting ‘September 30, 1990’ for ‘December 31, 1986’”. SEC. 7106. EXTENSION OF ENERGY INVESTMENT CREDIT FOR SOLAR, GEOTHERMAL, AND OCEAN THERMAL PROPERTY. The table contained in section 46(b)(2)(A) (relating to energy percentage) is amended by striking “Dec. 31, 1989” in clauses (viii), (ix), and
(x)and inserting “Sept. 30, 1990”. SEC. 7107. EXTENSION OF SPECIAL RULES FOR HEALTH INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.
(a)Extension.—
(1)General rule.—Paragraph
(5)of section 162(1) (relating to special rules for health insurance costs of self-employed individuals) is amended by striking “December 31, 1989” and inserting “September 30, 1990”.
(2)[26 USC 162 note](/us/usc/t26/s162). Special rule.—In the case of any taxable year beginning in 1990—
(A)only amounts paid before October 1, 1990, by the individual for insurance coverage for periods before October 1, 1990, shall be taken into account in determining the amount deductible under section 162(1) of the Internal Revenue Code of 1986 with respect to such individual for such taxable year, and
(B)for purposes of section 162(l)(2)(A) of such Code, the amount of the earned income described in such paragraph taken into account for such taxable year shall be the amount which bears the same ratio to the total amount of such earned income as the number of months in such taxable year ending before October 1, 1990, bears to the number of months in such taxable year.
(b)Special Rule for Certain S Corporation Shareholders.—Subsection
(1)of section 162 (as amended by subsection (a)) is amended by redesignating paragraph
(5)as paragraph
(6)and by inserting after paragraph
(4)the following new paragraph: " “(5) Treatment of certain 8 corporation shareholders.—This subsection shall apply in the case of any individual treated as a partner under section 1372(a), except that— “(A) for purposes of this subsection, such individual’s wages (as defined in section 3121) from the S corporation shall be treated as such individual’s earned income (within the meaning of section 401(c)(1)), and “(B) there shall be such adjustments in the application of this subsection as the Secretary may by regulations prescribe.” "
(c)[26 USC 162 note](/us/usc/t26/s162). Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 1989. SEC. 7108. EXTENSION AND MODIFICATION OF LOW-INCOME HOUSING CREDIT.
(a)Extension.—
(1)In general.—Subsection
(n)of section 42 (relating to low-income housing credit) is amended to read as follows— " “(n) Termination.— 103 STAT. 2307 “(1) In general.—Except as provided in paragraph (2), for any calendar year after 1990— “(A) clause
(i)of subsection (h)(3)(C) shall not apply, and “(B) subsection (h)(4) shall not apply to any building placed in service after 1990. “(2) Exception for bond-financed buildings in progress.—For purposes of paragraph (1)(B), a building shall be treated as placed in service before 1990 if— “(A) the bonds with respect to such building are issued before 1990, “(B) such building is constructed, reconstructed, or rehabilitated by the taxpayer, “(C) more than 10 percent of the reasonably anticipated cost of such construction, reconstruction, or rehabilitation has been incurred as of January 1, 1990, and some of such cost is incurred on or after such date, and “(D) such building is placed in service before January 1, 1992.” "
(2)Special rule.—In the case of calendar year 1990, section [26 USC 42 note](/us/usc/t26/s42).42(h)(3)(C)(i) of the Internal Revenue Code of 1986 (as amended by subsection (b)(1)) shall be applied by substituting “$.9375” for “$1.25”.
(b)1-Year Carryover of Unused Credit Authority, Etc.—
(1)In general.— Section 42(h)(3) (relating to housing credit dollar amount for agencies) is amended by redesignating subparagraphs (D), (E), and
(F)as subparagraphs (E), (F), and (G), respectively, and by striking subparagraph
(C)and inserting the following new subparagraphs: " “(C) State housing credit ceiling.—The State housing credit ceiling applicable to any State for any calendar year shall be an amount equal to the sum of— “(i) $1.25 multiplied by the State population, “(ii) the unused State housing credit ceiling (if any) of such State for the preceding calendar year, “(iii) the amount of State housing credit ceiling returned in the calendar year, plus “(iv) the amount (if any) allocated under subparagraph
(D)to such State by the Secretary. For purposes of clause (ii), the unused State housing credit ceiling for any calendar year is the excess (if any) of the amount described in clause
(i)over the aggregate housing credit dollar amount allocated for such year. For purposes of clause (iii), the amount of State housing credit ceiling returned in the calendar year equals the housing credit dollar amount previously allocated within the State to any project which does not become a qualified low-income housing project within the period required by this section or the terms of the allocation or to any project with respect to which an allocation is cancelled by mutual consent of the housing credit agency and the allocation recipient. “(D) Unused housing credit carryovers allocated among certain states.— “(i) In general.—The unused housing credit carryover of a State for any calendar year shall be assigned to the Secretary for allocation among qualified States for the succeeding calendar year. 103 STAT. 2308 “(ii) Unused housing credit carryover.—For purposes of this subparagraph, the unused housing credit carryover of a State for any calendar year is the excess (if any) of the unused State housing credit ceiling for such year (as defined in subparagraph (C)(ii)) over the excess (if any) of— “(I) the aggregate housing credit dollar amount allocated for such year, over “(II) the amount described in clause
(i)of subparagraph (C). “(iii) Formula for allocation of unused housing credit carryovers among qualified states.—The amount allocated under this subparagraph to a qualified State for any calendar year shall be the amount determined by the Secretary to bear the same ratio to the aggregate unused housing credit carryovers of all States for the preceding calendar year as such State’s population for the calendar year bears to the population of all qualified States for the calendar year. For purposes of the preceding sentence, population shall be determined in accordance with section 146(j). “(iv) Qualified state.—For purposes of this subparagraph, the term ‘qualified State’ means, with respect to a calendar year, any State— “(I) which allocated its entire State housing credit ceiling for the preceding calendar year, and “(II) for which a request is made (not later than May 1 of the calendar year) to receive an allocation under clause (in).”"
(2)Conforming amendments.—
(A)Subparagraph
(E)of section 42(h)(5) is amended by striking “subparagraph (E)” and inserting “subparagraph (F)”.
(B)Paragraph
(6)of section 42(h) is amended by striking subparagraph
(B)and by redesignating subparagraphs (C), (D), and
(E)as subparagraphs (B), (C), and (D), respectively.
(c)Buildings Eligible for Credit Only if Minimum Long-Term Commitment to Low-Income Housing.—
(1)In general.—Section 42(h) (relating to limitation on aggregate credit allowable with respect to projects located in a State) is amended by redesignating paragraphs
(6)and
(7)as paragraphs
(7)and (8), respectively, and by inserting after paragraph
(5)the following new paragraph: " “(6) Buildings eligible for credit only if minimum long-term commitment to low-income housing.— “(A) In general.—No credit shall be allowed by reason of this section with respect to any building for the taxable year unless an extended low-income housing commitment is in effect as of the end of such taxable year. “(B) Extended low-income housing commitment.—For purposes of this paragraph, the term ‘extended low-income housing commitment means any agreement between the taxpayer and the housing credit agency— “(i) which requires that the applicable fraction (as defined in subsection (c)(1)) for the building for each taxable year in the extended use period will not be less 103 STAT. 2309than the applicable fraction specified in such agreement, “(ii) which allows individuals who meet the income limitation applicable to the building under subsection
(g)(whether prospective, present, or former occupants of the building) the right to enforce in any State court the requirement of clause (i), “(iii) which is binding on all successors of the taxpayer, and “(iv) which, with respect to the property, is recorded pursuant to State law as a restrictive covenant. “(C) Allocation of credit may not exceed amount necessary to support commitment.— “(i) In general.—The housing credit dollar amount allocated to any building may not exceed the amount necessary to support the applicable fraction specified in the extended low-income housing commitment for such building, including any increase in such fraction pursuant to the application of subsection (f)(3) if such increase is reflected in an amended low-income housing commitment “(ii) Buildings financed by tax-exempt bonds.—If paragraph
(4)applies to any building the amount of credit allowed in any taxable year may not exceed the amount necessary to support the applicable fraction specified in the extended low-income housing commitment for such building. Such commitment may be amended to increase such fraction. “(D) Extended use period.—For purposes of this paragraph, the term ‘extended use period’ means the period— “(i) beginning on the 1st day in the compliance period on which such building is part of a qualified low-income housing project, and “(ii) ending on the later of— “(I) the date specified by such agency in such agreement, or “(II) the date which is 15 years after the close of the compliance period. “(E) Exceptions if foreclosure or if no buyer willing to maintain low-income status.— “(i) In general.—The extended use period for any building shall terminate— “(I) on the date the building is acquired by foreclosure (or instrument in lieu of foreclosure), or “(II) on the last day of the period specified in subparagraph
(I)if the housing credit agency is unable to present during such period a qualified contract for the acquisition of the low-income portion of the building by any person who will continue to operate such portion as a qualified low-income building. Subclause
(II)shall not apply to the extent more stringent requirements are provided in the agreement or in State law. “(ii) Eviction, etc. of existing low-income tenants not permitted.—The termination of an extended use period under clause
(i)shall not be construed to permit 103 STAT. 2310before the close of the 3-year period following such termination— “(I) the eviction or the termination of tenancy (other than for good cause) of an existing tenant of any low-income unit, or “(II) any increase in the gross rent with respect to such unit. “(F) Qualified contract.—For purposes of subparagraph (E), the term ‘qualified contract’ means a bona fide contract to acquire (within a reasonable period after the contract is entered into) the low-income portion of the building for an amount not less than the applicable fraction (specified in the extended low-income housing commitment) of— “(i) the sum of— “(I) the outstanding indebtedness secured by, or with respect to, the building, “(II) the adjusted investor equity in the building, plus “(III) other capital contributions not reflected in the amounts described in subclause
(I)or (Q), reduced by “(ii) cash distributions from (or available for distribution from) the project. Regulations. The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this paragraph, including regulations to prevent the manipulation of the amount determined under the preceding sentence. “(G) Adjusted investor equity.— “(i) In general.—For purposes of subparagraph (E), the term ‘adjusted investor equity’ means, with respect to any calendar year, the aggregate amount of cash taxpayers invested with respect to the project increased by the amount equal to— “(I) such amount, multiplied by “(II) the cost-of-living adjustment for such calendar year, determined under section 1(f)(3) by substituting the base calendar year for ‘calendar year 1987’. An amount shall be taken into account as an investment in the project only to the extent there was an obligation to invest such amount as of the beginning of the credit period and to the extent such amount is reflected in the adjusted basis of the project. “(ii) Cost-of-living increases in excess of 5 percent not taken into account.—Under regulations prescribed by the Secretary, if the CPI for any calendar year (as defined in section 1(f)(4)) exceeds the CPI for the preceding calendar year by more than 5 percent, the CPI for the base calendar year shall be increased such that such excess shall never be taken into account under clause (i). “(iii) Base calendar year.—For purposes of this subparagraph, the term “base calendar year” means the calendar year with or within which the 1st taxable year of the credit period ends. “(H) Low-income portion.—For purposes of this paragraph, the low-income portion of a building is the portion of 103 STAT. 2311such building equal to the applicable fraction specified in the extended low-income housing commitment for the building. “(I) Period for finding buyer.—The period referred to in this subparagraph is the 1-year period beginning on the date (after the 14th year of the compliance period) the taxpayer submits a written request to the housing credit agency to find a person to acquire the taxpayer’s interest in the low-income portion of the building. “(J) Sales of less than low-income portion of building.—In the case of a sale or exchange of only a portion of the low-income portion of the building, only the same portion (as the portion sold or exchanged) of the amount determined under subparagraph
(F)shall be taken into account thereunder. “(K) Effect of noncompliance.—If, during a taxable year, there is a determination that an extended low-income housing agreement was not in effect as of the beginning of such year, such determination shall not apply to any period before such year and subparagraph
(A)shall be applied without regard to such determination if the failure is corrected within 1 year from the date of the determination. “(L) Projects which consist of more than 1 building.—The application of this paragraph to projects which consist of more than 1 building shall be made under regulations prescribed by the Secretary.” "
(2)Conforming amendment.—Subparagraph (0 of section 42(b)(3) is amended by striking “subsection (h)(6))” and inserting “subsection (h)(7)”.
(d)Credit for Acquisition of Existing Building To Apply Only If Building To Be Rehabilitated; Increase in Required Rehabilitation Expenditures.—
(1)In general.—Subparagraph
(B)of section 42(d)(2) is amended by striking “and” at the end of clause (ii), by striking the period at the end of clause
(iii)and inserting “, and”, and by adding at the end thereof the following new clause: " “(iv) except as provided in subsection (f)(5), a credit is allowable under subsection
(a)by reason of subsection
(e)with respect to the building.” "
(2)Credit period for existing buildings not to begin before rehabilitation credit allowed.—Subsection
(f)of section 42 (relating to definition and special rules relating to credit period), as amended by subtitle H, is amended by adding at the end thereof the following new paragraph: " “(5) Credit period for existing buildings not to begin before rehabilitation credit allowed.— “(A) In general.—The credit period for an existing building shall not begin before the 1st taxable year of the credit period for rehabilitation expenditures with respect to the building. “(B) Acquisition credit allowed for certain buildings not allowed a rehabilitation credit.— “(i) In general.—In the case of a building described in clause (ii)— “(I) subsection (d)(2)(B)(iv) shall not apply, and “(II) the credit period for such building shall not begin before the taxable year which would be the 103 STAT. 23121st taxable year of the credit period for rehabilitation expenditures with respect to the building under the modifications described in clause (ii)(II). “(ii) Building described.—A building is described in this clause if— “(I) a waiver is granted under subsection (d)(6)(C) with respect to the acquisition of the building, and “(II) a credit would be allowed for rehabilitation expenditures with respect to such building if subsection (e)(3)(A)(ii)(I) did not apply and if subsection (e)(S)(A)(ii)(II) were applied by substituting ‘$2,000’ for ’$3,000’.” "
(3)Increase in required rehabilitation expenditures.—Paragraph
(3)of section 42(e) is amended by redesignating subparagraph
(B)as subparagraph
(C)and by striking so much of such paragraph as precedes such subparagraph and inserting the following: " “(3) Minimum expenditures to qualify.— “(A) In general.—Paragraph
(1)shall apply to rehabilitation expenditures with respect to any building only if— “(i) the expenditures are allocable to 1 or more low-income units or substantially benefit such units, and “(ii) the amount of such expenditures during any 24-month period meets the requirements of whichever of the following subclauses requires the greater amount of such expenditures: “(I) The requirement of this subclause is met if such amount is not less than 10 percent of the adjusted basis of the building (determined as of the 1st day of such period and without regard to paragraphs
(2)and
(3)of section 1016(a)). “(II) The requirement of this subclause is met if the qualified basis attributable to such amount, when divided by the number of low-income units in the building, is $3,000 or more. “(B) Exception from 10 percent rehabilitation.—In the case of a building acquired by the taxpayer from a governmental unit, at the election of the taxpayer, subparagraph (A)(ii)(I) shall not apply and the credit under this section for such rehabilitation expenditures shall be determined using the percentage applicable under subsection (b)(2)(B)(ii).” "
(e)Changes in Rules Relating to Rent Restrictions.—
(1)Rent restriction determined on basis of number of bedrooms —
(A)Section 42(g)(2) is amended by redesignating subparagraph
(C)as subparagraph
(E)and by inserting after subparagraph
(B)the following new subparagraphs: " “(C) Imputed income limitation applicable to unit.—For purposes of this paragraph, the imputed income limitation applicable to a unit is the income limitation which would apply under paragraph
(1)to individuals occupying the unit if the number of individuals occupying the unit were as follows: “(i) In the case of a unit which does not have a separate bedroom, 1 individual. 103 STAT. 2313 “(ii) In the case of a unit which has 1 or more separate bedrooms, 1.5 individuals for each separate bedroom. In the case of a project with respect to which a credit is allowable by reason of this section and for which financing is provided by a bond described in section 142(a)(7), the imputed income limitation shall apply in lieu of the otherwise applicable income limitation for purposes of applying section 142(d)(4)(B)(ii). “(D) Treatment of units occupied by individuals whose incomes rise above limit.— “(i) In general.—Except as provided in clause (ii), notwithstanding an increase in the income of the occupants of a low-income unit above the income limitation applicable under paragraph (1), such unit shall continue to be treated as a low-income unit if the income of such occupants initially met such income limitation. “(ii) Next available unit must be rented to low-income tenant if income rises above 140 percent of income limit.—If the income of the occupants of the unit increases above 140 percent of the income limitation applicable under paragraph (1), clause
(i)shall cease to apply to such unit if any residential rental unit in the building (of a size comparable to, or smaller than, such unit) is occupied by a new resident whose income exceeds such income limitation.” "
(B)Subparagraph
(A)of section 42(g)(2) is amended by striking “the income limitation under paragraph
(1)applicable to individuals occupying such unit” and inserting “the imputed income limitation applicable to such unit”
(2)Reduction in area median gross income not to require reduction of rent.—Subparagraph
(A)of section 42(g)(2) (relating to rent-restricted units) is amended by adding at the end thereof the following new sentence: “For purposes of the preceding sentence, the amount of the income limitation under paragraph
(1)applicable for any period shall not be less than such limitation applicable for the earliest period the building (which contains the unit) was included in the determination of whether the project is a qualified low-income housing project.”
(3)Exclusion with respect to continuing care facilities not to apply in determining income.—Subparagraph
(B)of section 142(d)(2) is amended by adding at the end thereof the following: " “Section 7872(g) shall not apply in determining the income of individuals under this subparagraph.” "
(f)Additional Buildings Eligible for Waiver of 10-Year Period Applicable to Acquisitions of Existing Buildings.—Paragraph
(6)of section 42(d) is amended by redesignating subparagraph
(C)as subparagraph
(E)and by inserting after subparagraph
(B)the following new subparagraphs: " “(C) Low-income buildings where mortgage may be prepaid.—A waiver may be granted under subparagraph
(A)(without regard to any clause thereof) with respect to a federally-assisted building described in clause
(ii)or
(iii)of subparagraph
(B)if— “(i) the mortgage on such building is eligible for prepayment under subtitle B of the Emergency Low 103 STAT. 2314Income Housing Preservation Act of 1987 or under section 502(c) of the Housing Act of 1949 at any time within 1 year after the date of the application for such a waiver, “(ii) the appropriate Federal official certifies to the Secretary that it is reasonable to expect that, if the waiver is not granted, such building will cease complying with its low-income occupancy requirements, and “(iii) the eligibility to prepay such mortgage without the approval of the appropriate Federal official is waived by all persons who are so eligible and such waiver is binding on all successors of such persons. “(D) Buildings acquired from insured depository institutions in default.—A waiver may be granted under subparagraph
(A)(without regard to any clause thereof) with respect to any building acquired from an insured depository institution in default (as defined in section 3 of the Federal Deposit Insurance Act) or from a receiver or conservator of such an institution.” "
(g)Increase in Credit for Buildings in High Cost Areas.—Paragraph
(5)of section 42(d) (relating to eligible basis) is amended by adding at the end thereof the following new subparagraph: " “(D) Increase in credit for buildings in high cost areas.— “(i) In general.—In the case of any building located in a qualified census tract or difficult development area which is designated for purposes of this subparagraph— “(I) in the case of a new building, the eligible basis of such building shall be 130 percent of such basis determined without regard to this subparagraph, and “(II) in the case of an existing building, the rehabilitation expenditures taken into account under subsection
(e)shall be 130 percent of such expenditures determined without regard to this subparagraph. “(ii) Qualified census tract.— “(I) In general.—The term ‘qualified census tract’ means any census tract in which 50 percent or more of the households have an income which is less than 60 percent of the area median gross income. “(II) Limit on msa’s designated.—The portion of a metropolitan statistical area which may be designated for purposes of this subparagraph shall not exceed an area having 20 percent of the population of such metropolitan statistical area. “(III) Determination of areas.—For purposes of this clause, each metropolitan statistical area shall be treated as a separate area and all nonmetropolitan areas in a State shall be treated as 1 area. “(iii) Difficult development areas.— “(I) In general.—The term ‘difficult development areas’ means any area designated by the Secretary of Housing and Urban Development as 103 STAT. 2315an area which has high construction, land, and utility costs relative to area median gross income. “(II) Limit on areas designated.—The portions of metropolitan statistical areas which may be designated for purposes of this subparagraph shall not exceed an aggregate area having 20 percent of the population of such metropolitan statistical areas. A comparable rule shall apply to nonmetropolitan areas. “(iv) Special rules and definitions.—For purposes of this subparagraph— “(I) population shall be determined on the basis of the most recent decennial census for which data are available, “(II) area median gross income shall be determined in accordance with subsection (g)(4), “(III) the term ‘metropolitan statistical area’ has the same meaning as when used in section 143(k)(2)(B), and “(IV) the term ‘nonmetropolitan area’ means any county (or portion thereof) which is not within a metropolitan statistical area.” "
(h)Changes in Rules Relating to Buildings fob Which Credit May Be Allowed.—
(1)Single-room occupancy units rented on a monthly basis.—Subparagraph
(B)of section 42(i)(3) (relating to low income unit) is amended by adding at the end thereof the following new sentence: “For purposes of the preceding sentence, a single-room occupancy unit shall not be treated as used on a transient basis merely because it is rented on a month-by-month basis.”
(2)Special needs housing.—Subparagraph
(B)of section 42(g)(2) (relating to gross rent) is amended—
(A)in clause (i), by striking “and” at the end,
(B)in clause (ii), by striking the period at the end and inserting “, and”, and
(C)by adding at the end the following: " “(iii) does not include any fee for a supportive service which is paid to the owner of the unit (on the basis of the low-income status of the tenant of the unit) by any governmental program of assistance (or by an organization described in section 501(c)(3) and exempt from tax under section 501(a)) if such program (or organization) provides assistance for rent and the amount of assistance provided for rent is not separable from the amount of assistance provided for supportive services. For purposes of clause (iii), the term ‘supportive service’ means any service provided under a planned program of services designed to enable residents of a residential rental property to remain independent and avoid placement in a hospital, nursing home, or intermediate care facility for the mentally or physically handicapped. In the case of a single-room occupancy unit or a building described in subsection (i)(3)(B)(iii), such term includes any service provided to assist tenants in locating and retaining permanent housing.”" 103 STAT. 2316
(3)Scattered bite projects.—Section 42(g) (relating to qualified low-income housing project) is amended by adding at the end thereof the following new paragraph: " “(7) Scattered site projects.—Buildings which would (but for their lack of proximity) be treated as a project for purposes of this section snail be so treated if all of the dwelling units in each of the buildings are rent-restricted (within the meaning of paragraph (2)) residential rental units.” "
(4)Owner-occupied buildings having 4 or fewer units eligible for credit where development plan.— Section 42(i)(3) (defining low-income unit), as amended by subtitle H, is amended by adding at the end thereof the following new subparagraph: " “(E) Owner-occupied buildings having 4 or fewer units eligible for credit where development plan.— “(i) In general.—Subparagraph
(C)shall not apply to the acquisition or rehabilitation of a building pursuant to a development plan of action sponsored by a State or local government or a qualified nonprofit organization (as defined in subsection (h)(5)(C)). “(ii) Limitation on credit.—In the case of a building to which clause
(i)applies, the applicable fraction shall not exceed 80 percent of the unit fraction. “(iii) Certain unrented units treated as owner-occupied.—In the case of a building to which clause
(i)applies, any unit which is not rented for 90 days or more shall be treated as occupied by the owner of the building as of the 1st day it is not rented.” "
(5)Buildings receiving section 8 moderate rehabilitation assistance or similar assistance not eligible for credit.—Section 42(b)(1) (relating to applicable percentage for buildings placed in service during 1987) is amended by adding at the end thereof the following new flush sentence: " “A building shall not be treated as described in subparagraph
(B)if, at any time during the credit period, moderate rehabilitation assistance is provided with respect to such building under section 8(e)(2) of the United States Housing Act of 1937.” "
(i)Application of Credit to Transitional Housing for the Homeless; Denial of Credit for Substandard Housing.—
(1)In general.— Subparagraph
(B)of section 42(i)(3) (defining low-income unit) is amended to read as follows: " “(B) Exceptions.— “(i) In general.—A unit shall not be treated as a low-income unit unless the unit is suitable for occupancy and used other than on a transient basis. “(ii) Suitability for occupancy.—For purposes of clause (i), the suitability of a unit for occupancy shall be determined under regulations prescribed by the Secretary taking into account local health, safety, and building codes. “(iii) Transitional housing for homeless.—For purposes of clause (i), a unit shall be considered to be used other than on a transient basis if the unit contains sleeping accommodations and kitchen and bathroom facilities and is located in a building— “(I) which is used exclusively to facilitate the transition of homeless individuals (within the 103 STAT. 2317meaning of section 103 of the Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 11302), as in effect on the date of the enactment of this clause) to independent living within 24 months, and “(II) in which a governmental entity or qualified nonprofit organization (as defined in subsection (h)(5)) provides such individuals with temporary housing and supportive services designed to assist such individuals in locating and retaining permanent housing. “(iv) Single-Room occupancy units.—For purposes of clause (i), a single-room occupancy unit shall not be treated as used on a transient basis merely because it is rented on a month-by-month basis.” "
(2)Qualified basis to include portion of building used to provide supportive services.— Paragraph
(1)of section 42(c) is amended by adding at the end thereof the following new subparagraph: " “(E) Qualified basis to include portion of building used to provide supportive services for homeless.—In the case of a qualified low-income building described in subsection (i)(3)(B)(iii), the qualified basis of such building for any taxable year shall be increased by the lesser of— “(i) so much of the eligible basis of such building as is used throughout the year to provide supportive services designed to assist tenants in locating and retaining permanent housing, or “(ii) 20 percent of the qualified basis of such building (determined without regard to this subparagraph).” "
(j)Volume Cap Not To Apply Where 50 Percent or More of Building Is Financed With Tax-Exempt Bonds.—Subparagraph
(B)of section 42(h)(4) is amended by striking “70 percent” each place it appears and inserting “50 percent”.
(k)Building Not Treated as Federally Subsidized By Reason of Community Development Block Grant.—Subparagraph
(D)of section 42(i)(2) (defining below market Federal loan) is amended by adding at the end thereof the following new sentence: “Such term shall not include any loan which would be a below market Federal loan solely by reason of assistance provided under section 106, 107, or 108 of the Housing and Community Development Act of 1974 (as in effect on the date of the enactment of this sentence).”
(l)Eligible Basis for New Buildings To Include Expenditures Before Close of 1st Year of Credit Period.—
(1)New buildings.—Paragraph
(1)of section 42(d) (relating to eligible basis for new buildings) is amended by inserting before the period “as of the close of the 1st taxable year of the credit period”.
(2)Existing buildings.—Subparagraph
(A)of section 42(d)(2) (relating to eligible basis for existing buildings) is amended by striking “subparagraph (B)” and all that follows through the end of clause
(i)and inserting “subparagraph (B), its adjusted basis as of the close of the 1st taxable year of the credit period, and”.
(3)Conforming amendments.—
(A)Subparagraph
(C)of section 42(d)(2) is amended by striking “Acquisition cost” in the heading and inserting 103 STAT. 2318“Adjusted basis” and by striking “cost” in the text and inserting “adjusted basis”.
(B)Paragraph
(5)of section 42(d), as amended by subsection (g), is further amended by striking subparagraph (A), by redesignating subparagraphs (B), (C), and
(D)as subparagraphs (A), (B), and (C), respectively, and by striking the paragraph heading and inserting the following: " “(5) Special rules for determining eligible basis.—”. "
(C)Paragraph
(5)of section 42(e) is amended by striking “subsection (d)(2)(A)(i)(II)” and inserting “subsection (d)(2)(A)(i)”.
(m)Housing Credit May Be Allocated on Project Basis.—
(1)In general.— Section 42(h)(1) (relating to credit may not exceed credit amount allocated to building) is amended by adding at the end thereof the following new subparagraph: " “(F) Allocation of credit on a project basis.— “(i) In general.—In the case of a project which includes (or will include) more than 1 building, an allocation meets the requirements of this subparagraph if— “(I) the allocation is made to the project for a calendar year during the project period, “(II) the allocation only applies to buildings placed in service during or after the calendar year for which the allocation is made, and “(III) the portion of such allocation which is allocated to any building in such project is specified not later than the close of the calendar year in which the building is placed in service. “(ii) Project period.—For purposes of clause (i), the term ‘project period’ means the period— “(I) beginning with the 1st calendar year for which an allocation may be made for the 1st building placed in service as part of such project, and “(II) ending with the calendar year the last building is placed in service as part of such project.” "
(2)Conforming amendment.—Subparagraph
(B)of section 42(h)(1) is amended by striking “or (E)” and inserting “(E), or (F)”.
(3)Projects with more than 1 building must be identified.— Section 42(g)(3) (relating to date for meeting requirements) is amended by adding at the end thereof the following new subparagraph: " “(D) Projects with more than 1 building must be identified.—For purposes of this section, a project shall be treated as consisting of only 1 building unless, before the close of the 1st calendar year in the project period (as defined in subsection (h)(I)(F)(ii)), each building which is (or will be) part of such project is identified in such form and manner as the Secretary may provide.” "
(n)Changes in Rules Related to Deep Rent Skewed Projects.—
(1)Clause
(iii)of section 142(d)(4)(B) (relating to deep rent skewed project) is amended by striking “⅓” and inserting “½”.
(2)Section 42(g)(4) (relating to certain rules made applicable) is amended by striking “(other than section 142(d)(4)(B)(iii))”. 103 STAT. 2319
(o)Increased Responsibilities for Housing Credit Agencies.—Section 42 is amended by redesignating subsections
(m)and
(n)as subsections
(n)and (o), respectively, and by inserting after subsection
(l)the following new subsection: " “(m) Responsibilities of Housing Credit Agencies.— “(1) Plans for allocation of credit among projects.— “(A) In general.—Notwithstanding any other provision of this section, the housing credit dollar amount with respect to any building shall be zero unless— “(i) such amount was allocated pursuant to a qualified allocation plan of the housing credit agency which is approved by the governmental unit (in accordance with rules similar to the rules of section 147(f)(2) (other than subparagraph (B)(ii) thereof)) of which such agency is a part, and “(ii) such agency notifies the chief executive officer (or the equivalent) of the local jurisdiction within which the building is located of such project and provides such individual a reasonable opportunity to comment on the project. “(B) Qualified allocation plan.—For purposes of this paragraph, the term ‘qualified allocation plan’ means any plan— “(i) which sets forth selection criteria to be used to determine housing priorities of the housing credit agency which are appropriate to local conditions, “(ii) which gives the highest priority to those projects as to which the highest percentage of the housing credit dollar amount is to be used for project costs other than the cost of intermediaries unless granting such priority would impede the development of projects in hard-to-develop areas, “(iii) which also gives preference in allocating housing credit dollar amounts among selected projects to— “(I) projects serving the lowest income tenants, and “(II) projects obligated to serve qualified tenants for the longest periods, and “(iv) which provides a procedure that the agency will follow in notifying the Internal Revenue Service of noncompliance with the provisions of this section which such agency becomes aware of. “(C) Certain selection criteria must be used.—The selection criteria set forth in a qualified allocation plan must include— “(i) project location, “(ii) housing needs characteristics, “(iii) project characteristics, “(iv) sponsor characteristics, “(v) participation of local tax-exempt organizations, “(vi) tenant populations with special housing needs, and “(vii) public housing waiting lists. “(D) Application to bond financed projects.—Subsection (h)(4) shall not apply to any project unless the project satisfies the requirements for allocation of a housing credit 103 STAT. 2320dollar amount under the qualified allocation plan applicable to the area in which the project is located. “(2) Credit allocated to building not to exceed amount necessary to assure project feasibility.— “(A) In general.—The housing credit dollar amount allocated to a project shall not exceed the amount the housing credit agency determines is necessary for the financial feasibility of the project and its viability as a qualified low-income housing project throughout the credit period. “(B) Agency evaluation.—In making the determination under subparagraph (A), the housing credit agency shall consider— “(i) the sources and uses of funds and the total financing planned for the project, and “(ii) any proceeds or receipts expected to be generated by reason of tax benefits. Such a determination shall not be construed to be a representation or warranty as to the feasibility or viability of the project. “(C) Determination made when credit amount applied for and when building placed in service.— “(i) In general.—A determination under subparagraph
(A)shall be made as of each of the following times: “(I) The application for the housing credit dollar amount. “(II) The allocation of the housing credit dollar amount. “(III) The date the building is placed in service. “(ii) Certification as to amount of other subsidies.—Prior to each determination under clause (i), the taxpayer shall certify to the housing credit agency the full extent of all Federal, State, and local subsidies which apply (or which the taxpayer expects to apply) with respect to the building. “(D) Application to bond financed projects.—Subsection (h)(4) shall not apply to any project unless the governmental unit which issued the bonds (or on behalf of which the bonds were issued) makes a determination under rules similar to the rules of subparagraphs
(A)and (B).” "
(o)Application of At-Risk Rules With Respect To Certain Financing Provided by Qualified Nonprofit Organizations.—Subparagraph
(D)of section 42(k)(2) (relating to application of at-risk rules) is amended by adding at the end thereof the following new flush sentence: " “In the case of a qualified nonprofit organization which is not described in section 46ic)(8)(D)(iv)(II) with respect to a building, clause
(ii)of this subparagraph shall be applied as if the date described therein were the 90th day after the earlier of the date the building ceases to be a qualified low-income building or the date which is 15 years after the close of a compliance period with respect thereto.” "
(p)Time for Certification.—Section 42(l)(1) (relating to certification with respect to 1st year of credit period) is amended—
(1)by striking “Not later than the 90th day following” and inserting “Following”, and
(2)by inserting “at such time and” before “in such form”. 103 STAT. 2321
(q)Impact of Tenant’s Right of 1st Refusal to Acquire Property.—Subsection
(i)of section 42 is amended by adding at the end thereof the following new paragraph: " “(8) Impact of tenants right of 1st refusal to acquire property.— “(A) In general.—No Federal income tax benefit shall fail to be allowable to the taxpayer with respect to any qualified low-income building merely by reason of a right of 1st refusal held by the tenants of such building to purchase the property after the close of the compliance period for a price which is not less than the minimum purchase price determined under subparagraph (B). “(B) Minimum purchase price.—For purposes of subparagraph (A), the minimum purchase price under this subparagraph is an amount equal to the sum of— “(i) the principal amount of outstanding indebtedness secured by the building (other than indebtedness incurred within the 5-year period ending on the date of the sale to the tenants), and “(ii) all Federal, State, and local taxes attributable to such sale. Except in the case of Federal income taxes, there shall not be taken into account under clause
(ii)any additional tax attributable to the application of clause (ii).” "
(r)Effective Dates.— [26 USC 42 note](/us/usc/t26/s42).
(1)In general.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to determinations under section 42 of the Internal Revenue Code of 1986 with respect to housing credit dollar amounts allocated from State housing credit ceilings for calendar years after 1989.
(2)Buildings not subject to allocation limits.—Except as otherwise provided in this subsection, to the extent paragraph
(1)of section 42(h) of such Code does not apply to any building by reason of paragraph
(4)thereof, the amendments made by this section shall apply to buildings placed in service after December 31, 1989.
(3)One-year carryover of unused credit authority, etc.—The amendments made by subsection
(b)shall apply to calendar years after 1989, but clauses (ii), (iii), and
(iv)of section 42(h)(3)(C) of such Code (as added by this section) shall be applied without regard to allocations for 1989 or any preceding year.
(4)Additional buildings eligible for waiver of 10-year rule.—The amendments made by subsection (0 shall take effect on the date of the enactment of this Act.
(5)Certifications with respect to 1st year of credit period.—The amendment made by subsection
(p)shall apply to taxable years ending on or after December 31, 1989.
(6)Certain rules which apply to bonds.—Paragraphs (1)(D) and (2)(D) of section 42(m) of such Code, as added by this section, shall apply to obligations issued December 31, 1989.
(7)Clarifications.—The amendments made by the following provisions of this section shall apply as if included in the amendments made by section 252 of the Tax Reform Act of 1986:
(A)Paragraph
(1)of subsection
(h)(relating to units rented on a monthly basis). 103 STAT. 2322
(B)Subsection
(l)(relating to eligible basis for new buildings to include expenditures before close of 1st year of credit period).
(8)Guidance on difficult development areas and posting of bond to avoid recapture.—Not later than 180 days after the date of the enactment of this Act—
(A)the Secretary of Housing and Urban Development shall publish initial guidance on the designation of difficult development areas under section 42(d)(5)(C) of such Code, as added by this section, and
(B)the Secretary of the Treasury shall publish initial guidance under section 42(j)(6) of such Code (relating to no recapture on disposition of building (or interest therein) where bond posted). SEC. 7109. LOW-INCOME HOUSING CREDIT EXEMPT FROM INCOME PHASE-OUT OF 125,000 EXEMPTION FROM PASSIVE LOSS RULES.
(a)In General.—Paragraph
(3)of section 469(i) (relating to phase-out of exemption) is amended by redesignating subparagraph
(D)as subparagraph
(E)and by striking subparagraphs
(B)and
(C)and inserting the following new subparagraphs: " “(B) Special phase-out of rehabilitation credit.—In the case of any portion of the passive activity credit for any taxable year which is attributable to the rehabilitation investment credit (within the meaning of section 48(o)), subparagraph
(A)shall be applied by substituting ‘$200,000’ for ‘$100,000’. “(C) Exception for low-income housing credit.—Subparagraph
(A)shall not apply to any portion of the passive activity credit for any taxable year which is attributable to any credit determined under section 42. “(D) Ordering rules to reflect exception and separate phase-out.—If subparagraph
(B)or
(C)applies for any taxable year, paragraph
(1)shall be applied— “(i) first to the passive activity loss, “(ii) second to the portion of the passive activity credit to which subparagraph
(B)or
(C)does not apply, “(iii) third to the portion of such credit to which subparagraph
(B)applies, and “(iv) then to the portion of such credit to which subparagraph
(C)applies.” "
(b)[26 USC 469 note](/us/usc/t26/s469). Effective Date.—
(1)In general.—Except as provided in paragraph (2), the amendments made by this section shall apply to property placed in service after December 31, 1989, in taxable years ending after such date.
(2)Special rule where interest held in pass-thru entity.—In the case of a taxpayer who holds an indirect interest in property described in paragraph (1), the amendments made by this section shall apply only if such interest is acquired after December 31, 1989. SEC. 7110. EXTENSION AND MODIFICATION OF RESEARCH CREDIT.
(a)Extension.—
(1)In general.—Subsection
(h)of section 41 (relating to termination), as redesignated by subtitle H, is amended— 103 STAT. 2323
(A)by striking “December 31, 1989” each place it appears and inserting “December 31, 1990”, and
(B)by striking “January 1, 1990” each place it appears and inserting “January 1, 1991”.
(2)Special rules.— [26 USC 41 note](/us/usc/t26/s41).
(A)In the case of any taxable year which begins before October 1, 1990, and ends after September 30, 1990, the amount treated as the qualified research expenses for such taxable year for purposes of section 41 of the Internal Revenue Code of 1986 shall be the amount which bears the same ratio to the amount which would have been determined for such taxable year without regard to this subparagraph as the number of days in such taxable year before October 1, 1990, bears to the total number of days in such taxable year before January 1, 1991.
(B)In the case of a taxable year described in subparagraph (A), paragraph
(2)of section 41(h) of such Code, as so redesignated, shall be applied by substituting “October 1, 1990” for “January 1, 1991” each place it appears and by substituting “September 30, 1990” for “December 31, 1990”.
(3)Conforming amendment.—Subparagraph
(D)of section 28(b)(1) is amended by striking “December 31, 1989” and inserting “December 31, 1990”.
(b)Changes in Computation of Incremental Credit.—
(1)In general.—Subsection
(c)of section 41 is amended to read as follows: " “(c) Base Amount.— “(1) In general.—The term ‘base amount’ means the product of— “(A) the fixed-base percentage, and “(B) the average annual gross receipts of the taxpayer for the 4 taxable years preceding the taxable year for which the credit is being determined (hereinafter in this subsection referred to as the ‘credit year’). “(2) Minimum base amount.—In no event shall the base amount be less than 50 percent of the qualified research expenses for the credit year. “(3) Fixed-base percentage.— “(A) In general.—Except as otherwise provided in this paragraph, the fixed-base percentage is the percentage which the aggregate qualified research expenses of the taxpayer for taxable years beginning after December 31, 1983, and before January 1, 1989, is of the aggregate gross receipts of the taxpayer for such taxable years. “(B) Start-up companies.— “(i) Taxpayers to which subparagraph applies.—The fixed-base percentage shall be determined under this subparagraph if there are fewer than 3 taxable years beginning after December 31, 1983, and before January 1, 1989, in which the taxpayer had both gross receipts and qualified research expenses. “(ii) Fixed-base percentage.—In a case to which this subparagraph applies, the fixed-base percentage is 3 percent. “(iii) Treatment of de minimis amounts of gross receipts and qualified research expenses.—The Secretary may prescribe regulations providing that de 103 STAT. 2324minimis amounts of gross receipts and qualified research expenses shall be disregarded under clause (i). “(C) Maximum fixed-base percentage.—In no event shall the fixed-base percentage exceed 16 percent. “(D) Rounding.—The percentages determined under subparagraph
(A)shall be rounded to the nearest 1/100th of 1 percent. “(4) Consistent treatment of expenses required.— “(A) In general.—Notwithstanding whether the period for filing a claim for credit or refund has expired for any taxable year taken into account in determining the fixed-base percentage, the qualified research expenses taken into account in computing such percentage shall be determined on a basis consistent with the determination of qualified research expenses for the credit year. “(B) Prevention of distortions.—The Secretary may prescribe regulations to prevent distortions in calculating a taxpayer’s qualified research expenses or gross receipts caused by a change in accounting methods used by such taxpayer between the current year and a year taken into account in computing such taxpayer’s fixed-base percentage. “(5) Gross receipts.—For purposes of this subsection, gross receipts for any taxable year shall be reduced by returns and allowances made during the taxable year. In the case of a foreign corporation, there shall be taken into account only gross receipts which are effectively connected with the conduct of a trade or business within the United States.” "
(2)Conforming amendments.—
(A)Subparagraph
(B)of section 41(a)(1) is amended to read as follows: " “(B) the base amount, and”. "
(B)Clause
(ii)of section 41(e)(7)(C) is amended by striking “base period research expenses” and inserting “base amount”.
(C)Paragraph
(1)of section 41(f) (relating to aggregation of expenditures) is amended by striking “proportionate share of the increase in qualified research expenses” each place it appears and inserting “proportionate shares of the qualified research expenses and basic research payments”.
(D)Subparagraph
(A)of section 41(f)(3) is amended—
(i)by striking “June 30, 1980” and inserting “December 31, 1983”, and
(ii)by inserting before the period “, and the gross receipts of the taxpayer for such periods shall be increased by so much of the gross receipts of such predecessor with respect to the acquired trade or business as is attributable to such portion”.
(E)Subparagraph
(B)of section 41(f)(3) is amended—
(i)by striking “June 30, 1980” and inserting “December 31, 1983”, and
(ii)by inserting before the period “, and the gross receipts of the taxpayer for such periods shall be decreased by so much of the gross receipts as is attributable to such portion”. (F)(i) Subparagraph
(C)of section 41(f)(3) is amended by striking “for the base period” and all that follows and 103 STAT. 2325inserting “for the taxable years taken into account in computing the fixed-base percentage shall be increased by the lesser of— " “(i) the amount of the decrease under subparagraph
(B)which is allocable to taxable years so taken into account, or “(ii) the product of the number of taxable years so taken into account, multiplied by the amount of the reimbursement described in this subparagraph.” "
(iii)The heading for such subparagraph
(C)is amended to read as follows: " “(C) Certain reimbursements taken into account in determining fixed-base percentage.—”."
(G)Paragraph
(4)of section 41(f) is amended by inserting “and gross receipts” after “qualified research expenses”.
(H)Paragraph
(2)of section 41(h), as redesignated by subtitle H, is amended—
(i)by striking “base period expenses” in the heading and inserting “base amount”, and
(ii)by striking “any amount for any base period” and all that follows through “such base period” and inserting “the base amount with respect to such taxable year shall be the amount which bears the same ratio to the base amount for such year (determined without regard to this paragraph)”.
(b)Trade or Business Requirement Disregarded for In-House Research Expenses of Certain Startup Ventures.—Subsection
(b)of section 41 (defining qualified research expenses) is amended by adding at the end thereof the following new paragraph: " “(4) Trade or business requirement disregarded for in-house research expenses of certain startup ventures.—In the case of in-house research expenses, a taxpayer shall be treated as meeting the trade or business requirement of paragraph
(1)if, at the time such in-house research expenses are paid or incurred, the principal purpose of the taxpayer in making such expenditures is to use the results of the research in the active conduct of a future trade or business— “(A) of the taxpayer, or “(B) of 1 or more other persons who with the taxpayer are treated as a single taxpayer under subsection (f)(1)”. "
(c)Full Disallowance of Deduction for Qualified Research Expenses.—
(1)Subsection
(c)of section 280C, as amended by subtitle H, is further amended by striking “50 percent of” each place it appears.
(2)Paragraph
(2)of section 196(d) is amended by inserting before the period “for a taxable year beginning before January 1, 1990”.
(d)Only Reasonable Research Expenditures Eligible for Section 174.—Section 174 is amended by redesignating subsection
(e)as subsection
(f)and by inserting after subsection
(d)the following new subsection: " “(e) Only Reasonable Research Expenditures Eligible.—This section shall apply to a research or experimental expenditure only to the extent that the amount thereof is reasonable under the circumstances.” " 103 STAT. 2326
(e)[26 USC 41 note](/us/usc/t26/s41). Effective Date.—The amendments made by this section (other than subsection (a)) shall apply to taxable years thinning after December 31, 1989. SEC. 7111. ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES. Section 864 (relating to definitions and special rule) is amended by adding at the end thereof the following new subsection: " “(f) Allocation of Research and Experimental Expenditures.— “(1) In general.—For purposes of sections 861(b), 862(b), and 863(b), qualified research and experimental expenditures shall be allocated and apportioned as follows: “(A) Any qualified research and experimental expenditures expended solely to meet legal requirements imposed by a political entity with respect to the improvement or marketing of specific products or processes for purposes not reasonably expected to generate gross income (beyond de minimis amounts) outside the jurisdiction of the political entity shall be allocated only to gross income from sources within such jurisdiction. “(B) In the case of any qualified research and experimental expenditures (not allocated under subparagraph (A)) to the extent— “(i) that such expenditures are attributable to activities conducted in the United States, 64 percent of such expenditures shall be allocated and apportioned to income from sources within the United States and deducted from such income in determining the amount of taxable income from sources within the United States, and “(ii) that such expenditures are attributable to activities conducted outside the United States, 64 percent of such expenditures shall be allocated and apportioned to income from sources outside the United States and deducted from such income in determining the amount of taxable income from sources outside the United States. “(C) The remaining portion of qualified research and experimental expenditures (not allocated under subparagraphs
(A)and (B)) shall be apportioned, at the annual election of the taxpayer, on the basis of gross sales or gross income, except that, if the taxpayer elects to apportion on the basis of gross income, the amount apportioned to income from sources outside the United States shall at least be 30 percent of the amount which would be so apportioned on the basis of gross sales. “(2) Qualified research and experimental expenditures.—For purposes of this section, the term ‘qualified research and experimental expenditures’ means amounts which are research and experimental expenditures within the meaning of section 174. For purposes of this paragraph, rules similar to the rules of subsection
(c)of section 174 shall apply. Any qualified research and experimental expenditures treated as deferred expenses under subsection
(b)of section 174 shall be taken into account under this subsection for the taxable year for which such expenditures are allowed as a deduction under such subsection. 103 STAT. 2327 “(3) Special rules for expenditures attributable to activities conducted in space, etc.— “(A) In general.—Any qualified research and experimental expenditures described in subparagraph (B)— “(i) if incurred by a United States person, shall be allocated and apportioned under this section in the same manner as if they were attributable to activities conducted in the United States, and “(ii) if incurred by a person other than a United States person, shall be allocated and apportioned under this section in the same manner as if they were attributable to activities conducted outside the United States. “(B) Description of expenditures.—For purposes of subparagraph (A), qualified research and experimental expenditures are described in this subparagraph if such expenditures are attributable to activities conducted— “(i) in space, “(ii) on or under water not within the jurisdiction (as recognized by the United States) of a foreign country, possession of the United States, or the United States, or “(iii) in Antarctica. “(4) Affiliated group.— “(A) Except as provided in subparagraph (B), the allocation and apportionment required by paragraph
(1)shall be determined as if all members of the affiliated group (as defined in subsection (e)(5)) were a single corporation. “(B) For purposes of the allocation and apportionment required by paragraph (1)— “(i) sales and gross income from products produced in whole or in part in a possession by an electing corporation (within the meaning of section 936(h)(5)(E)), and “(ii) dividends from an electing corporation, shall not be taken into account, except that this subparagraph shall not apply to sales of (and gross income and dividends attributable to sales of) products with respect to which an election under section 936(h)(5)(F) is not in effect. “(C) The qualified research and experimental expenditures taken into account for purposes of paragraph
(1)shall be adjusted to reflect the amount of such expenditures included in computing the cost-sharing amount (determined under section 936(h)(5)(C)(i)(I)). “(D) The Secretary may prescribe such regulations as may be necessary to carry out the purposes of this paragraph, including regulations providing for the source of gross income and the allocation and apportionment of deductions to take into account the adjustments required by subparagraph (C). “(E) Paragraph
(6)of subsection
(e)shall not apply to qualified research and experimental expenditures. “(5) Year to which rule applies.— “(A) In general.—Except as provided in this paragraph, this subsection shall apply to the taxpayer’s first taxable year beginning after August 1, 1989, and before August 2, 1990. “(B) Reduction.—Notwithstanding subparagraph
(A)this subsection shall only apply to that portion of the 103 STAT. 2328qualified research and experimental expenditures for the taxable year referred to in subparagraph
(A)which bears the same ratio to the total amount of such expenditures 88— “(i) the lesser of 9 months or the number of months in the taxable year, bears to “(ii) the number of months in the taxable year.” " Subtitle B—Corporate Provisions Securities. SEC. 7201. LIMITATION ON USE OF GROUP LOSSES TO OFFSET INCOME OF SUBSIDIARY PAYING PREFERRED DIVIDENDS.
(a)General Rule.—Section 1503 (relating to computation and payment of tax) is amended by adding at the end thereof the following new subsection: " “(f) Limitation on Use of Group Losses to Offset Income of Subsidiary Paying Preferred Dividends.— “(1) In general.—In the case of any subsidiary distributing during any taxable year dividends on any applicable preferred stock— “(A) no group loss item shall be allowed to reduce the disqualified separately computed income of such subsidiary for such taxable year, and “(B) no group credit item shall be allowed against the tax imposed by this chapter on such disqualified separately computed income. “(2) Group items.—For purposes of this subsection— “(A) Group loss item.—The term ‘group loss item’ means any of the following items of any other member of the affiliated group which includes the subsidiary: “(i) Any net operating loss and any net operating loss carryover or carryback under section 172. “(ii) Any loss from the sale or exchange of any capital asset and any capital loss carryover or carryback under section 1212. “(B) Group credit item.—The term ‘group credit item’ means any credit allowable under part IV of subchapter A of chapter 1 (other than section 34) to any other member of the affiliated group which includes the subsidiary and any carryover or carryback of any such credit. “(3) Other definitions.—For purposes of this subsection— “(A) Disqualified separately computed income.— The term ‘disqualified separately computed income’ means the portion of the separately computed taxable income of the subsidiary which does not exceed the dividends distributed by the subsidiary during the taxable year on applicable preferred stock. “(B) Separately computed taxable income.—The term ‘separately computed taxable income’ means the separate taxable income of the subsidiary for the taxable year determined— “(i) by taking into account gains and losses from the sale or exchange of a capital asset and section 1231 gains and losses, “(ii) without regard to any net operating loss or capital loss carryover or carryback, and 103 STAT. 2329 “(iii) with such adjustments as the Secretary may prescribe. “(C) Subsidiary.—The term ‘subsidiary’ means any corporation which is a member of an affiliated group filing a consolidated return other than the common parent. “(D) Applicable preferred stock.—The term ‘applicable preferred stock’ means stock described in section 1504(a)(4) in the subsidiary which is— “(i) issued after November 17, 1989, and “(ii) held by a person other than a member of the same affiliated group as the subsidiary. “(4) Regulations.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the provisions of this subsection, including regulations— “(A) to prevent the avoidance of this subsection through the transfer of built-in losses to the subsidiary, “(B) to provide rules for cases in which the subsidiary owns (directly or indirectly) stock in another member of the affiliated group, and “(C) to provide for the application of this subsection where dividends are not paid currently, where the redemption and liquidation rights of the applicable preferred stock exceed the issue price for such stock, or where the stock is otherwise structured to avoid the purposes of this subsection.” "
(b)Effective Dates.— [26 USC 1503 note](/us/usc/t26/s1503).
(1)In general.—The amendment made by this section shall apply to taxable years ending after November 17, 1989.
(2)Binding contract exception.—For purposes of section 1503(f)(3)(D) of the Internal Revenue Code of 1986, stock issued after November 17, 1989, pursuant to a written binding contract in effect on November 17, 1989, and at all times thereafter before such issuance, shall be treated as issued on November 17, 1989.
(3)Special rule when subsidiary leaves group.—If, by reason of a transaction after November 17, 1989, a corporation ceases to be, or becomes, a member of an affiliated group, the stock of such corporation shall be treated, for purposes of section 1503(f)(3)(D) of such Code, as issued on the date of such cessation or commencement, unless such transaction is of a kind which would not result in the recognition of any deferred intercompany gain under the consolidated return regulations by reason of the acquisition of the entire group.
(4)Retired stock.—
(A)Except as provided in subparagraph (B), if stock issued before November 18, 1989, (or described in paragraph (2)), is retired or acquired after November 17, 1989, by the corporation or another member of the same affiliated group, such stock shall be treated, for purposes of section 1503(f)(3)(D) of such Code, as issued on the date of such retirement or acquisition.
(B)Subparagraph
(A)shall not apply to any retirement or acquisition pursuant to an obligation to reissue under a binding written contract in effect on November 17, 1989, and at all times thereafter before such retirement or acquisition. 103 STAT. 2330
(5)Auction rate preferred.—For purposes of section 1503(f)(3)(D) of such Code, auction rate preferred stock shall be treated as issued when the contract requiring the auction became binding.
(6)Special rule for certain auction rate preferred.—For purposes of section 1503(0(3)(0) of the Internal Revenue Code of 1986, any auction rate preferred stock shall be treated as issued before November 18, 1989, if—
(A)a subsidiary was incorporated before July 10, 1989 for the special purpose of issuing such stock,
(B)a rating agency was retained before July 10, 1989, and
(C)such stock is issued before the date 30 days after the date of the enactment of this Act. SEC. 7202. TREATMENT OF CERTAIN HIGH YIELD ORIGINAL ISSUE DISCOUNT OBLIGATIONS.
(a)General Rule.—Subsection
(e)of section 163 (relating to interest deductions on original issue discount obligations) is amended by redesignating paragraph
(5)as paragraph
(6)and by inserting after paragraph
(4)the following new paragraph: " “(5) Special rules for original issue discount on certain high yield obligations.— “(A) In general.—In the case of an applicable high yield discount obligation issued by a corporation— “(i) no deduction shall be allowed under this chapter for the disqualified portion of the original issue discount on such obligation, and “(ii) the remainder of such original issue discount shall not be allowable as a deduction until paid. For purposes of clause (ii), rules similar to the rules of subsection (i)(3)(B) shall apply in determining the time when the original issue discount is paid. “(B) Disqualified portion treated as stock distribution for purposes of dividend received deduction.— “(i) In general.—Solely for purposes of sections 243, 245, 246, and 246A, the dividend equivalent portion of any amount includible in gross income of a corporation under section 1272(a) in respect of an applicable high yield discount obligation shall be treated as a dividend received by such corporation from the corporation issuing such obligation. “(ii) Dividend equivalent portion.—For purposes of clause (i), the dividend equivalent portion of any amount includible in gross income under section 1272(a) in respect of an applicable high yield discount obligation is the portion of the amount so includible— “(I) which is attributable to the disqualified portion of the original issue discount on such obligation, and “(II) which would have been treated as a dividend if it had been a distribution made by the issuing corporation with respect to stock in such corporation. “(C) Disqualified portion.— “(i) In general.—For purposes of this paragraph, the disqualified portion of the original issue discount on 103 STAT. 2331any applicable high yield discount obligation is the lesser of— “(I) the amount of such original issue discount, or “(II) the portion of the total return on such obligation which bears the same ratio to such total return as the disqualified yield on such obligation bears to the yield to maturity on such obligation. “(ii) Definitions.—For purposes of clause (i), the term ‘disqualified yield’ means the excess of the yield to maturity on the obligation over the sum referred to subsection (i)(1)(B) plus 1 percentage point, and the term ‘total return’ is the amount which would have been the original issue discount on the obligation if interest described in the parenthetical in section 1273(a)(2) were included in the stated redemption price at maturity. “(D) Exception for s corporations.—This paragraph shall not apply to any obligation issued by any corporation for any period for which such corporation is an S corporation. “(E) Effect on earnings and profits.—This paragraph shall not apply for purposes of determining earnings and profits; except that, for purposes of determining the dividend equivalent portion of any amount includible in gross income under section 1272(a) in respect of an applicable high yield discount obligation, no reduction shall be made for any amount attributable to the disqualified portion of any original issue discount on such obligation. “(F) Cross reference.— **“For definition of applicable high yield discount obligation, see subsection (i).”** "
(b)Applicable High Yield Discount Obligation.—Section 163 is amended by redesignating subsection
(i)as subsection
(j)and by inserting after subsection
(h)the following new subsection: " “(i) Applicable High Yield Discount Obligation.— “(1) In general.—For purposes of this section, the term ‘applicable high yield discount obligation’ means any debt instrument if— “(A) the maturity date of such instrument is more than 5 years from the date of issue, “(B) the yield to maturity on such instrument equals or exceeds the sum of— “(i) the applicable Federal rate in effect under section 1274(d) for the calendar month in which the obligation is issued, plus “(ii) 5 percentage points, and “(C) such instrument has significant original issue discount. For purposes of subparagraph (B)(i), the Secretary may by regulation permit a rate to be used with respect to any debt instrument which is higher than the applicable Federal rate if the taxpayer establishes to the satisfaction of the Secretary that such higher rate is based on the same principles as the applicable Federal rate and is appropriate for the term of the instrument. 103 STAT. 2332 “(2) Significant original issue discount.—For purposes of paragraph (1)(C), a debt instrument shall be treated as having significant original issue discount if— “(A) the aggregate amount which would be includible in gross income with respect to such instrument for periods before the close of any accrual period (as defined in section 1272(a)(5)) ending after the date 5 years after the date of issue, exceeds— “(B) the sum of— “(i) the aggregate amount of interest to be paid under the instrument before the close of such accrual period, and “(ii) the product of the issue price of such instrument (as defined in sections 1273(b) and 1274(a)) and its yield to maturity. “(3) Special rules.—For purposes of determining whether a debt instrument is an applicable high yield discount obligation— “(A) any payment under the instrument shall be assumed to be made on the last day permitted under the instrument, and “(B) any payment to be made in the form of another obligation (or stock) of the issuer (or a related person within the meaning of section 453(f)(1)) shall be assumed to be made when such obligation (or stock) is required to be paid in cash or in property other than such obligation (or stock). “(4) Debt instrument.—For purposes of this subsection, the term ‘debt instrument’ means any instrument which is a debt instrument as defined in section 1275(a). “(5) Regulations.—The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this subsection and subsection (e)(5), including— “(A) regulations providing for modifications to the provisions of this subsection and subsection (e)(5) in the case of varying rates of interest, put or call options, indefinite maturities, contingent payments, assumptions of debt instruments, conversion rights, or other circumstances where such modifications are appropriate to carry out the purposes of this subsection and subsection (e)(5), and “(B) regulations to prevent avoidance of the purposes of this subsection and subsection (e)(5) through the use of issuers other than C corporations, agreements to borrow amounts due under the debt instrument, or other arrangements.” "
(c)[26 USC 163 note](/us/usc/t26/s163). Effective Date.—
(1)In general.—Except as provided in paragraph (2), the amendments made by this section shall apply to instruments issued after July 10, 1989.
(2)Exceptions.—
(A)The amendments made by this section shall not apply to any instrument if—
(i)such instrument is issued in connection with an acquisition—
(I)which is made on or before July 10, 1989,
(II)for which there was a written binding contract in effect on July 10, 1989, and at all times thereafter before such acquisition, or 103 STAT. 2333
(III)for which a tender offer was filed with the Securities and Exchange Commission on or before July 10, 1989,
(ii)the term of such instrument is not greater than—
(I)the term specified in the written documents described in clause (iii), or
(II)if no term is determined under subclause (I), 10 years, and
(iii)the use of such instrument in connection with such acquisition (and the maximum amount of proceeds from such instrument) was determined on or before July 10, 1989, and such determination is evidenced by written documents—
(I)which were transmitted on or before July 10, 1989, between the issuer and any governmental regulatory bodies or prospective parties to the issuance or acquisition, and
(II)which are customarily used for the type of acquisition or financing involved.
(B)The amendments made by this section shall not apply to any instrument issued pursuant to the terms of a debt instrument issued on or before July 10, 1989, or described in subparagraph
(A)or (D).
(C)The amendments made by this section shall not apply to any instrument issued to refinance an original issue discount debt instrument to which the amendments made by this section do not apply if—
(i)the maturity date of the refinancing instrument is not later than the maturity date of the refinanced instrument,
(ii)the issue price of the refinancing instrument does not exceed the adjusted issue price of the refinanced instrument,
(iii)the stated redemption price at maturity of the refinancing instrument is not greater than the stated redemption price at maturity of the refinanced instrument, and
(iv)the interest payments required under the refinancing instrument before maturity are not less than (and are paid not later than) the interest payments required under the refinanced instrument.
(D)The amendments made by this section shall not apply to instruments issued after July 10, 1989, pursuant to a reorganization plan in a title 11 or similar case (as defined in section 368(a)(3) of the Internal Revenue Code of 1986) if the amount of proceeds of such instruments, and the maturities of such instruments, do not exceed the amount or maturities specified in the last reorganization plan filed in such case on or before July 10, 1989. SEC. 7203. SECURITIES TREATED AS BOOT UNDER SECTION 351.
(a)General Rule.—Section 351(a) (relating to nonrecognition in cases of transfers to corporations controlled by transferor) is amended by striking “or securities”.
(b)Conforming Amendments.—
(1)Subsections (b), (d), and (e)(2) of section 351 are each amended by striking “or securities”. 103 STAT. 2334
(2)Paragraph
(2)of section 351(g) is amended by striking “stock, securities, or property” and inserting “stock or property”.
(c)[26 USC 351 note](/us/usc/t26/s351). Effective Date.—
(1)In general.—Except as provided in this subsection, the amendments made by this section shall apply to transfers after October 2, 1989, in taxable years ending after such date.
(2)Binding contract.—The amendments made by this section shall not apply to any transfer pursuant to a written binding contract in effect on October 2, 1989, and at all times thereafter before such transfer.
(3)Corporate transfers.—In the case of property transferred (directly or indirectly through a partnership or otherwise) by a C corporation, paragraphs
(1)and
(2)shall be applied by substituting “July 11, 1989” for “October 2, 1989”. The preceding sentence shall not apply where the corporation meets the requirements of section 1504(a)(2) of the Internal Revenue Code of 1986 with respect to the transferee corporation (and where the transfer is not part of a plan pursuant to which the transferor subsequently fails to meet such requirements). SEC. 7204. PROVISIONS RELATED TO REGULATED INVESTMENT COMPANIES.
(a)Requirement to Distribute 98 Percent of Ordinary Income.—
(1)In general.—Subparagraph
(A)of section 4982(b)(1) (defining required distribution) is amended by striking “97 percent” and inserting “98 percent”.
(2)[26 USC 4982 note](/us/usc/t26/s4982). Effective date.—The amendment made by paragraph
(1)shall apply to calendar years ending after July 10, 1989.
(b)Treatment of Certain Mutual Fund Load Charges.—
(1)In general.—Section 852 (relating to taxation of regulated investment companies and their shareholders) is amended by adding at the end thereof the following new subsection: " “(f) Treatment of Certain Load Charges.— “(1) In general.—If— “(A) the taxpayer incurs a load charge in acquiring stock in a regulated investment company and, by reason of incurring such charge or making such acquisition, the taxpayer acquires a reinvestment right, “(B) such stock is disposed of before the 91st day after the date on which such stock was acquired, and “(C) the taxpayer subsequently acquires stock in such regulated investment company or in another regulated investment company and the otherwise applicable load charge is reduced by reason of the reinvestment right, the load charge referred to in subparagraph
(A)(to the extent it does not exceed the reduction referred to in subparagraph (C)) shall not be taken into account for purposes of determining the amount of gain or loss on the disposition referred to in subparagraph (B). To the extent such charge is not taken into account in determining the amount of such gain or loss, such charge shall be treated as incurred in connection with the acquisition referred to in subparagraph
(C)(including for purposes of reapplying this paragraph). “(2) Definitions and special rules.—For purposes of this subsection— 103 STAT. 2335 “(A) Load charge.—The term load charge’ means any sales or similar charge incurred by a person in acquiring stock of a regulated investment company. Such term does not include any charge incurred by reason of the reinvestment of a dividend. “(B) Reinvestment right.—The term ‘reinvestment right’ means any right to acquire stock of 1 or more regulated investment companies without the payment of a load charge or with the payment of a reduced charge. “(C) Nonrecognition transactions.—If the taxpayer acquires stock in a regulated investment company from another person in a transaction in which gain or loss is not recognized, the taxpayer shall succeed to the treatment of such other person under this subsection.” "
(2)Effective date.—The amendment made by paragraph
(1)[26 USC 852 note](/us/usc/t26/s852).shall apply to charges incurred after October 3, 1989, in taxable years ending after such date.
(c)Regulated Investment Companies Required To Accrue Dividends on the Ex-Dividend Date.—
(1)In general.—Subsection
(b)of section 852 (relating to treatment of companies and shareholders) is amended by adding at the end thereof the following new paragraph: " “(9) Dividends treated as received by company on ex-dividend date.—For purposes of this title, if a regulated investment company is the holder of record of any share of stock on the record date for any dividend payable with respect to such stock, such dividend shall be included in gross income by such company as of the later of— “(A) the date such share became ex-dividend with respect to such dividend, or “(B) the date such company acquired such share.” "
(2)Effective date.—The amendment made by paragraph
(1)[26 USC 852 note](/us/usc/t26/s852).shall apply to dividends in cases where the stock becomes ex-dividend after the date of the enactment of this Act. SEC. 7205. LIMITATION ON THRESHOLD REQUIREMENT UNDER SECTION 382 BUILT-IN GAIN AND LOSS PROVISIONS.
(a)General Rule.—Clause
(i)of section 382(h)(3)(B) (relating to threshold requirement) is amended to read as follows: " “(i) In general.—If the amount of the net unrealized built-in gain or net unrealized built-in loss (determined without regard to this subparagraph) of any old loss corporation is not greater than the lesser of— “(I) 15 percent of the amount determined for purposes of subparagraph (A)(i)(I), or “(II) $10,000,000, the net unrealized built-in gain or net unrealized built-in loss shall be zero.” "
(b)Conforming Amendment to Adjusted Current Earnings Preference.—Subparagraph
(H)of section 56(g)(4) (relating to treatment of certain ownership changes) is amended by striking clause
(ii)and all that follows and inserting the following: " “(ii) there is a net unrealized built-in loss (within the meaning of section 382(h)) with respect to such corporation, then the adjusted basis of each asset of such corporation (immediately after the ownership change) shall be its 103 STAT. 2336proportionate share (determined on the basis of respective fair market values) of the fair market value of the assets of such corporation (determined under section 382(h)) immediately before the ownership change.” "
(c)[26 USC 56 note](/us/usc/t26/s56). Effective Date.—
(1)In general.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to ownership changes and acquisitions after October 2, 1989, in taxable years ending after such date.
(2)Binding contract.—The amendments made by this section shall not apply to any ownership change or acquisition pursuant to a written binding contract in effect on October 2, 1989, and at all times thereafter before such change or acquisition.
(3)Bankruptcy proceedings.—In the case of a reorganization described in section 368(a)(I)(G) of the Internal Revenue Code of 1986, or an exchange of debt for stock in a title 11 or similar case (as defined in section 368(a)(3) of such Code), the amendments made by this section shall not apply to any ownership change resulting from such a reorganization or proceeding if a petition in such case was filed with the court before October 3, 1989.
(4)Subsidiaries of bankrupt parent.—The amendments made by this section shall not apply to any built-in loss of a corporation which is a member (on October 2, 1989) of an affiliated group the common parent of which (on such date) was subject to title 11 or similar case (as defined in section 368(a)(3) of such Code). The preceding sentence shall apply only if the ownership change or acquisition is pursuant to the plan approved in such proceeding and is before the date 2 years after the date on which the petition which commenced such proceeding was filed. SEC. 7206. DISTRIBUTIONS ON CERTAIN PREFERRED STOCK TREATED AS EXTRAORDINARY DIVIDENDS.
(a)General Rule.—Section 1059 (relating to corporate shareholder’s basis in stock reduced by nontaxed portion of extraordinary dividends) is amended by striking subsection
(f)and inserting the following: " “(f) Treatment of Dividends on Certain Preferred Stock.— “(1) In general.—Any dividend with respect to disqualified preferred stock shall be treated as an extraordinary dividend to which paragraphs
(1)and
(2)of subsection
(a)apply without regard to the period the taxpayer held the stock. “(2) Disqualified preferred stock.—For purposes of this subsection, the term ‘disqualified preferred stock’ means any stock which is preferred as to dividends if— “(A) when issued, such stock has a dividend rate which declines (or can reasonably be expected to decline) in the future, “(B) the issue price of such stock exceeds its liquidation rights or its stated redemption price, or “(C) such stock is otherwise structured— “(i) to avoid the other provisions of this section, and “(ii) to enable corporate shareholders to reduce tax through a combination of dividend received deductions and loss on the disposition of the stock. 103 STAT. 2337 “(g) Regulations.—The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this section, including regulations— “(1) providing for the application of this section in the case of stock dividends, stock splits, reorganizations, and other similar transactions and in the case of stock held by pass-thru entities, and “(2) providing that the rules of subsection (0 shall apply in the case of stock which is not preferred as to dividends in cases where stock is structured to avoid the purposes of this section.” "
(b)Effective Date.— [26 USC 1059 note](/us/usc/t26/s1059).
(1)In general.—Except as provided in paragraph (2), the amendment made by subsection
(a)shall apply to stock issued after July 10, 1989, in taxable years ending after such date.
(2)Binding contract.—The amendment made by subsection
(a)shall not apply to any stock issued pursuant to a written binding contract in effect on July 10, 1989, and at all times thereafter before the stock is issued. SEC. 7207. REPEAL OF ELECTION TO REDUCE EXCESS LOSS ACCOUNT RECAPTURE BY REDUCING BASIS OF INDEBTEDNESS.
(a)General Rule.—Subsection
(e)of section 1503 (relating to special rule for determining adjustment to basis) is amended by adding at the end thereof the following new paragraph: " “(4) Elimination of election to reduce basis of indebtedness.—Nothing in the regulations prescribed under section 1502 shall permit any reduction in the amount otherwise included in gross income by reason of an excess loss account if such reduction is on account of a reduction in the basis of indebtedness.” "
(b)Effective Date.— [26 USC 1503 note](/us/usc/t26/s1503).
(1)In general.—Except as provided in paragraph (2), the amendment made by subsection
(a)shall apply to dispositions after July 10, 1989, in taxable years ending after such date.
(2)Binding contract.—The amendment made by subsection
(a)shall not apply to any disposition pursuant to a written binding contract in effect on July 10, 1989, and at all times thereafter before such disposition. SEC. 7208. OTHER PROVISIONS RELATING TO TREATMENT OF STOCK AND DEBT; ETC.
(a)Clarification op Regulatory Authority Under Section 385.—
(1)In general.—Subsection
(a)of section 385 (relating to treatment of certain interests in corporations as stock or indebtedness) is amended by inserting “(or as in part stock and in part indebtedness)” before the period at the end thereof.
(2)Regulations not to be applied retroactively.—Any [26 USC 385 note](/us/usc/t26/s385).regulations issued pursuant to the authority granted by the amendment made by paragraph
(1)shall only apply with respect to instruments issued after the date on which the Secretary of the Treasury or his delegate provides public guidance as to the characterization of such instruments whether by regulation, ruling, or otherwise.
(b)Reporting of Certain Acquisitions or Recapitalizations.—
(1)In general.—Section 6043 is amended by striking subsection
(c)and inserting the following new subsections: " “(c) Changes in Control and Recapitalizations.—If— 103 STAT. 2338 “(1) control (as defined in section 304(c)(1)) of a corporation is acquired by any person (or group of persons) in a transaction (or series of related transactions), or “(2) there is a recapitalization of a corporation or other substantial change in the capital structure of a corporation, when required by the Secretary, such corporation shall make a return (at such time and in such manner as the Secretary may prescribe) setting forth the identity of the parties to the transaction, the fees involved, the changes in the capital structure involved, and such other information as the Secretary may require with respect to such transaction. “(d) Cross References.— “For provisions relating to penalties for failure to file— “(1) a return under subsection (b), see section 6652(c), or “(2) a return under subsection (c), see section 6652(1).” "
(2)Penalty.—Section 6652 is amended by redesignating subsection
(l)as subsection
(m)and by inserting after subsection
(k)the following new subsection: " “(l) Failure To File Return With Respect to Certain Corporate Transactions.—In the case of any failure to make a return required under section 6043(c) containing the information required by such section on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause, there shall be paid (on notice and demand by the Secretary and in the same manner as tax) by the person failing to file such return, an amount equal to $500 for each day during which such failure continues, but the total amount imposed under this subsection with respect to any return shall not exceed $100,000.” "
(3)Conforming amendments.—
(A)The subsection heading for subsection
(a)of section 6043 is amended by striking “Corporations” and inserting “Corporate Liquidating, Etc., Transactions”.
(B)The section heading for section 6043 is amended to read as follows: " “SEC. 6043. LIQUIDATING; ETC., TRANSACTIONS.” "
(C)The table of sections for subpart B of part III of subchapter A of chapter 61 is amended by striking the item relating to section 6043 and inserting the following: " “Sec. 6043. Liquidating; etc., transactions.” "
(4)Effective date.—The amendments made by this subsection shall apply to transactions after March 31, 1990. SEC. 7209. ESTIMATED TAX PAYMENTS REQUIRED FOR S CORPORATIONS.
(a)In General.—Subsection
(g)of section 6655 (relating to failure by corporation to pay estimated income tax) is amended by adding at the end thereof the following new paragraph: " “(4) [26 USC 6043 note](/us/usc/t26/s6043). Application of section to certain taxes imposed on s corporations.—In the case of an S corporation, for purposes of this section— “(A) The following taxes shall be treated as imposed by section 11: “(i) The tax imposed by section 1374(a) (or the corresponding provisions of prior law). 103 STAT. 2339 “(ii) The tax imposed by section 1375(a). “(iii) Any tax for which the S corporation is liable by reason of section 1371(d)(2). “(B) Paragraph
(2)of subsection
(d)shall not apply. “(C) Clause
(ii)of subsection (d)(1)(B) shall be applied as if it read as follows: “‘(ii) the sum of— “‘(I) the amount determined under clause
(i)by only taking into account the taxes referred to in clauses
(i)and
(iii)of subsection (g)(4)(A), and “‘(III) 100 percent of the tax imposed by section 1375(a) which was shown on the return of the corporation for the preceding taxable year.’ “(D) The requirement in the last sentence of subsection (d)(1)(B) that the return for the preceding taxable year show a liability for tax shall not apply. “(E) Any reference in subsection
(e)to taxable income shall be treated as including a reference to the net recognized built-in gain or the excess passive income (as the case may be).” "
(b)Effective Date.—The amendment made by subsection
(a)[26 USC 6655 note](/us/usc/t26/s6655).shall apply to taxable years beginning after December 31, 1989. SEC. 7210. LIMITATION ON DEDUCTION FOR CERTAIN INTEREST PAID TO RELATED PERSON.
(a)General Rule.—Section 163 (as amended by section 7202) is amended by redesignating subsection
(j)as subsection
(k)and by inserting after subsection
(i)the following new subsection: " “(j) Limitation on Deduction for Certain Interest Paid by Corporation to Related Person.— “(1) Limitation.— “(A) In general.—If this subsection applies to any corporation for any taxable year, no deduction shall be allowed under this chapter for disqualified interest paid or accrued by such corporation during such taxable year. The amount disallowed under the preceding sentence shall not exceed the corporation’s excess interest expense for the taxable year. “(B) Disallowed amount carried to succeeding taxable year.—Any amount disallowed under subparagraph
(A)for any taxable year shall be treated as disqualified interest paid or accrued in the succeeding taxable year. “(2) Corporations to which subsection applies.— “(A) In general.—This subsection shall apply to any corporation for any taxable year if— “(i) such corporation has excess interest expense for such taxable year, and “(ii) the ratio of debt to equity of such corporation as of the close of such taxable year (and on such other days during the taxable year as the Secretary may by regulations prescribe) exceeds 1.5 to 1. “(B) Excess interest expense.— “(i) In general.—For purposes of this subsection, the term ‘excess interest expense’ means the excess (if any) of— “(I) the corporation’s net interest expense, over 103 STAT. 2340 “(II) the sum of 50 percent of the adjusted taxable income of the corporation plus any excess limitation carryforward under clause (ii). “(ii) Excess limitation carryforward.—If a corporation has an excess limitation for any taxable year, the amount of such excess limitation shall be an excess limitation carryforward to the 1st succeeding taxable year and to the 2nd and 3rd succeeding taxable years to the extent not previously taken into account under this clause. The amount of such a carryforward taken into account for any such succeeding taxable year shall not exceed the excess interest expense for such succeeding taxable year (determined without regard to the carryforward from the taxable year of such excess limitation). “(iii) Excess limitation.—For purposes of clause (i), the term ‘excess limitation’ means the excess (if any) of— “(I) 50 percent of the adjusted taxable income of the corporation, over “(II) the corporation’s net interest expense. “(C) Ratio of debt to equity.—For purposes of this paragraph, the term ‘ratio of debt to equity’ means the ratio which the total indebtedness of the corporation bears to the sum of its money and all other assets less such total indebtedness. For purposes of the preceding sentence— “(i) the amount taken into account with respect to any asset shall be the adjusted basis thereof for purposes of determining gain, “(ii) the amount taken into account with respect to any indebtedness with original issue discount shall be its issue price plus the portion of the original issue discount previously accrued as determined under the rules of section 1272 (determined without regard to subsection (a)(7) or (b)(4) thereof), and “(iii) there shall be such other adjustments as the Secretary may by regulations prescribe. “(3) Disqualified interest.—For purposes of this subsection— “(A) In general.—Except as provided in subparagraph (B), the term ‘disqualified interest’ means any interest paid or accrued by the taxpayer (directly or indirectly) to a related person if no tax is imposed by this subtitle with respect to such interest. “(B) Exception for certain existing indebtedness.—The term ‘disqualified interest’ does not include any interest paid or accrued under indebtedness with a fixed term— “(i) which was issued on or before July 10, 1989, or “(ii) which was issued after such date pursuant to a written binding contract in effect on such date and all times thereafter before such indebtedness was issued. “(4) Related person.—For purposes of this subsection— “(A) In general.—Except as provided in subparagraph (B), the term ‘related person’ means any person who is related (within the meaning of section 267(b) or 707(b)(D) to the taxpayer. 103 STAT. 2341 “(B) Special rule for certain partnerships.— “(i) In general.—Any interest paid or accrued to a partnership which (without regard to this subparagraph) is a related person shall not be treated as paid or accrued to a related person if less than 10 percent of the profits and capital interests in such partnership are held by persons with respect to whom no tax is imposed by this subtitle on such interest. The preceding sentence shall not apply to any interest allocable to any partner in such partnership who is a related person to the taxpayer. “(ii) Special rule where treaty reduction.—If any treaty between the United States and any foreign country reduces the rate of tax imposed by this subtitle on a partner’s share of any interest paid or accrued to a partnership, such partner’s interests in such partnership shall, for purposes of clause (i), be treated as held in part by a tax-exempt person and in part by a taxable person under rules similar to the rules of paragraph (5)(B). “(5) Special rules for determining whether interest is subject to tax.— “(A) Treatment of pass-thru entities.—In the case of any interest paid or accrued to a partnership, the determination of whether any tax is imposed by this subtitle on such interest shall be made at the partner level. Rules similar to the rules of the preceding sentence shall apply in the case of any pass-thru entity other than a partnership and in the case of tiered partnerships and other entities. “(B) Interest treated as tax-exempt to extent of treaty reduction.—If any treaty between the United States and any foreign country reduces the rate of tax imposed by this subtitle on any interest paid or accrued by the taxpayer to a related person, such interest shall be treated as interest on which no tax is imposed by this subtitle to the extent of the same proportion of such interest as— “(i) the rate of tax imposed without regard to such treaty, reduced by the rate of tax imposed under the treaty, bears to “(ii) the rate of tax imposed without regard to the treaty. “(6) Other definitions and special rules.—For purposes of this subsection— “(A) Adjusted taxable income.—The term ‘adjusted taxable income’ means the taxable income of the taxpayer— “(i) computed without regard to— “(I) any deduction allowable under this chapter for the net interest expense, “(II) the amount of any net operating loss deduction under section 172, and “(III) any deduction allowable for depreciation, amortization, or depletion, and “(ii) computed with such other adjustments as the Secretary may by regulations prescribe. “(B) Net interest expense.—The term ‘net interest expense’ means the excess (if any) of— 103 STAT. 2342 “(i) the interest paid or accrued by the taxpayer during the taxable year, over “(ii) the amount of interest includible in the gross income of such taxpayer for such taxable year. The Secretary may by regulations provide for adjustments in determining the amount of net interest expense. “(C) Treatment of affiliated group.—All members of the same affiliated group (within the meaning of section 1504(a)) shall be treated as 1 taxpayer. “(7) Regulations.—The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this subsection, including— “(A) such regulations as may be appropriate to prevent the avoidance of the purposes of this subsection, “(B) regulations providing such adjustments in the case of corporations which are members of an affiliated group as may be appropriate to carry out the purposes of this subsection, and “(C) regulations for the coordination of this subsection with section 884.” "
(b)[26 USC 163 note](/us/usc/t26/s163). Effective Date.—
(1)In general.—The amendment made by this section shall apply to interest paid or accrued in taxable years beginning after July 10, 1989.
(2)Special rule for demand loans, etc.—In the case of any demand loan (or other loan without a fixed term) which was outstanding on July 10, 1989, interest on such loan to the extent attributable to periods before September 1, 1989, shall not be treated as disqualified interest for purposes of section 163(j) of the Internal Revenue Code of 1986 (as added by subsection (a)). SEC. 7211. LIMITATIONS ON REFUNDS DUE TO NET OPERATING LOSS CARRYBACKS OR EXCESS INTEREST ALLOCABLE TO CORPORATE EQUITY REDUCTION TRANSACTIONS.
(a)In General.—Paragraph
(1)of section 172(b) (relating to years to which loss may be carried) is amended by adding at the end thereof the following new subparagraph: " “(M) Excess interest loss.— “(i) In general.—If— “(I) there is a corporate equity reduction transaction, and “(II) an applicable corporation has a corporate equity reduction interest loss for any loss limitation year ending after August 2, 1989, then the corporate equity reduction interest loss shall be a net operating loss carryback and carryover to the taxable years described in subparagraphs
(A)and (B), except that such loss shall not be carried back to a taxable year preceding the taxable year in which the corporate equity reduction transaction occurs. “(ii) Loss limitation year.—For purposes of clause
(i)and subsection (m), the term ‘loss limitation year’ means, with respect to any corporate equity reduction transaction, the taxable year in which such transaction occurs and each of the 2 succeeding taxable years. 103 STAT. 2343 “(iii) Applicable corporation.—For purposes of clause (i), the term ‘applicable corporation means a C corporation— “(I) which acquires stock, or the stock of which is acquired, in a major stock acquisition, “(II) a corporation making distributions with respect to, or redeeming, its stock in connection with an excess distribution, or “(III) any successor corporation of a corporation described in subclause
(I)or (II). “(iv) Other definitions.— **“For definitions of terms used in this subparagraph, see subsection (m).”** "
(b)Corporate Equity Reduction Interest Loans and Corporate Equity Reduction Transaction Defined.—Section 172 is amended by redesignating subsection
(m)as subsection
(n)and by inserting after subsection
(l)the following new subsection: " “(m) Corporate Equity Reduction Interest Losses.—For purposes of this section— “(1) In general.—The term ‘corporate equity reduction interest loss’ means, with respect to any loss limitation year, the excess (if any) of— “(A) the net operating loss for such taxable year, over “(B) the net operating loss for such taxable year determined without regard to any allocable interest deductions otherwise taken into account in computing such loss. “(2) Allocable interest deductions.— “(A) In general.—The term ‘allocable interest deductions’ means deductions allowed under this chapter for interest on the portion of any indebtedness allocable to a corporate equity reduction transaction. “(B) Method of allocation.—Except as provided in regulations and subparagraph (E), indebtedness shall be allocated to a corporate equity reduction transaction in the manner prescribed under clause
(ii)of section 263A(f)(2)(A) (without regard to clause
(i)thereof). “(C) Allocable deductions not to exceed interest increases.—Allocable interest deductions for any loss limitation year shall not exceed the excess (if any) of— “(i) the amount allowable as a deduction for interest paid or accrued by the taxpayer during the loss limitation year, over “(ii) the average of such amounts for the 3 taxable years preceding the taxable year in which the corporate equity reduction transaction occurred. “(D) De minimis rule.—A taxpayer shall be treated as having no allocable interest deductions for any taxable year if the amount of such deductions (without regard to this subparagraph) is less than $1,000,000. “(E) Special rule for certain unforeseeable events.—If an unforeseeable extraordinary adverse event occurs during a loss limitation year but after the corporate equity reduction transaction— “(i) indebtedness shall be allocated in the manner described in subparagraph
(B)to unreimbursed costs paid or incurred in connection with such event before 103 STAT. 2344being allocated to the corporate equity reduction transaction, and “(ii) the amount determined under subparagraph (C)(i) shall be reduced by the amount of interest on indebtedness described in clause (i). “(F) Transition rule.—If any of the 3 taxable years described in subparagraph (C)(ii) end on or before August 2, 1989, the taxpayer may substitute for the amount determined under such subparagraph an amount equal to the interest paid or accrued (determined on an annualized basis) during the taxpayer’s taxable year which includes August 3, 1989, on indebtedness of the taxpayer outstanding on August 2, 1989. “(3) Corporate equity reduction transaction.— “(A) In general.—The term ‘corporate equity reduction transaction’ means— “(i) a major stock acquisition, or “(ii) an excess distribution. “(B) Major stock acquisition.— “(i) In general.—The term ‘major stock acquisition’ means the acquisition by a corporation pursuant to a plan of such corporation (or any group of persons acting in concert with such corporation) of stock in another corporation representing 50 percent or more (by vote or value) of the stock in such other corporation, “(ii) Exceptions.—The term ‘major stock acquisition’ shall not include— “(I) a qualified stock purchase (within the meaning of section 338) to which an election under section 338 applies, or “(II) except as provided in regulations, an acquisition in which a corporation acquires stock of another corporation which, immediately before the acquisition, was a member of an affiliated group (within the meaning of section 1504(a)) other than the common parent of such group. “(C) Excess distribution.—The term ‘excess distribution’ means the excess (if any) of— “(i) the aggregate distributions (including redemptions) made during a taxable year by a corporation with respect to its stock, over “(ii) the greater of— “(I) 150 percent of the average of such distributions during the 3 taxable years immediately preceding such taxable year, or “(II) 10 percent of the fair market value of the stock of such corporation as of the beginning of such taxable year. “(D) Rules for applying subparagraph (b).—For purposes of subparagraph (B)— “(i) Plans to acquire stock.—All plans referred to in subparagraph
(B)by any corporation (or group of persons acting in concert with such corporation) with respect to another corporation shall be treated as 1 plan. 103 STAT. 2345 “(ii) Acquisitions during 24-month period.—All acquisitions during any 24-month period shall be treated as pursuant to I plan. “(E) Rules for applying subparagraph (C).—For purposes of subparagraph (C)— “(i) Certain preferred stock disregarded.—Stock described in section 1504(a)(4), and distributions (including redemptions) with respect to such stock, shall be disregarded. “(ii) Issuance of stock.—The amounts determined under clauses
(i)and (ii)(i) of subparagraph
(C)shall be reduced by the aggregate amount of stock issued by the corporation during the applicable period in exchange for money or property other than stock in the corporation. “(4) Other rules.— “(A) Ordering rule.—For purposes of paragraph (1), in determining the allocable interest deductions taken into account in computing the net operating loss for any taxable year, taxable income for such taxable year shall be treated as having been computed by taking allocable interest deductions into account after all other deductions. “(B) Coordination with subsection (b)(2).—In applying paragraph
(2)of subsection (b), the corporate equity reduction interest loss shall be treated in a manner similar to the manner in which a foreign expropriation loss is treated. “(C) Members of affiliated groups.—Except as provided by regulations, all members of an affiliated group filing a consolidated return under section 1501 shall be treated as 1 taxpayer for purposes of this subsection and subsection (b)(1)(M). “(5) Regulations.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including regulations— “(A) for applying this subsection to successor corporations and in cases where a taxpayer becomes, or ceases to be, a member of an affiliated group filing a consolidated return under section 1501, “(B) to prevent the avoidance of this subsection through related parties, pass-through entities, and intermediaries, and “(C) for applying this subsection where more than 1 corporation is involved in a corporate equity reduction transaction. "
(c)Effective Date.— [26 USC 172 note](/us/usc/t26/s172).
(1)In general.—Except as provided in this subsection, the amendments made by this section shall apply to corporate equity reduction transactions occurring after August 2, 1989, in taxable years ending after August 2, 1989.
(2)Exceptions.—In determining whether a corporate equity reduction transaction has occurred after August 2, 1989, there shall not be taken into account—
(A)acquisitions or redemptions of stock, or distributions with respect to stock, occurring on or before August 2, 1989,
(B)acquisitions or redemptions of stock after August 2, 1989, pursuant to a binding written contract (or tender offer filed with the Securities and Exchange Commission) in 103 STAT. 2346effect on August 2, 1989, and at all times thereafter before such acquisition or redemption, or
(C)any distribution with respect to stock after August 2, 1989, which was declared on or before August 2, 1989. Any distribution to which the preceding sentence applies shall be taken into account under section 172(m)(3)(C)(ii)(I) of the Internal Revenue Code of 1986 (relating to base period for distributions). **Subtitle C—****Employee Benefit Provisions** **PART I—****EMPLOYEE STOCK OWNERSHIP PLANS** SEC. 7301. LIMITATIONS ON PARTIAL EXCLUSION OF INTEREST ON LOANS USED TO ACQUIRE EMPLOYER SECURITIES.
(a)Exclusion Available Only Where Employees Receive Significant Ownership Interest.—Subsection
(b)of section 133 (defining securities acquisition loans) is amended by adding at the end thereof the following new paragraph: " “(6) Plan must hold more than 50 percent of stock after acquisition or transfer.— “(A) In general.—A loan shall not be treated as a securities acquisition loan for purposes of this section unless, immediately after the acquisition or transfer referred to in subparagraph
(A)or
(B)of paragraph (1), respectively, the employee stock ownership plan owns more than 50 percent of— “(i) each class of outstanding stock of the corporation issuing the employer securities, or “(ii) the total value of all outstanding stock of the corporation. “(B) Failure to retain minimum stock interest.— “(i) In general.—Subsection
(a)shall not apply to any interest received with respect to a securities acquisition loan which is allocable to any period during which the employee stock ownership plan does not own stock meeting the requirements of subparagraph (A). “(ii) Exception.—To the extent provided by the Secretary, clause
(i)shall not apply to any period if, within 90 days of the first date on which the failure occurred (or such longer period not in excess of 180 days as the Secretary may prescribe), the plan acquires stock which results in its meeting the requirements of subparagraph (A). “(C) Stock.—For purposes of subparagraph (A)— “(i) In general.—The term ‘stock’ means stock other than stock described in section 1504(a)(4). “(ii) Treatment of certain rights.—The Secretary may provide that warrants, options, contracts to acquire stock, convertible debt interests and other similar interests be treated as stock for 1 or more purposes under subparagraph (A). “(D) Aggregation rule.—For purposes of determining whether the requirements of subparagraph
(A)are met, an employee stock ownership plan shall be treated as owning stock in the corporation issuing the employer securities which is held 103 STAT. 2347by any other employee stock ownership plan which is maintained by— “(i) the employer maintaining the plan, or “(ii) any member of a controlled group of corporations (within the meaning of section 409(l)(4)) of which the employer described in clause
(i)is a member.” "
(b)Term of Loan May Not Exceed 15 Years.—Paragraph
(1)of section 133(b) is amended by adding at the end thereof the following new sentence: “The term ‘securities acquisition loan’ shall not include a loan with a term greater than 15 years.”
(c)Voting Rights.—Subsection
(b)of section 133, as amended by subsection (a), is amended by adding at the end thereof the following new paragraph: " “(7) Voting rights of employer securities.—A loan shall not be treated as a securities acquisition loan for purposes of this section unless— “(A) the employee stock ownership plan meets the requirements of section 409(e)(2) with respect to all employer securities acquired by, or transferred to, the plan in connection with such loan (without regard to whether or not the employer has a registration-type class of securities), and “(B) no stock described in section 409(l)(3) is acquired by, or transferred to, the plan in connection with such loan unless— “(i) such stock has voting rights equivalent to the stock to which it may be converted, and “(ii) the requirements of subparagraph
(A)are met with respect to such voting rights.”. "
(d)Tax on Disposition of Securities by Employee Stock Owner ship Plans.—
(1)In general.—Chapter 43 is amended by inserting after section 4978A the following new section: " “SEC. 4978B. TAX ON DISPOSITION OF EMPLOYER SECURITIES TO WHICH SECTION 133 APPLIED. “(a) Imposition of Tax.—In the case of an employee stock ownership plan which has acquired section 133 securities, there is hereby imposed a tax on each taxable event in an amount equal to the amount determined under subsection (b). “(b) Amount of Tax.— “(1) In general.—The amount of the tax imposed by subsection
(a)shall be equal to 10 percent of the amount realized on the disposition to the extent allocable to section 133 securities under section 4978(b)(2). “(2) Dispositions other than sales or exchanges.—For purposes of paragraph (1), in the case of a disposition of employer securities which is not a sale or exchange, the amount realized on such disposition shall be the fair market value of such securities at the time of disposition. “(c) Taxable Event.—For purposes of this section, the term ‘taxable event’ means any of the following dispositions: “(1) Dispositions within 3 years.—Any disposition of any employer securities by an employee stock ownership plan within 3 years after such plan acquired section 133 securities if— 103 STAT. 2348 “(A) the total number of employer securities held by such plan after such disposition is less than the total number of employer securities held after such acquisition, or “(B) except to the extent provided in regulations, the value of employer securities held by such plan after the disposition is 50 percent or less of the total value of all employer securities as of the time of the disposition. For purposes of subparagraph (B), the aggregation rule of section 133(b)(6)(D) shall apply. “(2) Stock disposed of before allocation.—Any disposition of section 133 securities to which paragraph
(1)does not apply if— “(A) such disposition occurs before such securities are allocated to accounts of participants or their beneficiaries, and “(B) the proceeds from such disposition are not so allocated. “(d) Section Not to Apply to Certain Dispositions.— “(1) In general.—This section shall not apply to any disposition described in paragraph (1), (3), or
(4)of section 4978(d). “(2) Certain reorganizations.—For purposes of this section, any exchange of section 133 securities for employer securities of another corporation in any reorganization described in section 368(a)(1) shall not be treated as a disposition, but the employer securities received shall be treated as section 133 securities and as having been held by the plan during the period the securities which were exchanged were held. “(3) Forced disposition occurring by operation of state law.—Any forced disposition of section 133 securities by an employee stock ownership plan occurring by operation of a State law shall not be treated as a disposition. This paragraph shall only apply to securities which, at the time the securities were acquired by the plan, were regularly traded on an established securities market. “(e) Definitions and Special Rules.—For purposes of this section— “(1) Liability for payment of taxes.—The tax imposed by this section shall be paid by the employer. “(2) Section 133 securities.—The term ‘section 133 securities’ means employer securities acquired by an employee stock ownership plan in a transaction to which section 133 applied, except that such term shall not include— “(A) qualified securities (as defined in section 4978(e)(2)), or “(B) qualified employer securities (as defined in section 4978A(f)(2), as in effect on the day before the date of the enactment of this section). “(3) Disposition.—The term ‘disposition’ includes any distribution. “(4) Ordering rules.—For ordering rules for dispositions of employer securities, see section 4978(b)(2).” "
(2)Conforming amendment.—The table of sections for chapter 43 is amended by inserting after the item relating to section 4978A the following new item: " “Sec. 49780. Tax on disposition of employer securities to which section 133 applied.”. " 103 STAT. 2349
(e)Reporting Requirements.—Section 6047 (relating to information reports relating to certain trusts or annuity plans) is amended by redesignating subsection
(e)as subsection
(f)and by inserting after subsection
(d)the following new subsection: " “(e) Employee Stock Ownership Plans.—The Secretary shall require— “(1) any employer maintaining, or the plan administrator (within the meaning of section 414(g)) of, an employee stock ownership plan— “(A) which acquired stock in a transaction to which section 133 applies, or “(B) which holds stock with respect to which section 404(k) applies to dividends paid on such stock, “(2) any person making or holding a loan to which section 133 applies, or “(3) both such employer or plan administrator and such person, to make returns and reports regarding such plan, transaction, or loan to the Secretary and to such other persons as the Secretary may prescribe. Such returns and reports shall be made in such form, shall be made at such time, and shall contain such information as the Secretary may prescribe.” "
(f)Effective Dates.— [26 USC 133 note](/us/usc/t26/s133).
(1)In general.—Except as provided in this subsection, the amendments made by this section shall apply to loans made after July 10, 1989.
(2)Binding commitment exceptions.—
(A)The amendments made by this section shall not apply to any loan—
(i)which is made pursuant to a binding written commitment in effect on June 6, 1989, and at all times thereafter before such loan is made, or
(ii)to the extent that the proceeds of such loan are used to acquire employer securities pursuant to a written binding contract (or tender offer registered with the Securities and Exchange Commission) in effect on June 6, 1989, and at all times thereafter before such securities are acquired.
(B)The amendments made by this section shall not apply to any loan to which subparagraph
(A)does not apply which is made pursuant to a binding written commitment in effect on July 10, 1989, and at all times thereafter before such loan is made. The preceding sentence shall only apply to the extent that the proceeds of such loan are used to acquire employer securities pursuant to a written binding contract (or tender offer registered with the Securities and Exchange Commission) in effect on July 10, 1989, and at all times thereafter before such securities are acquired.
(C)The amendments made by this section shall not apply to any loan made on or before July 10, 1992, pursuant to a written agreement entered into on or before July 10, 1989, if such agreement evidences the intent of the borrower on a periodic basis to enter into securities acquisition loans described in section 133(b)(1)(B) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of this Act). The preceding sentence shall apply 103 STAT. 2350only if one or more securities acquisition loans were made to the borrower on or before July 10, 1989.
(3)Refinancings.—The amendments made by this section shall not apply to loans made after July 10, 1989, to refinance securities acquisition loans (determined without regard to section 133(b)(2) of the Internal Revenue Code of 1986) made on or before such date or to refinance loans described in this paragraph or paragraph (2), (4), or
(5)if—
(A)such refinancing loans meet the requirements of such section 133 of such Code (as in effect before such amendments) applicable to such loans,
(B)immediately after the refinancing the principal amount of the loan resulting from the refinancing does not exceed the principal amount of the refinanced loan (immediately before the refinancing), and
(C)the term of such refinancing loan does not extend beyond the later of—
(i)the last day of the term of the original securities acquisition loan, or
(ii)the last day of the 7-year period beginning on the date the original securities acquisition loan was made. For purposes of this paragraph, the term “securities acquisition loan” shall include a loan from a corporation to an employee stock ownership plan described in section 133(b)(3) of such Code.
(4)Collective bargaining agreements.—The amendments made by this section shall not apply to any loan to the extent such loan is used to acquire employer securities for an employee stock ownership plan pursuant to a collective bargaining agreement which sets forth the material terms of such employee stock ownership plan and which was agreed to on or before June 6, 1989, by one or more employers and employee representatives (and ratified on or before such date or within a reasonable period thereafter).
(5)Filings with united states.—The amendments made by this section shall not apply to any loan the aggregate principal amount of which was specified in a filing with an agency of the United States on or before June 6, 1989, if—
(A)such filing specifies such loan is to be a securities acquisition loan for purposes of section 133 of the Internal Revenue Code of 1986 and such filing is for the registration required to permit the offering of such loan, or
(B)such filing is for the approval required in order for the employee stock ownership plan to acquire more than a certain percentage of the stock of the employer.
(6)30-percent test substituted for 50-percent test in case of certain loans.—In the case of a loan to which the amendments made by this section apply—
(A)which is made before November 18, 1989, or
(B)with respect to which such amendments would not apply if paragraph (2)(A) were applied by substituting “November 17, 1989” for “June 6, 1989” each place it appears, section 133(b)(6)(A) of the Internal Revenue Code of 1986 (as added by subsection (a)) shall be applied by substituting “at least 30 percent” for “more than 50 percent” and section 4978B(c)(1)(B) of such Code (as added by subsection (d)) shall be 103 STAT. 2351applied by substituting “less than 30 percent” for “50 percent or less”. The preceding sentence shall apply to any loan which is used to refinance a loan described in such sentence if the requirements of subparagraphs (A), (B), and
(C)of paragraph
(3)are met with respect to the refinancing loan. SEC. 7302. LIMITATIONS ON DEDUCTIONS FOR DIVIDENDS PAID ON EMPLOYER SECURITIES.
(a)In General.—Subsection
(k)of section 404 is amended to read as follows: " “(k) Deduction for Dividends Paid on Certain Employer Securities.— “(1) General rule.—In the case of a corporation, there shall be allowed as a deduction for a taxable year the amount of any applicable dividend paid in cash by such corporation during the taxable year with respect to applicable employer securities. Such deduction shall be in addition to the deductions allowed under subsection (a). “(2) Applicable dividend.—For purposes of this subsection— “(A) In general.—The term ‘applicable dividend’ means any dividend which, in accordance with the plan provisions— “(i) is paid in cash to the participants in the plan or their beneficiaries, “(ii) is paid to the plan and is distributed in cash to participants in the plan or their beneficiaries not later than 90 days after the close of the plan year in which paid, or “(iii) is used to make payments on a loan described in subsection (a)(9) the proceeds of which were used to acquire the employer securities (whether or not allocated to participants) with respect to which the dividend is paid. “(B) Limitation on certain dividends.—A dividend described in subparagraph (A)(iii) which is paid with respect to any employer security which is allocated to a participant shall not be treated as an applicable dividend unless the plan provides that employer securities with a fair market value of not less than the amount of such dividend are allocated to such participant for the year which (but for subparagraph (A)) such dividend would have been allocated to such participant. “(3) Applicable employer securities.—For purposes of this subsection, the term ‘applicable employer securities’ means, with respect to any dividend, employer securities which are held on the record date for such dividend by an employee stock ownership plan which is maintained by— “(A) the corporation paying such dividend, or “(B) any other corporation which is a member of a controlled group of corporations (within the meaning of section 409(l)(4)) which includes such corporation. “(4) Time for deduction.— “(A) In general.—The deduction under paragraph
(1)shall be allowable in the taxable year of the corporation in which the dividend is paid or distributed to a participant or his beneficiary. 103 STAT. 2352 “(B) Repayment of loans.—In the case of an applicable dividend described in clause
(iii)of paragraph (2)(A), the deduction under paragraph
(1)shall be allowable in the taxable year of the corporation in which such dividend is used to repay the loan described in such clause. “(5) Other rules.—For purposes of this subsection— “(A) Disallowance of deduction.—The Secretary may disallow the deduction under paragraph
(1)for any dividend if the Secretary determines that such dividend constitutes, in substance, an evasion of taxation. “(B) Plan qualification.—A plan shall not be treated as violating the requirements of section 401, 409, or 4975(e)(7), or as engaging in a prohibited transaction for purposes of section 4975(d)(3), merely by reason of any payment or distribution described in paragraph (2)(A). “(6) Definitions.—For purposes of this subsection— “(A) Employer securities.—The term ‘employer securities’ has the meaning given such term by section 409(1). “(B) Employee stock ownership plan.—The term ‘employee stock ownership plan’ has the meaning given such term by section 4975(e)(7). Such term includes a tax credit employee stock ownership plan (as defined in section 409).” "
(b)[26 USC 404 note](/us/usc/t26/s404).Effective Date.—
(1)In general.—The amendment made by this section shall apply to employer securities acquired after August 4, 1989.
(2)Securities acquired with certain loans.—The amendment made by this section shall not apply to employer securities acquired after August 4, 1989, which are acquired—
(A)with the proceeds of any loan which was made pursuant to a binding written commitment in effect on August 4, 1989, and at all times thereafter before such loan is made, and
(B)pursuant to a written binding contract (or tender offer registered with the Securities and Exchange Commission) in effect on August 4, 1989, and at all times thereafter before such securities are acquired. SEC. 7303. 3-YEAR HOLDING PERIOD REQUIRED BEFORE SECTION 1042 SALE.
(a)In General.—Section 1042(b) (relating to requirements to qualify for nonrecognition) is amended by adding at the end thereof the following new paragraph: " “(4) 3-year holding period.—The taxpayer’s holding period with respect to the qualified securities is at least 3 years (determined as of the time of the sale).” "
(b)[26 USC 1042 note](/us/usc/t26/s1042). Effective Date.—The amendment made by this section shall apply to sales after July 10, 1989. SEC. 7304. REPEAL OF CERTAIN PROVISIONS RELATING TO EMPLOYEE STOCK OWNERSHIP PLANS.
(a)Estate Tax Deduction.—
(1)In general.—Section 2057 (relating to sales of employer securities to employee stock ownership plans or worker-owned corporations) is hereby repealed.
(2)Conforming amendments.—
(A)Paragraph
(1)of section 409(n) is amended—
(i)by striking “or section 2057” each place it appears. 103 STAT. 2353
(ii)by striking “or any decedent if the executor of the estate of such decedent makes a qualified sale to which section 2057 applies” in subparagraph (A)(i) thereof, and
(iii)by striking “or the decedent” in subparagraph (A)(ii) thereof.
(B)Paragraphs (2)(C)(i) and (3)(A)(iii) of section 409(n) are each amended by striking “or section 2057”. (C)(i) Section 4978A is hereby repealed.
(ii)Section 4978(b)(2) is amended by striking “(determined as if such securities were disposed of in the order described in section 4978A(e)).” and inserting “determined as if such securities were disposed of— " “(A) first, from section 133 securities (as defined in section 4978B(e)(2)) acquired during the 3-year period ending on the date of such disposition, beginning with the securities first so acquired. “(B) second, from section 133 securities (as so defined) acquired before such 3-year period unless such securities (or proceeds from the disposition) have been allocated to accounts of participants or beneficiaries.” “(C) third, from qualified securities to which section 1042 applied acquired during the 3-year period ending on the date of the disposition, beginning with the securities first so acquired, and “(D) then from any other employer securities. If subsection
(d)or section 4978B(d) applies to a disposition, the disposition shall be treated as made from employer securities in the opposite order of the preceding sentence.” "
(iii)The table of sections for chapter 43 is amended by striking the item relating to section 4978A
(D)Section 4979A is amended—
(i)by striking “or section 2057” in subsection (b)(1), and
(ii)by striking “or section 2057(d)” in subsection (c)(2).
(E)The table of sections for part IV of subchapter A of chapter 11 is amended by striking the item relating to section 2057.
(3)Effective date.—The amendments made by this subsection [26 USC 409 note](/us/usc/t26/s409).shall apply to the estates of decedents dying after the date of the enactment of this Act.
(b)Liability for Payment of Estate Tax.—
(1)In general.—Section 2210 (relating to liability for payment in case of transfer of employer securities) is hereby repealed.
(2)Conforming amendments.—
(A)Section 2002 is amended by striking “Except as provided in section 2210, the” and inserting “The”.
(B)Section 6018 is amended by striking subsection (c).
(C)The table of sections for subchapter C of chapter 11 is amended by striking the item relating to section 2210.
(3)Effective date.—The amendments made by this subsection [26 USC 2002 note](/us/usc/t26/s2002).shall apply to estates of decedents dying after July 12, 1989.
(c)Limitations on Defined Contribution Plans.—
(1)In general.—Paragraph
(6)of section 415(c) is amended to read as follows: 103 STAT. 2354 " “(6) Special rule for employee stock ownership plans.—If no more than one-third of the employer contributions to an employee stock ownership plan (as described in section 4975(e)(7)) for a year which are deductible under paragraph
(9)of section 404(a) are allocated to highly compensated employees (within the meaning of section 414(q)), the limitations imposed by this section shall not apply to— “(A) forfeitures of employer securities (within the meaning of section 409) under such an employee stock ownership plan if such securities were acquired with the proceeds of a loan (as described in section 404(a)(9)(A)), or “(B) employer contributions to such an employee stock ownership plan which are deductible under section 404(a)(9)(B) and charged against the participant’s account.” "
(2)[26 USC 415 note](/us/usc/t26/s415). Effective date.—The amendment made by this subsection shall apply to years beginning after July 12, 1989.
(d)Special Rules Relating to Net Operating Losses.—
(1)In general.—Section 382(l)(3) is amended by striking subparagraph
(C)and by redesignating subparagraph
(D)as subparagraph (C).
(2)[26 USC 382 note](/us/usc/t26/s382). Effective date.—The amendments made by this subsection shall apply to acquisitions of employer securities after July 12, 1989, except that such amendments shall not apply to acquisitions after July 12, 1989, pursuant to a written binding contract in effect on July 12, 1989, and at all times thereafter before such acquisition. **PART II—****SECTION 401(H) ACCOUNTS** SEC. 7311. LIMITATION ON CONTRIBUTIONS TO SECTION 401(h) ACCOUNTS.
(a)In General.—Section 401(h) is amended by adding at the end thereof the following new sentence: “In no event shall the requirements of paragraph
(1)be treated as met if the aggregate actual contributions for medical benefits, when added to actual contributions for life insurance protection under the plan, exceed 25 percent of the total actual contributions to the plan (other than contributions to fund past service credits) after the date on which the account is established.”
(b)[26 USC 401 note](/us/usc/t26/s401). Effective Date.—
(1)In general.—The amendment made by this section shall apply to contributions after October 3, 1989.
(2)Transition.—The amendment made by this section shall not apply to contributions made before January 1, 1990, if—
(A)the employer requested before October 3, 1989, a private letter ruling or determination letter with respect to the qualification of the plan maintaining the account under section 401(h) of the Internal Revenue Code of 1986,
(B)the request sets forth a method under which the amount of contributions to the account are to be determined on the basis of cost,
(C)such method is permissible under section 401(h) of such Code under the provisions of General Counsel Memorandum 39785, and
(D)the Internal Revenue Service issued before October 4, 1989, a private letter ruling, determination letter, or other letter providing that the specific plan involved qualifies 103 STAT. 2355under section 401(a) of such Code when such method is used, that contributions to the account are deductible, or acknowledging that the account would not adversely affect the qualified status of the plan (contingent on all phases of the particular plan being approved). Subtitle D—Foreign Provisions SEC. 7401. TAXABLE YEAR OF CERTAIN FOREIGN CORPORATIONS.
(a)General Rule.—Subpart D of part II of subchapter N of chapter 1 (relating to miscellaneous provisions) is amended by adding at the end thereof the following new section: " “SEC. 898. TAXABLE YEAR OF CERTAIN FOREIGN CORPORATIONS. “(a) General Rule.—For purposes of this title, the taxable year of any specified foreign corporation shall be the required year determined under subsection (c). “(b) Specified Foreign Corporation.—For purposes of this section— “(1) In general.—The term ‘specified foreign corporation’ means any foreign corporation— “(A) which is— “(i) treated as a controlled foreign corporation for any purpose under subpart F of part III of this subchapter, or “(ii) a foreign personal holding company (as defined in section 552), and “(B) with respect to which the ownership requirements of paragraph
(2)are met “(2) Ownership requirements.— “(A) In general.—The ownership requirements of this paragraph are met with respect to any foreign corporation if a United States shareholder owns, on each testing day, more than 50 percent of— “(i) the total voting power of all classes of stock of such corporation entitled to vote, or “(ii) the total value of all classes of stock of such corporation. “(B) Ownership.—For purposes of subparagraph (A), the rules of subsections
(a)and
(b)of section 958 and sections 551(f) and 554, whichever are applicable, shall apply in determining ownership. “(3) United states shareholder.— “(A) In general.—The term ‘United States shareholder’ has the meaning given to such term by section 951(b), except that, in the case of a foreign corporation having related person insurance income (as defined in section 953(c)(2)), the Secretary may treat any person as a United States shareholder for purposes of this section if such person is treated as a United States shareholder under section 953(c)(1). “(B) Foreign personal holding companies.—In the case of any foreign personal holding company (as defined in section 552) which is not a specified foreign corporation by reason of paragraph (I)(A)(i), the term ‘United States share-103 STAT. 2356holder’ means any person who is treated as a United States shareholder under section 551. “(c) Determination of Required Year.— “(1) Controlled foreign corporations.— “(A) In general.—In the case of a specified foreign corporation described in subsection (b)(I)(A)(i), the required year is— “(i) the majority U.S. shareholder year, or “(ii) if there is no majority U.S. shareholder year, the taxable year prescribed under regulations. “(B) 1-month deferral allowed.—A specified foreign corporation may elect, in lieu of the taxable year under subparagraph (A)(i), a taxable year beginning 1 month earlier than the majority U.S. shareholder year. “(C) Majority u.s. shareholder year.— “(i) In general.—For purposes of this subsection, the term ‘majority U.S. shareholder year’ means the taxable year (if any) which, on each testing day, constituted the taxable year of— “(I) each United States shareholder described in subsection (b)(2)(A), and “(II) each United States shareholder not described in subclause
(I)whose stock was treated as owned under subsection (b)(2)(B) by any shareholder described in such subclause. “(ii) Testing day.—The testing days shall be— “(I) the first day of the corporation’s taxable year (determined without regard to this section), or “(II) the days during such representative period as the Secretary may prescribe. “(2) Foreign personal holding companies.—In the case of a foreign personal holding company described in subsection (b)(3)(B), the required year shall be determined under paragraph (1), except that subparagraph
(B)of paragraph
(1)shall not apply”."
(b)Treatment of Dividends Paid After Close of Taxable Year.—
(1)In general.—Section 563 is amended by redesignating subsection
(c)as subsection
(d)and by inserting after subsection
(b)the following new subsection: " “(c) Foreign Personal Holding Company Tax.— “(1) In general.—In the determination of the dividends paid deduction for purposes of part III, a dividend paid after the close of any taxable year and on or before the 15th day of the 3rd month following the close of such taxable year shall, to the extent the company designates such dividend as being taken into account under this subsection, be considered as paid during such taxable year. The amount allowed as a deduction by reason of the application of this subsection with respect to any taxable year shall not exceed the undistributed foreign personal holding company income of the corporation for the taxable year computed without regard to this subsection. “(2) Special rules.—In the case of any distribution referred to in paragraph (1)— “(A) paragraph
(1)shall apply only if such distribution is to the person who was the shareholder of record (as of the last day of the taxable year of the foreign personal holding 103 STAT. 2357company) with respect to the stock, for which such distribution is made, “(B) the determination of the person required to include such distribution in gross income shall be made under the principles of section 551(f), and “(C) any person required to include such distribution in gross or distributable net income shall include such distribution in income for such person’s taxable year in which the taxable year of the foreign personal holding company ends.” "
(2)Conforming amendment.—Subsection
(d)of section 563 (as redesignated by paragraph (1)) is amended by striking “subsection
(a)or (b)” and inserting “subsection (a), (b), or (c)”.
(c)Clerical Amendment.—The table of sections for subpart D of part II of subchapter N of chapter 1 is amended by adding at the end thereof the following new item: " “Sec. 898. Taxable year of certain foreign corporations.” "
(d)Effective Date.— [26 USC 898 note](/us/usc/t26/s898).
(1)In general.—The amendments made by this section shall apply to taxable years of foreign corporations beginning after July 10, 1989.
(2)Special rules.—If any foreign corporation is required by the amendments made by this section to change its taxable year for its first taxable year beginning after July 10, 1989—
(A)such change shall be treated as initiated by the taxpayer,
(B)such change shall be treated as having been made with the consent of the Secretary of the Treasury or his delegate, and
(C)if, by reason of such change, any United States person is required to include in gross income for 1 taxable year amounts attributable to 2 taxable years of such foreign corporation, the amount which would otherwise be required to be included in gross income for such 1 taxable year by reason of the short taxable year of the foreign corporation resulting from such change shall be included in gross income ratably over the f taxable-year period beginning with such 1 taxable year. SEC. 7402. LIMITATION ON USE OF DECONSOLIDATION TO AVOID FOREIGN TAX CREDIT LIMITATIONS.
(a)General Rule.—Section 904 (relating to limitations on foreign tax credit) is amended by redesignating subsection
(i)as subsection
(j)and by inserting after subsection
(h)the following new subsection: " “(i) Limitation on Use of Deconsolidation To Avoid Foreign Tax Credit Limitations.—If 2 or more domestic corporations would be members of the same affiliated group if— “(1) section 1504(b) were applied without regard to the exceptions contained therein, and “(2) the constructive ownership rules of section 1563(e) applied for purposes of section 1504(a), the Secretary may by regulations provide for resourcing the income of any of such corporations or for modifications to the consolidated return regulations to the extent that such resourcing or modifications are necessary to prevent the avoidance of the provisions of this subpart.” " 103 STAT. 2358
(b)[26 USC 904 note](/us/usc/t26/s904). Effective Date.—The amendment made by subsection
(a)shall apply to taxable years beginning after July 10, 1989. SEC. 7403. INFORMATION WITH RESPECT TO CERTAIN FOREIGN-OWNED CORPORATIONS.
(a)25-Percent Foreign-Owned Corporations Required to Report.—
(1)Paragraph
(2)of section 6038A(a) is amended to read as follows: " “(2) is 25-percent foreign-owned,”. "
(2)Subsection
(c)of section 6038A is amended to read as follows: " “(c) Definitions.—For purposes of this section— “(1) 25-percent foreign-owned.—A corporation is 25-percent foreign-owned if at least 25 percent of— “(A) the total voting power of all classes of stock of such corporation entitled to vote, or “(B) the total value of all classes of stock of such corporation, is owned at any time during the taxable year by 1 foreign person (hereinafter in this section referred to as a ‘25-percent foreign shareholder’). “(2) Related party.—The term ‘related party’ means— “(A) any 25-percent foreign shareholder of the reporting corporation, “(B) any person who is related (within the meaning of section 267(b) or 707(b)(1) ) to the reporting corporation or to a 25-percent foreign shareholder of the reporting corporation, and “(C) any other person who is related (within the meaning of section 482) to the reporting corporation.
(4)Foreign person.—The term ‘foreign person’ means any person who is not a United States person. For purposes of the preceding sentence, the term ‘United States person’ has the meaning given to such term by section 7701(a)(30), except that any individual who is a citizen of any possession of the United States (but not otherwise a citizen of the United States) and who is not a resident of the United States shall not be treated as a United States person.
(5)Records.—The term ‘records’ includes any books, papers, or other data.
(6)Section 318 to apply.—Section 318 shall apply for purposes of paragraphs
(1)and (2), except that— “(A) ‘10 percent’ shall be substituted for ‘50 percent’ in section 318(a)(2)(C), and “(B) subparagraphs (A), (B), and
(C)of section 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person.” "
(b)Regulations. U.S. Recordkeeping Requirements.—Subsection
(a)of section 6038A is amended by inserting before the period at the end thereof the following “and such corporation shall maintain (in the location, in the manner, and to the extent prescribed in regulations) such records as may be appropriate to determine the correct treatment of transactions with related parties as the Secretary shall by regulations prescribe (or shall cause another person to so maintain such records)”. 103 STAT. 2359
(c)Increase in Penalty.—Subsection
(d)of section 6038A is amended to read as follows: " “(d) Penalty for Failure To Furnish Information or Maintain Records.— “(1) In general.—If a reporting corporation— “(A) fails to furnish (within the time prescribed by regulations) any information described in subsection (b), or “(B) fails to maintain (or cause another to maintain) records as required by subsection (a), such corporation shall pay a penalty of $10,000 for each taxable year with respect to which such failure occurs. “(2) Increase in penalty where failure continues after notification.—If any failure described in paragraph
(1)continues for more than 90 days after the day on which the Secretary mails notice of such failure to the reporting corporation, such corporation shall pay a penal to (in addition to the amount required under paragraph (1)) of $10,000 for each 30-day period (or fraction thereof) during which such failure continues after the expiration of such 90-day period. “(3) Reasonable cause.—For purposes of this subsection, the time prescribed by regulations to furnish information or maintain records (and the beginning of the 90-day period after notice by the Secretary) shall be treated as not earlier than the last day on which (as shown to the satisfaction of the Secretary) reasonable cause existed for failure to furnish the information or maintain the records.” "
(d)Enforcement of Information Requests.—Section 6038A is amended by redesignating subsection
(e)as subsection
(f)and by inserting after subsection
(d)the following new subsection: " “(e) Enforcement of Requests for Certain Records.— “(1) Agreement to treat corporation as agent.—The rules of paragraph
(3)shall apply to any transaction between the reporting corporation and any related party who is a foreign person unless such related party agrees (in such manner and at such time as the Secretary shall prescribe) to authorize the reporting corporation to act as such related party’s limited agent solely for purposes of applying sections 7602, 7603, and 7604 with respect to any request by the Secretary to examine records or produce testimony related to any such transaction or with respect to any summons by the Secretary for such records or testimony. The appearance of persons or production of records by reason of the reporting corporation being such an agent shall not subject such persons or records to legal process for any purpose other than determining the correct treatment under this title of any transaction between the reporting corporation and such related party. “(2) Rules where information not furnished.—If— “(A) for purposes of determining the correct treatment under this title of any transaction between the reporting corporation and a related party who is a foreign person, the Secretary issues a summons to such corporation to produce (either directly or as agent for such related party) any records or testimony, “(B) such summons is not quashed in a proceeding begun under paragraph
(4)and is not determined to be invalid in a proceeding begun under section 7604(b) to enforce such summons, and 103 STAT. 2360 “(C) Mail. the reporting corporation does not substantially comply in a timely manner with such summons and the Secretary has sent by certified or registered mail a notice to such reporting corporation that such reporting corporation has not so substantially complied, the Secretary may apply the rules of paragraph
(3)with respect to such transaction (whether or not the Secretary begins a proceeding to enforce such summons). If the reporting corporation fails to maintain (or cause another to maintain) records as required by subsection (a), and by reason of that failure, the summons is quashed in a proceeding described in subparagraph
(B)or the reporting corporation is not able to provide the records requested in the summons, the Secretary may apply the rules of paragraph
(3)with respect to any transaction to which the records relate. “(3) Applicable rules in cases of noncompliance.—If the rules of this paragraph apply to any transaction— “(A) the amount of the deduction allowed under subtitle A for any amount paid or incurred by the reporting corporation to the related party in connection with such transaction, and “(B) Real property. the cost to the reporting corporation of any property acquired in such transaction from the related party (or transferred by such corporation in such transaction to the related party), shall be the amount determined by the Secretary in the Secretary’s sole discretion from the Secretary’s own knowledge or from such information as the Secretary may obtain through testimony or otherwise. “(4) Judicial proceedings.— “(A) Proceedings to quash.—Notwithstanding any law or rule of law, any reporting corporation to which the Secretary issues a summons referred to in paragraph (2)(A) shall have the right to begin a proceeding to quash such summons not later than the 90th day after such summons was issued. In any such proceeding, the Secretary may seek to compel compliance with such summons. “(B) Review of secretarial determination of non-compliance.—Notwithstanding any law or rule of law, any reporting corporation which has been notified by the Secretary that the Secretary has determined that such corporation has not substantially complied with a summons referred to in paragraph
(2)shall have the right to begin a proceeding to review such determination not later than the 90th day after the day on which the notice referred to in paragraph (2)(C) was mailed. If such a proceeding is not begun on or before such 90th day, such determination by the Secretary shall be binding and shall not be reviewed by any court. “(C) Jurisdiction.—The United States district court for the district in which the person (to whom the summons is issued) resides or is found shall have jurisdiction to hear any proceeding brought under subparagraph
(A)or (B). Any order or other determination in such a proceeding shall be treated as a final order which may be appealed. “(D) Suspension of statute of limitations.—If the reporting corporation brings an action under subparagraph 103 STAT. 2361(A) or (B), the running of any period of limitations under section 6501 (relating to assessment and collection of tax) or under section 6531 (relating to criminal prosecutions) with respect to any transaction to which the summons relates shall be suspended for the period during which such proceeding, and appeals therein, are pending. In no event shall any such period expire before the 90th day after the day on which there is a final determination in such proceeding.” "
(e)Effective Date.—The amendments made by this section shall [26 USC 6038A note](/us/usc/t26/s6038A).apply to taxable years beginning after July 10, 1989. SEC. 7104. REPEAL OF SPECIAL TREATMENT OF INTEREST ON CERTAIN FOREIGN LOANS.
(a)General Rule.—Paragraph
(2)of section 1201(e) of the Tax Reform Act of 1986 is hereby repealed. [26 USC 904 note](/us/usc/t26/s904).[26 USC 904 note](/us/usc/t26/s904).
(b)Effective Date.—The repeal made by subsection
(a)shall apply to taxable years beginning after December 31, 1989.
(c)Exception for Certain Taxpayers With Substantial Loan Loss Reserves.— [26 USC 904 note](/us/usc/t26/s904).
(1)In general.—The repeal made by subsection
(a)shall not apply to any taxpayer if, on any financial statement filed by such taxpayer for regulatory purposes with respect to any quarter ending during the period beginning on March 31, 1989, and ending on December 31, 1989, such taxpayer showed loss reserves against its qualified loans equal to at least 25 percent of the amount of such loans.
(2)Definitions and special rules.—For purposes of this subsection—
(A)Qualified loan.—The term “qualified loan” has the meaning given such term by section 1201(e)(2)(H) of the Tax Reform Act of 1986 (as in effect before its repeal by subsection (a)).
(B)Parent-subsidiary controlled groups.—In the case of any taxpayer which is a member of a parent-subsidiary controlled group (as defined in section 585(c)(5)(A)), this subsection shall be applied by treating all members of such group as 1 taxpayer. Subtitle E—Excise Tax Provisions SEC. 7501. 1-YEAR SUSPENSION OF AUTOMATIC REDUCTION IN AVUTION-RELATED TAXES.
(a)In General.—Subsection
(a)of section 4283 (relating to reduction in aviation-related taxes in certain cases) is amended by striking “1990” and inserting “1991”.
(b)Conforming Amendments.—
(1)Clause
(i)of section 4283(b)(1)(A) is amended by striking “1988 and 1989” and inserting “1989 and 1990”.
(2)Paragraph
(3)of section 4283(b) is amended—
(A)by striking “1990” and inserting “1991”, and
(B)by striking “1989” and inserting “1990”.
(3)Subsection
(q)of section 6427 is amended by striking “1990” each place it appears and inserting “1991”. 103 STAT. 2362 SEC. 7502. ACCELERATION OF DEPOSIT REQUIREMENTS FOR AIRLINE TICKET TAX.
(a)In General.—Section 6302 (relating to mode or time of collection) is amended by redesignating subsection
(e)as subsection
(f)and by inserting after subsection
(d)the following new subsection: " “(e) Time for Deposit of Taxes on Airline Tickets.—If, under regulations prescribed by the Secretary, a person is required to make deposits of any tax imposed by subsection
(a)or
(b)of section 4261 with respect to amounts considered collected by such person during any semimonthly period, such deposit shall be made not later than the 3rd day (not including Saturdays, Sundays, or legal holidays) after the close of the 1st week of the 2nd semimonthly period following the period to which such amounts relate.” "
(b)[26 USC 6302 note](/us/usc/t26/s6302). Effective Date.—The amendment made by subsection
(a)shall apply to payments of taxes considered collected for semi-monthly periods beginning after June 30, 1990. SEC. 7503. INCREASE IN INTERNATIONAL AIR PASSENGER DEPARTURE TAX.
(a)In General—Section 4261(c) (relating to tax on use of international travel facilities) is amended by striking “33” and inserting “$6”.
(b)[26 USC 4261 note](/us/usc/t26/s4261). Effective Date.—The amendment made by subsection
(a)shall apply with respect to transportation beginning after December 31, 1989, which was not paid for before such date. SEC. 7504. SHIP PASSENGERS INTERNATIONAL DEPARTURE TAX.
(a)In General.—Chapter 36 (relating to certain other excise taxes) is amended by inserting after subchapter A the following new subchapter: " “Subchapter B—Transportation by Water “Sec. 4471. Imposition of tax. “Sec. 4472. Definitions and special rules. “SEC. 4471. IMPOSITION OF TAX. “(a) In General.—There is hereby imposed a tax of 33 per passenger on a covered voyage. “(b) By Whom Paid.—The tax imposed by this section shall be paid by the person providing the covered voyage. “(c) Time of Imposition.—The tax imposed by this section shall be imposed only once for each passenger on a covered voyage, either at the time of first embarkation or disembarkation in the United States. “SEC. 4472. DEFINITIONS. “For purposes of this subchapter— “(1) Covered voyage.— “(A) In general.—The term ‘covered voyage’ means a voyage of— “(i) a commercial passenger vessel which extends over 1 or more nights, or “(ii) a commercial vessel transporting passengers engaged in gambling aboard the vessel beyond the territorial waters of the United States, during which passengers embark or disembark the vessel in the United States. Such term shall not include any voyage 103 STAT. 2363on any vessel owned or operated by the United States, a State, or any agency or subdivision thereof. “(B) Exception fob certain voyages on passenger vessels.—The term ‘covered voyage’ shall not include a voyage of a passenger vessel of less than 12 hours between 2 ports in the United States. “(2) Passenger vessel.—The term ‘passenger vessel’ means any vessel having berth or stateroom accommodations for more than 16 passengers.” "
(b)Clerical Amendments.—The table of subchapters for chapter 36 is amended by inserting after the item relating to subchapter A the following new item: " “Subchapter B. Transportation by water.” "
(c)Effective Date.— [26 USC 4471 note](/us/usc/t26/s4471).
(1)In general.—The amendments made by this section shall apply to voyages beginning after December 31, 1989, which were not paid for before such date.
(2)No deposits required before april 1, 1990.—No deposit of any tax imposed by subchapter B of chapter 36 of the Internal Revenue Code of 1986, as added by this section, shall be required to be made before April 1, 1990. SEC. 7505. OIL SPILL LIABILITY TRUST FUND TAX TO TAKE EFFECT ON JANUARY 1, 1990.
(a)Tax To Take Effect on January 1, 1990.—
(1)In general.—Subsection
(f)of section 4611 (relating to application of Oil Spill Liability Trust Fund financing rate) is amended to read as follows: " “(f) Application of Oil Spill Liability Trust Fund Financing Rate.— “(1) In general.—Except as provided in paragraph (2), the Oil Spill Liability Trust Fund financing rate under subsection
(c)shall apply after December 31, 1989, and before January 1, 1995. “(2) No tax if unobligated balance in fund exceeds «1,000,000,000.—The Oil Spill Liability Trust Fund financing rate shall not apply during any calendar quarter if the Secretary estimates that as of the close of the preceding calendar quarter the unobligated balance in the Oil Spill Liability Trust Fund exceeds $1,000,090,000.” "
(b)5 Cent Rate of Tax.—Subparagraph
(B)of section 4611(c)(2) is amended by striking “1.3 cents” and inserting “5 cents”.
(c)Credit Against Oil Spill Tax for Excess Amounts in the Trans-Alaska Pipeline Liability Fund.—Subsection
(d)of section 4612 is amended by adding at the end thereof the following new sentence: " “The preceding sentence shall also apply to amounts paid by the taxpayer into the Trans-Alaska Pipeline Liability Fund to the extent of amounts transferred from such Fund into the Oil Spill Liability Trust Fund. Amounts may be transferred from the Trans-Alaska Pipeline Liability Fund into the Oil Spill Liability Trust Fund only to the extent the administrators of the Trans-Alaska Pipeline Liability Fund determine that such amounts are not needed to satisfy claims against such Fund.” "
(d)Oil Spill Liability Trust Fund To Be Operating Fund.—
(1)In general.— [26 USC 4611 note](/us/usc/t26/s4611). For purposes of sections 8032(d) and 8033(c) of the Omnibus Budget Reconciliation Act of 1986, the commencement date is January 1, 1990. 103 STAT. 2364
(2)Conforming amendments.—
(A)Section 9509 (relating to Oil Spill Liability Trust Fund) is amended by adding at the end thereof the following new subsection: " “(f) References to Comprehensive Oil Pollution Liability and Compensation Act.—For purposes of this section, references to the Comprehensive Oil Pollution Liability and Compensation Act shall be treated as references to any law enacted before December 31, 1990, which is substantially identical to subtitle E of title VI, or subtitle D of title VIII, of H.R. 5300 of the 99th Congress as passed by the House of Representatives.” "
(B)Paragraph
(3)of section 9509(b) is amended by striking “(on the 1st day the Oil Spill Liability Trust Fund financing rate under section 4611(c) applies)” and inserting “(on January 1, 1990)”.
(C)Paragraph
(1)of section 9509(c) is amended by striking the last sentence. SEC. 7506. Environmental protection. EXCISE TAX ON SALE OF CHEMICALS WHICH DEPLETE THE OZONE LAYER AND OF PRODUCTS CONTAINING SUCH CHEMICALS.
(a)In General.—Chapter 38 (relating to environmental taxes) is amended by adding at the end thereof the following new subchapter: " “Subchapter D—Ozone-Depleting Chemicals, Etc. “Sec. 4681. Imposition of tax. “Sec. 4682. Definitions and special rules. “SEC. 4681. IMPOSITION OF TAX. “(a) General Rule.—There is hereby imposed a tax on— “(1) any ozone-depleting chemical sold or used by the manufacturer, producer, or importer thereof, and “(2) Imports. any imported taxable product sold or used by the importer thereof. “(b) Amount of Tax.— “(1) Ozone-depleting chemicals.— “(A) In general.—The amount of the tax imposed by subsection
(a)on each pound of ozone-depleting chemical shall be an amount equal to— “(i) the base tax amount, multiplied by “(ii) the ozone-depletion factor for such chemical. “(B) Base tax amount for years before 1995.—The base tax amount for purposes of subparagraph
(A)with respect to any sale or use during a calendar year before 1995 is the amount determined under the following table for such calendar year: “Calendar year: Base tax amount 1990 or 1991 $1.37 1992 1.67 1993 or 1994 2.65. “(C) Base tax amount for years after 1994.—The base tax amount for purposes of subparagraph
(A)with respect to any sale or use during a calendar year after 1994 shall be the base tax amount for 1994 increased by 45 cents for each year after 1994. “(2) Imported taxable product.— 103 STAT. 2365 “(A) In general.—The amount of the tax imposed by subsection
(a)on any imported taxable product shall be the amount of tax which would have been imposed by subsection
(a)on the ozone-depleting chemicals used as materials in the manufacture or production of such product if such ozone-depleting chemicals had been sold in the United States on the date of the sale of such imported taxable product. “(B) Certain rules to apply.—Rules similar to the rules of paragraphs
(2)and
(3)of section 4671(b) shall apply. “SEC. 4682. DEFINITIONS AND SPECIAL RULES. “(a) Ozone-Depleting Chemical.—For purposes of this subchapter— “(1) In general.—The term ‘ozone-depleting chemical’ means any substance— “(A) which, at the time of the sale or use by the manufacturer, producer, or importer, is listed as an ozone-depleting chemical in the table contained in paragraph (2), and “(B) which is manufactured or produced in the United States or entered into the United States for consumption, use, or warehousing. “(2) Ozone-depleting chemicals.— “Common name: Chemical nomenclature: CFC–11 trichlorofluoromethane CFC–12 dichlorodifluoromethane CFC–113 trichlorotrifluoroethane CFC–114 1,2-dichloro-1,1,2,2-tetrafluoroethane CFC–115 chloropentafluoroethane Halon-1211 bromochlorodifluoromethane Halon-1301 bromotrifluoromethane Halon-2402 dibromotetrafluoroethane. “(b) Ozone-Depletion Factor.—For purposes of this subchapter, the term ‘ozone-depletion factor’ means, with respect to an ozone-depleting chemical, the factor assigned to such chemical under the following table: “Ozone-depleting chemical: Ozone-depletion factor: CFC–11 1.0 CFC–12 1.0 CFC–113 0.8 CFC–114 1.0 CFC–115 0.6 Halon-1211 3.0 Halon-1301 10.0 Halon-2402 6.0. “(c) Imported Taxable Product.—For purposes of this subchapter— “(1) In general.—The term ‘imported taxable product’ means any product (other than an ozone-depleting chemical) entered into the United States for consumption, use, or warehousing if any ozone-depleting chemical was used as material in the manufacture or production of such product. “(2) De minimis exception.—The term ‘imported taxable product’ shall not include any product specified in regulations prescribed by the Secretary as using a de minimis amount of ozone-depleting chemicals as materials in the manufacture or production thereof. The preceding sentence shall not apply to any product in which any ozone-depleting chemical is used for purposes of refrigeration or air conditioning, creating an aerosol or foam, or manufacturing electronic components. 103 STAT. 2366 “(d) Exceptions.— “(1) Recycling.—No tax shall be imposed by section 4681 on any ozone-depleting chemical which is diverted or recovered in the United States as part of a recycling process (and not as part of the original manufacturing or production process). “(2) Use in further manufacture.— “(A) In general.—No tax shall be imposed by section 4681— “(i) on the use of any ozone-depleting chemical in the manufacture or production of any other chemical if the ozone-depleting chemical is entirely consumed in such use, “(ii) on the sale by the manufacturer, producer, or importer of any ozone-depleting chemical— “(I) for a use by the purchaser which meets the requirements of clause (i), or “(II) for resale by the purchaser to a second purchaser for a use by the second purchaser which meets the requirements of clause (i). Clause
(ii)shall apply only if the manufacturer, producer, and importer, and the 1st and 2d purchasers (if any), meet such registration requirements as may be prescribed by the Secretary. “(B) Credit or refund.—Under regulations prescribed by the Secretary, if— “(i) a tax under this subchapter was paid with respect to any ozone-depleting chemical, and “(ii) such chemical was used (and entirely consumed) by any person in the manufacture or production of any other chemical, then an amount equal to the tax so paid shall be allowed as a credit or refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by section 4681. “(3) Exports.— “(A) In general.—Except as provided in subparagraph (B), rules similar to the rules of section 4662(e) (other than section 4662(e)(2)(A)(ii)(II) shall apply for purposes of this subchapter. “(B) Limit on benefit.— “(i) In general.—The aggregate tax benefit allowable under subparagraph
(A)with respect to ozone-depleting chemicals manufactured or produced by any person during a calendar year shall not exceed the sum of— “(I) the amount equal to the 1986 export percentage of the aggregate tax imposed by this subchapter with respect to ozone-depleting chemicals manufactured or produced by such person during such calendar year (other than chemicals with respect to which subclause
(II)applies), and “(II) the aggregate tax imposed by this subchapter with respect to any additional production allowance granted to such person with respect to ozone-depleting chemicals manufactured or produced by such person during such calendar year by 103 STAT. 2367the Environmental Protection Agency under 40 CFR Part 82 (as in effect on September 14, 1989). “(ii) 1986 export percentage.—A person’s 1986 export percentage is the percentage equal to the ozone-depletion factor adjusted pounds of ozone-depleting chemicals manufactured or produced by such person during 1986 which were exported during 1986, divided by the ozone-depletion factor adjusted pounds of all ozone-depleting chemicals manufactured or produced by such person during 1986. The percentage determined under the preceding sentence shall be based on data published by the Environmental Protection Agency. “(e) Other Definitions.—For purposes of this subchapter— “(1) Importer.—The term ‘importer’ means the person entering the article for consumption, use, or warehousing. “(2) United states.—The term ‘United States’ has the meaning given such term by section 4612(a)(4). “(f) Special Rules.— “(1) Fractional parts of a pound.—In the case of a fraction of a pound, the tax imposed by this subchapter shall be the same fraction of the amount of such tax imposed on a whole pound. “(2) Disposition of revenues from Puerto rico and the virgin islands.—The provisions of subsections (a)(3) and (b)(3) of section 7652 shall not apply to any tax imposed by this subchapter. “(g) Phase-In of Tax on Certain Substances.— “(1) Treatment for 1990.— “(A) Halons.—The term ‘ozone-depleting chemical’ shall not include halon-1211, halon-1301, or halon-2402 with respect to any sale or use during 1990. “(B) Chemicals used in rigid foam insulation.—No tax shall be imposed by section 4681— “(i) on the use during 1990 of any substance in the manufacture of rigid foam insulation, “(ii) on the sale during 1990 by the manufacturer, producer, or importer of any substance— “(I) for use by the purchaser in the manufacture of rigid foam insulation, or “(II) for resale by the purchaser to a second purchaser for such use by the second purchaser, or ” “(iii) on the sale or use during 1990 by the importer of any rigid foam insulation. Clause
(ii)shall apply only if the manufacturer, producer, and importer, and the 1st and 2d purchasers (if any) meet such registration requirements as may be prescribed by the Secretary. “(2) Treatment for 1991, 1992, and 1993.— “(A) Halons.—The tax imposed by section 4681 during 1991, 1992, or 1993 by reason of the treatment of halon-1211, halon-1301, and halon-2402 as ozone-depleting chemicals shall be the applicable percentage (determined under the following table) of the amount of such tax which would (but for this subparagraph) be imposed. 103 STAT. 2368 The applicable percentage is: For sales or use during 1991 For sales or use during 1992 For sales or use during 1993 “In the case of: Halon-1211 6.0 5.0 3.3 Halon-1301 1.8 1.5 1.0 Halon-2402 3.0 2.5 1.6. “(B) Chemicals used in rigid foam insulation.—In the case of a sale or use during 1991, 1992, or 1993 on which no tax would have been imposed by reason of paragraph (1)(B) had such sale or use occurred during 1990, the tax imposed by section 4681 shall be the applicable percentage (determined in accordance with the following table) of the amount of such tax which would (but for this subparagraph) be imposed. “In the case of sales or The applicable percentage is: use during: 1991 18 1992 15 1993 10. “(3) Overpayments with respect to chemicals used in rigid foam insulation.—If any substance on which tax was paid under this subchapter is used during 1990, 1991, 1992, or 1993 by any person in the manufacture of rigid foam insulation, credit or refund (without interest) shall be allowed to such person an amount equal to the excess of— “(A) the tax paid under this subchapter on such substance, over “(B) the tax (if any) which would be imposed by section 4681 if such substance were used for such use by the manufacturer, producer, or importer thereof on the date of its use by such person. “Amounts payable under the preceding sentence with respect to uses during the taxable year shall be treated as described in section 34(a) for such year unless claim therefor has been timely filed under this paragraph. ‘(h) Imposition of Floor Stocks Taxes.— “(1) January 1, 1990, tax.—On any ozone-depleting chemical which on January 1, 1990, is held by any person (other than the manufacturer, producer, or importer thereof) for sale or for use in further manufacture, there is hereby imposed a floor stocks tax in an amount equal to the tax which would be imposed by section 4681 on such chemical if the sale of such chemical by the manufacturer, producer, or importer thereof had occurred during 1990. “(2) Other tax-increase dates.— “(A) In general.—If, on any tax-increase date, any ozone-depleting chemical is held by any person (other than the manufacturer, producer, or importer thereof) for sale or for use in further manufacture, there is hereby imposed a floor stocks tax. “(B) Amount of tax.—The amount of the tax imposed by subparagraph
(A)shall be the excess (if any) of— “(i) the tax which would be imposed under section 4681 on such substance if the sale of such chemical by 103 STAT. 2369the manufacturer, producer, or importer thereof had occurred on the tax-increase date, over “(ii) the prior tax (if any) imposed by this subchapter on such substance. “(C) Tax-increase date.—For purposes of this paragraph, the term ‘tax-increase date’ means January 1 of 1991, 1992, 1993, and 1994.
(3)Due date.—The taxes imposed by this subsection on January 1 of any calendar year shall be paid on or before April 1 of such year.
(4)Application of other laws.—All other provisions of law, including penalties, applicable with respect to the taxes imposed by section 4681 shall apply to the floor stocks taxes imposed by this subsection.” "
(b)Clerical Amendment.—The table of subchapters for chapter 38 is amended by adding at the end thereof the following new item: " “Subchapter D. Ozone-depleting chemicals, etc.” "
(c)Effective Date.— [26 USC 4681 note](/us/usc/t26/s4681).
(1)In general.—The amendments made by this section shall take effect on January 1, 1990.
(2)No deposits required before april 1, 1990.—No deposit of any tax imposed by subchapter D of chapter 38 of the Internal Revenue Code of 1986, as added by this section, shall be required to be made before April 1, 1990.
(3)Notification of changes in international agreements.—The Secretary of the Treasury or his delegate shall notify the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate of changes in the Montreal Protocol and of other international agreements to which the United States is a signatory relating to ozone-depleting chemicals. SEC. 7507. ACCELERATION OF DEPOSIT REQUIREMENTS FOR GASOLINE EXCISE TAX.
(a)In General.—Section 6302 (relating to mode or time of collection), as amended by section 7502, is amended by redesignating subsection
(f)as subsection
(g)and by inserting after subsection
(e)the following new subsection: " “(f) Time for Deposit of Taxes on Gasoline.— “(1) General rule.—Notwithstanding section 518 of the Highway Revenue Act of 1982, any person whose liability for tax under section 4081 is payable with respect to semimonthly periods shall, not later than September 27, make deposits of such tax for the period beginning on September 16 and ending on September 22. “(2) Special rule where due date falls on Saturday, Sunday, or holiday.—If, but for this paragraph, the due date District of Columbia.under paragraph
(1)would fall on a Saturday, Sunday, or holiday in the District of Columbia, such due date shall be deemed to be the immediately preceding day which is not a Saturday, Sunday, or such a holiday.” "
(b)Effective Date.—The amendment made by subsection
(a)[26 USC 6302 note](/us/usc/t26/s6302).shall apply to payments of taxes for tax periods beginning after December 31, 1989. 103 STAT. 2370 SEC. 7508. TAXATION OF BULK CIGAR IMPORTS.
(a)In General.—Subsection
(c)of section 5704 (relating to tobacco products and cigarette papers and tubes released in bond from customs custody) is amended by inserting “or to a manufacturer of tobacco products or cigarette papers and tubes if such articles are not put up in packages,” after “export warehouse,”.
(b)[26 USC 5704 note](/us/usc/t26/s5704). Effective Date.—The amendment made by subsection
(a)shall apply to articles imported or brought into the United States after the date of the enactment of this Act. Subtitle F—Miscellaneous Provisions PART I—LIMITATION ON NONRECOGNITION FOR CERTAIN EXCHANGES Real property. SEC. 7601. LIKE KIND EXCHANGES BETWEEN RELATED PERSONS.
(a)Special Rules for Exchanges Between Related Persons, Etc.—Section 1031 (relating to exchange of property held for productive use or investment) is amended by adding at the end thereof the following new subsections: " “(f) Special Rules for Exchanges Between Related Persons.— “(1) In general.—If— “(A) a taxpayer exchanges property with a related person, “(B) there is nonrecognition of gain or loss to the taxpayer under this section with respect to the exchange of such property (determined without regard to this subsection), and “(C) before the date 2 years after the date of the last transfer which was part of such exchange— “(i) the related person disposes of such property, or “(ii) the taxpayer disposes of the property received in the exchange from the related person which was of like kind to the property transferred by the taxpayer, there shall be no non recognition of gain or loss under this section to the taxpayer with respect to such exchange; except that any gain or loss recognized by the taxpayer by reason of this subsection shall be taken into account as of the date on which the disposition referred to in subparagraph
(C)occurs. “(2) Certain dispositions not taken into account.—For purposes of paragraph (1)(C), there shall not be taken into account any disposition— “(A) after the earlier of the death of the taxpayer or the death of the related person, “(B) in a compulsory or involuntary conversion (within the meaning of section 1033) if the exchange occurred before the threat or imminence of such conversion, or “(C) with respect to which it is established to the satisfaction of the Secretary that neither the exchange nor such disposition had as one of its principal purposes the avoidance of Federal income tax. “(3) Related person.—For purposes of this subsection, the term ‘related person’ means any person bearing a relationship to the taxpayer described in section 267(b). 103 STAT. 2371 “(4) Treatment of certain transactions.—This section shall not apply to any exchange which is part of a transaction (or series of transactions) structured to avoid the purposes of this subsection. “(g) Special Rule Where Substantial Diminution of Risk.— “(1) In general.—If paragraph
(2)applies to any property for any period, the running of the period set forth in subsection (f)(1)(C) with respect to such property shall be suspended during such period. “(2) Property to which subsection applies.— This paragraph shall apply to any property for any period during which the holder’s risk of loss with respect to the property is substantially diminished by— “(A) the holding of a put with respect to such property, “(B) the holding by another person of a right to acquire such property, or “(C) a short sale or any other transaction. “(h) Special Rule for Foreign Real Property.—For purposes of this section, real property located in the United States and real property located outside the United States are not property of a like kind.” "
(b)Effective Date.— [26 USC 1031 note](/us/usc/t26/s1031).
(1)In general.—Except as provided in paragraph (2), the amendments made by this section shall apply to transfers after July 10, 1989, in taxable years ending after such date.
(2)Binding contract.—The amendments made by this section shall not apply to any transfer pursuant to a written binding contract in effect on July 10, 1989, and at all times thereafter before the transfer. **PART II—****MINIMUM TAX PROVISIONS** SEC. 7611. SIMPLIFICATION OF ADJUSTED CURRENT EARNINGS PREFERENCE.
(a)Elimination of Book Limitations Applicable to Depreciation.—
(1)In general—
(A)Clause
(i)of section 56(g)(4)(A) (relating to depreciation) is amended to read as follows: " “(i) Property placed in service after 1989.—The depreciation deduction with respect to any property placed in service in a taxable year beginning after 1989 shall be determined under the alternative system of section 168(g),” "
(B)Subparagraph
(A)of section 56(g)(4) is amended by striking clauses
(v)and
(vi)and by redesignating clause
(vii)as clause (v).
(2)Technical amendment.—Clause
(iii)of section 56(g)(4)(A) is amended by inserting “and which is placed in service in a taxable year beginning before 1990” after “thereof) applies”.
(b)Treatment of Certain Earnings and Profits Adjustments.— Subparagraph
(D)of section 56(g)(4) is amended to read as follows: " “(D) Certain other earnings and profits adjustments.— 103 STAT. 2372 “(i) Intangible drilling costs.—The adjustments provided in section 312(n)(2)(A) shall apply in the case of amounts paid or incurred in taxable years beginning after December 31, 1989. “(ii) Certain amortization provisions not to apply.—Sections 173 and 248 shall not apply to expenditures paid or incurred in taxable year beginning after December 31, 1989. “(iii) LIFO inventory adjustments.—The adjustments provided in section 312(n)(4) shall apply. “(iv) Installment sales.—In the case of any installment sale in a taxable year beginning after December 31, 1989, adjusted current earnings shall be computed as if the corporation did not use the installment method. The preceding sentence shall not apply to the applicable percentage (as determined under section 453A) of the gain from any installment sale with respect to which section 453A(a)(1) applies.” "
(c)Elimination of Book Limitation on Depletion.—Subparagraph
(G)of section 56(g)(4) is amended to read as follows: " “(G) Depletion.—The allowance for depletion with respect to any property placed in service in a taxable year beginning after 1989 shall be cost depletion determined under section 611.” "
(d)Treatment of Certain Dividends.—Clause
(ii)of section 56(g)(4)(C) is amended to read as follows: " “(ii) Special rule for certain dividends.— “(I) In general.—Clause
(i)shall not apply to any deduction allowable under section 243 or 245 for any dividend which is a 100-percent dividend or which is received from a 20-percent owned corporation (as defined in section 243(c)(2)), but only to the extent such dividend is attributable to income of the paying corporation which is subject to tax under this chapter (determined after the application of sections 936 and 921). “(II) 100-percent dividend.—For purposes of the subclause (I), the term ‘100 percent dividend’ means any dividend if the percentage used for purposes of determining the amount allowable as a deduction under section 243 or 245 with respect to such dividend is 100 percent.” "
(e)Special Rule for Certain Dividends Received by Cooperatives.—Subparagraph
(C)of section 56(g)(4) is amended by adding at the end thereof the following new clause: " “(iv) Special rule for certain dividends received by certain cooperatives.—In the case of a cooperative described in section 927(a)(4), clause
(i)shall not apply to any amount allowable as a deduction under section 245(c).” "
(f)Technical and Conforming Amendments.—
(1)Clause
(i)of section 56(g)(4)(H) is amended by striking “after the date of the enactment of the Tax Reform Act of 1986” and inserting “in a taxable year beginning after 1989”.
(2)Clause
(i)of section 56(g)(4)(B) is amended by adding at the end thereof the following new sentence: 103 STAT. 2373 " “The preceding sentence shall not apply in the case of any amount excluded from gross income under section 108 (or the corresponding provisions of prior law).” "
(3)Clause
(iii)of section 56(g)(4)(B) is hereby repealed.
(4)Paragraph
(5)of section 56(g) is amended by striking subparagraphs
(A)and
(C)and by redesignating subparagraphs
(B)and
(D)as subparagraphs
(A)and (B), respectively. (5)(A) Clause
(ii)of section 312(n)(2)(A) is amended by striking “in which the production from the well begins” and inserting “in which such amount was paid or incurred”.
(B)Paragraph
(1)of section 59(e) is amended by inserting before the period at the end thereof: “(or, in the case of a qualified expenditure described in paragraph (2)(C), over the 60-month period beginning with the month in which such expenditure was paid or incurred)”.
(6)Subsection
(i)of section 59 is amended—
(A)by striking “interest shall” and inserting “any amount shall”, and
(B)by striking “Interest” in the subsection heading and inserting “Amounts”.
(g)Effective Dates.— [26 USC 56 note](/us/usc/t26/s56).
(1)In general.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 1989.
(2)Intangible drilling costs.—The amendments made by subsection (f)(5) shall apply to costs paid or incurred in taxable years beginning after December 31, 1989.
(3)Regulations on earnings and profits rules.—Not later than March 15, 1991, the Secretary of the Treasury or his delegate shall prescribe initial regulations providing guidance as to which items of Income are included in adjusted current earnings under section 56(g)(4)(B)(1) of the Internal Revenue Code of 1986 and which items of deduction are disallowed under section 56(g)(4)(C) of such Code. SEC. 7612. OTHER MODIFICATIONS TO MINIMUM TAX.
(a)Modification to Corporate Minimum Tax Credit.—
(1)In general.— Subparagraph
(B)of section 53(d)(1) (relating to credit not allowed for exclusion preferences) is amended by adding at the end thereof the following new clause: " “(iv) Credit allowable for exclusion preferences of corporations.—In the case of a corporation— “(I) the preceding provisions of this subparagraph shall not apply, and “(II) the adjusted net minimum tax for any taxable year is the amount of the net minimum tax for such year increased by the amount of any credit not allowed under section 29 solely by reason of the application of section 29(b)(5)(B).” "
(2)Conforming amendment.— Clause
(ii)of section 53(d)(1)(B) is amended—
(A)by striking “subsections (b)(1) and (c)(3)” and inserting “subsection (b)(1)”, and
(B)by striking the last sentence.
(3)Effective date.—The amendments made by this subsection [26 USC 53 note](/us/usc/t26/s53).shall apply for purposes of determining the adjusted net 103 STAT. 2374minimum tax for taxable years beginning after December 31, 1989.
(b)Adjustment for Disallowed Portion of Orphan Drug Credit.—
(1)In general.—Clauses
(iii)and
(iv)of section 53(d)(1)
(B)(as amended by subsection (a)) are each amended by inserting after “section 29(d)(5)(B)” the following: “or not allowed under section 28 solely by reason of the application of section 28(d)(2)(B)”.
(2)[26 USC 53 note](/us/usc/t26/s53). Effective date.—The amendment made by paragraph
(1)shall apply for purposes of determining the amount of the minimum tax credit for taxable years beginning after December 31, 1989; except that, for such purposes, section 53(b)(1) of the Internal Revenue Code of 1986 shall be applied as if such amendment had been in effect for all prior taxable years.
(c)Exemption for Certain Home Construction Contracts.—
(1)In general.—Paragraph
(3)of section 56(a) (relating to treatment of certain long-term contracts) is amended by striking “with respect to which the requirements of clauses
(i)and
(ii)of section 460(e)(1)(B) are met”.
(2)[26 USC 56 note](/us/usc/t26/s56). Effective date.—The amendment made by paragraph
(1)shall apply to contracts entered into in taxable years beginning after September 30, 1990,
(d)Treatment of Certain Research and Experimental Expenditures.—
(1)In general.— Paragraph
(2)of section 56(b) (relating to circulation and research and experimental expenditures) is amended by adding at the end thereof the following new subparagraph: " “(D) Exception for certain research and experimental expenditures.—If the taxpayer materially participates (within the meaning of section 469(h)) in an activity, this paragraph shall not apply to any amount allowable as a deduction under section 174(a) for expenditures paid or incurred in connection with such activity.” "
(2)[26 USC 56 note](/us/usc/t26/s56). Effective date.—The amendment made by paragraph
(1)shall apply to taxable years beginning after December 31, 1990.
(e)90-Percent Limitation on Foreign Tax Credit Not To Apply to Certain Corporations.—
(1)In general.— Paragraph
(2)of section 59(a) (relating to limitation of foreign tax credit to 90-percent of tax) is amended by adding at the end thereof the following new subparagraph: " “(C) Exception.— Subparagraph
(A)shall not apply to any domestic corporation if— “(i) more than 50 percent of the stock of such domestic corporation (by vote and value) is owned by United States persons who are not members of an affiliated group (as defined in section 1504 of such Code) which includes such corporation, “(ii) International agreements.all of the activities of such corporation are conducted in 1 foreign country with which the United States has an income tax treaty in effect and such treaty provides for the exchange of information between such foreign country and the United States, “(iii) all of the current earnings and profits of such corporation are distributed at least annually (other than current earnings and profits retained for normal 103 STAT. 2375maintenance or capital replacements or improvements of an existing business), and “(iv) all of such distributions by such corporation to United States persons are used by such persons in a trade or business conducted in the United States.” "
(2)[26 USC 59 note](/us/usc/t26/s59). Effective date.—
(A)In general.—The amendment made by paragraph
(1)shall apply to taxable years beginning after March 31, 1990.
(B)Special rule for year which includes march 31, 1990.—In the case of any taxable year (of a corporation described in subparagraph
(C)of section 59(a)(2) of the Internal Revenue Code of 1986 (as added by paragraph (1))) which begins after December 31, 1989, and includes March 31, 1990, the amount determined under clause
(ii)of section 59(a)(2)(A) of such Code shall be an amount which bears the same ratio to the amount which would have been determined under such clause without regard to this subparagraph as the number of days in such taxable year on or before March 31, 1990, bears to the total number of days in such taxable year.
(f)Study of Depreciation Treatment of Certain Vehicles.—
(1)In general.—The Secretary of the Treasury or his delegate shall conduct a study on the proper class life for cars and light trucks.
(2)Report.—Not later than the day 1 year after the date of the enactment of this Act, the Secretary shall submit a report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate on the report conducted under paragraph (1), together with such recommendations as he may deem advisable. **PART III—****ACCOUNTING PROVISIONS** SEC. 7621. REPEAL OF COMPLETED CONTRACT METHOD OF ACCOUNTING FOR LONG-TERM CONTRACTS.
(a)In General.—Subsection
(a)of section 460 (relating to special rules for long-term contracts) is amended to read as follows: " “(a) Requirement That Percentage of Completion Method Be Used.—In the case of any long-term contract, the taxable income from such contract shall be determined under the percentage of completion method (as modified by subsection (b)).” "
(b)Election to Use Modified Percentage of Completion Method.—Subsection
(b)of section 460 (as amended by subsection (c)(1)) is amended by adding at the end thereof the following new paragraph: " “(5) Election to use 10-percent method.— “(A) General rule.—In the case of any long-term contract with respect to which an election under this paragraph is in effect, the 10-percent method shall apply in determining the taxable income from such contract. “(B) 10-percent method.— For purposes of this paragraph— “(i) In general.—The 10-percent method is the percentage of completion method, modified so that any item which would otherwise be taken into account in computing taxable income with respect to a contract 103 STAT. 2376for any taxable year before the 10-percent year is taken into account in the 10-percent year. “(ii) 10-percent year.—The term ‘10-percent year’ means the 1st taxable year as of the close of which at least 10 percent of the estimated total contract costs have been incurred. “(C) Election.—An election under this paragraph shall apply to all long-term contracts of the taxpayer which are entered into during the taxable year in which the election is made or any subsequent taxable year. “(D) Coordination with other provisions.— “(i) Simplified method of cost allocation.—This paragraph shall not apply to any taxpayer which uses a simplified procedure for allocation of costs under paragraph (3)(A). “(ii) Look-back method.—The 10-percent method shall be taken into account for purposes of applying the look-back method of paragraph
(2)to any taxpayer making an election under this paragraph.” "
(c)Conforming Amendments.—
(1)Subsection
(b)of section 460 is amended by striking paragraph
(1)and by redesignating paragraphs
(2)through
(5)as paragraphs
(1)through (4), respectively.
(2)Paragraph
(1)of section 460(b), as redesignated by paragraph (1), is amended—
(A)by striking “paragraph (4)” and inserting “paragraph (3)” and
(B)by striking “paragraph (3)” and inserting “paragraph (2)”.
(3)Paragraph
(3)of section 460(b), as redesignated by paragraph (1), is amended by striking “Paragraph (2)(B) and subsection (a)(2)” and inserting “Paragraph (1)(B)”.
(4)Subparagraph
(A)of section 460(b)(4), as redesignated by paragraph (1), is amended—
(A)by striking “paragraph (3)” each place it appears and inserting “paragraph (2)”,
(B)by striking “paragraph (3)(B)” and inserting “paragraph (2)(B)”, and
(C)by striking “paragraph (3)(A)” and inserting “paragraph (2)(A)”.
(5)Paragraph
(5)of section 460(e) is amended by striking so much of such paragraph as precedes subparagraph
(A)and inserting the following: " “(5) Special bulk for residential construction contracts which are not home construction contracts.—In the Case of any residential construction contract which is not a home construction contract, subsection
(a)(as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1989) shall apply except that such subsection shall be applied—”. "
(d)[26 USC 400 note](/us/usc/t26/s400). Effective Date.—
(1)In general.—Except as provided in paragraph (2), the amendments made by this section shall apply to contracts entered into on or after July 11, 1989.
(2)Binding bids.—The amendments made by this section shall not apply to any contract resulting from the acceptance of a bid made before July 11, 1989. The preceding sentence shall 103 STAT. 2377apply only if the bid could not have been revoked or altered at any time on or after July 11, 1989.
(3)Special rule for certain ship contracts.—The amendments made by this section shall not apply in the case of a qualified ship contract (as defined in section 10203(b)(2)(B) of the Revenue Act of 1987). SEC. 7822. CHANGES IN TREATMENT OF TRANSFERS OF FRANCHISES, TRADEMARKS, AND TRADE NAMES.
(a)Contingent Payments.—Paragraph
(1)of section 1253(d) (relating to treatment of payments by transferee) is amended to read as follows: " “(1) Contingent serial payments.— “(A) In general.—Any amount described in subparagraph
(B)which is paid or incurred during the taxable year on account of a transfer, sale, or other disposition of a franchise, trademark, or trade name shall be allowed as a deduction under section 162(a) (relating to trade or business expenses). “(B) Amounts to which paragraph applies.— An amount is described in this subparagraph if it— “(i) is contingent on the productivity, use, or disposition of the franchise, trademark, or trade name, and “(ii) is paid as part of a series of payments— “(I) which are payable not less frequently than annually throughout the entire term of the transfer agreement, and “(II) which are substantially equal in amount (or payable under a fixed formula).” "
(b)$100,000 Limitation on Certain Payments.—
(1)In general.— Paragraph
(2)of section 1253(d) is amended by adding at the end thereof the following new subparagraph: " “(B) $100,000 limitation on deductibility of principal sum.—Subparagraph
(A)shall not apply if the principal sum referred to in such subparagraph exceeds $100,000. For purposes of the preceding sentence, all payments which are part of the same transaction (or a series of related transactions) shall be taken into account as payments with respect to each such transaction.” "
(2)Conforming amendments.— Paragraph
(2)of section 1253(d) is amended—
(A)by striking all that precedes “If” and inserting: " “(2) Certain payments in discharge of principal sums.— “(A) In general.—”, and "
(B)by redesignating subparagraphs (A), (B), and
(C)as clauses (i), (ii), and (iii), respectively, and by redesignating clauses
(i)and
(ii)of subparagraph
(B)as subclauses
(I)and (II), respectively.
(c)Other Payments, Etc.—Section 1253(d) is amended by adding at the end thereof the following new paragraphs: " “(3) Other payments.— “(A) In general.—Any amount paid or incurred on account of a transfer, sale, or other disposition of a franchise, trademark, or trade name to which paragraph
(1)or
(2)does not apply shall be treated as an amount chargeable to capital account. “(B) Election to recover amounts over 25 years.— 103 STAT. 2378 “(i) In general.—If the taxpayer elects the application of this subparagraph, an amount chargeable to capital account— “(I) to which paragraph
(1)would apply but for subparagraph (B)(ii) thereof, or “(II) to which paragraph
(2)would apply but for subparagraph
(B)thereof, shall be allowed as a deduction ratably over the 25-year period beginning with the taxable year in which the transfer occurs. “(ii) Consistent treatment.—An election under clause
(i)shall apply to all amounts which are part of the same transaction (or a series of related transactions). “(4) Renewals, etc.—For purposes of determining the term of a transfer agreement or any period of amortization under this subsection, there shall be taken into account all renewal options (and any other period for which the parties reasonably expect the agreement to be renewed). “(5) Certain rules made applicable—Rules similar to the rules of section 168(i)(7) shall apply for purposes of this subsection.”. "
(b)Technical Amendments.—
(1)Depreciation allowable.—Subsection
(r)of section 167 is hereby repealed.
(2)Deduction subject to recapture.—
(A)Subparagraph
(C)of section 1245(a)(2) is amended by striking “or 193” and inserting “193, or 1253(d)
(2)or (3)”.
(B)The material preceding subparagraph
(A)of section 1245(a)(3) is amended by striking “section 185” and inserting “section 185 or 1253(d)
(2)or (3)”.
(c)[26 USC 167 note](/us/usc/t26/s167). Effective Date.—
(1)In general.—The amendments made by this section shall apply to transfers after October 2, 1989.
(2)Binding contract.—The amendments made by this section shall not apply to any transfer pursuant to a written binding contract in effect on October 2, 1989, and at all times thereafter before the transfer. **PART IV—****EMPLOYMENT TAX PROVISIONS** SEC. 7631. TREATMENT OF AGRICULTURAL WORKERS UNDER WAGE WITHHOLDING.
(a)In General.—Paragraph
(2)of section 3401(a) (defining wages) is amended to read as follows: " “(2) for agricultural labor (as defined in section 3121(g)) unless the remuneration paid for such labor is wages (as defined in section 3121(a)); or”. "
(b)Crew Leader Rules To Apply.—Section 3401 is amended by adding at the end thereof the following new subsection: " “(h) Crew Leader Rules To Apply.—Rules similar to the rules of section 3121(e) shall apply for purposes of this chapter.” "
(c)[26 USC 3401 note](/us/usc/t26/s3401). Effective Date.—The amendments made by this section shall apply to remuneration paid after December 31, 1989. 103 STAT. 2379 SEC. 7632. ACCELERATION OF DEPOSIT REQUIREMENTS.
(a)In General.—Section 6302 (relating to mode or time for collection), as amended by this title, is amended by redesignating subsection
(g)as subsection
(h)and by inserting after subsection
(f)the following new subsection: " “(g) Deposits of Social Security Taxes and Withheld Income Taxes.— “(1) In general.—If, under regulations prescribed by the Secretary, a person is required to make deposits of taxes imposed by chapters 21 and 24 on the basis of eighth-month periods, such person shall, for the years specified in paragraph (2), make deposits of such taxes on the applicable banking day after any day on which such person has $100,000 or more of such taxes for deposit. “(2) Specified years.—For purposes of paragraph (1)— “In the case of: The applicable banking day is: 1990 1st 1991 2d 1992 3rd 1993 1st 1994 1st.” "
(b)Effective Date.— [26 USC 6302 note](/us/usc/t26/s6302).
(1)General rule.—Except as provided in paragraph (2), the amendment made by subsection
(a)shall apply to amounts required to be deposited after July 31, 1990.
(2)Rule for 1995 and thereafter.—For calendar year Regulations.1995 and thereafter, the Secretary of the Treasury shall prescribe regulations with respect to the date on which deposits of such taxes shall be made in order to minimize the unevenness in the revenue effects of the amendment made by subsection (a). **PART V—****OTHER PROVISIONS** SEC. 7641. LIMITATION ON SECTION KM EXCLUSION.
(a)General Rule.—Section 104(a) (relating to compensation for injuries or sickness) is amended by adding at the end thereof the following new sentence: “Paragraph
(2)shall not apply to any punitive damages in connection with a case not involving physical injury or physical sickness.”
(b)Effective Date.— [26 USC 104 note](/us/usc/t26/s104).
(1)In general.—Except as provided in paragraph (2), the amendment made by subsection
(a)shall apply to amounts received after July 10, 1989, in taxable years ending after such date.
(2)Exception.— The amendment made by subsection
(a)shall not apply to any amount received—
(A)under any written binding agreement, court decree, or mediation award in effect on (or issued on or before) July 10, 1989, or
(B)pursuant to any suit filed on or before July 10, 1989. SEC. 7642. TREATMENT OF DISTRIBUTIONS BY PARTNERSHIPS OF CONTRIBUTED PROPERTY.
(a)General Rule.—Subsection
(c)of section 704 (relating to contributed property) is amended to read as follows: 103 STAT. 2380 " “(c) Contributed Property.— “(1) In general.— Under regulations prescribed by the Secretary— “(A) income, gain, loss, and deduction with respect to property contributed to the partnership by a partner shall be shared among the partners so as to take account of the variation between the basis of the property to the partnership and its fair market value at the time of contribution, and “(B) if any property so contributed is distributed by the partnership (other than to the contributing partner) within 5 years of being contributed— “(i) the contributing partner shall be treated as recognizing gain or loss (as the case may be) from the sale of such property in an amount equal to the gain or loss which would have been allocated to such partner under subparagraph
(A)by reason of the variation described in subparagraph
(A)if the property had been sold at its fair market value at the time of the distribution, “(ii) the character of such gain or loss shall be determined by reference to the character of the gain or loss which would have resulted if such property had been sold by the partnership to the distributee, and “(iii) appropriate adjustments shall be made to the adjusted basis of the contributing partner’s interest in the partnership and to the adjusted basis of the property distributed to reflect any gain or loss recognized under this subparagraph. “(2) Special rule for distributions where gain or loss would not be recognized outside partnerships.— Under regulations prescribed by the Secretary, if— “(A) property contributed by a partner (hereinafter referred to as the ‘contributing partner’) is distributed by the partnership to another partner, and “(B) other property of a like kind (within the meaning of section 1031) is distributed by the partnership to the contributing partner not later than the earlier of— “(i) the 180th day after the date of the distribution described in subparagraph (A), or “(ii) the due date (determined with regard to extensions) for the contributing partner’s return of the tax imposed by this chapter for the taxable year in which the distribution described in subparagraph
(A)occurs, then to the extent of the value of the property described in subparagraph (B), paragraph (1)(B) shall be applied as if the contributing partner had contributed to the partnership the property described in subparagraph (B). “(3) Other rules.—Under regulations prescribed by the Secretary, rules similar to the rules of paragraph
(1)shall apply to contributions by a partner (using the cash receipts and disbursements method of accounting) of accounts payable and other accrued but unpaid items. Any reference in paragraph
(1)or
(2)to the contributing partner shall be treated as including a reference to any successor of such partner.” " 103 STAT. 2381
(b)Effective Date.—The amendment made by subsection
(a)[26 USC 704 note](/us/usc/t26/s704).shall apply in the case of property contributed to the partnership after October 3, 1989, in taxable years ending after such date. SEC. 7643. DEPRECIATION TREATMENT OF CELLULAR TELEPHONES.
(a)General Rule.—Subparagraph
(A)of section 280F(d)(4) (defining listed property) is amended by striking “and” at the end of clause (iv), by redesignating clause
(v)as clause (vi), and by inserting after clause
(iv)the following new clause: " “(v) any cellular telephone (or other similar telecommunications equipment), and”. "
(b)Effective Date.—The amendment made by subsection
(a)[26 USC 280F note](/us/usc/t26/s280F).shall apply to property placed in service or leased in taxable years beginning after December 31, 1989. SEC. 7644. ELIMINATION OF RETROACTIVE CERTIFICATION OF EMPLOYEES FOR WORK INCENTIVE JOBS CREDIT.
(a)In General.—So much of subparagraph
(A)of section 50B(h)(1) of the Internal Revenue Code of 1954 (as in effect for taxable years beginning before January 1, 1982) as precedes clause
(i)thereof is amended to read as follows: " “(A) who has been certified (or for whom a written request for certification has been made) on or before the day the individual began work for the taxpayer by the Secretary of Labor or by the appropriate agency of State or local government as—”. "
(b)Effective Date.—The amendment made by subsection
(a)[26 USC 50B note](/us/usc/t26/s50B).shall apply for purposes of credits first claimed after March 11, 1987. SEC. 7645. DISALLOWANCE OF DEPRECIATION FOR CERTAIN TERM INTERESTS. Real property.
(a)General Rule.—Section 167 (as amended by section 7622) is amended by inserting after subsection
(q)the following new subsection: " “(r) Certain Term Interests Not Depreciable.— “(1) In general.—No depreciation deduction shall be allowed under this section (and no depreciation or amortization deduction shall be allowed under any other provision of this subtitle) to the taxpayer for any term interest in property for any period during which the remainder interest in such property is held (directly or indirectly) by a related person. “(2) Coordination with section 273.—This subsection shall not apply to any term interest to which section 273 applies. “(3) Basis adjustments.— If, but for this subsection, a depreciation or amortization deduction would be allowable to the taxpayer with respect to any term interest in property— “(A) the taxpayer’s basis in such property shall be reduced by any depreciation or amortization deductions disallowed under this subsection, and “(B) the basis of the remainder interest in such property shall be increased by the amount of such disallowed deductions (properly adjusted for any depreciation deductions allowable under subsection
(h)to the taxpayer). “(4) Special rules.— “(A) Denial of increase in basis of remainderman.—No increase in the basis of the remainder interest shall be made under paragraph (3)(B) for any disallowed deductions 103 STAT. 2382attributable to periods during which the term interest was held— “(i) by an organization exempt from tax under this subtitle, or “(ii) Aliens.Business and industry.by a nonresident alien individual or foreign corporation but only if income from the term interest is not effectively connected with the conduct of a trade or business in the United States. “(B) Coordination with subsection (h).—If, but for this subsection, a depreciation or amortization deduction would be allowable to any person with respect to any term interest in property, the principles of subsection
(h)shall apply to such person with respect to such term interest. “(5) Definitions.— For purposes of this subsection— “(A) Term interest in property.—The term ‘term interest in property’ has the meaning given such term by section 1001(e)(2). “(B) Related person.—The term ‘related person’ means any person bearing a relationship to the taxpayer described in subsection
(b)or
(e)of section 267. “(6) Regulations.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including regulations preventing avoidance of this subsection through cross-ownership arrangements or otherwise.” "
(b)[26 USC 167 note](/us/usc/t26/s167). Effective Date.—The amendment made by subsection
(a)shall apply to interests created or acquired after July 27, 1989, in taxable years ending after such date. SEC. 7646. REPORTING OF POINTS ON MORTGAGE LOANS.
(a)General Rule.—Paragraph
(2)of section 6050H(b) (relating to form and manner of returns) is amended by striking “and” at the end of subparagraph (B), by redesignating subparagraph
(C)as subparagraph
(D)and by inserting after subparagraph
(B)the following new subparagraph: " “(C) the amount of points on the mortgage received during the calendar year and whether such points were paid directly by the borrower, and”. "
(b)Technical Amendments.—
(1)Subparagraph
(B)of section 6050H(b)(1) is amended by inserting “(other than points)” after “such interest”.
(2)Paragraph
(2)of section 6050H(d) is amended—
(A)by inserting “(other than points)” after “subsection (a)(2)”, and
(B)by inserting before the period at the end thereof the following: “(and the information required under subsection (b)(2)(C))”.
(c)[26 USC 6050H note](/us/usc/t26/s6050H). Effective Date.—The amendments made by this section shall apply to returns and statements the due date for which (determined without regard to extensions) is after December 31, 1991. SEC. 7647. TREATMENT OF CERTAIN INVESTMENT-ORIENTED LIFE INSURANCE CONTRACTS.
(a)General Rule.—Subsection
(c)of section 7702A (relating to computational rules) is amended by adding at the end thereof the following new paragraph: 103 STAT. 2383 " “(6) Treatment of certain contracts with more than one insured.— If— “(A) a contract provides a death benefit which is payable only upon the death of 1 insured following (or occurring simultaneously with) the death of another insured, and “(B) there is a reduction in such death benefit below the lowest level of such death benefit provided under the contract during the 1st 7 contract years, this section shall be applied as if the contract had originally been issued at the reduced benefit level.” "
(b)Effective Date.—The amendment made by subsection
(a)[26 USC 7702A note](/us/usc/t26/s7702A).shall apply to contracts entered into on or after September 14, 1989. **PART VI—****TAX-EXEMPT BOND PROVISIONS** SEC. 7651. TREATMENT OF HEDGE BONDS.
(a)In General.—Section 149 (relating to bonds must be registered to be tax-exempt; other requirements) is amended by adding at the end thereof the following new subsection: " “(g) Treatment of Hedge Bonds.— “(1) In general.— Section 103(a) shall not apply to any hedge bond unless, with respect to the issue of which such bond is a part— “(A) the requirement of paragraph
(2)is met, and “(B) the requirement of subsection (f)(3) is met. “(2) Reasonable expectations as to when proceeds will be spent.— An issue meets the requirement of this paragraph if the issuer reasonably expects that— “(A) 10 percent of the spendable proceeds of the issue will be spent for the governmental purposes of the issue within the 1-year period beginning on the date the bonds are issued, “(B) 30 percent of the spendable proceeds of the issue will be spent for such purposes within the 2-year period beginning on such date, “(C) 60 percent of the spendable proceeds of the issue will be spent for such purposes within the 3-year period beginning on such date, and “(D) 85 percent of the spendable proceeds of the issue will be spent for such purposes within the 5-year period beginning on such date. “(3) Hedge bond.— “(A) In general.—For purposes of this subsection, the term ‘hedge bond’ means any bond issued as part of an issue unless— “(i) the issuer reasonably expects that 85 percent of the spendable proceeds of the issue will be used to carry out the governmental purposes of the issue within the 3-year period beginning on the date the bonds are issued, and “(ii) not more than 50 percent of the proceeds of the issue are invested in nonpurpose investments (as defined in section 148(f)(6)(A)) having a substantially guaranteed yield for 4 years or more. “(B) Exception for investment in tax-exempt bonds not subject to minimum tax.— 103 STAT. 2384 “(i) In general.—Such term shall not include any bond issued as part of an issue 95 percent of the net proceeds of which are invested in bonds— “(I) the interest on which is not includible in gross income under section 103, and “(II) which are not specified private activity bonds (as defined in section 57(a)(5)(C)). “(ii) Amounts in bona fide debt service fund.—Amounts in a bona fide debt service fund shall be treated as invested in bonds described in clause (i). “(iii) Investment earnings held pending reinvestment.—Investment earnings held for not more than 30 days pending reinvestment shall be treated as invested in bonds described in clause (i). “(C) Exception for refunding bonds.— “(i) In general.—A refunding bond shall be treated as meeting the requirements of this subsection only if the original bond met such requirements. “(ii) General rule for refunding of pre-effective date bonds.—A refunding bond shall be treated as meeting the requirements of this subsection if— “(I) this subsection does not apply to the original bond, “(II) the average maturity date of the issue of which the refunding bond is a part is not later than the average maturity date of the bonds to be refunded by such issue, and “(III) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond. “(iii) Refunding of pre-effective date bonds entitled to 5-year temporary period.—A refunding bond shall be treated as meeting the requirements of this subsection if— “(I) this subsection does not apply to the original bond, “(II) the issuer reasonably expected that 85 percent of the spendable proceeds of the issue of which the original bond is a part would be used to carry out the governmental purposes of the issue within the 5-year period beginning on the date the original bonds were issued but did not reasonably expect that 85 percent of such proceeds would be so spent within the 3-year period beginning on such date, and “(III) at least 85 percent of the spendable proceeds of the original issue (and all other prior original issues issued to finance the governmental purposes of such issue) were spent before the date the refunding bonds are issued. “(4) Special rules.— For purposes of this subsection— “(A) Construction period in excess of 5 years.—The Secretary may, at the request of any issuer, provide that the requirement of paragraph
(2)shall be treated as met with respect to the portion of the spendable proceeds of an issue which is to be used for any construction project having a construction period in excess of 5 years if it is 103 STAT. 2385reasonably expected that such proceeds will be spent over a reasonable construction schedule specified in such request. “(B) Rules for determining expectations.—The rules of subsection (Í)(2)(B) shall apply.
(5)Regulations.—The Secretary may prescribe regulations to prevent the avoidance of the rules of this subsection, including through the aggregation of projects within a single issue.” "
(b)Effective Date.— [26 USC 149 note](/us/usc/t26/s149).
(1)In general.—Except as otherwise provided in this subsection, the amendment made by subsection
(a)shall apply to bonds issued after September 14, 1989.
(2)Bonds sold before September 15, 1989.—The amendment made by subsection
(a)shall not apply to any bond sold before September 15, 1989, and issued before October 15, 1989.
(3)Bonds with respect to which preliminary offering materials mailed.—The amendment made by subsection
(a)shall not apply to any issue issued after the date of the enactment of this Act if the preliminary offering materials with respect to such issue were mailed (or otherwise delivered) to members of the underwriting syndicate before September 15, 1989.
(4)Certain other bonds.—In the case of a bond issued before January 1, 1991, with respect to which official action was taken (or a series of official actions were taken), or other comparable preliminary approval was given, before November 18, 1989, demonstrating an intent to issue such bonds in a maximum specified amount for such issue or with a maximum specified amount of net proceeds of such issue, the issuer may elect to apply section 149(g)(2) of the Internal Revenue Code of 1986 (as added by this section) by substituting “15 percent” for “10 percent” in subparagraph
(A)and “50 percent” for “60 percent” in subparagraph (C).
(5)Bonds issued to finance self-insurance funds.—The amendment made by subsection
(a)shall not apply to any bonds issued before July 1, 1990, to finance a self-insurance fund if official action was taken (or a series of official actions were taken), or other comparable preliminary approval was given, before September 15, 1989, demonstrating an intent to issue such bonds in a maximum specified amount for such issue or with a maximum specified amount of net proceeds of such issue. SEC. 7652. EXCEPTIONS FROM ARBITRAGE REBATE REQUIREMENT.
(a)In general.—Clause
(i)of section 148(f)(4)(B) (relating to temporary investments) is amended to read as follows: " “(i) In general.—An issue shall, for purposes of this subsection, be treated as meeting the requirements of paragraph
(2)if— “(I) the gross proceeds of such issue are expended for the governmental purposes for which the issue was issued no later than the day which is 6 months after the date of issuance of the issue, and “(II) the requirements of paragraph
(2)are met after such 6 months with respect to earnings on amounts in any reasonably required reserve or replacement fund. Gross proceeds which are held in a bona fide debt service fund or a reasonably required reserve or 103 STAT. 2386replacement fund shall not be considered gross proceeds for purposes of this subparagraph only.”"
(b)Construction Bonds.—Subparagraph
(B)of section 148(f)(4) (relating to temporary investments) is amended by adding at the end thereof the following new clause: " “(iv) 2-year period for certain construction bonds.— “(I) In general.—In the case of an issue described in subclause (IV), clause
(i)shall be applied by substituting ‘2 years’ for ‘6 months’ each place it appears. “(II) Proceeds must be spent within certain periods.—Subclause
(I)shall not apply to any issue if less than 10 percent of the net proceeds of the issue are spent for the governmental purposes of the issue within the 6-month period beginning on the date the bonds are issued, less than 45 percent of such proceeds are spent for such purposes within the 1-year period beginning on such date, less than 75 percent of such proceeds are spent for such purposes within the 18-month period beginning on such date, or less than 100 percent of such proceeds are spent for such purposes within the 2-year period beginning on such date. For purposes of the preceding sentence, the term ’net proceeds’ includes investment proceeds earned before the close of the period involved on the investment of the sale proceeds of the issue. “(III) Exception for reasonable retainage.—For purposes of subclause (II), 100 percent of the net proceeds of an issue shall be treated as spent for the governmental purposes of the issue within the 2-year period beginning on the date the bonds are issued if such requirement is met within the 3-year period beginning on such date and such requirement would have been met within such 2-year period but for a reasonable retainage (not exceeding 5 percent of the net proceeds of the issue). “(IV) Issues to which subclause
(I)applies.—An issue is described in this subclause if at least 75 percent of the net proceeds of the issue are to be used for construction expenditures with respect to property which is owned by a governmental unit or a 501(c)(3) organization. For purposes of the preceding sentence, the term ‘construction’ includes reconstruction and rehabilitation, and section 142(b)(1) shall apply. An issue is not described in this subclause if any bond which is part of such issue is a bond other than a qualified 501(c)(3) bond, a bond which is not a private activity bond, or a private activity bond to finance property to be owned by a governmental unit or a 501(c)(3) organization. “(V) Election to pay penalty in lieu of rebate.—In the case of an issue described in subclause
(IV)which fails to meet the require-103 STAT. 2387ments of subclause (H), if the issuer elected the application of this subclause, the requirements of paragraph
(2)shall be treated as met if the issuer pays the penalty under paragraph
(7)or pays a penalty with respect to the close of each 6 month period after the date the bonds are issued equal to 1½ percent of the amount of the net proceeds of the issue which, as of the close of such period, are not spent as required by subclause (II). The penalty under this subclause shall cease to apply only after the bonds (including any refunding bonds with respect thereto) are no longer outstanding. “(VI) Election to rebate on earnings on reserve.—If the issuer so elects, the term ‘net proceeds’ for purposes of subclause
(II)shall not include earnings on any reasonably required reserve or replacement fund and the requirements of paragraph
(2)shall apply to such earnings. “(VII) Pooled financing bonds.—At the election of the issuer of an issue the proceeds of which are to be used to make or finance loans (other than nonpurpose investments) to 2 or more persons, the periods described in clause
(i)and this clause shall gin on the date the loan is made in the case of loans made within the 1-year period after the date the bonds were issued. In the case of loans made after such 1-year period, the periods described in clause
(i)and this clause shall begin at the close of such 1-year period. “(VIII) Portions of issue may be treated separately.—If only a portion of an issue is to be used for construction expenditures referred to in subclause (TV), such portion and the other portion of such issue may, at the election of the issuer, be treated as separate issues for purposes of this clause and clause (i). “(IX) Elections.—Any election under this clause shall be made on or before the date the bonds are issued; and, once made, shall be irrevocable.”"
(c)Pooled Financing Bonds.—Subparagraph
(A)of section 148(c)(2) is amended by redesignating subparagraph
(D)as subparagraph
(E)and by inserting after subparagraph
(C)the following new subparagraph: " “(D) Bonds used to provide construction financing.—In the case of an issue described in subparagraph
(A)any portion of which is used to make or finance loans for construction expenditures (within the meaning of subsection (f)(4)(B)(iv)(IV))— “(i) rules similar to the rules of subsection (f)(4)(B)(iv)(VIII) shall apply, and “(ii) subparagraph
(A)shall be applied with respect to such portion by substituting ‘2 years’ for ‘6 months’.”"
(d)Conforming Amendment.—Subclause
(I)of section 148(f)(4)(B)(ii) is amended by inserting “each place it appears” after “‘6 months’”.
(e)Effective Date.—The amendments made by this section shall [26 USC 148 note](/us/usc/t26/s148).apply to bonds issued after the date of the enactment of this Act. 103 STAT. 2388 Subtitle G—Revision of Civil Penalties Improved Penalty Administration and Compliance Tax Act.[26 USC 1 note](/us/usc/t26/s1). SEC. 7781. SHORT TITLE. This subtitle may be cited as the “Improved Penalty Administration and Compliance Tax Act”. **PART I—****DOCUMENT AND INFORMATION RETURN PENALTIES** SEC. 7711. UNIFORM PENALTIES FOR FAILURES TO COMPLY WITH CERTAIN INFORMATION REPORTING REQUIREMENTS.
(a)General Rule.—Part II of subchapter B of chapter 68 (relating to failure to file certain information returns or statements) is amended to read as follows: " “PART II—FAILURE TO COMPLY WITH CERTAIN INFORMATION REPORTING REQUIREMENTS “Sec. 6721. Failure to file correct information returns. “Sec. 6722. Failure to furnish correct payee statements. “Sec. 6723. Failure to comply with other information reporting requirements. “Sec. 6724. Waiver; definitions and special rules. “SEC. 6721. FAILURE TO FILE CORRECT INFORMATION RETURNS. “(a) Imposition of Penalty.— “(1) In general.—In the case of a failure described in paragraph
(2)by any person with respect to an information return, such person shall pay a penalty of $50 for each return with respect to which such a failure occurs, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $250,000. “(2) Failures subject to penalty.— For purposes of paragraph (1), the failures described in this paragraph are— “(A) any failure to file an information return with the Secretary on or before the required filing date, and “(B) any failure to include all of the information required to be shown on the return or the inclusion of incorrect information. “(b) Reduction Where Correction in Specified Period.— “(1) Correction within so days.— If any failure described in subsection (a)(2) is corrected on or before the day 30 days after the required filing date— “(A) the penalty imposed by subsection
(a)shall be $15 in lieu of $50, and “(B) the total amount imposed on the person for all such failures during any calendar year which are so corrected shall not exceed $75,000. “(2) Failures corrected on or before august 1.— If any failure described in subsection (a)(2) is corrected after the 30th day referred to in paragraph
(1)but on or before August 1 of the calendar year in which the required filing date occurs— “(A) the penalty imposed by subsection
(a)shall be $30 in lieu of $50, and 103 STAT. 2389 “(B) the total amount imposed on the person for all such failures during the calendar year which are so corrected shall not exceed $150,000. “(c) Exception for De Minimis Failures to Include All Required Information.— “(1) In general.— If— “(A) an information return is filed with the Secretary, “(B) there is a failure described in subsection (a)(2)(B) (determined after the application of section 6724(a)) with respect to such return, and “(C) such failure is corrected on or before August 1 of the calendar year in which the required filing date occurs, for purposes of this section, such return shall be treated as having been filed with all of the correct required information. “(2) Limitation.— The number of information returns to which paragraph
(1)applies for any calendar year shall not exceed the greater of— “(A) 10, or “(B) one-half of 1 percent of the total number of information returns required to be filed by the person during the calendar year. “(d) Lower Limitations for Persons With Gross Receipts of Not More Than $5,000,000.— “(1) In general.— If any person meets the gross receipts test of paragraph
(2)with respect to any calendar year, with respect to failures during such taxable year— “(A) subsection (a)(1) shall be applied by substituting ‘$100,000’ for ‘$250,000’, “(B) subsection (b)(1)(B) shall be applied by substituting ‘$25,000’ for ‘$75,000’, and “(C) subsection (b)(2)(B) shall be applied by substituting ‘$50,000’ for ‘$150,000’. “(2) Gross receipts test.— “(A) In general.—A person meets the gross receipts test of this paragraph for any calendar year if the average annual gross receipts of such person for the most recent 3 taxable years ending before such calendar year do not exceed $5,000,000. “(B) Certain rules made applicable.—For purposes of subparagraph (A), the rules of paragraphs
(2)and
(3)of section 448(c) shall apply. “(e) Penalty in Case of Intentional Disregard.—If 1 or more failures described in subsection (a)(2) are due to intentional disregard of the filing requirement (or the correct information reporting requirement), then, with respect to each such failure— “(1) subsections (b), (c), and
(d)shall not apply, “(2) the penalty imposed under subsection
(a)shall be $100, or, if greater— “(A) in the case of a return other than a return required under section 6045(a), 6041A(b), 6050H, 6050J, 6050K, or 6050L, 10 percent of the aggregate amount of the items required to be reported correctly, or “(B) in the case of a return required to be filed by section 6045(a), 6050K, or 6050L, 5 percent of the aggregate amount of the items required to be reported correctly, and “(3) in the case of any penalty determined under paragraph (2)— 103 STAT. 2390 “(A) the $250,000 limitation under subsection
(a)shall not apply, and “(B) such penalty shall not be taken into account in applying such limitation (or any similar limitation under subsection (b)) to penalties not determined under paragraph (2). “SEC. 6722. FAILURE TO FURNISH CORRECT PAYEE STATEMENTS. “(a) General Rule.—In the case of each failure described in subsection
(b)by any person with respect to a payee statement, such person shall pay a penalty of $50 for each statement with respect to which such a failure occurs, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $100,000. “(b) Failures Subject to Penalty.—For purposes of subsection (a), the failures described in this subsection are— “(1) any failure to furnish a payee statement on or before the date prescribed therefor to the person to whom such statement is required to be furnished, and “(2) any failure to include all of the information required to be shown on a payee statement or the inclusion of incorrect information. “(c) Penalty in Case of Intentional Disregard.—If 1 or more failures to which subsection
(a)applies are due to intentional disregard of the requirement to furnish a payee statement (or the correct information reporting requirement), then, with respect to each failure— “(1) the penalty imposed under subsection
(a)shall be $100, or, if greater— “(A) in the case of a payee statement other than a statement required under section 6045(b), 6041A(e) (in respect of a return required under section 6041A(b)), 6050H(d), 6050J(e), 6050K(b), or 6050L(c), 10 percent of the aggregate amount of the items required to be reported correctly, or “(B) in the case of a payee statement required under section 6045(b), 6050K(b), or 6050L(c), 5 percent of the aggregate amount of the items required to be reported correctly, and “(2) in the case of any penalty determined under paragraph (1)— “(A) the $100,000 limitation under subsection
(a)shall not apply, and “(B) such penalty shall not be taken into account in applying such limitation to penalties not determined under paragraph (1). “SEC. 6723. FAILURE TO COMPLY WITH OTHER INFORMATION REPORTING REQUIREMENTS. “In the case of a failure by any person to comply with a specified information reporting requirement on or before the time prescribed therefor, such person shall pay a penalty of $50 for each such failure, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $100,000. 103 STAT. 2391 ‘SEC. 6724. WAIVER; DEFINITIONS AND SPECIAL RULES. “(a) Reasonable Cause Waiver.—No penalty shall be imposed under this part with respect to any failure if it is shown that such failure is due to reasonable cause and not to willful neglect. “(b) Payment of Penalty.—Any penalty imposed by this part shall be paid on notice and demand by the Secretary and in the same manner as tax. “(c) Special Rule for Failure to Meet Magnetic Media Requirements.—No penalty shall be imposed under section 6721 solely by reason of any failure to comply with the requirements of the regulations prescribed under section 6011(e)(2), except to the extent that such a failure occurs with respect to more than 250 information returns. “(d) Definitions.—For purposes of this part— “(1) Information return.— The term ‘information return’ means— “(A) any statement of the amount of payments to another person required by— “(i) section 6041(a) or
(b)(relating to certain information at source), “(ii) section 6042(a)(1) (relating to payments of dividends), “(iii) section 6044(a)(1) (relating to payments of patronage dividends), “(iv) section 6049(a) (relating to payments of interest), “(v) section 6050A(a) (relating to reporting requirements of certain fishing boat operators), “(vi) section 6050N(a) (relating to payments of royalties), or “(vii) section 6051(d) (relating to information returns with respect to income tax withheld), and “(B) any return required by— “(i) section 6041A(a) or
(b)(relating to returns of direct sellers), “(ii) section 6045(a) or
(d)(relating to returns of brokers), “(iii) section 6050H(a) (relating to mortgage interest received in trade or business from individuals), “(iv) section 60501(a) (relating to cash received in trade or business), “(v) section 6050J(a) (relating to foreclosures and abandonments of security), “(vi) section 6050K(a) (relating to exchanges of certain partnership interests), “(vii) section 6050L(a) (relating to returns relating to certain dispositions of donated property), “(viii) section 6052(a) (relating to reporting payment of wages in the form of group-life insurance), “(ix) section 6053(c)(1) (relating to reporting with respect to certain tips), “(x) section 1060(b) (relating to reporting requirements of transferors and transferees in certain asset acquisitions), or “(xi) subparagraph
(A)or
(C)of subsection (c)(4), or subsection (e), of section 4093 (relating to information 103 STAT. 2392reporting with respect to tax on diesel and aviation fuels). Such term also includes any form, statement, or schedule required to be filed with the Secretary with respect to any amount from which tax was required to be deducted and withheld under chapter 3 (or from which tax would be required to be so deducted and withheld but for an exemption under this title or any treaty obligation of the United States). “(2) Payee statement.— The term ‘payee statement’ means any statement required to be furnished under— “(A) section 6031(b) or (c), 6034A, or 6037(b) (relating to statements furnished by certain pass-thru entities), “(B) section 6039(a) (relating to information required in connection with certain options), “(C) section 6041(d) (relating to information at source), “(D) section 6041A(e) (relating to returns regarding payments of remuneration for services and direct sales), “(E) section 6042(c) (relating to returns regarding payments of dividends and corporate earnings and profits), “(F) section 6044(e) (relating to returns regarding payments of patronage dividends), “(G) section 6045(b) or
(d)(relating to returns of brokers), “(H) section 6049(c) (relating to returns regarding payments of interest), “(I) section 6050A(b) (relating to reporting requirements of certain fishing boat operators), “(J) section 6050H(d) relating to returns relating to mortgage interest received in trade or business from individuals), “(K) section 60501(e) (relating to returns relating to cash received in trade or business), “(L) section 6050J(e) (relating to returns relating to foreclosures and abandonments of security), “(M) section 6050K(b) (relating to returns relating to exchanges of certain partnership interests), “(N) section 6050L(c) (relating to returns relating to certain dispositions of donated property), “(O) section 6050N(b) (relating to returns regarding payments of royalties), “(P) section 6051 (relating to receipts for employees), “(Q) section 6052(b) (relating to returns regarding payment of wages in the form of group-term life insurance), “(R) section 6053(b) or
(c)(relating to reports of tips), or “(S) section 4093(c)(4)(B) (relating to certain purchasers of diesel and aviation fuels). Such term also includes any form, statement, or schedule required to be furnished to the recipient of any amount from which tax was required to be deducted and withheld under chapter 3 (or from which tax would be required to be so deducted and withheld but for an exemption under this title or any treaty obligation of the United States). “(3) Specified information reporting requirement.— The term ‘specified information reporting requirement’ means– “(A) the notice required by section 6050K(c)(1) (relating to requirement that transferor notify partnership of exchange), 103 STAT. 2393 “(B) any requirement contained in the regulations prescribed under section 6109 that a person— “(i) include his TIN on any return, statement, or other document (other than an information return or payee statement), “(ii) furnish his TIN to another person, or “(iii) include on any return, statement, or other document (other than an information return or payee statement) made with respect to another person the TIN of such person, “(C) any requirement contained in the regulations prescribed under section 215 that a person— “(i) furnish his TIN to another person, or “(ii) include on his return the TIN of another person, and “(D) the requirement of section 6109(e) that a person include the TIN of any dependent on his return. “(4) Required filing date.—The term ‘required filing date’ means the date prescribed for filing an information return with the Secretary (determined with regard to any extension of time for filing).” "
(b)Technical Amendments —
(1)Sections 6017A, 6676, and 6687 are hereby repealed.
(2)Subsection
(b)of section 7205 is amended to read as follows: " “(b) Backup Withholding on Interest and Dividends.—If any Fraud.Law enforcement and crime.individual willfully makes a false certification under paragraph
(1)or (2)(C) of section 3406(d), then such individual shall, in addition to any other penalty provided by law, upon conviction thereof, be fined not more than $1,000, or imprisoned not more than 1 year, or both.”"
(3)The table of sections for subpart B of part II of subchapter A of chapter 61 is amended by striking the item relating to section 6017A.
(4)The table of sections for part I of subchapter B of chapter 68 is amended by striking the items relating to sections 6676 and 6687.
(5)The table of parts for subchapter B of chapter 68 is amended by striking the item relating to part H and inserting the following: " “Part II. Failure to comply with certain information reporting requirements.” "
(c)Effective Date.—The amendments made by this section shall [26 USC 6721 note](/us/usc/t26/s6721).apply to returns and statements the due date for which (determined without regard to extensions) is after December 31, 1989. SEC. 7712. INFORMATION REQUIRED WITH RESPECT TO CERTAIN FOREIGN CORPORATIONS.
(a)Clarification of Reporting Requirements Under Section 6038.—
(1)Subsection
(a)of section 6038 (relating to information with respect to certain foreign corporations) is amended by adding at the end thereof the following new paragraph: " “(4) Information required from certain shareholders in certain cases.—If any foreign corporation is treated as a controlled foreign corporation for any purpose under subpart F of part III of subchapter N of chapter 1, the Secretary may require any United States person treated as a United States share-103 STAT. 2394holder of such corporation for any purpose under subpart F to furnish the information required under paragraph (1).” "
(2)Paragraph
(1)of section 6038(a) is amended by inserting before the period at the end of the second sentence the following: “or which the Secretary determines to be appropriate to carry out the provisions of this title.”
(b)[26 USC 6038 note](/us/usc/t26/s6038). Effective Date.—The amendments made by subsection
(a)shall apply to returns and statements the due date for which (determined without regard to extensions) is after December 31, 1989. SEC. 7713. UNIFORM REQUIREMENTS FOR RETURNS ON MAGNETIC MEDIA.
(a)General Rule.—Subsection
(e)of section 6011 (relating to regulations requiring returns on magnetic tape, etc.) is amended to read as follows: " “(e) Regulations Requiring Returns on Magnetic Media, Etc.— “(1) In general.—The Secretary shall prescribe regulations providing standards for determining which returns must be filed on magnetic media or in other machine-readable form. The Secretary may not require returns of any tax imposed by subtitle A on individuals, estates, and trusts to be other than on paper forms supplied by the Secretary. “(2) Requirements of regulations.— In prescribing regulations under paragraph (1), the Secretary— “(A) shall not require any person to file returns on magnetic media unless such person is required to file at least 250 returns during the calendar year, and “(B) shall take into account (among other relevant factors) the ability of the taxpayer to comply at reasonable cost with the requirements of such regulations.” "
(b)[26 USC 6011 note](/us/usc/t26/s6011). Effective Date.—The amendment made by subsection
(a)shall apply to returns the due date for which (determined without regard to extensions) is after December 31, 1989. SEC. 7714. STUDY OF PROCEDURES TO PREVENT MISMATCHING.
(a)General Rule.—The Comptroller General (in consultation with the Secretary of the Treasury or his delegate) shall conduct a study on procedures to resolve, with the least disclosure of return information possible, discrepancies between taxpayer-identity information shown on information returns and such information in the records of the Internal Revenue Service.
(b)Report.—Not later than June 1, 1990, the Comptroller General 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 study conducted under subsection (a), together with such recommendations as he may deem advisable. SEC. 7715. STUDY OF SERVICE BUREAUS.
(a)General Rule.—The Comptroller General (in consultation with the Secretary of the Treasury or his delegate) shall conduct a study of whether persona engaged in the business of transmitting information returns or other documents to the Internal Revenue Service on behalf of other persons should be subject to registration or other regulation. 103 STAT. 2395
(b)Report.—Not later than July 1, 1990, the Comptroller General 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 study conducted under subsection (a), together with such recommendations as he may deem advisable. **PART II—****REVISION OF ACCURACY-RELATED PENALTIES** SEC. 7721. REVISION OF ACCURACY-RELATED PENALTIES.
(a)General Rule.—Subchapter A of chapter 68 (relating to additions to the tax and additional amounts) is amended by striking section 6662 and inserting the following: " “PART II—ACCURACY-RELATED AND FRAUD PENALTIES “Sec. 6662. Imposition of accuracy-related penalty. “Sec. 6663. Imposition of fraud penalty. “Sec. 6664. Definitions and special rules. “SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY. “(a) Imposition of Penalty.—If this section applies to any portion of an underpayment of tax required to be shown on a return, there shall be added to the tax an amount equal to 20 percent of the portion of the underpayment to which this section applies. “(b) Portion of Underpayment to Which Section Applies.—This section shall apply to the portion of any underpayment which is attributable to 1 or more of the following: “(1) Negligence or disregard of rules or regulations. “(2) Any substantial understatement of income tax. “(3) Any substantial valuation overstatement under chapter 1. “(4) Any substantial overstatement of pension liabilities. “(5) Any substantial estate or gift tax valuation understatement. This section shall not apply to any portion of an underpayment on which a penalty is imposed under section 6663. “(c) Negligence.—For purposes of this section, the term ‘negligence’ includes any failure to make a reasonable attempt to comply with the provisions of this title, and the term ‘disregard’ includes any careless, reckless, or intentional disregard. “(d) Substantial Understatement of Income Tax.— “(1) Substantial understatement.— “(A) In general.—For purposes of this section, there is a substantial understatement of income tax for any taxable year if the amount of the understatement for the taxable year exceeds the greater of— “(i) 10 percent of the tax required to be shown on the return for the taxable year, or “(ii) $5,000. “(B) Special rule for corporations.—In the case of a corporation other than an S corporation or a personal holding company (as defined in section 542), paragraph
(1)shall be applied by substituting “$10,000” for “$5,000”. “(2) Understatement.— 103 STAT. 2396 “(A) In general.—For purposes of paragraph (1), the term ‘understatement’ means the excess of— “(i) the amount of the tax required to be shown on the return for the taxable year, over “(ii) the amount of the tax imposed which is shown on the return, reduced by any rebate (within the meaning of section 6211(b)(2)). “(B) Reduction for understatement due to position of taxpayer or disclosed item.—The amount of the understatement under subparagraph
(A)shall be reduced by that portion of the understatement which is attributable to— “(i) the tax treatment of any item by the taxpayer if there is or was substantial authority for such treatment, or “(ii) any item with respect to which the relevant facts affecting the item’s tax treatment are adequately disclosed in the return or in a statement attached to the return. “(C) Special rules in cases involving tax shelters.— “(i) In general.—In the case of any item attributable to a tax shelter— “(I) subparagraph (B)(ii) shall not apply, and “(II) subparagraph (B)(i) shall not apply unless (in addition to meeting the requirements of such subparagraph) the taxpayer reasonably believed that the tax treatment of such item by the taxpayer was more likely than not the proper treatment. “(ii) Tax shelter.—For purposes of clause (i), the term ‘tax shelter’ means— “(I) a partnership or other entity, “(II) any investment plan or arrangement, or “(III) any other plan or arrangement, if the principal purpose of such partnership, entity, plan, or arrangement is the avoidance or evasion of Federal income tax. “(D) Secretarial list.—The Secretary shall prescribe (and revise not less frequently than annually) a list of positions— “(i) for which the Secretary believes there is not substantial authority, and “(ii) which affect a significant number of taxpayers. Federal Register, publication. Such list (and any revision thereof) shall be published in the Federal Register. “(e) Substantial Valuation Overstatement Under Chapter 1.— “(1) In general.—For purposes of this section, there is a substantial valuation overstatement under chapter 1 if the value of any property (or the adjusted basis of any property) claimed on any return of tax imposed by chapter 1 is 200 percent or more of the amount determined to be the correct amount of such valuation or adjusted basis (as the case may be). “(2) Limitation.—No penalty shall be imposed by reason of subsection (b)(3) unless the portion of the underpayment for the taxable year attributable to substantial valuation overstatements under chapter 1 exceeds $5,000 ($10,000 in the case of a 103 STAT. 2397corporation other than an S corporation or a personal holding company (as defined in section 542)). “(f) Substantial Overstatement of Pension Liabilities.— “(1) In general.—For purposes of this section, there is a substantial overstatement of pension liabilities if the actuarial determination of the liabilities taken into account for purposes of computing the deduction under paragraph
(1)or
(2)of section 404(a) is 200 percent or more of the amount determined to be the correct amount of such liabilities. “(2) Limitation.—No penalty shall be imposed by reason of subsection (b)(4) unless the portion of the underpayment for the taxable year attributable to substantial overstatements of pension liabilities exceeds $1,000. “(g) Substantial Estate or Gift Tax Valuation Understatement.— “(1) In general.—For purposes of this section, there is a substantial estate or gift tax valuation understatement if the value of any property claimed on any return of tax imposed by subtitle B is 50 percent or less of the amount determined to be the correct amount of such valuation. “(2) Limitation.—No penalty shall be imposed by reason of subsection (b)(5) unless the portion of the underpayment attributable to substantial estate or gift tax valuation understatements for the taxable period (or, in the case of the tax imposed by chapter 11, with respect to the estate of the decedent) exceeds $5,000. “(h) Increase in Penalty in Case of Gross Valuation Misstatements.— “(1) In general.—To the extent that a portion of the underpayment to which this section applies is attributable to one or more gross valuation misstatements, subsection
(a)shall be applied with respect to such portion by substituting ‘40 percent’ for ‘20 percent’. “(2) Gross valuation misstatements.— The term ‘gross valuation misstatements’ means— “(A) any substantial valuation overstatement under chapter 1 as determined under subsection
(e)by substituting ‘400 percent’ for ‘200 percent’, “(B) any substantial overstatement of pension liabilities as determined under subsection
(f)by substituting ‘400 percent’ for ‘200 percent’, and “(C) any substantial estate or gift tax valuation understatement as determined under subsection
(g)by substituting ‘25 percent’ for ‘50 percent’. “SEC. 6663. IMPOSITION OF FRAUD PENALTY. “(a) Imposition of Penalty.—If any part of any underpayment of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 75 percent of the portion of the underpayment which is attributable to fraud. “(b) Determination of Portion Attributable to Fraud.—If the Secretary establishes that any portion of an underpayment is attributable to fraud, the entire underpayment shall be treated as attributable to fraud, except with respect to any portion of the underpayment which the taxpayer establishes (by a preponderance of the evidence) is not attributable to fraud. 103 STAT. 2398 “(c) Special Rule for Joint Returns.—In the case of a joint return, this section shall not apply with respect to a spouse unless some part of the underpayment is due to the fraud of such spouse. “SEC. 6664. DEFINITIONS AND SPECIAL RULES. “(a) Underpayment.—For purposes of this part, the term ‘underpayment’ means the amount by which any tax imposed by this tide exceeds the excess of— “(1) the sum of— “(A) the amount shown as the tax by the taxpayer on his return, plus “(B) amounts not so shown previously assessed (or collected without assessment), over “(2) the amount of rebates made. For purposes of paragraph (2), the term ‘rebate’ means so much of an abatement, credit, refund, or other repayment, as was made on the ground that the tax imposed was less than the excess of the amount specified in paragraph
(1)over the rebates previously made. “(b) Penalties Applicable Only Where Return Filed.—The penalties provided in this part shall apply only in cases where a return of tax is filed (other than a return prepared by the Secretary under the authority of section 6020(b)). “(c) Reasonable Cause Exception.— “(1) In general.—No penalty shall be imposed under this part with respect to any portion of an underpayment if it is shown that there was a reasonable cause for such portion and that the taxpayer acted in good faith with respect to such portion. “(2) Gifts and property. Special rule for certain valuation overstatements.— In the case of any underpayment attributable to a substantial or gross valuation overstatement under chapter 1 with respect to charitable deduction property, paragraph
(1)shall not apply unless— “(A) the claimed value of the property was based on a qualified appraisal made by a qualified appraiser, and “(B) in addition to obtaining such appraisal, the taxpayer made a good faith investigation of the value of the contributed property. “(3) Definitions.— For purposes of this subsection— “(A) Charitable deduction property.—The term ‘charitable deduction property’ means any property contributed by the taxpayer in a contribution for which a deduction was claimed under section 170. For purposes of paragraph (2), such term shall not include any securities for which (as of the date of the contribution) market quotations are readily available on an established securities market. “(B) Qualified appraiser.—The term ‘qualified appraiser’ means any appraiser meeting the requirements of the regulations prescribed under section 170(a)(1). “(C) Qualified appraisal.—The term ‘qualified appraisal’ means any appraisal meeting the requirements of the regulations prescribed under section 170(a)(1). “PART III—APPLICABLE RULES “Sec. 6665. Applicable rules. 103 STAT. 2399 “SEC. 6665. APPLICABLE RULES. “(a) Additions Treated as Tax.—Except as otherwise provided in this title— “(1) the additions to the tax, additional amounts, and penalties provided by this chapter shall be paid upon notice and demand and shall be assessed, collected, and paid in the same manner as taxes; and “(2) any reference in this title to ‘tax’ imposed by this title shall be deemed also to refer to the additions to the tax, additional amounts, and penalties provided by this chapter. “(b) Procedure for Assessing Certain Additions to Tax.—For purposes of subchapter B of chapter 63 (relating to deficiency procedures for income, estate, gift, and certain excise taxes), subsection
(a)shall not apply to any addition to tax under section 6651, 6654, or 6655; except that it shall apply— “(1) in the case of an addition described in section 6651, to that portion of such addition which is attributable to a deficiency in tax described in section 6211; or “(2) to an addition described in section 6654 or 6655, if no return is filed for the taxable year.” "
(b)Repeal of Increase in Interest on Certain Substantial Underpayments.—Subsection
(c)of section 6621 (relating to interest on substantial underpayments attributable to tax motivated transactions) is hereby repealed.
(c)Technical and Conforming Amendments.—
(1)Section 6653 is amended to read as follows: " “SEC. 6653. FAILURE TO PAY STAMP TAX. “Any person (as defined in section 6671(b)) who— “(1) willfully fails to pay any tax imposed by this title which is payable by stamp, coupons, tickets, books, or other devices or methods prescribed by this title or by regulations under the authority of this title, or “(2) willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable for a penalty of 50 percent of the total amount of the underpayment of the tax.” "
(2)Sections 6659, 6659A, 6660, and 6661 are hereby repealed.
(3)Subsection
(b)of section 5684 is amended—
(A)by striking “6662(a)” and inserting “6665(a)”, and
(B)by striking “6662” in the subsection heading and inserting “6665”.
(4)Subsection
(a)of section 5761 is amended by striking “or 6653” and inserting “or 6653 or part II of subchapter A of chapter 68”.
(5)Subsection
(c)of section 5761 is amended—
(A)by striking “6662(a)” and inserting “6665(a)”, and
(B)by striking “6662” in the subsection heading and inserting “6665”.
(6)Subparagraph
(A)of section 6O13(b)(5) is amended—
(A)by striking “section 6653” and inserting “part II of subchapter A of chapter 68”, and
(B)by striking “**SECTION 6653**” in the subparagraph heading and inserting “**PART II OF SUBCHAPTER A OF CHAPTER 68**”. 103 STAT. 2400
(7)Subsection
(d)of section 6222 is amended by striking “section 6653(a)” and inserting “part II of subchapter A of chapter 68”.
(8)Paragraph
(2)of section 6601(e) is amended by striking “section 6651(a)(1), 6653, 6659, 6660, or 6661” each place it appears and inserting “section 6651(a)(1) or 6653 or under part II of subchapter A of chapter 68”.
(9)Subsection
(a)of section 6672 is amended by striking “under section 6653” and inserting “under section 6653 or part II of subchapter A of chapter 68”.
(10)Subparagraph
(C)of section 461(i)(3) is amended by striking “section 6662(b)(2)(C)(h)” and inserting “section 6662(d)(2)(C)(ii)”.
(11)Clause
(i)of section 1274(b)(3)(B) is amended by striking “section 6661(b)(2)(C)(ii)” and inserting “section 6662(d)(2)(C)(ii)”.
(12)Subparagraph
(B)of section 7519(f)(4) is amended by striking “section 6653” and inserting “part II of subchapter A of chapter 68”.
(13)Subchapter A of chapter 68 is amended by inserting after the subchapter heading the following: " “Part I. General provisions. “Part II. Accuracy-related and fraud penalties. “Part III. Applicable rules. “PART I—GENERAL PROVISIONS”. "
(14)The table of sections for part I of subchapter A of chapter 68 (as amended by paragraph (1)) is amended—
(A)by striking out the items relating to sections 6659, 6659A, 6660, and 6661, and
(B)by striking the item relating to section 6653 and inserting: " “Sec. 6653. Failure to pay stamp tax.” "
(d)[26 USC 461 note](/us/usc/t26/s461).Effective Date.—The amendments made by this section shall apply to returns the due date for which (determined without regard to extensions) is after December 31, 1989. **PART III—****PREPARER, PROMOTER, AND PROTESTER PENALTIES** SEC. 7731. PENALTY FOR INSTITUTING PROCEEDINGS BEFORE TAX COURT PRIMARILY FOR DELAY, ETC.
(a)General Rule.—Section 6673 (relating to damages assessable for instituting proceedings before the Tax Court primarily for delay, etc.) is amended to read as follows: " “SEC. 6673. SANCTIONS AND COSTS AWARDED BY COURTS. “(a) Tax Court Proceedings.— “(1) Procedures instituted primarily for delay, etc.— Whenever it appears to the Tax Court that— “(A) proceedings before it have been instituted or maintained by the taxpayer primarily for delay, “(B) the taxpayer’s position in such proceeding is frivolous or groundless, or 103 STAT. 2401 “(C) the taxpayer unreasonably failed to pursue available administrative remedies, the Tax Court, in its decision, may require the taxpayer to pay to the United States a penalty not in excess of $25,000. “(2) Counsel’s liability for excessive costs.— Whenever it appears to the Tax Court that any attorney or other person admitted to practice before the Tax Court has multiplied the proceedings in any case unreasonably and vexatiously, the Tax Court may require— “(A) that such attorney or other person pay personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct, or “(B) if such attorney is appearing on behalf of the Commissioner of Internal Revenue, that the United States pay such excess costs, expenses, and attorneys’ fees in the same manner as such an award by a district court. “(b) Proceedings in Other Courts.— “(1) Claims under section 7433.—Whenever it appears to the court that the taxpayer’s position in the proceedings before the court instituted or maintained by such taxpayer under section 7433 is frivolous or groundless, the court may require the taxpayer to pay to the United States a penalty not in excess of $10,000. “(2) Collection of sanctions and costs.—In any civil proceeding before any court (other than the Tax Court) which is brought by or against the United States in connection with the determination, collection, or refund of any tax, interest, or penalty under this title, any monetary sanctions, penalties, or costs awarded by the court to the United States may be assessed by the Secretary and, upon notice and demand, may be collected in the same manner as a tax. “(3) Sanctions and costs awarded by a court of appeals.—In connection with any appeal from a proceeding in the Tax Court or a civil proceeding described in paragraph (2), an order of a United States Court of Appeals or the Supreme Court awarding monetary sanctions, penalties or court costs to the United States may be registered in a district court upon filing a certified copy of such order and shall be enforceable as other district court judgments. Any such sanctions, penalties, or costs may be assessed by the Secretary and, upon notice and demand, may be collected in the same manner as a tax.” "
(b)Clarification of Authority To Impose Penalties by Appellate Courts.—Paragraph
(4)of section 7482(c) (relating to power to impose damages) is amended to read as follows: " “(4) To impose penalties.—The United States Court of Appeals and the Supreme Court shall have the power to require the taxpayer to pay to the United States a penalty in any case where the decision of the Tax Court is affirmed and it appears that the appeal was instituted or maintained primarily for delay or that the taxpayer’s position in the appeal is frivolous or groundless.” "
(c)Clerical Amendment.—The table of sections for part I of subchapter B of chapter 68 is amended by striking the item relating to section 6673 and inserting the following: " “Sec. 6673. Sanctions and costs awarded by courts.” " 103 STAT. 2402
(d)[26 USC 6673 note](/us/usc/t26/s6673).Effective Date.—The amendments made by this section shall apply to positions taken after December 31, 1989, in proceedings which are pending on, or commenced after such date. SEC. 7732. MODIFICATIONS TO PENALTIES ON RETURN PREPARERS FOR CERTAIN UNDERSTATEMENTS.
(a)General Rule.—Subsections
(a)and
(b)of section 6694 (relating to understatement of taxpayer’s liability by income tax return preparer) are amended to read as follows: " “(a) Understatements Due to Unrealistic Positions.—If— “(1) any part of any understatement of liability with respect to any return or claim for refund is due to a position for which there was not a realistic possibility of being sustained on its merits, “(2) any person who is an income tax return preparer with respect to such return or claim knew (or reasonably should have known) of such position, and “(3) such position was not disclosed as provided in section 6662(d)(2)(B)(ii) or was frivolous, such person shall pay a penalty of $250 with respect to such return or claim unless it is shown that there is reasonable cause for the understatement and such person acted in good faith. “(b) Willful or Reckless Conduct.—If any part of any understatement of liability with respect to any return or claim for refund is due— “(1) to a willful attempt in any manner to understate the liability for tax by a person who is an income tax return preparer with respect to such return or claim, or “(2) to any reckless or intentional disregard of rules or regulations by any such person, such person shall pay a penalty of $1,000 with respect to such return or claim. With respect to any return or claim, the amount of the penalty payable by any person by reason of this subsection shall be reduced by the amount of the penalty paid by such person by reason of subsection (a).” "
(b)[26 USC 6694 note](/us/usc/t26/s6694). Effective Date.—The amendment made by subsection
(a)shall apply with respect to documents prepared after December 31, 1989. SEC. 7733. MODIFICATIONS TO OTHER ASSESSABLE PENALTIES WITH RESPECT TO RETURN PREPARERS.
(a)Failure To Furnish Copy to Taxpayer.—Subsection
(a)of section 6695 is amended—
(1)by striking “$25” and inserting “$50”, and
(2)by adding at the end thereof the following new sentence: “The maximum penalty imposed under this subsection on any person with respect to documents filed during any calendar year shall not exceed $25,000.”
(b)Failure To Sign Return.—Subsection
(b)of section 6695 is amended—
(1)by striking “$25” and inserting “$50”, and
(2)by adding at the end thereof the following new sentence: “The maximum penalty imposed under this subsection on any person with respect to documents filed during any calendar year shall not exceed $25,000.”
(c)Failure To Furnish Identifying Number.—Subsection
(c)of section 6695 is amended— 103 STAT. 2403
(1)by striking “$25” and inserting “$50”, and
(2)by adding at the end thereof the following new sentence: " “The maximum penalty imposed under this subsection on any person with respect to documents filed during any calendar year shall not exceed $25,000.” "
(d)Failure To FILE Correct Information Returns.—Subsection
(e)of section 6695 is amended to read as follows: " “(e) Failure To File Correct Information Returns.—Any person required to make a return under section 6060 who fails to comply with the requirements of such section shall pay a penalty of $50 for— “(1) each failure to file a return as required under such section, and “(2) each failure to set forth an item in the return as required under section, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to any return period shall not exceed $25,000.” "
(e)Effective Date.—The amendments made by this section shall [26 USC 6695 note](/us/usc/t26/s6695).apply to documents prepared after December 31, 1989. SEC. 7734. MODIFICATIONS TO PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS, ETC.
(a)General Rule.—Subsection
(a)of section 6700 is amended—
(1)by inserting “(directly or indirectly)” after “participates” in paragraph (1)(B),
(2)by inserting “or causes another person to make or furnish” after “makes or furnishes” in paragraph (2), and
(3)by striking the material following paragraph
(2)and inserting the following: " " “shall pay, with respect to each activity described in paragraph (1), a penalty equal to the $1,000 or, if the person establishes that it is lesser, 100 percent of the gross income derived (or to be derived) by such person from such activity. For purposes of the preceding sentence, activities described in paragraph (1)(A) with respect to each entity or arrangement shall be treated as a separate activity and participation in each sale described in paragraph (1)(B) shall be so treated.” " "
(b)Effective Date.—The amendment made by subsection
(a)[26 USC 6700 note](/us/usc/t26/s6700).shall apply to activities after December 31, 1989. SEC. 7735. MODIFICATIONS TO PENALTIES FOR AIDING AND ABETTING UNDERSTATEMENT OF TAX LIABILITY.
(a)General Rule.—Subsection
(a)of section 6701 (relating to penalties for aiding and abetting understatement of tax liability) is amended—
(1)by striking “in connection with any matter arising under the internal revenue laws” in paragraph (1),
(2)by striking “who knows” in paragraph
(2)and inserting “who knows (or has reason to believe)”, and
(3)by striking “will result” in paragraph
(3)and inserting “would result”.
(b)Coordination With Penalty Under Section 6700.—
(1)In general.—Subsection ® of section 6701 is amended by adding at the end thereof the following new paragraph: 103 STAT. 2404 " “(3) Coordination with section 6700.—No penalty shall be assessed under section 6700 on any person with respect to any document for which a penalty is assessed on such person under subsection (a).” "
(2)Technical amendment.—Paragraph
(1)of section 6701(C) is amended by striking “paragraph (2)” and inserting “paragraphs
(2)and (3)”.
(c)[26 USC 6701 note](/us/usc/t26/s6701). Effective Date.—The amendments made by this section shall take effect on December 31, 1989. SEC. 7736. MODIFICATION TO PENALTY FOR FRIVOLOUS INCOME TAX RETURN.
(a)Requirement of Full Payment of Penalty.—Subsection
(c)of section 6703 is amended by striking “section 6700, 6701, or 6702” each place it appears and inserting “section 6700 or 6701”.
(b)[26 USC 6703 note](/us/usc/t26/s6703). Effective Date.—The amendment made by subsection
(a)shall apply to returns filed after December 31, 1989. SEC. 7737. AUTHORITY TO COUNTERCLAIM FOR BALANCE OF PENALTY IN PARTIAL REFUND SUITS.
(a)General Rule.—Sections 6672(b)(1), 6694(c)(1), and 6703(c)(1) are each amended by adding at the end thereof the following new sentence: “Nothing in this paragraph shall be construed to prohibit any counterclaim for the remainder of such penalty in a proceeding begun as provided in paragraph (2).”
(b)[26 USC 6672 note](/us/usc/t26/s6672). Effective Date.—The amendment made by subsection
(a)shall take effect on the date of the enactment of this Act. SEC. 7738. REPEAL OF BONDING REQUIREMENT UNDER SECTION 7407.
(a)General Rule.—Subsection
(c)of section 7407 (relating to bond to stay injunction) is hereby repealed.
(b)Conforming Amendment.—Subsection
(a)of section 7407 is amended by striking “Except as provided in subsection (c), a civil” and inserting “A civil”.
(c)[26 USC 7407 note](/us/usc/t26/s7407). Effective Date.—The amendments made by this section shall apply to actions commenced after December 31, 1989. SEC. 7739. CERTAIN DISCLOSURES OF INFORMATION BY PREPARERS PERMITTED.
(a)General Rule.—Paragraph
(3)of section 7216(b) (relating to exceptions) is amended by adding at the end thereof the following new sentence: “Such regulations shall permit (subject to such conditions as such regulations shall provide) the disclosure or use of information for quality or peer reviews.” .
(b)[26 USC 7216 note](/us/usc/t26/s7216). Effective Date.—The amendment made by subsection
(a)shall take effect on the date of the enactment of this Act. **PART IV—****FAILURES TO FILE OR PAY** SEC. 7741. INCREASE IN PENALTY FOR FRAUDULENT FAILURE TO FILE.
(a)General Rule.—Section 6651 (relating to failure to file tax return or pay tax) is amended by adding at the end thereof the following new subsection: " “(f) Increase in Penalty for Fraudulent Failure to File.—If any failure to file any return is fraudulent, paragraph
(1)of subsection
(a)shall be applied— 103 STAT. 2405 “(1) by substituting ‘15 percent’ for ‘5 percent’ each place it appears, and “(2) by substituting ‘75 percent’ for ‘25 percent’.” "
(b)Effective Date.—The amendment made by subsection
(a)[26 USC 6651 note](/us/usc/t26/s6651).shall apply in the case of failures to file returns the due date for which (determined without regard to extensions) is after December 31, 1989. SEC. 7742. FAILURE TO MAKE DEPOSIT OF TAXES.
(a)General Rule.—Section 6656 (relating to failure to make deposit of taxes or overstatement of deposits) is amended to read as follows: " “SEC. 6456. FAILURE TO MAKE DEPOSIT OF TAXES. “(a) Underpayment of Deposits.—In the case of any failure by any person to deposit (as required by this title or by regulations of the Secretary under this title) on the date prescribed therefor any amount of tax imposed by this title in such government depository as is authorized under section 6302(c) to receive such deposit, unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be imposed upon such person a penalty equal to the applicable percentage of the amount of the underpayment. “(b) Definitions.—For purposes of subsection (a)— “(1) Applicable percentage.— “(A) In general.—Except as provided in subparagraph (B), the term ‘applicable percentage’ means— “(i) 2 percent if the failure is for not more than 5 days, “(ii) 5 percent if the failure is for more than 5 days but not more than 15 days, and “(iii) 10 percent if the failure is for more than 15 days. “(B) Special rule.—In any case where the tax is not deposited on or before the earlier of— “(i) the day 10 days after the date of the first delinquency notice to the taxpayer under section 6303, or “(ii) the day on which notice and demand for immediate payment is given under section 6861 or 6862 or the last sentence of section 6331(a), the applicable percentage shall be 15 percent. “(2) Underpayment.—The term ‘underpayment’ means the excess of the amount of the tax required to be deposited over the amount, if any, thereof deposited on or before the date prescribed therefor.” "
(b)Clerical Amendment.—The table of sections for part I of subchapter A of chapter 68 (as amended by title II) is amended by striking the item relating to section 6656 and inserting the following: " “Sec. 6656. Failure to make deposit of taxes.” "
(c)Effective Date.—The amendments made by this section shall [26 USC 6656 note](/us/usc/t26/s6656).apply to deposits required to be made after December 31, 1989. 103 STAT. 2406 SEC. 7743. EFFECT OF PAYMENT OF TAX BY RECIPIENT ON CERTAIN PENALTIES.
(a)General Rule.—Section 1463 (relating to tax paid by recipient of income) is amended to read as follows: " “SEC. 1463. TAX PAID BY RECIPIENT OF INCOME. “If— “(1) any person, in violation of the provisions of this chapter, fails to deduct and withhold any tax under this chapter, and “(2) thereafter the tax against which such tax may be credited is paid, the tax so required to be deducted and withheld shall not be collected from such person; but this subsection shall in no case relieve such person from liability for interest or any penalties or additions to the tax otherwise applicable in respect of such failure to deduct and withhold.” "
(b)[26 USC 1463 note](/us/usc/t26/s1463). Effective Date.—The amendment made by subsection
(a)shall apply to failures after December 31, 1989. Subtitle H—Technical Corrections SEC. 7801. DEFINITIONS; COORDINATION WITH OTHER SUBTITLES.
(a)Definitions.—For purposes of this subtitle—
(1)1988 Act.—The term “1988 Act” means the Technical and Miscellaneous Revenue Act of 1988.
(2)1987 Act.—The term “1987 Act” means the Revenue Act of 1987.
(b)[26 USC 1 note](/us/usc/t26/s1). Coordination With Other Subtitles.—For purposes of applying the amendments made by any subtitle of this title other than this subtitle, the provisions of this subtitle shall be treated as having been enacted immediately before the provisions of such other subtitles. **PART I—****AMENDMENTS RELATED TO TECHNICAL AND MISCELLANEOUS REVENUE ACT OF 1988** SEC. 7811. AMENDMENTS RELATED TO TITLE I OF THE 1988 ACT.
(a)Amendments Related to Section 1002 of the 1988 Act.—
(1)The heading for subparagraph
(C)of section 42(d)(5) is amended by inserting “SECTION” before “167(k)”.
(2)Clause
(ii)of section 42(h)(5)(D) is amended by striking “clause (ii)” and inserting “clause (i)”.
(b)Amendments Related to Section 1003 of the 1988 Act.—
(1)Subparagraph
(C)of section 643(a)(6) is amended by striking “(i)” and by striking “, and (ii)” and all that follows and inserting a period.
(2)Paragraph
(6)of section 643(a) is amended by striking subparagraph (D).
(c)Amendments Related to Section 1006 of the 1988 Act.—
(1)Subparagraphs
(C)and
(D)of section 26(b)(2) are amended to read as follows: " “(C) subsection (m)(5)(B), (q), (t), or
(v)of section 72 (relating to additional taxes on certain distributions). 103 STAT. 2407 “(D) section 143(m) (relating to recapture of proration of Federal subsidy from use of mortgage bonds and mortgage credit certificates),”. "
(2)Paragraph
(2)of section 26(b) is amended by striking subparagraph
(K)and all that follows and inserting the following new subparagraphs: " “(K) sections 871(a) and 881 (relating to certain income of nonresident aliens and foreign corporations), “(L) section 860E(e) (relating to taxes with respect to certain residual interests), and “(M) section 884 (relating to branch profits tax).” "
(3)Subparagraph
(B)of section 6724(d)(1) is amended by striking clause
(viii)and all that follows and inserting the following: " “(viii) section 6052(a) (relating to reporting payment of wages in the form of group-term life insurance), “(ix) section 6053(c)(1) (relating to reporting with respect to certain tips), “(x) section 1060(b) (relating to reporting requirements of transferors and transferees in certain asset acquisitions), or “(xi) subparagraph
(A)or
(C)of subsection (c)(4), or subsection (e), of section 4093 (relating to information reporting with respect to tax on diesel and aviation fuel).” "
(4)Clause
(i)of section 1374(d)(2)(A) is amended by striking “(except as provided in subsection (b)(2))”. (5)(A) Paragraph
(6)of section 382(h) is amended—
(i)by striking “during the recognition period” in subparagraph
(B)and inserting “during the recognition period (determined without regard to any carryover)”, and
(ii)by striking “treated as recognized built-in gains or losses under this paragraph” in subparagraph
(C)and inserting “which would be treated as recognized built-in gains or losses under this paragraph if such amounts were properly taken into account (or allowable as a deduction) during the recognition period”.
(B)Paragraph
(5)of section 1374(d) is amended—
(i)by striking “during the recognition period” in subparagraph
(B)and inserting “during the recognition period (determined without regard to any carryover)”, and
(ii)by striking “treated as recognized built-in gains or losses under this paragraph” in subparagraph
(C)and inserting “which would be treated as recognized built-in gains or losses under this paragraph if such amounts were properly taken into account (or allowable as a deduction) during the recognition period”.
(6)Subparagraph
(B)of section 1361(b)(2) is amended to read as follows: " “(B) a financial institution to which section 585 applies (or would apply but for subsection
(c)thereof) or to which section 593 applies,”. "
(7)Paragraph
(2)of section 1366(f) is amended to read as follows: " “(2) Treatment of tax imposed on built-in gains.—If any Corporations.tax is imposed under section 1374 for any taxable year on an S corporation, for purposes of subsection (a), the amount so imposed shall be treated as a loss sustained by the S corporation 103 STAT. 2408during such taxable year. The character of such loss shall be determined by allocating the loss proportionately among the recognized built-in gains giving rise to such tax.” "
(8)Subparagraph
(B)of section 1374(b)(3) is amended by Corporations.adding at the end the following new sentence: “A similar rule shall apply in the case of the minimum tax credit under section 53 to the extent attributable to taxable years for which the corporation was a C corporation.”
(9)The last sentence of section 860G(a)(3) is amended by striking “this subparagraph” and inserting “subparagraph (A)”.
(d)Amendments Related to Section 1007 of the 1988 Act.— (1)(A) Subsection
(g)of section 59 is amended by striking “for any taxable year” and inserting “for the taxable year for which the item is taken into account or for any other taxable year”.
(B)Effective date.[26 USC 58 note](/us/usc/t26/s58). The repeal of section 58(h) of the Internal Revenue Code of 1954 by the Tax Reform Act of 1986 shall be effective only with respect to items of tax preference arising in taxable years beginning after December 31, 1986.
(2)Subclause
(II)of section 53(d)(1)(B)(i) is amended by inserting before the period at the end the following: “and if section 59(a)(2) did not apply”.
(3)Paragraph
(3)of section 56(b) is amended—
(A)by inserting after the first sentence the following new sentence: “Section 422A(c)(2) shall apply in any case where the disposition and the inclusion for purposes of this part are within the same taxable year and such section shall not apply in any other case.”, and
(B)by striking “the preceding sentence” and inserting “this paragraph”.
(e)Amendments Related to Section 1008 of the 1988 Act.—
(1)Paragraph
(2)of section 460(a) is amended by inserting “(or, with respect to any amount properly taken into account after completion of the contract, when such amount is so properly taken into account)” after “any long-term contract”.
(2)Subparagraph
(B)of section 460(b)(2) is amended—
(A)by striking “any amount received or accrued” and inserting “any amount properly taken into account”, and
(B)by striking “is so received or accrued” and inserting “is so properly taken into account”.
(3)Paragraph
(3)of section 460(b) is amended—
(A)by striking “any amount received or accrued” in the second sentence and inserting “any amount properly taken into account”, and
(B)by striking “such amount was received or accrued” in the second sentence and inserting “such amount was properly taken into account”.
(4)Paragraph
(2)of section 460(b) is amended by adding at the end the following new sentence: " Contracts. “In the case of any long-term contract with respect to which the percentage of completion method is used, except for purposes of applying the look-back method of paragraph (3), any income under the contract (to the extent not previously includible in gross income) shall be included in gross income for the taxable year following the taxable year in which the contract was completed.” "
(5)Paragraph
(2)of section 460(e) is amended by striking “and” at the end of subparagraph (A), by inserting “and” at the 103 STAT. 2409end of subparagraph (B), and by inserting after subparagraph
(B)the following new subparagraph: " “(C) any predecessor of the taxpayer or a person described in subparagraph
(A)or (B),”. "
(6)Paragraph
(2)of section 460(b) is amended by adding at the end the following new sentence: " “For purposes of subtitle F (other than sections 6654 and 6655), Contracts.any interest required to be paid by the taxpayer under subparagraph
(B)shall be treated as an increase in the tax imposed by this chapter for the taxable year in which the contract is completed (or, in the case of interest payable with respect to any amount properly taken into account after completion of the contract, for the taxable year in which the amount is so properly taken into account).” "
(f)Amendments Related to Section 1009 of the 1988 Act.—
(1)Subparagraph
(A)of section 643(a)(6) is amended by striking “section 265(1)” and inserting “section 265(a)(1)”.
(2)Subparagraph
(B)of section 1009(b)(3) of the 1988 Act is [26 USC 265 note](/us/usc/t26/s265).amended by striking “section 265(b)(3)(B)(iii)” and inserting “section 265(b)(3)(B)(i)(III)”.
(g)Amendment Related to Section 1011 of the 1988 Act.—
(1)Subsection
(a)of section 401 is amended by moving paragraph
(30)from the end and inserting it after paragraph (29).
(2)The last sentence of section 402(g)(3) is amended by inserting “involving a one-time irrevocable election” after “similar arrangement”.
(3)The heading of sections 406(c) and 407(c) are each amended by striking “Purposes Limitation” and inserting “Purposes of Limitation”.
(4)Clause
(iii)of section 457(d)(1)(A) is amended by striking the period at the end and inserting “, and”.
(5)Subclause
(I)of section 457(d)(2)(B)(i) is amended by adding “and” at the end.
(h)Amendments Related to Section 1011B of the 1988 Act.—
(1)Paragraph
(5)of section 409(1) is amended by striking “the last sentence” and inserting “the second sentence”.
(2)Subsection
(a)of section 129 is amended by striking the sentence following paragraph (2)(C) and preceding subsection (b).
(3)Paragraph
(1)of section 1011B(j) of the 1988 Act is [26 USC 401](/us/usc/t26/s401).amended by striking “401(a)(28)(B)” and inserting “401(a)(28)(B)(ii)”.
(i)Amendments Related to Section 1012 of the 1988 Act.—
(1)Subparagraph
(H)of section 904(d)(1) is amended by striking “qualified interest and carrying charges (as defined in section 245(c))” and inserting “interest or carrying charges (as defined in section 927(d)(1)) derived from a transaction which results in foreign trade income (as defined in section 923(b))”.
(2)Sections 861(a)(6), 862(a)(6), 863(b)(2), and 863(b)(3) are each amended by striking “865(h)(1)” and inserting “865(i)(1)”.
(3)Subparagraph
(A)of section 954(c)(3) is amended—
(A)by striking “is created” in clause
(i)and inserting “is a corporation created”,
(B)by striking “from a related person” in clause
(ii)and inserting “from a corporation which is a related person”, and
(C)by adding at the end the following: 103 STAT. 2410 " Corporations. “To the extent provided in regulations, payments made by a partnership with 1 or more corporate partners shall be treated as made by such corporate partners in proportion to their respective interests in the partnership.” "
(4)Paragraph
(5)of section 1297(b) is amended—
(A)by inserting “stock” after “where” in the paragraph heading,
(B)by striking “any disposition of” in subparagraph (A)(ii) and inserting “any distribution of”, and
(C)by striking “treated as a disposition to” in subparagraph
(A)and inserting “treated as a disposition by, or distribution to”.
(5)[26 USC 884 note](/us/usc/t26/s884).Subparagraph
(B)of section 1012(q)(1) of the 1988 Act is amended—
(A)by striking “1021(e)(2)(C)” and inserting “1021(c)(2)(C)”. and
(B)by striking “823(b)(4)(C)” and inserting “832(b)(4)(C)”. (6)(A) Subparagraph
(B)of section 1446(b)(2) is amended by striking “section 11(b)” and inserting “section 11(b)(1)”.
(B)Paragraph
(2)of section 1446(d) is amended to read as follows: " “(2) Credit treated as distributed to partner.— Except as provided in regulations, a foreign partner’s share of any withholding tax paid by the partnership under this section shall be treated as distributed to such partner by such partnership on the earlier of— “(A) the day on which such tax was paid by the partnership, or “(B) the last day of the partnership’s taxable year for which such tax was paid.” "
(C)Subsection
(f)of section 1446 is amended to read as follows: " “(f) Regulations.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including— “(1) regulations providing for the application of this section in the case of publicly traded partnerships, and “(2) regulations providing— “(A) that, for purposes of section 6655, the withholding tax imposed under this section shall be treated as a tax imposed by section 11 and any partnership required to pay such tax shall be treated as a corporation, and “(B) appropriate adjustments in applying section 6655 with respect to such withholding tax.” "
(7)Subsection
(a)of section 988 is amended by inserting after the subsection heading the following: “Notwithstanding any other provision of this chapter—”. (8)(A) Subsection
(b)of section 887 is amended by redesignating paragraph
(3)as paragraph
(4)and by inserting after paragraph
(2)the following new paragraph: " “(3) Exception for certain income taxable in possessions.— The term ‘United States source gross transportation income’ does not include any income taxable in a possession of the United States under the provisions of this title as made applicable in such possession.” "
(B)Paragraph
(1)of section 887(b) is amended by striking “paragraph (2)” and inserting “paragraphs
(2)and (3)”. 103 STAT. 2411
(C)Subsection
(b)of section 872 is amended by adding at the end the following new paragraph: " “(7) Treatment or possessions.— To the extent provided in regulations, a possession of the United States shall be treated as a foreign country for purposes of this subsection.” "
(D)Paragraph
(4)of section 883(a) is amended by striking “(5) and (6)” and inserting “(5), (6), and (7)”.
(9)Paragraph
(4)of section 887(b) (as redesignated by paragraph
(8)is amended by striking “transportation income” the first two places it appears and inserting “United States source gross transportation income”.
(10)Subsection
(a)of section 883 is amended by adding at the end the following new paragraph: " “(5) Special rule for countries which tax on residence basis.—For purposes of this subsection, there shall not be taken into account any failure of a foreign country to grant an exemption to a corporation organized in the United States if such corporation is subject to tax by such foreign country on a residence basis pursuant to provisions of foreign law which meets such standards (if any) as the Secretary may prescribe.” "
(11)Paragraph
(2)of section 4371 is amended by striking “, unless the insurer is subject to tax under section 842(b)”.
(12)Subsection
(g)of section 995 is amended by striking “section 511” and inserting “section 511 (or any other person otherwise subject to tax under section 511)”.
(13)Effective with respect to taxable years ending after the Effective date.date of the enactment of this Act (or, at the election of the taxpayer, beginning after December 31, 1986), subsection
(e)of section 402 is amended by adding at the end the following new paragraph: " “(7) Coordination with foreign tax credit limitations.—Subsections (a), (b), and
(c)of section 904 shall be applied separately with respect to any lump sum distribution on which tax is imposed under paragraph (1), and the amount of such distribution shall be treated as the taxable income for purposes of such separate application.” "
(14)Paragraph (2)(A) of section 1012(1) of the 1988 Act is [26 USC 245](/us/usc/t26/s245).amended by striking “section 245” and inserting “section 245(a)”.
(j)Amendments Related to Section 1014 of the 1988 Act.—
(1)The subparagraph
(C)of section l(i)(3) added by section 1014(e)(7) of the 1988 Act is redesignated as subparagraph (D).
(2)Paragraph
(1)of section 2654(a) is amended by adding at the end the following new sentence: “The preceding shall be applied after any basis adjustment under section 1015 with respect to the transfer.”
(3)Subsection
(g)of section 642 is amended by inserting after the first sentence the following new sentence: “Rules similar to the rules of the preceding sentence shall apply to amounts which may be taken into account under 2621(a)(2) or 2622(b).”
(4)Paragraphs
(1)and
(3)of section 2642(b) are each amended by striking “a timely filed gift tax return required by section 6019” and inserting “a gift tax return filed on or before the date prescribed by section 6075(b)”.
(5)Paragraph
(1)of section 6654(l) is amended by striking “this subsection shall” and inserting “this section shall”. 103 STAT. 2412
(6)Clause
(ii)of section 66540)(2)(B) is amended by inserting before the period at the end the following: “(or, if no will is admitted to probate, which is the trust primarily responsible for paying debts, taxes, and expenses of administration)”.
(7)The heading for subparagraph
(D)of section 59(j)(2) is amended by striking “Others” and inserting “Other”.
(k)Amendments Related to Section 1015 or the 1988 Act.—
(1)[26 USC 6213](/us/usc/t26/s6213).Paragraph
(3)of section 1015(r) of the 1988 Act is amended by striking “section 6211” and inserting “section 6213”.
(2)The last sentence of section 6502(a) is amended by striking “enforceable” and inserting “unenforceable”.
(l)Amendment Related to Section 1016 or the 1988 Act.—The subparagraph
(E)of section 514(c)(9) added by section 1016 of the 1988 Act is redesignated as subparagraph (F).
(m)Amendments Related to Section 1018 of the 1988 Act.—
(1)The subsection
(f)of section 2503 added by section 1018 of the 1988 Act is redesignated as subsection (g).
(2)[26 USC 312](/us/usc/t26/s312).Paragraph
(4)of section 1018(d) of the 1988 Act is amended by inserting “the first place it appears” before “and inserting”.
(3)[26 USC 9509](/us/usc/t26/s9509).Paragraph
(20)of section 1018(u) of the 1988 Act is amended by striking “section 9507(b)” and inserting “section 9509(b)”.
(4)Subparagraph
(B)of section 72(q)(2) is amended by striking “subsection (s)(6)(B))” and inserting “subsection (s)(6)(B)))”.
(5)Paragraph
(10)of section 414(p) is amended by inserting “section” before “403(b)”.
(6)[26 USC 425](/us/usc/t26/s425).Paragraph
(2)of section 1018(1) of the 1988 Act is amended by striking “paragraph
(2)and (3)” and inserting “paragraphs
(2)and (3)”
(7)Subsections (a)(6) and (b)(3) of section 408 are each amended by striking “(without regard to subparagraph (C)(ii) thereof)”. SEC. 7812. AMENDMENTS RELATED TO TITLE II OF THE 1988 ACT.
(a)Amendment Related to Section 2001 of the 1988 Act.—[26 USC 6427](/us/usc/t26/s6427). Subparagraph
(C)of section 2001(d)(7) of the 1988 Act is amended by striking “section 6427(g)(1)” and inserting “section 6427(f)(1)”.
(b)Effective date.[26 USC 4042 note](/us/usc/t26/s4042). Amendment Related to Section 2002 of the 1988 Act.—Subsection
(d)of section 2002 of the 1988 Act is amended by striking “this section” and inserting “subsections
(b)and (c)” and by inserting before the period “, and the amendment made by subsection (a)(2) shall take effect as if included in the amendment made by section 521(a)(3) of the Superfund Revenue Act of 1986”.
(c)Amendments Related to Section 2004 of the 1988 Act.—
(1)Paragraph
(1)of section 384(e) is amended by striking “build-in gain” and inserting “built-in gain”.
(2)Paragraph
(3)of section 453A(b) is amended by striking “(5).” and inserting “(5)).”
(d)Effective date.[26 USC 404 note](/us/usc/t26/s404). Amendment Related to Section 2005 of the 1988 Act.—Section 2005(e) of the 1988 Act is amended by inserting before the period “, except that the amendment made by subsection (a)(1) shall take effect as if included in the amendment made by section 1131(c) of the Tax Reform Act of 1986”. SEC. 7813. AMENDMENTS RELATED TO TITLE III OF THE 1988 ACT.
(a)Amendment Related to Section 3001 of the 1988 Act.—Paragraph
(2)of section 6724(d) is amended by redesignating subparagraph
(U)as subparagraph (S), by striking “or” at the end of 103 STAT. 2413subparagraph (Q), and by striking the period at the end of subparagraph
(R)and inserting , or”.
(b)Amendments Related to Section 3011 of the 1988 Act.—Paragraphs
(4)and
(5)of section 3011(b) of the 1988 Act are each [26 USC 414](/us/usc/t26/s414).amended—
(1)by striking “111B(a)” and inserting “1011B(a)”, and
(2)by striking “162(k)(2)” and inserting “162(k)”. SEC. 7814. AMENDMENTS RELATED TO TITLE IV OF THE 1988 ACT.
(a)Amendment Related to Section 4001 of the 1988 Act.—Subsection
(c)of section 127 is amended by striking paragraph (8).
(b)Amendment Related to Section 4002 of the 1988 Act.—Subparagraph
(A)of section 125(e)(2) is amended by striking “includable” and inserting “includible”.
(c)Amendments Related to Section 4005 of the 1988 Act.—
(1)The paragraph
(3)of section 6045(e) added by section 4005 of the 1988 Act is redesignated as paragraph (4).
(2)Clause
(ii)of section 148(d)(3)(E) is amended by striking “a qualified mortgage bond or”.
(d)Amendment Related to Section 4006 of the 1988 Act.—Section 4006 of the 1988 Act is amended— [26 USC 46](/us/usc/t26/s46).
(1)by striking “December 31, 1988” and inserting “Dec. 31, 1988”, and
(2)by striking “December 31, 1989” and inserting “Dec. 31, 1989”.
(e)Amendments Related to Section 4008 of the 1988 Act.—
(1)Subsection
(d)of section 196 is amended by striking “substituting” and all that follows through “in the case of—” and inserting “substituting ‘an amount equal to 50 percent of’ for ‘an amount equal to’ in the case of—”. (2)(A) Subsection
(c)of section 280C is amended by redesignating paragraph
(3)as paragraph
(4)and by inserting after paragraph
(2)the following new paragraph: " “(3) Election of reduced credit.— “(A) In general.—In the case of any taxable year for which an election is made under this paragraph— “(i) paragraphs
(1)and
(2)shall not apply, and “(ii) the amount of the credit under section 41(a) shall be the amount determined under subparagraph (B). “(B) Amount of reduced credit.—The amount or credit determined under this subparagraph for any taxable year shall be the amount equal to the excess of— “(i) the amount of credit determined under section 41(a) without regard to this paragraph, over “(ii) the product of— “(I) 50 percent of the amount described in clause (i), and “(II) the maximum rate of tax under section 11(b)(1). “(C) Election.—An election under this paragraph for any taxable year shall be made not later than the time for filing the return of tax for such year (including extensions), shall be made on such return, and shall be made in such manner as the Secretary may prescribe. Such an election, once made, shall be irrevocable.” "
(B)In the case of a taxable year for which the last date for [26 USC 280C note](/us/usc/t26/s280C).making the election under section 280C(c)(3) of the Internal 103 STAT. 2414Revenue Code of 1986 (as added by subparagraph (A)) is on or before the date which is 75 days after the date of the enactment of this Act, such an election for such year may be made—
(i)at any time before the date which is 75 days after such date of enactment, and
(ii)in such form and manner as the Secretary of the Treasury or his delegate may prescribe.
(C)Section 41 is amended by striking subsection
(h)and by redesignating subsection
(i)as subsection (h).
(D)Paragraph
(4)of section 196(c) is amended by inserting “(other than such credit determined under section 280C(c)(3))” after “section 41(a)”.
(E)Subsection
(n)of section 6501 is amended by striking “, 41(h),”.
(f)Amendment Related to Section 4011 of the 1988 Act.—Subsection
(c)of section 67 is amended by striking paragraph (4). SEC. 7815. AMENDMENTS RELATED TO TITLE V OF THE 1988 ACT.
(a)Amendments Related to Section 5012 of the 1988 Act.—
(1)Subparagraph
(B)of section 7702A(c)(3) is amended to read as follows: " “(B) Treatment of certain benefit increases.—For purposes of subparagraph (A), the term ‘material change’ includes any increase in the death benefit under the contract or any increase in, or addition of, a qualified additional benefit under the contract. Such term shall not include— “(i) any increase which is attributable to the payment of premiums necessary to fund the lowest level of the death benefit and qualified additional benefits payable in the 1st 7 contract years (determined after taking into account death benefit increases described in subparagraph
(A)or
(B)of section 7702(e)(2)) or to crediting of interest or other earnings (including policyholder dividends) in respect of such premiums, and “(ii) to the extent provided in regulations, any cost-of-living increase based on an established broad-based index if such increase is funded ratably over the remaining period during which premiums are required to be paid under the contract.” "
(2)[26 USC 7702A note](/us/usc/t26/s7702A). Paragraph
(2)of section 5012(e) of the 1988 Act is amended by striking “continues to make level annual premium payments over the life of the contract” and inserting “makes at least 7 level annual premium payments”.
(3)Subparagraph
(A)or section 72(e)(11) is amended by adding at the end the following new sentence: " “The preceding sentence shall not apply to any contract described in paragraph (5)(D).” "
(4)Paragraph
(4)of section 7702A(c) is amended—
(A)by striking “under $10,000” in the paragraph heading and inserting “of $10,000 OR less”, and
(B)by striking “the same insurer” and inserting “the same policyholder”.
(5)Section 72(e)(U)(A) is amended by striking “12-month period” and inserting “calendar year”.
(b)[26 USC 1504 note](/us/usc/t26/s1504). Amendment Related to Section 5021 of the 1988 Act.—Subsection
(e)of section 5021 of the 1988 Act is amended by striking “no provision in any law (whether enacted before, on, or after the 103 STAT. 2415date of the enactment of this Act)” and inserting “no provision in any law enacted after the date of the enactment of this Act”.
(c)Amendment Related to Section 5032 of the 1988 Act.—Subsection
(b)of section 2101 is amended by adding at the end the following new sentence: " “For purposes of the preceding sentence, there shall be appropriate adjustments in the application of section 2001(c)(3) to reflect the difference between the amount of the credit provided under section 2102(c) and the amount of the credit provided under section 2010.” "
(d)Amendments Related to Section 5033 of the 1988 Act.— (1)(A) Paragraph
(2)of section 2523(i) is amended by striking “made by the donor to such spouse” and inserting “which are made by the donor to such spouse and with respect to which a deduction would be allowable under this section but for paragraph (1)”.
(B)The amendment made by subparagraph
(A)shall apply Gifts and property.[26 USC 2523 note](/us/usc/t26/s2523).with respect to gifts made after June 29, 1989.
(2)Subsection
(a)of section 2523 is amended by striking “who is a citizen or resident”.
(3)Paragraph
(3)of section 2106(a) is amended by striking “allowed where spouse is citizen”. (4)(A) Subparagraph
(B)of section 2056(d)(2) is amended to read as follows: " “(B) Special rule.—If any property passes from the decedent Gifts and property.to the surviving spouse of the decedent, for purposes of subparagraph (A), such property shall be treated as passing to such spouse in a qualified domestic trust if— “(i) such property is transferred to such a trust before the date on which the return of the tax imposed by this chapter is made, or “(ii) such property is irrevocably assigned to such a trust under an irrevocable assignment made on or before such date which is enforceable under local law.” "
(B)In the case of the estate of a decedent dying before the [26 USC 2056 note](/us/usc/t26/s2056).date of the enactment of this Act, the period during which the transfer (or irrevocable assignment) referred to in section 2056(d)(2)(B) of the Internal Revenue Code of 1986 (as amended by subparagraph (A)) may be made shall not expire before the date 1 year after such date of enactment.
(5)Subsection
(d)of section 2056 is amended by adding at the end the following new paragraph: " “(4) Special rule where resident spouse becomes citizen.— Paragraph
(1)shall not apply if— “(A) the surviving spouse of the decedent becomes a citizen of the United States before the day on which the return of the tax imposed by this chapter is made, and “(B) such spouse was a resident of the United States at all times after the date of the death of the decedent and before becoming a citizen of the United States.” "
(6)Paragraph
(3)of section 2056(d) is amended—
(A)by striking “section 2001” and inserting “this chapter”, and
(B)by inserting before the period at the end the following: “and without regard to subsection (d)(3) of such section”. (7)(A) Subsection
(a)of section 2056A is amended—
(i)by amending paragraph
(1)to read as follows: 103 STAT. 2416 " “(1) the trust instrument requires that at least 1 trustee of the trust be an individual citizen of the United States or a domestic corporation and that no distribution from the trust may be made without the approval of such a trustee,”, and "
(ii)by striking paragraph
(2)and redesignating paragraphs
(3)and
(4)as paragraphs
(2)and (3), respectively.
(B)Subsection
(b)of section 2056A is amended by redesignating paragraphs
(3)through
(8)as paragraphs
(4)through (9), respectively, and by inserting after paragraph
(2)the following new paragraph: " “(3) Certain lifetime distributions exempt from tax.— “(A) Income distributions.—No tax shall be imposed by paragraph (1)(A) on any distribution of income to the surviving spouse. “(B) Hardship Exemption —No tax shall be imposed by paragraph (1)(A) on any distribution to the surviving spouse on account of hardship.” "
(C)Subparagraph
(A)of section 2056A(b)(1) is amended by striking “other than a distribution of income required under subsection (a)(2)”.
(D)Paragraph
(4)of section 2056A(b) (as redesignated by subparagraph (B)) is amended to read as follows: " “(4) Tax where trust ceases to qualify.—If any qualified domestic trust ceases to meet the requirements of paragraphs
(1)and
(2)of subsection (a), the tax imposed by paragraph
(1)shall apply as if the surviving spouse died on the date of such cessation.” "
(8)Subsection
(d)of section 2056 is amended by adding at the end the following new paragraph: " “(4) Reformations permitted.— “(A) Gifts and property. In general.—In the case of any property with respect to which a deduction would be allowable under subsection
(a)but for this subsection, the determination of whether a trust is a qualified domestic trust shall be made— “(i) as of the date on which the return of the tax imposed by this chapter is made, or “(ii) if a judicial proceeding is commenced on or before the due date (determined with regard to extensions) for filing such return to change such trust into a trust which is a qualified domestic trust, as of the time when the changes pursuant to such proceeding are made. “(B) Statute of limitations.—If a judicial proceeding described in subparagraph (A)(ii) is commenced with respect to any trust, the period for assessing any deficiency of tax attributable to any failure of such trust to be a qualified domestic trust shall not expire before the date 1 year after the date on which the Secretary is notified that the trust has been changed pursuant to such judicial proceeding or that such proceeding has been terminated.” "
(9)Subsection
(b)of section 2056A is amended by adding at the end the following new paragraphs: " “(10) Certain benefits allowed.— “(A) Gifts and property. In general.—If any property remaining in the qualified domestic trust on the date of the death of the surviving spouse is includible in the gross estate of such 103 STAT. 2417spouse for purposes of this chapter (or would be includible if such spouse were a citizen or resident of the United States), any benefit which is allowable (or would be allowable if such spouse were a citizen or resident of the United States) with respect to such property to the estate of such spouse under section 2032, 2032A, 2055, 2056, or 6166 shall be allowed for purposes of the tax imposed by paragraph (1)(B). “(B) Section 803.—If the estate of the surviving spouse meets the requirements of section 303 with respect to any property described in subparagraph (A), for purposes of section 303, the tax imposed by paragraph (1)(B) with respect to such property shall be treated as a Federal estate tax payable with respect to the estate of the surviving spouse. “(C) Section 6161
(a)(1).—The provisions of section 6161(a)(2) shall apply with respect to the tax imposed by paragraph (1)(B), and the reference in such section to the executor shall be treated as a reference to the trustees of the trust. “(11) Special rule where distribution tax paid out of trust.—For purposes of this subsection, if any portion of the tax imposed by paragraph (1)(A) with respect to any distribution is paid out of the trust, an amount equal to the portion so paid shall be treated as a distribution described in paragraph (1)(A). “(12) Special rule where spouse becomes citizen.— If the surviving spouse of the decedent becomes a citizen of the United States and if— “(A) such spouse was a resident of the United States at all times after the date of the death of the decedent and before such spouse becomes a citizen of the United States, “(B) no tax was imposed by paragraph (1)(A) with respect to any distribution before such spouse becomes such a citizen, or “(C) such spouse elects— “(i) to treat any distribution on which tax was imposed by paragraph (1)(A) as a taxable gift made by such spouse for purposes of— “(I) section 2001, and “(II) determining the amount of the tax imposed by section 2501 on actual taxable gifts made by such spouse during the year in which the spouse becomes a citizen or any subsequent year, and “(ii) to treat any reduction in the tax imposed by paragraph (1)(A) by reason of the credit allowable under section 2010 with respect to the decedent as a credit allowable to such surviving spouse under section 2505 for purposes of determining the amount of the credit allowable under section 2505 with respect to taxable gifts made by the surviving spouse during the year in which the spouse becomes a citizen or any subsequent year, paragraph (1)(A) shall not apply to any distributions after such spouse becomes such a citizen (and paragraph (1)(B) shall not apply). “(13) Coordination with section 1015.—For purposes of section Gifts and property.1015, any distribution on which tax is imposed by para-103 STAT. 2418graph (1)(A) shall be treated as a transfer by gift, and any tax paid under paragraph (1)(A) shall be treated as a gift tax.” "
(10)Paragraph
(2)of section 2056A(c) is amended by striking “The term” and inserting “Except as provided in regulations, the term”.
(11)Clause
(ii)of section 2056A(b)(2)(B) is amended by striking “as a credit or refund” and inserting “as a credit or refund (with interest)”.
(12)Paragraph
(2)of section 2056A(b) is amended by adding at the end the following new subparagraph: " “(C) Special rule where decedent has more than 1 qualified domestic trust.—If there is more than 1 qualified domestic trust with respect to any decedent, the amount of the tax imposed by paragraph
(1)with respect to such trusts shall be determined by using the highest rate of tax in effect under section 2001 as of the date of the decedent’s death (and the provisions of paragraph (3)(B) shall not apply) unless, pursuant to a designation made by the decedent’s executor, there is 1 person— “(i) who is an individual citizen of the United States or a domestic corporation and is responsible for filing all returns of tax imposed under paragraph
(1)with respect to such trusts and for paying all tax so imposed, and “(ii) who meets such requirements as the Secretary may by regulations prescribe.” "
(13)Section 2056A is amended by adding at the end the following new subsection: " “(e) Regulations.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including regulations under which there may be treated as a qualified domestic trust any annuity or other payment which is includible in the decedent’s gross estate and is by its terms payable for life or a term of years.” "
(14)Gifts and property.[26 USC 2056 note](/us/usc/t26/s2056).In the case of the estate of, or gift by, an individual who was not a citizen or resident of the United States but was a resident of a foreign country with which the United States has a tax treaty with respect to estate, inheritance, or gift taxes, the amendments made by section 5033 of the 1988 Act shall not apply to the extent such amendments would be inconsistent with the provisions of such treaty relating to estate, inheritance, or gift tax marital deductions. In the case of the estate of an individual dying before the date 3 years after the date of the enactment of this Act, or a gift by an individual before the date 3 years after the date of the enactment of this Act, the requirement of the preceding sentence that the individual not be a citizen or resident of the United States shall not apply.
(15)Paragraph
(5)of section 2O56A(b) (as redesignated by paragraph (7)(B) of this subsection) is amended to read as follows: " “(5) Gifts and property. Due date.— “(A) Tax on distributions.—The estate tax imposed by paragraph (1)(A) shall be due and payable on the 15th day of the 4th month following the calendar year in which the taxable event occurs; except that the estate tax imposed by paragraph (1)(A) on distributions during the calendar year in which the surviving spouse dies shall be due and payable 103 STAT. 2419not later than the date on which the estate tax imposed by paragraph (1)(B) is due and payable. “(B) Tax at death of spouse.—The estate tax imposed by paragraph (1)(B) shall be due and payable on the date 9 months after the date of such death.” "
(16)For purposes of applying section 2040(a) of the Internal Gifts and property.[26 USC 2040 note](/us/usc/t26/s2040).Revenue Code of 1986 with respect to any joint interest to which section 2040(b) of such Code does not apply solely by reason of section 2056(d)(1)(B) of such Code, any consideration furnished before July 14, 1988, by the decedent for such interest to the extent treated as a gift to the spouse of the decedent for purposes of chapter 12 of such Code shall be treated as consideration originally belonging to such spouse and never acquired by such spouse from the decedent.
(e)Amendments Related to Section 5041 of the 1988 Act.—
(1)Subparagraph
(A)of section 460(e)(6) is amended—
(A)by striking “the building, construction, reconstruction, or rehabilitation of” and inserting “activities referred to in paragraph
(4)with respect to”, and
(B)by striking clause
(i)and inserting the following: " “(i) dwelling units (as defined in section 167(k)) contained in buildings containing 4 or fewer dwelling units (as so defined), and”. " (2)(A) Paragraph
(4)of section 5041(b) of the 1988 Act is [26 USC 56](/us/usc/t26/s56).amended by inserting “, as amended by title I of this Act,” after “1986 Code”.
(B)Paragraph
(3)of section 56(a) is amended by striking “The preceding sentence shall not” and inserting “The first sentence of this paragraph shall not”.
(3)Subparagraph
(C)of section 5041(e)(1) of the 1988 Act is [26 USC 460 note](/us/usc/t26/s460).amended by striking “subsections (a), (b), and (c)” and inserting “subsections
(a)and (b)”.
(4)Clause
(i)of section 56(g)(4)(D) is amended by adding “and” at the end of subclause
(III)and by striking subclauses
(IV)and
(V)and inserting the following new subclause: " “(IV) paragraphs (6), (7), and
(8)shall not apply.” "
(f)Amendment Related to Section 5053 of the 1988 Act.—Subsection
(d)of section 145 is amended by redesignating paragraph
(3)as paragraph
(4)and by inserting after paragraph
(2)the following new paragraph: "
(3)Certain property treated as new property.—Solely for purposes of determining under paragraph (2)(A) whether the 1st use of property is pursuant to tax-exempt financing— “(A) In general.—If— “(i) the 1st use of property is pursuant to taxable financing, “(ii) there was a reasonable expectation (at the time such taxable financing was provided) that such financing would be replaced by tax-exempt financing, and “(iii) the taxable financing is in fact so replaced within a reasonable period after the taxable financing was provided, then the 1st use of such property shall be treated as being pursuant to the tax-exempt financing. “(B) Special rule where no operating state or local program for tax-exempt financing.—If, at the time of the 1st use of property, there was no operating State or local 103 STAT. 2420program for tax-exempt financing of the property, the 1st use of the property shall be treated as pursuant to the 1st tax-exempt financing of the property. “(C) Definitions.—For purposes of this paragraph— “(i) Tax-exempt financing.—The term ‘tax-exempt financing’ means financing provided by tax-exempt bonds. “(ii) Taxable financing.—The term ‘taxable financing’ means financing which is not tax-exempt financing.”"
(g)Amendment Related to Section 5076 of the 1988 Act.—Paragraph
(3)of section 453A(b) is amended to read as follows: " “(3) Exception for personal use and farm property.— An installment obligation shall not be treated as described in paragraph
(1)if it arises from the disposition— “(A) by an individual of personal use property (within the meaning of section 1275(b)(3)), or “(B) of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e)
(4)or (5)).” "
(h)Amendment Related to Section 5077 of the 1988 Act.—Clause
(ii)of section 382(1)(3)(C) is amended by striking “for purposes of subclause (III),” and inserting “For purposes of subclause (III),”. SEC. 7816. AMENDMENTS RELATED TO TITLE VI OF THE 1988 ACT.
(a)Amendment Related to Section 6003 of the 1988 Act.—Paragraph
(2)of section 274(n) is amended—
(1)by striking so much of such paragraph as follows subparagraph
(D)and precedes subparagraph
(F)and inserting the following: " “(E) in the case of an employer who pays or reimburses moving expenses of an employee, such expenses are includible in the income of the employee under section 82, or”, and "
(2)by adding at the end the following new sentence: “In the case of the employee, the exception of subparagraph
(A)shall not apply to expenses described in subparagraph (E).”
(b)Amendment Related to Section 6006 of the 1988 Act.—Subparagraph
(A)of section l(i)(7) is amended by inserting “(other than for purposes of this paragraph)” after “shall be treated”.
(c)Amendments Related to ¡Section 6009 of the 1988 Act.—
(1)[26 USC 219](/us/usc/t26/s219). Paragraph
(2)of section 6009(c) of the 1988 Act is amended by striking “Clause (i)” and inserting “Clause (ii)”.
(2)Paragraph
(1)of section 135(d) is amended by striking “subsection
(a)respect to” and inserting “subsection
(a)with respect to”.
(d)Amendments Related to Section 6026 of the 1988 Act.—
(1)Subparagraph
(D)of section 263A(h)(3) is amended to read as follows: " “(D) Treatment of certain corporations.— “(i) In general.—If— “(I) substantially all of the stock of a corporation is owned by a qualified employee-owner and members of his family (as defined in section 267(c)(4)), and “(II) the principal activity of such corporation is performance of personal services directly related to 103 STAT. 2421the activities of the qualified employee-owner and such services are substantially performed by the qualified employee-owner, this subsection shall apply to any expense of such corporation which directly relates to the activities of such employee-owner in the same manner as if such expense were incurred by such employee-owner. “(ii) Qualified employee-owner.—For purposes of this subparagraph, the term ‘qualified employee-owner’ means any individual who is an employee-owner of the corporation (as defined in section 269A(b)(2)) and who is a writer, photographer, or artist.” "
(2)Subparagraph
(B)of section 6026(d)(2) of the 1988 Act is [26 USC 263A note](/us/usc/t26/s263A).amended by striking “the taxpayer made” and inserting “a taxpayer engaged in a farming business involving the production of animals having a preproductive period of more than 2 years made”.
(e)Amendments Related to Section 6028 of the 1988 Act.—
(1)Paragraph
(5)of section 168(b) is amended by striking “paragraph (2)(B)” and inserting “paragraph (2)(C)”.
(2)Paragraph
(2)of section 168(c) is amended by striking “subsection (b)(2)(B)” and inserting “subsection (b)(2)(C)”.
(f)Amendment Related to Section 6029 of the 1988 Act.—The subparagraph
(D)of section 168(b)(3) added by section 6029 of the 1988 Act is redesignated as subparagraph (E).
(g)Amendment Related to Section 6033 of the 1988 Act.—Subsection
(b)of section 6033 of the 1988 Act is amended by striking [26 USC 451 note](/us/usc/t26/s451).“paragraph (1)” and inserting “subsection (a)”.
(h)Amendment Related to Section 6054 of the 1988 Act.—Paragraph
(1)of section 6054(b) of the 1988 Act is amended by [26 USC 415 note](/us/usc/t26/s415).striking “subsection apply” and inserting “section shall apply”.
(i)Amendment Related to Section 6061 of the 1988 Act.—Section 6061 of the 1988 Act is amended— [26 USC 133 note](/us/usc/t26/s133).
(1)by striking “section 111B(h)(5)(A)” and inserting “section 1011B(h)(5)(A)”, and
(2)by striking “section 1118(h)” and inserting “section 1011B(h)”.
(j)Amendment Related to Section 6064 of the 1988 Act.—Paragraph
(13)of section 457(e) is amended to read as follows: " “(13) Special rule for churches.—The term ‘eligible employer’ shall not include a church (as defined in section 3121(w)(3)(A)) or qualified church-controlled organization (as defined in section 3121(w)(3)(B)).” "
(k)Amendment Related to Section 6067 of the 1988 Act.—Subsection
(c)of section 6067 of the 1988 Act is amended by striking [26 USC 414 note](/us/usc/t26/s414).“section 205(c)” and inserting “section 2005(c)”.
(l)Amendment Related to Section 6071 of the 1988 Act.—Paragraph
(2)of section 6071(b) of the 1988 Act is amended by [26 USC 401](/us/usc/t26/s401).striking “electric plan” and inserting “electric cooperative plan”.
(m)Provision Related to Section 6076 of the 1988 Act.—If, for [26 USC 481 note](/us/usc/t26/s481).the 1st taxable year beginning on or after January 1, 1987, a qualified group self-insurers’ fund changes its treatment of policyholder dividends to take into account such dividends no earlier than the date that the State regulatory authority determines the amount of the policyholder dividend that may be paid, then such change shall be treated as a change in a method of accounting and no adjustment under section 481(a) of the Internal Revenue Code of 103 STAT. 24221986 shall be made with respect to such change in method of accounting.
(n)Amendments Related to Section 6077 of the 1988 Act.—
(1)Paragraph
(1)of section 847 is amended—
(A)by striking “separate estimated tax” and inserting “special estimated tax”, and
(B)by striking “after December 31, 1986” and inserting “in taxable years beginning after December 31, 1986”.
(2)The first sentence of section 847(2) is amended to read as follows: “The deduction under paragraph
(1)shall be allowed only to the extent that such deduction would result in a tax benefit for the taxable year for which such deduction is allowed or any carryback year and only to the extent that special estimated tax payments are made in an amount equal to the tax benefit attributable to such deduction on or before the due date (determined without regard to extensions) for filing the return for the taxable year for which the deduction is allowed.”
(3)Paragraph
(5)of section 847 is amended by adding at the end the following new sentence: " “To the extent that any amount added to the special loss discount account is not subtracted from such account before the 15th year after the year for which the amount was so added, such amount shall be subtracted from such account for such 15th year and included in gross income for such 15th year.” "
(4)Paragraph
(9)of section 847 is amended by striking “and” at the end of subparagraph (A), by striking the period at the end of subparagraph
(B)and inserting “, and”, and by adding at the end the following new subparagraph: " “(C) providing for the application of this section in cases where the deduction allowed under paragraph
(1)for any taxable year is less than the excess referred to in paragraph
(1)for such year.” "
(5)Section 847 (as amended by paragraph (4)) is amended by redesignating paragraph
(9)as paragraph
(10)and by inserting after paragraph
(8)the following new paragraph: " “(9) Effect on earnings and profits.— In determining the earnings and profits— “(A) any special estimated tax payment made for any taxable year shall be treated as a payment of income tax imposed by this title for such taxable year, and “(B) any deduction or inclusion under this section shall not be taken into account. Nothing in the preceding sentence shall be construed to affect the application of section 56(g) (relating to adjustments based on adjusted current earnings).” "
(6)Paragraph
(8)of section 847 is amended by adding at the end the following new sentence: “The limitations on consolidation contained in section 1503(c) shall not apply to the deduction allowed under paragraph (1).”
(o)Amendments Related to Section 6105 of the 1988 Act.—
(1)The subsection
(c)of section 5276 added by section 6105 of the 1988 Act is amended—
(A)by striking “(c) Exemption” and inserting “(d) Exception”,
(B)by striking “section 5271(a)(2)” in paragraph
(1)and inserting “section 5271”, and 103 STAT. 2423
(C)by striking “specially denatured distilled spirits” in paragraph
(2)and inserting “distilled spirits free of tax”.
(2)Subsection
(a)of section 5276 is amended by striking “Except as provided in subsection (c),” and inserting “Except as otherwise provided in this section,”.
(p)Amendment Related to Section 6135 or the 1988 Act.—Paragraph
(3)of section 953(d) is amended by striking “(as defined in section 1503(d))” and inserting “for purposes of section 1503(d) without regard to paragraph (2)(B) thereof”.
(q)Amendment Related to Section 6152 of the 1988 Act.—Subparagraph
(C)of section 2056(b)(7) is amended by striking “an annuity” and inserting “an annuity included in the gross estate of the decedent under section 2039”.
(r)Amendment Related to Section 6177 of the 1988 Act.—Subclause
(III)of section 148(f)(4)(B)(iii) is amended by striking “such date of issuance, or the date” and inserting “such date of issuance or the date”.
(s)Amendments Related to Section 6180 of the 1988 Act.—
(1)Paragraph
(1)of section 142(i) is amended by inserting “In general.—” after “(1)”.
(2)The paragraph
(3)of section 146(g) added by section 6180 of the 1988 Act is redesignated as paragraph (4).
(3)Paragraph
(3)of section 147(c) is amended by inserting a comma after “mass commuting facility” each place it appears.
(t)Amendments Related to Section 6183 of the 1988 Act.—Subclause
(II)of section 148(f)(4)(C)(ii) is amended by striking “on behalf of” and inserting “to make loans to”.
(u)Amendments Related to Section 6228 of the 1988 Act.—
(1)The section 7520 added by section 6228 of the 1988 Act is redesignated as section 7521.
(2)The table of sections for chapter 77 is amended by striking the item added by section 6228 of the 1988 Act and inserting the following: " “Sec. 7521. Procedures involving taxpayer interviews.” "
(v)Amendments Related to Section 6242 of the 1988 Act.—
(1)The section 6712 added by section 6242 of the 1988 Act is redesignated as section 6713.
(2)The table of sections for part I of subchapter B of chapter 68 is amended by striking the item added by section 6242 of the 1988 Act and inserting the following: " “Sec. 6713. Disclosure or use of information by preparers of returns.” "
(w)Amendment Related to Section 6253 of the 1988 Act.—Section 6253 of the 1988 Act is amended by inserting “, as amended [26 USC 168](/us/usc/t26/s168).by title I of this Act,” after “1986 Code”. SEC. 7817. EFFECTIVE DATE. [26 USC 1 note](/us/usc/t26/s1). Except as otherwise provided in this part, any amendment made by this part shall take effect as if included in the provision of the 1988 Act to which such amendment relates. **PART II—****AMENDMENTS RELATED TO REVENUE ACT OF 1987** SEC. 7821. AMENDMENTS RELATED TO SUBTITLE B.
(a)Amendments Related to Section 10202 of the 1987 Act.— 103 STAT. 2424
(1)Subparagraph
(B)of section 453A(b)(2) is amended by striking “all obligations of the taxpayer described in paragraph (1)” and inserting “all such obligations held by the taxpayer”.
(2)Subparagraph
(B)of section 453A(d)(2) is amended by striking “before such secured indebtedness was incurred” and inserting “before the later of the times referred to in subparagraph
(A)or
(B)of paragraph (1)”.
(3)Subparagraph
(B)of section 453A(d)(1) is amended by inserting “the time” before the “the proceeds”. (4)(A) Paragraph
(2)of section 26(b) (as amended by section 11811) is amended by striking “and” at the end of subparagraph (L), by striking the period at the end of subparagraph
(M)and inserting “, and”, and by adding at the end the following new subparagraph: " “(N) sections 453(1)(3) and 453A(c) (relating to interest on certain deferred tax liabilities).” "
(B)Subsection
(c)of section 453A is amended by redesignating paragraph
(5)as paragraph
(6)and by inserting after paragraph
(4)the following new paragraph: " “(5) Treatment as interest.—Any amount payable under this subsection shall be taken into account in computing the amount of any deduction allowable to the taxpayer for interest paid or accrued during the taxable year.” "
(5)[26 USC 56 note](/us/usc/t26/s56).In the case of taxable years beginning in 1987, the reference to section 453 contained in section 56(a)(6) of the Internal Revenue Code of 1986 shall be treated as including a reference to section 453A.
(b)Amendments Related to Section 10206 of the 1987 Act.—Effective with respect to taxable years beginning after 1988, the last sentence of section 7519(d)(4) is amended—
(1)by striking “for taxable years beginning after 1987,”,
(2)by striking “if more than 50 percent” and inserting “unless more than 50 percent”, and
(3)by striking “who would not have been entitled” and inserting “who would have been entitled”.
(c)Amendment Related to Section 10222 of the 1987 Act.—Clause
(ii)of section 1503(e)(2)(A) is amended by striking “another member” and inserting “another corporation which is or was a member”.
(d)Amendments Related to Section 10242 of the 1987 Act.—
(1)The item relating to section 842 in the table of sections for part ID of subchapter L of chapter 1 is amended by striking “corporations” and inserting “companies”.
(2)The heading for paragraph
(4)of section 842(c) is amended by striking “yeilds” and inserting “yields”. SEC. 7822. AMENDMENTS RELATED TO SUBTITLE C AND FOLLOWING SUBTITLES.
(a)Amendment Related to Section 10301 of the 1987 Act.—Paragraph
(1)of section 6655(e) is amended by striking “section (d)(1)” and inserting “subsection (d)(1)”.
(b)Amendments Related to Section 10502 of the 1987 Act.—
(1)Paragraph
(1)of section 6427(i) is amended by striking “subsection (a)” and all that follows through “by any person” and inserting “subsection (a), (b), (c), (d), (e), (g), (h), (1), or
(q)by any person”. 103 STAT. 2425
(2)Clause
(i)of section 6427(i)(2)(A) is amended to read as follows: " “(i) $1,000 or more is payable under subsections (a), (b), (d), (e), (g), (h), and (q), or”, "
(3)Subparagraph
(B)of section 64270)(2) is amended to read as follows: " “(B) Special rule.—If the requirements of subparagraph (A)(ii) are met by any person for any quarter but the requirements of subparagraph (A)(i) are not met by such person for such quarter, such person may file a claim under subparagraph
(A)for such quarter only with respect to amounts referred to in subparagraph (A)(ii).” "
(4)The subsection of section 6427 relating to payments for taxes imposed by section 4041(d) is redesignated as subsection (p).
(5)Paragraph
(3)of section 9502(b) is amended by striking “, and” and inserting “; and”.
(6)Subparagraph
(A)of section 9503(b)(4) is amended by striking “sections 4041(d)” and inserting “section 4041(d)”.
(7)Subsections (b)(3) and (c)(2)(A) of section 9508 are each amended by striking “Storage Trust Fund” and inserting “Storage Tank Trust Fund”.
(c)Amendment Related to Section 10611 of the 1987 Act.—The table of sections for part II of subchapter B of chapter 1 is amended by inserting “Illegal” before “Federal” in the item relating to section 90.
(d)Amendments Related to Section 10713 of the 1987 Act.—
(1)Subparagraph
(G)of section 10713(b)(2) of the 1987 Act is [26 USC 7611](/us/usc/t26/s7611).amended to read as follows: " “(G) Paragraph
(3)of section 7611(i) is amended by striking all that follows ‘income tax)’ and inserting “, section 6852 (relating to termination assessments in case of flagrant political expenditures of section 501(c)(3) organizations), or section 6861 (relating to jeopardy assessments of income taxes, etc.),’.” "
(2)Clause
(iii)of section 10713(b)(2)(E) of the 1987 Act is [26 USC 6863](/us/usc/t26/s6863).amended to read as follows: " “(iii) by striking ‘6851(a) nor 6861(a)’ in subsection (b)(3)(A)(iii) and inserting ‘6851(a), 6852(a), nor 6861(a)’.” " SEC. 7823. EFFECTIVE DATE. [26 USC 26 note](/us/usc/t26/s26). Except as otherwise provided in this part, any amendment made by this part shall take effect as if included in the provision of the 1987 Act to which such amendment relates. **PART III—****AMENDMENTS RELATED TO TAX REFORM ACT OF 1986** SEC. 7831. AMENDMENTS RELATED TO TAX REFORM ACT OF 1988.
(a)Amendment Related to Section 101 of the 1986 Act.—Subparagraph
(B)of section l(f)(6) (relating to rounding of inflation adjustments for married individuals filing separately) is amended by striking “(other than with respect to section 63(c)(4))” and inserting the following: “(other than with respect to subsection (c)(4) of section 63 (as it applies to subsections (c)(5)(A) and
(f)of such section) and section 151(d)(3))”. 103 STAT. 2426
(b)Amendment Related to Section 201 of the 1986 Act.—Paragraph
(5)of section 1250(b) is amended—
(1)by striking “in the case of recovery property” in subparagraph
(A)and inserting “in the case of property to which section 168 applies”, and
(2)by striking “in the case of any property which is not recovery property” in subparagraph
(B)and inserting “in the case any property to which section 168 does not apply”.
(c)Amendments Related to Section 252 of the 1986 Act.—
(1)Regulations.Subparagraph
(B)of section 42(i)(3) (defining low-income unit) is amended by inserting “(as determined under regulations prescribed by the Secretary taking into account local health, safety, and building codes)” after “suitable for occupancy”.
(2)Paragraph
(3)of section 42(i) is amended by adding at the end the following new subparagraph: " “(D) Students in government-supported job training programs not to disqualify unit.—A unit shall not fail to be treated as a low-income unit merely because it is occupied by an individual who is enrolled in a job training program receiving assistance under the Job Training Partnership Act or under other similar Federal, State, or local laws.” "
(3)Subsection
(i)of section 42 (relating to special rules) is amended by adding at the end the following new paragraph: " “(6) Application to estates and trusts.—In the case of an estate or trust, the amount of the credit determined under subsection
(a)and any increase in tax under subsection
(j)shall be apportioned between the estate or trust and the beneficiaries on the basis of the income of the estate or trust allocable to each.” "
(4)Subsection
(f)of section 42 is amended by adding at the end the following new paragraph: " “(4) Dispositions of property.—If a building (or an interest therein) is disposed of during any year for which credit is allowable under subsection (a), such credit shall be allocated between the parties on the basis of the number of days during such year the building (or interest) was held by each. In any such case, proper adjustments shall be made in the application of subsection (j).” "
(5)Subsection
(m)of section 42 (relating to regulations) is amended by striking “and” at the end of paragraph (2), by striking the period at the end of paragraph
(3)and inserting “, and”, and by adding at the end the following new paragraph: " “(4) providing the opportunity for housing credit agencies to correct administrative errors and omissions with respect to allocations and record keeping within a reasonable period after their discovery, taking into account the availability of regulations and other administrative guidance from the Secretary.” "
(6)Subparagraph
(A)of section 42(d)(7) is amended by inserting “(or interest therein)” after “a building described in subparagraph (B)”.
(d)Amendments Related to Section 803 of the 1986 Act.—
(1)Subparagraph
(A)of section 803(d)(4) of the Tax Reform [26 USC 263A note](/us/usc/t26/s263A).Act of 1986 is amended by striking so much of such subparagraph as precedes clause
(i)thereof and inserting the following: " “(A) Transition property exempted from interest capitalization.—Section 263A of the Internal Revenue 103 STAT. 2427Code of 1986 (as added by this section) and the amendment made by subsection (b)(1) shall not apply to interest costs which are allocable to any property—”. "
(2)If any interest costs incurred after December 31, 1986, are [26 USC 263A note](/us/usc/t26/s263A).attributable to costs incurred before January 1, 1987, the amendments made by section 803 of the Tax Reform Act of 1986 shall apply to such interest costs only to the extent such interest costs are attributable to costs which were required to be capitalized under section 263 of the Internal Revenue Code of 1954 and which would have been taken into account in applying section 189 of the Internal Revenue Code of 1954 (as in effect before its repeal by section 803 of the Tax Reform Act of 1986) or, if applicable, section 266 of such Code.
(e)Application of Future Legislation to Transitioned Bonds.—[26 USC 141 note](/us/usc/t26/s141).Section 1318 of the Tax Reform Act of 1986 is amended by adding at the end the following new paragraph: " “(8) Application of future legislation to transitioned bonds.— In the case of any bond to which the amendments made by section 1301 do not apply by reason of a provision of this Act, any amendment of the 1986 Code (and any other provision applicable to such Code) included in any law enacted after October 22, 1986, shall be treated as included in section 103 and section 103A (as appropriate) of the 1954 Code with respect to such bond unless— “(A) such law expressly provides that such amendment (or other provision) shall not apply to such bond, or “(B) such amendment (or other provision) applies to a provision of the 1986 Code— “(i) for which there is no corresponding provision in section 103 and section 103A (as appropriate) of the 1954 Code, and “(ii) which is not otherwise treated as included in such sections 103 and 103A with respect to such bond.” "
(f)Amendment Related to Section 1114 of the 1986 Act.—Subparagraphs
(A)and
(B)of section 1114(b)(9) of the Tax Reform Act of 1986 are each amended by striking “consist of supervising” [26 USC 406, 407](/us/usc/t26/s406/407).and inserting “consist in supervising”.
(g)Effective Date.—Any amendment made by this section shall [26 USC 1 note](/us/usc/t26/s1).take effect as if included in the provision of the Tax Reform Act of 1986 to which such amendment relates. **PART IV—****MISCELLANEOUS CHANGES** SEC. 7841. MISCELLANEOUS CHANGES.
(a)Amendment Related to Transfers Incident to Divorce or Separation.—
(1)Paragraph
(6)of section 408(d) is amended by striking “his former spouse under a divorce decree or under a written instrument incident to such divorce” and inserting “his spouse or former spouse under a divorce or separation instrument described in subparagraph
(A)of section 71(b)(2)”.
(2)Subsection
(p)of section 414 is amended by redesignating paragraph
(11)as paragraph
(12)and by inserting after paragraph
(10)the following new paragraph: " “(11) Application of rules to governmental and church plans.—For purposes of this title, a distribution or payment 103 STAT. 2428from a governmental plan (as defined in subsection (d)) or a church plan (as described in subsection (e)) shall be treated as made pursuant to a qualified domestic relations order if it is made pursuant to a domestic relations order which meets the requirement of clause
(i)of paragraph (1)(A).” "
(3)[26 USC 408 note](/us/usc/t26/s408).The amendments made by this subsection shall apply to transfers after the date of the enactment of this Act in taxable years ending after such date.
(b)Amendment Related to Single-Employer Pension Plan Amendments Act of 1986.—
(1)Section 404(g)(1) is amended by inserting “4041(b),” before “4062”.
(2)[26 USC 404 note](/us/usc/t26/s404). The amendment made by paragraph
(1)shall apply to payments made after January 1, 1986, in taxable years ending after such date.
(c)Definition of Compensation.—
(1)Paragraph
(1)of section 219(f) (defining compensation) is amended by adding at the end thereof the following new sentence: “For purposes of this paragraph, section 401(c)(2) shall be applied as if the term trade or business for purposes of section 1402 included service described in subsection (c)(6).
(2)[26 USC 219 note](/us/usc/t26/s219). The amendment made by paragraph
(1)shall apply to contributions after the date of the enactment of this Act in taxable years ending after such date.
(d)Miscellaneous Clerical Changes.—
(1)Paragraph
(1)of section 6103(d) is amended by striking “45,”.
(2)Section 6871 is amended by striking “44, or 45” each place it appears and inserting “or 44”.
(3)Paragraph
(5)of section 691(c) is amended by striking “paragraph (1)(D)” and inserting “paragraph (1)(C)”.
(4)The table of chapters for subtitle D is amended by striking the comma in the item relating to chapter 42 and inserting a semicolon.
(5)Section 6652 is amended—
(A)by redesignating the subsection relating to information with respect to includible employee benefits as subsection (k), and
(B)by redesignating the subsection relating to alcohol and tobacco taxes as subsection (1).
(6)Paragraph
(2)of section 410(a) is amended by striking the comma before the period.
(7)The heading of paragraph
(1)of section 132(h) is amended by striking “officers, etc.,” and inserting “highly compensated employees”.
(8)Paragraph
(1)of section 66(d) is amended by striking “section 911(b)” and inserting “section 911(d)(2)”.
(9)Subsection
(e)of section 861 is amended by striking “section 826(a)” and inserting “section 862(a)”.
(10)Paragraph
(27)of section 381(a) (relating to credit under section 53) is redesignated as paragraph (26).
(11)Subclause
(III)of section 382(l)(3)(B)(i) is amended by striking “divorce,” and inserting “divorce),”.
(12)The last sentence of section 6157(a) is amended by striking “subsections
(c)and (d)” and inserting “subsection (c)”. 103 STAT. 2429
(13)Clause
(i)of section 42(d)(6)(A) is amended by striking “Farmers’ Home Administration” and inserting “Farmers Home Administration”.
(14)Clause
(ii)of section 42(d)(7)(A) is amended by striking “sebsection (a)” and inserting “subsection (a)”.
(15)Subparagraph
(A)of section 42(e)(2) is amended by striking “captial account” and inserting “capital account”.
(16)Paragraph
(2)of section 844(a) is amended by striking “for the taxable year” and inserting “for a prior taxable year”.
(17)Subsection
(c)of section 4221 is amended by striking “or 4083”.
(18)Clause
(i)of section 274(n)(2)(F) is amended by inserting “any” before “Federal”.
(19)Subparagraph
(B)of section 132(f)(2) is amended by striking “section 151(e)(3)” and inserting “section 151(c)(3)”.
(20)Sections 6420(e)(2), 6421(g)(2), and 6427(j)(2) are each amended by striking “section 7602” and inserting “section 7602(a)”.
(e)Amendment Related to Treatment of Transactions in Which Federal Financial Assistance Provided.—
(1)Section 597(b)(2) is amended by striking “to reflect such treatment” and inserting “in connection with such assistance”.
(2)The amendment made by this subsection shall apply as if [26 USC 597 note](/us/usc/t26/s597).included in the amendments made by section 1401 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
(f)Amendment Related to Alcohol, Tobacco, and Firearms Returns.—Paragraph
(6)of section 6091(b) is amended by inserting “section 4181 or” before “subtitle E”.
(g)Authority to Pay Administrative Expenses from Vaccine Injury Compensation Trust Fund.
(1)In general.—Paragraph
(1)of section 9510(c) (relating to expenditures from Vaccine Injury Compensation Trust Fund) is amended by inserting before the period at the end thereof the following: “, or for the payment of all expenses of administration (but not in excess of $6,000,000 for any fiscal year) incurred by the Federal Government in administering such subtitle”.
(2)Effective date.—The amendment made by paragraph
(1)[26 USC 9510 note](/us/usc/t26/s9510).shall apply to fiscal years beginning after September 30, 1989. **PART V—****AMENDMENTS RELATED TO PENSION PROVISIONS** SEC. 7851. DEFINITIONS. For purposes of this part—
(1)Reform act.—Except where incompatible with the intent, the term “Reform Act” means the Tax Reform Act of 1986.
(2)ERISA.—The term “ERISA” means the Employee Retirement Income Security Act of 1974. Subpart A—Amendments Related To Tax Reform Act of 1986 SEC. 7861. AMENDMENTS RELATED TO TITLE XI OF THE REFORM ACT.
(a)Amendments Related to Section 1113 of the Reform Act.— 103 STAT. 2430
(1)[29 USC 1053](/us/usc/t29/s1053).Section 203(a)(2) of ERISA is amended—
(A)by striking “following” the first place it appears, and
(B)by striking “414(f)(1)(B)” in subparagraph (C)(ii)(I) and inserting “3(37)(A)(ii)”.
(2)[29 USC 1052](/us/usc/t29/s1052). Section 1113(e)(3) of the Reform Act is amended by striking “Section 202(B)(i)” and inserting “Section 202(a)(1)(B)(i)”.
(3)[26 USC 411 note](/us/usc/t26/s411). The second subsection
(e)of section 1113 of the Reform Act is redesignated as subsection (f).
(4)Section 1113(f) of the Reform Act, as redesignated by paragraph (3), is amended by adding at the end thereof the following new paragraph: " “(4) Repeal of class year vesting.— If a plan amendment repealing class year vesting is adopted after October 22, 1986, such amendment shall not apply to any employee for the 1st plan year to which the amendments made by subsections
(b)and (e)(2) apply (and any subsequent plan year) if— “(A) such plan amendment would reduce the nonforfeitable right of such employee for such year, and “(B) such employee has at least 1 hour of service before the adoption of such plan amendment and after the beginning of such 1st plan year. This paragraph shall not apply to an employee who has 5 consecutive 1-year breaks in service (as defined in section 411(a)(6)(A) of the Internal Revenue Code of 1986) which include the 1st day of the 1st plan year to which the amendments made by subsection
(b)and (e)(2) apply. A plan shall not be treated as failing to meet the requirements of section 401(a)(26) of such Code by reason of complying with the provisions of this paragraph.” " (5)(A) [26 USC 411](/us/usc/t26/s411).Section 411(a)(3) is amended by adding at the end thereof the following new subparagraph: " “(G) Treatment of matching contributions forfeited by reason of excess deferral or contribution.—A matching contribution (within the meaning of section 40 Km)) shall not be treated as forfeitable merely because such contribution is forfeitable if the contribution to which the matching contribution relates is treated as an excess contribution under section 401(k)(8)(B), an excess deferral under section 402(g)(2)( A), or an excess aggregate contribution under section 401(m)(6)(B).”. "
(B)Paragraph
(3)of section 203(a) of ERISA is amended by adding at the end thereof the following new subparagraph: " “(F) A matching contribution (within the meaning of section 401(m) of the Internal Revenue Code of 1986) shall not be treated as forfeitable merely because such contribution is forfeitable if the contribution to which the matching contribution relates is treated as an excess contribution under section 401(k)(8)(B) of such Code, an excess deferral under section 4O2(g)(2)(A) of such Code, or an excess aggregate contribution under section 401(m)(6)(B) of such Code.”. " (6)(A) Section 411(a)(4)(A) is amended to read as follows: " “(A) years of service before age 18,”. "
(B)Subparagraph
(A)of section 2O3(b)(1) of ERISA is amended to read as follows: " “(A) years of service before age 18,”. "
(b)[26 USC 4980 note](/us/usc/t26/s4980). Amendment Related to Section 1132 of the Act.— 103 STAT. 2431
(1)Notwithstanding any other provision of law, in the case of any qualified pension plan and welfare benefit plan described in paragraph (2), the assets of such pension plan in excess of its liabilities may be transferred to such welfare benefit plan upon the termination of such pension plan if such assets are to be used to provide retiree health benefits.
(2)For purposes of paragraph (1), a qualified pension plan and welfare benefit plan are described in this paragraph if—
(A)both such plans are jointly administered pursuant to a collective bargaining agreement between the employer maintaining such plans and one or more employee representatives,
(B)the welfare benefit plan provides retiree health benefits, and
(C)the qualified pension plan has assets in excess of liabilities (determined on a termination basis) and the welfare benefit plan has assets which are less than the present value of the benefits to be provided under the plan (determined as of the time of termination of the pension plan).
(3)For purposes of the Internal Revenue Code of 1986, any transfer of assets to which paragraph
(1)applies shall be treated as a reversion of such assets to the employer maintaining the plan which is includible in the gross income of such employer and subject to the tax imposed by section 4980 of such Code.
(c)Amendments Related to Section 1140 of the Reform Act.—
(1)Subsection
(a)of section 1140 of the Reform Act is amended [26 USC 401 note](/us/usc/t26/s401).by striking “or subtitle C” and inserting “, subtitle C, or title XVIII of this Act”.
(2)Section 1140(c) of the Reform Act is amended by striking all after “the first plan year beginning” and inserting “after the later of” " “(1) December 31, 1988, or “(2) the earlier of— “(A) December 31, 1990, or “(B) the date on which the last of such collective bargaining agreements terminate (without regard to any extension after February 28, 1986).” "
(3)Section 1140(c) is amended by adding at the end thereof the following new flush sentence: " “For purposes of paragraph (1)(B) and any other provision of this title, an agreement shall not be treated as terminated merely because the plan is amended pursuant to such agreement to meet the requirements of any amendment made by this title or title XVIII of this Act.”. "
(d)Amendments Related to Section 1145 of the Reform Act.—
(1)Subsection
(f)of section 303 of the Retirement Equity Act of 1984 is amended by striking “July 24, 1984” and inserting [26 USC 1001 note](/us/usc/t26/s1001).“July 17, 1984”.
(2)Paragraph
(3)of section 205(b) of ERISA, as added by section 1145(b) of the Reform Act, is redesignated as paragraph [29 USC 1055](/us/usc/t29/s1055).(4). SEC. 7862. AMENDMENTS RELATED TO TITLE XVIII OF THE REFORM ACT.
(a)Amendment Related to Section 1852 or the Reform Act.—Paragraph
(1)of section 4402(h) of ERISA is amended by striking [29 USC 1461](/us/usc/t29/s1461).“January 12, 1982” the second place it appears and inserting “January 16, 1982”. 103 STAT. 2432
(b)Amendment Related to Section 1879 of the Reform Act.—
(1)[29 USC 1054 and note](/us/usc/t29/s1054).Subsection
(u)of section 1879 of the Reform Act is amended—
(A)by striking “206(h)” each place it appears in paragraphs
(1)and (4)(B) and inserting “204(h)”,
(B)by redesignating paragraph
(4)as paragraph (5), and
(C)by inserting after paragraph
(3)the following: " “(4) Correction of cross reference.—Section 4218(1)(A) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1398(1)(A)) is amended by striking ‘section 4062(d)’ and inserting ‘section 4069(b)’.” "
(2)[29 USC 1054](/us/usc/t29/s1054). So much of section 204(h)(2) of ERISA as precedes subparagraph
(A)thereof is amended by adjusting the left-hand margination thereof to full measure.
(c)Amendments Related to Section 1895 of the Reform Act.— (1)(A) [26 USC 106](/us/usc/t26/s106).Section 106(b)(2) (relating to exception to certain plans) is amended by striking the last sentence thereof.
(B)[29 USC 1161](/us/usc/t29/s1161). Section 601(b) of ERISA is amended by striking the last sentence thereof.
(C)[26 USC 106 note](/us/usc/t26/s106). The amendments made by this paragraph shall apply to years beginning after December 31, 1986. (2)(A) [29 USC 1167](/us/usc/t29/s1167).Section 607(2) of ERISA is amended by striking “the individual’s employment or previous employment with an employer” and inserting “the performance of services by the individual for 1 or more persons maintaining the plan (including as an employee defined in section 401(c)(1) of the Internal Revenue Code of 1986)”.
(B)Section 4980B(f)(7), as added by the Technical and Miscellaneous [26 USC 4980B](/us/usc/t26/s4980B).Revenue Act of 1988, is amended by striking “the individual’s employment or previous employment with an employer” and inserting “the performance of services by the individual for 1 or more persons maintaining the plan (including as an employee defined in section 401(c)(1))”.
(C)[26 USC 4980B note](/us/usc/t26/s4980B). The amendments made by this paragraph shall apply to plan years beginning after December 31, 1989. (3)(A) [26 USC 162](/us/usc/t26/s162).Clause
(iv)of section 162(k)(2)(B) is amended—
(i)by striking “eligibility” in the heading and inserting “entitlement”, and
(ii)by inserting “which does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary” after “or otherwise)” in subclause (I).
(B)[29 USC 1162](/us/usc/t29/s1162).Section 602(2)(D) of ERISA is amended—
(i)by striking “eligibility” in the heading and inserting “entitlement”, and
(ii)by inserting “which does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary” after “or otherwise)” in clause (i).
(C)Clause
(iv)of section 4980B(f)(2)(B), as added by the Technical and Miscellaneous Revenue Act of 1988, is amended—
(i)by striking “eligibility” in the heading and inserting “entitlement”, and
(ii)by inserting “which does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary” after “or otherwise)” in subclause (I).
(D)[26 USC 162 note](/us/usc/t26/s162).The amendments made by this paragraph shall apply to—
(i)qualifying events occurring after December 31, 1989, and 103 STAT. 2433
(ii)in the case of qualified beneficiaries who elected continuation coverage after December 31, 1988, the period for which the required premium was paid (or was attempted to be paid but was rejected as such). (4)(A) The last sentence of section 602(3) of ERISA is amended [29 USC 1162](/us/usc/t29/s1162).to read as follows: " “In no event may the plan require the payment of any premium before the day which is 45 days after the day on which the qualified beneficiary made the initial election for continuation coverage.” "
(B)The last sentence of section 4980B(f)(2)(C) of the 1986 Code (as added by the Technical and Miscellaneous Revenue Act of 1988) is amended to read as follows: " “In no event may the plan require the payment of any premium before the day which is 45 days after the day on which the qualified beneficiary made the initial election for continuation coverage.” "
(C)The amendments made by this paragraph shall apply to [26 USC 4980B note](/us/usc/t26/s4980B).plan years beginning after December 31, 1989. (5)(A) Clause
(i)of section 4980B(f)(2)(B) is amended by adding at the end thereof the following new subclause: " “(V) Qualifying event involving medicare entitlement.—In the case of an event described in paragraph (3)(D) (without regard to whether such event is a qualifying event), the period of coverage for qualified beneficiaries other than the covered employee for such event or any subsequent qualifying event shall not terminate before the close of the 36-month period beginning on the date the covered employee becomes entitled to benefits under title XVIII of the Social Security Act.” "
(B)Section 602(2)(A) of ERISA is amended by adding at the end thereof the following new clause: " “(v) Qualifying event involving medicare entitlement.—In the case of an event described in section 603(4) (without regard to whether such event is a qualifying event), the period of coverage for qualified beneficiaries other than the covered employee for such event or any subsequent qualifying event shall not terminate before the close of the 36-month period beginning on the date the covered employee becomes entitled to benefits under title XVIII of the Social Security Act.” "
(C)The amendments made by this paragraph shall apply to [26 USC 4980B note](/us/usc/t26/s4980B).plan years beginning after December 31, 1989. (6)(A) Section 3011(b)(6) of the Technical and Miscellaneous Revenue Act of 1988 (Public Law 100–647) is repealed. [29 USC 1167](/us/usc/t29/s1167).Effective date.[29 USC 1167 note](/us/usc/t29/s1167).
(B)Subparagraph
(A)shall be effective as if included in the enactment of section 3011(b) of the Technical and Miscellaneous Revenue Act of 1988.
(d)Amendments Related to Section 1898 of the Reform Act.— (1)(A) Clause
(ii)of section 417(a)(3)(B) (defining applicable [26 USC 417](/us/usc/t26/s417).period) is amended by striking subclause
(V)and inserting at the end thereof the following new flush sentence: " “In the case of a participant who separates from service before attaining age 35, the applicable period shall be a reasonable period after separation.”. " 103 STAT. 2434
(B)[29 USC 1055](/us/usc/t29/s1055).Clause
(ii)of section 205(c)(3)(B) of ERISA is amended by striking subclause
(V)and inserting at the end thereof the following new flush sentence: " “In the case of a participant who separates from service before attaining age 35, the applicable period shall be a reasonable period after separation.”. "
(2)[26 USC 417 note](/us/usc/t26/s417). Section 1898(b)(8) of the Reform Act is amended by adding at the end thereof the following new subparagraph: " “(C) Effective date.—The amendments made by this paragraph shall apply to distributions after the date of the enactment of this Act.”. "
(3)Section 205(h) of ERISA is amended—
(A)in paragraph (1), by striking “the term” and inserting “The term”, and by striking “benefit,” and inserting “benefit.”; and
(B)in paragraph (3), by striking “the term” and inserting “The term”.
(4)[29 USC 1053](/us/usc/t29/s1053). Subparagraph
(B)of section 1898(d)(1) of the Reform Act is amended by striking “Paragraph (1)” and inserting “Subsection (e)(i)”.
(5)[29 USC 1053](/us/usc/t29/s1053). Section 203(e)(1) of ERISA (as amended by section 1898(d)(1) of the Tax Reform Act of 1986) is further amended to read as follows: " “(e)(1) If the present value of any nonforfeitable benefit with respect to a participant in a plan exceeds $3,500, the plan shall provide that such benefit may not be immediately distributed without the consent of the participant.”. "
(6)Subclause
(IV)of section 205(c)(3)(B)(ii) of ERISA is amended by striking “401(a)(11)” and inserting “205”.
(7)[29 USC 1055](/us/usc/t29/s1055).Subparagraph
(B)of section 1898(b)(7) of the Reform Act is amended by striking “Subparagraph
(C)of section 205(b)(1)” and inserting “Clause
(i)of section 205(b)(1)(C)”.
(8)Section 205(e)(2) of ERISA is amended by striking “nonforfeitable accrued benefit” and inserting “nonforfeitable right (within the meaning of section 203)”. (9)(A) Subparagraph
(B)of section 1898(b)(14) of the Reform Act is amended by inserting “(as amended by section 1145(b))” after “1974”.
(B)Paragraph
(3)of section 205(b) of ERISA (as added by section 1898(b)(14)(B) of the Reform Act) is redesignated as paragraph (4).
(10)Section 203(e)(1) of ERISA is amended by striking “vested accrued benefit” and inserting “nonforfeitable benefit” . SEC. 7863. [26 USC 106 note](/us/usc/t26/s106). EFFECTIVE DATE. Except as otherwise provided in this subpart, any amendment made by this subpart shall take effect as if included in the provision of the Reform Act to which such amendment relates. Subpart B—Amendments Related to Omnibus Budget Reconciliation Act of 1986 SEC. 7871. AMENDMENTS RELATED TO OMNIBUS BUDGET RECONCILIATION ACT OF 1986.
(a)Amendments Related to Section 9202 of the Act.— 103 STAT. 2435
(1)Section 411(b)(2) of the Internal Revenue Code of 1986 and section 204(b)(2) of ERISA are each amended by striking [26 USC 411](/us/usc/t26/s411); [29 USC 1054](/us/usc/t29/s1054).subparagraph
(B)and by redesignating subparagraphs
(C)and
(D)as subparagraphs
(B)and (C), respectively.
(2)Section 411(b)(2)(C), as redesignated by paragraph (1), is amended by striking “subparagraph” and inserting “paragraph”.
(3)Section 204(b)(2)(C) of ERISA, as redesignated by paragraph (1), is amended by striking “(C) and (D)” and inserting “(B) and (C)”.
(4)The amendments made by this subsection shall take effect Effective date.[26 USC 411 note](/us/usc/t26/s411).as if included in the amendments made by section 9202 of the Omnibus Budget Reconciliation Act of 1986.
(b)Amendments Related to Section 9203 of the Act.—
(1)Section 411(a)(8)(B) is amended to read as follows: " “(B) the later of— “(i) the time a plan participant attains age 65, or “(ii) the 5th anniversary of the time a plan participant commenced participation in the plan.” "
(2)Section 3(24)(B) of ERISA is amended to read as follows: [29 USC 1002](/us/usc/t29/s1002). " “(B) the later of— “(i) the time a plan participant attains age 65, or “(ii) the 5th anniversary of the time a plan participant commenced participation in the plan.” "
(3)The amendments made by this subsection shall take effect Effective date.[26 USC 411 note](/us/usc/t26/s411).as if included in the amendments made by section 9203 of the Omnibus Budget Reconciliation Act of 1986.
(c)Amendment Relating to Section 9501.—Section 602(2)(A)(iii) of ERISA is amended by inserting “section” before “603(6)”. [29 USC 1162](/us/usc/t29/s1162). Subpart C—Amendments Related to Pension Protection Act SEC. 7881. AMENDMENTS RELATED TO PENSION PROTECTION ACT.
(a)Amendments Related to Section 9303.— (1)(A) Subclause
(II)of section 412(l)(3)(C)(ii) is amended by [26 USC 412](/us/usc/t26/s412).inserting “(but not below zero)” after “reducing”.
(B)Subclause
(II)of section 302(d)(3)(C)(ii) of ERISA is [29 USC 1082](/us/usc/t29/s1082).amended by inserting “(but not below zero)” after “reducing”. (2)(A) Clause
(i)of section 412(1)(4)(8) is amended by inserting “and the unamortized portion of the unfunded existing benefit increase liability” after “liability”.
(B)Clause
(i)of section 302(d)(4)(B) of ERISA is amended by inserting “and the unamortized portion of the unfunded existing benefit increase liability” after “liability”. (3)(A) Section 412(l)(5)(C) is amended by striking “October 17, 1987” and inserting “the first plan year beginning after December 31, 1988”.
(B)Section 302(d)(5)(C) of ERISA is amended by striking “October 17, 1987” and inserting “the first plan year beginning after December 31, 1988”. (4)(A) Section 412(1)(7)(D) is amended—
(i)by striking “and” at the end of clause (iii)(I), by striking the period at the end of clause (iii)(II) and inserting “, and”, and by adding at the end of clause
(iii)the following new subclause: 103 STAT. 2436 " “(III) has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.”, and "
(ii)by adding at the end thereof the following new clause: " “(iv) Election.—An employer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of the Secretary.”. "
(B)[29 USC 1082](/us/usc/t29/s1082).Section 302(d)(7)(D) of ERISA is amended—
(i)by striking “and” at the end of clause (iii)(I), by striking the period at the end of clause (iii)(II) and inserting “, and”, and by adding at the end of clause
(iii)the following new subclause: " “(III) has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.”, and "
(ii)by adding at the end thereof the following new clause: " “(iv) Election.—An employer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of the Secretary of the Treasury.”. " (5)(A) [26 USC 412](/us/usc/t26/s412).Section 412(1)(8) is amended—
(i)by striking “reduced by any credit balance in the funding standard account” in subparagraph (A)(ii), and
(ii)by adding at the end thereof the following new subparagraph: " “(E) Deduction for credit balances.—For purposes of this subsection, the amount determined under subparagraph (A)(ii) shall be reduced by any credit balance in the funding standard account. The Secretary may provide for such reduction for purposes of any other provision which references this subsection.”. "
(B)Section 302(d)(8) of ERISA is amended—
(i)by striking “reduced by any credit balance in the funding standard account” in subparagraph (A)(ii), and
(ii)by adding at the end thereof the following new subparagraph: " “(E) Deduction for credit balances.—For purposes of this subsection, the amount determined under subparagraph (A)(ii) shall be reduced by any credit balance in the funding standard account. The Secretary of the Treasury may provide for such reduction for purposes of any other provision which references this subsection.”. " (6)(A) Section 412(c)(9) is amended—
(i)by striking “3 years” and inserting “year”, and
(ii)by striking “3-year” in the heading and inserting “Annual”.
(B)Section 302(c)(9) of ERISA is amended by striking “3 years” and inserting “year”.
(7)Subclause
(II)of section 9303(e)(3)(C)(ii) of the Pension [26 USC 412 note](/us/usc/t26/s412).Protection Act is amended by inserting “(and any income allocable to such amount)” after “clause (i)”.
(b)Amendments Related to Section 9304.— (1)(A) Subparagraph
(A)of section 412(c)(10) is amended—
(i)by inserting “defined benefit” before “plan other”, and
(ii)by striking “Plans” in the heading and inserting “Defined benefit plans”. 103 STAT. 2437
(B)Subparagraph
(A)of section 302(c)(10) of ERISA is [29 USC 1082](/us/usc/t29/s1082).amended by inserting “defined benefit” before “plan other”. (2)(A) Subparagraph
(B)of section 412(c)(10) is amended— [26 USC 412](/us/usc/t26/s412).
(i)by striking “multiemployer plan” and inserting “plan not described in subparagraph (A)”, and
(ii)by striking “Multiemployer” in the heading and inserting “Other”.
(B)Subparagraph
(B)of section 302(c)(10) of ERISA is amended by striking “multiemployer plan” and inserting “plan not described in subparagraph (A)”. (3)(A) Section 412(m)(1) is amended by inserting “defined benefit” before “plan (other”.
(B)Section 302(e)(1) of ERISA is amended by inserting “defined benefit” before “plan (other”. (4)(A) Subparagraph
(D)of section 412(m)(4) is amended to read as follows: " “(D) Special rules for unpredictable contingent event benefits.—In the case of a plan to which subsection
(1)applies for any calendar year and which has any unpredictable contingent event benefit liabilities— “(i) Liabilities not taken into account.—Such liabilities shall not be taken into account in computing the required annual payment under subparagraph (B). “(ii) Increase in installments.—Each required installment shall be increased by the greater of— “(I) the unfunded percentage of the amount of benefits described in subsection (l)(5)(A)(i) paid during the 3-month period preceding the month in which the due date for such installment occurs, or “(II) 25 percent of the amount determined under subsection (l)(5)(A)(ii) for the plan year. “(iii) Unfunded percentage.—For purposes of clause (ii)(I), the term ‘unfunded percentage’ means the percentage determined under subsection d)(5)(A)(i)(I) for the plan year. “(iv) Limitation on increase.—In no event shall the increases under clause
(ii)exceed the amount necessary to increase the funded current liability percentage (within the meaning of subsection (1)(8)(B)) for the plan year to 100 percent.”. "
(B)Subparagraph
(D)of section 302(e)(4) of ERISA is amended to read as follows: " “(D) Special rules for unpredictable contingent event benefits.—In the case of a plan to which subsection
(d)applies for any calendar year and which has any unpredictable contingent event benefit liabilities— “(i) Liabilities not taken into account.—Such liabilities shall not be taken into account in computing the required annual payment under subparagraph (B). “(ii) Increase in installments.—Each required installment shall be increased by the greater of— “(I) the unfunded percentage of the amount of benefits described in subsection (d)(5)(A)(i) paid curing the 3-month period preceding the month in which the due date for such installment occurs, or “(II) 25 percent of the amount determined under subsection (d)(5)(A)(ii) for the plan year. 103 STAT. 2438 “(iii) Unfunded percentage.—For purposes of clause (ii)(I), the term ‘unfunded percentage’ means the percentage determined under subsection (d)(5)(A)(i)(I) for the plan year. “(iv) Limitation on increase.—In no event shall the increases under clause
(ii)exceed the amount necessary to increase the funded current liability percentage (within the meaning of subsection (d)(8)(B)) for the plan year to 100 percent.”. " (5)(A) [29 USC 1021](/us/usc/t29/s1021).Section 101(d)(1) of ERISA is amended by striking “an employer of a plan” and inserting “an employer maintaining a plan”.
(B)[29 USC 1132](/us/usc/t29/s1132). Section 502(c) of ERISA is amended by adding at the end thereof the following new paragraph: " “(3) Employment and unemployment. Any employer maintaining a plan who fails to meet the notice requirement of section 101(d) with respect to any participant or beneficiary may in the court’s discretion be liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure, and the court may in its discretion order such other relief as it deems proper.”. "
(C)[29 USC 1021 note](/us/usc/t29/s1021). Section 9304(d) of the Pension Protection Act is amended by striking “Section” and inserting “Effective with respect to plan years beginning after December 31, 1987, section”. (6)(A)(i) [26 USC 412](/us/usc/t26/s412).Subparagraph
(B)of section 412(m)(1) is amended to read as follows: " “(B) the rate of interest used under the plan in determining costs (including adjustments under subsection (b)(5)(B)).”. "
(ii)Clause
(ii)of section 412(d)(1)(A) is amended by inserting “(including adjustments under subsection (b)(5)(B))” after “costs”. (B)(i) [29 USC 1082](/us/usc/t29/s1082).Subparagraph
(B)of section 302(e)(1) of ERISA is amended to read as follows: " “(B) the rate of interest used under the plan in determining costs (including adjustments under subsection (b)(5)(B)).”. "
(ii)[29 USC 1083](/us/usc/t29/s1083). Section 303(a)(1)(B) of ERISA (as redesignated by subsection (e)(2)) is amended by inserting “(including adjustments under section 302(b)(5)(B))” after “costs”.
(7)Section 303(a) of ERISA (as amended by section 9306(c)(2)(A) of the Pension Protection Act) is amended—
(A)by redesignating subparagraphs
(A)and
(B)as paragraphs
(1)and (2), respectively, and by adjusting the left-hand margination thereof 4 ems to the left;
(B)in paragraph
(1)(as redesignated), by redesignating clauses
(i)and
(ii)as subparagraphs
(A)and (B), respectively; and
(C)in paragraph
(2)(as redesignated), by inserting “of such Code” after “section 6621(b)”.
(8)Subsection
(f)of section 303 of ERISA (as so redesignated by section 9306(a)(2) of the Pension Protection Act) is transferred to immediately after subsection
(e)of such section.
(c)Amendments Related to Section 9306.—
(1)The last sentence of section 412(f)(4)(A) is amended by striking “the benefit liabilities” and inserting “for benefit liabilities”. 103 STAT. 2439
(2)The last sentence of section 303(e)(1) of ERISA is amended [29 USC 1083](/us/usc/t29/s1083).by striking “the benefit liabilities” and inserting “for benefit liabilities”.
(3)Section 9306(f)(3) of the Pension Protection Act is amended [26 USC 412 note](/us/usc/t26/s412).to read as follows: " “(3) Subsection (b).—The amendments made by subsection
(b)shall apply to waivers for plan years beginning after December 31, 1987. For purposes of applying such amendments, the number of waivers which may be granted for plan years after December 31, 1987, shall be determined without regard to any waivers granted for plan years beginning before January 1, 1988.”. "
(d)Amendments Related to Section 9307.— (1)(A) Clause
(iii)of section 412(b)(5)(B) is amended by striking [26 USC 412](/us/usc/t26/s412).“for purposes of this section and for purposes of determining current liability,”.
(B)Clause
(iii)of section 302(b)(5)(B) of ERISA is amended by [29 USC 1082](/us/usc/t29/s1082).striking “for purposes of this section and for purposes of determining current liability,”. (2)(A) Section 302(b)(5)(B) of ERISA is amended by inserting the following matter after the heading and before clause (i): “For purposes of determining a plan’s current liability and for purposes of determining a plan’s required contribution under section 302(d) for any plan year—”.
(B)Section 302(b)(5) of ERISA is amended by striking the matter following the heading thereof and preceding subparagraph (A).
(C)Subclause
(I)of section 302(b)(5)(B)(ii) of ERISA is amended by striking “average rate” and inserting “the weighted average of the rates”.
(3)Section 9307(f) of the Pension Protection Act is amended to [26 USC 404 note](/us/usc/t26/s404).read as follows: " “(f) Effective Date.— “(1) In general.—Except as provided in paragraph (2), the amendments made by this section shall apply to years beginning after December 31, 1987. “(2) Amortization of gains and losses.—Sections 412(b)(2)(B)(iv) and 412(b)(3)(B)(ii) of the Internal Revenue Code of 1986 and sections 302(b)(2)(B)(iv) and 302(b)(3)(B)(ii) of the Employee Retirement Income Security Act of 1974 (as amended by paragraphs (1)(A) and (2)(A) of subsection (a)) shall apply to gains and losses established in years beginning after December 31, 1987. For purposes of the preceding sentence, any gain or loss determined by a valuation occurring as of January 1, 1988, shall be treated as established in years beginning before 1988, or at the election of the employer, shall be amortized in accordance with Internal Revenue Service Notice 89–52.”. "
(4)Subparagraphs
(A)and
(B)of section 302(c)(3) of ERISA are each amended by adjusting the left-hand margination thereof, and of each subdivision thereof, 2 ems to the left.
(e)Amendments Related to Section 9311.—
(1)Section 9311(a)(2) of the Pension Protection Act is amended [29 USC 1344 note](/us/usc/t29/s1344).by striking “plan assets to the employer for purposes of section 4044(d)(1)(C) of the Employee Retirement Income Security Act of 1974” and inserting “residual plan assets upon termination”.
(2)Section 9311(d) of the Pension Protection Act is amended— [29 USC 1344 note](/us/usc/t29/s1344). 103 STAT. 2440
(A)by striking “section 4041(c)” and inserting “section 4041” in paragraph (1), and
(B)by adding at the end thereof the following new flush sentence: " “Except as provided in subsection (a)(2), the amendments made by subsection
(a)shall, apply to any provision of the plan or plan amendment adopted after December 17, 1987.”. "
(3)[29 USC 1344](/us/usc/t29/s1344). Section 9311(b)(2) of the Pension Protection Act is amended by striking “subsection (c)(1)” and inserting “subsection (a)(1)”.
(4)[29 USC 1344 note](/us/usc/t29/s1344). Section 9311(a)(2) of the Pension Protection Act is amended—
(A)by striking “1 year after the effective date of such amendments made by paragraph (1)” and inserting “December 17, 1988”; and
(B)by striking the last sentence.
(f)Amendments Related to Section 9312.—
(1)[29 USC 1322 note](/us/usc/t29/s1322). Section 9312(b)(3)(B)(i) of the Pension Protection Act is amended—
(A)by striking “section 4022(c)(1)” in subclause
(I)and inserting “section 4022(c)(3)”, and
(B)by striking “subparagraph
(B)of section 4022(c)(1)” and inserting “subparagraph
(C)of section 4022(c)(3)”.
(2)[29 USC 1362](/us/usc/t29/s1362). Section 4062(a) of ERISA is amended—
(A)by inserting “and” at the end of paragraph (1);
(B)by striking paragraph (2);
(C)by redesignating paragraph
(3)as paragraph (2); and
(D)in paragraph
(2)(as so redesignated), by striking “subsection (d)” and inserting “subsection (c)”. (3)(A) [29 USC 1364](/us/usc/t29/s1364).Section 4064(b) of ERISA is amended by striking “and clauses (i)(II) and
(ii)of section 4062(b)(1)(A)” and inserting “and section 4068(a)”.
(B)[29 USC 1368](/us/usc/t29/s1368).Section 4068(a) of ERISA is amended by striking the last sentence.
(4)[29 USC 1322](/us/usc/t29/s1322). Section 4022(c)(1) of ERISA is amended by striking “(in the case of a deceased participant)”.
(5)Section 4022(c)(3)(B)(ii) of ERISA is amended by inserting “, and during the 5-Federal fiscal year period ending with the fiscal year preceding the fiscal year in which occurs the date of the notice of intent to terminate with respect to the plan termination for which the recovery ratio is being determined” after “1987”.
(6)Section 9312(b)(3)(B) of the Pension Protection Act is amended by striking clause (ii).
(7)[29 USC 1341](/us/usc/t29/s1341). Section 4041(c) of ERISA is amended—
(A)fay striking “(or its designee under section 4049(b))” in paragraph (2)(A)(iii)(H),
(B)by striking “section 4049” in paragraph (2)(A)(iii)(II) and inserting “section 4022(c)”, and
(C)by striking the last sentence of paragraph (3)(C)(i).
(8)[29 USC 1370](/us/usc/t29/s1370).[29 USC 1301 note](/us/usc/t29/s1301). Section 4070(a) of ERISA is amended by striking “4049,”.
(9)Section 9312(d)(1) of the Pension Protection Act is amended by striking “section 4041(c)” and inserting “section 4041”. (10)(A) Section 4062(b)(2)(B) of ERISA is amended by striking “the liability under paragraph (1)(A)(ii)” and inserting “so much of the liability under paragraph (1)(A) as exceeds 30 percent of the collective net worth of all persons described in subsection
(a)(including interest)”. 103 STAT. 2441
(B)Section 9312(b)(2)(B)(ii) of the Pension Protection Act is [29 USC 1362](/us/usc/t29/s1362).amended to read as follows: " “(ii) Section 4062(d) of ERISA (as redesignated by paragraph (1)(B)) is amended by striking out paragraph (3).”. "
(C)Section 4068 of ERISA is amended by adding at the end [29 USC 1368](/us/usc/t29/s1368).the following new subsection: " “(f) Definitions.—For purposes of this section— “(1) The collective net worth of persons subject to liability in connection with a plan termination shall be determined as provided in section 4062(d)(1). “(2) The term ‘pre-tax profits’ has the meaning provided in section 4062(d)(2).”. "
(11)Section 4022(c)(1) of ERISA is amended by striking “section [29 USC 1322](/us/usc/t29/s1322).4044(a), to such participant” and inserting “section 4044(a). Such payment shall be made to such participant”.
(12)Subsection
(a)of section 4068 of ERISA is amended—
(A)by striking “to the extent such amount does not exceed 30 percent of the collective net worth of all persons described in section 4062(a)” the first place it appears; and
(B)by striking “to the extent such amount does not Gifts and property.Real property.exceed 30 percent of the collective net worth of all persons described in section 4062(a)” the second place it appears and all that follows and inserting the following: “in the amount of such liability (including interest) upon all property and rights to property, whether real or personal, belonging to such person, except that such lien may not be in an amount in excess of 30 percent of the collective net worth of all persons described in section 4062(a)”.
(13)The table of contents in section 1 of ERISA is amended by striking the item relating to section 4049.
(g)Amendments Related to Section 9313.—
(1)Section 4041(d)(1) of ERISA is amended by striking “sufficient [29 USC 1341](/us/usc/t29/s1341).for benefit commitments” and inserting “sufficient for benefit liabilities”.
(2)Section 4041(c)(2)(B) of ERISA is amended by inserting “proposed” before “termination” in the parenthetical in the second sentence.
(3)Clause
(ii)of section 4041(c)(2)(A) of ERISA is amended—
(A)by inserting “unless the corporation determines the information is not necessary for purposes of paragraph (3)(A) or section 4062,” before “certification”,
(B)by inserting “and, if applicable, the proposed distribution date” after “termination date” in subclause (I), and
(C)by striking “date” and inserting “dates” in subclauses
(II)through (V).
(4)Subparagraph
(B)of section 4041(b)(3) of ERISA is amended by adding a period at the end.
(5)Section 9313(b)(3) of the Pension Protection Act is amended [29 USC 1341](/us/usc/t29/s1341).by inserting “each place it appears” before the period.
(6)Section 4041(b)(2)(A) of ERISA is amended by adjusting the left-hand margination of the last sentence two ems to the right.
(7)The first subsection
(b)of section 9314 of the Pension Protection Act is amended by striking “Section 4042” and [29 USC 1342](/us/usc/t29/s1342).inserting “Section 4042(a)”, and by striking “third sentence” and inserting “last sentence”. 103 STAT. 2442
(8)[29 USC 1371](/us/usc/t29/s1371).Section 9314(c)(1) of the Pension Protection Act is amended by inserting “title IV of” after “Subtitle D of”.
(h)Amendment Related to Section 9331.—
(1)[29 USC 1306](/us/usc/t29/s1306). Subparagraph
(E)of section 4006(a)(3) of ERISA is amended by adding at the end thereof the following new clause: " “(v) No premium shall be determined under this subparagraph for any plan year if, as of the close of the preceding plan year, contributions to the plan for the preceding plan year were not less than the full funding limitation for the preceding plan year under section 412(c)(7) of the Internal Revenue Code of 1986.”. "
(2)Clause
(iii)of section 4006(c)(1)(A) of ERISA is amended by adjusting the left-hand margination thereof 2 ems to the left.
(i)Amendments Related to Section 9341.— (1)(A) [26 USC 401](/us/usc/t26/s401).Section 401(a)(29)(C)(i)(H) is amended by inserting “and any other plan amendments adopted after December 22, 1987, and before such plan amendment” after “amendment”.
(B)[29 USC 1085b](/us/usc/t29/s1085b).Section 307(c)(1)(B) of ERISA is amended by inserting “and any other plan amendments adopted after December 22, 1987, and before such plan amendment”.
(2)Section 307(d) of ERISA is amended by inserting “of the Treasury” after “Secretary”. (3)(A) Section 307 of ERISA is amended by redesignating subsection
(e)as subsection
(f)and by inserting after subsection
(d)the following new subsection: " “(e) Notice.—A contributing sponsor which is required to provide security under subsection
(a)shall notify the Pension Benefit Guaranty Corporation within 30 days after the amendment requiring such security takes effect. Such notice shall contain such information as the Corporation may require.”. "
(B)[29 USC 1371](/us/usc/t29/s1371).Section 4071 of ERISA is amended—
(i)by striking “or subtitle A B, or C” and inserting “, subtitle A B, or C, as section 302(f)(4) or 307(e)”, and
(ii)by inserting “or such section” after “such subtitle”. (4)(A) Clause
(i)of section 401(a)(29)(A) is amended by inserting “to which the requirements of section 412 apply” after “multiemployer plan)”.
(B)Section 307(a)(1) of ERISA is amended by inserting “to which the requirements of section 302 apply” after “multiemployer plan)”.
(5)[26 USC 401 note](/us/usc/t26/s401). Section 9341(c) of the Pension Protection Act is amended by inserting “(without regard to any extension, amendment, or modification of such agreements on or after such date of enactment)” after “ratified before the date of enactment”.
(j)Amendments Related to Section 9342.—
(1)[29 USC 1023](/us/usc/t29/s1023). Paragraph
(11)of section 103(d) of ERISA is amended—
(A)by striking “60 percent” and inserting “70 percent”, and
(B)by striking “such percentage” and inserting “the percentage which such value is of such liability.”.
(2)[29 USC 1132](/us/usc/t29/s1132).Section 502(a)(6) of ERISA is amended by striking “subsection (i)” and inserting “subsection (c)(2) or (i)”.
(3)Section 502(c)(2) of ERISA is amended—
(A)by inserting “against any plan administrator” after “civil penalty”, and
(B)by striking “a plan administrator’s” and inserting “such plan administrator’s”. 103 STAT. 2443
(4)Paragraph
(2)of section 413 of ERISA is amended by [29 USC 1113](/us/usc/t29/s1113).striking the comma.
(k)Amendment Related to Section 9343.—Section 403(c) of ERISA is amended by striking paragraph
(3)and by redesignating [29 USC 1103](/us/usc/t29/s1103).paragraph
(4)as paragraph (3).
(l)Amendments Related to Section 9345.—
(1)Section 407(d)(3)(C) of ERISA is amended by adjusting the [29 USC 1107](/us/usc/t29/s1107).left-hand margination thereof 2 ems to the left.
(2)Section 4O7(d)(9) of ERISA is amended—
(A)by striking “such arrangement” and inserting “such individual account plan”; and
(B)by adjusting the left-hand margination thereof 2 ems to the right.
(3)Section 407(f) of ERISA is amended—
(A)in paragraph (1), by striking “this subsection” and inserting “this paragraph”; and
(B)by striking paragraph (3).
(4)Section 407(f)(1) of ERISA is amended by inserting “, immediately following the acquisition of such stock” after “if”.
(5)Section 408(b) of ERISA is amended by adding at the end [29 USC 1108](/us/usc/t29/s1108).the following new paragraph: " “(12) The sale by a plan to a party in interest on or after Securities.December 18, 1987, of any stock, if— “(A) the requirements of paragraphs
(1)and
(2)of subsection
(e)are met with respect to such stock, “(B) on the later of the date on which the stock was acquired by the plan, or January 1, 1975, such stock constituted a qualifying employer security (as defined in section 4O7(d)(5) as then in effect), and “(C) such stock does not constitute a qualifying employer security (as defined in section 407(d)(5) as in effect at the time of the sale).”. "
(m)Amendments Related to Section 9346.— (1)(A) Clause
(iii)of section 411(c)(2)(C) is amended to read as [26 USC 411](/us/usc/t26/s411).follows: " “(iii) interest on the sum of the amounts determined under clauses
(i)and
(ii)compounded annually— “(I) at the rate of 120 percent of the Federal mid-term rate (as in effect under section 1274 for the 1st month of a plan year) for the period beginning with the 1st plan year to which subsection (a)(2) applies (by reason of the applicable effective date) and ending with the date on which the determination is being made, and “(II) at the interest rate which would be used under the plan under section 417(e)(3) (as of the determination date) for the period beginning with the determination date and ending on the date on which the employee attains normal retirement age.”, "
(B)Subparagraph
(B)of section 411(c)(2) is amended to read as follows: " “(B) Defined benefit plans.—In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal retirement age, using an interest rate which would be used 103 STAT. 2444under the plan under section 417(e)(3) (as of the determination date).”. "
(C)[26 USC 411](/us/usc/t26/s411).Section 411(c)(2) is amended by striking subparagraph (E).
(D)Section 411(a)(7) is amended by adding at the end thereof the following new subparagraph: " “(D) Accrued benefit attributable to employee contributions.—The accrued benefit of an employee shall not be less than the amount determined under subsection (c)(2)(B) with respect to the employee’s accumulated contributions.”. " (2)(A) [29 USC 1054](/us/usc/t29/s1054).Clause
(iii)of section 204(c)(2)(C) of ERISA is amended to read as follows: " “(iii) interest on the sum of the amounts determined under clauses
(i)and
(ii)compounded annually— “(I) at the rate of 120 percent of the Federal mid-term rate (as in effect under section 1274 of the Internal Revenue Code of 1986 for the 1st month of a plan year for the period beginning with the 1st plan year to which subsection (a)(2) applies by reason of the applicable effective date) and ending with the date on which the determination is being made, and “(II) at the interest rate which would be used under the plan under section 205(g)(3) (as of the determination date) for the period beginning with the determination date and ending on the date on which the employee attains normal retirement age.”."
(B)Subparagraph
(B)of section 204(c)(2) of ERISA is amended to read as follows: " “(B) Defined benefit plans.—In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal retirement age, using an interest rate which would be used under the plan under section 205(g)(3) (as of the determination date).”. "
(C)Section 204(c)(2) of ERISA is amended by striking subparagraph (E).
(D)[29 USC 1002](/us/usc/t29/s1002). Paragraph
(23)of section 3 of ERISA is amended by adding at the end thereof the following new flush sentence: " “The accrued benefit of an employee shall not be less than the amount determined under section 204(c)(2)(B) with respect to the employee’s accumulated contribution.”. "
(3)[29 USC 1054 note](/us/usc/t29/s1054). If—
(A)during the period beginning December 22, 1987, and ending June 21, 1988, a plan was amended to reflect the amendments made by section 9346 of the Pension Protection Act, and
(B)such plan is amended to reflect the amendments made by this subsection, any plan amendment described in subparagraph
(B)shall not be treated as reducing accrued benefits for purposes of section 411(d)(6) of the Internal Revenue Code of 1986 or section 204(g) of ERISA. 103 STAT. 2445 SEC. 7882. EFFECTIVE DATE. [26 USC 401 note](/us/usc/t26/s401). Except as otherwise provided in this subpart, any amendment made by this subpart shall take effect as if included in the provision of the Pension Protection Act to which such amendment relates. Subpart D—Additional Pension Provisions SEC. 7891. AMENDMENTS RELATING TO THE TAX REFORM ACT OF 1986.
(a)Amendments Related to Section 2.—
(1)Titles I, III, and IV of ERISA (other than sections 3(37)(E), [29 USC 1001 *et seq*](/us/usc/t29/s1001).301(a)(7), and 308, the last sentence of section 408(d), and sections 414(c), 4001(a)(3)(ii), and 4303) are each amended by striking “Internal Revenue Code of 1954” each place it appears and inserting “Internal Revenue Code of 1986”.
(2)The last sentence of section 408(d) of ERISA (as amended [29 USC 1108](/us/usc/t29/s1108).by section 7894(e)(4)(A)(i)) is further amended—
(A)by striking “section 408 of the Internal Revenue Code of 1954” and inserting “section 408 of the Internal Revenue Code of 1986”; and
(B)by striking “section 408(c) of such Code” and inserting “section 408(c) of the Internal Revenue Code of 1986”.
(b)Amendments Related to Section 1139.—
(1)Paragraphs (2)(A) and (2)(B) of section 203(e) of ERISA are [29 USC 1053](/us/usc/t29/s1053).each amended by adjusting the margination thereof, and of each subdivision thereof, 2 ems to the left.
(2)Subparagraph
(B)of section 203(e)(2) of ERISA is amended by striking “Applicable interest rate.—”.
(3)Paragraph (3)(A) of section 205(g) of ERISA is amended by [29 USC 1055](/us/usc/t29/s1055).adjusting the left-hand margination thereof, and of each subdivision thereof, 2 ems to the left.
(c)Amendment Related to Section 1145.—Paragraph
(3)of section 205(b) of ERISA (as added by section 1145(b) of the Reform Act) is amended by adjusting the left-hand margination thereof 2 ems to the left.
(d)Amendments Related to Section 1895.— (1)(A)(i) Section 606 of ERISA is amended— [29 USC 1166](/us/usc/t29/s1166).
(I)in paragraph (2), by inserting after “30 days” the following: “(or, in the case of a group health plan which is a multiemployer plan, such longer period of time as may be provided in the terms of the plan)”; and
(II)in the first sentence following paragraph (4), by inserting after “14 days” the following: “(or, in the case of a group health plan which is a multiemployer plan, such longer period of time as may be provided in the terms of the plan)”.
(ii)Section 606 of ERISA is amended—
(I)by inserting “(a) In General.—” before “In accordance”;
(II)by striking “For purposes of paragraph (4),” and inserting the following: " “(c) Rules Relating to Notification of Qualified Beneficiaries by Plan Administrator.—For purposes of subsection (a)(4),”; and "
(III)by inserting after subsection (a)(4) (as so designated by the amendment made by subclause (I)) the following new subsection: 103 STAT. 2446 " “(b) Alternative Means of Compliance with Requirement for Notification of Multiemployer Plans by Employers.—The requirements of subsection (a)(2) shall be considered satisfied in the case of a multiemployer plan in connection with a qualifying event described in paragraph
(2)of section 603 if the plan provides that the determination of the occurrence of such qualifying event will be made by the plan administrator.”. " (B)(i) Section 4980B(f)(6) of the 1986 Code (as added by the Technical and Miscellaneous Revenue Act of 1988) is amended—
(I)in subparagraph (B), by inserting after “30 days” the following: “(or, in the case of a group health plan which is a multiemployer plan, such longer period of time as may be provided in the terms of the plan)”; and
(II)in the first sentence following subparagraph (D), by inserting after “14 days” the following: “(or, in the case of a group health plan which is a multiemployer plan, such longer period of time as may be provided in the terms of the plan)”.
(ii)Section 4980B(f)(6) of the 1986 Code (as added by the Technical and Miscellaneous Revenue Act of 1988) is amended by inserting, after and below subparagraph (D), the following new flush sentence: " “The requirements of subparagraph
(B)shall be considered satisfied in the case of a multiemployer plan in connection with a qualifying event described in paragraph (3)(B) if the plan provides that the determination of the occurrence of such qualifying event will be made by the plan administrator.”. "
(C)[26 USC 4980B note](/us/usc/t26/s4980B).The amendments made by this paragraph shall apply with respect to plan years beginning on or after January 1, 1990. (2)(A) Section 4980B(f) of the 1986 Code (as added by the Technical and Miscellaneous Revenue Act of 1988) is amended by adding at the end the following new paragraph: " “(8) Optional extension of required periods.— A group health plan shall not be treated as failing to meet the requirements of this subsection solely because the plan provides both— “(A) that the period of extended coverage referred to in paragraph (2)(B) commences with the date of the loss of coverage, and “(B) that the applicable notice period provided under paragraph (6)(B) commences with the date of the loss of coverage.”. " (B)(i) [29 USC 1167](/us/usc/t29/s1167).Section 607 of ERISA is amended—
(I)in the heading, by inserting “**AND SPECIAL RULES**” after “**DEFINITIONS**”; and
(II)by adding at the end the following new paragraph: " “(5) Optional extension of required periods.— A group health plan shall not be treated as failing to meet the requirements of this part solely because the plan provides both— “(A) that the period of extended coverage referred to in section 602(2) commences with the date of the loss of coverage, and “(B) that the applicable notice period provided under section 606(a)(2) commences with the date of the loss of coverage.”. " 103 STAT. 2447
(ii)The item relating to section 607 in the table of contents in section 1 of ERISA is amended by inserting “and special rules” after “Definitions”.
(C)The amendments made by this paragraph shall apply with [26 USC 4980B note](/us/usc/t26/s4980B).respect to plan years beginning on or after January 1, 1990.
(e)Amendments Related to Section 1898.—Section 205(h) of ERISA is amended— [29 USC 1055](/us/usc/t29/s1055).
(1)in paragraph (1), by striking “the term” and inserting “The term”, and by striking “benefit,” and inserting “benefit.”, and
(2)in paragraph (3), by striking “the term” and inserting “The term”.
(f)Effective Date.—Except as otherwise provided in this section, [29 USC 1002 note](/us/usc/t29/s1002).any amendment made by this section shall take effect as if included in the provision of the Reform Act to which such amendment relates. SEC. 7892. AMENDMENTS RELATING TO THE PENSION PROTECTION ACT.
(a)Amendment Related to Section 9203.—Section 202(a)(2) of ERISA is amended by striking the comma. [29 USC 1052 note](/us/usc/t29/s1052).
(b)Amendment Related to Section 9301.—Paragraph
(7)of section 302(c) of ERISA is amended by adjusting the left-hand [29 USC 1082](/us/usc/t29/s1082).margination thereof, and of each subdivision thereof, 2 ems to the left.
(c)Effective Date.—Any amendment made by this section shall [29 USC 1052](/us/usc/t29/s1052).take effect as if included in the provision of the Omnibus Budget Reconciliation Act of 1987 or Pension Protection Act to which such amendment relates. SEC. 7893. AMENDMENTS RELATING TO THE SINGLE-EMPLOYER PENSION PLAN AMENDMENTS ACT OF 1986.
(a)Amendment Related to Section 11004.—Section 3(37)(B) of ERISA is amended by striking “section 4001(c)(1)” and inserting [29 USC 1002](/us/usc/t29/s1002).“section 4001(b)(1)”.
(b)Amendment Related to Section 11005.—Subparagraph
(B)of section 4022A(f)(2) of ERISA is amended by striking “the the enactment” [29 USC 1322a](/us/usc/t29/s1322a).and inserting “the enactment”.
(c)Amendment Related to Section 11008.—Subparagraph
(B)of section 4041(b)(2) of ERISA is amended by adjusting the margination [29 USC 1341](/us/usc/t29/s1341).of the sentence following clause (ii)(V) 2 ems to the left.
(d)Amendments Related to Section 11009.—
(1)Subparagraph
(D)of section 4041(c)(3) of ERISA is amended by adjusting the margination thereof, and of each subdivision thereof, 2 ems to the right.
(2)Subclause
(I)of section 4041(c)(3)(D)(ii) of ERISA is amended by striking “of” and inserting “under”.
(e)Amendment Related to Section 11010.—Section 4042(a) of ERISA is amended, in the matter following paragraph (4), by inserting [29 USC 1342](/us/usc/t29/s1342).a period after “terms of the plan”.
(f)Amendment Related to Section 11013.—Subparagraph
(A)of section 4218(1) of ERISA is amended by striking “section 4062(d)” [29 USC 1398](/us/usc/t29/s1398).and inserting “section 4069(b)”.
(g)Amendments Related to Section 11016.—
(1)Section 4047 of ERISA is amended, in the first sentence, by [29 USC 1347](/us/usc/t29/s1347).striking “under this subtitle”.
(2)Section 4066 of ERISA is amended by inserting “any” [29 USC 1366](/us/usc/t29/s1366).before “contributing sponsor” the first place it appears. 103 STAT. 2448
(3)Section 11016(a)(6)(A)(ii) of the Single-Employer Pension [29 USC 1367](/us/usc/t29/s1367).Plan Amendments Act of 1986 is amended to read as follows: " “(ii) by striking ‘employers’ and inserting ‘contributing sponsors and members of their controlled groups’; and”. "
(h)[29 USC 1002 note](/us/usc/t29/s1002). Effective Date.—Any amendment made by this section shall take effect as if included in the provision of the Single-Employer Pension Plan Amendments Act of 1986 to which such amendment relates. SEC. 7894. OTHER AMENDMENTS TO ERISA.
(a)Amendments Related to Section 3.— (1)(A) [29 USC 1002](/us/usc/t29/s1002).Section 3(33)(D)(iii) of ERISA is amended by inserting “of the Treasury” after “Secretary” each place it appears.
(B)Effective date.[29 USC 1002 note](/us/usc/t29/s1002).The amendments made by subparagraph
(A)shall take effect as if included in section 407 of the Multiemployer Pension Plan Amendments Act of 1980. (2)(A) [29 USC 1002](/us/usc/t29/s1002).Section 3(37)(F) of ERISA (as added by section 136 of Public Law 100–202 (101 Stat. 1329–441)) is amended—
(i)in clause (i)(II), by striking “such Code” and inserting “the Internal Revenue Code of 1986”;
(ii)in clause (ii)(I), by inserting “of such Code” after “section 501(c)”; and
(iii)in clause (ii)(II), by inserting “of such Code” after “section 170(b)(1)(A)(ii)”.
(B)Effective date.[29 USC 1002 note](/us/usc/t29/s1002).The amendment made by this paragraph shall take effect as if included in section 136 of Public Law 100–202.
(3)Section 3(39) of ERISA is amended by inserting a comma after “mean” and by inserting “the” before “calendar”.
(4)Section 3 of ERISA is amended by adding at the end the following new paragraph: " “(41) Single-employer plan.—The term ‘single-employer plan’ means an employee benefit plan other than a multiemployer plan.”. "
(b)Amendments Related to Part 1 of Subtitle B of Title I.—
(1)The heading for part 1 of subtitle B of title I of ERISA is amended by striking “Part I” and inserting “Part 1”.
(2)[29 USC 1021](/us/usc/t29/s1021).Section 101(a)(2) of ERISA is amended by striking “section” and inserting “sections”.
(3)[29 USC 1024](/us/usc/t29/s1024).Section 104(a)(5)(B) of ERISA is amended by striking the period and inserting a comma.
(4)Section 104(b)(1) of ERISA is amended by striking the comma after “summary”.
(5)[29 USC 1026](/us/usc/t29/s1026).Section 105(b) of ERISA is amended by striking “12 month” and inserting “12-month”.
(6)[29 USC 1026](/us/usc/t29/s1026).Section 106(b) of ERISA is amended by striking “section” and inserting “sections”.
(7)[29 USC 1028](/us/usc/t29/s1028).Section 108 of ERISA is amended by striking “act of omission” and inserting “act or omission”.
(c)Amendments Related to Part 2 of Subtitle B of Title I.— (1)(A) [29 USC 1051](/us/usc/t29/s1051).Section 201 of ERISA is amended—
(i)in paragraph (6), by striking “or” at the end;
(ii)in paragraph (7), by striking “plan.” and inserting “plan; or”; and
(iii)in paragraph (8), by striking “Any” and inserting “any”. 103 STAT. 2449
(B)The amendments made by subparagraph
(A)shall take Effective date.[29 USC 1061 note](/us/usc/t29/s1061).effect as if included in section 411 of the Multiemployer Pension Plan Amendments Act of 1980. (2)(A) Section 202(a)(1)(B)(ii) of ERISA is amended by striking [29 USC 1052](/us/usc/t29/s1052).“institution” and inserting “organization”.
(B)Section 202(b)(2) of ERISA is amended by striking “the plan” and inserting “a plan”.
(3)Section 203(a)(3)(D)(v) of ERISA is amended by striking [29 USC 1053](/us/usc/t29/s1053).“nonforfeitably” and inserting “nonforfeitability”.
(4)Section 204(b)(1)(A) of ERISA is amended in the last sentence [29 USC 1054](/us/usc/t29/s1054)by striking “suparagraph” and inserting “subparagraph”.
(5)Section 204(b)(1)(E) of ERISA is amended by striking “years” in the last sentence and inserting “year”.
(6)Section 204(d) of ERISA is amended, in the matter following paragraph (2), so as to remove the indentation of the term “Paragraph” the first place it appears. (7)(A) Section 205(c)(6) of ERISA is amended by striking “act” [29 USC 1055](/us/usc/t29/s1055).and inserting “Act”.
(B)The amendment made by subparagraph
(A)shall take Effective date.[29 USC 1055 note](/us/usc/t29/s1055).effect as if included in section 103 of the Retirement Equity Act of 1984 in reference to the new section 205(c)(5) of ERISA as added by such section 3113.
(8)Section 206(a)(1) of ERISA is amended by inserting [29 USC 1056](/us/usc/t29/s1056).“occurs” after“(1)”. (9)(A) Section 206(d)(3)(I) of ERISA is amended by striking “act” and inserting “Act”.
(B)The amendment made by subparagraph
(A)shall take Effective date.[29 USC 1056 note](/us/usc/t29/s1056).effect as if included in section 104 of the Retirement Equity Act of 1984.
(10)Section 210(c) of ERISA is amended by striking “such [29 USC 1060](/us/usc/t29/s1060).code” and inserting “such Code”. (11)(A) Section 201(6) of ERISA is amended by striking “section [29 USC 1051](/us/usc/t29/s1051).409 of such Code” and inserting “section 409 of the Internal Revenue Code of 1954 (as effective for obligations issued before January 1, 1984)”.
(B)The amendment made by subparagraph
(A)shall take Effective date.[29 USC 1051 note](/us/usc/t29/s1051).effect as if originally included in section 491(b) of Public Law 98–369.
(d)Amendment Related to Part 3 of Subtitle B of Title I.— (1)(A) Section 301(a) of ERISA is amended— [29 USC 1081](/us/usc/t29/s1081).
(i)in paragraph (8), by striking “or” at the end;
(ii)in paragraph (9), by striking “plan.” and inserting “plan; or”; and
(iii)in paragraph (10), by striking “Any” and inserting “any”.
(B)The amendments made by subparagraph
(A)shall take Effective date.[29 USC 1081 note](/us/usc/t29/s1081).effect as if included in section 411 of the Multiemployer Pension Plan Amendments Act of 1980.
(2)Clause
(iii)of section 302(b)(3)(B) of ERISA is amended by [29 USC 1082](/us/usc/t29/s1082).striking the period and inserting a comma.
(3)Subparagraph
(A)of section 3O4(b)(2) of ERISA is amended [29 USC 1084](/us/usc/t29/s1084).by striking the period and inserting a comma. (4)(A) Section 301(a)(7) of ERISA is amended by striking “section 409 of such Code” and inserting “section 409 of the Internal Revenue Code of 1954 (as effective for obligations issued before January 1, 1984)”. 103 STAT. 2450
(B)Effective date.[29 USC 1081 note](/us/usc/t29/s1081). The amendment made by subparagraph
(A)shall take effect as if originally included in section 491(b) of Public Law 98–369.
(5)[29 USC 1082](/us/usc/t29/s1082). Paragraph
(6)of section 302(c) of ERISA is amended by striking “subsection (g)” and inserting “section 305”.
(e)Amendments Related to Part 4 of Subtitle B of Title I.— (1)(A) [29 USC 1103](/us/usc/t29/s1103).Subsection
(c)of section 403 of ERISA is amended—
(i)in paragraph (2)(A), by striking “part iv” and inserting “title IV”, and
(ii)by inserting “if such contribution or payment is” after “(i)” and “(ii)”, respectively.
(B)Effective date.[29 USC 1103 note](/us/usc/t29/s1103).The amendments made by subparagraph
(A)shall take effect as if included in section 410 of the Multiemployer Pension Plan Amendments Act of 1980.
(2)[29 USC 1107](/us/usc/t29/s1107).Section 407(d)(6)(A) of ERISA is amended—
(A)by inserting “plan” after “money purchase”; and
(B)by striking “employee securities” and inserting “employer securities”.
(3)Paragraph
(3)of section 403(b) of ERISA is amended—
(A)by redesignating clauses
(i)and
(ii)as subparagraphs
(A)and (B), respectively;
(B)by striking “, to the extent” and all that follows through “applicable” in subparagraph
(B)(as so redesignated); and
(C)by adding at the end, after and below subparagraph
(B)(as redesignated), the following: " “to the extent that such plan’s assets are held in one or more custodial accounts which qualify under section 401(f) or 408(h) of such Code, whichever is applicable.”. " (4)(A) [29 USC 1108](/us/usc/t29/s1108).Section 408(d) of ERISA is amended, in the last sentence—
(i)by striking “individual retirement account, individual retirement annuity, or an individual retirement bond (as defined in section 408 or 409 of the Internal Revenue Code of 1954)” and inserting “individual retirement account or individual retirement annuity described in section 408 of the Internal Revenue Code of 1954 or a retirement bond described in section 409 of the Internal Revenue Code of 1954 (as effective for obligations issued before January 1, 1984)”; and
(ii)by striking “section 408(c) of such code” and inserting “section 408(c) of such Code”.
(B)Effective date.[29 USC 1108 note](/us/usc/t29/s1108).The amendments made by subparagraph
(A)shall take effect as if originally included in section 491(b) of the Deficit Reduction Act of 1984.
(5)[29 USC 1113](/us/usc/t29/s1113).[29 USC 1114](/us/usc/t29/s1114).Section 413 of ERISA is amended by striking “(a)”.
(6)Section 414(c)(2) of ERISA is amended by striking “1954)” and inserting “1986”, and by striking “prior law” and inserting “prior law)”.
(f)Amendments Related to Part 5 of Subtitle B of Title I.—
(1)[29 USC 1132](/us/usc/t29/s1132). Section 502(b)(1) of ERISA is amended by striking “respct” and inserting “respect”. (2)(A) Section 514(b)(5)(C) of ERISA (as amended by section 301 [29 USC 1144](/us/usc/t29/s1144).of Public Law 97–473 (96 Stat. 2611)) is amended by striking “such parts” the second place it appears and inserting “such parts 1 and 4 and the preceding sections of this part”. 103 STAT. 2451
(B)The amendment made by this paragraph shall take effect Effective date.[29 USC 1144 note](/us/usc/t29/s1144).as if included in section 301 of Public Law 97–473. (3)(A) Section 514(b)(6)(B) of ERISA (as amended by section 302 of Public Law 97–473 (96 Stat. 2612)) is amended by striking [29 USC 1144](/us/usc/t29/s1144).“section 3(1)” and inserting “section 3d)”.
(B)The amendments made by this paragraph shall take effect Effective date.[29 USC 1144 note](/us/usc/t29/s1144).as if included in section 302 of Public Law 97–473.
(g)Amendments to Title IV.—
(1)Section 4022(b)(2) of ERISA is amended by striking “60 [29 USC 1322](/us/usc/t29/s1322).month” and inserting “60-month”.
(2)Paragraph
(1)of section 4044(a) of ERISA is amended by [29 USC 1344](/us/usc/t29/s1344).striking “accured” and inserting “accrued”. (3)(A) Section 4021(a) of ERISA is amended by striking “this [29 USC 1321](/us/usc/t29/s1321).section” and inserting “this title”.
(B)Section 4022(a) of ERISA is amended by striking “section 4021” and inserting “this title”. (C)(i) Section 4022A(a)(1) of ERISA is amended by striking [29 USC 1322a](/us/usc/t29/s1322a).“section 4021” and inserting “this title”.
(ii)The amendment made by clause
(i)shall take effect as if Effective date.[29 USC 1322a note](/us/usc/t29/s1322a).originally included in section 102 of the Multiemployer Pension Plan Amendments Act of 1980. (4)(A) Paragraph
(2)of section 4068(c) of ERISA is amended by [29 USC 1368](/us/usc/t29/s1368).striking “section 3466 of the Revised Statutes (31 U.S.C. 191)” and inserting “section 3713 of title 31 of the United States Code”.
(B)The amendment made by subparagraph
(A)shall take Effective date.[29 USC 1368 note](/us/usc/t29/s1368).effect as if originally included in section 3 of Public Law 97–258.
(h)Amendments Clarifying Applicability of Original Effective Date Provisions.—
(1)Section 111 of ERISA is amended by adding at the end the [29 USC 1031](/us/usc/t29/s1031).following new subsection: " “(d) Subsections
(b)and
(c)shall not apply with respect to amendments made to this part in provisions enacted after the date of the enactment of this Act.”. "
(2)Section 211 of ERISA is amended by adding at the end the [29 USC 1061](/us/usc/t29/s1061).following new subsection: " “(f) The preceding provisions of this section shall not apply with respect to amendments made to this part in provisions enacted after the date of the enactment of this Act.”. "
(3)Section 308 of ERISA is amended by adding at the end the [29 USC 1086](/us/usc/t29/s1086).following new subsection: " “(f) The preceding provisions of this section shall not apply with respect to amendments made to this part in provisions enacted after the date of the enactment of this Act.”. "
(4)Section 414 of ERISA is amended by adding at the end the [29 USC 1114](/us/usc/t29/s1114).following new subsection: " “(e) The preceding provisions of this section shall not apply with respect to amendments made to this part in provisions enacted after the date of the enactment of this Act.”. " (5)(A) Section 4402 of ERISA is amended by adding at the end [29 USC 1461](/us/usc/t29/s1461).the following new subsection: " “(i) The preceding provisions of this section shall not apply with respect to amendments made to this title in provisions enacted after the date of the enactment of the Tax Reform Act of 1986.”. "
(B)The amendment made by subparagraph
(A)shall take effect as if originally included in the Reform Act. Effective date.[29 USC 1461 note](/us/usc/t29/s1461). 103 STAT. 2452
(i)[29 USC 1002 note](/us/usc/t29/s1002). Effective Date.—Except as otherwise provided in this section, any amendment made by this section shall take effect as if originally included in the provision of the Employee Retirement Income Security Act of 1974 to which such amendment relates. TITLE VIII—HUMAN RESOURCE AND INCOME SECURITY PROVISIONS SEC. 8000. TABLE OF CONTENTS; AMENDMENT OF SOCIAL SECURITY ACT.
(a)Table of Contents.— Sec. 8000. Table of contents; amendment of Social Security Act. Sec. 8001. Extension of authority to transfer footer care funds to child welfare services. Sec. 8002. Extension of independent living initiatives program. Sec. 8003. Permanent extension of medicaid eligibility extension due to collection of child or spousal support Sec. 8004. New AFDC quality control system. Sec. 8005. Emergency assistance and AFDC special needs. Sec. 8006. Increase in reimbursement for foster and adoptive parent training. Sec. 8007 Case plans to include health and education records and to be reviewed and updated at the time of each placement Sec. 8008. Establishment and conduct of outreach program for children. Sec. 8009. Eligibility for benefits of children of Armed Forces personnel residing overseas. Sec. 8010. Rule for deeming to children the income and resources of their parents waived for certain disabled children. Sec. 8011. Exclusion from income of domestic commercial transportation tickets received as gifts. Sec. 8012. Reduction in time during which income and resources of separated couples must be treated as jointly available. Sec. 8013. Exclusion of accrued income with respect to purchase of certain burial spaces. Sec. 8014 Exclusion from resources of ell income-producing property. Sec. 8015. Demonstration of effectiveness of Minnesota Family Investment Plan. Sec. 8016. Increase in funding for title XX social services block grant.
(b)Amendment of Social Security Act.—Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Social Security Act. SEC. 8001. EXTENSION OF AUTHORITY TO TRANSFER FOSTER CARE FUNDS TO CHILD WELFARE SERVICES.
(a)3-Year Extension.—Subsections (b)(1), (b)(2)(B), (b)(4)(B), (b)(5)(A), (b)(5)(A)(ü), (c)(1), and (c)(2) of section 474 (42 U.S.C. 674) are each amended by striking “1989” and inserting “1992”.
(b)[42 USC 674 note](/us/usc/t42/s674). Effective Date.—The amendments made by subsection
(a)shall take effect on October 1, 1989. SEC. 8002. EXTENSION OF INDEPENDENT LIVING INITIATIVES PROGRAM.
(a)Program Extended for 3 Years.—Section 477 (42 U.S.C. 677) is amended—
(1)in each of subsections (a)(1) and (e)(1), by striking “, 1988, and 1989” and inserting “through 1992”; and
(2)in subsection (c), by striking “the fiscal year 1988 or 1989” and inserting “any of the fiscal years 1988 through 1992”.
(b)Entitlement Increased.—Section 477(e)(1) (42 U.S.C. 677(e)(1)) is amended—
(1)by inserting “(A)” after “(1)”; 103 STAT. 2453
(2)by striking ”The amount” and inserting ”The basic amount”;
(3)by striking ”and 1989” and inserting ”1989, 1990, 1991, and 1992”;
(4)by striking “$45,000,000” and inserting ”the basic ceiling for such fiscal year”; and
(5)by adding after and below such provision the following: " “(B) The maximum additional amount to which a State shall be State and local governments.entitled under section 474(a)(4) for fiscal years 1991 and 1992 shall be an amount which bears the same ratio to the additional ceiling for such fiscal year as the basic amount of such State bears to $45,000,000.”; and “(C) As used in this section: “(i) The term ‘basic ceiling’ means— “(I) for fiscal year 1990, $50,000,000; and “(II) for each fiscal year other than fiscal year 1990, $45,000,000. “(ii) The term ‘additional ceiling’ means— “(I) for fiscal year 1991, $15,000,000; and “(II) for fiscal year 1992, $25,000,000.”. "
(c)Matching Payments to States.—Section 474(a)(4) (42 U.S.C. 674(a)(4)) is amended to read as follows: " “(4) an amount equal to the sum of— “(A) so much of the amounts expended by such State to carry out programs under section 477 as do not exceed the basic amount for such State determined under section 477(e)(1); and “(B) the lesser of— “(i) one-half of any additional amounts expended by such State for such programs; or “(ii) the maximum additional amount for such State under such section 477(e)(1).”."
(d)Study by the Secretary of HHS; Report.— [42 USC 677 note](/us/usc/t42/s677).
(1)Study.—The Secretary of Health and Human Services shall study the programs authorized under section 477 of the Social Security Act for the purposes of evaluating the effectiveness of the programs. The study shall include a comparison of Children and youth.outcomes of children who participated in the programs and a comparable group of children who did not participate in the programs.
(2)Report.—Upon completion of the study, the Secretary shall issue a report to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives.
(e)Effective Date.—The amendments made by subsections (a), [42 USC 674 note](/us/usc/t42/s674).(b) and
(c)shall take effect October 1, 1989. SEC. 8003. PERMANENT EXTENSION OF MEDICAID ELIGIBILITY EXTENSION DUE TO COLLECTION OF CHILD OR SPOUSAL SUPPORT.
(a)Rumination of Sunset on Applicability of Medicaid Eligibility Extension.—Section 20(b) of the Child Support Enforcement Amendments of 1984 (Public Law 98–378) is amended by striking [42 USC 606 note](/us/usc/t42/s606).“and before October 1, 1989”.
(b)Effective Date.—The amendment made by subsection
(a)[42 USC 606 note](/us/usc/t42/s606).shall take effect on October 1, 1989. 103 STAT. 2454 SEC. 8004. NEW AFDC QUALITY CONTROL SYSTEM.
(a)In General.—Part A of title IV (42 U.S.C. 601 et seq.) is amended by inserting after section 407 the following: " “SEC. 408. State and local governments.[42 USC 608](/us/usc/t42/s608). AFDC QUALITY CONTROL SYSTEM. “(a) In General.—In order to improve the accuracy of payments of aid to families with dependent children, the Secretary shall establish and operate a quality control system under which the Secretary shall determine, with respect to each State, the amount (if any) of the disallowance required to be repaid to the Secretary due to erroneous payments made by the State in carrying out the State plan approved under this part. “(b) Review of Cases.— “(1) State review.— “(A) In general.—Each State with a plan approved under this part shall for each fiscal year, in accordance with the time schedule and methodology prescribed in regulations issued under paragraphs
(1)and
(2)of subsection (h)— “(i) review a sample of cases in the State with respect to which a payment has been made under such plan during the fiscal year; and “(ii) determine the level of erroneous payments for the State for the fiscal year. “(B) Effects of failure to complete review in a timely manner.— “(i) Secretary conducts review.—If a State fails to conduct and complete, on a timely basis, a review required by subparagraph (A), or otherwise fails to cooperate with the Secretary in implementing this subsection, the Secretary, directly or through contractual or such other arrangements as the Secretary may find appropriate, shall conduct the review and establish the error rate for the State for the fiscal year on the basis of the best data reasonably available to the Secretary, in accordance with the statistical methods that would apply if the review were conducted by the State. “(ii) State incurs costs of review.—The amount that would otherwise be payable under this part to a State for which the Secretary conducts a review under clause
(i)shall be reduced by the costs incurred by the Secretary in conducting the review. “(2) Review by the secretary.—The Secretary shall review a subsample of the cases reviewed by the State, or by the Secretary with respect to the State, under paragraph (1). “(3) Notification of difference cases.—Upon completion of the review under paragraph (2), the Secretary shall notify the State of any case in the subsample which the Secretary finds involves erroneous payments, and which the State’s review determined to be correct (in this section referred to as a ‘difference case’). “(4) Regulations. Establishment of quality control review panel.—The Secretary shall by regulation establish a Quality Control Review Panel to review difference cases. “(5) Resolution of difference cases.— 103 STAT. 2455 “(A) In general.—The State may seek review by the Panel of any difference case, within the time period prescribed in regulations issued under subsection (h)(3). “(B) Procedural rules.—The State and the Secretary may submit such documentation to the Panel as the State or the Secretary finds appropriate to substantiate its position. The findings of the Panel shall be made on the record, Records.within the time period prescribed in regulations issued under subsection (h)(4). “(C) Status of decisions of the quality control review panel.—The decisions of the Panel shall constitute the decisions of the Secretary for purposes of establishing the State’s error rate for the fiscal year. “(D) Appealability of decisions of the quality control review panel.—The decisions of the Panel shall not be appealable, except as provided in subsection (k). “(c) Identification of Erroneous Payments.— “(1) Apply provisions of state plan.—Except as provided in paragraph (2), in determining whether a payment is an erroneous payment, the State and the Secretary shall apply all relevant provisions of the State plan approved under this part. “(2) Treatment of provisions of state plan that are inconsistent with federal law.— “(A) In general.—If a provision of a State plan approved under this part is inconsistent with a provision of Federal law or regulations, and the Secretary has notified the State of the inconsistency, the provision of Federal law or regulations shall control. “(B) Exception.—Subparagraph
(A)shall not apply with respect to a payment of the State if— “(i) it is necessary for the State to enact a law in order to remove an inconsistency described in subparagraph (A), the Secretary has advised the State that the State will be allowed a reasonable period in which to enact such a law, and the payment was made during such period; or “(ii) the State agency made the payment in compliance with a court order. “(3) Certain payments not considered erroneous.— For purposes of this section, a payment by a State shall not be considered an erroneous payment if the payment is in error solely by reason of— “(A) the State’s failure to implement properly changes in Federal statute within 6 months after the effective date of such changes or, if later, 6 months after the issuance of final regulations (including regulations in interim final form) if such regulations are reasonably necessary to construe or apply the Federal statutory change; “(B) the State’s reliance upon and correct use of erroneous information provided by the Secretary about matters of fact; “(C) the State’s reliance upon and correct use of written statements of Federal policy provided to the State by the Secretary; “(D) the occurrence of an event in the State that— 103 STAT. 2456 “(i) results in the declaration by the President or the Governor of the State of a state of emergency or major disaster; and “(ii) directly affects the State agency’s ability to make correct payments under the State plan approved under this part; or “(E) the failure of a family to submit monthly reports to the State pursuant to section 402(a)(14), if the failure did not affect the amount of the payment. “(4) Certain payments considered erroneous.— Notwithstanding any other provision of this section, a payment shall be considered an erroneous payment if the payment is made to a family— “(A) which has failed without good cause to assign support rights as required by section 402(a)(26); or “(B) any member of which is a recipient of aid under a State plan approved under this part and does not have a social security account number (unless an application for a social security account number for the family member has been filed within 30 days after the date of application for such aid). “(d) Determination of Error Rates.— “(1) In general.—The Secretary shall, in accordance with this subsection, determine an error rate for each State for the fiscal year involved, based on the reviews under paragraphs
(1)and
(2)of subsection
(b)and the decisions of the Quality Control Review Panel under subsection (b)(5). “(2) Error rate formula.— Except as provided in paragraph (3), the State’s error rate for a fiscal year is— “(A) the ratio of— “(i) the erroneous payments of the State for the fiscal year; to “(ii) the total payments of aid under the State plan approved under this part for the fiscal year; reduced by “(B) the amount by which— “(i) the national average underpayment rate for the fiscal year; exceeds “(ii) the underpayment rate of the State for the fiscal year. “(3) Application of reduction to subsequent fiscal year.—At the request of a State, the Secretary shall apply the reduction described in paragraph (2)(B) in determining the State’s error rate for either of the 2 following fiscal years instead of in determining the State’s error rate for the fiscal year to which the reduction would otherwise apply. “(e) Notification to States of Error Rates.—The Secretary shall notify each State of the error rate of the State determined under subsection (d), within the time period prescribed in regulations issued under subsection (h)(5). “(f) Imposition of Disallowances.—If a State’s error rate for a fiscal year exceeds the national average error rate for the fiscal year, the Secretary shall impose a disallowance on the State for the fiscal year in an amount equal to— “(1) the product of— “(A) the State’s total payments of aid to families with dependent children for the fiscal year; 103 STAT. 2457 “(B) the Federal medical assistance percentage applicable to the State for purposes of section 1118; “(C) the lesser of— “(i) the ratio of— “(I) the amount by which the State’s error rate for the fiscal year exceeds the national average error rate for the fiscal year; to “(II) the national average error rate for the fiscal year; or “(ii) 1; and “(D) the amount by which the State’s error rate for the fiscal year exceeds the national average error rate for the fiscal year; reduced by “(2) the product of— “(A) the ratio of— “(i) the amount by which the State’s error rate for the fiscal year exceeds the national average error rate for the fiscal year; and “(ii) the State’s error rate for the fiscal year; “(B) the overpayments recovered by the State in the fiscal year; and “(C) the Federal medical assistance percentage applicable to the State for purposes of section 1118; and further reduced by “(3) the product of— “(A) the calculation described in paragraphs
(1)and (2); and “(B) the percentage by which— “(i) the State’s rate of child support collections for the fiscal year; exceeds “(ii) the lesser of— “(I) the national average rate of child support collections for the fiscal year; or “(II) the average of the State’s child support collection rates for each of the 3 fiscal years preceding the fiscal year. “(g) Notification to States of Amounts of Disallowances.—The Secretary shall notify each State on which the Secretary imposes a disallowance the amount of the disallowance, within the time period prescribed in regulations issued under subsection (h)(6). “(h) Regulations.—The Secretary, after consultation with the chief executives of the States, shall by regulation prescribe— “(1) the periods within which— “(A) the reviews required by paragraphs
(1)and
(2)of subsection
(b)are to begin and be completed; and “(B) the results of the review required by subsection (b)(1) are to be reported to the Secretary, “(2) matters relating to the selection and size of the samples to be reviewed under paragraphs
(1)and
(2)of subsection (b), and the methodology for making statistically valid estimates of each State’s error rate; “(3) the period within which a State may seek review by the Quality Control Review Panel of a difference case; “(4) the period within which a difference case appealed by a State is to be resolved by the Quality Control Review Panel; 103 STAT. 2458 “(5) the period, after the completion of the reviews required by paragraphs
(1)and
(2)of subsection
(b)and the resolution by the Quality Control Review Panel of any difference cases appealed by a State, within which the Secretary is to notify the State of the error rate of the State for the fiscal year involved; and “(6) the period within which the Secretary is to notify a State of any disallowance. “(i) Payment of Disallowances.— “(1) Payment options.— Within 45 days after the date a State is notified of a disallowance pursuant to subsection (g), the State shall, at the option of the State— “(A) pay the Secretary the amount of the disallowance; or “(B) Contracts.enter into an agreement with the Secretary under which the State will make quarterly payments to the Secretary over a period not to exceed 30 months beginning not later than the first quarter beginning after the date the State receives the notice, in amounts sufficient to repay the disallowance with interest by the end of such period. “(2) Authority to adjust state matching payments.—If a State fails to pay the amount of a disallowance imposed on the State, in the manner required by the applicable subparagraph of paragraph (1), the Secretary shall reduce the amount to be paid to the State under section 403(a) by amounts sufficient to recover the amount of the disallowance with interest. “(3) Interest on unpaid disallowances.— “(A) Rate of interest.—Interest on the unpaid amount of a disallowance shall accrue at the overpayment rate established under section 6621(a)(1) of the Internal Revenue Code of 1986. “(B) Accrual of interest.— “(i) In general.—Except as provided in clause (ii), interest on the unpaid amount of a State’s disallowance shall accrue beginning 45 days after the date the State receives notice of the disallowance. “(ii) Exception.—If the State appeals the imposition of a disallowance under this section to the Departmental Appeals Board and the Board does not decide the appeal within 90 days after the date of the State’s notice of appeal, interest shall not accrue on the unpaid amount of the disallowance during the period beginning on such 90th day and ending on the date of the Board’s final decision on the appeal, except to the extent that the Board finds that the State caused or requested the delay. “(j) Administrative Review of Disallowances.— “(1) In general.—Within 60 days after the date a State receives notice of a disallowance imposed under this section, the State may appeal the imposition of the disallowance, in whole or in part, to the Departmental Appeals Board established in the Department of Health and Human Services, by filing an appeal with the Board. “(2) Procedural rules.—The Board shall consider a State’s appeal 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 or any portion thereof, the Board shall conduct a thorough 103 STAT. 2459review of the issues and take into account all relevant evidence. In rendering its final decision, the Board shall incorporate by reference any findings of the Quality Control Review Panel that were made in connection with the determination of the error rate and the amount of the disallowance, and such findings shall not be reviewable by the Board. “(k) Judicial Review of Disallowances.— “(1) In general.— Within 90 days after the date of a final decision by the Departmental Appeals Board with respect to the imposition of a disallowance on a State under this section, the State may obtain judicial review of the final decision (and the findings of the Quality Control Review Panel 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 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 (or to the Quality Control Review Panel, in the case of any finding by the Panel which is at issue in the appeal). “(l) Refund of Disallowances Imposed in Error.—If the Secretary, directly or indirectly, receives from a State part or all of the amount of a disallowance imposed on the State under this section, and part or all of the disallowance is finally determined to have been imposed in error, the Secretary shall refund to the State the amount received by reason of the error, with interest which shall accrue from the date of receipt at the rate described in subsection (i)(3)(A). “(m) Definitions.—As used in this section: “(1) National average error rate.— The term ‘national average error rate’ for a fiscal year means the greater of— “(A) the ratio of— “(i) the total amount of erroneous payments made by all States for the fiscal year; to “(ii) the total amount of aid paid by ail the States for the fiscal year under plans approved under this part; or “(B) 4 percent. “(2) Underpayment rate.— The term ‘underpayment rate’, with respect to a State for a fiscal year, means the ratio of— “(A) the total amounts of aid that should have been but were erroneously not paid for a fiscal year to recipients of aid under the State plan approved under this part; to “(B) the total amount of aid paid under such plan for the fiscal year. “(3) National average underpayment rate.— The term ‘national average underpayment rate’ for a fiscal year means the ratio of— “(A) the total amounts of aid that should have been but were erroneously not paid for a fiscal year to all recipients of aid under State plans approved under this part; to 103 STAT. 2460 “(B) the total amount of aid paid for the fiscal year under all State plans approved under this part. “(4) Child support collection rate.— The term ‘child support collection rate’, with respect to a State for a fiscal year, means the ratio of— “(A) the sum of the number of cases reported by the agency administering the State plan approved under part D for each quarter in the fiscal year for which— “(i) an assignment was made under section 402(a)(26); and “(ii) a collection was made under the State’s plan approved under part D; to “(B) the sum of the number of cases reported by such agency for each quarter in the fiscal year under which an assignment was made under section 402(a)(26). “(5) National child support collection rate.— The term ‘national child support collection rate’ for a fiscal year means the ratio of— “(A) the sum of the number of cases described in paragraph (4)(A) reported by all States for quarters in the fiscal year; to “(B) the sum of the number of cases described in paragraph (4)(B) reported by all States for quarters in the fiscal year.
(6)Erroneous payments.—The term ‘erroneous payments’ means the sum of overpayments to eligible families and payments to ineligible families made in carrying out a plan approved under this part.”. "
(b)Effective date.[42 USC 603](/us/usc/t42/s603).[42 USC 608 note](/us/usc/t42/s608). Conforming Repeals.—Effective October 1, 1990, subsections
(i)and
(j)of section 403 are hereby repealed.
(c)Applicability of New Quality Control System.—The amendment made by subsection
(a)shall apply to erroneous payments made in any fiscal year after fiscal year 1990.
(d)State and local governments.[42 USC 603 note](/us/usc/t42/s603). No Sanctions with respect to Disallowances Before Fiscal Year 1991.—No disallowance or other similar sanction shall be applied to a State for any fiscal year before fiscal year 1991 under section 403(i) of the Social Security Act or any predecessor statutory or regulatory provision relating to disallowances for erroneous payments made in carrying out a State plan approved under part A of title IV of such Act.
(e)[42 USC 608 note](/us/usc/t42/s608). Implementation.—The Secretary of Health and Human Services shall take all actions necessary to assure that adequate numbers of staff are available to perform the functions required by the amendments made by this section.
(f)[42 USC 608 note](/us/usc/t42/s608). Annual Reports.—The Secretary of Health and Human Services shall annually submit to the Committee on Finance of the Senate, and to the Committee on Ways and Means of the House of Representatives a report on whether the time periods contained in the regulations prescribed pursuant to section 408 of the Social Security Act (as added by subsection (a)) have been or will be met. The first such report shall be submitted not later than January 1, 1992.
(g)Reports.[42 USC 608 note](/us/usc/t42/s608). Study of Negative Case Actions.—
(1)In general.—Not later than October 1, 1992, the Secretary of Health and Human Services shall report and make recommendations to the Congress on the results of a study of negative case actions under the program of aid to families with 103 STAT. 2461dependent children under State plans approved under part A of title IV of the Social Security Act.
(2)Negative case actions defined.—As used in paragraph (1), the term “negative case actions” means termination of assistance under part A of title IV of the Social Security Act, denial of an application for assistance under such part, or other action with respect to an application under such part without a determination of eligibility for assistance under such part. SEC. 8005. EMERGENCY ASSISTANCE AND AFDC SPECIAL NEEDS. [42 USC 606 note](/us/usc/t42/s606).
(a)Implementation of Proposed Regulations Prohibited.—Except as provided in subsection (b), the Secretary of Health and Human Services (in this section referred to as the “Secretary”) shall not—
(1)implement in whole or in part the proposed regulation published in the Federal Register on December 14, 1987, (52 F.R. 47420) with respect to emergency assistance and the need for and amount of assistance under the program of aid to families with dependent children; or
(2)before October 1, 1990, change any policy in effect immediately before the date of the enactment of this Act with respect to any of the matters addressed in the proposed regulation.
(b)Revised Proposed Regulation.—Notwithstanding subsection (a), the Secretary may issue a revised proposed regulation concerning the use of emergency assistance under the program of aid to families with dependent children under title IV of the Social Security Act that incorporates the recommendations included in the report entitled “Use of the Emergency Assistance and AFDC Programs to Provide Shelter to Families” that the Secretary submitted to the Congress on July 3, 1989.
(c)Establishment of Effective Dates for Proposed Rules.—Any final regulation which would change any policy in effect immediately before the date of the enactment of this Act with respect to the use of emergency assistance or special needs funds under the program of aid to families with dependent children under part A of title IV of the Social Security Act shall not take effect before October 1, 1990.
(d)Reporting Requirements.—With respect to any calendar quarter beginning on or after January 1, 1990, a financial report by a State submitted to the Secretary to fulfill reporting requirements under the program of aid to families with dependent children under part A of title IV of the Social Security Act shall identify any emergency assistance and special needs funds expended by the State under the program and used to pay for housing in hotels or similar temporary living arrangements (as defined by the Secretary) that house recipients of such aid. SEC. 8006. INCREASE IN REIMBURSEMENT FOR FOSTER AND ADOPTIVE PARENT TRAINING. State and local governments.
(a)In General.—Section 474(a)(3) (42 U.S.C. 674(a)(3)) is amended—
(1)by striking “and” at the end of subparagraph (A);
(2)by redesignating subparagraph
(B)as subparagraph (C); and
(3)by inserting after subparagraph
(A)the following: " “(B) 75 percent of so much of such expenditures (including travel and per diem expenses) as are for the short-term 103 STAT. 2462training of current or prospective foster or adoptive parents and the members of the staff of State-licensed or State-approved child care institutions providing care to foster and adopted children receiving assistance under this part, in ways that increase the ability of such current or prospective parents, staff members, and institutions to provide support and assistance to foster and adopted children, whether incurred directly by the State or by contract, and”. "
(b)[42 USC 674 note](/us/usc/t42/s674). Effective Date.—The amendments made by subsection
(a)shall apply to expenditures made on or after October 1, 1989, and before October 1, 1992. SEC. 8007. CASE PLANS TO INCLUDE HEALTH AND EDUCATION RECORDS AND TO BE REVIEWED AND UPDATED AT THE TIME OF EACH PLACEMENT.
(a)Inclusion of Health and Education Records.—Section 475(1) (42 U.S.C. 675(1)) is amended—
(1)by inserting “(A)” before “A description”;
(2)by striking “472(a)(1); and a” and inserting “472(a)(1).
(B)A”;
(3)by indenting subparagraphs
(A)and
(B)(as so amended by paragraphs
(1)and
(2)of this subsection) 4 ems to the right of the left margin;
(4)by inserting after and below subparagraph
(B)(as so amended and indented) the following: " “(C) To the extent available and accessible, the health and education records of the child, including— “(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) assurances that the child’s placement in foster care takes into account proximity to the school in which the child is enrolled at the time of placement; “(v) a record of the child’s immunizations; “(vi) the child’s known medical problems; “(vii) the child’s medications; and “(viii) any other relevant health and education information concerning the child determined to be appropriate by the State agency.”; and "
(5)by setting the last sentence flush with the left margin of the paragraph.
(b)Review and Update of Health and Education Record at Time of Placement.—Section 475(5) (42 U.S.C. 675(5)) is amended—
(1)by striking “and” at the end of subparagraph (B);
(2)by striking the period at the end of subparagraph
(C)and inserting “; and”; and
(3)by adding at the end the following new subparagraph: " “(D) a child’s health and education record (as described in paragraph (1)(A)) is reviewed and updated, and 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.”. "
(c)[42 USC 675 note](/us/usc/t42/s675). Effective Date.—The amendments made by subsections
(a)and
(b)shall take effect on April 1, 1990. 103 STAT. 2463 SEC. 8008. ESTABLISHMENT AND CONDUCT OF OUTREACH PROGRAM FOR CHILDREN.
(a)In General.—Part B of title XVI (42 U.S.C. 1383 et seq.) is amended by adding at the end the following: " “SEC. 1635. OUTREACH PROGRAM FOR CHILDREN. Blind persons.Handicapped persons.[42 USC 1383d](/us/usc/t42/s1383d). “(a) Establishment.—The Secretary 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 Secretary 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.”. "
(b)Effective Date.—The amendment made by subsection
(a)[42 USC 1383d note](/us/usc/t42/s1383d).shall take effect 3 months after the date of the enactment of this Act. SEC. 8009. ELIGIBILITY FOR BENEFITS OF CHILDREN OF ARMED FORCES PERSONNEL RESIDING OVERSEAS.
(a)In General.—Section 1611(f) (42 U.S.C. 1382(f)) is amended by inserting “(other than a child described in section 1614(a)(1)(B)(ii))” after “no individual”.
(b)Conforming Amendment.—Section 1614(a)(1) (42 U.S.C. 1382c(a)(1)) is amended—
(1)in subparagraph (B)—
(A)by redesignating clauses
(i)and
(ii)as subclauses
(I)and (II), respectively;
(B)by inserting “(i)” after “(B)”; and
(C)by striking the period and inserting “, or”; and
(2)by adding after and below subparagraph
(B)the following: " “(ii) is a child who is a citizen of the United States, 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, the District of Columbia, Puerto Rico, and the territories and possessions of the United States, and who, during the month before the parent reported for such assignment, was receiving benefits under this title.”. "
(c)Effective Date.—The amendments made by subsections
(a)[42 USC 1382 note](/us/usc/t42/s1382).and
(b)shall apply with respect to benefits for months after March 1990. SEC. 8010. RULE FOR DEEMING TO CHILDREN THE INCOME AND RESOURCES OF THEIR PARENTS WAIVED FOR CERTAIN DISABLED CHILDREN.
(a)In General.—Section 1614(f)(2) (42 U.S.C. 1382c(f)(2)) is amended—
(1)by inserting “(A)” after “(2)”; and
(2)by adding at the end the following: " “(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; 103 STAT. 2464 “(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.”. "
(b)Personal Needs Allowance.—Section 1611(e)(1)(B) (42 U.S.C. 1382(e)(1)(B)) is amended by inserting “or an eligible individual is a child described in section 1614(f)(2)(B),” before “the benefit under this title”.
(c)[42 USC 1382 note](/us/usc/t42/s1382). Effective Date.—The amendments made by subsections
(a)and
(b)shall take effect on the 1st day of the 6th calendar month beginning after the date of the enactment of this Act. SEC. 8011. EXCLUSION FROM INCOME OF DOMESTIC COMMERCIAL TRANSPORTATION TICKETS RECEIVED AS GIFTS.
(a)Exclusion From Income.—Section 1612(b) (42 U.S.C. 1382a(b)) is amended—
(1)by striking “and” at the end of paragraph (13);
(2)by striking the period at the end of paragraph
(14)and inserting “; and”; and
(3)by adding at the end the following: " “(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.”. "
(b)[42 USC 1382a note](/us/usc/t42/s1382a). Effective Date.—The amendments made by subsection
(a)shall take effect on the 1st day of the 3rd calendar month beginning after the date of the enactment of this Act. SEC. 8012. REDUCTION IN TIME DURING WHICH INCOME AND RESOURCES OF SEPARATED COUPLES MUST BE TREATED AS JOINTLY AVAILABLE.
(a)In General.—Section 1614(b) (42 U.S.C. 1382c(b)) is amended by striking the 1st sentence and inserting “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 or requests restoration of eligibility under this title during the month, at the time the application or request is filed.”.
(b)[42 USC 1382c note](/us/usc/t42/s1382c). Effective Date.—The amendment made by subsection
(a)shall take effect on October 1, 1990. SEC. 8013. EXCLUSION OF ACCRUED INCOME WITH RESPECT TO PURCHASE OF CERTAIN BURIAL SPACES.
(a)Exclusion From Income.—Section 1612(b) (42 U.S.C. 1382a(b)), as amended by section 8011(a) of this Act, is amended—
(1)by striking “and” at the end of paragraph (14);
(2)by striking the period at the end of paragraph
(15)and inserting “; and”; and 103 STAT. 2465
(3)by adding at the end the following: " “(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.”. "
(b)Exclusion From Resources.—Section 1613(a)(2)(B) (42 U.S.C. 1382b(a)(2)(B)) is amended by inserting “or agreement (including any interest accumulated thereon) representing the purchase of a burial space” after “the value of any burial space”.
(c)Effective Date.—The amendments made by subsections
(a)[42 USC 1382a note](/us/usc/t42/s1382a).and
(b)shall take effect on the 1st day of the 4th month beginning after the date of the enactment of this Act. SEC. 8014. EXCLUSION FROM RESOURCES OF ALL INCOME-PRODUCING PROPERTY.
(a)In General.—Section 1613(a)(3) (42 U.S.C. 1382b(a)(3)) is amended to read as follows: " “(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 Secretary, except that the Secretary 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;”. "
(b)Effective Date.—The amendment made by subsection
(a)[42 USC 1382b note](/us/usc/t42/s1382b).shall take effect on the 1st day of the 5th calendar month beginning after the date of the enactment of this Act. SEC. 8015. DEMONSTRATION OF EFFECTIVENESS OF MINNESOTA FAMILY INVESTMENT PLAN.
(a)In General.—Upon written application of the State of Minnesota [42 USC 602 note](/us/usc/t42/s602).(in this section referred to as the “State”) within 24 months after the date of the enactment of this Act, and after the Secretary of Health and Human Services approves the application as meeting the requirements set forth in subsection (b), the State may conduct a demonstration project to determine whether the State family investment plan helps families to become self-supporting and enhances the ability of families to care for their children more effectively than does the State program of aid to families with dependent children under part A of title IV of the Social Security Act.
(b)Project Requirements.—In an application submitted under subsection (a), the State shall provide that the following terms and conditions shall be in effect under the demonstration project:
(1)Field trials.— The project will consist of 2 field trials, conducted as follows:
(A)Urban field trial.—1 field trial will be conducted in 1 or more of the following counties in the State:
(i)Anoka.
(ii)Carver.
(iii)Dakota.
(iv)Hennepin.
(v)Scott.
(vi)Washington.
(B)Rural field trial.—1 field trial will be conducted in 1 or more counties in the State not specified in subparagraph (A). 103 STAT. 2466
(C)Number of families involved.—The field trials will not involve more than a total of 6,000 families at any one time, excluding families whose sole involvement is as members of control groups needed to evaluate the project.
(2)Authority to implement field trials differently.—The implementation of the family investment plan in 1 field trial may be different from the implementation of such plan in the other field trial.
(3)Waivers required before project begins.—The project will not begin before all waivers required as described in subsection
(e)have been granted.
(4)Beginning of project.—
(A)In general.—The project will begin during the first month of a calendar quarter.
(B)Begin defined.—For purposes of this section, the project begins when the first family receives assistance under the project.
(5)Project to be operated in accordance with certain Minnesota laws.—The project will be operated in accordance with the 1989 Minnesota Laws sections 6 through 11, 13, 130, and 132 of article 5 of chapter 282, and all amendments to the Laws of Minnesota, to the extent that such laws and amendments are consistent with the goals of the project and this subsection.
(6)Project participants ineligible for afdc.—Each family which participates in the project will not be eligible for aid under the State plan approved under section 402(a) of the Social Security Act.
(7)Medicaid eligibility rules applicable to project.—
(A)Eligibility of participants.—
(i)In general.—Each family which participates in the project and would (but for such participation) be eligible for aid under the State plan approved under section 402(a) of the Social Security Act will be treated as receiving such aid Tor purposes of the State plan approved under section 1902(a) of such Act.
(ii)Eligibility extended for project participants with increased employment income.—Each family which participates in the project and, during such participation, would (but for such participation) become ineligible for aid under the State plan approved under section 402(a) of the Social Security Act by reason of increased income from employment will, for purposes of section 1925 of such Act, be treated as a family that has become ineligible for such aid.
(B)Eligibility extended for persons leaving project because of increased receipt of child support.—Each family whose participation in the project is terminated by reason of the collection or increased collection of child support under part D of title IV of the Social Security Act will be treated as a recipient of aid to families with dependent children for purposes of title XIX of such Act for an additional 4 calendar months beginning with the month in which the termination occurs.
(8)AFDC rules to apply generally.—
(A)In general.—Except where inconsistent with this subsection, the requirements of the State plan approved 103 STAT. 2467under section 402(a) of the Social Security Act will apply to the project, unless waived by the Secretary of Health and Human Services in accordance with subsection (d).
(B)Rules relating to participation in education, employment, and training activities.—
(i)Participation generally not required.—Except as provided in clause (ii), the State will not require any individual who applies for or receives assistance under the project to comply with any education, employment, or training requirement of title IV of the Social Security Act, unless required to do so under a contract entered into under the project.
(ii)Authority to require participation of parent of child age i or older.—The State may require any individual to comply with any education, employment, or training requirement imposed under the project if the State plan approved under section 402(a) of the Social Security Act does not prohibit the State from requiring such compliance, and the individual—
(I)receives assistance under the project;
(II)is the parent or relative of a child who has attained the age of 1 year; and
(III)is personally providing care for the child.
(9)Availability of education, employment, and training services.—The education, employment, and training services available under the State plan approved under part F of title IV of the Social Security Act will be made available to each family required to enter into a contract with a county agency under the 1989 Minnesota Laws, section 10 of article 5 of chapter 282.
(10)Assistance under project not less than under afdc and food stamp program.—
(A)Establishment of policies and standards.—The State will establish policies and standards to ensure that families participating in the project receive cash assistance under the project in an amount not less than the aggregate value of the assistance that such families would have received under the State plan approved under section 402(a) of such Act and under the food stamp program established under the Food Stamp Act of 1977 in the absence of the project.
(B)Identification of characteristics of participants who might receive less benefits than under afdc and food stamp program.—The State will identify the set or sets of characteristics of families that (but for this paragraph) might receive benefits under the project in an amount less than the amount required under subparagraph
(A)to be provided to such family.
(C)Determination of benefit level for participants with identified characteristics.—The State will establish a mechanism to determine, for each family with any set of characteristics identified under subparagraph (B), whether the family would (but for this paragraph) receive benefits under the project in an amount less than the amount required under subparagraph
(A)to be provided to such family.
(D)Assistance under project increased where necessary.—The State will, for each family which would (but 103 STAT. 2468for this paragraph) receive benefits under the project in an amount less than the amount required under subparagraph
(A)to be provided to such family, increase the amount of such benefits to such family to the amount so required.
(11)Termination of project.—The project will terminate at the end of the 5-year period beginning on the first day of the month during which the project begins, or, if earlier—
(A)180 days after the State notifies the Secretary of Health and Human Services that the State intends to terminate the project;
(B)180 days after the Secretary of Health and Human Services, after 30 days written notice to the State and opportunity for a hearing, determines that the State has materially failed to comply with this section; or
(C)on agreement by the State and the Secretary of Health and Human Services.
(c)Funding.—
(1)In general.— If an application submitted under subsection
(a)by the State complies with the requirements specified in subsection
(b)and contains an evaluation plan which meets the requirements of subsection (g), and the Secretary of Health and Human Services approves the application, then the Secretary shall, from amounts made available under parts A and F of title IV of the Social Security Act—
(A)pay the State for each calendar quarter, pursuant to section 403 of such Act, the amounts that would have been payable to the State during such calendar quarter, in the absence of the demonstration project, for cash assistance, child care, education, employment and training, and administrative expenses under the State plan approved under section 402(a) of such Act;
(B)reimburse the State at the rate of 50 percent, for expenses of evaluating the effects of the project.
(2)Rule of construction.—Paragraph
(1)shall not be construed to prevent the State from claiming and receiving reimbursement for additional persons who would qualify for assistance under the State plan approved under section 402(a) of the Social Security Act, for costs attributable to increases in the State’s payment standard under such plan, or for any other benefits and services for which Federal matching funds are available under part A of title IV of such Act.
(d)Waiver Authority.—
(1)AFDC waivers.—
(A)In general.—Except as provided in subparagraph (B), the Secretary of Health and Human Services shall, with respect to the demonstration project under this section, waive any requirement of part A or F of title IV of the Social Security Act that, if applied, would prevent the State from
(i)carrying out the project in accordance with subsection (b), or
(ii)effectively achieving its purposes, but only to the extent necessary to enable the State to carry out the project.
(B)Limitations.—The Secretary of Health and Human Services may not, with respect to the demonstration project under this section—
(i)waive any requirement of section 402(a)(4) or 482(h) of the Social Security Act; 103 STAT. 2469
(ii)permit the State to provide cash assistance to any family under the project in an amount less than the aggregate value of the assistance that would have been provided to such family under the State plan approved under section 402(a) of such Act and under the food stamp program established under the Food Stamp Act of 1977 in the absence of the project; or
(iii)waive any requirement of section 402(a)(19)(C) of such Act.
(2)Other waivers.— If, under this section, the Secretary of Health and Human Services approves an application by the State to conduct a demonstration project relating to the State family investment plan, the Secretary of Health and Human Services shall, in order to enable the State to implement the demonstration project— (A)(i) require that the State treat each family participating in the project as individuals eligible for medical assistance under section 1902(a)(10)(A) of the Social Security Act,
(ii)require that the State treat, for purposes of section 1925 of such Act, each family whose participation in the project is terminated by reason of increased income from employment as a family that has become ineligible for aid under the State plan approved under part A of title IV of such Act, and
(iii)require that the State treat each family whose participation in the project is terminated by reason of the collection or increased collection of child support under part D of title IV of the Social Security Act as a recipient of aid to families with dependent children for purposes of title XIX of such Act for an additional 4 calendar months beginning with the month in which such termination occurs; and
(B)make payment, under section 1903 of such Act, for medical assistance and administrative expenses for families participating in the project in the same manner as such payments may be made for medical assistance and administrative expenses for individuals entitled to benefits under title XIX of such Act, except that the aggregate amount of such payments may not exceed the aggregate amount of payments that would have been made for those families in the absence of such project.
(e)Definitions of Certain Terms.—As used in this section, the terms “family” and “contract” shall have the meaning given such terms by the 1989 Minnesota Laws, sections 6 through 11, 13, 130, and 132 of article 5 of chapter 282.
(f)Quality Control.—Cases participating in the demonstration project under this section during a fiscal year shall be excluded from any sample taken for purposes of determining under section 403(i) or 408 of the Social Security Act, whichever is applicable, the rate at which the State made overpayments under part A of title TV of such Act for the fiscal year. For purposes of such sections 403(i) and 408, payments made by the State under the project shall be treated as payments made under the State plan approved under section 402(a) of such Act.
(g)Evaluation of Project.—
(1)Evaluation plan.—The State shall develop and implement an evaluation plan designed to provide reliable information on the impact and implementation of the demonstration 103 STAT. 2470project. The evaluation plan shall include groups of project participants and control groups assigned at random in the held trial conducted in accordance with subsection (b)(1)(A).
(2)Evaluation.—The evaluation conducted under the evaluation plan shall measure the extent to which the project increases family employment and income, prevents long-term dependency, moves families toward self-support, reduces total assistance payments, and simplifies the welfare system.
(3)Reports.—The State shall issue an interim report and a final report on the results of the evaluation described in paragraph
(2)to the Secretary of Health and Human Services at such times as the Secretary shall require.
(h)Report to Congress.—Within 3 months after receipt of the final report issued pursuant to subsection (g)(3), the Secretary of Health and Human Services shall report to the Congress the results of the evaluation described in subsection (g)(2). SEC. 8016. INCREASE IN FUNDING FOR TITLE XX SOCIAL SERVICES BLOCK GRANT. Section 2003(c) (42 U.S.C. 1397b(c)) is amended—
(1)in paragraph (3), by striking “and 1987, and for each succeeding fiscal year other than the fiscal year 1988; and” and inserting “1987, and 1989;”;
(2)in paragraph (4), by striking the period and inserting “; and”; and
(3)by adding at the end the following: " “(5) $2,800,000,000 for each fiscal year after fiscal year 1989.”. " TITLE IX—OFFSHORE OIL POLLUTION COMPENSATION FUND SEC. 9001. PAYMENTS TO THE OFFSHORE OIL POLLUTION COMPENSATION FUND.
(a)In General.—
(1)Section 302(d)(1) of the Outer Continental Shelf Lands Act Amendments of 1978 (43 U.S.C. 1812(d)(1)) is amended by striking out “not to exceed”.
(2)Section 302(d)(2) of the Outer Continental Shelf Lands Act Amendments of 1978 (43 U.S.C. 1812(d)(2)) is amended by striking out “not less than $100,000,000 and not more than” and adding in lieu thereof “not more than or less than”.
(b)[43 USC 1812](/us/usc/t43/s1812). Effective Date.—The amendments made by this section shall take effect on the date of enactment of this Act. TITLE X—MISCELLANEOUS AND TECHNICAL SOCIAL SECURITY ACT AMENDMENTS Miscellaneous and Technical Social Security Act Amendments of 1989. SEC. 10000. [42 USC 1305 note](/us/usc/t42/s1305). SHORT TITLE; TABLE OF CONTENTS. This title may be cited as the “Miscellaneous and Technical Social Security Act Amendments of 1989”. Table of Contents Sec. 10000. Short title; table of contents. 103 STAT. 2471 Subtitle A— Time-Sensitive Provisions Sec. 10101. Continuation of disability benefits during appeal. Sec. 10102. Transfer to railroad retirement account Sec. 10109. Extension of disability insurance program demonstration project authority. Subtitle B— Technical Provisions Sec. 10201. Prohibition of termination of coverage of U.S. citizens and residents employed abroad by a foreign affiliate of an American employer. Sec. 10202. Exclusion from wages and compensation of refunds required from employers to compensate for duplication of medicare benefits by health care benefits provided by the employers. Sec. 10203. Elimination of any carryover reduction in retirement or disability benefits due to receipt of widow’s or widower’s benefits before attaining age 62. Sec. 10204. Clarification of rules governing taxation under FICA and SECA of individuals of certain religious faiths. Sec. 10205. Treatment of group-term life insurance under railroad retirement taxes. Sec. 10206. Treatment of certain deferred compensation and salary reduction arrangements under railroad retirement taxes. Sec. 10207. Treatment of Rowan decision under railroad retirement taxes. Sec. 10208. Inclusion of certain deferred compensation in determination of wage-based adjustments. Subtitle C— Additional Amendments Sec. 10301. Elimination of the dependency test applicable to certain adopted children. Sec. 10302. Authority for Secretary to take into account misinformation provided to applicants in determining date of application for benefits. Sec. 10303. Same-day personal interviews at field offices of the Social Security Administration in certain cases where time is of the essence. Sec. 10304. Authority to amend wage records after expiration of time limitation. Sec. 10305. Standards applicable in certain determinations of good cause, fault, and good faith. Sec. 10306. Notice requirements. Sec. 10307. Representation of claimants. Sec. 10308. Earnings and benefit statements. Subtitle D— Human Resource and Income Security Provisions Sec. 10401. Increase in authorization for child welfare services under title IV–B of the Social Security Act. Sec. 10402. Extension and permanent increase in foster care ceiling. Sec. 10403. Miscellaneous technical corrections. Sec. 10404. Demonstration project. Sec. 10405. Agent Orange settlement payments excluded from countable income and resources under Federal means-tested programs. Sec. 10406. Treatment of triennial reviews of State foster care protections for fiscal years before October 1, 1990. Subtitle A—Time-Sensitive Provisions SEC. 10101. CONTINUATION OF DISABILITY BENEFITS DURING APPEAL. Subsection
(g)of section 223 of the Social Security Act (42 U.S.C. 423(g)) is amended—
(1)in paragraph (1)(iii), by striking “June 1990” and inserting “June 1991”; and
(2)in paragraph (3)(B), by striking “January 1, 1990” and inserting “January 1, 1991”. SEC. 10102. TRANSFER TO RAILROAD RETIREMENT ACCOUNT. Subsection (c)(1)(A) of section 224 of the Railroad Retirement Solvency Act of 1983 (relating to section 72(r) revenue increase [45 USC 231n note](/us/usc/t45/s231n).transferred to certain railroad accounts) is amended by striking “1989” and inserting “1990”. 103 STAT. 2472 SEC. 10103. EXTENSION OF DISABILITY INSURANCE PROGRAM DEMONSTRATION PROJECT AUTHORITY.
(a)In General.—Section 505 of the Social Security Disability Amendments of 1980 (Public Law 96–265), as amended by section 12101 of the Consolidated Omnibus Budget Reconciliation Act of [42 USC 1310 note](/us/usc/t42/s1310).1985 (Public Law 99–272), is further amended—
(1)in paragraph
(3)of subsection (a), by striking “June 10, 1990” and inserting “June 10, 1993”;
(2)in paragraph
(4)of subsection (a), by striking “in each of the years 1986, 1987, 1988, and 1989” and inserting “in 1986 and each of the succeeding years through 1992”; and
(3)in subsection (c), by striking “June 9, 1990” and inserting “June 9, 1993”.
(b)[42 USC 1310 note](/us/usc/t42/s1310). Effective Date.—The amendments made by this section shall take effect on the date of the enactment of this Act. Subtitle B—Technical Provisions SEC. 10201. PROHIBITION OF TERMINATION OF COVERAGE OF U.S. CITIZENS AND RESIDENTS EMPLOYED ABROAD BY A FOREIGN AFFILIATE OF AN AMERICAN EMPLOYER
(a)In General.—Subsection
(1)of section 3121 of the Internal [26 USC 3121](/us/usc/t26/s3121).Revenue Code of 1986 (relating to agreements entered into by American employers with respect to foreign affiliates) is amended—
(1)in paragraph (2), by adding at the end the following: “Notwithstanding any other provision of this subsection, the period for which any such agreement is effective with respect to any foreign entity shall terminate at the end of any calendar quarter in which the foreign entity, at any time in such quarter, ceases to be a foreign affiliate as defined in paragraph (6).”;
(2)by striking paragraphs (3), (4), and (5);
(3)by inserting after paragraph
(2)the following new paragraph: " “(3) No termination of agreement.—No agreement under this subsection may be terminated, either in its entirety or with respect to any foreign affiliate, on or after June 15, 1989.”; and "
(4)by redesignating paragraphs
(6)through
(10)as paragraphs
(4)through (8), respectively.
(b)Conforming Amendments.—
(1)Subsection
(a)of section 210 of the Social Security Act (42 U.S.C. 410(a)) and subsection
(a)of section 406 of the Internal Revenue Code of 1986 (relating to treatment of employees of American employer) are each amended by striking “section 3121(l)(8)” and inserting “section 3121(l)(6)”.
(2)Paragraph
(3)of section 406(c) of the Internal Revenue Code of 1986 (relating to termination of status as deemed employee not be treated as separation from service for purposes of limitation of tax) is amended by striking “section 3121(l)(8)(B)” and inserting “section 3121(l)(6)(B)”.
(3)Paragraph
(1)of section 3121(1) of such Code (relating to agreements entered into by American employers with respect to foreign affiliates) is amended, in the matter preceding subparagraph (A), by striking “paragraph (8)” and inserting “paragraph (6)”.
(c)[26 USC 406 note](/us/usc/t26/s406). Effective Date.—The amendments made by this section shall apply with respect to any agreement in effect under section 3121(l) 103 STAT. 2473of the Internal Revenue Code of 1986 on or after June 15, 1989, with respect to which no notice of termination is in effect on such date. SEC. 10202. EXCLUSION FROM WAGES AND COMPENSATION OF REFUNDS REQUIRED FROM EMPLOYERS TO COMPENSATE FOR DUPLICATION OF MEDICARE BENEFITS BY HEALTH CARE BENEFITS PROVIDED BY THE EMPLOYERS. [42 USC 1395b note](/us/usc/t42/s1395b).
(a)Old-Age, Survivors, and Disability, and Hospital Insurance Programs.—For purposes of title II of the Social Security Act and chapter 21 of the Internal Revenue Code of 1986, the term “wages” shall not include the amount of any refund required under section 421 of the Medicare Catastrophic Coverage Act of 1988.
(b)Railroad Retirement Program.—For purposes of chapter 22 of the Internal Revenue Code of 1986, the term “compensation” shall not include the amount of any refund required under section 421 of the Medicare Catastrophic Coverage Act of 1988.
(c)Federal Unemployment Programs.—
(1)Federal unemployment tax.—For purposes of chapter 23 of the Internal Revenue Code of 1986, the term “wages” shall not include the amount of any refund required under section 421 of the Medicare Catastrophic Coverage Act of 1988.
(2)Railroad unemployment contributions.—For purposes of the Railroad Unemployment Insurance Act, the term “compensation” shall not include the amount of any refund required under section 421 of the Medicare Catastrophic Coverage Act of 1988.
(3)Railroad unemployment repayment tax.—For purposes of chapter 23A of the Internal Revenue Code of 1986, the term “rail wages” shall not include the amount of any refund required under section 421 of the Medicare Catastrophic Coverage Act of 1988.
(d)Reporting Requirements.—Any refund required under section 421 of the Medicare Catastrophic Coverage Act of 1988 shall be reported to the Secretary of the Treasury or his delegate and to the person to whom such refund is made in such manner as the Secretary of the Treasury or his delegate shall prescribe.
(e)Effective Date.—This section shall apply with respect to refunds provided on or after January 1, 1989. SEC. 10203. ELIMINATION OF ANY CARRYOVER REDUCTION IN RETIREMENT OR DISABILITY BENEFITS DUE TO RECEIPT OF WIDOW’S OR WIDOWER’S BENEFITS BEFORE ATTAINING AGE 62.
(a)In General.—Section 202(q)(3) of the Social Security Act (42 U.S.C. 402(q)(3)) is amended—
(1)by striking subparagraphs (E), (F), and (G); and
(2)by redesignating subparagraph
(H)as subparagraph (E).
(b)Effective Date.—The amendments made by this section shall [42 USC 402 note](/us/usc/t42/s402).apply—
(1)in the case of any individual’s old-age insurance benefit referred to in section 202(q)(3)(E) of the Social Security Act (as in effect before the amendments made by this section), only if such individual attains age 62 on or after January 1, 1990, and
(2)in the case of any individual’s disability insurance benefit referred to in section 202(q)(3)
(F)or
(G)of such Act (as so in effect), only if such individual both attains age 62 and becomes disabled on or after such date. 103 STAT. 2474 SEC. 10204. CLARIFICATION OF RULES GOVERNING TAXATION UNDER FICA AND SECA OF INDIVIDUALS OF CERTAIN RELIGIOUS FAITHS.
(a)Exemption from SECA Taxation for Certain Employees Exempt from FICA Taxation.—
(1)In general.— Paragraph
(3)of section 1402(g) of the Internal [26 USC 1402](/us/usc/t26/s1402).Revenue Code of 1986 (relating to inapplicability of exemption to certain church employees) is amended—
(A)in the heading, by striking “not to apply” and inserting “to apply”; and
(B)by striking “shall not” and inserting “shall”.
(2)[26 USC 1402 note](/us/usc/t26/s1402). Effective date.—The amendments made by paragraph
(1)shall apply with respect to taxable years beginning after December 31, 1989.
(b)Technical Amendment Clarifying Inclusion of Partnerships Among Employers Eligible for Religious Exemption from FICA.—
(1)In general.— Section 3127 of the Internal Revenue Code of 1986 (relating to exemption for employers and their employees where both are members of religious faiths opposed to participation in Social Security Act programs) is amended—
(A)in subsection (a)(1), by inserting “(or, if the employer is a partnership, each partner therein)” after “an employer”;
(B)in subsection (a), in the matter following paragraph (2), by striking “his employees” and inserting “the employees thereof”;
(C)in subsection (b), by inserting “(or a partner)” after “an employer”;
(D)in subsection (c), by striking “his employees” and inserting “the employees thereof”;
(E)in subsection (c)(1), by inserting “(or, if the employer is a partnership, each partner therein)” after “such employer”; and
(F)in subsection (c)(2), by striking “such employer or the employee involved ceases to meet” and inserting “such employer (or, if the employer is a partnership, any partner therein) or the employee involved does not meet”, and by inserting “(or, if the employer is a partnership, any partner therein)” after “such employer” the second place it appears.
(2)[26 USC 3127 note](/us/usc/t26/s3127). Effective date.—The amendments made by this subsection shall be effective as if they were included in the amendments made by section 8007(a)(1) of the Technical and Miscellaneous Revenue Act of 1988 (102 Stat. 3781). SEC. 10205. TREATMENT OF GROUP-TERM LIFE INSURANCE UNDER RAILROAD RETIREMENT TAXES.
(a)In General.—The second sentence of section 3231(e)(1) of the Internal Revenue Code of 1986 (defining compensation) is amended by striking ”,
(ii)tips” and inserting “or death, except that this clause 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,
(ii)tips”.
(b)[26 USC 3231 note](/us/usc/t26/s3231). Effective Date.—
(1)In general.— Except as provided in paragraph (2), the amendment made by subsection
(a)shall apply to— 103 STAT. 2475
(A)group-term life insurance coverage in effect after December 31, 1989, and
(B)remuneration paid before January 1, 1990, which the employer treated as compensation when paid.
(2)Exception.—The amendment made by subsection
(a)shall not apply with respect to payments by the employer (or a successor of such employer) for group-term life insurance for such employer’s former employees who separated from employment with the employer on or before December 31, 1989, to the extent that such payments are not for coverage for any such employee for any period for which such employee is employed by such employer (or a successor of such employer) after the date of such separation.
(3)Benefit determinations to take into account remuneration on which tax paid.—The term “compensation” as defined in section 1(h) of the Railroad Retirement Act of 1974 includes any remuneration which is included in the term “compensation” as defined in section 3231(e)(1) of the Internal Revenue Code of 1986 by reason of the amendment made by subsection (a). SEC. 10206. TREATMENT OF CERTAIN DEFERRED COMPENSATION AND SALARY REDUCTION ARRANGEMENTS UNDER RAILROAD RETIREMENT TAXES.
(a)In General.—The second sentence of section 3231(e)(1) of the Internal Revenue Code of 1986 (defining compensation) is amended [26 USC 3231](/us/usc/t26/s3231).by striking “or (iii)” and inserting “(iii) and by inserting before the period or
(iv)any remuneration which would not (if chapter 21 applied to such remuneration) be treated as wages (as defined in section 3121(a)) by reason of section 3121(a)(5)”.
(b)Treatment of Certain Deferred Compensation and Salary Reduction Arrangements.—Subsection
(e)of section 3231 of such Code is amended by adding at the end thereof the following new paragraph: " “(9) Treatment of certain deferred compensation and salary reduction arrangements.— “(A) Certain employer contributions treated as compensation.—Nothing in any paragraph of this subsection (other than paragraph (2)) shall exclude from the term ‘compensation’ any amount described in subparagraph
(A)or
(B)of section 3121(v)(1). “(B) Treatment of certain nonqualified deferred compensation.—The rules of section 3121(v)(2) which apply for purposes of chapter 21 shall also apply for purposes of this chapter.”. "
(c)Effective Dates.— [26 USC 3231 note](/us/usc/t26/s3231).
(1)Subsection (a).—The amendment made by subsection
(a)shall apply to remuneration paid after December 31, 1989.
(2)Subsection (b).— Except as otherwise provided in this subsection—
(A)In general.—The amendment made by subsection
(b)shall apply to—
(i)remuneration paid after December 31, 1989, and
(ii)remuneration paid before January 1, 1990, which the employer treated as compensation when paid.
(B)Benefit determinations to take into account remuneration on which tax paid.—The term “compensa-103 STAT. 2476tion” as defined in section 1(h) of the Railroad Retirement Act of 1974 includes any remuneration which is included in the term “compensation” as defined in section 3231(e)(1) of the Internal Revenue Code of 1986 by reason of the amendment made by subsection (b).
(3)Special rule for certain payments.—For purposes of applying the amendment made by subsection
(b)to remuneration paid after December 31, 1989, which would have been taken into account before January 1, 1990, if such amendments had applied to periods before January 1, 1990, such remuneration shall be taken into account when paid (or, at the election of the payor, at the time which would be appropriate if such amendments had applied).
(4)Exception for certain 401
(k)contributions.— The amendment made by subsection
(b)shall not apply to employer contributions made during 1990 and attributable to services performed during 1989 under a qualified cash or deferred arrangement (as defined in section 401(k) of the Internal Revenue Code of 1986) if, under the terms of the arrangement as in effect on June 15, 1989—
(A)the employee makes an election with respect to such contributions before January 1, 1990, and
(B)the employer identifies the amount of such contribution before January 1, 1990.
(5)Special rule with respect to nonqualified deferred compensation plans.—In the case of an agreement in existence on June 15, 1989, between a nonqualified deferred compensation plan (as defined in section 3121(v)(2)(C) of such Code) and an individual, the amendment made by subsection
(b)shall apply with respect to services performed by the individual after December 31, 1989. The preceding sentence shall not apply in the case of a plan to which section 457(a) of such Code applies. SEC. 10207. TREATMENT OF ROWAN DECISION UNDER RAILROAD RETIREMENT TAXES.
(a)Exclusion of Meals and Lodging.—Subsection
(e)of section 3231 of the Internal Revenue Code of 1986 is further amended by adding at the end the following new paragraph: " “(10) Meals and lodging.—The term ‘compensation’ shall not include the value of 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.”. "
(b)Income Tax Withholding Regulations Not To Apply.—Paragraph
(1)of section 3231(e) of such Code is amended by adding at the end the following new sentence: “Nothing in the regulations prescribed for purposes of chapter 24 (relating to wage withholding) which provides an exclusion from ‘wages’ as used in such chapter shall be construed to require a similar exclusion from ‘compensation’ in regulations prescribed for purposes of this chapter.”.
(c)[26 USC 3231 note](/us/usc/t26/s3231). Effective Date.—The amendments made by this section shall apply to remuneration paid after December 31, 1989. SEC. 10208. INCLUSION OF CERTAIN DEFERRED COMPENSATION IN DETERMINATION OF WAGE-BASED ADJUSTMENTS.
(a)In General.—Section 209 of the Social Security Act (42 U.S.C. 409) is amended by adding at the end the following new subsection: 103 STAT. 2477 " “(k)(1) For purposes of sections 203(f)(8)(B)(ii), 213(d)(2)(B), 215(a)(1)(B)(ii), 215(b)(3)(A)(n), 224(f)(2)(B), and 230(b)(2) (and 230(b)(2) as in effect immediately prior to the enactment of the Social Security Amendments of 1977), the term ‘deemed average total wages’ for any particular calendar year means the product of— “(A) the SSA average wage index (as defined in section 215(i)(1)(G) and promulgated by the Secretary) for the calendar year preceding such particular calendar year, and “(B) the quotient obtained by dividing— “(i) the average of total wages (as defined in regulations of the Secretary and computed without regard to the limitation specified in subsection (a)(1) and by including deferred compensation amounts) reported to the Secretary of the Treasury or his delegate for such particular calendar year, by “(ii) the average of total wages (as so defined and computed) reported to the Secretary of the Treasury or his delegate for the calendar year preceding such particular calendar year. “(2) For purposes of paragraph (1), 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 Secretary, deferred compensation provided under any arrangement, agreement, or plan referred to in subsection
(i)or (j).”. "
(b)Conforming Amendments.—
(1)Sections 203(f)(8)(B)(ii), 215(b)(3)(A)(ii), and 230(b)(2)(A) of the Social Security Act (42 U.S.C. 403(i)(8)(B)(ii)(I), 415(b)(3)(A)(ii)(I), and 430(b)(2)(A)), as amended by subsection (d)(2)( A)(i). are each further amended—
(A)by striking “the average of the total wages (as defined in regulations of the Secretary and computed without regard to the limitations specified in section 209(a)(1)) reported to the Secretary of the Treasury or his delegate” and inserting “the deemed average total wages (as defined in section 209(k)(1))”;
(B)by striking “the average of the total wages (as so defined and computed) reported to the Secretary of the Treasury or his delegate” and inserting “the deemed average total wages (as so defined)”; and
(C)in section 215(b)(3)(A)(ii)(B, by striking “(after 1976)”.
(2)Sections 213(d)(2)(B), 215(a)(1)(B)(ii), and 224(f)(2)(B) of such Act (42 U.S.C. 413(d)(2)(B), 415(a)(1)(B)(u), and 424a(f)(2)(B)), as amended by subsection (d)(2)(A)(i), are each further amended—
(A)by striking “the average of the total wages (as defined in regulations of the Secretary and computed without regard to the limitations specified in section 209(a)(1)) reported to the Secretary of the Treasury or his delegate” and inserting “the deemed average total wages (as defined in section 209(k)(1))”; 103 STAT. 2478
(B)[42 USC 413, 415](/us/usc/t42/s413/415). in section 213(d)(2)(B) and 215(a)(1)(B)(ii)(n), by striking “(as so defined and computed)” and inserting “(as defined in regulations of the Secretary and computed without regard to the limitations specified in section 209(a)(1))”; and
(C)[42 USC 424a](/us/usc/t42/s424a). in section 224(f)(2)(B)(ii), by inserting “(I)” after “(ii)”, by striking “as so defined and computed)” and inserting “(as defined in regulations of the Secretary and computed without regard to the limitations specified in section 209(a)(1))”, and by inserting after “disability)” the following: “, if such calendar year is before 1991, or
(II)the deemed average total wages (as defined in section 209(k)(1)) 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), if such calendar year is after 1990”.
(3)Section 215(i)(1)(G) of such Act (42 U.S.C. 415(i)(1)(G)) is amended by striking “the average of the total wages reported to the Secretary of the Treasury or his delegate as determined for purposes of subsection (b)(3)(A)(ii)” and inserting “the amount determined for such calendar year under subsection (b)(3)(A)(ii)(I)”.
(4)Section 215(a)(1)(C)(ii) of such Act (42 U.S.C. 415(a)(1)(C)(u)) is amended by striking “change.” and inserting “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 deemed average total wages (within the meaning of section 209(k)(1)) for such calendar year).”.
(5)Section 230(d) of such Act (42 U.S.C. 430(d)) is amended by striking “change.” and inserting “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 deemed average total wage (within the meaning of section 209(k)(1)) for such calendar year).”.
(c)[42 USC 430 note](/us/usc/t42/s430). Effective Date.—
(1)In general.—The amendments made by subsections
(a)and
(b)shall apply with respect to the computation of average total wage amounts (under the amended provisions) for calendar years after 1990.
(2)Transitional rule.— For purposes of determining the contribution and benefit base for 1990, 1991, and 1992 under section 230(b) of the Social Security Act (and section 230(b) of such Act as in effect immediately prior to enactment of the Social Security Amendments of 1977)—
(A)the average of total wages for 1988 shall be deemed to be equal to the amount which would have been determined without regard to this paragraph, plus 2 percent of the amount which has been determined to the average of total wages for 1987,
(B)the average of total wages for 1989 shall be deemed to be equal to the amount which would have been determined without regard to this paragraph, plus 2 percent of the amount which would have been determined to be the aver-103 STAT. 2479age of total wages for 1988 without regard to subparagraph (A), and
(C)the average of total wages reported to the Secretary of the Treasury for 1990 shall be deemed to be equal to the product of—
(i)the SSA average wage index (as defined in section 215(i)(1)(G) of the Social Security Act and promulgated by the Secretary) for 1989, and
(ii)the quotient obtained by dividing—
(I)the average of total wages (as defined in regulations of the Secretary and computed without regard to the limitations of section 209(a)(1) of the Social Security Act and by including deferred compensation amounts, within the meaning of section 209(k)(2) of such Act as added by this section) reported to the Secretary of the Treasury or his delegate for 1990, by
(II)the average of total wages (as so defined and computed without regard to the limitations specified in such section 209(a)(1) and by excluding deferred compensation amounts within the meaning of such section 2O9(k)(2)) reported to the Secretary of the Treasury or his delegate for 1989.
(3)Determination of contribution and benefit base for 1993.—For purposes of determining the contribution and benefit base for 1993 under section 230(b) of the Social Security Act (and section 230(b) of such Act as in effect immediately prior to enactment of the Social Security Amendments of 1977), the average of total wages for 1990 shall be determined without regard to subparagraph
(C)of paragraph (2).
(4)Revised determination under section 230 of the social, security act.—As soon as possible after the enactment of this Act, the Secretary of Health and Human Services shall revise and publish, in accordance with the provisions of this Act and the amendments made thereby, the contribution and benefit base under section 230 of the Social Security Act with respect to remuneration paid after 1989 and taxable years beginning after calendar year 1989.
(d)Clerical Amendments.—
(1)Designation of undesignated provisions.— Section 209 of the Social Security Act is further amended— [42 USC 409](/us/usc/t42/s409).
(A)by redesignating paragraphs
(1)through
(9)of subsection
(a)as subparagraphs
(A)through (I), respectively;
(B)by redesignating clauses
(1)through
(3)of subsection
(b)as clauses
(A)through (C), respectively;
(C)by redesignating clauses
(1)through
(9)of subsection
(e)as clauses
(A)through (I), respectively;
(D)by redesignating paragraphs
(1)and
(2)of subsection
(f)as subparagraphs
(A)and (B), respectively;
(E)by redesignating paragraphs (1), (2), and
(3)of subsection
(g)as subparagraphs (A), (B), and (C), respectively;
(F)in subsection (h), by redesignating clauses (i), (ii), and
(iii)as clauses (I), (II), and (III), respectively, by redesignating subparagraphs
(A)and
(B)of paragraph
(2)as clauses
(i)and (ii), respectively, and by redesignating paragraphs
(1)and
(2)as subparagraphs
(A)and (B), respectively; 103 STAT. 2480
(G)by redesignating paragraphs
(1)and
(2)of subsection
(l)as subparagraphs
(A)and (B), respectively;
(H)by redesignating paragraphs
(1)and
(2)of subsection
(m)as subparagraphs
(A)and (B), respectively;
(I)by redesignating paragraphs
(1)and
(2)of subsection
(p)as subparagraphs
(A)and (B), respectively;
(J)by redesignating subsections (a), (b), (d), (e), (f), (g), (h), (j), (k), Q), (m), (n), (o), (p), (q), (r), (s), and
(t)(in the matter preceding subsection
(k)added by subsection
(a)of this section, and as amended by the preceding provisions of this paragraph) as paragraphs (1), (2), (3), (4), (5), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17), and (18), respectively;
(K)by inserting “(a)” after “Sec. 209.”;
(L)by striking “Nothing in the regulations” and inserting the following: " “(b) Nothing in the regulations”; "
(M)in the undesignated paragraph commencing with “For purposes of this title, in the case of domestic service”, by inserting “(c) ” at the beginning thereof, and by striking “subsection (g)(2)” each place it appears and inserting “subsection (a)(6)(B)”;
(N)in the undesignated paragraph commencing with “For purposes of this title, in the case of an individual performing service, as a member”, by inserting “(d)” at the beginning thereof, and by striking “subsection (a)” and inserting “subsection (a)(1)”;
(O)by inserting “(e)” at the beginning of the undesignated paragraph commencing with “For purposes of this title, in the case of an individual performing service, as a volunteer”;
(P)by inserting “(f)” at the beginning of the undesignated paragraph commencing with “For purposes of this title, tips received”;
(Q)by inserting “(g)” at the beginning of the undesignated paragraph commencing with “For purposes of this title, in any case where”;
(R)by inserting “(h)” at the beginning of the undesignated paragraph commencing with “For purposes of this title, in the case of an individual performing service under the provisions”;
(S)by inserting “(i)” at the beginning of the undesignated paragraph commencing with “Nothing in any of the foregoing”; and
(T)by inserting “(j)” at the beginning of the undesignated paragraph commencing with “Any amount deferred”.
(2)Conforming amendments.—
(A)Title II of such Act is amended—
(i)in sections 203(f)(8)(B)(ii)(I), 213(d)(2)(B), 215(a)(1)(B)(ii)(I), 215(b)(3)(A)(ii)(I), 224(f)(2)(B)(i), and 230(b)(2)(A) (42 U.S.C. 403(f)(8)(B)(ii)(I), 413(d)(2)(B), 415(a)(1)(B)(ii)(I), 415(b)(3)(A)(ii)(I), 424a(f)(2)(B)(i), and 430(b)(2)(A)), by striking “section 209(a)” and inserting “section 209(a)(1)”;
(ii)in section 203(f)(5)(C), by striking “subsections (a), (g)(2), (g)(3), (h)(2), and
(j)of section 209” and inserting “paragraphs (1), (6)(B), (6)(C), (7)(B), and
(8)of section 209(a)”; 103 STAT. 2481
(iii)in clauses
(B)and
(C)of the last sentence of section 224(a), by striking “209(a)” and inserting [42 USC 424a](/us/usc/t42/s424a).“209(a)(1)”;
(iv)in section 217(b)(1), by striking “209(e)(2)” and [42 USC 417](/us/usc/t42/s417).inserting “209(a)(4)(B)”;
(v)in section 218(c)(5), by striking “paragraph
(2)of [42 USC 418](/us/usc/t42/s418).section 209(h)” and inserting “subparagraph
(B)of section 209(a)(7)”; and
(vi)in section 203(f)(5)(C)(ii), by striking “209(m)(2)” [42 USC 403](/us/usc/t42/s403).and inserting “209(a)(11)(B)”. (B)(i) Section 6(f)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(f)(1)) is amended by striking “209(g)” and inserting “209(a)(6)”.
(ii)Section 1(h)(5)(iii) of the Railroad Retirement Act of 1974 (45 U.S.C. 231(h)(5)(iii)) is amended by striking “the third paragraph of section 209” and inserting “section 209(d)”. Subtitle C—Additional Amendments SEC. 10301. ELIMINATION OF THE DEPENDENCY TEST APPLICABLE TO CERTAIN ADOPTED CHILDREN.
(a)In General.—Section 202(d)(8)(D) of the Social Security Act (42 U.S.C. 402(d)(8)(D)) is amended—
(1)by adding “and” after the comma at the end of clause (i); and
(2)by striking clauses
(ii)and
(iii)and inserting the following new clause: " “(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”. "
(b)Conforming Amendment.—Paragraph
(8)of section 202(d) of such Act is further amended by striking the last sentence.
(c)Effective Date.—The amendments made by this section shall [42 USC 402 note](/us/usc/t42/s402).apply with respect to benefits payable for months after December 1989, but only on the basis of applications filed on or after January 1, 1990. SEC. 10302. AUTHORITY FOR SECRETARY TO TAKE INTO ACCOUNT MISINFORMATION PROVIDED TO APPLICANTS IN DETERMINING DATE OF APPLICATION FOR BENEFITS.
(a)Old-Age, Survivors, and Disability Insurance.—
(1)In general.—Section 202(j) of the Social Security Act (42 U.S.C. 402(j)) is amended by adding at the end the following new paragraph: " “(5) In any case in which it is determined to the satisfaction of the Secretary 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— 103 STAT. 2482 “(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).”. "
(2)[42 USC 402 note](/us/usc/t42/s402). Effective date.—The amendment made by paragraph
(1)shall apply with respect to misinformation furnished after December 1982 and to benefits for months after December 1982.
(b)Supplemental Security Income.—
(1)In general.—Section 1631(e) of such Act (42 U.S.C. 1383(e)) is amended by adding at the end the following new paragraph: " “(5) In any case in which it is determined to the satisfaction of the Secretary 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).”. "
(2)[42 USC 1383 note](/us/usc/t42/s1383). Effective date.—The amendment made by paragraph
(1)shall apply with respect to misinformation furnished on or after the date of the enactment of this Act and to benefits for months after the month in which this Act is enacted. SEC. 10303. SAME-DAY PERSONAL INTERVIEWS AT FIELD OFFICES OF THE SOCIAL SECURITY ADMINISTRATION IN CERTAIN CASES WHERE TIME IS OF THE ESSENCE.
(a)Old-Age, Survivors, and Disability Insurance.—Section 205 of the Social Security Act (42 U.S.C. 405) is amended by adding at the end the following new subsection: " “Same-Day Personal Interviews at Field Offices In Cases Where Time Is of The Essence “(t) 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 Secretary 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.”. "
(b)Supplemental Security Income.—Section 1631(e) of such Act (42 U.S.C. 1383(e)) is amended by adding after the paragraph added by section 10302(b)(1) of this Act the following new paragraph: " “(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— 103 STAT. 2483
(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 Secretary 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.”. "
(c)Effective Date.—The amendments made by this section shall [42 USC 405 note](/us/usc/t42/s405).apply to visits to field offices of the Social Security Administration on or after January 1, 1990. SEC. 10304. AUTHORITY TO AMEND WAGE RECORDS AFTER EXPIRATION OF TIME LIMITATION. Subparagraph
(H)of section 205(c)(5) of the Social Security Act (42 U.S.C. 405(c)(5)(H)) is amended by striking “if” and all that follows through “period”. SEC. 10305. STANDARDS APPLICABLE IN CERTAIN DETERMINATIONS OF GOOD CAUSE, FAULT, AND GOOD FAITH.
(a)Goon Cause for Failure to Make Earnings Reports Timely.—Section 203(1) of the Social Security Act (42 U.S.C. 403(1)) is amended in the last sentence by striking “Secretary” and inserting “Secretary, except that in making any such determination, the Secretary 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)”.
(b)Waivers of Recovery of Overpayments.—Section 204(b) of such Act (42 U.S.C. 404(b)) is amended by adding at the end the following new sentence: “In making for purposes of this subsection any determination of whether any individual is without fault, the Secretary 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).”.
(c)Standard of Review in Termination of Disability Benefits.—Section 223(f) of such Act (42 U.S.C. 423(f)) is amended by inserting after the first sentence in the matter following paragraph
(4)the following new sentence: “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 Secretary 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).”.
(d)Continuation of Benefits Pending Appeal.—Section 223(g)(2)(B) of such Act (42 U.S.C. 423(g)(2)(B)) is amended by adding at the end the following new sentence: “In making for purposes of this subparagraph any determination of whether any individual’s appeal is made in good faith, the Secretary 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).”.
(e)Supplemental Security Income.—Section 1631(c)(1) of such Act (42 U.S.C. 1383(c)(1)) is amended by adding at the end the following: “The Secretary shall specifically take into account any physical, mental, educational, or linguistic limitation of such individual (including any lack of facility with the English language) 103 STAT. 2484in 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.”.
(f)[42 USC 403 note](/us/usc/t42/s403). Effective Date.—The amendments made by this section shall apply with respect to determinations made on or after July 1, 1990. SEC. 10306. NOTICE REQUIREMENTS.
(a)Applicability to Blind Beneficiaries Under Title II of Notice Standards Currently Applicable to Blind Beneficiaries Under Title XVI.—
(1)In general.—Section 221 of the Social Security Act (42 U.S.C. 421) is amended by adding at the end the following new subsection: " “(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 Secretary 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 Secretary 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.”. "
(2)[42 USC 421 note](/us/usc/t42/s421). Application to current recipients.—Not later than July 1, 1990, the Secretary of Health and Human Services shall provide every individual receiving benefits under title II of the Social Security Act on the basis of disability by reason of blindness an opportunity to make an election under section 221(l)(1) of such Act (as added by paragraph (1)).
(3)[42 USC 421 note](/us/usc/t42/s421). Effective date.—The amendment made by this section shall apply with respect to notices issued on or after July 1, 1990.
(b)[42 USC 902 note](/us/usc/t42/s902). Report Regarding Notices in Languages Other Than English.—Not later than January 1, 1991, the Secretary of Health and Human Services shall submit a report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate setting forth—
(1)the procedures of the Social Security Administration currently in effect for issuing notices in languages other than English to individuals who have a limited capacity to communicate with such Administration in English, and
(2)reasonable options for expanding the use of notices in languages other than English. SEC. 10307. REPRESENTATION OF CLAIMANTS.
(a)Recording of Identity of Representatives in Electronic Information Retrieval System.— 103 STAT. 2485
(1)Old-age, survivors, and disability insurance.—Section 206(a) of the Social Security Act (42 U.S.C. 406(a)) is amended by adding at the end the following new sentence: “The Secretary shall maintain in the electronic information retrieval system used by the Social Security Administration a current record, with respect to any claimant before the Secretary, of the identity of any person representing such claimant in accordance with this subsection.”.
(2)Supplemental security income.—Section 1631(d)(2) of such Act (42 U.S.C. 1383(d)(2)) is amended by adding at the end the following new sentence: “The Secretary shall maintain in the electronic information retrieval system used by the Social Security Administration a current record, with respect to any claimant before the Secretary, of the identity of any person representing such claimant in accordance with this paragraph.”.
(3)Effective date.—The amendments made by this subsection [42 USC 406 note](/us/usc/t42/s406).shall take effect June 1, 1991.
(b)Notification of Options for Obtaining Attorneys.—
(1)Old-age, survivors, and disability insurance.—Section 206 of such Act (42 U.S.C. 406) is further amended by adding at the end the following new subsection: " “(c) The Secretary 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 Secretary. Such notification shall also advise the claimant of the availability to qualifying claimants of legal services organizations which provide legal services free of charge.”. "
(2)Supplemental security income.— Section 1631(d)(2) of such Act (42 U.S.C. 1383(d)(2)) is amended—
(A)by inserting “(A)” after “(2)”; and
(B)by adding at the end the following new subparagraph: " “(B) The Secretary 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 Secretary. Such notification shall also advise the claimant of the availability to qualifying claimants of legal services organizations which provide legal services free of charge.”. "
(3)Effective date.—The amendments made by this subsection [42 USC 406 note](/us/usc/t42/s406).shall apply with respect to adverse determinations made on or after January 1, 1991. SEC. 10308. EARNINGS AND BENEFIT STATEMENTS. Part A of title XI of the Social Security Act is amended by adding at the end thereof the following new section: " “social security account statements “Provision Upon Request “Sec. 1142. (a)(1) Beginning not later than October 1, 1990, the [42 USC 13208–13](/us/usc/t42/s13208/13).Secretary 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— 103 STAT. 2486 “(A) the amount of wages paid to and self-employment income derived by the eligible individual as shown by the records of the Secretary at the date of the request; “(B) an estimate of the aggregate of the employee and self-employment contributions of the eligible individual for old-age, survivors, and disability insurance as shown by the records of the Secretary on the date of the request; “(C) a separate estimate of the aggregate of the employee and self-employment contributions of the eligible individual for hospital insurance as shown by the records of the Secretary on the date of the request; and “(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. “(3) For purposes of this section, the term ‘eligible individual’ means an individual who— “(A) has a social security account number, “(B) has attained age 25 or over, and “(C) has wages or net earnings from self-employment. “Notice to Eligible Individuals “(b) The Secretary 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). “Mandatory Provision of Statements “(c)(1) By not later than September 30, 1995, the Secretary 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 Secretary determines to be appropriate. In fiscal years 1995 through 1999 the Secretary 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 Secretary determines to be appropriate. The Secretary 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 Secretary shall provide a statement on a biennial 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 Secretary 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.”. " 103 STAT. 2487 Subtitle D—Human Resource and Income Security Provisions SEC. 10401. INCREASE IN AUTHORIZATION FOR CHILD WELFARE SERVICES UNDER TITLE IV–B OF THE SOCIAL SECURITY ACT.
(a)In General.—Sections 420(a), 427(b), 474(c)(4)(B), and 47 4(c)(4)(C) of the Social Security Act (42 U.S.C. 620(a), 627(b), 674(c)(4)(B), and 674(c)(4)(C)) are each amended by striking “8266,000,000” and inserting “$325,000,000”.
(b)Effective Date.—The amendments made by subsection
(a)[42 USC 620 note](/us/usc/t42/s620).shall take effect on October 1, 1989. SEC. 10402. EXTENSION AND PERMANENT INCREASE IN FOSTER CARE CEILING.
(a)Permanent Increase in Appropriations Level Which Triggers Foster Care Ceiling.—Section 474(b)(2)(A) of the Social Security Act (42 U.S.C. 674(b)(2)(A)) is amended—
(1)by striking “and” at the end of clause (ii);
(2)by striking the period at the end of clause
(iii)and inserting “; and”; and
(3)by adding at the end the following new clause: " “(iv) with respect to each fiscal year succeeding the fiscal year 1989, only if $325,000,000 is appropriated under section 420 for such succeeding fiscal year.”. "
(b)Effective Date.—The amendments made by subsection
(a)[42 USC 674 note](/us/usc/t42/s674).shall take effect on October 1, 1989. SEC. 10403. MISCELLANEOUS TECHNICAL CORRECTIONS.
(a)Technical Corrections Relating to the Family Support Act of 1988.—
(1)Corrections taking effect retroactively.— (A)(i) Section 407(b)(1)(B)(iii)(I) of the Social Security Act (42 U.S.C. 607(b)(1)(B)(iii)(I)), as amended by section 202(b)(8)(A), and redesignated by section 401(b)(1), of the Family Support Act of 1988, is amended by striking “409(a)(19)(C)” and inserting “402(a)(19)(C)”.
(ii)The amendment made by clause
(i)shall take effect as [42 USC 607 note](/us/usc/t42/s607).if such amendment had been included in section 202(b)(8)(A) of the Family Support Act of 1988 on the date of the enactment of such Act. (B)(i) Sections 402(a)(30) and 452(d)(2)(B) of the Social Security Act (42 U.S.C. 602(a)(30) and 652(d)(2)(B)) are each amended by striking “automatic” and inserting “automated”.
(ii)The amendments made by clause
(i)shall take effect [42 SC 602 note](/us/usc/t42/s602).as if such amendments had been included in section 123(d) of the Family Support Act of 1988 on the date of the enactment of such Act.
(i)Section 402(g)(1)(A) of the Social Security Act (42 U.S.C. 602(g)(1)(A)) is amended—
(I)in clause (iv), by striking “includes a child who is (or, if needy,” and inserting “received aid to families with dependent”; and
(II)in clause (v), by striking the first comma. 103 STAT. 2488
(ii)[42 USC 602 note](/us/usc/t42/s602). The amendments made by clause
(i)shall take effect as if such amendments had been included in section 302(c) of the Family Support Act of 1988 on the date of the enactment of such Act.
(2)Correction taking effect prospectively.—Effective September 30, 1998, section 407(d)(1) of the Social Security Act (42 U.S.C. 607(d)(1)) is amended by striking “participated” and all that follows and inserting “participated in a program under part F”.
(b)Technical Correction Relating to the Tax Reform Act of 1986.—
(1)Correction.—Section 422(b)(1)(A) of the Social Security Act (42 U.S.C. 622(b)(1)(A)) is amended by striking “the individual or agency designated pursuant to section 2003(d)(1)(C) to administer or supervise the administration of the State’s services program” and inserting “the individual or agency that administers or supervises the administration of the State’s services program under title XX”.
(2)[42 USC 622 note](/us/usc/t42/s622). Effective date.—The amendment made by paragraph
(1)shall take effect as if such amendment had been included in section 1883(e)(1) of the Tax Reform Act of 1986 on the date of the enactment of such Act.
(c)Technical Correction Relating to Section 474(b)(2(B) of the Social Security Act.—
(1)[42 USC 674](/us/usc/t42/s674). Correction.—Section 4(a)(1) of Public Law 98–617 is amended to read as follows: " “(1)(A) in paragraphs
(1)and (4)(B), by striking out ‘1981 through 1984’ and inserting in lieu thereof ‘1981 through 1985’; and “(B) in paragraph (2)(B), by striking out ‘1982 through 1984’ and inserting in lieu thereof ‘1981 through 1985’.”. "
(2)[42 USC 674 note](/us/usc/t42/s674). Effective date.—The amendment made by paragraph
(1)of this subsection shall take effect as if included in section 4 of Public Law 98–617 at the time such section became law. SEC. 10404. Children and youth.Handicapped persons.Voluntarism.[42 USC 1395b–1 note](/us/usc/t42/s1395b/1). DEMONSTRATION PROJECT.
(a)Number of Projects.—In order to determine whether, and if so, the extent to which, the use of volunteer senior aides to provide basic medical assistance and support to families with moderately or severely disabled or chronically ill children contributes to reducing the costs of care for such children, not more than 10 communities may conduct demonstration projects under this section.
(b)Duties of the Secretary.—
(1)Consideration of applications.— The Secretary of Health and Human Services (in this section referred to as the “Secretary”) shall consider all applications received from communities desiring to conduct demonstration projects under this section.
(2)Approval of certain applications.—The Secretary shall approve not more than 10 applications to conduct projects which appear likely to contribute significantly to the achievement of the purpose of this section.
(3)Grants.—The Secretary shall make grants to each community the application of which to conduct a demonstration project under this section is approved by the Secretary to assist the community in carrying out the project. 103 STAT. 2489
(c)Requirements.—Each community receiving a grant with respect to a demonstration project under this section shall conduct the project in accordance with such requirements as the Secretary may prescribe.
(d)Limitation on Authorization of Appropriations.—For grants under this section, there are authorized to be appropriated to the Secretary of Health and Human Services not to exceed—
(1)$1,000,000 for each of the fiscal years 1990 and 1991; and
(2)$2,000,000 for each of the fiscal years 1992, 1993, and 1994.
(e)Effective Date.—This section shall take effect on October 1, 1989. SEC. 10405. AGENT ORANGE SETTLEMENT PAYMENTS EXCLUDED FROM COUNTABLE INCOME AND RESOURCES UNDER FEDERAL MEANS-TESTED PROGRAMS.
(a)In General.—
(1)Treatment of payments.—The payments made from the Agent Orange Settlement Fund or any other fund established pursuant to the settlement in the In re Agent Orange product liability litigation, M.D.L. No. 381 (E.D.N.Y.), shall not be considered income or resources in determining eligibility for the amount of benefits under any Federal or federally assisted program described in paragraph (2).
(2)Programs involved.— The program benefits described in this paragraph are—
(A)benefits under the supplemental security income program under title XVI of the Social Security Act;
(B)aid to families with dependent children under a State plan approved under section 402(a) of the Social Security Act;
(C)medical assistance under a State plan approved under section 1902(a) of the Social Security Act;
(D)benefits under title XX of the Social Security Act;
(E)benefits under the food stamp program (as defined in section 3(h) of the Food Stamp Act of 1977);
(F)benefits under the special supplemental food program for women, infants, and children established under section 17 of the Child Nutrition Act of 1966;
(G)benefits under section 336 of the Older Americans Act;
(H)benefits under the National School Lunch Act;
(I)benefits under any housing assistance program for lower income families or elderly or handicapped persons which is administered by the Secretary of Housing and Urban Development or the Secretary of Agriculture;
(J)benefits under the Low-Income Home Energy Assistance Act of 1981;
(K)benefits under part A of the Energy Conservation in Existing Buildings Act of 1976;
(L)benefits under any educational assistance grant or loan program which is administered by the Secretary of Education; and
(M)benefits under a State plan approved under title I, X, XIV, or XVI of the Social Security Act.
(b)Effective Date.—Subsection
(a)shall take effect on January 1, 1989. 103 STAT. 2490 SEC. 10406. [42 USC 627 note](/us/usc/t42/s627). TREATMENT OF TRIENNIAL REVIEWS OF STATE FOSTER CARE PROTECTIONS FOR FISCAL YEARS BEFORE OCTOBER 1, 1990. The Secretary of Health and Human Services shall not, before October 1, 1990, reduce any payment to, withhold any payment from, or seek any repayment from, any State under part B or E of title IV of the Social Security Act, by reason of a determination made in connection with any triennial review of State compliance with the foster care protections of section 427 of such Act for any Federal fiscal year preceding fiscal year 1991. TITLE XI—MISCELLANEOUS SEC. 11001. SECTION 202(b) EXCEPTION. Any transfer of outlays, receipts, or revenues from one fiscal year to an adjacent fiscal year that occurs pursuant to any provision of this Act or any amendment made by this Act shall be considered a necessary (but secondary) result of a significant policy change as provided in section 202(b) of the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987. SEC. 11002. [2 USC 902 note](/us/usc/t2/s902). RESTORATION OF FUNDS SEQUESTERED.
(a)President of U.S. Order Rescinded.—
(1)Upon the issuance of a new final order by the President under subsection (b)(4), the order issued by the President on October 16, 1989, pursuant to section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 is rescinded.
(2)Except as otherwise provided in sections 6001, 6101, and 6201, and subject to subsection (b), any action taken to implement the order issued by the President on October 16, 1989, shall be reversed, and any sequesterable budgetary resource that has been reduced or sequestered by such order is restored, revived, or released and shall be available to the same extent and for the same purposes as if an order had not been issued.
(3)For purposes of section 702(d) and 1101(c) of the Ethics Reform Act of 1989, the order issued by the President on October 16, 1989, pursuant to section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 is deemed to be rescinded on January 31, 1990.
(b)Adjusted Reduction.—
(1)Reports. Before the close of the fifteenth calendar day beginning after the date of enactment of this Act, the Director of OMB shall issue a revised report using the exact budget baseline set forth in the report of October 16, 1989, and following the requirements, specifications, definitions, and calculations required by the Balanced Budget and Emergency Deficit Control Act of 1985 for the final report issued under section 251(c)(2) for fiscal year 1990, except that the aggregate outlay reduction to be achieved shall be an amount equal to $16.1 billion multiplied by 130 divided by 365. Calculations made to carry out the preceding sentence shall take into account the reductions and cancellations achieved by paragraphs
(2)and
(3)and shall not be affected by subsection (d).
(2)Notwithstanding any provision of law other than this paragraph, the reductions and cancellations in the student loan programs described in section 256(c) of the Balanced Budget and Emergency Deficit Control Act of 1985 achieved by the order 103 STAT. 2491issued by the President on October 16, 1989, shall remain in effect through December 31, 1989, and no reductions or cancellations in such programs shall be made by the order issued under paragraph (4).
(3)Notwithstanding any provision of law other than this paragraph, any automatic spending increase suspended or cancelled by the order issued by the President on October 16, 1989, shall be paid at a rate that is 130/365ths less than the rate that would have been paid under the laws providing for such automatic spending increase.
(4)On the date that the Director submits a revised report to President of U.S.the President under paragraph
(1)for fiscal year 1990, the President shall issue a new final order to make all of the reductions and cancellations specified in such report in conformity with section 252(a)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985. Such order shall be deemed to have become effective on October 16, 1989.
(c)Compliance Report by Comptroller General.—Before the close of the thirtieth day beginning after the date the President issues a new final order under subsection (b)(4), the Comptroller General shall submit to the Congress and the President a compliance report setting forth the information required under section 253 of the Balanced Budget and Emergency Deficit Control Act of 1985 with respect to such order.
(d)No Double Reduction in Medicare.—With respect to items and services described in section 6001, 6101, or 6201 for periods for which reductions are made pursuant to the respective sections, no reduction shall be made under subsection (b). Approved December 19, 1989. LEGISLATIVE HISTORY—[H.R. 3299](/us/bill/101/hr/3299) ([S. 1750](/us/bill/101/s/1750)) (*See* [S. 1726](/us/bill/101/s/1726)): HOUSE REPORTS: No. [101–247](/us/hrpt/101/247) (Comm. on the Budget) and No. [101–386](/us/hrpt/101/386) (Comm. of Conference). CONGRESSIONAL RECORD, Vol. 135 (1989): Sept. 26–28, Oct. 3–5, considered and passed House. Oct. 12, [S. 1750](/us/bill/101/s/1750) considered in Senate. Oct. 13, [H.R. 3299](/us/bill/101/hr/3299) considered and passed Senate, amended. Nov. 21, House and Senate agreed to conference report. WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 25 (1989): Dec. 19, Presidential statement. Public Law 101–240: To reauthorize the Export-Import Bank tied aid credit fund and pilot interest subsidy program, to provide for the participation of the United States in a replenishment of the Inter-American Development Bank and in the Enhanced Structural Adjustment Facility of the International Monetary Fund, to improve the safety and soundness of the United States banking system and encourage the reduction of the debt burdens of the highly indebted countries, to encourage the multilateral development banks to engage in environmentally sustainable lending practices and give greater priority to poverty alleviation, and for other purposes. Public Law 240 Public Law 101–240 103 Stat. 2492 1989-12-19 United States Government Publishing Office text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain. Digitization Vendor 2025-06-27 101 1 public
Connectionstraces to 296
Traces to 296 documents
U.S. Code
- Price support§ 1421
- Omitted§ 1444e
- Omitted§ 1433d
- Repealed. Pub. L. 101–508, title XIII, § 13212, Nov. 5, 1990, 104 Stat. 1388–621§ 909
- Price support levels for designated nonbasic agricultural commodities§ 1446
- Specific powers of Corporation§ 714c
- General definition of institution of higher education§ 1001
- Eligibility of student borrowers and terms of federally insured student loans§ 1077
- Federal payments to reduce student interest costs§ 1078
- Terms of loans§ 1087dd
- Definitions for student loan insurance program§ 1085
- Program participation agreements§ 1094
- Legal powers and responsibilities§ 1082
- Definitions§ 1088
- Institutional and financial assistance information for students§ 1092
- National Student Loan Data System§ 1092b
- Civil enforcement§ 1132
- Application fees§ 158
- Discriminations and preferences§ 202
- Schedules of charges§ 203
- Commission authorized to prescribe just and reasonable charges; penalties for violations§ 205
- Extension of lines or discontinuance of service; certificate of public convenience and necessity§ 214
- Reports by carriers; contents and requirements generally§ 219
- Accounts, records, and memoranda§ 220
- Forfeitures; recovery§ 362
- Forfeitures§ 386
- Forfeitures§ 503
- Repealed. Pub. L. 109–58, title VI, § 637(b), Aug. 8, 2005, 119 Stat. 791§ 2213
- Budgetary treatment of the Postal Service Fund§ 2009a
- Civil Service Retirement and Disability Fund§ 8348
- Contributions§ 8906
- The Postal Service Fund§ 2003
- Alternative forms of annuities§ 8343a
- Treatment of receipt of monetary allowance and other benefits§ 1833
- Enforcing pay-as-you-go§ 902
- Payments to hospitals for inpatient hospital services§ 1395ww
- Prohibition against any Federal interference§ 1395
- Description of program§ 1395c
- Definitions§ 1395x
- Scope of benefits§ 1395d
- Conditions of and limitations on payment for services§ 1395f
- Consultation with State agencies and other organizations to develop conditions of participation for providers of services§ 1395z
- Agreements with States§ 1395aa
- Effect of accreditation§ 1395bb
- Provisions relating to the administration of part A§ 1395h
- Transferred§ 13951
- Procedure for payment of claims of providers of services§ 1395n
- Provisions relating to the administration of part B§ 1395u
- Exclusions from coverage and medicare as secondary payer§ 1395y
- Agreements with providers of services; enrollment processes§ 1395cc
- Examination and treatment for emergency medical conditions and women in labor§ 1395dd
- Agreements with States§ 1395v
- Payments to providers of services§ 1395g
- Payment to skilled nursing facilities for routine service costs§ 1395yy
- Payment of benefits§ 1395l
- Special payment rules for particular items and services§ 1395m
- End stage renal disease program§ 1395rr
- Definitions§ 201
- Mission and duties§ 299
- General authorities§ 299a
- Health care outcome improvement research§ 299b
- Definitions§ 1301
- Studies and recommendations§ 1395ll
- Advisory Council for Healthcare Research and Quality§ 299c
- COUNCIL.§ 5
- Appointment and authority of the Director of the Centers for Disease Control and Prevention§ 242c
- Research and investigations generally§ 241
- Repealed. Pub. L. 101–239, title VI, § 6103(d)(1)(B), Dec. 19, 1989, 103 Stat. 2205§ 242n
- General authority respecting research, evaluations, and demonstrations in health statistics, health services, and health care technology§ 242b
- National Center for Health Statistics§ 242k
- International cooperation§ 242l
- General provisions respecting effectiveness, efficiency, and quality of health services§ 242m
- Rural health care services outreach, rural health network development, and small health care provider quality improvement grant programs§ 254c
- Miscellaneous provisions§ 11137
- Professional review§ 11111
- Construction§ 11115
- Ruth L. Kirschstein National Research Service Awards§ 288
- Overpayment on behalf of individuals and settlement of claims for benefits on behalf of deceased individuals§ 1395gg
- State plans for medical assistance§ 1396a
- Scope of benefits; definitions§ 1395k
- Confidentiality and disclosure of returns and return information§ 6103
- Certain group health plans§ 5000
- Prohibition of age discrimination§ 623
- Age limits§ 631
- Enrollment periods§ 1395p
- Amount of premiums for individuals enrolled under this part§ 1395r
- Limitation on certain physician referrals§ 1395nn
- Payments to health maintenance organizations and competitive medical plans§ 1395mm
- Office of Rural Health Policy§ 912
- Limitation on liability where claims are disallowed§ 1395pp
- Option to individuals to obtain other health insurance protection§ 1395b
- Payment to States§ 1396b
- Program for distribution of pediatric vaccines§ 1396s
- Definitions§ 1396d
- Use of enrollment fees, premiums, deductions, cost sharing, and similar charges§ 1396o
- Compliance with State plan and payment provisions§ 1396n
- Liens, adjustments and recoveries, and transfers of assets§ 1396p
- Eligible States; State plan§ 602
- Authorization of appropriations; purposes; definitions§ 701
- Application for block grant funds§ 705
- Allotment to States and Federal set-aside§ 702
- Payments to States§ 703
- Use of allotment funds§ 704
- Administrative and fiscal accountability§ 706
- Administration of Federal and State programs§ 709
- Continuation coverage§ 1162
- Notice requirements§ 1166
- Requirements for nursing facilities§ 1396r
- Transferred§ 13961
- Tax imposed§ 1
- Educational assistance programs§ 127
- Certain fringe benefits§ 132
- Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(19)(A), Dec. 19, 2014, 128 Stat. 4039]§ 120
- Amount of credit§ 51
- Trade or business expenses§ 162
- Low-income housing credit§ 42
- General definition of homeless individual§ 11302
- Passive activity losses and credits limited§ 469
- Credit for increasing research activities§ 41
- Computation and payment of tax§ 1503
- Interest§ 163
- Transfer to corporation controlled by transferor§ 351
- Excise tax on undistributed income of regulated investment companies§ 4982
- Taxation of regulated investment companies and their shareholders§ 852
- Adjustments in computing alternative minimum taxable income§ 56
- Corporate shareholder’s basis in stock reduced by nontaxed portion of extraordinary dividends§ 1059
- Treatment of certain interests in corporations as stock or indebtedness§ 385
- Liquidating, etc., transactions§ 6043
- Failure by corporation to pay estimated income tax§ 6655
- Net operating loss deduction§ 172
- Repealed. Pub. L. 104–188, title I, § 1602(a), Aug. 20, 1996, 110 Stat. 1833]§ 133
- Deduction for contributions of an employer to an employees’ trust or annuity plan and compensation under a deferred-payment plan§ 404
- Sales of stock to employee stock ownership plans or certain cooperatives§ 1042
- Qualifications for tax credit employee stock ownership plans§ 409
- Liability for payment§ 2002
- Limitations on benefits and contribution under qualified plans§ 415
- Limitation on net operating loss carryforwards and certain built-in losses following ownership change§ 382
- Qualified pension, profit-sharing, and stock bonus plans§ 401
- Taxable year of certain foreign corporations§ 898
- Limitation on credit§ 904
- Mode or time of collection§ 6302
- Imposition of tax§ 4261
- Imposition of tax§ 4471
- Imposition of tax§ 4611
- Imposition of tax§ 4681
- Exemption from tax§ 5704
- Exchange of real property held for productive use or investment§ 1031
- Credit for prior year minimum tax liability§ 53
- Other definitions and special rules§ 59
- Depreciation§ 167
- Definitions§ 3401
- Compensation for injuries or sickness§ 104
- Partner’s distributive share§ 704
- Bonds must be registered to be tax exempt; other requirements§ 149
- Arbitrage§ 148
- Failure to file correct information returns§ 6721
- Information reporting with respect to certain foreign corporations and partnerships§ 6038
- General requirement of return, statement, or list§ 6011
- General rule for taxable year of deduction§ 461
- Sanctions and costs awarded by courts§ 6673
- Understatement of taxpayer’s liability by tax return preparer§ 6694
- Other assessable penalties with respect to the preparation of tax returns for other persons§ 6695
- Promoting abusive tax shelters, etc.§ 6700
- Penalties for aiding and abetting understatement of tax liability§ 6701
- Rules applicable to penalties under sections 6700, 6701, and 6702§ 6703
- Failure to collect and pay over tax, or attempt to evade or defeat tax§ 6672
- Action to enjoin tax return preparers§ 7407
- Disclosure or use of information by preparers of returns§ 7216
- Failure to file tax return or to pay tax§ 6651
- Failure to make deposit of taxes§ 6656
- Tax paid by recipient of income§ 1463
- Denial of certain losses§ 58
- Expenses and interest relating to tax-exempt income§ 265
- Branch profits tax§ 884
- Dividends received from certain foreign corporations§ 245
- Restrictions applicable to deficiencies; petition to Tax Court§ 6213
- Effect on earnings and profits§ 312
- Oil Spill Liability Trust Fund§ 9509
- Renumbered § 424]§ 425
- Fuels not used for taxable purposes§ 6427
- Tax on fuel used in commercial transportation on inland waterways§ 4042
- Definitions and special rules§ 414
- Amount of credit§ 46
- Definitions§ 1504
- Gift to spouse§ 2523
- Bequests, etc., to surviving spouse§ 2056
- Joint interests§ 2040
- Special rules for long-term contracts§ 460
- Retirement savings§ 219
- General rule for taxable year of inclusion§ 451
- Adjustments required by changes in method of accounting§ 481
- Accelerated cost recovery system§ 168
- Restrictions on church tax inquiries and examinations§ 7611
- Stay of collection of jeopardy assessments§ 6863
- Limitation based on tax liability; definition of tax liability§ 26
- Private activity bond; qualified bond§ 141
- Employees of foreign affiliates covered by section 3121(l) agreements§ 406
- Individual retirement accounts§ 408
- Treatment of transactions in which Federal financial assistance provided§ 597
- Vaccine Injury Compensation Trust Fund§ 9510
- Minimum vesting standards§ 1053
- Minimum participation standards§ 1052
- Minimum vesting standards§ 411
- Tax on reversion of qualified plan assets to employer§ 4980
- Determination of amount of and recognition of gain or loss§ 1001
- Requirement of joint and survivor annuity and preretirement survivor annuity§ 1055
- Effective date; special rules§ 1461
- Benefit accrual requirements§ 1054
- Withdrawal not to occur because of change in business form or suspension of contributions during labor dispute§ 1398
- Contributions by employer to accident and health plans§ 106
- Plans must provide continuation coverage to certain individuals§ 1161
- Definitions and special rules§ 1167
- Definitions and special rules for purposes of minimum survivor annuity requirements§ 417
- Definitions§ 1002
- Minimum funding standards§ 412
- Minimum funding standards§ 1082
- Duty of disclosure and reporting§ 1021
- Minimum funding standards for single-employer defined benefit pension plans§ 1083
- Allocation of assets§ 1344
- Single-employer plan benefits guaranteed§ 1322
- Liability for termination of single-employer plans under a distress termination or a termination by corporation§ 1362
- Liability on termination of single-employer plans under multiple controlled groups§ 1364
- Lien for liability§ 1368
- Termination of single-employer plans§ 1341
- Enforcement authority relating to terminations of single-employer plans§ 1370
- Definitions§ 1301
- Institution of termination proceedings by the corporation§ 1342
- Penalty for failure to timely provide required information§ 1371
- Premium rates§ 1306
- Annual reports§ 1023
- Limitation of actions§ 1113
- Establishment of trust§ 1103
- Limitation with respect to acquisition and holding of employer securities and employer real property by certain plans§ 1107
- Exemptions from prohibited transactions§ 1108
- Congressional findings and declaration of policy§ 1001
- Multiemployer plan benefits guaranteed§ 1322a
- Restoration of plans§ 1347
- Annual notification to substantial employers§ 1366
- Recovery of liability for plan termination§ 1367
- Filing with Secretary and furnishing information to participants and certain employers§ 1024
- Reports made public information§ 1026
- Reliance on administrative interpretations§ 1028
- Coverage§ 1051
- Effective dates§ 1061
- Form and payment of benefits§ 1056
- Multiple employer plans and other special rules§ 1060
- Coverage§ 1081
- Minimum funding standards for multiemployer plans§ 1084
- Effective date§ 1114
- Other laws§ 1144
- Coverage§ 1321
- Repeal and effective date§ 1031
- Payments to States§ 674
- John H. Chafee Foster Care Program for Successful Transition to Adulthood§ 677
- Federal loans for State welfare programs§ 606
- Purpose§ 601
- Prohibitions; requirements§ 608
- Grants to States§ 603
- Definitions§ 675
- Procedure for payment of benefits§ 1383
- Outreach program for children§ 1383d
- Eligibility for benefits§ 1382
- Definitions§ 1382c
- Income; earned and unearned income defined; exclusions from income§ 1382a
- Resources§ 1382b
- Allotments§ 1397b
- Short title of chapter§ 1305
- Disability insurance benefit payments§ 423
- Railroad Retirement Account§ 231n
- Cooperative research or demonstration projects§ 1310
- Definitions§ 3121
- Definitions relating to employment§ 410
- Old-age and survivors insurance benefit payments§ 402
- Definitions§ 1402
- Exemption for employers and their employees where both are members of religious faiths opposed to participation in Social Security Act programs§ 3127
- Definitions§ 3231
- “Wages” defined§ 409
- Reduction of insurance benefits§ 403
- GRANTS.§ 413
- Reduction of disability benefits§ 424a
- Computation of primary insurance amount§ 415
- Adjustment of contribution and benefit base§ 430
- Benefits for veterans§ 417
- Voluntary agreements for coverage of State and local employees§ 418
- Minimum wage§ 206
- Definitions§ 231
- Evidence, procedure, and certification for payments§ 405
- Overpayments and underpayments§ 404
- Disability determinations§ 421
- Commissioner; Deputy Commissioner; other officers§ 902
- Representation of claimants before Commissioner§ 406
- Repealed. Pub. L. 109–288, § 6(a), Sept. 28, 2006, 120 Stat. 1244§ 620
- Mandatory work requirements§ 607
- State plans for child welfare services§ 622
- Kinship navigators§ 627
136 references not yet in our index
- Pub. L. 101-239
- 7 USC 1464(e)
- 7 USC 1445b–2(a)(2)(G)
- Pub. L. 101-82
- 103 Stat. 587
- Pub. L. 100-119
- Pub. L. 100-418
- 7 USC 1736s(a)
- 12 USC 2278b–9
- Pub. L. 100-460
- 102 Stat. 2266
- 12 USC 2278b–5(b)
- 20 USC 1078–1(a)
- 20 USC 1078–1
- 20 USC 1078–1(b)(D)
- 20 USC 1078–1(a)(1)
- 20 USC 1078–6
- 20 USC 1078–7
- 20 USC 1987tt(a)
- Pub. L. 99-272
- 42 USC 1395i–4
- 42 USC 1320a–7a(b)(1)
- 42 USC 1320a–7b(c)
- 42 USC 1320b–4
- 42 USC 1320b–8(a)(1)
- 42 USC 1320c–13(e)
- 42 USC 1395i–2
- 42 USC 1395i–2a
- 42 USC 1395w–4
- 42 USC 299a–1
- 42 USC 299a–2
- 42 USC 299b–1
- 42 USC 299b–2
- 42 USC 299b–3
- 42 USC 1320b–12
- 42 USC 299c–1
- 42 USC 299c–2
- 42 USC 299c–3
- 31 USC 529
- 42 USC 299c–4
+ 96 more
Citation graph
cites case law
Public Law 101–239
To provide for reconciliation pursuant to section 5 of the concurrent resolution on the budget for the fiscal year 1990
Pub. L.Pub. L. 101-239
Cite7 USC 1464(e)
Cite7 USC 1445b–2(a)(2)(G)
Cites 432 · showing 12Cited by 0 across 0 sources