
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC1395xx]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                       CHAPTER 7--SOCIAL SECURITY
 
        SUBCHAPTER XVIII--HEALTH INSURANCE FOR AGED AND DISABLED
 
                    Part D--Miscellaneous Provisions
 
Sec. 1395xx. Payment of provider-based physicians and payment 
        under certain percentage arrangements
        

(a) Criteria; amount of payments

    (1) The Secretary shall by regulation determine criteria for 
distinguishing those services (including inpatient and outpatient 
services) rendered in hospitals or skilled nursing facilities--
        (A) which constitute professional medical services, which are 
    personally rendered for an individual patient by a physician and 
    which contribute to the diagnosis or treatment of an individual 
    patient, and which may be reimbursed as physicians' services under 
    part B, and
        (B) which constitute professional services which are rendered 
    for the general benefit to patients in a hospital or skilled nursing 
    facility and which may be reimbursed only on a reasonable cost basis 
    or on the bases described in section 1395ww of this title.

    (2)(A) For purposes of cost reimbursement, the Secretary shall 
recognize as a reasonable cost of a hospital or skilled nursing facility 
only that portion of the costs attributable to services rendered by a 
physician in such hospital or facility which are services described in 
paragraph (1)(B), apportioned on the basis of the amount of time 
actually spent by such physician rendering such services.
    (B) In determining the amount of the payments which may be made with 
respect to services described in paragraph (1)(B), after apportioning 
costs as required by subparagraph (A), the Secretary may not recognize 
as reasonable (in the efficient delivery of health services) such 
portion of the provider's costs for such services to the extent that 
such costs exceed the reasonable compensation equivalent for such 
services. The reasonable compensation equivalent for any service shall 
be established by the Secretary in regulations.
    (C) The Secretary may, upon a showing by a hospital or facility that 
it is unable to recruit or maintain an adequate number of physicians for 
the hospital or facility on account of the reimbursement limits 
established under this subsection, grant exceptions to such 
reimbursement limits as may be necessary to allow such provider to 
provide a compensation level sufficient to provide adequate physician 
services in such hospital or facility.

(b) Prohibition of recognition of payments under certain percentage 
        agreements

    (1) Except as provided in paragraph (2), in the case of a provider 
of services which is paid under this subchapter on a reasonable cost 
basis, or other basis related to costs that are reasonable, and which 
has entered into a contract for the purpose of having services furnished 
for or on behalf of it, the Secretary may not include any cost incurred 
by the provider under the contract if the amount payable under the 
contract by the provider for that cost is determined on the basis of a 
percentage (or other proportion) of the provider's charges, revenues, or 
claim for reimbursement.
    (2) Paragraph (1) shall not apply--
        (A) to services furnished by a physician and described in 
    subsection (a)(1)(B) of this section and covered by regulations in 
    effect under subsection (a) of this section, and
        (B) under regulations established by the Secretary, where the 
    amount involved under the percentage contract is reasonable and the 
    contract--
            (i) is a customary commercial business practice, or
            (ii) provides incentives for the efficient and economical 
        operation of the provider of services.

(Aug. 14, 1935, ch. 531, title XVIII, Sec. 1887, as added and amended 
Pub. L. 97-248, title I, Secs. 108(a)[(1)], 109(a), Sept. 3, 1982, 96 
Stat. 337, 338; Pub. L. 98-21, title VI, Sec. 602(j), Apr. 20, 1983, 97 
Stat. 165.)


                               Amendments

    1983--Subsec. (a)(1)(B). Pub. L. 98-21 inserted ``or on the bases 
described in section 1395ww of this title''.
    1982--Subsec. (b). Pub. L. 97-248, Sec. 109(a)(2), added subsec. 
(b).


                    Effective Date of 1983 Amendment

    Amendment by Pub. L. 98-21 applicable to items and services 
furnished by or under arrangement with a hospital beginning with its 
first cost reporting period that begins on or after Oct. 1, 1983, any 
change in a hospital's cost reporting period made after November 1982 to 
be recognized for such purposes only if the Secretary finds good cause 
therefor, see section 604(a)(1) of Pub. L. 98-21, set out as a note 
under section 1395ww of this title.


                    Effective Date of 1982 Amendment

    Section 109(c)(1), (2) of Pub. L. 97-248 provided that:
    ``(1) The amendments made by this section [amending this section and 
section 1395x of this title] shall become effective on the date of the 
enactment of this Act [Sept. 3, 1982], except that section 1887(b)(1) of 
the Social Security Act [subsec. (b)(1) of this section] shall not apply 
before October 1, 1982, to services furnished by a physician and 
described in section 1887(a)(1)(B) of such Act [subsec. (a)(1)(B) of 
this section].
    ``(2) In the case of a contract with a provider of services entered 
into prior to the date of the enactment of this Act [Sept. 3, 1982], the 
amendment made by subsection (a) [amending this section] shall apply to 
payments under such contract (A) 30 days after the first date (after 
such date of enactment) the provider of services may unilaterally 
terminate the contract, or (B) one year after the date of the enactment 
of this Act, whichever is earlier.''


                      Effective Date of Regulations

    Section 108(b), formerly Sec. 108(c), of Pub. L. 97-248, as 
redesignated by Pub. L. 97-448, title III, Sec. 309(a)(3), Jan. 12, 
1983, 96 Stat. 2408, provided that: ``The Secretary of Health and Human 
Services shall first promulgate regulations to carry out section 1887(a) 
of the Social Security Act [subsec. (a) of this section] not later than 
October 1, 1982. Such regulations shall become effective on October 1, 
1982, and shall be effective with respect to cost reporting periods 
ending after September 30, 1982, but in the case of any cost reporting 
period beginning before October 1, 1982, any reduction in payments under 
title XVIII of the Social Security Act [this subchapter] to a hospital 
or skilled nursing facility resulting from such regulations shall be 
imposed only in proportion to the part of the period which occurs after 
September 30, 1982.''

                  Section Referred to in Other Sections

    This section is referred to in section 1395x of this title.
